Netia: Mobile launch in 1Q07

Mr. Bannister, the CEO of P4, the mobile operator, 30% owned by Netia, reiterated plans of launching commercial services in February-March 2007, despite delay in construction of relay stations, according to today’s ‘Gazeta Prawna’ daily. He said that P4 targets a 5% market share, or 2m customers, by the end of 2007, and 25% over the long term horizon. The operator is currently undertaking marketing tests on 20k large group of volunteers from two Polish big cities, 22-39 years old, which were offered new phones, unlimited number of free minutes and a limit of PLN 150 for non-voice services. Based on the results of the tests, P4 would formulate its marketing offer in February. The operator hired several former brand managers of Heyah, the successful mobile brand launched a few years ago. The total marketing budget of the launch would amount to PLN 250m.

Our view: We expect no material trading impact on the shareprice as Netia, although we highlight that the timetable looks challenging to us. We do not believe P4 could launch meaningful operations until 2H07. We note that the launching costs are significant. We maintain our Sell recommendation on the stock.