TP S.A. Reports Unconsolidated PAS Results

WARSAW, Poland, A (PROTEXT) - Telekomunikacja Polska S.A. (LSE: TPSAq.L and WSE: TPSAs.WA), Central Europe's largest telephone company, reported strong financial and operational results for the second quarter of 1999. Highlights -- Second quarter net revenues rose to approximately PLN 3.0 billion, from PLN 2.8 billion in the first quarter. -- Operating profit increased from PLN 857.0 million in the first quarter to PLN 862.6 million in the second quarter. -- Net profit increased 405 percent to PLN 452.7 million, compared to PLN 89.6 million in the first quarter. Commenting on the results, Pawel Rzepka, President of the Management Board of TP S.A., said: "We are taking the necessary steps to effect a rapid transformation into a leading edge integral telecommunications provider. During the past quarter we continued to focus on expanding our service offering, increasing productivity and reducing costs. We maintain our strong commitment to the Polish market and our shareholders and will continue to create value for them." TP S.A.'s revenues for the second quarter of 1999 increased to PLN 3.0 billion, compared to PLN 2.8 billion in the first quarter of 1999. Accumulated revenues for the first half of the year rose 20.8 percent to PLN 5.8 billion, compared with PLN 4.8 billion in the first half of 1998. (Data referring to the second quarter of 1998 is not available, as the Company was not required to report results prior to the first phase of the privatisation.) Operating profit for the second quarter reached PLN 862.6 million and gross profit for the period increased approximately 332.8 percent to PLN 680.0 million, as compared to PLN 157.2 million in the first quarter. TP S.A.'s net profit rose approximately 405 percent over the first quarter of 1999, from PLN 89.6 million to PLN 452.7 million. Gross profit and net profit levels achieved were substantially impacted by foreign exchange rate fluctuations, which were favourable to the Company in the second quarter of 1999. Donald Chodak, Chief Financial Officer and Member of the Management Board of TP S.A., said: "We are pleased with our financial and operational results for the quarter. We see continued growth in revenues, which combined with the current Polish economic environment, augurs well for the coming quarters." On May 20, Telekomunikacja Polska S.A. signed a seven-year loan facility for PLN 466 million, granted by the consortium of banks represented by Citibank Poland S.A.. The facility replaced the short-term loan of the same amount, which improved the debt structure of the Company. Another relevant achievement in the reported period was the conclusion of an agreement with Credit Suisse First Boston (Europe) Limited encompassing two transactions. The first will eliminate the financial consequences of hedging a foreign currency loan of US$100 million against exchange rate and interest rate risks, whereas the second will hedge a currency exposure of US$300 million of the bond issue-related financial obligations. Operations At the beginning of May, Telekomunikacja Polska S.A. concluded an agreement with Prokom Software S.A., under which Prokom will provide information technology services to TP S.A.. The agreement covers issues related to the Year 2000 Problem and the adjustment of TP S.A.'s digital IT platform. The platform will enable TP S.A. to modernise its financial and accounting procedures in order to meet the organisational needs of the Company. The total value of the transaction is estimated at PLN 126 million (EURO 30.4 million). The Company also signed an agreement of unlimited duration with EUTELSAT (European Satellite Communication Organisation) for the leasing of satellite equipment to be used by the Polish Television Network, one of TPSA's major customers. The total value of the agreement is EURO 2.4 million. Towards the end of the quarter, TP S.A. introduced changes in local tariffs, which were effective July 1, 1999. The changes relate to an increase in the rates corresponding to the local automatic traffic and to payphones, which increased from PLN 0,26 (including VAT) to PLN 0,29 (including VAT) per each three-minute call during day-time. Additionally, a 50 percent reduction was inducted to night-time local call rates. Telekomunikacja Polska S.A. will announce Half Year 1999 IAS Results on August 31, 1999. The announcement will be followed by a conference call for investors and analysts. Details of the call will be communicated closer to the date. Note: Telekomunikacja Polska S.A. (TP S.A.) is the leading provider of telecommunications services in Poland. TP S.A.'s vision is to maintain its position as the principal operator in Poland by becoming a market-orientated provider of services which actively competes to attract and retain its customers. TP S.A. provides a wide variety of products and services, including fixed, mobile and radio communications, Internet access, data transmission, telecom equipment and magnetic cards. TP S.A.'s growth strategy is based on the rapid expansion of the access network and a gradual re-balancing of its tariffs. As part of the modernization process it is leading in Poland's telecommunications sector, TP S.A. plans to convert all urban switches to a digital system by the year 2000. After concluding the first stage of the privatisation in the fourth quarter of 1998, TP S.A. is focusing on the second stage, which involves the incorporation of a strategic partner, expected to take place before the end of 1999. The strategic partner will provide the expertise and technological advancement to strengthen TP S.A.'s leadership in the Polish market. CONTACT: Victoria Kemanian, +44-171-417-9185, or Ranjana Panikar,

+44-171-417-4185, both of Grandfield-McBride; or Can Onen

of Anne McBride Company, +1-212-983-1702; or Zenon Komar,

+48-22-828-7384, or Richard Moskalewicz, +48-22-661- 7426,

both of TP S.A.

