Current reports

Warsaw, Poland - February 28, 2001 - Netia Holdings (NASDAQ: NTIA, WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced audited financial results for the year ended December 31, 2000.

Financial highlights

• EBITDA for 2000 improved to PLN 23.2 million (US$ 5.6 million), from a negative PLN 15.4 million in 1999. EBITDA for the fourth quarter 2000 improved to PLN 8.3 million (US$ 2.0 million) from PLN 3.7 million in the fourth quarter of 1999, and from PLN 1.8 million in the third quarter 2000. EBITDA margins for the year and fourth quarter 2000 were 5.2% and 6.4%, respectively.
  
  
• Total revenues in 2000 increased by 77.7% to PLN 442.7 million (US$ 106.9 million) compared to PLN 249.1 million in 1999. Total revenues for the fourth quarter 2000 increased by 47.5% to PLN 128.8 million (US$ 31.1 million) compared to PLN 87.3 million for the fourth quarter 1999, and by 13.1% compared to PLN 113.9 million in the third quarter 2000.
  
  
• Revenues from telecom services in 2000 increased by 81.5% to PLN 395.2 million (US$ 95.4 million) compared to PLN 217.7 million in 1999. Revenues from telecom services for the fourth quarter 2000 increased by 59.1% to PLN 116.8 million (US$ 28.2 million) compared to PLN 73.4 million for the fourth quarter 1999, and by 15.6% compared to PLN 101.0 million over the third quarter 2000.
  
  
• Investments in gross fixed assets and computer software at December 31, 2000 increased by 38.0% to PLN 2,677.4 million (US$ 646.2 million) compared to PLN 1,939.9 million at December 31, 1999, and by 13.3% compared to PLN 2,362.6 million at September 30, 2000, reflecting the continued build-out of Netia's network. At December 31, 2000, Netia had PLN 1,142.9 million (US$ 275.8 million) in cash (excluding restricted investments of PLN 205.5 million or US$ 49.6 million).
  
  
• On January 18, 2001, Netia entered into its second currency hedge transaction. To date, the coupon payments on debt of nearly US$ 400 million, representing approx. 47% of Netia's long-term debt denominated in foreign currencies, have been swapped into Polish zloty.
  
  
• On February 5, 2001, several Netia subsidiaries were granted a deferral on payments of EUR 44 million (approx. US$ 41 million) in outstanding license fees until the end of 2010.
  
  
• Effective November 15, 2000, Netia was added to the Warsaw Stock Exchange's key benchmark, the WIG20 Index of Poland's top twenty companies by market capitalization.

Operational highlights

• Number of subscriber lines in service increased by 27.5% to 321,073 at December 31, 2000 from 251,724 at December 31, 1999, and 4.5% from 307,160 at September 30, 2000. The larger number of subscriber lines is net of customer churn and disconnections, which amounted to 9,756 and 17,609, respectively for 2000, and 2,358 and 10,385 for fourth quarter 2000.
  
  
• Business lines as a percentage of total subscriber lines reached 25.3%, up from 20.5% at December 31, 1999, and 23.6% at September 30, 2000. Business percentage of net additions reached 62.9% and 42.7% in the fourth quarter and year-to-date, respectively. Revenues from business customers accounted for 49.6% of telecommunications revenues in December 2000.
  
  
• Number of business customer lines in service increased by 57.4% to 81,137 from 51,554 at December 31, 1999, and by 12.1% from 72,379 at September 30, 2000.
  
  
• Average monthly revenue per line grew by 23.9% to PLN 114 (US$ 27.5) in the fourth quarter 2000, compared to PLN 92 in the fourth quarter 1999, and by 4.6% from PLN 109 in the third quarter 2000. In January and July 2000, Netia increased its local tariff and monthly subscription fee.
  
  
• Netia's national backbone network connecting Poland's ten largest cities went fully operational in fourth quarter 2000. Further network construction to enable the provision of wholesale services is on track and scheduled for completion by the end of 2001.
  
  
• At December 31, 2000, Internetia had 36,500 active and registered users paying for the service, positioning it as the second largest dial-up Internet service provider in Poland.
  
  
• In January 2001, Netia signed an interconnection agreement with Telekomunikacja Polska S.A. ("TP S.A.") for the license area of the Warsaw numbering zone.
  
  
• In January 2001, the Ministry of Communications ruled in favor of Netia in an arbitration decision on domestic long distance interconnection rates. A final interconnect agreement has been negotiated with TP S.A. and is now ready for signing.

