Netia SA The Broadband Opportunity in Poland

Transcription

1 Netia SA The Broadband Opportunity in Poland March

2 Some of the information contained in this material contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's annual financial report and press release announced on February 28, 28. Netia undertakes no obligation to publicly update or revise any forward-looking statements. 2

3 Key recent developments at Netia Highly favourable regulatory opportunities available from January 27 in particular for LLU and Bitstream access Strategy refocused on the consumer broadband opportunity in Poland Netia has clearly established itself as the leading altnet provider of broadband services in Poland: Broadband customer base of 244 K growing by over 26% during 27 19% of all broadband net additions acquired during 27 New management team highly incentivised to maximise shareholder value Q1 28 sale of founding 23% stake in the fourth Polish mobile player for Euro 13m: 63% profit on invested capital Key strategic commercial relationships remain post sale Strong Netia balance sheet to exploit new opportunities 3

4 Contents Market overview Strategy 27 performance and guidance Summary 4

5 Poland is a fast growing and attractive economy Key factors GDP growth (%) (1) Politics: Committed to fast telecoms access liberalization EU accession fosters stability Economics: Low inflation Fast growth of the economy Low interest rates Society: Migration to large cities and EU countries Growing middle class and elderly population Technology: Mass use of Internet and mobile telephony Fast acceptance of new technologies 8 88 Per Capita GDP (EUR) (1) ,1 6,5 5,1 3, E 28E Unemployment rate (%) (1) Inflation / interest rate (2) (%) (%) E E 3. (1) Source: Central Statistical Office (2) Interest rate represented by 1-year government bond yield 5

6 Rapidly liberalising regulatory environment Regulations LLU wholesale pricing (1) 6 (EUR) Bitstream with 51% discount Wholesale Line Rental with 47% discount 18.8 LLU with full access at 36 PLN / month Almost PLN.5 bn of fines imposed on TP with many upheld by courts Italy Greece Portugal Denmark Poland France Netherlands UK Germany Austria Finland Spain Sweden Belgium Czech Norway Switzerland Netia demanded over PLN 21 m contractual penalties from TP due under the bitstream agreement Attractive bitstream economics Bitstream wholesale pricing (2) (EUR) Q (3) PLN Portugal Poland Belgium Denmark UK Netherlands Germany France Greece Italy Finland Spain Sweden Austria Switzerland Norway Net24 6M Net24 2M Net24 1M Net24 512k Bandwidth (1) Merrill Lynch Research (2) Resale ADSL is shown for Finland, Germany, Greece, Sweden and Switzerland (3) Calculated as 51% discount to TPSA s ADSL ARPU in 26 TPSA Price Netia Price BSA

7 Polish broadband market upside Broadband penetration (1) 21E BB penetration upside (households) (1)(2) 11% 11% 1 1% 9% 8% 7% 6% 91,3% 9,7% 89,3% 87,5% 86,5% 84,2% 83,8% 75,% 72,5% 72,% 71,1% 1% 9% 8% 7% 6% Approx. one million new households per year available for broadband connection during % 4% 3% 63,9% 6,% 58,4% 55,3% 48,9% 48,% 42,6% 5% 4% 3% % 2% % 1% % Sweden UK Switzerland Denmark Finland Netherlands Norway France Belgium Spain Europe Austria Italy Germany Greece Poland Czech Portugal % UK Germany Spain France Poland Italy Sweden Greece Czech Belgium Austria Netherlands Switzerland Portugal Finland Norway Denmark 2Q7A 21E PC Penetration on Households 27 PC Penetration on Households 21 Source: Merrill Lynch Broadband Matrix, Merrill Lynch CE3 Matrix Note: Western European Countries forecasts formulated post Q2 7 results, Poland and Czech Republic forecasts formulated post Q1 6 results; 26 year end figures for Poland and Czech republic estimated as at Q1 6 (1) Always excludes Ethernet Networks (2) Represents Households with Broadband Penetration in 21E minus Households with Broadband Penetration in 2Q 27A 7

8 Broadband market is fragmented Broadband subscribers Q4 27 Growth opportunity for Netia 21% Total 4.7 mln 8% 43% Netia Copper/ Fibre Network Continue to expand penetration of ADSL to existing 25K residential customer lines and 15K business customer lines TP Regulatory Access Bitstream Internet Access Upsell voice VoIP and wholesale line rental (WLR) Move to LLU when scale justifies Up-sell IPTV and cross-sell mobile services 21% 2% 5% Ethernet Networks High capacity local networks TP Dialog Ethernet network Netia CATV operator Other Cable TV No scale to offer content or meet regulatory requirements Potential for bolt-on acquisitions Netia has opportunity to compete with multiplay offers Source: OECD June 26, UKE, Netia,PMR 8

