Cyfrowy BRE Bank Securities BRE Bank Securities 12 September 2008

PolskaPoland CPSM.WA; CPS.PW (New)

Market Still Set for Growth KapitalizacjaMarket cap PLN 3.85bn Free float PLN 1.22bn ŚredniAverage dzienny daily trading obrót (3(3M) mies.) PLN 3.47m Polaris Finance B.V. 68.18% Others 31.82% FY2007 was record year as far as the growth in the number of satellite TV subscribers is concerned: between them, the three providers added around 1.2m new customers. Although this feat cannot be repeated in the near future, satellite platforms should continue growing at a stable rate for a few more years (relatively faster over the next two). We believe that pay TV It will take a few years for the pay-TV market to mature operators will add ca. 2m new subscribers in our forecast horizon, of which and for its customer base to stabilize. The estimated the lion's share will go to digital platforms. number of new subscribers to be acquired is 2m, of which the lion’s share should go to digital satellite plat- forms. should be the main beneficiary of the expected growth of the market. We are estimating that at the end of the forecast horizon, it will have ca. 3.15m subscribers. In addition to the growth in the number of subscribers, we are expecting a significant improvement to its EBITA margin. On the one hand, it will increase due to the increase in the number Cyfrowy Polsat is the market leader in terms of the number of subscribers, with ca. 2.3m of them at the of subscribers. On the other hand, as the rate at which new subscribers are end of Q2'08. In addition to pay TV provision, CP has added decreases, the negative impact of set-top box subsidies will diminish. recently launched an MVNO business. In our view, ARPU growth will be driven by the customers' migration from the “mini” channel package to the “family” packages, with new channels added to the individual packages.

13 November 2008 - Q3 2008 report In the near future, the pay TV market will be affected by factors that could lead to a significant increase in competitive pressure. TPSA and TVP are both preparing to launch their own platforms, and DTTV might be launched

at the end of next year as well. Digital platforms may also be hurt by the growth of IPTV, and their customer base may shrink as the Polish expat society evolves. We think, however, these factors will not be felt before the 16 end of 2009, by which time the current players will have by and large PLN divided the market between themselves. We think that this will greatly help 14.6 Cyfrowy Polsat stave off potential competitors.

13.2

11.8 Revenue 493.8 796.7 1109.9 1267.5 1360.7 EBITDA 74.3 165.9 335.5 448.7 503.1 10.4 EBITDA margin 15.0% 20.8% 30.2% 35.4% 37.0% Cyfrowy Polsat WIG EBIT 41.7 145.1 314.2 427.0 480.8 9 profit 55.7 113.4 247.2 342.6 392.0 08-05-06 08-06-06 08-07-06 08-08-06 08-09-06 DPS 0.0 0.0 0.5 0.6 0.7

z P/E 69.0 33.9 15.6 11.2 9.8 (48 22) 697 47 17 P/CE 43.6 28.7 14.3 10.6 9.3 [email protected] P/BV -61.4 62.9 20.8 10.8 7.0 EV/EBITDA 53.5 23.6 11.4 8.3 7.1 www.dibre.com.pl

12BRE September Bank Securities 2008 does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report. BRE Bank Securities Cyfrowy Polsat

Business Profile

Pay-TV Market in

Market Players The Company’s core business is pay-TV. Currently, almost all its revenue comes from this source, the reminder being due to real-estate management. There are three groups of companies in the Polish pay TV market: digital (satellite) platforms, cable networks and IPTV providers. All in all, these companies provide television to 7.5-8.2m households (depending on the source, with the discrepancies mostly in the headcount of cable users). Since the number of households in official statistics published by the Central Statistical Office (GUS) is 14.1m, of which 99% own a TV set, according to AGB Nielsen’s estimate, pay-TV penetration can be estimated at 54-59%.

Number of pay-TV users by distribution segment

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 cable TV digital platforms IPTV

2006 2007 H1 2008

Source: Cyfrowy Polsat, PIKE

Digital Platforms Poland currently has three digital (satellite) platforms. The clear market leader is Cyfrowy Polsat, which received its license from the National Council (KRRiTV) in 2003. At the end of H1’08, it had 2.29m subscribers. The runner-up is Cyfra Plus, which launched operations in 1997 and which currently has some 1.1m subscribers. The youngest and the smallest competitor is ‘’, operator by ITI Neovision, which is co-owned by ITI (75%) and TVN (25%). ‘n’ has been present in the Polish market since October 2006. At the end of H1’08, it had 326,000 subscribers. Together, the digital platforms serve 3.6m households, which entails penetration of 25.9%. Last year was particularly good, as the three providers added a total of 1.2m subscribers, of which the lion’s share went to Cyfrowy Polsat (800,000), followed by ‘n’ (250,000) and Cyfra+ (150,000).

Market Strategy Each of the three digital platforms operates in a slightly different segment of the market. Cyfra+ focuses on the premium segment, and its target share are high-ARPU, wealthy customers. As this group is rather limited, Cyfra+ has the smallest potential to increase its subscriber base; instead, its strategy is focused on increasing the ARPU. ‘n’ focuses on the “medium” segment. Its customers generate an ARPU of PLN 56 and the Company is planning to boost it by adding new channels to the offer. ‘n’ was the first Polish pay-TV operator to introduce value-added services such as VOD. The target group of Cyfrowy Polsat are the less wealthy viewers. At PLN 35 (in 2008), the ARPU is much lower. This is an effect of purposeful strategy. CP offers its subscribers two basic channel packages: family and mini . The mini package is a “social” package: at PLN 9.90 a month, users get access to 20 Polish channels and all the foreign FTA channels. The family packages are more expensive. In contrast to the mini package, it is possible to supplement them with thematic packages. The Company’s goal is to use the mini package to expand the subscriber base and to make users attached to the brand. The Company is not expecting the ARPU generated on this product to increase – users who get wealthier are expected to move onto the family package, which comes with options allowing the number of accessible channels to be increased, and which is aimed to boost the ARPU in the medium term.

