News Archives 2007

Acquisition of significant value assets
Current report no 64/2007 dated 8 December 2007

The Management Board of Multimedia Polska S.A. announces that on 7 December 2007 Multimedia Polska S.A. (the “Acquirer” or “MMP") acquired from a natural person (the “Seller”) 100 shares of Zicom Sp. z o.o. with its registered office in Tarnów (the “Company”) (the “Agreement”) registered with the register of entrepreneurs kept by the District Court for Krakow-Srodmiescie of Krakow, Economic Department of the National Court Register, entry no. 0000243195 (the “Shares”).

The Shares acquired under the Agreement with a nominal value of PLN 500 each and an aggregate nominal value of PLN 50,000 are equal and indivisible shares constituting 100% of the share capital of the Company and represent 100% of votes at the Shareholders’ Meeting of Zicom Sp. z o.o.

As at the date of signing of the Agreement, the Share purchase price was set at PLN 6,000,000.00 plus the Company’s cash and current receivables and less the value of the Company’s debt (the “Price of Shares”).

The Price of Shares will be reviewed and referred to the final settlement of the transaction upon completion of a due diligence process, involving primarily determination of the value of the Company’s debt and level of cash held.

Payment of the Price of Shares will be made in three instalments:
1. payment of PLN 1,000,000 will be made within 4 days from the conclusion of the Agreement;
2. the second instalment will be payable within 7 days from the completion of the due diligence process; the instalment will be equal to the difference between the Price of Shares determined at the conclusion of the Agreement less the first instalment paid and PLN 500,000 and the result of the due diligence process;
3. the remainder of the Price of Shares amounting to PLN 500,000 will be payable on 7 March 2008.

Ownership of the Shares was transferred to the Acquirer on the day of the conclusion of the Agreement.

The transactions will be financed with the issuer’s existing cash.

The primary business activity of Zicom Sp. z o.o. is the provision of fixed-line telephony and internet services, and digital television as a pilot project. Zicom Sp. z o.o. owns telecom networks in Tarnów passing by ca. 8,000 homes and provides ca. 5,000 internet and telephony services.

The acquisition of Zicom Sp. z o.o. is a realisation of one of the purposes of the public offering and an important element of MMP’s strategy set forth in the prospectus, which include active participation in the consolidation of telecom operators through mergers and acquisitions.

There are no existing links between the Seller and MMP and directors or supervisors of MMP.

The financial assets purchased in the transaction have been deemed significant value assets as the shares acquired constitute over 20% of the share capital of Zicom Sp. z o.o.

Legal basis:
Regulation of the Minister of Finance on current and periodical information provided by issuers of securities § 5.1.1.

Wednesday, 21 November 2007:

Multimedia Polska enters Warsaw

Multimedia Polska, Poland’s leading provider of triple play, has begun its investment programme to enter the Warsaw market. We have finalised our first acquisition in the capital, as previously declared, while we also intend to grow this market through organic growth. We have signed the first contract with one of Warsaw’s housing cooperatives and purchased a pipeline that will allow us to link Warsaw with our nationwide backbone. We are planning to reach coverage of some 10 percent of Warsaw households. This will translate into some 100,000 homes passed. Our total investments at this stage are estimated at ca. PLN 70-100m.

“From the business perspective, Warsaw is one of the most promising media and telecom markets in Poland because the number of new constructions is constantly on the rise, and also because the Warsawers’ level of earnings is significantly higher than those seen in other areas, which translates into higher spending on services such as television, internet and telephony,” says Multimedia’s President Andrzej Rogowski. “This is a good opportunity for us to grow the number of customers taking out our key product—the triple play bundle. Moreover, we believe that Warsawers will be interested in the more advanced services, such as digital cable TV or the recently introduced Video-on-Demand.”