9 Netia is best placed altnet to exploit the liberalising Polish telecom market Key market players Player Key focus Market position Revenues 7 (EUR mln) Market Cap (EUR mln) National backbone Customer focus LLU BSA/WLR strategy Broadband clients (K) TP Fixed line, internet, data 8.9mn fixed lines 2,883 8,887 2,22 PTK Centertel (Orange) Mobile 14.1mln mobile subscribers 2,284 PCMCIA/ BSA 2^ Polkomtel (Plus) Mobile 13.4mln mobile subscribers 2,29 Not Listed 2^ PTC (Era) Mobile 12.9mln mobile subscribers 2,13 Not Listed BSA 15^ Netia Fixed line, data, internet 421k fixed lines Yes Bus/Res WLR, BSA, LLU 217 Exatel Fixed line 1.2% share of Polish telcom market in terms of value 137 (1) Not Listed Yes Business WLR, BSA <1 Telefonia Dialog Fixed line, data, internet 49k fixed lines 141 Not Listed No Res/Bus WLR, BSA, LLU 11 GTS Energis Fixed line 7k business clients, approx 1% of the telecoms market by value 13 (1) Not Listed Yes Business WLR, BSA, LLU <1 UPC Polska Cable TV 2mln homes passed 1mln cable TV subscribers 14 (1) Not Listed No Residential 263 Tele2 Fixed line, reseller 1mln fixed line subscribers 11 (1) Not Listed No Residential WLR, BSA, LLU <1 Multimedia Cable TV 626k cable TV subscribers 165k fixed lines No Residential WLR, BSA, LLU 211 Vectra Cable TV 645k cable TV subscribers 82 Not Listed No Residential BSA,LLU 14 Hyperion Broadband N/A 5.1 (1) 22 No Residential 7 market cap as of , at Euro 3,53 ^ mobile broadband (1) Revenues 6 Source: GUS, CBOS, TNS OBOP, PMR, company data, financial statements of operators, Netia estimates 9

10 Netia is uniquely positioned to capitalize on the broadband opportunity Early mover Business partnership with PLAY National reach Existing business supports growth Management Over 244K broadband customers makes Netia number 1 among Polish altnets First mover advantage on deregulation - approx. 78% market share in bitstream access First in unbundling the TP local loop Netia broadband available through the 45 Germanos stores Ongoing works on launching mobile products to Netia customers under Netia brand and introducing a joint convergent offering with PLAY Brand name established nationally National marketing and distribution National backbone network provides capacity and backhaul from interconnection points National maintenance and delivery capability through Ericsson outsourcing agreement Cash generative legacy business Significant potential for further optimisation Strong balance sheet to finance broadband push Highly experienced management team with Polish telco market know-how Proven M&A skills Shareholder value driven compensation plans 1

11 Contents Market overview Strategy 27 performance and guidance Summary 11

12 Netia s objectives to drive shareholder value Broadband leadership amongst altnets target to acquire one million broadband customers by the end of 21 Optimize strong position in business customer segment Leverage PLAY investment While Changing organizational culture to support value growth-focused strategy Focusing on a scalable investment strategy to drive value growth 12

13 Growth strategy Increase customer value Increased penetration of LLU and migration of Bitstream / WLR customers Further acquisitions of local Ethernet networks Introduce and up-sell of triple-play Up-sell of mobile and convergent services Further optimization of network capacity utilization Broaden portfolio of services Early entry into LLU and quick roll-out in most attractive areas Evaluation of market potential, technology and business model for IPTV and VoD, followed by roll-out in 28 Preparation, business and technology assessment and initial entry into mobile and convergent services Increase number of customers 27 Expand distribution and back-office capacity to serve Home market nationally Aggressive acquisition of broadband customers based on geo-marketing Leading position in Bitstream Better utilization of own copper Optimization of existing WiMax investments Selective acquisition of high quality Ethernet access networks Up-sell of WLR to Bitstream and CPS customers 13

