Netia is due to report its 1Q06 results after the close of market today, and will be holding a conference call at 17h00 tomorrow to discuss the results (Dial-in: Europe +44 207 138 0819, US +1 718 354 1361). We
expect net profit to decline 36.3% y/y to PLN 14.7m, versus consensus estimate of PLN 2.6m (source: PAP). We believe that the large difference between our and consensus estimate is driven by expectations of higher
costs below the EBITDA line associated with the regulator’s decision to convert El-Net’s license into investment commitments. However, given that Netia has booked El-Net’s license in its balance sheet at fair value, having
known that the license would be converted, we do not anticipate large incremental costs from the license write-off. On the other hand, our 1Q06 revenue and EBITDA forecasts of PLN 225.7m and PLN 73.9m are some 1.8% and 4.5% below consensus estimates of PLN 229.9m and PLN 77.3m respectively.