Acquisition of Margo-Sat 

The first acquisition effected by Multimedia in Warsaw was the acquisition of a cable television and internet operator Margo-Sat which operates in Białołęka. The networks acquired by Multimedia pass by some 2,400 homes. Margo-Sat customers subscribed in aggregate to some 1,000 services (cable television and internet). Some were using a bundle of video and broadband services.

Białołęka is an area of dynamic growth. It is among the highest-rated Warsaw districts as far as the number of new homes is concerned. “We intend to co-operate with Margo-Sat in order to further expand our coverage by cabling newly-constructed housing estates,” adds Andrzej Rogowski.

The value of the transaction is similar to other same-size transactions finalised by Multimedia Polska. “We are confident that Margo-Sat is a very good investment. Its networks are modern and do not require significant capital expenditure. They will be relatively easy to integrate with our backbone network and we will soon be able to offer Margo-Sat subscribers our VoIP telephony together with digital television and video on demand,” continues Mr. Rogowski. He adds: “We are also having talks with other operators and with respect to other networks in Warsaw that we may be able to acquire.”

Construction of Own Networks

The acquisition of Margo-Sat is just an example of our efforts to enter the Warsaw market. It is part of a larger project, which in the first stage will result in Multimedia gaining coverage of ca. 10 percent of all Warsaw households. Our networks will then be passing by some 100,000 homes. We intend to invest some PLN 70-100m in order to reach that target. The overall spending will depend on where we will concentrate our operations and how many fibre optic cables and cable ducts will have to be laid and constructed to complete this project.

The first step towards building our own infrastructure in Warsaw was the purchase of 15 km of telecom ducts (cable pipeline), which will be used to link Warsaw to Multimedia’s own nationwide backbone network. This project will allow us to integrate our infrastructure with any networks acquired from other operators in Warsaw and any networks that we intend to build from scratch. “We are involved in talks with housing cooperatives and Warsaw’s developers and I believe that some of our negotiations will soon be finalised to our benefit and we will be able to give you an update on the results,” says President Rogowski.

Multimedia Polska has already marked its presence in the suburban city of Pruszków. Our cooperation with developers is going well and we have started selling our services to some 150 newly-constructed households in Parzniew Housing Estate. We have already connected our Pruszków network with own nationwide backbone and we are planning to build an access network for the whole city of Pruszków. “Our strategy is to make investments throughout the Warsaw agglomeration,” concludes Andrzej Rogowski.

Thursday, 27 September 2007:

Multimedia Polska launches video on demand (VoD)

• Multimedia Polska yet again reaffirms its position as innovative leader in the sector. We are the first cable operator in Poland to roll out VoD.
• Multimedia’s video collection will comprise several hundreds of titles – to be expanded within the next several weeks and include HD films.
• High quality of Multimedia systems allows the Company to implement highly advanced services.
• New titles will be available simultaneously to their release to traditional video rental stores.

‘We have kept our word. We have, in line with our earlier declarations, rolled out yet another new service. Again we were the first in Poland to do so. No other cable operator is offering virtual video rental,’ says Andrzej Rogowski, President of Multimedia Polska.

The service is available to our subscribers in 6 cities: Gdynia, Kalisz, Lublin, Łódź, Olsztyn, and Toruń. By the end of this year, the service will be made available to our entire digital cable TV market of 450,000 homes passed.

Our recent market analysis shows that the number of digital TV subscribers is constantly on the rise. We had five thousand subscriber contracts signed by the end of July and twice as much by the end of August.

‘I wish to reiterate that the high quality of our digital cable platform allows us to implement any number of technologically advanced value-added services. Video on demand is just another step towards our main goal—providing a fully comprehensive bundle of multimedia services including entertainment, information and communication; mobile communication as well,’ says Andrzej Rogowski.

Video on demand is rolled out as part of our digital cable TV project to which we have allocated approximately PLN 70m. We will have invested PLN 30m by the end of this year.

We have prepared a vast film library, consisting of ca. 600 titles, and we have signed three agreements with film distributors. SPI International provided 500 titles, while the other two distributors, Private and S.C. IKO, provided several dozen titles each.

