Current reports

Warsaw, Poland - November 20, 2000 - Netia Holdings (NASDAQ: NTIA, WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced unaudited results for the nine-month period ended September 30, 2000.

Financial highlights

• Total revenues increased by 94.0% to PLN 313.9 million (US$ 69.1 million) compared to PLN 161.8 million for the first three quarters of 1999. Total revenues for third quarter 2000 increased by 75.2% to PLN 113.9 million (US$ 25.1 million) compared to PLN 65.0 million for third quarter 1999, and by 8.7% compared to PLN 104.8 million in second quarter 2000.
  
  
• Revenues from telecom services increased by 93.0% to PLN 278.5 million (US$ 61.3 million) compared to PLN 144.3 million for the same period in 1999. Revenues from telecom services for the third quarter 2000 increased by 74.1% to PLN 101.0 million (US$ 22.2 million) compared to PLN 58.0 million for the third quarter 1999, and by 11.7% compared to PLN 90.4 million over the second quarter 2000.
  
  
• EBITDA for the nine-month period ended September 30, 2000 improved to PLN 14.9 million (US$ 3.3 million), from a negative PLN 19.1 million for the corresponding period of 1999. EBITDA for the third quarter 2000 improved to PLN 1.8 million (US$ 0.4 million) from a negative PLN 3.1 million in the third quarter of 1999. EBITDA in the quarter decreased from PLN 3.3 million in the second quarter 2000 as the company continues to build its structure to offer both local connectivity in Warsaw and long distance services nationwide. To date, Netia has not been able to reach a satisfactory interconnection agreement with TP S.A. This has so far inhibited Netia from launching such services commercially. To resolve the issue and in line with the related licensing procedures, Netia has entered into an arbitration process with the Ministry of Communications. Additionally, EBITDA in the third quarter was affected by the one-off charges of PLN 425,000 associated with UMTS license tender process from which Netia recently withdrew.
  
  
• Investments in gross fixed assets at September 30, 2000 increased by 44.9% to PLN 2,362.6 million (US$ 520.4 million) compared to PLN 1,630.5 million at September 30, 1999, and by 8.3% compared to PLN 2,181.0 million at June 30, 2000, reflecting the continued build-out of Netia's network. At September 30, 2000, Netia had PLN 1,563.0 million (US$ 344.2 million) in cash (excluding restricted investments of PLN 369.8 million or US$ 81.4 million).
  
  
• On July 31, 2000, Netia entered into its first currency hedge transaction in order to more effectively manage the foreign currency risk associated with certain of its debt denominated in US dollars.

Operational highlights

• Number of subscriber lines in service increased by 43.4% to 307,160 at September 30, 2000 from 214,242 at September 30, 1999, and 7.3% from 286,259 at June 30, 2000. The increased number of subscriber lines is net of customer churn and disconnections.
  
  
• Business lines as a percentage of total subscriber lines reached 23.6%, up from 19.3% at September 30, 1999, and 22.1% at June 30, 2000. Business percentage of net additions reached 43.8% and 37.6% in the third quarter and year-to-date, respectively.
  
  
• Number of business customer lines in service increased by 75.5% to 72,379 from 41,242 at September 30, 1999, and increased by 14.5% from 63,217 at June 30, 2000.
  
  
• Average monthly revenue per line grew by 36.3% to PLN 109 (US$ 24) in the third quarter 2000, compared to PLN 80 in the third quarter 1999, and by 1.8% from PLN 107 in the second quarter 2000. In January and July 2000, Netia increased tariffs in line with increases announced by TP S.A.
  
  
• Build-out of Netia's national inter-city fiber optic network was on track in the period. The "10 largest cities" backbone network is operational, with 80% of own network to be in place by the end of 2000.
  
  
• On August 8, 2000, Netia agreed to acquire all of the outstanding shares of Millennium Communications S.A., a Warsaw-based provider of shared tenant telecommunications services in multi-tenant buildings. The results of Millennium are expected to be consolidated beginning in the fourth quarter 2000, after the closing has occurred.
  