12 September 2008 2 BRE Bank Securities Cyfrowy Polsat

Digital satellite platform subscribers (millions)

2.5

2

1.5

1

0.5

0 2006 2007 H1 2008

Cyfrowy Polsat Cyfra+ n'

Source: Cyfrowy Polsat:

Cable TV operators The Polish pay-TV market is very fragmented, with 630 operators according to KRRiTV’s data. The number of cable subscribers varies by source, from 3.8m according to GUS to 4.5m according to the Polish Chamber of Electronic Communications (PIKE), which entails penetration rates of 27.3% and 32.4%, respectively. In the ensuing parts of this report, we will be using the PIKE data. Despite the high number of providers, there are four clear leaders: UPC, with 1m subscribers at the end of Q1’08, followed by Vectra (660k), Mutlimedia (640k) and Aster (370k), according to PIKE. No other provider has more than 150k customers. Over the recent years, the segment has stagnated, with the number of subscribers growing at the meager pace of 1.8% a year since 2002. It is likely that the sector will enter a period of consolidation in the near future, as the smaller providers will not be able to afford the CAPEX necessary to improve the quality of their services and to make them state-of-the-art.

IPTV IPTV (Internet Protocol TV) is the youngest pay-TV distribution channel. In Poland, it is being introduced by Telekomunikacja Polska (TPSA). Currently, the service is available in 42 cities, with 54k subscribers at the end of Q2’08 (vs. 40k at year-end 2007). TPSA cooperates with Cyfra+, offering a basic package with 36 Polish and foreign channels and the option to add Cyfra+ packages. and ITI Neovision also announced that they would jointly provide an IPTV service, but no sales results have been disclosed as yet. Their partnership is similar to that between TPSA and Cyfra+: Netia distributes content from the ‘n’ platform over its network. IPTV is still not very widespread in Poland, but it is quickly gaining popularity worldwide. At the end of Q1’08, there were 15.4m IPTV subscribers worldwide, i.e. over twice as many as a year earlier. Most IPTV subscribers can be found in Europe (8.4m), followed by Asia and the Pacific (2.6m) and North America (2.3m).

Financial Condition

Q2’08 Financial Results In Q2'08, Cyfrowy Polsat’s earnings were very strong, with revenue increasing from PLN 173.1m to PLN 277.3m, i.e. by 60.2%. Sales growth was driven by new subscriber additions, which boosted revenue from subscription fees from PLN 158.1m to PLN 236.2m. Reversing the trends observed in the previous quarters, revenue from equipment sales and leasing increased as well. This was due to the fact that SD set-top boxes were being exchanged for HD set-top boxes in greater numbers. Rental rates and prices for the latter are higher. In turn, other net operating income was boosted by the ca. PLN 6m received from on account of the exchange of access cards and set-top boxes due to a change in access codes.

12 September 2008 3 BRE Bank Securities Cyfrowy Polsat

Q2’08 and H1’08 earnings Q2’08 Q2’07 change H1 2008F H1 2007 change revenues 277.3 173.1 60.2% 526.0 354.7 48.3% EBITDA 103.9 59.3 75.3% 192.6 107.7 78.9% EBIT 99.4 54.9 81.2% 182.9 98.7 85.4% net income 79.8 47.6 67.6% 143.9 79.7 80.5% EBITDA margin 37.5% 34.2% 9.5% 36.6% 30.4% 20.6% EBIT margin 35.9% 31.7% 13.1% 34.8% 27.8% 25.0% net margin 28.8% 27.5% 4.6% 27.3% 22.5% 21.7% Source: Cyfrowy Polsat:

Operating expenses increased by 50.4%, which was chiefly driven by distribution and marketing expenses (increase from PLN 24.3m to PLN 45.2m), content licensing costs (increase from PLN 35.6m to PLN 46.1m) and the cost of set-top boxes sold (increase from PLN 20.1m to PLN 31.6m). We expect that these costs will continue to grow fast in the future as well, impacting the earnings more than other expense categories. We would also like to point out that the gap between set top-box revenues and costs is decreasing. This is driven by two factors: on the one hand, with the market slowing down, the number of set-top boxes that require subsidies decreases; on the other, costs have decreased after in-house manufacturing was launched, as evidenced by the fact that the gap between revenues and costs is decreasing both on a per-set basis as well. As a result of these changes, the Company's operating profit increased year-on-year from PLN 54.9m to PLN 99.4m, which translated into an improvement in net income from PLN 47.6m to PLN 79.8m. In addition to the strong earnings, Q2 saw fast expansion of the subscriber base. During this period, Cyfrowy Polsat added over 100.4k users, which was better than the 92.2k acquisitions in the second quarter of 2007 (a year that was extremely successful for the sector). Of the newly-acquired subscribers, over 70k chose the family packages, with the remaining 30k opting for the mini package. As a result, the Company strengthened its position as the leader of the market in terms of subscribers.

Growth Prospects

Market Growth Potential

Big Upside Potential for New Subscribers… Pay-TV penetration in Poland is at a European average. The 59% penetration rate places Poland in the middle of the European league table. The Benelux countries, which are in the lead, have ca. 97% penetration. It is also high in Switzerland, Denmark and Norway. However, penetration is much lower in countries such as Italy, France and the UK. The penetration rate varies widely because it is affected by factors such as the size of the country, its geography, the number of FTA channels in the given language as well as the society’s entertainment preferences. Most likely, Poland is heading towards the model seen in Germany and Romania. It will therefore reach maturity within several years, at ca. 70% penetration. Taking into account a small increase in the number of households, this entails ca. 10m subscribers, i.e. 2m more than currently. We believe that most of this growth will come in the next 2-3 years, after which the market will stabilize.

