Grzegorz Stanisławski Department of Business Development and Strategic Analyses

1. Grzegorz StanisławskiDepartment ofBusiness Development and Strategic Analyses Polish Telecommunications MarketOverview ITS Berlin, September7th, 2004

2. POLAND Demographic data SwedenPopulation: 8,9 MHH: 4,4 M FinlandPopulation: 5,2 MHH: 2,4 M 312th. km2 Area GermanyPopulation: 82,5 MHH: 38,2 M Population 2003 EstoniaPopulation: 1,4 MHH: 0,6 M 38 230 th AustriaPopulation: 8 MHH: 3,5 M LatviaPopulation: 2,3 MHH: 0,9 M 11800 th UKPopulation: 59,3 MHH: 26,2 M Households 2003 LithuaniaPopulation: 1,4 MHH: 3,5 M GDP 2003 per capita € 4 824 B, DK, NL, LPopulation: 32,4 MHH: 14 M GDP 2003 €184 bn IrelandPopulation: 4,0 MHH: 1,3 M Poland GDP growth and CPI (%) FrancePopulation: 59,6 MHH: 24,7 M SloveniaPopulation: 2 MHH: 0,7 M ItalyPopulation: 57,3 MHH: 22,2 M PortugalPopulation: 10,4 MHH: 3,5 M GreecePopulation: 11 MHH: 4 M MaltaPopulation: 0,4 MHH: n.a. SpainPopulation: 40,7 MHH: 13,7 M

3. Penetration of Fixed and Mobile Services 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.

4. Penetration of Internet In Poland we observe significantly lower Internet penetration among households that are PC equipped. GAP

5. Evolution of Demand for Telco Services Forecast of end customer expenditure on telecommunication services CAGR 2003 - 2010 38,4 CAGR +5% 9 % 26,5 23 % 11 % - 3 %

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

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. TP’s ADSL stands for 67% of total broadband (xDSL + CATV + FWA) Minimal price 35 Euro+free trail 22 Euro 13 Euro 35 Euro - 60%

8. Market Liberalisation Monopoly 2002 2001 2003 2004 Free market of telecommunicationservices Competition in each segment Access to infrastructure - last mile 2001.07.01 Full liberalisation of DLD markets 2003.01.01 Full liberalisation of ILD market 2004.01.01 Cost orientation of tariffs

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 Domestic Long Distance market share* (traffic) Local Loop market share (main lines) International Long Distance market share* (traffic) Fixed to Mobilemarket share* (traffic) * Mass and business segment Source: TP estimates as of 2004 H1

11. 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!