  
• On September 14, 2000, Internetia, a 100% owned subsidiary of Netia, reduced tariffs for dial-up Internet access and began offering flat rate Internet access. At September 30, 2000, Internetia had 24,354 active and registered users paying for the service.
  
  
• On October 26, 2000, Netia announced that it would not participate in Poland's UMTS license tender due to the lack of clear regulatory provisions and unattractive economics of the present conditions.
  
  
• Effective November 15, 2000, Netia shares were included in the WIG20 Index on the Warsaw Stock Exchange.

Key Figures

* The US$ amounts shown in this table have been translated using the exchange rate of PLN 4.5404 = US$ 1.00, the average rate announced by the National Bank of Poland at September 30, 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.

Commenting on the results, Meir Srebernik, President and CEO of Netia, said: "Netia's growth continues, as we have now completed a full twelve month period with positive operational results and have approximately doubled our revenues year-on-year. Business customer additions are accelerating as a proportion of total subscribers, underscoring the success of our intensifying focus on the high value corporate and SME segments of the market."

"To support our goal of being the supplier of choice to Polish business customers, we are preparing to introduce a new, nationwide platform of network services. By year end we intend to inaugurate our Warsaw telehousing facility, offer leased lines and dark fiber through our national "10 largest cities" backbone. We will also launch advanced fixed Internet access solutions and start the pilot phase of IP VPNs and frame-relay in key urban locations, including the city of Warsaw, based on our newly installed ATM network.

"In traditional voice, which today accounts for 87% of our revenues, we are ready to enter the Warsaw market and to launch our national domestic long distance service, with a primary focus on business customers. These efforts have been delayed pending a satisfactory interconnect agreement with TP S.A. following expected intervention by the Ministry of Communications. Our resolute adherence to strict business criteria is illustrated by our decision not to participate in the current Polish UMTS license tender, but to focus on and leverage Netia's strengths as Poland's leading alternative fixed-line voice, data and IP services provider."

Avi Hochman, Chief Financial Officer of Netia, added: "This is a fourth consecutive quarter of positive EBITDA for Netia. We have been able to remain on the positive side despite the fact that we continued to realize start-up costs related to IP products development as well as the pending launch of domestic long distance services and our entry into the Warsaw market, without the expected revenue streams due to the continued delay in reaching interconnection agreements with TP S.A."

Financial Information

2000 Year to Date vs 1999 Year to Date
Revenues increased by 94.0% to PLN 313.9 million (US$ 69.1 million) during the nine-month period ended September 2000, compared to PLN 161.8 million for the same period in 1999.

Revenues from telecommunications services increased by 93.0% to PLN 278.5 million (US$ 61.3 million) from PLN 144.3 million in the corresponding period of 1999. The increase was primarily attributable to a 43.4% increase in the number of total subscribers to 307,160 at September 30, 2000 from 214,242 at September 30, 1999. Other contributing factors were the overall increase in average monthly revenue per line (PLN 109 (US$ 24) for the third quarter 2000, compared to PLN 80 for the third quarter 1999), increases in Netia's local tariff and monthly subscription fee in January and July 2000, matching the increases of TP S.A.'s tariff, and higher usage.

Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to PLN 14.9 million or US$ 3.3 million, compared with a negative result of PLN 19.0 million in the nine-month period of 1999.

Interconnection charges increased by 96.2% to PLN 83.2 million (US$ 18.3 million) from PLN 42.4 million. Interconnection charges as a percentage of calling charges decreased to 41.3% from 42.8%, reflecting the result of direct interconnection to the mobile operators. Netia has requested arbitration of the MOC on the interconnection rates to TP S.A.'s network with regard to operations of Netia 1 (domestic long distance) and local access project companies.