12 September 2008 4 BRE Bank Securities Cyfrowy Polsat

Pay-TV penetration among households at year-end 2006

Greece 8

Turkey 11

Italy 20

Russia 21

Spain 27

Czech Republic 30

France 43

UK 45

Poland 59

Hungary 61

Germany 68

Romania 70

Israel 75

Norway 85

Denmark 85

Switzerland 90

Belgium 95

Netherlands 98

0 10 20 30 40 50 60 70 80 90 100

Source: Cyfrowy Polsat:

… But Not So Big for the ARPU We believe the ARPU will not grow that fast. At present, digital TV in Poland is expensive relative to other European countries. According to the Globalization Institute, in Poland a pay- TV user earning the average salary must work for 6.1 hours to cover the subscription fee. This is among Europe’s highest ratios; only Romania is more expensive in this respect. In the case of Denmark and Norway, 2-2.5 hrs are enough, which is surely one of the reasons why the penetration rate of pay-TV is so high there. The situation is similar when the earnings of people on minimum wages are considered. In Poland, they need to work some 15.8 hours to pay for their subscription. This is less than in Cyprus and in Spain, but much more than in the Netherlands, Belgium or France. ARPU growth hinges on consumer spending, which is a function of disposable income, i.e. to a large extent, of salaries. At present, salaries in Poland are growing very fast, at over 11% y/y on average. In the future, however, they can be expected to slow down, approaching the GDP growth rate. In the light of the report prepared by the Globalization Institute, ARPU growth should not outpace salary growth, so that in the long term Poland approaches the European standards, decreasing the ratio of wages to subscription prices.

12 September 2008 5 BRE Bank Securities Cyfrowy Polsat

Number of working hours required of an average-salary earner to pay subscription fee

TV Vlaanderen - Belgium 2.0

CanalSat - France 5.0

Boom TV - Romania 12.0

Sky Italia - Italy 4.2

Canal Digital - Norway 2.5

Canal Digital - Denmark 1.9

Poland 6.1

FreeSat - UK 0.0

Sky Digital - UK 2.3

0 2 4 6 8 10 12 14

Source: Globalization Institute, BRE Bank Securities

Number of working hours required of a minimum-salary earner to pay subscription fee

TV Vlaanderen - Belgium 2.5

CanalSat - France 6.1

Canal Digitaal Satelliet - Netherlands 5.3

Athina Sat - Cyprus 16.5

Digital+ - Spain 18.0

Poland 15.8

FreeSat - UK 0.0

Sky Digital - UK 8.4

0 2 4 6 8 10 12 14 16 18 20

Source: Globalization Institute, BRE Bank Securities

Cyfrowy Polsat in a Privileged Position Although the high cost of pay-TV may dampen ARPU growth in the future, we believe in the case of digital platforms it should still outpace the inflation rate. The providers will achieve this by adding new channels to the packages, as well as through value-added services, whether related to television (e.g. VOD or PVR) or not (e.g. MVNO). We also believe that the ARPU upside potential is greater for Cyfrowy Polsat than in the case of other platforms. We expect that subscribers to the mini package will stay loyal to Cyfrowy Polsat, upgrading to the family package and thereby boosting the Company's ARPU. In our model we estimate that Cyfrowy Polsat's ARPU will be increasing at 3.2% a year on average in the forecast period, with the caveat that for the mini package, ARPU growth will be equal to average inflation.

12 September 2008 6 BRE Bank Securities Cyfrowy Polsat

Subscription prices at various digital providers (EUR) mini package medium package premium package Sky Digital - UK 21.22 27.46 58.66 Digital+ - Spain 20.95 26.95 55.95 Satelliet - Netherlands 9.95 14.95 29.95 CanalSat - France 20.90 34.90 57.90 TV Vlaanderen – Belgium 9.90 13.90 19.90 Canal Digital - Denmark 13.28 30.73 45.49 Canal Digital - Norway 11.07 30.34 54.59

Sky Italia - Italy 15.00 39.00 63.00 Source: BRE Bank Securities

Cyfrowy Polsat average revenue pre user

60.0

50.0

40.0

30.0

20.0

10.0

0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ARPU Cyfrowy Polsat ARPU family package ARPU mini package

Source: Cyfrowy Polsat, estimates by BRE Bank securities

Competitive Strengths and Weaknesses

Digital Platforms vs. Cable Providers We believe that digital satellite platforms will be the key beneficiaries of the likely growth in the number of subscribers. This is because infrastructural limitations are the key obstacle faced by their main competitors. Cable TV networks need extensive networks to provide their services, which come with significant construction costs, in practice limiting their reach to the bigger towns (over 50,000 inhabitants), and within them to areas with high population densities (e.g. high-rise housing estates). In big cities, however, pay-TV penetration is much higher than the national average, which severely limits their growth potential. For this reason, new customer acquisitions should be expected mostly in rural areas and in small towns, where cable networks are virtually non-existent. Another advantage that satellite providers have is the digitization process. Cable TV providers have long delayed investment in digital broadcasting. As a result, only the biggest cable networks have been able to implement digital technology so far. This has two serious consequences: first, analog transmission comes with a much smaller bandwidth, which means that their channel offer is much more limited, and when one is added to the line-up, another has to be dropped; second, without digital transmission, cable providers will not be able to offer HD channels, which are quickly gaining in popularity and which might be the future of television. One instrument that cable providers have at their disposal to contain churn is selling internet access, telephony and television in a bundle. Bundles come with significant discounts and make it difficult to drop just one service in favor of a competitor's offer. Digital platforms are attempting to counteract this, striking alliances with telecoms, but this does not seem to be enough to outweigh advantages stemming from bundled services.

12 September 2008 7 BRE Bank Securities Cyfrowy Polsat

Digital Platforms vs. IPTV As is the case with cable providers, IPTV also faces technical limitations. It requires a stable, high-bandwidth connection, which limits its reach to the biggest cities, where there are enough concentrators to keep data transfer at the required level. As time progresses, technological progress will be making IPTV more widely available. On the other hand, its growth will be affected by the increasing popularity of HD channels, which require even higher bandwidths than SD channels. IPTV providers may also face problems related to content provision. In Poland, IPTV is provided by telecoms that do not have the relationships with the biggest film studios which are necessary to successfully negotiate content purchases. For this reason, IPTV providers often specialize in niche content, cooperating with traditional pay-TV providers in order to be able to show the hits. This is illustrated by the alliances of TPSA and Cyfra+ and Netia with ITI Neovision. The one advantage IPTV certainly has is how interactive it is. Services which are bread and butter for IPTV will slowly be introduced by satellite providers, and it will take long before they become available in cable networks. The services in question are, among others, VOD and PVR. However, in contrast to digital platforms, they will be provided from a remote server rather than locally, which means that subscribers will not be required to buy special equipment to use them.

