Mission

Vision

• satisfying our customers’ needs for fully featured, high quality broadband services;
• creating value through dynamic growth of our customer base;
• providing an inspiring, performance-driven and entrepreneurial work environment. 
   

Main strategic objectives

• reach 1 million broadband customers (*).

2. Leverage PLAY investments by:

• introducing fixed-mobile convergent services in 2008;
• achieving cost and infrastructure synergies at the group level.

3. Optimize Netia’s strong position in the business market segment by:

• increasing significantly the number of SOHO & SME clients;
• increasing profitability of large corporate clients while minimizing capital expenditures.

4. Introduce changes to the organizational culture to support a strategy focused on value growth by:

• strengthening employees’ values such as focusing on clients’ needs, reaching objectives, entrepreneurial drive and trust.

5. Invest for profitable growth:

• achieving an industry-leading revenue compound average growth rate during 2007-2009;
• maximizing utilization of the existing assets;
• achieving strong EBITDA growth by 2009 and positive free cash flow by 2010 as a result of three years of investment in broadband services of up to PLN 700 million.

Guidance for 2008 and medium-term outlook for 2008 - 2011

Guidance for 2008

Medium-term outlook

After almost a year of rolling out Netia’s broadband driven growth strategy announced on April 18, 2007, sufficient performance data has now been accumulated to provide a medium-term outlook for future development.

Management believes that Netia has now established itself as the leading altnet provider and that further acceleration of broadband customer acquisitions will result from the Company’s investment in advertising and acceleration in market penetration growth. The Company now projects that it will reach its primary strategic target of achieving 1 million broadband subscribers by the end of 2010.

Netia targets continuous sequential quarterly revenue growth and annual growth rates in the mid to high teens for 2008-2010, driven mainly by broadband, double-play with voice service, Netia branded mobile services and transmission services for P4.

Management considers that achieving a recovery in EBITDA above the PLN 220.0m level of 2006 is mainly dependent on deep penetration of double-play services and an extensive and timely roll out of DSL equipment into the TP local loop. Both are primary focus areas for 2008, along with increasing sales efficiency. Management currently expects EBITDA to recover strongly above PLN 220.0m by 2010 and for long run EBITDA margins to settle above 20% by 2011 with a less asset intensive business model.

The first year’s results indicate that the original estimate of PLN 200.0m of start-up losses for broadband growth and PLN 500.0m of capital investments for broadband investment and ethernet network acquisitions to achieve 1 million subscribers remains on track. Of these amounts, PLN 66.0m of operational losses, PLN 81.4m of investments in broadband and PLN 39.0m in acquisitions of ethernet networks were consumed during 2007. Management maintains its objective of free cash flow break-even by 2010. Management’s projections indicate that Netia should return to operating profit by 2010 and net profit by 2011 at the latest.

Netia would also like to announce that it will continue to monitor the possibilities of achieving the forecast results on a quarterly basis. The achievement of the forecast results will be assessed, and any necessary adjustments introduced, after the end of a given quarter of the financial year based on an analysis of sales revenues, investment expenditure and the number of broadband clients.

Strategy publication date: April 18, 2007
2008 guidance and medium-term outlook publication date: February 28, 2008
2008 guidance update date:  August 12, 2008

(*) The total number of clients using broadband services through the use of various access methods, e.g. xDSL within Netia’s own copper network, WiMax, bitstream (BSA) and through local loop unbundling via TP SA’s network.