Our prices are comparable to those of traditional video rental stores and are half the price of a cinema ticket. Film premieres will be available to our customers for 9 zloty and new releases for 6 zloty.

Video on demand is just the first of many value-added services to be implemented as part of our global digital TV project. Other services, such as interactive television, time-shift TV, T-commerce etc. will soon be part of our offering.

The presentation from our press conference regarding the roll out of VoD which took place on 27 September 2007 is available in  Prezentacje (Polish only)

Amendment to significant Agreement – Decision of the President of the UKE regarding flat interconnection rates for Multimedia Polska S.A.
Current report no 51/2007 dated 24 August 2007

With reference to current report no 23/2007 dated 20 March 2007, the Management Board of Multimedia Polska S.A. announces that on 24 August 2007 Multimedia Polska S.A. (“the Company”, “Multimedia”) received a decision by the President of the Office of Electronic Communications no DRTH-WWM-60600-34/07(21) amending the Agreement on Network Interconnection dated 8 August 2006 concluded by and between Telekomunikacja Polska S.A. (“TP S.A.”) and Multimedia (“the Decision”).

The Decision amends the Agreement in such a manner that it introduces the flat-rate model for interconnection charging, which will allow Multimedia Polska to reduce the cost of carrying domestic voice traffic over TP S.A.’s networks. The terms and conditions set out in the Decision are similar to those set out in several other decisions previously issued by the President of the Office of Electronic Communications for other operators.

Legal basis:
Regulation of the Minister of Finance on current and periodical information provided by issuers of securities, § 5.1.3.

Decision of the President of the UKE regarding LLU (local loop unbundling by TP S.A.)
Current report no 48/2007 dated 2 August 2007

The Management Board of Multimedia Polska S.A. announces that on 2 August 2007 Multimedia Polska S.A. (“the Company”, “Multimedia”) received a decision by the President of the Office of Electronic Communications no DRTH-WWM-60600-16/07(23) replacing the Agreement on Local Loop Unbundling and related amenities for full or shared access to local loops (“LLU”) concluded by and between Telekomunikacja Polska S.A. (“TP S.A.”) and Multimedia (“the Decision”).

The Decision sets forth the terms and conditions of cooperation between Multimedia and TP S.A. in respect of access by Multimedia to local loops of Telekomunikacja Polska S.A. The terms and conditions set out in the Decision are similar to those set out in other decisions previously issued by the President of the Office of Electronic Communications for other operators.

The Decision enables Multimedia to use TP S.A.’s access infrastructure to provide its own telecommunications services. The Decision will allow the Company to address new markets with a full Triple Play package (video, voice and data) without having to build its own access networks.

Multimedia Polska S.A. intends to take full advantage of the Decision by starting service sales once all necessary arrangements, required for the proper implementation of the Decision, are made with TP S.A. The Company believes that the size of product sales based on LLU may prove significant for the Company’s future financial results.

Legal basis:
Art. 56.1.1 of the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies (Journal of Laws of 23 September 2005).

Amendment to significant Agreement – Decision of the President of the UKE re. WLR for Multimedia Polska S.A.
Current report no 46/2007 dated 18 July 2007

With reference to current report no 23/2007 dated 20 March 2007, the Management Board of Multimedia Polska S.A. announces that on 17 July 2007 Multimedia Polska S.A. (“the Company”, “Multimedia”) received a decision by the President of the Office of Electronic Communications no DRTH-WWM-60600-4/07(29) amending the Agreement on Network Interconnection dated 8 August 2006 concluded by and between Telekomunikacja Polska S.A. (“TP S.A.”) and Multimedia (“the Decision”).

The Decision sets forth the terms and conditions of cooperation between Multimedia and TP S.A. in respect of wholesale access by Multimedia to the telecom network of Telekomunikacja Polska S.A. The terms and conditions set out in the Decision are similar to those set out in other decisions previously issued by the President of the Office of Electronic Communications for other operators.