Market Opportunities and Threats

Growing Subscriber Base As we have said, we believe digital platforms will lead market growth in terms of subscriber additions. Among them, Cyfrowy Polsat will be the main beneficiary. Its offer has the broadest reach in the society, targeting the relatively less wealthy population. Among the wealthier segments, pay-TV penetration is already very high. This is why the expansion of Cyfra+ requires social advancement, which hinges on salary growth. This is also true of 'n', but to a lesser extent. As it has not been present in the market for long, it still needs to mature, and its target population is somewhat less wealthy than that of Cyfra+, which entails lower pay-TV penetration. For this reason, 'n' should grow much faster than Cyfra+, but still not as fast as Cyfrowy Polsat. Moreover, Cyfrowy Polsat focuses on rural areas and small towns, from which cable and IPTV providers are practically absent, leaving the other two digital platforms as the only competitors. In our forecasts, we assume that Cyfrowy Polsat will reach 2.58m subscribers at year-end 2008 and 3.15m at the end of the forecast horizon.

Pay-TV subscribers in Poland, 2006-2018

12

10.09 10.19 9.79 9.89 9.99 10 9.50 9.60 9.70 9.14 9.32 8.70 7.94 8 6.65

6

4

2

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Cyfrowy Polsat, estimates by BRE Bank securities

12 September 2008 8 BRE Bank Securities Cyfrowy Polsat

Cyfrowy Polsat subscribers, 2006-2018

3.5 3.14 3.05 3.08 3.11 2.96 2.99 3.02 2.87 2.93 3.0 2.78 2.58 2.5 2.07 2.0

1.5 1.27

1.0

0.5

0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Cyfrowy Polsat, estimates by BRE Bank securities

MVNO On September 8, 2008 Cyfrowy Polsat launched a post-paid MVNO service, following the launch of a pre-paid service at the start of August. The MVNO service should help boost set- top box sales, and also build customer loyalty just as cable providers’ triple-play services do. The offer is chiefly targeted at families, offering them numerous attractive discounts. The target population is therefore no different than that of Cyfrowy Polsat’s pay-TV service. Another perk is the chance to earn attractive discounts for the TV subscription in return for charging an appropriate amount to the account. The Management of Cyfrowy Polsat believe that to break even, an MVNO needs to reach 1m subscribers. We believe this is a very steep target that will take years to achieve. Cyfrowy Polsat does reach 2.3m households, which entails some 7.5m subscribers, but most of them are bound to be use the mobile services of other subscribers, mostly the traditional ones. According to GUS, MVNOs have some 180k subscribers, which shows how tough this market is. To be sure, Cyfrowy Polsat will have an additional weapon in the fight for mobile customers – slightly higher mobile termination rates compared to Plus, Era and Orange – but this difference is not big enough to bring about a revolution in the Polish mobile market. We believe the chief functions of the MVNO service is supporting set-top box sales and increasing customer loyalty; from this point of view, it should be considered a good move on the Management's part. We are not expecting it to break even on standalone basis within the next 4-5 years, and for the upcoming year we are forecasting an EBITDA loss of PLN 40m.

New Platforms in the Market At present, TPSA and Telewizja Polska (TVP) are thinking of launching their own digital platforms. TPSA’s will be launched by the end of 2008, complementing the company’s offer which has hitherto been based on IPTV. Just as is the case with the latter service, TPSA chose to cooperate with Cyfra+ on this new project. Its offer includes all the channel packages Cyfra+ offers to its customers. We can therefore assume that the new digital platform will be positioned in the same way as Cyfra+, i.e. much above Cyfrowy Polsat's target group. It is not quite clear to us why Cyfra+ chose to cooperate with TPSA, as the joint offer may cannibalize its subscriber base. We believe that this cooperation may be a step towards ownership changes, with Cyfra+ taken over either by TPSA or by its French owner. The project has been postponed several times. Each time that happens again, a successful entry into the market will become more difficult. We believe TVP is less of a threat, first and foremost because the decision to launch a digital platform has not been taken yet. According to the TVP management, the business plan for the project was supposed to be considered in the fall of 2008, with the launch coming in ca. 9 months after its approval. This means that TVP’s platform will not come prior to the fall of 2009, i.e. when the pay-TV market will be entering its last phase of rapid growth, after which it will reach maturity. Given the delays observed so far, we believe the project may be postponed again, which will additionally hurt its profitability and feasibility. Financing is another question mark. Significant outlays on the technical infrastructure as well as promotion and marketing will be required. If these funds were to come from the mandatory TV license fee, political complications are bound to arise, while competitors are certain to vociferously object. What makes it more likely is the fact that both satellite and cable providers are legally required to broadcast TVP’s channels. That being the case, TVP will find it very

12 September 2008 9 BRE Bank Securities Cyfrowy Polsat

hard to justify why it should launch a platform of its own for public money. We also believe that the argument that this would speed up the digitization process misses the point. When the other platforms are growing fast, the growth of digital broadcasting via satellite seems assured, and there seems to be no need for the public broadcaster to enter this market.

IPTV Growth We consider IPTV to be a much bigger threat to digital satellite platforms, including Cyfrowy Polsat. At present, this distribution channel is severely hindered by the poor infrastructure which puts a limit on its geographical reach. In contrast to cable networks, we are expecting that these barriers will gradually disappear as signal compression technology improves, making it possible to decrease capacity requirements. In addition, the number of concentrators will grow all around Poland, including outside the major urban areas. Nonetheless, these technological improvements will come in 3-4 years, and only at that point will IPTV providers be able to successfully contend for digital TV subscribers, as well as, to a larger extent, cable subscribers.

