ITS Berlin, September 7th, 2004 Polish Telecommunications Market Overview Grzegorz Stanisławski Department of Business Development and Strategic Analyses.

ITS Berlin, September 7th, 2004

Polish Telecommunications Market Overview

Grzegorz Stanisławski

Department of

Business Development and Strategic Analyses

2

POLAND

PortugalPopulation: 10,4 MHH: 3,5 M

SpainPopulation: 40,7 MHH: 13,7 M

FrancePopulation: 59,6 MHH: 24,7 M

UKPopulation: 59,3 MHH: 26,2 M

IrelandPopulation: 4,0 MHH: 1,3 M

B, DK, NL, LPopulation: 32,4 MHH: 14 M

AustriaPopulation: 8 MHH: 3,5 M

ItalyPopulation: 57,3 MHH: 22,2 M Greece

Population: 11 MHH: 4 M

MaltaPopulation: 0,4 MHH: n.a.

FinlandPopulation: 5,2 MHH: 2,4 M

SwedenPopulation: 8,9 MHH: 4,4 M

GermanyPopulation: 82,5 MHH: 38,2 M

EstoniaPopulation: 1,4 MHH: 0,6 M

LatviaPopulation: 2,3 MHH: 0,9 M

LithuaniaPopulation: 1,4 MHH: 3,5 M

Poland

SloveniaPopulation: 2 MHH: 0,7 M

Demographic data

€ 4 824GDP 2003 per capita

€ 184 bnGDP 2003

38 230 thPopulation 2003

312 th. km2Area

Households 2003 11 800 th

GDP growth and CPI (%)

5,70%3,80%

4,06%

1,00% 1,40%

5,48%3,70%

0,83%1,94%

10,09%

0%

2%

4%

6%

8%

10%

12%

2000 2001 2002 2003 2004F

GDP growth (real, % YoY) CPI (% YoY, pavg)

3

Poland is the only country in Central Europe with fixed penetration still growing.

In Czech Republic and Hungary decrease in number of fixed lines can be observed since 2001

Polish mobile penetration is growing much slower than in other European countries.

We expect it will be 58% in 12/2004and ca. 70% in 12/2005.

Mobile penetration 2000 - 2004

17,7

%

26,2

%

36,4

%

45,5

%

51,2

%

31,0

%

48,3

%

67,6

%

78,5

%

81,2

%

42,1

%

66,9

%

83,6

%

94,7

%

98,3

%

0%

20%

40%

60%

80%

100%

2000 2001 2002 2003 2004 H1

Poland Hungary Czech Rep.

Fixed line penetration 2000 - 2004

28,8

%

30,0

%

31,1

%

32,1

%

32,9

%

37,4

%

36,6

%

36,0

%

35,6

%

35,6

%

37,4

%

37,3

%

35,7

%

35,2

%

34,3

%

0%

10%

20%

30%

40%

2000 2001 2002 2003 2004 H1

Poland Hungary Czech Rep.

Penetration of Fixed and Mobile Services

4

GAP

Penetration of Households with PC and Interet (2003)

69

%

68

%

64

%

63

%

58

%

55

%

54

%

50

%

43

%

41

%

38

%

36

%

49

%

36

%

65

%

60

%

50

%

57

%

50

%

47

%

48

%

42

%

36

%

34

%

28

%

32

%

28

%

42

%

18

%

35

%

0%

20%

40%

60%

80%

100%

Sw

eden

Den

mar

k

Bel

gium

Net

herla

nd

Sw

itzer

land

Fin

land

Ger

man

y

UK

Ital

y

Fra

nce

Spa

in

Gre

ece

Por

tuga

l

Wes

t E

urop

e

Pol

and

0%

20%

40%

60%

80%

100%

PC penetration On line Households with PC that are on-line

Penetration of Internet

In Poland we observe significantly lower Internet penetration among households

that are PC equipped.

5

CAGR

2003 - 2010

9 %

23 %

11 %

- 3 %

Forecast of end customer expenditure on telecommunication services

Evolution of Demand for Telco Services

26,5

38,4

CAGR +5%

12,3 11,7 11,0 10,5 10,3 10,1 9,9 9,9

11,3 13,3 15,016,6

18,0 18,720,0

1,83,7

1,1 4,8

19,3

0

10

20

30

40

2003 2004F 2005F 2006F 2007F 2008F 2009F 2010F

bn

PL

N

Mobile

Internet

DataTransmission

Fixed Voice

6

AFFORDABILITY

Dustribution of disposable income of Polish households

02

00

04

00

06

00

08

00

0

95%85%75%65%55%45%35%25%15%5%

% of Popultaion

Th

. Eu

ro p

er

ye

ar

Only 10% of household can spend 50 Euro per month

as 10% of their budget

Only 30% of household can spend 20 Euro per month

as 7% of their budget

Global demand of telecommunication services in Poland is strongly restricted by affordability of households.

7

Example: ADSL roll-out

Increase of penetration of ADSL is driven by strong price decrease.The vast majority of customers chose the cheapest available option.

Number of TP's ADSL customers (th. lines)

2136

66

134164

270

380

500

1Q'03 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 3Q'04F 4Q'04F

35 Euro 22 Euro35 Euro

+free trail13 Euro

Minimal

price

- 60%

TP’s ADSL stands for 67% of total broadband

(xDSL + CATV + FWA)

8

2001.07.01

2003.01.01

2004.01.01

Full liberalisation of DLD markets

Full liberalisation of ILD market

Cost orientation of tariffs

Access to infrastructure - last mileFree market of telecommunicationservices

Competition in each segment

Monopoly

2002

Market Liberalisation

20042001 2003

9

Key Regulatory Issues

Current regulatory regime: Current

DLD, ILD and F2M market open for competition (pre-selection) Cost-orientation for universal services (Jan 1, 2004) Cost orientation concerning interconnect rates, infrastructure sharing

and leased lines Oct 1, 2003 - Amendments of the Telecommunication Law,

adapting it to the EU legislation of 1998

Sep 2, 2004, New Telecommunication Law, adopting 2002 EU legislation

Bitstream access Found for covering costs of universal service

10

TP Position in Fixed Line Market

TP90,7%

Others1,5%

TeleNet1,0%

Dialog3,4%

Netia3,4%

* Mass and business segment

Other0,3%

Netia4,0%

NOM3,0%

Energis4,0%

Tele26,0%

TP82,7%

other0,9%

Netia1,5%

NOM2,0%

Energis3,5%

Tele210,0%

TP82,1%

International Long Distance market share* (traffic)

Fixed to Mobile market share* (traffic)

Local Loop market share (main lines)

Domestic Long Distance market share* (traffic)

other0,2%

Netia2,2%

NOM1,1%

Energis1,5%

Tele25,5%

TP89,5%

Source: TP estimates as of 2004 H1

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Main issues for telco industry

Stimulation investments in the infrastructure

PSTN in rural area xDSL to extend the coverage

(form 70% to at least 95% of lines) UMTS

Increase penetration of Internet access

Program for schools 50% of households with PC do not use Internet

New business areas

Entertainment E-commerce

Stable condition for investments

Support by universal service found

Public support(i.e. some tax deduction)

Public services(e-government, e-health..)

Regulation of media (IPR, DRM)

Security

12

Dziękujemy

Thank You!