"Other operating expenses" amounted to PLN 197.1 million (US$ 43.4 million), with salaries and benefits as the main item; headcount at September 30, 2000 was 1,555, compared to 1,089 at September 30, 1999. The above mentioned "other operating expenses" represented 62.8% of total revenues at September 30, 2000, compared to 81.8% at September 30, 1999. Productivity continued to improve, as the number of active lines in service per employee increased by 14% to an average of 208 in the nine-month period ended September 2000, from 183 in the same period of 1999. Monthly average telecommunications revenue per employee increased by 46.2% in the period to PLN 23,232 (US$ 5,117) from PLN 15,893 in the same period in 1999.

Depreciation of fixed assets and amortization of licenses increased by 43.6% to PLN 108.0 million (US$ 23.8 million), from PLN 75.2 million, as the construction stage of additional parts of the network drew to completion. Net financial expenses decreased due to an appreciation of PLN against EUR offset with depreciation of PLN against the US dollar.

The cash outflow from investing activities increased by 80.3% to PLN 945.5 million (US$ 208.2 million), from PLN 524.2 million for the same period of 1999.

Net loss amounted to PLN 396.0 million (US$ 87.2 million), compared to a net loss of PLN 426.9 million for the same period of 1999. The decrease in the loss was mainly affected by a decrease in the financial expenses due to more favorable movement of exchange rates.

2000 Third Quarter vs 2000 Second Quarter

Revenues for the quarter increased by 8.7% to PLN 113.9 million (US$ 25.1 million) compared to PLN 104.8 million for the second quarter of 2000. This increase was attributable to a 11.7% increase in revenues from telecommunications services to PLN 101.0 million (US$ 22.2 million) compared to PLN 90.4 million for the second quarter of this year.

EBITDA for the quarter was PLN 1.8 million (US$ 0.4 million), compared to PLN 3.3 million for the second quarter of this year. The changes at EBITDA level are caused by the ongoing introduction and preparation of new services (such as IP products, domestic long distance and entry into the Warsaw market) coupled with lower than expected revenue stream due to delays in negotiating interconnection agreements with TP S.A. with regard to the DLD and local Warsaw market.

Operational Review

During the past nine months, Netia has made considerable progress in building out its telecommunications network. Construction of the inter- and intracity network continues on track. The Company's intercity fiber optic backbone, planned at a total of 3,500 km, is 800 km short of reaching all of Poland's ten largest metropolitan areas, out of which 300 km are under construction, with 86% of rights of way for the remaining 500 km secured. Construction of the local access fiber optic city rings in all major cities within Netia's voice licenses should be substantially completed by the end of 2000, with four additional cities (Lodz, Bydgoszcz, Wroclaw and Szczecin) planned for completion in 2001 and Warsaw by the end of 2002.

The Company has increased the number of connected lines (defined as lines connected to the distribution point, with the last drop to the customer to be completed) by 30.8% to 489,945 lines at the end of third quarter 2000, up from 374,569 lines at September 30, 1999, and by 4.2% in the quarter, up from 470,006 lines at June 30, 2000.

Business lines as a percentage of total subscriber lines reached 23.6%, up from 19.3% at September 30, 1999.

Net cash used in the purchase of fixed assets amounted to PLN 555.3 million (US$ 122.3 million). Net fixed assets increased by 41.9% to PLN 2,133.5 million (US$ 469.9 million) as of September 30, 2000, compared to PLN 1,503.4 million at the same date in 1999, and 7.6% from PLN 1,983.5 million at the end of second quarter of 2000, further reflecting the expansion of the network.

At September 30, 2000, Netia had cash and cash equivalents of PLN 1,563.0 million (US$ 344.2 million) available to be invested in building its telecommunications network and to support operating activities. The Company had deposits in escrow amounting to PLN 369.8 million (US$ 81.4 million) to service interest payments on its 1997 Senior Notes until November 2000, interest payments on its 1999 Senior Notes until June 2001, and 2000 Senior Notes until June 2002.

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. 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.