14 Netia s broadband customer base growing fast Netia - Poland 25% Market Shares BB subscribers 1 2% FORTHNet 21.% Iliad 18.4% % Wastweb 13.% 4 1% P 21 Netia's netw ork TP's netw ork Ethernet netw orks FORTHNet 5% % Start Date Start Subs Q Netia 4.6% Q Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q1 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q2 Q21 Q22 Q23 Q24 Q25 Q % 19.9% 19.2% 18.5% 19.% 2.3% 18.9% 19.6% 19.% 21.% FORTHNet Iliad Fastweb (1) Netia Iliad Q % n.a 11.6% n.a 12.8% 14.3% 15.3% 16.3% 16.% 16.3% 16.7% 17.% 16.8% 17.% 17.2% 17.8% 18.% 18.% 18.4% Fastweb Q % 4.4% 5.3% 9.2% 11.7% 13.6% 12.9% 13.1% 12.5% 11.6% 12.4% 11.2% 1.5% 1.1% 1.% 8.4% 8.2% 8.7% 8.9% 8.5% 9.1% 9.3% 9.8% 1.2% 12.% 13.% NETIA Q % 2.4% 3.% 3.8% 4,6% Forthnet - Greece Comparable markets and altnets Iliad - France Fastweb - Italy n.a. n.a. Launched LLU Q4 6 n.a.,2%,4%,6%,8% 1,2% 1,8% 2,3% 2,8% 4,1% 5,9% 7,7% 9,8% 12,8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16.2% 19,5% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % ,% 1,4% 1,7% 2,5% 3,2% Launched LLU in 22 3,9% 4,6% 6,9% 8,5% 9,6% 11,5% 15,3% 18,% 2,3% 22,6% 26,8% 3,2% 31,9% 34,4% 38,3% 42,4% 44,9% 47,2% 51,3% 55,3% 57,6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % ,9% 1,1% 1,5% 2,% 2,4% 2,8% 3,7% 5,% 6,3% 8,% 8,9% 11,2% 13,7% Announcement of LLU strategy January 25 15,8% 17,5% 22,7% 25,3% 26,5% 27,8% 32,% 33,6% 35,5% 36,8% 39,4% 42,3% 43,1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Number of Company's Subscribers ( ) BB Penetration of Households [%] Source: Merrill Lynch Research, Informa, Company Financials (1) Nationwide market share. Fastweb Fibre to the home network covered only ca. 4mm homes until nationwide LLU roll out commenced in January 25 14

15 Marketing strategy First and commercially aggressive in broadband customer acquisition Value-added services as differentiating factors High quality customer service Emphasis on low cost distribution and acquisition channels Marketing infrastructure in place State of the art e-sales system 2+ Telesales (113 internal and 91 outsourced) 53 door-to-door sales commission only 45 Play Germanos high-street stores available with the exclusivity on broadband High street presence secured Brand awareness 93% 98% 97% prompted awareness spontaneous awareness Transitioning to mass market 76% 77% Brand well established with business customer base 51% 25% 55% 94% 85% 37% 18% 29% 44% New consumer logo design Launch of mass market advertising campaign (TV, print, megaboard, direct mail, etc.) Advertising efficiencies given nation-wide footprint home bus. home bus. home bus. home only Data for consumer: January 28 (N=3) Data for business: October 27 (N=3) 15

16 Customer service Netia s customer service ranked high by its clients Focus on high quality customer service Adequate resources provisioning to ensure performance Call center evaluation 8,2 7,8 7,5 7,5 Customer service competence time needed to solve a problem - average note employee's competence - average note 8,5 8,4 8,6 8, 7,5 7,2 6,9 6,9 Customer operations resources 3 Call centres, two of which are outsourced (capability to handle 1, calls per day) Geneva billing / Clarify CRM more than sufficient Technical support outsourced to Ericsson 3 professionals National coverage 3+ customer service staff 15 flexible external capacity added in past 12 months 2+ telesales force for CRM and upselling Installations Plug&Play CPE Installation advice outsourced home bus. home bus. home bus. Data for consumer: November 27 (Netia=22, TP S.A.=284, Dialog=28) Data for business: November 27 (Netia=273, TP S.A.=3, Dialog=21) 16

