Current reports

WARSAW, Poland - January 27, 2000 - Netia Holdings SA (Nasdaq: NTIA), the largest alternative fixed-line telephone operator in Poland, today announced that the Polish Ministry of Communications (MOC) has awarded the Netia 1 consortium a license to provide domestic long distance (DLD) voice services throughout Poland.

 

Meir Srebernik, President and CEO of Netia, said: "The MOC¿s decision to grant Netia 1 the DLD license recognizes our ability to enter the domestic long-distance market quickly as a strong competitor with nationwide infrastructure, a strong brand and expanding customer base. The opportunity to bundle domestic long-distance voice telephony with our existing local fixed line services as well as our national IP platform-based and data transmission services will further strengthen Netia¿s position as Poland¿s best national alternative provider of telecom solutions to business and residential customers.

 

A nationwide launch of domestic long-distance services is planned for the third quarter of 2000. Operationally, Netia 1 will be our company¿s 'product house' driving the development of long-distance service within Netia¿s unified 'one brand, one cost structure¿ organizational model. The consortium structure gives us a powerful partnership within the Polish business community, additional funding commitments in full support of the initial phase of the venture and a way of conforming with current Polish telecoms ownership laws, while realizing 100% of the longer-term value of the venture for Netia shareholders."

 

The Netia 1 Sp. z o.o. consortium formed in November 1999 to participate in the DLD tender process includes such leading Polish financial institutions (or their affiliate companies) as BRE Bank S.A. (22%) and PKO B.P. (22%), Warsaw electric utility STOEN S.A. (7%), and Netia¿s strategic partner Telia AB, the Swedish national telecommunications operator (11%). The remaining 38% is held by various Netia entities. Current Polish telecommunications legislation requires 51% ownership by Polish majority-owned entities.

 

In anticipation of the lifting of restrictions on foreign ownership when the Polish telecommunications law is revised to meet EU standards, the consortium agreement contemplates eventual consolidation of Netia 1 into Netia Holdings. The consortium partners hold 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.

 

In line with the continuing liberalization of the Polish Telecommunications market, Netia expects to enter the international long distance market as and when authorization is granted by the MOC.

 

Netia is the largest alternative fixed-line telecommunications operator in Poland, with 23 licenses to provide local telecommunications services in territories covering some 13 million people or approximately 33% of the Polish population. Netia has also secured the benefit of a data and IP license to provide data transmission and internet-based services nationally.

Netia¿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. Currently the company¿s digital access network serviced over 250,000 subscriber lines in operation, out of which 50,000 lines are servicing business customers