Netia expects to make a loss on P4 shares

2007-03-08

Netia, a listed fixed-line operator, announced that in 2007 its loss on the shares of P4, a 3G mobile operator, is expected to exceed the PLN 31m (€7.9m) recorded last year.
The company explains that the loss will be far more substantial than that of 2006, as P4 is about to commence operations and costs at the outset are very high. The mobile services of Netia’s subsidiary are to be made available by the end of March 2007. P4 is to carry out marketing activities in the field of individual users and small enterprises by itself, while Netia will offer convergent services (fixed and mobile) to large corporate clients under its own brand name. The services of Netia are to be distributed via the retail network of P4, which recently acquired Germanos, to date the most prominent dealer of PTC, the Era and Heyah operator. Netia admitted that not all of the 300 points of sale which were controlled by Germanos are to sell P4’s products and services. Germanos has direct control of only the stores in the largest cities; other outlets are run by subdealers who are free to decide with whom they cooperate.
Netia’s 2006 net loss was PLN 378.4m (€97m), whereas revenues stood at PLN 862.1m (€221.1m). The company emphasised that the loss figure is based on a corrected evaluation of fixed-line assets. Netia had to create a reserve of PLN 355m (€91m), as it made substantial investments in the fixed-line network and cannot make any substantial profits from it at the moment, and the loss should be seen in this light. According to company representatives, the operator has around PLN 160m (€41m) of free capital. Netia has also announced that it is not going to pay shareholder dividends in the near future, as profitability should be showing signs of improvement before any decision on the payment of the dividends can be made.
The new Netia strategy is to be made public by the end of the second quarter of the year at the latest.

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