Telekomunikacja Polska S.A.

Statements of Income

(In thousands of PLN)

2Q99

Half Year 1999

Half Year 1998 I. Net revenues

3,017,144 5,779,972 4,784,188

1. Net revenue from

sales of products 3,002,264 5,750,439 ,752,791

2. Net revenue from

sales of goods

and materials

14,880

29,533

31,397 II. Costs of products,

goods and

materials sold

1,613,211 3,103,000 ,783,146

1. Cost of finished

products sold

1,600,252 3,077,619 ,757,930

2. Value of goods and

materials sold

12,959

25,381

25,216 III. Gross profit/(loss)

on sales (I-II)

1,403,933 2,676,972 ,001,042 IV. Selling expenses

174,069

342,636

178,053 V. General and

administration

expenses

291,940

519,244

388,204 VI. Profit/(Loss)

on sales (III-IV-V)

937,924 1,815,092 1,434,785 VII. Other operating

revenues

22,135

59,420

88,044 VIII. Other operating

expenses

97,464

154,867

278,676 IX. Profit/(loss) on

operating activities

(VI+VII-VIII)

862,595 1,719,645 1,244,153 X. Income from shares

in other entities

12,431

14,052

12,322 XI. Income from other

financial fixed assets

--

--

-- XII. Other financial income 7,963

399,380

81,598 XIII. Financial expenses

207,146 1,298,904

466,667 XIV. Profit/(Loss) on

economic activities

(IX+X+XI+XII-XIII)

675,843

834,173

871,406 XV. Result on extraordinary

events (XV.1. - XV.2.) 4,171

3,002

-2,929

1. Extraordinary gains

8,197

8,515

9,888

2. Extraordinary losses

4,026

5,513

12,817 XVI. Gross profit/(loss)

680,014

837,175

868,477 XVII. Corporate income tax 227,341

294,891

359,885 XVIII. Other obligatory charges (i.e. Increase of losses)

--

--

66,689 XIX. Net profit/(loss)

452,673

542,284

441,903 Net profit/(loss)

452,673 Weighted average number of ordinary shares 1,400,000,000 Profit/(loss) per ordinary share (PLN)

0.32

Telekomunikacja Polska S.A.

Balance Sheets

(In thousands of PLN)

As of

As of

As of

March 31, 1999 June 30, 1999 June 30, 1998 A s s e t s I. Fixed assets

16,999,702

17,742,105 14,670,604

1. Intangible assets

115,063

116,456

78,163

2. Tangible fixed

assets

16,223,645

16,917,893 14,139,922

3. Financial tangible

assets

660,023

706,538

452,393

4. Long-term receivables

971

1,218

126 II. Current assets

4,833,671

4,478,056

2,552,511

1. Stock

144,532

142,809

169,054

2. Short-term

receivables

2,128,696

2,217,095

2,037,137

3. Disposable own

shares (stock)

--

--

--

4. Tradeable securities

5,414

--

--

5. Cash

2,555,029

2,118,152

346,320 III. Deferred Charges

122,195

92,584

75,788

1. Deferred income tax asset --

--

--

2. Other deferred charges 122,195

92,584

75,788 T o t a l a s s e t s 21,955,568

22,312,745 17,298,903 L i a b i l i t i e s I. Equity capital

9,427,935

9,549,108

8,747,394

1. Share capital

4,200,000

4,200,000

500,000

2. Unpaid share capital

(negative value)

--

--

--

3. Reserve capital

2,045,759

2,717,853

5,739,282

4. Revaluation reserve 1,976,756

1,973,559

1,971,213

5. Other reserve capital 94,996

115,412

94,996

6. Realised foreign

exchange gain/loss

on consolidation

--

--

--

7. Undistributed

profit/uncovered

losses from

previous years

1,020,813

--

--

8. Net profit/(loss)

89,611

542,284

441,903 IV. Reserves

812,170

900,021

878,989

1. Deferred income

tax liability

332,349

363,973

473,459

2. Other reserves

479,821

536,048

405,530 V. Liabilities

11,384,551

11,505,162

7,332,006

1. Long-term

liabilities

7,404,727

7,751,968

3,972,684

2. Short-term

liabilities

3,979,824

3,753,194

3,359,322 VI. Accruals and

deferred income

330,912

358,454

340,514 T o t a l l i a b i l i t i e s 21,955,568

22,312,745 17,298,903 ots Original Text Service: Telekomunikacja Polska S.A. Internet: http://www.newsaktuell.de Contact: Victoria Kemanian, +44-171- 417-9185, or Ranjana Panikar, +44-171-417-4185, both of Grandfield-McBride; or Can Onen of Anne McBride Company, +1-212- 983-1702; or Zenon Komar, +48-22-828-7384, or Richard Moskalewicz, +48-22-661-7426, both of TP S.A.

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