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					TP Group Presentation November 2002

Roadshow Team

 Marek Józefiak  Bertrand Le Guern

CEO Deputy CEO
(Networks, IT, Strategic Planning)

 Roger de Bazelaire
 Bruno Duthoit  Wojciech Roman

CFO
Board Member
(Sales & Marketing)

Board Member
(Human Resources)

Agenda

 TP Group

 Operating Initiatives
 Financial Results and Strategy

TP Group

Delivery versus Guidance
Guidance 2002 Revenue growth 3-5% Results YTD 4.2%

EBITDA margin
OPEX* CAPEX

40%
ca. (10%) PLN 5.3 bn

41%
(10%) PLN 2.9 bn

Fixed access lines
Centertel subscribers Headcount reduction

10.9 million
4 million 11,000

10.7 million
4 million 10,000

* Fixed line business; excluding depreciation, amortisation, and employment restructuring provisions

TP: Strong Position in Fixed Line Market
Local loop market share (subscribers) DLD market share (traffic)
Dialog 3.0% Netia 2.9% Others 3.3%

TP 90.8%

TP 96.0%

Others 4.0%

ILD market share (outgoing traffic)

ILD market share (incoming trafic)
VoIP 15% TP 85%

TP 98%

VoIP 2%

Source: TP estimates; as of September 2002

TP regained DLD market share

Centertel: Continuing Market Share Gains
Market share (%) Share of Gross Subscriber Additions (%)
40.8%
31.7% 27.8% 22.1% 17.2%

36.4% 27.9%

14.2%

1999

2000

2001

Q3 2002

1999

2000

2001

Q3 2002

Centertel

PTC

Polkomtel

Centertel

PTC

Polkomtel

In Q3 2002 Centertel speeded up market share gains with 44.8% of net additions.
Source: Centertel

Centertel’s market share grew to 31.7% in Q3 2002

TP Group: Revenue Composition
Q1-3 2001 Q1-3 2002

Other 12% Mobile 10% Interconnect 7%

Subscription 21%

Other 12%

Subscription 22%

Mobile 15%

Interconnect 6% Traffic 45%

Traffic 50%

Source: TP; IFRS (IAS) data

TP continues to grow the share of Group revenues from mobile telephony

TP: Fixed-Line Traffic Revenues
Revenues from traffic (PLN mn)*
(8.4%) 2,547 2,333 (3.8%) 1,933

1,859 (25.9%) 1,106 819 565 486

(14.0%)

12.3% 29.6% 309 347 125 162
Audiotex & IN

Local
Source: TP

F2M

DLD

ILD

Internet dial-up

Q1-3 2001
* Based on billing data, excluding public pay-phones

Q1-3 2002

Regulatory Environment

 ILD liberalisation from January 1, 2003  Key proposed changes in Telecoms law
– – –

Local loop unbundling Number portability Carrier pre-selection

 Default long distance carrier  Antimonopoly Court ruling – introduction of interconnect rates with mobile operators based on benchmarks was unjustified cost-based rates to be introduced

Operating Initiatives

Opex Optimisation
Opex breakdown Q1-3 2002
Noncontrollable costs Controllable costs

 Employment restructuring  Centralisation and consolidation of network supervsion systems

Interconnect 13%

Employment costs 24%

 Network maintainance contracts renegotiation
 Consolidation of billing systems  Optimisation of international Internet connection costs

Depreciation & Amortisation 29%

Third party services 16% Other costs 18%

 Leveraging on the economies of scale within TP Group:
— Managing

product offer operational activities

Source: TP; IFRS (IAS)

— Conducting

Optimisation of Opex will help maintaining high EBITDA margin

Employment Restructuring
Number of permanent jobs at end of period – fixed-line telephony
Since December 31, 2001: • Down by 9,912 at TP with new subsidiaries • Down by 10,903 at TP alone
New subsidiaries TP
3,439 68,103 57,762 53,990 3,349 49,856

2,358 2,223 71,572

46,859

1999
Source: TP

2000

2001

Q1 20021

Q2 20022

Q3 20023

Notes: (1) as at April 1; (2) as at July 1; (3) as at October 1

The number of lines per employee increased from 163 to 227

Capex Optimisation
TP Group Capex (PLN mn)
56.3% 50.6%

Key Capex Programmes in 2003
Fixed line

124 1,246 2,557

36.5% 27%

 Lower network spendings optimising existing resources  Higher IT capex - CRM, billing, ERM, network management and supervision  Data transmission Centertel

150 1,244 < 5,000

6,160

5,354

4,929

1999

2000

2001

2002e

 Data transmission  Infrastructure – increase network coverage  No UMTS investments

Capex/Revenues
Source: TP

TP Others

Centertel

Capex will not exceed PLN 5 bn per annum in 2003-2005

Reduced capex is a reflection of TP’s maturing business

Financial Results and Strategy

TP Group: Profit & Loss Account
(PLN mn) 1999 2000
15,879

2001
17,324

Q1-3 2001

Q1-3 2002

Revenues EBITDA EBIT Net profit

13,160

12,851

13,386

5,197 2,840 1,029

6,072 2,939 1,523

5,729 1,902 544

5,063 2,225 877

5,528 2,374 313

EBITDA margin EBIT margin Net margin

39.5% 21.6% 7.8%

38.2% 18.5% 9.6%

39.4% 33.1% 17.3% 11.0% 3.1% 6.8%

41.3%

17.7% 2.3%

Source: TP; IFRS (IAS) data

Debt Structure
Debt breakdown by currency and hedging
PLN 9% USD 34%
PLN 56% USD 16%