The Decision enables Multimedia to provide line rental services (WLR) to TP S.A.’s subscribers. The Company has already been able to offer basic telephone services to TP S.A.’s subscribers using carrier pre-selection (NDS) on the basis of the agreement dated 8 August 2006; this Decision enables the Company to sell a full range of voice services to TP S.A.’s subscribers (NDS + WLR).

Multimedia Polska S.A. intends to launch the sale of NDS + WLR once necessary arrangements, required for the proper implementation of the Decision, are made with TP S.A. The Company believes that the size of NDS + WLR sales may prove significant for the Company’s future budget plans.

Legal basis:
Regulation of the Minister of Finance on current and periodical information provided by issuers of securities, § 5.1.3.

Realisation of the purposes of public offering – acquisition of telecommunications networks
Current report no 45/2007 dated 18 July 2007

The Management Board of Multimedia Polska S.A. announces that yesterday Multimedia Polska S.A. acquired 15 cable television networks located in Sochaczew, Rawa Mazowiecka, Łowicz, Głowno, Pajęczyn, Zduńska Wola, Poddębice, Chojnów, Wołów, Barcin, Piechcin, Łabiszyn, Lubostroń, Chełmża and Chełmno from a natural person.

The cable networks acquired in the transaction pass by approximately 43,800 homes and serve 23,400 cable television subscribers and 5,600 Internet subscribers. 5,300 subscribers take up the two services jointly.

The networks have been acquired by Multimedia Polska S.A. for a total consideration of PLN 40,869,887.76 (PLN 33,499,908 net plus 22% VAT) (the “Sale Price”).

The Sale Price will be adjusted by the parties on or before 1 August 2007 by reference to the exact number of subscribers using telecommunications services provided by the networks. The ownership of the networks will be transferred to Multimedia Polska S.A. on the same day, 1 August 2007.

If upon final settlement of the transaction the actual number of subscribers varies by over 5 percent against the number provided in the seller’s original statement, the parties will agree on a new sale price calculated as a product of the verified number of subscribers and the sum of PLN 1,431.62.

The Sale Price will be payable by Multimedia Polska in five instalments against VAT invoices issued by the seller; the first and second instalments equivalent to 30% and 50% of PLN 40,869,887.76, respectively, will be payable within 3 days from the signing of the Agreement and upon the parties signing Network handover protocols, while the remaining three instalments will be paid by MMP upon verification of the Sale Price and will be equivalent to 10%, 5% and 5% of the New Sale Price, respectively.

The transaction was wholly financed from the issue proceeds generated last year; it is an accomplishment of one of the purposes of the Company’s public offering and an important element of its strategy set forth in the prospectus.

Legal basis:
Art. 56.1.1 of the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies (Journal of Laws of 23 September 2005) – inside information.

Wednesday, 13 June 2007:

Multimedia Polska introduces WiMAX

We are pleased to announce the introduction of WiMAX technology into our networks. Thanks to WiMAX we will be able to provide wireless voice services and wireless broadband internet to our subscribers.

We have entered into a contract with a leading American WiMAX and Wi-Fi infrastructure provider, Airspan Networks, Inc. The value of the contract is PLN 8 million and our total capital expenditure relating to the introduction of WiMAX is expected to amount to some PLN 12 million. Investments will be carried out in 2007 and 2008.

In compliance with the decision of the Office of Electronic Communications, we must free the 2.4GHz radio frequency we have been using so far. We are planning to upgrade our wireless systems in 16 locations currently serving some 9,000 subscribers. Our new equipment will operate in 3.5 and 5.9GHz frequencies. ‘Our subscribers who have been using the old wireless systems will now enjoy a much more advanced high-quality solution,’ says President Andrzej Rogowski. ‘We will be able to offer our customers not only the telephone service that has been available to them so far, but also our broadband internet service,’ adds Mr. Rogowski.