Digital The biggest threat to satellite, cable and IPTV providers will come from digital terrestrial television (DTT). The KRRiTV as well as the Office of Electronic Communication (UKE) are both working on this project. At present, broadcasters are filing applications to be included in the first multiplex. In the first stage, two or three multiplexes will be launched (if three are launched, the third one will have very limited geographical coverage). Later on, when the main broadcasters the analog frequencies, new multiplexes will be launched. Poland's final deadline to switch off analog transmitters is July 2015; this is when further multiplexes should be launched. After DTT is launched, Poles will gain free access to the basic package of television channels, which should encompass TVP1, TVP2, TVP3, Polsat, TVN, TV4, Puls and several other Polish-language channels. The only requirement will be the purchase of an appropriate set-top box, whose price will most likely be in the PLN 300-400 range. Given the current advancement of the work on this project, we are not expecting it to be launched before H2’09. The free DTT offer will certainly constitute additional competition to pay-TV providers, and in particular to Cyfrowy Polsat, because it can be seen as a “social” package, i.e. the less wealthy the customers of the given platform are, the more likely will they be to defect. The biggest threat is to the mini package, whose offer includes few channels that will not find their way to the first multiplexes. How strong this competitive pressure gets, however, will depend on the cost of DTT set-top boxes. Digital platforms subsidize set-top boxes; in all likelihood, DTT equipment will be more expensive. A difference of PLN 200-250 might be a significant one-off charge for many household, enticing them to chose a small monthly satellite subscription fee instead. State subsidies for set-top boxes would help spread DTT, but it will be hard to find the required amounts in the budget; moreover, pay-TV providers are certain to object, demanding that the subsidies either be withdrawn, or that similar subsidies be granted for the purchase of their equipment.

Expats, or the Gray Zone Another potential threat are social changes taking place among the expats. Under the law, digital platform operators may only provide their services within Poland. In other words, it is forbidden to take the reception equipment abroad. In practice, however, this is hard to monitor and many expats watch Polish channels abroad, after illegally bringing set-top boxes with them. Frequently, both the expat worker and his family back in Poland own one. This is a risk factor - if migration trends reverse, repatriates will be giving their subscriptions up, thereby slowing the market down, especially in the long-term, as in the short term they will be bound by their contracts. Another risk is the reverse situation, i.e. people who have emigrated with their families. As their ties with the homeland disappear, they might be less inclined to retain access to Polish- language channels. It is hard to estimate what the impact of the expats will be on the platforms' subscriber base. Polish embassies in the UK and Ireland estimate that there may be over 1m Poles in those two countries (800k and 250k, respectively). Many of them are family members who have joined the original migrants: spouses, children, parents etc. The number of Poles working in the UK is estimated at 300k and this is the estimated number of Polish households (we believe illegal employees and multiple employees per household cancel each other out). If Ireland and other EU countries are added, we can estimate the number of Polish expat households at 450-500k. We have no estimates as to how many of them are digital platform subscribers, not how many of them have Cyfrowy Polsat set-top boxes. In all likelihood, the threat discussed here does not apply to more than 20% of Cyfrowy Polsat subscribers, i.e. 90-100k.

12 September 2008 10 BRE Bank Securities Cyfrowy Polsat

Valuation

Summary of Cyfrowy Polsat valuation price per PLN m in 9 months share weight DCF valuation 4045.9 4379.7 16.3 50% relative valuation 4248.4 4598.9 17.1 50%

average 4 489.3 16.7

Model Assumptions

1. Our valuation is based in the forecast of Cyfrowy Polsat earnings in 2008-2017. 2. In the forecast horizon, the risk free rate is 6.0% (yield on 10Y T-bonds). 3. Afterwards, the risk-free rate will be 5.8%. 4. We assume that the Company will be paying out 50% of its annual earnings as dividends to shareholders. 5. FCF growth rate after the forecast horizon is 2.0%.

Relative valuation We are basing our relative valuation on EV/EBITDA and P/E ratios of the Polish and foreign pay-TV providers. As the competitive pressure in the Polish market increases, we do not apply a premium on account of its immaturity vis-à-vis competition.

P/E and EV/EBITDA for Polish and foreign pay-TV providers EV/EBITDA P/E Price 2008 2009 2010 2008 2009 2010 Comcast Corp 7.0 6.4 6.0 23.6 19.2 15.8 B SKY B 9.6 8.2 7.1 17.1 13.7 10.7 CVS Caremark Corp 8.4 7.4 6.6 15.2 13.0 11.3 Multimedia Polska SA 6.3 5.7 5.1 15.9 13.5 12.9 9.1 8.2 7.6 21.4 18.4 16.0 Premiere AG 46.7 15.7 10.4 - - 20.6 Canal Plus 8.6 8.3 8.1 20.8 20.2 19.1 INC 3.2 2.8 2.5 15.2 11.7 - INC 6.7 6.3 5.9 57.2 33.9 17.5 Maximum 46.7 15.7 10.4 57.2 20.2 20.6 Minimum 3.2 2.8 2.5 15.2 11.7 10.7 Median 8.4 7.4 6.6 19.0 13.7 15.8 Cyfrowy Polsat 14.3 11.4 8.3 7.1 15.6 11.2 9.8 premium / discount 35.6% 11.2% 7.0% -17.9% -18.1% -37.9%

Relative valuation summary Multiple-implied price PLN m weight EV/EBITDA 3354.9 50% P/E 5141.9 50% Implied price 4248.4

12 September 2008 11 BRE Bank Securities Cyfrowy Polsat

DCF Valuation Model (PLN m) 2008F 2009F 2010F 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2017+ Revenue 1109.9 1267.5 1 360.7 1 429.1 1 489.7 1549.2 1610.8 1674.9 1741.6 1810.9 change 39.3% 14.2% 7.4% 5.0% 4.2% 4.0% 4.0% 4.0% 4.0% 4.0% EBITDA 335.5 448.7 503.1 523.2 538.0 543.3 547.5 550.6 554.3 556.8 EBITDA margin 30.2% 35.4% 37.0% 36.6% 36.1% 35.1% 34.0% 32.9% 31.8% 30.7% Amortization and depreciation 21.3 21.8 22.3 23.0 23.7 24.4 24.9 25.5 26.2 26.6 EBIT 314.2 427.0 480.8 500.2 514.3 518.9 522.5 525.0 528.1 530.2 EBIT margin 28.3% 33.7% 35.3% 35.0% 34.5% 33.5% 32.4% 31.3% 30.3% 29.3% Tax rate on EBIT 59.7 81.1 91.4 95.0 97.7 98.6 99.3 99.8 100.3 100.7 NOPLAT 254.5 345.8 389.4 405.2 416.6 420.3 423.3 425.3 427.8 429.5

