Netia Reduces Costs and Improves EBITDA Score

Netia reports expected results of the efficiency improvement and cost reduction programme. The company's 2010 costs are to decrease by PLN 100 million as compared with 2008. Thanks to significant savings and good initial results for Q1 2009, Netia once again improved EBITDA score prediction for 2009 and the following years.

Netia reports expected savings resulting from the „Profit” efficiency improvement and operations cost reduction programme. A comprehensive analysis of all of the company's areas of operation was carried out in Q4 2008 and Q1 2009. As a result of the analyses thus carried out, a detailed schedule was created for the implementation of individual initiatives, some of which are already in the process of execution. The programme will be fully implemented by the end of 2009.

Netia expects that—in comparison with the operations costs basis for 2008—savings will reach PLN 100 million per annum.

Savings are expected already this year and will effect the improvement of this year's EBITDA result by PLN 20 million. Initial results for Q1 show that, thanks to the additional improvement in operational efficiency, the EBITDA score will improve by a further PLN 10 million.

The value of the corrected EBITDA predicted by Netia thus improves by PLN 30 million and amounts to PLN 290 million (70% increase relative to 2008). Allowing for restructuring costs estimated at PLN 25 million, the company predicts reaching an EBITDA of PLN 265 million (55% increase).

„Initial results for Q1 show that a consistent implementation of the broadband services development strategy brings about a further, significant improvement of the company's profitability. Adding to this a significant cost reduction, Netia is able once again to increase the prediction for 2009 and the medium-term prediction,” said Mirosław Godlewski, President of Netia's Management Board.

The implementation of the cost reduction programme was allowed for in the previously published Netia's medium-term prediction. However, the scope of the project currently being implemented is greater than initially planned for by PLN 40 million, causing Netia to improve the medium-term EBITDA margin prediction for years 2010 and 2012 by 3 percentile points, i.e. to 23% and 28% respectively.

The table below shows a collation of the current estimation of all medium-term prediction components in comparison with previously published values.
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Medium-term prediction for years 2010-2012           Previous                 Updated
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Compound annual growth rate (CAGR)            5% - 10%                     5% - 10%
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EBITDA margin in 2010 (%)                     20%                             23% 
EBITDA margin in 2012 (%)                     25%                             28%
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Net profit in                                           2010                            2010
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Positive free cash flows in                       2010                            2010
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Investment to profit rate decrease to 15% in 2011                            2011
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1 million broadband services customers in    2012                            2012
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Netia SA is a leading alternative telecom operator, providing in.al. voice services and broadband Internet access to individual and business clients. It operates on the basis of its own infrastructure as well as the TP network.