Key Figures

* The US$ amounts shown in this table have been translated using the exchange rate of PLN 4.1432 = US$ 1.00, the average rate announced by the National Bank of Poland at December 31, 2000. These figures are included for convenience only.

** Net debt is defined as long term debt less cash and both long and short term portion of escrow accounts.

Mattias Gadd, Netia's new President and CEO effective January 1, 2001, commented: "Netia begins the year in an excellent position to capitalize on the growth of the Polish telecommunications market. The inter-city backbone connecting Poland's ten largest urban areas has become operational, our local access customer base now exceeds 320,000 subscribers and the company's brand is strengthening among high-return customers.

"Netia's main priority in 2001 will be to successfully roll out and secure the revenue streams from current services and selective new ones. We will launch domestic long distance and data transmission services, enter the lucrative Warsaw market, enhance Internet connectivity and services and expand Netia's portfolio with wholesale network services. We will also intensify our market and operational focus, anticipating the challenges of this dynamic environment and of future competition, to position Netia for continued success in the years to come."

Commenting on the results, Avi Hochman, Chief Financial Officer of Netia, said: "Telecommunications revenues increased by 81.5% year-on-year, and Netia delivered its first full year of positive EBITDA. Thanks to our focus on high-return customers, average ARPUs increased by 23.9% year-on-year, despite promotional campaigns targeting SME customers in 3Q and 4Q. We expect that the EBITDA margin will continue to rise throughout 2001, benefiting from new services and customers coming on stream as well as cost control measures."

Financial Information

2000 vs 1999
Total revenues for 2000 increased by 77.7% to PLN 442.7 million (US$ 106.9 million), compared to PLN 249.1 million for 1999.

Revenues from telecommunications services increased by 81.5% to PLN 395.2 million (US$ 95.4 million) from PLN 217.7 million in 1999. The increase was primarily attributable to a 27.5% increase in the number of total subscribers to 321,073 at December 31, 2000 from 251,724 at December 31, 1999. Other contributing factors were the overall increase in average monthly revenue per line (PLN 114 (US$ 27.5) for the fourth quarter 2000, compared to PLN 92 for the fourth quarter 1999) due to increases in Netia's local tariff and monthly subscription fees in January (by 13% and 33%, respectively) and July 2000 (by 7% and 25%) as well as higher usage.

Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to PLN 23.2 million or US$ 5.6 million compared with a negative of PLN 15.4 million in 1999.

Interconnection charges increased by 81.1% to PLN 112.3 million (US$ 27.1 million) from PLN 62.0 million. Interconnection charges as a percentage of calling charges decreased to 39.5% from 40.6%, reflecting the result of direct interconnection to the mobile operators.

"Other operating expenses" amounted to PLN 286.9 million (US$ 69.3 million), with salaries and benefits as the main item; headcount at December 31, 2000 was 1,626, compared to 1,211 at December 31, 1999. The above-mentioned "other operating expenses" represented 64.8% of total revenues at December 31, 2000, compared to 76.5% at December 31, 1999. Productivity continued to improve, as the number of active lines in service per employee increased by 12% to an average of 208 in 2000, from 186 in 1999. Monthly average telecommunications revenue per employee increased by 34.2% in the period to PLN 23,541 (US$ 5,682) from PLN 17,542 in 1999.

Depreciation of fixed assets and amortization of licenses increased by 56.8% to PLN 153.8 million (US$ 37.1 million), from PLN 98.1 million, as the construction stage of additional parts of the network drew to completion. Net financial expenses decreased due to an appreciation of the Polish zloty against the euro.

The cash outflow from investing activities increased by 39.9% to PLN 1,357.5 million (US$ 327.6 million), from PLN 970.5 million in 1999.

Net loss amounted to PLN 362.0 million (US$ 87.4 million), compared to a net loss of PLN 418.9 million in 1999. The decrease in the loss was mainly attributable to a decrease in financial expenses due to a more favorable exchange rate situation, and improved EBITDA.

Net cash used in the purchase of fixed assets and computer software amounted to PLN 756.7 million (US$ 182.6 million). Net fixed assets and computer software increased by 33.9% to PLN 2,406.1 million (US$ 580.7 million) as of December 31, 2000, compared to PLN 1,796.4 million in 1999, and 12.8% from PLN 2,133.5 million at the end of third quarter of 2000, further reflecting the expansion of the network.

At December 31, 2000, Netia had cash and cash equivalents of PLN 1,142.9 million (US$ 275.8 million) available to be invested to support commercial activities and in building its telecommunications network. The Company had deposits in escrow amounting to PLN 205.5 million (US$ 49.6 million) to service interest payments on its 1999 Senior Notes until June 2001, and 2000 Senior Notes until June 2002.