CAPEX -49.9 -50.7 -50.3 -48.6 -46.2 -43.4 -38.7 -40.2 -41.8 -26.6 Working capital -17.6 -17.1 -9.5 -17.1 -11.5 -3.4 17.0 9.6 10.7 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

FCF 208.2 299.9 351.9 362.5 382.6 397.9 426.5 420.3 422.9 429.5 438.1 WACC 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 10.8% discount factor 97.0% 87.4% 78.7% 70.9% 63.9% 57.6% 51.9% 46.7% 42.1% 37.9% 34.2% PV FCF 202.0 262.1 277.0 257.1 244.5 229.1 221.2 196.4 178.0 162.9

WACC 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 10.8% Cost of debt 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 6.8% Risk-free rate 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 5.8% Risk premium 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% Effective tax rate 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% Net debt / EV 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Cost of equity 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 10.8% Risk premium 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Beta 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

FCF growth after the forecast horizon 2.0% Sensitivity analysis Terminal value 4 978.1 FCF growth in perpetuity Present value of the terminal value (PV TV) 1 887.7 0.0% 1.0% 2.0% 3.0% 4.0% Present value of FCF in the forecast horizon 2 230.1 WACC +1.0pp 13.6 14.1 14.6 15.4 16.3 Equity value 4 117.8 WACC +0.5pp 14.2 14.8 15.4 16.3 17.3 Net debt 71.8 WACC 14.9 15.5 16.3 17.3 18.6 Other non-operating assets 0.0 WACC -0.5pp 15.7 16.4 17.3 18.5 20.0 Minority interests 0.0 WACC 01.0pp 15.8 16.6 17.7 19.1 20.9 Equity value 4 045.9 Number of shares (millions) 268.3 Equity value per share (PLN) 15.1 Cost of equity (9M) 8.3% Target Price 16.3

EV/EBITDA('08) for the target price 12.4 P/E('08) for the target price 18.0 TV to EV 46%

12 September 2008 12 BRE Bank Securities Cyfrowy Polsat

Income Statement (PLN m) 2006 2007 2008F 2009F 2010F 2011F 2012F Revenue 493.8 796.7 1 109.9 1 267.5 1 360.7 1 429.1 1 489.7 change 75.1% 61.3% 39.3% 14.2% 7.4% 5.0% 4.2% Subscription revenue 351.1 662.5 973.3 1 196.9 1 311.6 1 386.1 1 450.0 Other revenues 142.7 134.1 136.6 70.7 49.1 43.0 39.7

COGS 452.1 651.5 795.7 840.6 879.9 928.9 975.4 Amortization and depreciation 32.5 20.8 21.3 21.8 22.3 23.0 23.7 Content licensing costs 68.6 152.0 227.9 280.1 311.8 336.4 358.9 Signal transmission costs 36.1 48.4 57.8 72.9 76.9 80.0 82.8 Distribution and marketing 66.0 125.9 197.0 238.3 264.4 284.3 302.4 Payroll 19.9 41.7 66.8 84.5 90.9 97.9 105.4 Cost of set-top boxes sold 179.7 209.0 153.3 62.3 27.6 17.4 8.9 Cost of electronic equipment sold 9.2 0.0 0.0 0.0 0.0 0.0 0.0 Other operating expenses 40.0 53.7 71.6 80.7 86.1 90.0 93.4

EBIT 41.7 145.1 314.2 427.0 480.8 500.2 514.3 change 1710.7% 247.8% 116.5% 35.9% 12.6% 4.0% 2.8% EBIT margin 8.5% 18.2% 28.3% 33.7% 35.3% 35.0% 34.5%

Profit on financing activity 29.1 -5.0 -9.1 -4.0 3.1 11.2 19.8 Extraordinary gains/losses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Pre-tax income 70.8 140.2 305.1 423.0 483.9 511.4 534.1 Tax -15.1 -26.8 -58.0 -80.4 -91.9 -97.2 -101.5 Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income 55.7 113.4 247.2 342.6 392.0 414.2 432.6 change -260.6% 103.6% 117.9% 38.6% 14.4% 5.7% 4.4% margin 11.3% 14.2% 22.3% 27.0% 28.8% 29.0% 29.0%

Amortization and depreciation 32.5 20.8 21.3 21.8 22.3 23.0 23.7 EBITDA 74.3 165.9 335.5 448.7 503.1 523.2 538.0 change 41.7% 123.4% 102.2% 33.8% 12.1% 4.0% 2.8% EBITDA margin 15.0% 20.8% 30.2% 35.4% 37.0% 36.6% 36.1%

Shares at year-end (millions) 268.3 268.3 268.3 268.3 268.3 268.3 268.3 EPS 0.2 0.4 0.9 1.3 1.5 1.5 1.6 CEPS 0.3 0.5 1.0 1.4 1.5 1.6 1.7

ROAE -61.6% -15349.4% 201.1% 126.7% 86.3% 63.2% 49.9% ROAA 18.7% 23.9% 36.6% 40.7% 38.2% 33.9% 30.4%

12 September 2008 13 BRE Bank Securities Cyfrowy Polsat

Balance Sheet (PLN m) 2006 2007 2008F 2009F 2010F 2011F 2012F ASSETS 353.4 595.2 755.3 928.4 1 123.3 1 319.8 1 525.0 Fixed assets 103.0 163.4 191.4 220.4 248.4 274.0 296.5 Reception sets 8.0 0.5 0.0 0.0 0.0 0.0 0.0 Other PP&E 45.7 97.3 120.2 143.4 165.8 186.3 204.2 Equity value 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Intangible assets 4.4 11.5 17.2 23.0 28.6 33.7 38.2 Investment property 28.5 18.9 18.9 18.9 18.9 18.9 18.9 Other long-term assets 12.9 31.0 31.0 31.0 31.0 31.0 31.0 Deferred income tax assets 3.5 4.1 4.1 4.1 4.1 4.1 4.1

