Cyfrowy Polsat Group sums up Q1 2020 – providing aid in the fight against the coronavirus, launch of the commercial 5G network and acquisition of Interia Group

In spite of the declared state of epidemics in Poland, Cyfrowy Polsat Group started 2020 very well by effectively adjusting the operations of its companies to the situation caused by the epidemics and also by being involved in helping Polish healthcare institutions and Polish citizens. As regards its strategic  investments, Cyfrowy Polsat Group signed a preliminary agreement for acquisition of Interia Group and also launched the first in Poland commercial 5G network. These projects were possible thanks favorable terms of refinancing of the Group’s debt, ending the multi-stage process of debt restructuring which was carried out with a view to continue the Group’s development. It was also a very good quarter from the point of view of financial results – the Group generated revenue in the amount of PLN 2.85 bn, EBITDA exceeded PLN 1 bn, while net profit reached PLN 184 million.

Support for health care institutions and for Poles in the fight against the coronavirus

Polsat Group, who is responsible for assuring everyday communications and entertainment to millions of Poles, has faced a new challenge during the epidemics, i.e. providing reliable means and tools for mass-scale remote work, education or for managing businesses. Thanks to its efficiently operating network infrastructure as well as employment of state-of-the-art technologies when constructing the network, the Group was ready for increased traffic levels as well as for the new way of life and work of its customers. The Group has efficiently undertaken numerous activities to minimize the risk for its customers and employees, as well as to guarantee business continuity so as to assure full functionality and quality of its network and services for the customers.

“As the state of epidemics was declared, we immediately made numerous decisions which are essential for our employees, customers and the entire society. While caring for the health of our employees, in a very short time we have switched to the new, remote methods of work and we are implementing the planned projects without any delay. We proposed free bonus offers, in the form of access to additional TV channels or data bundles, to all customers. As a Polish company which is in good condition, since the start of the epidemics we have been actively involved in the fight against the coronavirus,” says Mirosław Błaszczyk, the President of the Management Boards of Cyfrowy Polsat and Polkomtel, the operator of Plus network.

“Jointly with our main shareholder, Zygmunt Solorz, for over 16 million zloty we purchased and donated to the Ministry of Health, and to the Polish people, 200 thousand coronavirus tests, along with the necessary laboratory equipment. Together with the Polsat Foundation and the participants of our special TV commercial block we allocated many millions of zloty to helping the healthcare institutions and we also donated 2200 tablets, for remote learning purposes, to the children living in orphanages and foster families,” – adds Mirosław Błaszczyk.

Polsat Group proposed numerous additions to the offer for its customers, be it in the area of TV – by introducing a “wide-open” window offering access to 33 channels, or in the area of telecommunication services – by providing additional data bundles or access to 30 TV channels in a special IPLA web TV package for Plus customers. Polsat News channel and Polsatnew.pl web portal play a special informational and educational role now.

 “And there were many more projects. I am glad about everything that we have been able to achieve in such a short time, thanks to the enormous contribution by our Group’s employees – the people who are involved, full of ideas and determined to do good. I am proud that in such difficult times we are also able to offer help to other people,” sums up Mirosław Błaszczyk.

Interia Group acquisition – a strategic investment

Two weeks ago Telewizja Polsat signed a preliminary agreement for acquisition of Interia Group. It is a strategic decision from the point of view of Polsat Group’s development, contributing to Polsat Group taking an important position in the Internet.

“Interia Group is a leading player in the Internet. We see enormous opportunities and synergies that the investment creates for us. We are counting on the dynamic development of Interia and we plan to double its EBITDA in the mid-term,” says Maciej Stec, the Vice-President of the Management Board of Cyfrowy Polsat and Polkomtel, while justifying the move.

