In spite of the state of epidemic, which was declared in Poland in spring, Cyfrowy Polsat Group ended the second quarter with stable results which were in line with market expectations. The Group has smoothly adjusted the operations of its companies to the situation and donated PLN 30 million to support the society and the healthcare system. Major events included the quick finalization of the acquisition of Interia.pl, which will enable the Group to gain a stronger foothold on the Internet market, start of operations on the photovoltaics market under the new ESOLEO brand, as well as further roll-out of the state-of-the-art 5G network, using spectrum from the unique 2.6 GHz TDD frequency band. The Group’s revenues amounted PLN 2.86 billion, adjusted EBITDA exceed PLN 1 billion while net profit increased to PLN 291 million.
“Today we see the developments from the early weeks of the pandemic in a different perspective but we should not forget the conditions in which we unexpectedly found ourselves this spring and about the challenges that accompanied them. During the first stage it was key for the management of our Group to maintain the continuity of the telecommunication network’s operation, the provision of services as well as sales and customer service processes, while ensuring maximally high comfort and safety for those of our teams whose scope of tasks did not allow them to switch to remote work. We did this very efficiently and, when looking at the results that were published today, it is fair to say that we have stood up to the challenge,” – says Mirosław Błaszczyk, President of the Management Board of Cyfrowy Polsat and Polkomtel, the operator of Plus network.
“As a Polish company we have been actively involved in helping the healthcare institutions and Polish citizens by donating, jointly with our main shareholder, Mr. Zygmunt Solorz, the amount of PLN 30 million. Moreover, in the extremely non-standard conditions we managed to continue running our investment and development projects. As a result, in recent weeks we acquired the Interia.pl web portal, started sales of solar panel systems under the ESOLEO brand and continued to roll-out Plus’s 5G network as scheduled,” adds Mirosław Błaszczyk.
The first in Poland commercial 5G network, using the spectrum from the 2.6 GHz TDD band, was launched by Polkomtel, the operator of Plus network, on May 11, 2020. The network comprises 100 base stations operating in 7 Polish cities, i.e. Warsaw, Gdansk, Katowice, Lodz, Poznan, Szczecin and Wroclaw. The next phase of development of Plus’s 5G network is to provide radio coverage for the entire area of Warsaw as well as the towns surrounding the capital where more than 600 further 5G base stations are being constructed. The operator successively expands the offer of smartphones and routers which support the 5G technology.
On July 8, 2020 Polsat Group finalized the acquisition of Interia Group. This is a strategic investment which will help the Group to assume a significant position in the Internet – an investment which will strengthen the Group’s position on the dynamically-developing online advertising market and which will form an additional channel for the distribution and monetization of the content produced by the Group and a fine channel for communicating with the Group’s existing and future customers.
On July 21, 2020 Polsat Group introduced photovoltaic systems into its offer under the new ESOLEO brand. The systems are offered by Alledo, a member company of the Group. Alledo has long-standing experience on the market of photovoltaic systems in Poland. ESOLEO’s offer provides numerous benefits: lower electricity bills, equipment from renowned manufacturers, comprehensive support in handling the associated formalities, preparation of a system’s design, assistance in obtaining a loan with a zero upfront payment, fast installation and the possibility of taking advantage of the subsidies that are offered for such solutions. The ESOLEO offer is available in more than 1000 points of sale and customer service of Plus and Cyfrowy Polsat nationwide as well as at www.esoleo.pl and though a dedicated 222 136 222 information line.
Since the beginning of the epidemic, Polsat Group embarked on numerous pro-social initiatives and introduced numerous beneficial solutions for its customers at the same time actively joining the fight against the coronavirus. It was involved in many spheres – supporting healthcare institutions, education, digitally-excluded children, senior citizens, as well as ensuring solutions for millions of its customers and thousands of its employees. Zygmunt Solorz and Polsat Group donated a total of more than PLN 30 million to these causes, while the actions which were conducted jointly with Polsat Foundation included the purchase of 200 thousand coronavirus tests, along with the necessary lab equipment, for over PLN 16 million, donation of 20 modern ventilators, worth PLN 3 million, to isolation hospitals, purchase of protective equipment, a dedicated commercial block aired in TV Polsat to raise money, as well as 2200 tablets for digitally-excluded children (more information here).
smartDOM – 2 million customers of multiplay services
Major operating figures[1] for Q2 2020:
- The number of customers using multiplay services increased by 130 thousand (7%) yoy and reached 2.028 million, which constitutes 36% of the contract customer base.