17 Comparison of Netia products/ pricing H1 27 focus on broadband access and attractive prices Comparison of prices for broadband Internet provided over BSA ~ Q4 27 subscription & BSA net additions Q3 27 subscription & BSA net additions H2 27 focus on voice (WLR) + Internet (BSA) bundles - offered since Aug. 2, focus on voice (WLR/ VOIP) + Internet PLN Netia TP TELE2 Dialog GTS Energis 17 other altnets no of subs. () PLN Netia TP TELE2 Dialog GTS Energis no of subs. () subscription: subscription: 1Mbps 1Mbps for 3for years 3 years contracts contracts net net additions, additions, quarter quarter ~ Comparison of average monthly fees, all prices gross. * Netia s promotion PLN 6 cash back (Nov 5- Dec 31, 27) ** Tele2 s laptop promotion (Nov 5-Dec 31, 27) ~ Comparison of average monthly fees, all prices gross. * Netia s promotion Internet free of charge for a year (July 9-Aug.1, 27) ** Tele2 s summer promotion An example of Netia s bitstream promotion PLN 6 cash back from Nov.-Dec 27 An example of Netia s bitstream promotion Internet free of charge for a year of July 27 17

18 Netia perceived as the best operator on the market Operator: TP s clients Netia s clients Tele2 s clients Netia is perceived as the best operator by its clients Telekomunikacja Polska S.A. 7,3 5,54 6,36 and by clients of TP Netia 8, 8,22 7,96 Tele2 4,82 4,49 8,15 *Poll conducted by 4P research mix in November 27, using the method of individual telephone interviews, on random client samples of chosen telecom operators. Scale 1-1. Services of which operator would you chose? (Question asked exclusively to users of fixed line phones considering the change of operator) The following operators were most frequently indicated as alternative operators: Netia (22,%) and Telefonia Dialog (17,3%). Less then every tenth person questioned mentioned Tele2 (8,7%) and Telekomunikacja Polska (5,5%). *CBM INDICATOR for UKE (National Regulator) 18

19 Netia was the first altnet to offer services based on TP s unbundled local loop The first node was unbundled in December 27 under a pilot project run in Warsaw LLU-based services were launched commercially in Q1 28 Selection of TP s nodes targeted by Netia for unbundling made based on geomarketing surveys Over 5 TP nodes targeted for unbundling of which 1 nodes targeted for unbundling during 28 5% coverage of TP s network Currently, Netia s LLU product offers bundled voice and data services priced identically to WLR and BSA Future migration of BSA/WLR clients to LLU profile further increase in customer value (up-selling of content and convergent products as well as voice services) 19

20 Optimize strong position in Business customer segment Target higher margin corporate business while minimizing cash burn Shift customer mix from large corporate to SOHO and SME Standardize products for SOHO and SME Simplify offering to eliminate costs of bespoke complexity Focus sales force on margin as the key KPI for business segment Voice services to be upsold to bitstream customers Bitstream services to be upsold to voice customers Reduce cost and capex to sales requirements Ringing lines Business voice subscriber lines q 22 2q 22 3q 22 4q 22 1q 23 2q 23 3q 23 4q 23 1q 24 2q 24 3q 24 4q 24 1q 25 2q 25 3q 25 4q 25 1q 26 2q 26 3q 26 4q 26 1q 27 2q 27 3q 27 4q 27 ` 2

21 Leverage PLAY investment Broaden product portfolio: Resell mobile products to Netia customers under Netia brand Develop convergent products with PLAY Provide backhaul solutions for Play s network 5 year contract ramping up to PLN 5 mln annual revenue Capital investment to PLN 1 mln in Access to the Play high street distribution market Up to 1% of Netia s bitstream sales comes through Germanos stores 21

22 PLAY: Netia s objectives achieved with 63% profit Equity value Status Q1 8 Market share 2,5% 1 mln subscribers 27 results: Revenue PLN 235 mln Loss PLN 657 mln Sale transaction: 23% sold for Euro 13 mln: EV PLN 2,175 mln EV/ subs PLN 2,175; > 6% premium over incumbents valuation Commercial contracts remain in place Netia avoids equity calls and extended guarantees Proforma profit on sale of PLN 41 mln and net cash > PLN 3 mln National roaming agreement signed with Polkomtel Infrastructure & billing partners selected Experienced management team recruited UMTS license at 2,34 / pop Distribution secured with acquisition of Germanos chain 3 employee national organisation in place 19 cell sites acquired National launch March 27 Asymmetric interconnection obtained Non-recourse vendor financing obtained 85K customers at Y/E 27 Over 7 BTS installed at Y/E 27 First own UMTS city networks switched on in Sept. 27 Brand successfully established