With the new technology in place, we will start offering wireless voice and broadband internet services in entirely new locations as well. WiMAX will allow us to cover tens of thousands of homes in Central and Eastern Poland which had been outside of the old systems’ coverage before. ‘We are certainly expecting to gain new subscribers,’ says Mr. Rogowski, ‘and we are hoping that a lot of new customers will be willing to take up our double play package, consisting of both internet and telephone. The package brings the Company higher revenues and greater customer loyalty, but is also very beneficial to customers, who pay less for each service if purchased as a bundle,’ concludes President Rogowski.

Thursday, 10 May 2007:

Multimedia Polska launches digital television over cable

This week we have commercially launched digital television over our cable networks.

The service is currently available in three cities - Gdynia (62,000 HP), Gorzów Wielkopolski (42,000 HP) and Lublin (32,000 HP). We will soon be offering the service in Kalisz, Łodź Olsztyn, Rzeszow, Toruń, Szczecin, Ełk, Zamość, Chełm and Wrocław as well. We are planning to make DTV available to more than half of our subscriber base by the end of the year.

The launch of digital television is a realisation of one of the purposes of our public offering as defined in the prospectus prepared in connection with the first listing of our shares on the primary market which took place last year.

We have contracted obligations of PLN 20 million connected with the project. They are related to an upgrade of our networks for digital video services and the purchase of the first batch of digital set-top boxes installed at the customer’s premises – necessary to receive the digital signal.

The remaining financial obligations connected with the project will be related to the purchase of more STBs and will be contracted in line with customer growth.

The presentation from our press conference which took place on 10 May 2007
is available in  Presentations 

Significant agreement
Current report no 23/2007 dated 20 March 2007

The Management Board of Multimedia Polska S.A. announces that on 20 March 2007 Multimedia Polska – Południe S.A. (“Multimedia”), a 100% subsidiary of the Issuer, received a signed copy of the Agreement on Network Interconnection (the “Agreement”) from Telekomunikacja Polska S.A. (TPSA). The Agreement was concluded as of 28 February 2007 and comes into effect on 1 July 2007.

The Agreement sets forth the terms and conditions of cooperation between the Parties in respect of the interconnection of Multimedia’s public switched telephone network and TPSA’s public switched telephone network in order to provide telecommunications services; it also sets forth the technical details and conditions of the interconnection and maintenance of the interconnection point as well as details of charges and tariffs.

The Agreement was concluded for an indefinite term. The total estimated value of services that Multimedia will be obliged to provide under the Agreement is PLN 30 million.

Other terms and conditions of the agreement are comparable to those of transactions concluded at arm’s length.

After entering into the Agreement, the estimated value of services provided by the entities of the Multimedia Polska Group under agreements concluded with Telekomunikacja Polska S.A. in the last 12 months exceeded the 10% Issuer’s equity threshold – the criterion defining a significant agreement – and amounts to PLN 60 million.

The agreement concluded by and between Multimedia Polska – Południe S.A. and TPSA on 28 February 2007, as discussed above, is of the highest value.

Legal basis:
Regulation of the Minister of Finance on current and periodical information
provided by issuers of securities, § 5.1.3.

Friday, 2 March 2007:

The first week of March: in a meeting with the Polish media, President Andrzej Rogowski announced the Company’s financial results for the fourth quarter of 2006. We have yet another reason to be satisfied and proud – the Company has posted record financials for 2006 and the fourth quarter was the best quarter in our history. Our revenues reached PLN 377 million with EBITDA just under PLN 183 million and net profit of PLN 68.6 million*.

‘You ask me and the journalists ask me how it is possible that prices for broadband Internet and voice services are falling and we still manage to post significant revenue growth. Well, the answer is that it’s possible because half of our revenues come from cable television and the other half from Internet and voice services. It is the target revenue structure for other operators in the market while we are only improving the proportions. That’s our enormous competitive advantage,’ says Mr. Rogowski.