- The number of services (RGU’s) used by this group of customers increased to 6.19 million.
- Churn ratio decreased to a very low level of 6.4% annually.
- Dynamic growth of the number of contract services – up by 528 thousand yoy, to 15 million. Contract services account for 85.6% of all the services that are provided.
- Stable base of 5.6 million of contract customers:
- Growth of the ratio showing service saturation per customer – up by 4.7% yoy, with each customer using on the average 2.68 services from the Group’s portfolio.
- Average revenue per contract customer (ARPU) increased by 3.7% yoy and amounted to PLN 86.5.
- Prepaid base of more than 2.5 million with growing ARPU at the level of PLN 21.4.
- In spite of the unprecedented situation, forcing us to stop the implementation of our spring programming schedule, and in spite of the delay of numerous sports events, the TV channels of TV Polsat Group remained in the leading positions in terms of audience shares in the commercial viewer group, achieving 23% in Q2 and 23.1% in the first half of the year.
- TV Polsat Group’s revenues from TV advertising and sponsoring amounted PLN 213 million in Q2, which resulted in the Group’s share in the TV advertising market growing to 27.4%, while in the first half of the year the figures were PLN 475 million and 27.7%, respectively.
“During the lockdown our larger business segment faced numerous challenges, in such areas as sales and customer care, among others. However, our immediate and determined actions brought results, which has been confirmed by Q2 figures. Despite the unprecedented situation we posted very good operating results and saw significant organic growth. Our flagship program, smartDOM, grew at a stable pace of 7% annually. The bundled services customer base increased by 130 thousand, with the customers from this group using a total of 6.2 million services (RGU’s). Once again we have achieved a very low churn ratio of 6.4%, which demonstrates the high loyalty of our customers and their satisfaction with our services. After the full re-opening of our sales network we have also quickly returned to the path of strong sales in the area of end-user telecommunication equipment,” comments Maciej Stec, the Vice President of the Management Board responsible for strategy in Cyfrowy Polsat and Polkomtel.
“We provide a total of nearly 15 million contract services and a big share of growth of our contract base – nearly 200 thousand – was generated in the second quarter, at the time when the restrictions related to COVID-19 were most stringent. Our strategic goal is to build customer value, a goal we pursue consistently given that average revenue per customer reached PLN 86.5,” stresses Maciej Stec, the Vice President of the Management Board responsible for strategy in Cyfrowy Polsat and Polkomtel.
“The pandemic has in a natural way affected our broadcasting and TV production operations. The advertising market responds very fast to expected changes of the macroeconomic situation and is susceptible to economic slowdown. Our response, however, was instantaneous. We have immediately adjusted our expenses to the condition of the advertising market and even in spite of stopping the launch of the spring programming schedule and delays affecting numerous sports events, we have managed to maintain audience shares within the range of our long-term assumptions, at the level of 23%,” – sums up Stanisław Janowski, the CEO of Telewizja Polsat.
It was a very difficult time for the whole media market. Television coped relatively well, compared to other media, still our sector has also felt the distinct drop of advertising revenue. However, we see positive signs as regards the next quarter. A vast part of our productions is back on set, we have new shows planned for September while the prospects for the third quarter seem to be improving significantly as of now,” notes Stanisław Janowski.
Polsat Group’s financial results in line with expectations
Our diversified and subscription-based business model has proved very resistant in such a non-standard situation. Predictable and stable revenue streams from customers gave us very good financial results which were in line with the expectations of market analysts. EBITDA was relatively stable, which enabled us to make the decision to incur additional one-off expenses in the amount of over PLN 40 million to fight the pandemic, most of which was used to support the Polish society and healthcare system in the form of donations,” says Katarzyna Ostap-Tomann, Cyfrowy Polsat and Polkomtel Management Board Member responsible for finance.
“Despite the fact that part of our sales network remained closed in March and April, smartphones continued to sell very well, which had a positive influence on our revenues. However, the whole telecommunication market felt the consequences of the restrictions related to international travel, which led to a decrease of roaming revenues. This adverse factor is likely to continue also during the third quarter. In the broadcasting and TV production segment the fast adjustment of the cost side to the level of advertising revenues helped significantly reduce the pressure on EBITDA. In this context the stable financial situation and the continuously generated high cash levels enabled us to implement the planned investments, finance the acquisition of Interia.pl from own funds, and present a recommendation regarding dividend payout in a record amount, which has been very well received by our investors,” sums up Katarzyna Ostap-Tomann.
[1] Without operating data for Netia Group which are published separately from the results of Cyfrowy Polsat Group.