23 Scalable investments to achieve value growth Sales rather then capex driven strategy Netia targets to become cash flow positive by 21, i.e. sooner than its broadband peers Netia expects to stay EBITDA positive throughout the growth phase Cash flow impact considerably mitigated by: Own-network cash flows Utilisation of existing assets Optimisation of real estate / other non-core assets Medium term outlook 1 mln BB customers by 21 Revenue growth in mid to high teens EBITDA to recover above PLN 22 mln by 21 EBITDA margins above 2% long term FCF positive by 21 Positive EBIT by 21 and net profit by 211 (3) 1 (1) (2) (3) (4) (5) (6) Iliad (1) Fastweb 4 2 (2) (4) (6) 13,7 4,3 (9,4) 54 13,5 (4,9) (18,4) (26) (47) (11) (6) (173) 9 Forthnet (3) Year 1 Year 2 Year 3 Year 4 Year 5 89 (326) 217 (5,4) (18,3) (23,7) (25,2) 193 (241) (416) (573) (5) (582) (58) EBITDA (284) Capex (115) (55,3) (8,5) ,4 EBITDA-Capex 272 (258) 19 (38) (35,4) (44,8) Market Cap (2) 4,3 3,5 42 Sources: Company financials, equity research reports (1) LLU launch in Year 2 (2) Share price as at 11 Oct. 27 (3) Last two years are Merrill Lynch Forecast 23

24 Contents Market overview Strategy 27 performance and guidance Summary 24

25 Netia delivered on its 27 guidance NETIA (PLN M unless otherwise stated) Original Guidance Most Recent Guidance 27 Actual Broadband subscribers ( ) > 2 > Voice service customers (own network + WLR) ( ) > Revenues EBITDA including BSA, WLR, LLU access start-up losses Capital investment PLAY mobile customers ( ) > 5 >

26 Netia builds momentum in its broadband expansion Increase by 26% within 12 months Boradband ports ,7 49,844 54,735 6,336 11, , , ,518 1Q 6 2Q 6 3Q 6 4Q 6 1Q 7 2Q 7 3Q 7 4Q 7 Target for copper and CATV Ethernet WiMAX BSA 28 ` ` Source: Netia, TP 26

27 ... and continuously increases its share in the broadband market Broadband customers (') % 3.% 3.8% 4.6% 2.4% q 26 1q 27 2q 27 3q 27 4q 27 Netia TP Others Netia's market share Netia s share of broadband net adds amounted to 19% for 27 Netia s share in the total number of broadband customers increased to 4.6% in Q4 27 from 1.5% in Q4 26 Source: Netia, TP 27

28 Netia is the clear leader on the Polish bitstream market ('.) % 6 79% Bitstream customers 84% % 1q 7 2q 7 3q 7 4q Netia Netia provisioning timing difference Others Netia's market share Netia serves 78% of all bitstream customers Significant improvement in customer care standards since the first bitstream offer launch in January 27 (current average activation time is 2 days) Source: Netia, TP 28

29 Double-play expected to help stabilise voice revenues Voice lines Voice ARPU 14 Direct voice lines WLR lines 1q 22 2q 22 3q 22 4q 22 1q 23 2q 23 3q 23 4q 23 1q 24 2q 24 3q 24 4q 24 1q 25 2q 25 3q 25 4q 25 1q 26 2q 26 3q 26 4q 26 1q 27 2q 27 3q 27 4q 27 PLN Business own network lines Residential own network lines WLR lines Voice ARPU ` The number of total voice lines (within Netia s own network and WLR) reached 422K at 27 year end For 28, Netia expects the number of voice lines (own network and WLR) to reach over 58K 29

30 Top-line development by product PLN'M +41% F* direct v oice and IN indirect v oice data interconnection and wholesale other telecommunications rev enue Netia recorded 6% revenue growth in Q4 27 vs the prior year quarter and 8% sequentially Data revenues for 27 grew to PLN 242.2m for a 41% year-on-year increase and a 12% sequential increase, more than offsetting the year-on-year decline in voice revenues Data, direct voice and indirect voice combined revenues for 27 grew by 5% over 26 to PLN 665.9m Overall revenue performance negatively impacted by declining wholesale and interconnection revenues (revenues for 27 decreased by 3% year-on-year to PLN 838.m) Continued expansion of the broadband base, the addition of WLR services and commencement of meaningful revenues from P4 transmission services contract are expected to accelerate Netia s revenue growth over coming quarters * Guidance for 28: > PLN 95 mln 3