Interia Group is among the three leading groups in the media-and-technology industry. Interia.pl web portal is one of the biggest horizontal portals, offering access to an e-mail service and news, theme vortals as well as to mobile applications and tools which generate revenues from many diverse sources. For Polsat Group the investment means substantial strengthening of its position on the dynamically-growing on-line advertising market, as well as an additional channel for distribution and monetization of the content which is now produced for the needs of the TV channels. Ultimately Interia will also be the main area of marketing activities of numerous Polsat Group brands in the Internet. Polsat Media, in turn, will support sale of Interia’s advertising space. Transaction finalization is contingent on obtaining the approval from the President of the Office of Consumer and Competition Protection (UOKiK).

“For a reasonable price we are buying a well-managed business, with a competent team and strong position on the Internet market. It perfectly fits with Polsat TV’s strategy. We want to deliver attractive content via all possible distribution channels Our offer for the advertisers will be enriched with the very effective web advertising formats which have very extensive reach. It also means a very important, for us, strengthening of our position on the dynamically-growing online advertising market and at the same time it is a perfect channel for communicating with our existing and future customers,” adds Stanisław Janowski, the President of the Management Board of Telewizja Polsat.

First in Poland commercial 5G network

The launch of the first in Poland 5G network, using the spectrum in 2.6 GHz TDD frequency band, is yet another important event which has been long-awaited by all. A network of 100 transceivers has for several days been operating in 7 Polish cities - Warsaw, Gdansk, Katowice, Lodz, Poznan, Szczecina and Wroclaw. The next stage of Plus 5G network development in Poland will be to provide coverage for the entire Warsaw urban area and the towns and places around it, with over 600 additional 5G stations being added. The offer already includes smartphones and routers which support 5G technology in the 2.6 GHz band, while further equipment from leading global manufacturers will be successively added to the sales offer in May and June. The 2.6 GHz TDD network is the first step en route to Plus’s nationwide 5G network coverage in Poland.

5G in Plus means even higher data speeds – of up to 600 Mbps, better connection stability, lower latency and much bigger network capacity. It will be possible to transmit much bigger data volumes much faster and without interference.  5G is a new quality of the Internet and freedom. It is the possibility of full and unconstrained wireless use of everything that the Internet offers, at any place where we are.

“It is a very important moment for our Group and for our customers. Being the technology leader of the Polish media and telecommunications markets, we have launched the first in Poland commercial 5G network and thanks to this our country has joined the leading nations in the European and global technology race. We are becoming the 5G technology leader and we want to be the leader in the future,” says Mirosław Błaszczyk, the CEO of Cyfrowy Polsat and Polkomtel, the operator of Plus network.

Plus was the first to start the roll-out a commercial 5G network while using the spectrum from the 2.6 GHz frequency band which offers balance between data transfer speed (up to 600 Mbps) and coverage (i.e. wide availability), while keeping both parameters at a very high quality levels. In the future, as the 5G network develops, current use of the2.6 GHz band will guarantee better land mass coverage than when using the 3.4-3.8 GHz bands only, and it will enable the operator to maintain the edge during further stages of 5G network roll out by offering the possibility of aggregation of 5G frequency bands.

Success of the smartDOM program – 2 million customers using multiplay services

Major operating figures[1] for Q1 2020:

• The level of multiplay offer customers reached 2 million in January 2020 – effective implementation of the upselling strategy:

• Stable growth of multiplay service customers – up by 157 thousand (8%) YoY, to the level of 2 million, or 36% of our contract customer base.
• The number of services (RGU’s) used by this group of customers increased to 6.12 million.
• Churn ratio fell to a very low level of 6.6% annually.

• Strong growth of the number of contract services – up by 466 thousand YoY, reaching 14.80 million in total (contract services account for 84.9% of all services that are provided):

• Another period of growth of mobile telephony services – up by 564 thousand YoY, to 8 million as a result of effective upselling strategy aimed at individual customers as well as introduction of attractive tariffs addressed to contract customers and also high demand for m2m services among business clients.
• The total number of pay TV (DTH) services was 5 million.
• High and stable base of Internet access service users of 1.8 million. In Q1 2020 Cyfrowy Polsat and Plus residential customers transferred ca. 350 PB of data (growth by 33% YoY). Nearly 100% of Poland’s population lives within the coverage of the Group’s LTE network, with LTE Advanced being available to 82% of the population.

