Bulletin
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23 November 1999
Netia forms consortium to bid for Polish domestic long distance license
WARSAW, Poland - November 23, 1999 - Netia Holdings SA (Nasdaq: NTIA), the largest alternative fixed-line telephone operator in Poland, today announced that it has formed a consortium to bid in the domestic long-distance tender which was announced by the Polish Ministry of Communications on 8 October, 1999. Netia¿s consortium creates a powerful partnership consisting of the leading Polish Banks BRE Bank S.A. and PKO B.P., Warsaw electric utility STOEN S.A., and (subject to board approval) Netia¿s strategic partner Telia AB, the Swedish national telecommunications operator. The MOC has indicated that the results of the tender process will be announced on or about the end of the year.
Netia and its partners will form a new entity, Netia 1 Sp. z o.o., which will participate in the domestic long-distance tender and if successful, drive the development of long-distance services as integral part of and within the Netia group. As required by the current Polish telecommunications law, 51% of shares will be held by Polish entities. Subject to board approval on November 25, Telia AB will take an 11% stake and the remaining 38% will be held by Netia Network S.A., Netia Holdings S.A. and several Netia Holdings¿ subsidiaries.
In anticipation of the lifting of restrictions on foreign ownership when the Polish telecommunications law is revised to meet EU standards, the agreement is expected to lead to the eventual consolidation of Netia 1 into Netia Holdings. The consortium partners are granted an option to exchange their Netia 1 shares for shares of Netia Holdings based on the amount funded by Netia 1 and the current Netia Holdings share price. Alternatively, the partners will be able to sell their shares in Netia 1 to Netia Holdings for a cash consideration.
The participants in the Netia 1 consortium have committed to fund a total of up to USD 40 million in support of the initial phase of this new venture. Netia 1 will operate within the Netia group, under the ¿Netia¿ brand strategy and within one cost structure.
Commenting on the agreement, Meir Srebernik, President and CEO of Netia, said: ¿We are thrilled with the partnership we have been able to assemble, which will strengthen Netia¿s entry into the Polish domestic long-distance voice market. The opportunity to bundle domestic long-distance voice telephony with our existing local fixed line services and our national IP platform-based and data transmission services under a unified cost structure and ¿one brand¿ approach will further strengthen Netia¿s role as Poland¿s national alternative provider of telecom solutions to Polish businesses as well as residential customers.
About BRE
BRE BANK S.A. is a Polish universal bank with a leading position in corporate and investment banking as well as private banking. At the end of 1998, BRE Bank¿s own funds reached PLZ 1,230.4 million (USD 312.3 million) and total assets amounted to PLZ 1,044.8 million (USD 2,803.2). 48.74% of BRE Bank¿s shares are held by Commerzbank AG, which provides BRE Bank with financial services know-how and access to German and other international clients. BRE Bank S.A. participated in Netia¿s IPO on Nasdaq in July 1999, purchasing over 900,000 shares.
Established in 1986 as the first Polish commercial bank founded since World War II, BRE Bank today is one of the country¿s largest financial institutions. Since October 1992 BRE Bank¿s shares have been quoted on the Warsaw Stock Exchange.
About PKO
PKO BP is the largest Polish retail bank and the leading bank to Polish local authorities. It provides services for over 12 million individual clients, including over 3.5 million private accounts and over 4 million savings books for over 5.5 million people as well as some 400,000 corporate accounts. PKO BP¿s network includes 1,100 bank branches and about 5,000 agencies.
PKO BP has been building its capital markets group, systematically modernizing its service technologies, and adjusting its offering to meet clients needs. Currently the bank is being readied for privatization.
About STOEN
Stoen is an electricity distribution company operating in five power sectors of the Warsaw region. With some 140 kilometres of fiber-optic cable and 200 kilometres of copper cable, it owns the largest network in and around the city of Warsaw, and its assets include a number of real estate properties and rights of way. The company reported in 1998 revenues of PLN 1 billion (USD 285 million), and has approximately 780,000 customers.
About Telia
Based in Sweden, Telia AB is the largest telecom operator in Scandinavia and one of the largest in Europe, providing fixed line, mobile (NMT and GSM), cable television and consulting services.
Telia is in the process of merging with Telenor, the Norwegian state-owned national telecommunications company, and is expected to be privatized by the end of 2000.
The company is rapidly expanding outside Sweden in both fixed and mobile telecommunications. Telia currently holds an approximately 30% stake in Netia Holdings. Telia has provided significant operational support to Netia, assisting with the design, operation and maintenance of Netia¿s network and the execution of its business and marketing strategy.
About Netia
Netia is the largest alternative fixed-line telecommunications operator in Poland, with 23 licenses for local telecommunications services in territories covering some 13 million people or approximately 33% of the Polish population. At September 30, 1999 the company¿s digital access network was serving 214,242 subscriber lines, out of which 41,242 were dedicated to business customers.
The Company¿s local telephone license territories cover five of the country¿s ten largest urban areas including Krakow, Poznan, Gdansk, Lublin, Katowice and several territories surrounding the city of Warsaw. Netia has also secured the benefit of a data and IP license to provide data transmission and internet-based services nationally.
Netia Network is a joint-stock company owned 49% by Netia and 51% by Polish owned entities. In April, 1999, Netia Network received a national data transmission services license, enabling Netia to provide the highest standards of data transmission services throughout all of Poland.
InterNetia, Netia¿s 100% owned subsidiary, acquired TopNet in September 1999, which significantly strengthened Netia¿s internet presence and enabling the company to offer its customers high quality Netia-branded internet services.