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

2 POLAND Portugal Population: 10,4 M HH: 3,5 M Spain Population: 40,7 M HH: 13,7 M France Population: 59,6 M HH: 24,7 M UK Population: 59,3 M HH: 26,2 M Ireland Population: 4,0 M HH: 1,3 M B, DK, NL, L Population: 32,4 M HH: 14 M Austria Population: 8 M HH: 3,5 M Italy Population: 57,3 M HH: 22,2 M Greece Population: 11 M HH: 4 M Malta Population: 0,4 M HH: n.a. Finland Population: 5,2 M HH: 2,4 M Sweden Population: 8,9 M HH: 4,4 M Germany Population: 82,5 M HH: 38,2 M Estonia Population: 1,4 M HH: 0,6 M Latvia Population: 2,3 M HH: 0,9 M Lithuania Population: 1,4 M HH: 3,5 M Poland Slovenia Population: 2 M HH: 0,7 M Demographic data € GDP 2003 per capita € 184 bn GDP th Population th. km2 Area Households th GDP growth and CPI (%)

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 12/2004 and ca. 70% in 12/2005. Penetration of Fixed and Mobile Services

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

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

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

Full liberalisation of DLD markets Full liberalisation of ILD market Cost orientation of tariffs Access to infrastructure - last mile Free market of telecommunication services Competition in each segment Monopoly 2002 Market Liberalisation

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, 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 * Mass and business segment International Long Distance market share* (traffic) Fixed to Mobile market share* (traffic) Local Loop market share (main lines) Domestic Long Distance market share* (traffic) 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

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