A promising start of the year for Cyfrowy Polsat Group

As a result of consistent implementation of its strategy of development in the area of integrated services, Cyfrowy Polsat Capital Group recorded growth of operating profit in Q1 2015 and maintained its leading position on key markets, i.e. pay TV, contract mobile services and TV (both in the mainstream and thematic channels).

Cyfrowy Polsat Group in Q1 2015:

• The total number of active revenue generating units was 16.4m, of which:

-        75% are contract services, which guarantees higher revenue stability in the future as well as greater customer loyalty.

• Excellent sales results of the smartDOM program:

-        707K thousand customers,

-        2.17m active RGUs in the abovementioned group of customers,

-        319K additional services purchased by the program’s customers during Q1 2015.

• 6.1m contract customers:

-        the number of contract RGUs increased to 12.4m YoY ,

-        ARPU per contract customer increased to PLN 85.8 YoY,

-        saturation of the customer base with active RGUs increased to 2.04 per customer YoY,

-        low churn ratio of 9.5%.

• Thanks to the regular expansion of the coverage of our LTE Internet, as well as the success of the smartDOM integrated offer, the number of contract mobile Internet access services increased by 39% YoY, to over 1.4m, while the total number of mobile Internet access services increased to over 1.6m.
  • Very good financial performance:

• The Polsat channel was the viewership leader in the commercial group with a share of 13.4%, while the total audience share of Polsat TV increased to 24%.
• TV Polsat Group’s revenue from advertising and sponsoring grew at a rate significantly exceeding the market average, namely at 6.4% vs. market growth of 3.7%, and reached the value of PLN 221m, while the Group’s share in the TV advertising market increased to 25.3%.
• The average monthly number of users of Poland’s biggest Internet TV service IPLA was around 4.3m.

-        Revenue:    PLN 2.329bn,

-        EBITDA: PLN 897m,

-        EBITDA margin: 38.5%,

-        LTM FCF after payment of interest on loans and bonds: PLN 1.116bn,

-        Net debt /EBITDA: 3.2x.

• Customers of Plus and Cyfrowy Polsat are the first to use LTE Internet access offered in the 800 MHz bandwidth. Thanks to over 1000 new base stations having been put on-air by Midas Group, as part of the LTE800 network roll-out project, over 90% of Poland’s population lives within the coverage of Plus’s and Cyfrowy Polsat’s LTE network.
• The Group made an additional early pre-payment of part of Polkomtel’s term loan in the amount of PLN 600m.

• Plus has introduced the HD Voice technology for all of its customers nationwide. Thanks HD Voice, Plus customers can enjoy even better quality and higher comfort of voice calls.
• Polkomtel has decided to discontinue active participation in the 800 MHz spectrum auction and switched to a passive approach.

• Cyfrowy Polsat Group has begun preliminary analyses of possibilities and potential terms of refinancing of the Group’s current debt with a view to simplify the debt structure,     further optimize the terms, and reduce the cost of debt servicing.
• As a result of signed acquisition agreements, two new companies have joined Cyfrowy Polsat Capital Group, which is in line with the Group’s development strategy in the  area of new technologies. The two companies are Teleaudio Dwa, the leader in Premium Rate services, and InterPhone Service – the manufacturer of state-of-the-art telecommunication equipment and electronic appliances.

“In 2015 we consistently and effectively continue the implementation of our development strategy in the area of integrated services. Our smartDOM program based on the bundling of services, is gaining new users at a fast pace, which has a positive influence on the indicator of saturation with services, the average revenue per user as well as subscriber loyalty and their satisfaction with the services we provide. As a technology leader on the Polish market, we were the first operator to launch LTE Internet access services relying on the 800 MHz band, thus increasing the coverage of our LTE services to over 90% of the population,” sums up Tomasz Gillner-Gorywoda, CEO of Cyfrowy Polsat S.A. and General Director of  Polkomtel Sp. z o.o.