Current assets 250.3 431.8 563.9 708.1 874.9 1 045.9 1 228.5 Inventories 58.0 130.0 150.1 149.3 144.2 139.5 133.2 Short-term investments 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Trade receivables 43.3 79.1 113.3 132.8 146.3 157.6 164.3 Current tax receivables 0.0 3.0 3.0 3.0 3.0 3.0 3.0 Other current assets 37.8 69.0 69.0 69.0 69.0 69.0 69.0 Cash 109.8 150.7 228.6 353.9 512.3 676.7 859.1 Fixed assets for sale 1.4 0.0 0.0 0.0 0.0 0.0 0.0

(PLN m) 2006 2007F 2008F 2009F 2010F 2011F 2012F LIABILITIES 353.4 595.2 755.3 928.4 1 123.3 1 319.8 1 525.0 Equity -62.6 61.1 184.7 356.0 552.0 759.1 975.4 Share capital 10.5 10.7 10.7 10.7 10.7 10.7 10.7 Reserves 0.0 13.7 13.7 13.7 13.7 13.7 13.7 Retained earnings -73.2 36.7 160.3 331.6 527.6 734.7 951.0 Minority interests 0.1 0.0 0.0 0.0 0.0 0.0 0.0

Long-term liabilities 30.7 134.9 135.0 135.1 135.1 135.2 135.2 Loans 29.2 132.2 132.2 132.2 132.2 132.2 132.2 Deferred tax liabilities 0.0 0.7 0.7 0.7 0.7 0.7 0.7 Other payables and provisions 1.5 2.0 2.2 2.2 2.2 2.3 2.3

Short-term liabilities 385.3 399.1 435.6 437.3 436.2 425.6 414.3 Trade creditors 97.6 208.7 222.2 218.6 212.0 205.9 197.6 Loans 208.1 88.7 88.7 88.7 88.7 88.7 88.7 Set-top box deposits 21.6 20.0 17.0 14.0 11.0 8.0 0.0 Other 58.0 81.7 107.6 115.9 124.4 122.9 128.1

Debt 238.2 222.6 222.6 222.6 222.6 222.6 222.6 Net debt 128.4 71.8 -6.0 -131.4 -289.8 -454.2 -636.5 (Net debt / Equity) -205.0% 117.5% -3.3% -36.9% -52.5% -59.8% -65.3% (Net debt / EBITDA) 1.7 0.4 0.0 -0.3 -0.6 -0.9 -1.2

BVPS -0.2 0.2 0.7 1.3 2.1 2.8 3.6

12 September 2008 14 BRE Bank Securities Cyfrowy Polsat

Cash Flows (PLN m) 2006 2007 2008F 2009F 2010F 2011F 2012F Cash flows from operating activities 81.0 110.9 242.3 343.4 407.8 431.3 464.7 Net income 55.7 113.4 247.2 342.6 392.0 414.2 432.6 Interest 14.0 13.2 -9.1 -4.0 3.1 11.2 19.8 Amortization and depreciation 32.5 20.8 21.3 21.8 22.3 23.0 23.7 Working capital -8.5 -35.8 -17.6 -17.1 -9.5 -17.1 -11.5 Other -12.7 -0.7 0.5 0.0 0.0 0.0 0.0

Cash flows from investing activities -38.8 -54.4 -49.9 -50.7 -50.3 -48.6 -46.2 CAPEX -27.7 -55.0 -49.9 -50.7 -50.3 -48.6 -46.2 Capital investments -11.1 0.6 0.0 0.0 0.0 0.0 0.0 Other (non-cash) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cash flows from financing activities 3.1 -15.7 -114.5 -167.3 -199.1 -218.3 -236.2 Debt 16.7 -1.4 0.0 0.0 0.0 0.0 0.0 Stock offering 0.0 0.2 0.0 0.0 0.0 0.0 0.0 Dividends/share buy-back 0.0 0.0 -123.6 -171.3 -196.0 -207.1 -216.3 Financial leasing -0.2 -0.2 0.0 0.0 0.0 0.0 0.0 Interest -13.2 -11.7 9.1 4.0 -3.1 -11.2 -19.8 Other -0.2 -2.6 0.0 0.0 0.0 0.0 0.0

Change in cash 45.4 40.9 77.9 125.3 158.4 164.4 182.4 Cash at the end of period 109.8 150.7 228.6 353.9 512.3 676.7 859.1

DPS (PLN) 0.0 0.0 0.5 0.6 0.7 0.8 0.8 FCF 29.2 47.5 208.2 299.9 351.9 362.5 382.6 (CAPEX / Sales) 3.5% 5.0% 3.9% 4.0% 3.7% 3.4% 3.1%

Market multiples 2006 2007 2008F 2009F 2010F 2011F 2012F P/E 69.0 33.9 15.6 11.2 9.8 9.3 8.9 P/CE 43.6 28.7 14.3 10.6 9.3 8.8 8.4 P/BV -61.4 62.9 20.8 10.8 7.0 5.1 3.9 P/S 7.8 4.8 3.5 3.0 2.8 2.7 2.6

FCF/EV 0.7% 1.2% 5.4% 8.1% 9.9% 10.7% 11.9% EV/EBITDA 53.5 23.6 11.4 8.3 7.1 6.5 6.0 EV/EBIT 95.2 27.0 12.2 8.7 7.4 6.8 6.2 EV/S 8.0 4.9 3.5 2.9 2.6 2.4 2.2

DYield 0.0% 0.0% 3.2% 4.5% 5.1% 5.4% 5.6%

Price (PLN) Shares at year-end (millions) 268.3 268.3 268.3 268.3 268.3 268.3 268.3 MC (PLN m) 3845.1 3845.1 3845.1 3845.1 3845.1 3845.1 3845.1 Equity attributable to minority shareholders (PLN m) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 EV (PLN m) 3 973.5 3 916.9 3 839.1 3 713.7 3 555.3 3 390.9 3 208.6