We attract more and more customers. The number of services we provide is constantly on the rise. At the end of last year, Multimedia’s customers were taking up 807,000 services in total, up 13 percent from 2005. Our efforts have been and will continue to be focused on incentivising our customers to use two or three services. This strategy results in higher customer loyalty and better relationship between the customers and their operator. Our churn rate—the rate of effective disconnections—has gone down. That is good news.

We announced the acquisition of 100% shares in Automatic Service at the end of February. Automatic Service operates in Kujawy and Wielkopolska regions. Thanks to the acquisition, we have welcomed 30,000 new customers, which means that we have crossed the 600,000 customer threshold!

All Polish media and Internet news portals have noticed our robust financial results. President Andrzej Rogowski has been invited to a number of television programmes. News items about our Company were broadcast by TVN 24 and TV Biznes.

* Based on our audited consolidated financial statements, the Group's net profit was PLN 98.6m.

Acquisition of significant value assets
Current report no 14/2007 dated 20 February 2007

The Management Board of Multimedia Polska S.A. announces that on 19 February 2007 Multimedia Polska S.A. (the "Acquirer" or "MMP") entered into a share purchase agreement with Mr Miroslaw Knocinski (the "Seller") to acquire 7,424 shares of Automatic Serwis Sp. z o.o. with registered office in Brodnica (the "Company") (the "Agreement") registered with the register of entrepreneurs kept by the District Court of Torun VII Economic Department of the National Court Register, entry no. 0000086484 (the "Shares").

The Shares acquired by Multimedia Polska S.A. with a nominal value of PLN 500 each and an aggregate nominal value of PLN 3,712,000.00 are equal and indivisible shares constituting 100% of the share capital of Automatic Serwis Sp. z o.o. The Shares were acquired for the total consideration of PLN 56,452,085.49.

The amount quoted above is the equivalent of the Price of Shares (PLN 52,000,000) plus (i) the net of cash in hand and at bank held by Automatic Serwis Sp. z o.o. and its liabilities, and (ii) the equivalent of an additional liability of PLN 2,400,000 potentially payable by the Company under tax liabilities in case of an unfavourable judgement of tax authorities against the Company (the "Additional Liabilities").

The transactions was financed with the Issuer's existing cash.

The transaction did not require a permit from the Office of Competition and Consumer Protection (OCCP) – based on the decision issued by the President of OCCP no RBG 2/2007 on 8.02.2007 regarding discontinuance of antimonopoly proceedings with respect to concentration of operations in connection with the acquisition of control over Automatic Serwis Sp. z o.o. with registered office in Brodnica by Multimedia Polska S.A. with registered office in Gdynia.

The acquisition of Automatic Serwis Sp. z o.o. is a realisation of one of the purposes of the public offering and an important element of the Company's strategy set forth in the prospectus, which include active participation in the consolidation of cable television operators through mergers and acquisitions.

The cable networks acquired in the transaction with Automatic Serwis Sp. z o.o. cover approximately 40,000 homes passed, 31,000 cable television subscribers and 7,300 internet subscribers.

The networks have been largely upgraded to provide internet services and will not require any significant capital expenditure. As the acquired networks are in the proximity of the Company's locations, their integration with the networks of Multimedia Polska S.A. may be completed in under a year.

There are no existing links between the Seller and MMP and directors or supervisors of MMP.

The financial assets purchased in the transaction were deemed significant value assets as their value exceeds 10% of MMP's equity and the shares acquired constitute over 20% of the shares of Automatic Serwis Sp. z o.o.

On 29 December 2006, the Management Board of Multimedia Polska S.A. filed a report to the Polish Financial Supervision Authority regarding negotiations of the Agreement being in progress, together with a motion to postpone announcing this confidential information to the public.

Legal basis:
Regulation of the Minister of Finance on current and periodical information provided by issuers of securities § 5.1.1.