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10 August 2004

Claims of Millennium and its related parties

WARSAW, Poland – August 10, 2004 – Netia SA (“Netia”) (WSE: NET), Poland’s largest alternative provider of fixed-line telecommunications services, today announced that Millennium Communications SA (“Millennium”), Newman Finance Corporation (“NFC”), its sole shareholder, and Genesis sp. z o.o. (“Genesis”), its subsidiary, filed motions for the declaration of bankruptcy of Netia with the District Court for the Capital City of Warsaw, XVII Commercial Division for bankruptcy and restructuring matters in Warsaw, on July 16, 2004, July 21, 2004 and July 27, 2004, respectively. The motions for declaration of Netia’s bankruptcy are based on the following grounds:

 (A) NFC’s Motion (ref: sygn. akt XVII GU 703/04). NFC filed an unsatisfied claim of PLN 45,431,788.40 (say: forty five million, four hundred and thirty-one thousand, seven hundred and eighty-eight and 40/100) with respect to: (i) damages for seizure of Millennium shares owned by NFC; and (ii) reimbursement of incurred costs of proceedings.

(B) Millennium’s Motion (ref: sygn. akt XVII GU 721/04). Millennium filed an unsatisfied claim of PLN 10,802,634 (say: ten million, eight hundred and two thousand, six hundred and thirty-four) with respect to (i) payment for the telecommunication network which was constructed at the instructions of Netia; and (ii) reimbursement of the costs of proceedings, if any.

 (C) Genesis’ Motion (ref: sygn. akt XVII 736/04). Genesis filed an unsatisfied motion for PLN 1,466,874.43 (say: one million four hundred and sixty-six thousand, eight hundred and seventy-four, and 43/100) as damages for interruption of delivery of services in 2003. Netia’s Management Board believes the above motions for declaration of bankruptcy are totally groundless. Irrespective of the above, in view of Netia’s financial situation, as indicated in the stand-alone financial statements prepared in accordance with the Polish Accounting Act for the first half of 2004 announced today, given the aggregate value of the filed claims and the strength of Netia’s balance sheet (Netia’s total assets exceed its total liabilities by PLN 2,176 million, and the total value of cash and cash equivalents amounts to PLN 196 million), the Management Board is of the opinion that there is no doubt whatsoever as to Netia’s solvency.