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27 December 2004

Supplemental information on the early repayment of Netia’s outstanding installment obligations


WARSAW, Poland – December 27, 2004 – Netia SA (“Netia” or the “Company”) (WSE: NET), Poland’s largest alternative provider of fixed-line telecommunications services, today announced supplemental information with regard to its prior decision on the early repayment of all of the Company’s outstanding installment obligations resulting from the arrangements approved in 2002 in the arrangement proceedings for Netia Holdings SA, Netia Telekom SA, and Netia South Sp. z o.o. (“Installment Obligations”).
 
In accordance with the information published in Netia’s press release dated November 8, 2004, Installment Obligations will be repaid as follows, at the discretion of the claim holders:
a) through cash payments, to accounts designated by the claim holders; or
b) in exchange for new shares in the Company; for this purpose, on December 6, 2004, Netia’s management board adopted a resolution on increasing the Company’s share capital and issuing no more than 18,373,785 ordinary bearer series “I” shares (the “Shares”) with the issue price of PLN 1.0826241 per share, i.e., for the price equal to the issue price of the series H shares issued in relation to the Company’s financial restructuring in 2002.
 
To receive the cash payments or to subscribe for the Shares, the claim holders should fill in the specific claim form available on the Company’s websites (www.netia.pl and www.investor.netia.pl) or in a request directed to Kent Holding (address: Kent Holding, Netia SA, ul. Poleczki 13, 02-822 Warsaw, Poland, phone: +48 330 2010, fax: + 48 338 20 10, e-mail: a_holding@netia.pl).
 
 
The completed claim form should be delivered to the following address:
The Bank of New York
Corporate Trust Administration
48th Floor
One Canada Square
London E14 5AL
Attention: Breige Tinnelly
Fax: +44 207 964 63 99
Phone: +44 207 964 64 02
 
 
not later than by:
 
(i)                  January 31, 2005 in order to receive the Shares, and
 
(ii)                April 29, 2005 in order to receive the cash payment.
 
Subsequent to April 29, 2005, cash amounts equivalent to the Installment Obligations of those claim holders who failed to submit the claim form within the deadline specified in point (ii) above will be deposited with the court depository at the District Court for Warsaw Mokotów, II Civil Division, Poland (Sąd Rejonowy dla Warszawy Mokotowa, II Wydział Cywilny).
 
Certain other actions may be required (including the execution of other documents) in connection with the above mentioned cash payments or debt/equity swap. Details will be available on the web pages (www.netia.pl and www.investor.netia.pl) and at the addresses given above.
 
On December 23, 2004, the deadline expired for the Polish Securities and Exchange Commission (Komisja Papierów Wartościowych i Giełd) to oppose (pursuant to Art. 63 of the Act of August 21, 1997 – the Law on the Public Trading of Securities) the notice on introducing the Shares to public trading, as filed by Netia on December 6, 2004. Filing such notice has the same effect as the Polish Securities and Exchange Commission granting approval for the introduction of shares to public trading. Consequently, as of December 28, 2004, the Company will make the Prospectus for the Shares publicly available in both printed and electronic versions (www.netia.pl). The Share offer shall be conducted solely in the Republic of Poland and shall be subject to Polish law; investors may participate in the offer of the Shares solely within the territory of the Republic of Poland. In any other countries, the Prospectus for the Shares may be used for informational purposes only.