31 Key performance indicators PLN 1 ARPU for direct voice services PLN 2 ARPU for broadband q 6 2q 6 3q 6 4q 6 1q 7 2q 7 3q 7 4q 7 1q 6 2q 6 3q 6 4q 6 1q 7 2q 7 3q 7 4q 7 [Mbps ] Incre ase of IP traffic in Ne tia's backbone ne twork from 3Q 26 to 4Q 27 Increase by 4% PLN Bitstream SAC 1 5 1q 7 2q 7 3q 7 4q 7 3q 26 4q 26 1q 27 2q 27 3q 27 4q27 Broadband ARPU falling as residential customers added New broadband orders in Q4 27 at 2% higher rates than during Q

32 Financial performance Revenues return to growth (PLN ) 4Q 3Q 27 2Q 1Q 4Q 3Q 26 2Q 1Q Revenues 222,494 25,559 25,58 24,392 29,718 23,537 23,422 % change (y-o-y) 6.1% (1.8% ) 1.1% (6.4%) (11.7%) (.1%) (9.2%) EBITDA / Adjusted EBITDA* 17,677 36,16 62,236 54,69 6,552* 53,994* 48,9* Margin 7.9% 17.6% 3.3% 26.7% 28.9%* 23.4%* 23.6%* EBIT/Pro Forma EBIT* (44,967) (35,714) (8,249) (14,91) (9,827)* (15,583)* (19,928)* Share of P4 start-up losses (52,892) (43,733) (42,994) (25,618) (15,735) (7,262) (4,65) 218,38.8% 58, % (5,843) (3,7) PAT/Pro Forma PAT * (99,92) (8,543) (51,1) (37,82) (31,494)* (22,919)* (23,11)* (1,638) Total assets 2,7,651 2,16,734 2,92,63 2,93,132 2,155,359 2,528,943 2,527,46 2,588,619 Net cash (37,3) 43,416 98, , ,586 17, ,8 228,957 Available credit lines 25, 295, 295, 1, 2,

33 (PLN'M) Improved cash flows from Netia s own network EBITDA % (mln zł) Capital investments EBITDA as raported Revenue Other income Other expense Other gains/(losses), net EBITDA margin SOP BSA & WLR start-up EBITDA legacy Legacy P4 Broadband (PLN'M) EBITDA % EBITDA margin on own network rose slightly to 25.6% from 25.3% EBITDA from own network products and services fell 4% Capex investment on legacy services fell year-on-year by 18% EBITDA as raported Revenue Impairment charge License prov ions Adjusted EBITDA EBITDA margin Other gains/(losses), net w/o license prov isions Other income Other expense SOP EBITDA legacy Cash generated by Netia s services on its own network rose from PLN 68 mln to PLN 86 mln 33

34 Key objectives for 28 Accelerate further broadband customer acquisitions Up-selling double-play services Increasing sales efficiency Extensive LLU roll-out at least 1 TP nodes targeted for unbundling during 28 Introducing Netia-branded mobile services - planned for H2 28 Further consolidation of local ethernet networks up to PLN 4m dedicated to M&A activities 34

35 28 guidance NETIA (PLN M unless otherwise stated) Broadband subscribers ( ) 27 Actual Guidance > 4 Voice service customers (own network + WLR) ( ) 422 > 58 Unbundled local loop (LLU) nodes (pcs) Revenues > 95 EBITDA including BSA, WLR, LLU access start-up losses Capital investment M&A investment in Ethernet networks

36 Capital investments guidance PLN M guidance Existing network and IT P4 Transmission Broadband - Including WiMax Total

37 Contents Market overview Strategy 27 performance and guidance Summary 37

38 Summary Attractive growth of the Home market and regulated access offers new opportunities to leverage Netia s existing core competencies and assets through Rapid acquisition of broadband customers and further increase in customer value by migration from bitstream to LLU and up-sell of content and convergent services will be the main source of growth Customer-centric organization will support Netia s growth strategy Netia will optimize its strong position in the Business market by focusing on the most attractive segments and minimizing cash-out A continuing close partnership with PLAY will allow Netia to offer mobile and convergent products Three years of investment in broadband should lead to improving EBITDA by 29, positive cash flow by 21, operating profit by 21 and net profit by 211 at the latest 38

39 Thank you for your attention 39