2000 Fourth Quarter vs 2000 Third Quarter

Revenues for the quarter increased by 13.1% to PLN 128.8 million (US$ 31.1 million) compared to PLN 113.9 million for the third quarter of 2000. This increase was attributable to a 15.6% increase in revenues from telecommunications services to PLN 116.8 million (US$ 28.2 million) compared to PLN 101.0 million for the third quarter of this year.

Average monthly revenue per line increased by 4.6% to PLN 114 (USD 27.5) from PLN 109 in the third quarter of 2000. As a result of a promotional campaign targeting SME customers, average monthly revenue per business line decreased by 5.1% to PLN 224 (USD 54.1) from PLN 236 in the third quarter. Average monthly revenue per residential line grew by 11.6% to PLN 77 (USD 18.6) from PLN 69 in the third quarter.

EBITDA for the quarter was PLN 8.3 million (US$ 2.0 million), compared to PLN 1.8 million for the third quarter of this year, representing an EBITDA margin of 6.4%. As previously reported, this EBITDA performance was achieved in spite of delays in negotiations with TP S.A. on concluding domestic long distance and Warsaw interconnection agreements, which resulted in lower than expected revenue streams coupled with additional costs associated with the introduction and preparation of new services.

Operational Review

The Company has increased the number of connected lines by 27.2% to 546,309 lines at the end of fourth quarter 2000, up from 429,595 lines at December 31, 1999, and by 11.5% in the quarter, up from 489,945 lines at September 30, 2000.

Business lines as a percentage of total subscriber lines reached 25.3%, up from 20.5% at December 31, 1999, reflecting the intensified focus on the high value corporate and SME market segments.

Netia has successfully launched its Internet service under the Internetia brand. Internetia is now Poland's second largest dial-up Internet service provider and is also one of Poland's four-most visited portals for Polish on-line content.

Netia is also selectively preparing its data service offering for business customers. The portfolio of traditional voice services, which accounts today for 87% of Netia revenues, was extended by Internet telephony (Voice over IP) introduced in December 2000.

In fourth quarter 2000, Netia successfully put into operation its nationwide backbone network, which connects Poland's ten largest urban areas. This backbone network now stretches to 2,550 km and consists of 1,650 km own fiber lines and 900 km leased lines.

Furthermore, as part of preparations to offer nationwide wholesale services, Netia is constructing additional infrastructure, planned for completion by the end of 2001. This will consist of a 1,700 km system of 7-8 ducts, with the potential to be extended by 900 km in 2002. At December 31, 2000, 900 km of the ducting system had been constructed.
In addition, the construction of the local access fiber optic rings in all major cities within Netia's voice licenses was substantially further developed, including the commencement of city rings construction work in Warsaw. The intra-city network now stretches to 1,600 km.

In January 2001, Netia signed an interconnection agreement with TP S.A. for the Warsaw area, thus enabling Netia to offer local connectivity as soon as the interconnection points are operational. Netia will connect its first customers in Warsaw in early March 2001.

In January 2001, Netia received a favorable arbitration decision from the Polish Minister of Communications, which sets the interconnection rates for domestic long distance services. Netia has been ready for launch of domestic long distance services since the second half of 2000 and has finalized negotiations on the interconnection agreement with TP S.A., which is ready for signing.

The transaction with Millennium Communications S.A. is not completed due to a dispute on implementation of the agreement signed on August 8, 2000.

This press release contains certain statements of a forward-looking nature with respect to plans and projections of future performance of Netia, the occurrence of which involves certain risks and uncertainties including but not limited to product and market acceptance risks, the impact of comparative pricing, product development, commercialization and technology. Investors are directed to Netia's reports and documents filed from time to time with the US Securities and Exchange Commission, including Netia's Annual Report on Form 20-F for the year ended December 31, 1999, for additional factors that should be considered before investing in Netia's securities.

NETIA HOLDINGS is the largest alternative fixed-line telecommunications operator in Poland. Netia has 24 licenses for local telecommunications services in territories, covering some 15 million people or approximately 40% of the Polish population, which include the most economically advanced parts of the country. The Company's existing local telephone license territories cover six of the country's ten largest urban areas including Warsaw, Krakow, Poznan, Gdansk, Lublin and Katowice. Netia has also secured the benefit of a nationwide data and IP license to provide data transmission and Internet-based services. In May 2000 the Netia 1 consortium was issued the nationwide domestic long distance voice license.