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25 June 2007

Internet Provider Purchased By Netia

Netia has purchased shares in Magma Systemy Komputerowe Schmidt i S-ka Sp. z o.o. with its seat in Wrocław, making up 100 per cent of its share capital and conferring the right to 100 per cent of votes at the meeting of shareholders of Magma. This closes the transaction entered into on June 6, 2007 when Netia also purchased shares of two other telecommunications operators providing Internet access: KOM-NET Systemy Komputerowe Sp. z o.o. and Lanet Sp. z o.o.

All three companies purchased operate housing development networks and provide broadband access to residential customers in Wrocław, Poznań, Legnica and Jelcz-Laskowice near Wrocław using FastEthernet. Such a high performance network enables the provision of other web-based services, e.g. video on demand or IPTV, with relatively low incremental capital expenditures. Netia plans the up-sale of its own services such as voice and hosting to the customers of the acquired companies.

"The purchase of these three Internet providers consolidates Netia's position on the very attractive Wrocław market where our activity was quite limited so far. We have purchased 100 per cent of shares of leading independent local providers who know the market very well and have a solid and continuously growing customer base. The acquisitions are in line with Netia's strategic objective of acquiring one million broadband customers over the next three years. We will consider purchasing internet providers with similarly high quality infrastructure in other regions of Poland." - Mirosław Godlewski, President of Netia, said.

The three companies had 22,000 customers in total at the transaction conclusion time. Netia's gaining access to 70,000 households is an important part of the transaction. In addition, Netia expects a further fast growth in the number of customers of the acquired companies.

The sales agreement with Magma Systemy Komputerowe Schmidt i S-ka has been concluded as a result of the performance of the Initial Agreement on Sales of Shares in the Share Capital of the Company Currently Operating under the Business Name of Magma Systemy Komputerowe Schmidt i S-ka Spółka Jawna with its Seat in Wrocław concluded on June 6, 2007 by and between Netia and the owners of Magma.

Magma Systemy Komputerowe Schmidt i S-ka Sp. z o.o. had been set up as a result of transformation of Magma Systemy Komputerowe Schmidt i S-ka Spółka Jawna.

Magma operates housing development networks and provides broadband access to residential customers in Wrocław and Jelcz-Laskowice. It uses FastEthernet technology which allows transmission speed of up to 100 Mb/s. The purchase of assets has been financed with Netia's own funds. It is a long-term investment.