• Stable base of 5.6 million contract customers:

• Growth of saturation of services per customer – by 4.3% YoY with each customer using an average of 2.6 services from the Group’s portfolio.
• Average revenue per contract customer (ARPU) increased by 3% YoY and amounted PLN 85.4.

• Stable base of over 2.6 million prepaid service users, with a growing ARPU of PLN 20.7.

• In line with the Polsat TV Group’s long-term strategy, its TV channels remained at the leading positions in the commercial viewers group, achieving the total audience share of 23.3%: 9.9% for the main channel and 13.4% for the thematic channels.

• Polsat TV Group’s revenue from TV advertising and sponsoring amounted PLN 263 million, and thus the Group’s share in the TV advertising market reached 28.1%.

“The quarter was very good for us from the point of view of operational results, even as the introduction of the state of epidemics had some impact on it. We provide nearly 14.8 million contract services and over 2 million of our customers use multiplay services. It is an enormous success of our smartDOM program – the biggest program of this kind, offering services for households and families. The effective implementation of our multiplay strategy, i.e. upselling of further services to our customers, has translated into the growth of the average revenue per customer and once again to a very low churn ratio. The churn level was a mere 6.6% annually, which demonstrates the extremely high loyalty of our customers,” stresses Maciej Stec, the Vice-President of the Management Board responsible for strategy in Cyfrowy Polsat and Polkomtel.

“As regards mobile number porting, Plus triumphed again, opening 2020 as the leader, and additionally being the only infrastructural operator to demonstrate a positive MNP balance. Very good results have been also demonstrated by Netia recently – I congratulate them on this and I am glad about the successful cooperation which translates into tangible results,” adds Maciej Stec

The advertising market has responded very quickly to the changes of the macroeconomic situation and is liable to economic slowdown. In spite of the necessity of discontinuing many live shows as well as many productions planned for our spring schedule, we have stayed in the leading positions in terms of audiences in the commercial viewers group. The dynamics of our revenues from TV advertising and sponsoring was in line with general market trends, while our market shares exceeded 28%,” says Stanisław Janowski, the President of the Management Board of Telewizja Polsat

“One should not forget that TV remains the most readily available form of entertainment, especially in the present circumstances. The current audience results show that Poles are willingly using TV. Moreover, as a result of the viewers’ natural interest in the coronavirus-related topics, as well as due to the introduction of numerous epidemics-dedicated schedule slots and programs, big audience increases have been noted recently by our Polsat News channel, the flagship “Wydarzenia” (The News) program and our polsatnews.pl portal,” adds Stanisław Janowski.

Solid financial performance of Polsat Group

“Our diversified, subscription service-based business model has turned out to be very resistant in the circumstances that we have unexpectedly found ourselves in. It assures predictable and stable revenue streams, which has given us very good financial results that are in line with the analysts’ expectations. Our revenue increased to PLN 2.85 billion, with EBITDA exceeding PLN 1 billion. We have continued to generate high level of cash, assuring us security in terms of current liquidity,” says Katarzyna Ostap-Tomann, Cyfrowy Polsat and Polkomtel Management Board Member responsible for finance.

“A last quarter’s event that deserves a special distinction is the favorable refinancing of our bank debt, which ended a multi-stage process of our debt restructuring. Thanks to this we have gained more flexibility and we have guaranteed to ourselves the ability to continue the development of the Group. We have increased the diversity of the instruments we use – we have issued the first Poland corporate green bonds worth PLN 1 billion, thus doubling the size of our presence on this prospective market. At the same time the comfortable situation we are in enables us to continue pursuing our dividend policy. In near future the Management Board plans to issue its recommendation regarding the dividend payout,” adds Katarzyna Ostap-Tomann.

