Following the resignation of Wojciech Madalski, Netia's acting CEO Pawel Karlowski said that Netia will be gradually shifting its focus on the retail consumer market, and away from the business segment. He said that P4 will drive the shift to the consumer market, and deregulation, which has allowed them to sign a bitstream agreement with TPSA, will also facilitate their push into the consumer market. The acting CEO said that he expects to be able to present a new 5-year strategy to the board ib the first half of October.
Our view: This statement sheds some light into Madalski's departure. Recall that Madalski presented a new mid- to long-term strategy earlier this year, where he positioned WiMax and P4 as the future drivers of the company, just a couple of months prior to the drastic profit warning. This suggests to us that the sudden and rapid deterioration in fundamentals may have caused tension between the board and management over the strategy. On the other hand, we are skeptical of Netia's transition prospects into the increasingly competitive consumer/residential market, where Tele2 and cable operators already have brand recognition. Moreover, using P4 as a vehicle to entry in the consumer market is a risky proposition given uncertainty over P4's launch, and increasing saturation in the mobile market. We maintain our Sell recommendation.