Bulletin
Revised Netia guidance for FY 2009 and mid-term outlook (49/2009)
The Management Board of Netia SA (hereinafter the “Company” or “Netia”), following an analysis of the Company’s financial and operating results for the first nine months of the financial year 2009, hereby announces the release of a revised guidance for the 2009 financial year and a new medium-term outlook for 2010 - 2012.
Netia is increasing its EBITDA guidance for FY2009 to PLN 290 million from PLN 275 million and its Adjusted EBITDA guidance to PLN 300 million from PLN 290 million, reflecting Project Profit and Tele2 Polska integration synergies ahead of earlier expectations.
In addition, a stronger than previously expected rebound in demand for broadband services during Q3 2009 and an aggressive promotions pipeline allows Netia to return to its original 2009 guidance of at least 525,000 broadband customers.
The continued weakness in corporate segment sales and a reduction of Netia’s carrier segment exposure to low margin or high risk projects are the reasons behind the reduction of the revenue guidance to PLN 1,495 million from PLN 1,500 million. In parallel, the capital investment guidance was decreased to PLN 250 million from PLN 260 million and the voice subscriber target has been revised downwards to at least 1,165,000 from 1,200,000.
The following table presents the Company’s current estimates of all the elements of the 2009 guidance in comparison to the guidance published previously (see Netia’s current report No. 40/2009 dated August 6, 2009):
| 2009 Guidance | Previous | Updated |
|---|---|---|
| Number of broadband service clients (excl. Ethernet acquisitions) | 510,000 | 525,000 + |
| Number of voice service clients (own network, WLR and LLU) | 1,200,000 | 1,165,000 + |
| Unbundled local loop (LLU) nodes | 300 | 300 |
Revenues (PLN m) | 1,500 | 1,495 |
| Adjusted EBITDA1 (PLN m) | 290 | 300 |
EBITDA (PLN m) | 275 | 290 |
Investment outlays (excl. M&A) (PLN m) | 260 | 250 |
1 Adjusted EBITDA excludes one-off restructuring costs related to the cost reduction program of PLN 15 million and a gain of PLN 5 million from the sale of the first tranche of P4 transmission assets
The subscriber guidance does not include potential Ethernet network acquisitions, which remain important to Netia’s strategy but are difficult to forecast in terms of timing and scale.
Furthermore, Netia revised its mid-term outlook and now estimates revenue increases for the combined retail segments (Home, Corpo and SOHO/SME) for the 2010 - 2012 period at 5-10% CAGR, while total revenue is expected to increase at 3-5% CAGR for same period due to the reduction in Carrier segment revenue resulting from the reduced scope of transmission services for P4 and the continued defocusing of lower margin wholesale services. In addition, Netia now forecasts that it will generate positive operating free cash flow in FY2009, taking into account the effect of potential acquisitions of Ethernet networks, i.e., a year earlier than previously expected. The Company also brings forward its deadline for reducing capex to sales to 15% from 2011 to 2010.
The following table presents the Company’s current estimates of all the elements of the medium-term outlook for the Netia Group in comparison to the guidance published previously (see Netia’s current report No. 28/2009 dated April 6, 2009):
| Medium term outlook for 2010-2012 | Previous | Updated |
|---|---|---|
| Revenue growth (CAGR) overall | 5% - 10% | 3% - 5% |
| Revenue growth (CAGR) in retail market segments | --- | 5% - 10% |
| EBITDA margin in 2010 (%) EBITDA margin in 2012 (%) | 23% | 23% |
| Net profit by | 2010 | 2010 |
| Free cash flow positive by | 2010 | 2009 |
| Capex to sales down to 15% by | 2011 | 2010 |
| 1 million broadband subscribers | 2012 | 2012 |
The detailed guidance for 2010 will be published by Netia during the first quarter of 2010.
Netia announces that it will continue to monitor the possibilities of achieving the forecast results on a quarterly basis. The achievement of the forecast results will be assessed, and any necessary adjustments will be introduced after the end of a given quarter of the financial year based on an analysis of sales revenues, investment expenditure, number of customers and any other factors it may consider relevant.
Disclaimer:
None of the information contained in this press release is a recommendation to purchase or sell financial instruments within the meaning of the Regulation of the Minister of Finance on information constituting recommendations regarding financial instruments or their issuers, dated 19 October 2005 (Polish Journal of Laws (Dz. U.) of 2005, No. 206, item 1715). For a more detailed description of the risks involved in investing in Netia’s securities, please see Netia’s 2007 annual financial report. Subject to the obligations referred to herein, Netia is not required to publicly update or revise any of its forecasts and assumptions of the strategic objectives.
Legal basis:
§5 section 1.25 of the Regulation of the Council of Ministers dated 19 February 2009 on current and periodical information disclosed by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member state (Journal of Laws of 2009, No. 33, item 259).