12 September 2008 15 BRE Bank Securities Cyfrowy Polsat

Michał Marczak tel. (+48 22) 697 47 38 Managing Director Head of Research [email protected] Strategy, telco, mining, metals, media

Research Department: Sales and Trading :

Marta Je żewska tel. (+48 22) 697 47 37 Piotr Dudzi ński tel. (+48 22) 697 48 22 Deputy Director Director [email protected] [email protected] Banks Marzena Łempicka-Wilim tel. (+48 22) 697 48 95 Deputy Director Analysts: [email protected]

Kamil Kliszcz tel. (+48 22) 697 47 06 Traders: [email protected]

Fuels, chemicals, retail Emil Onyszczuk tel. (+48 22) 697 49 63

[email protected] Piotr Grzybowski tel. (+48 22) 697 47 17

[email protected] Grzegorz St ępien tel. (+48 22) 697 48 62 Other [email protected]

Maciej Stokłosa tel. (+48 22) 697 47 41 Tomasz Dud ź tel. (+48 22) 697 49 68 [email protected] [email protected] Construction

Michał Jakubowski tel. (+48 22) 697 47 44 Michał Piasny tel. (+48 22) 697 47 40 [email protected] [email protected]

Real Estate Developers Tomasz Jakubiec tel. (+48 22) 697 48 48 [email protected]

Grzegorz Strublewski tel. (+48 22) 697 48 76 [email protected]

"Private Broker"

Jacek Szczepa ński tel. (+48 22) 697 48 26 Director [email protected]

Paweł Szczepanik tel. (+48 22) 697 49 47 Sales [email protected]

Dom Inwestycyjny BRE Banku S.A. ul. Wspólna 47/49 00-950 Warszawa www.dibre .com.pl

12 September 2008 16 BRE Bank Securities Cyfrowy Polsat

List of abbreviations and ratios contained in the report: EV – net debt + market value EBIT – Earnings Before Interest and Taxes EBITDA – EBIT + Depreciation and Amortisation P/CE – price to earnings with amortisation MC/S – market capitalisation to sales EBIT/EV – operating profit to economic value P/E – (Price/Earnings) – price divided by annual net profit per share

ROE – (Return on Equity) – annual net profit divided by average equity P/BV – (Price/Book Value) – price divided by book value per share Net debt – credits + debt papers + interest bearing loans – cash and cash equivalents EBITDA margin – EBITDA/Sales

Recommendations of BRE Bank Securities A recommendation is valid for a period of 6-9 months, unless a subsequent recommendation is issued within this period. Expected returns from individual recommendations are as follows: BUY – we expect that the rate of return from an investment will be at least 15%

ACCUMULATE – we expect that the rate of return from an investment will range from 5% to 15% HOLD – we expect that the rate of return from an investment will range from –5% to +5% REDUCE – we expect that the rate of return from an investment will range from -5% to -15% SELL – we expect that an investment will bear a loss greater than 15% Recommendations are updated at least once every nine months.

This document has been created and published by BRE Bank Securities S.A. The present report expresses the knowledge as well as opinions of the authors on day the report was prepared. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. The present report was prepared with due care and attention, observing principles of methodological correctness and objectivity, on the basis of sources available to the public, which BRE Bank Securities S.A. considers reliable, including information published by issuers, shares of which are subject to recommendations. However, BRE Bank Securities S.A., in no case, guarantees the accuracy and completeness of the report, in particular should sources on the basis of which the report was prepared prove to be inaccurate, incomplete or not fully consistent with the facts. BRE Bank Securities S.A. bears no responsibility for investment decisions taken on the basis of the present report or for any damages incurred as a result of investment decisions taken on the basis of the present report.

This document does not constitute an offer or invitation to subscribe for or purchase any financial instruments and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. It is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This document nor any copy hereof is not to be distributed directly or indirectly in the United States, Australia, Canada or Japan.

Recommendations are based on essential data from the entire history of a company being the subject of a recommendation, with particular emphasis on the period since the previous recommendation. Investing in shares is connected with a number of risks including, but not limited to, the macroeconomic situation of the country, changes in legal regulations as well a s changes on commodity markets. Full elimination of these risks is virtually impossible.

It is possible that BRE Bank Securities S.A. renders, will render or in the past has rendered services for companies and other entities mentioned in the present report.

The present report was transferred to the issuer prior to its publication for facts verification only. Following the issuer’s comments changes have been made in the content of the report, not affecting valuation.

BRE Bank Securities S.A., its shareholders and employees may hold long or short positions in the issuer's shares or other financial instruments related to the issuer's shares. BRE Bank Securities S.A., its affiliates and/or clients may conduct or may have conducted transactions for their own account or for account of another with respect to the financial instruments mentioned in this report or related investments before the recipient has received this report.

Copying or publishing the present report, in full or in part, or disseminating in any way information contained in the present report requires the prior written agreement of BRE Bank Securities S.A.

Recommendations are addressed to all Clients of BRE Bank Securities S.A. This report is not for distribution to third parties. The activity of BRE Bank Securities S.A. is subject to the supervision of the Polish Financial Supervision Commission.

Individuals who did not participate in the preparation of this recommendation, but had or could have had access to the recommendation prior to its publication, are employees of BRE Bank Securities S.A. authorised to access the premises in which recommendations are prepared, other than the analysts mentioned as the authors of the present recommendation.

Strong and weak points of valuation methods used in recommendations: DCF – acknowledged as the most methodologically correct method of valuation; it is based in discounting financial flows generated by a company; its weak point is the significant susceptibility to a change of forecast assumptions in the model. Comparative – based on a comparison of valuation multipliers of companies from a given sector; simple in construction, reflects the current state of the market; weak points include substantial variability (fluctuations together with market indices) as well as difficulty in the selection of the group of comparable companies.

BRE Bank Securities did not issue any recommendations for Cyfrowy Polsat in the last 9 months.

12 September 2008 17