Polsat Group in the fight against the coronavirus

The to-date offer and program solutions as well as the promotional activities introduced by Polsat Group as the elements of the fight against the epidemic include:

• Purchase by Zygmunt Solorz and the Polsat Group of 200 thousand coronavirus tests, along with the necessary lab equipment, for the amount of more than PLN 16 million, and donating these tests to the Ministry of Health and to Polish citizens so as to increase the capabilities of testing, identification of infected individuals and their isolation, i.e. the key elements of the fight against the epidemics in Poland.
• Donating 2200 tablets connected to the Internet to the children who are most in need, i.e. the ones living in orphanages and foster families.
• Collecting PLN 3 million thanks to “Advertising to the rescue – Together in the fight against coronavirus" action and transferring the amount to the hospitals and the institutions involved in the fight against the epidemics.
• Allocating by the Polsat Foundation of PLN 2 million from its own resources for the purchase of the most needed equipment for the health care institutions.
• „SMS to the rescue” – a dedicated commercial spot of Polsat Foundation and Polsat TV, all proceeds from which will be used for the purchase of necessary personal protection equipment for health care personnel.
• Aid to the Provincial Ambulance and Sanitary Transport Service "Meditrans" SP ZOZ in Warsaw.
• Plus, supported by ZTE Poland, donated 10 thousand protective masks to hospitals.
• #okonamalucha (#newbornsunderthewatchfuleye) –Plus donated SIM cards with Internet access to the Department of Neonatology and Neonatal Intensive Care Unit of the Warsaw Medical University in the Princess Anna Mazowiecka Clinical Hospital.
• Involving employees in the “Feel the taste of help” action – the collected funds allow 4 Smaki Restaurants&Catering to provide free meals to the Central Clinical Hospital of the Ministry of Internal Affairs and Administration.
• Donating over 3000 daffodils to the “Wolne Miejsce” Foundation under the action of “Easter Breakfast for the Lonely”.
• “Let’s help each other” social campaign by Polsat Group encouraging people to help the elderly.
• #CzytamyDlaDzieci (#ReadingforChildren) – the known and popular people read fairy tales – every day at 8 p.m. on the official profile of Polsat Foundation on Instagram.
• #JesteśmyDlaDzieci (#WearefortheChildren) – a program under the patronage of Polsat Foundation, addressing the important topics associated with the threats and consequences that the coronavirus may have for children and their parents.
• Under the joint action, the manufacturer of mobile devices - OPPO donated 188 smartphones and Plus donated 188 starter kits with free calls, SMS’s and Internet access services to the people in care of “Polki Mogą Wszystko” Foundation – the equipment was distributed to children in 24 day care centers.
• Broadcasting of Sunday Masses in Polsat News and Polsat Rodzina channels, as well as in IPLA service.  
• Daily workouts with personal trainer in Polsat News and daily entertainment with the stars of Polsat TV via live broadcasts on Facebook and Instagram.
• Film offer of IPLA, the biggest Internet entertainment service – strong titles which have had premieres in cinemas recently.
• Free 10 GB data pack for all customers of Plus and Plush and a new 20 GB data pack for PLN 10.
• Free 10 GB data pack for the customers of Cyfrowy Polsat using selected Internet tariffs and a new additional 20 GB data pack for PLN 10.
• Additional 33 channels under an “open window” for the subscribers of the DTH satellite television and the Cable TV in IPTV technology offered by Cyfrowy Polsat.
• 25 additional channels for all viewers in Plus network in a free IPLA PLUS package, bringing the total number of the channels offered to 30.
• Fixed-line Internet access provided by Plus network in HFC, ETTH, PON technologies has been accelerated to maximum data transmission speeds, even up to 1 Gbps, without any additional charges.
• TIDAL without data limit for customers of Plus network and for new users of the music service –  free access to TIDAL for 90 days.
• Big additional Internet data packs and more GB as the bonus for topping up accounts in prepaid offers in Plus network.
• Providing all current news related to the pandemics in Polsatnews.pl and in Polsat News mobile application as well as in Polsat and Polsat News channels.
• Free data transfer in Polsat News application for Plus customers.