Services provided to individual and business customers

“Thanks to our smartDOM program we continue to successfully up-sell our core services, i.e. TV, Internet access and mobile telephony, to individual and business customers. What is important, the marketing communication of the smartDOM program is well received among customers, and thereby has a positive impact on the sales of stand-alone services from our standard offer. As a result of the expansion of LTE coverage we maintain high sales of mobile Internet access services and we continue to be the leader on this market,” sums up Tobias Solorz, CEO of Polkomtel Sp. z o.o. and Vice-President of Cyfrowy Polsat S.A.

During Q1 Cyfrowy Polsat Group:

• had 6.1m contract customers:

-        the number of contract services (RGUs) increased by 3.4% YoY, to 12.4m (6.6m of mobile voice services, 4.4m of TV services, 1.4m of Internet access services),

-        ARPU per contract customer increased to PLN 85.8 YoY,

-        saturation with RGUs continued to increase systematically year over year, reaching 2.04 per customer,

-        low churn ratio of 9.5%.

• active prepaid base of over 4m, including:

-        3.8m voice services,

-        0.1m pay TV services,

-        0.2m Internet access services,

-        ARPU for RGU customers was PLN 17.3, up by 4% YoY,

• 4.7m SIMcards actively used data transmission services, which means growth by 26% compared to the corresponding period of 2014:

-        smartphones accounted for 85% of total sales of handsets in Q1 2015.

Financial results for the segment of services provided to individual and business customers in Q1 2015

* Costs excluding depreciation, amortization, impairment and liquidation  

“Consolidation of the results of Metelem Group, the owner of Polkomtel, was the factor behind the growth of major financial items in the segment of individual and business customers. However, organic growth of revenue has also been recorded, mainly thanks to higher revenue from telecommunication services which we owe to the very good sales of mobile Internet access services. Upon eliminating the effect of consolidation with Metelem, the cost dynamic was driven by high interest in the smartDOM program and growth of the mobile Internet user base,” commented Tomasz Szeląg, Management Board Member responsible for Finance in Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o.

TV broadcasting and production

“In Q1 Polsat’s main channel was the leader in the extremely important, for broadcasters, commercial viewer group. Thanks to the success of the spring programming of our channels – both Polsat and the thematic channels – our Group was the only one to have recorded growth of audience shares compared to the previous year. Our revenue from TV advertising and sponsoring grew at a faster rate than the market and thanks to this our share in the TV advertising market increased to 25%,” says Maciej Stec, Management Board Member of Cyfrowy Polsat S.A. and Telewizja Polsat Sp. z o.o.

• The main channel Polsat was the viewership leader in the commercial group with a share of 13.4%.
• TV Polsat’s thematic channels had the highestaudience share on the market – 10.5%.
• Total audience shares of Polsat Group increased by 1.5% YoY, to 24%.
• Revenue from advertising and sponsoring increased by 6.4% (vs. growth of 3.7% on the TV advertising market), to the level of PLN 221m, giving Polsat Group a 25.3% share in the TV advertising market.

Financial performance of the TV broadcasting and production segment in Q1 2015

* Costs excluding depreciation, amortization, impairment and liquidation 

“Growth of revenue in this segment of our operations has been achieved thanks to organic growth, the success of the programming of channels TV4 and TV6, as well as the Disco Polo Music channel which we launched last year. Once again, our strategy of balanced management of the programming offer proved to be effective,” comments Katarzyna Ostap-Tomann, Management Board Member and CFO of Telewizja Polsat Sp. z o.o.

Cyfrowy Polsat Group’s financial performance

Cyfrowy Polsat Group’s financial results for Q1 2015

* Costs excluding depreciation, amortization, impairment and liquidation 

“Financial results of our Group are in line with our expectations and the market consensus. They reflect our consistent implementation of the adopted strategy of growth on the integrated services market. Stable and high free cash flows continue to be a strong item in our financial statement, that is why in April we decided to repay an additional PLN 600m of our loan. Given the favorable situation on financial markets, we are at present analysing the possibility of refinancing the Group’s current debt. Debt optimization has always been one of our priorities” comments Tomasz Szeląg.

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