Debt breakdowns
PLN bn Short term Long term Floating rate** Fixed rate** Total 31-12-01 1,545 12,693 4,173 10,065 14,238 30-09-02 1,641 14,412 4,237 11,816 16,053

EUR 57%
Unhedged

EUR 28%
Hedged*

The level of hedging increased to approx. 56%

Source: TP; IFRS (IAS) data * Includes all SWAP transactions – trade, cashflow and fair-value ** according to loan agreements, excluding effects of hedging

Liquidity and debt restructuring
Debt restructuring schedule* (PLN bn) Existing sources of financing (PLN mn)
Instrument
2.9 1.9 0.7 2002 2003 2004 0.8 2.1

Limit

To use

Private bonds
Public bonds Credit lines EIB credit
2005 2006

1,000
1,000 750 c.1,600

800
1,000 750 c. 1,200

Total
Source: TP; IFRS (IAS) data

4,350

3,750

New financial instruments considered:  Receivables securitisation  Asset (real estate) monetisation Strong operating cash flow reduces the need for external financing

Financing Policy
 Keep financial ratios at level satisfactory to the rating agencies - to remain safely within current rating category

 Reduce reliance on non-zloty-denominated finance
 Smooth out the repayment schedule in 2002 - 2004  Adapt repayment schedule to free cash flow generation profile  Reduce cost of finance  Reduce the number of credit facilities in our portfolio and standardize information reporting obligations  Optimise tax burden

TP Group Presentation November 2002

Backup Slides

TP: Ongoing Growth in Fixed Lines
Fixed lines (000)
9,643 10,233 10,452
2

10,513
4

10,655
91 559
7

17 206

64 384

84 476

99 9,544

10,010

10,002

9,949

9,998

1999 POTS
Source: TP

2000 ISDN

2001 SDI

Q2 2002 ADSL

Q3 2002

Churn decreased to 3.1% in September Number of lines grew by 142,000 in Q3 2002 to reach 10.7 mn lines

TP: Traffic Volume
Outgoing traffic in 2001 and 2002 YTD – quarterly (million minutes *)
8,525
5,460

7,981
4,973

7,256
4,523

8,095
5,045

8,108
4,922

7,875
4,667

7,508
Local Internet dial-up DLD F2M ILD Audiotex and IN

4,323

1,900 1,568 1,435 927 488 109 49 747 502 108 42 728 482 101 48 708 438 94 46 458 97 53 1,334 801 1,691 1,799 1,676

880 469 111 37

869 479 96 65

Q1 2001
Source: TP

Q2 2001

Q3 2001

Q4 2001

Q1 2002

Q2 2002

Q3 2002

* Based on billing data, excluding public pay-phones

TP continued to reclaim traffic in the DLD segment

Centertel: Growing Customer Base
Customer base (000)

683

1,490

2,785

3,562

4,000

2,150 1,540 551 118 418 147 1999 834 105 2000 1,203 42 2001 IDEA (Post-paid) 1,395 17 Q2 2002 POP (Pre-paid)

2,486

1,500 14 Q3 2002

NMT (Post-paid)
Source: Centertel

Centertel’s fast growing customer base is a major source of growth for TP Group

Centertel: Stabilising ARPU and MoU
ARPU (PLN/month)
154 132 140 112 85 40 74 32 77 137

MoU (minutes/month)

152

147

196 174 141 121 113 61 57 78 36 136 72 30 122 65 30

34

31

34

1999

2000

2001

Q2 2002 Q3 2002 Pre-paid (POP) Blended

1999

2000

2001

Q2 2002 Q3 2002 Pre-paid (POP) Blended

Post-paid (IDEA)

Post-paid (IDEA)

Source: Centertel

Blended SMS ARPU in Q3 2002 was PLN 7.0 per month

Centertel’s ARPU and MoU stabilised in Q3 2002

Centertel: SACs and Payback Period
Subscriber Acquisition Costs (PLN) Customer Payback Period (months)

748 597

780 678 586 428 232 18 178

757
4.8

5.7

5.5 4.0

462 356 229 128 112

3.1

3.3

1999

2000

2001

Q2 2002 Q3 2002 Pre-paid (POP) Blended

2001

Q2 2002

Q3 2002

Post-paid (IDEA)
Source: Centertel

Post-paid (IDEA)

Pre-paid (POP)

Decreasing blended SAC is expected to have a positive impact on EBITDA margin

Certain of the statements contained in these presentations that are not historical facts, are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in such statements due to, among other factors, (i) changes in the competitive and regulatory framework in which our companies operate, (ii) changes in exchange rates, including particularly the exchange rate of the PLN to the US dollar and Euro, (iii) changes in economic or technological trends, (iv) customers and market concentration, and (v) general competitive and market factors on a global, regional and/or national basis. We have no obligation to update these statements. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. Any decision to transact TP’s securities should be made solely on the basis of information officially reported in accordance with the appropriate securities regulations.


				
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