Cyfrowy Polsat Group started 2019 very well – around 300 thousand more multiplay customers and in excess of 500 thousand additional contract services year-on-year, with churn again at a record low level of 7.2%. The Group’s strong financial performance is confirmed by its EBITDA which, in accordance with the new accounting standards, exceeded PLN 1 billion. Net profit, in turn, was 25% higher than the average amount expected by stock exchange analysts. During Q1 2019 the Group launched new attractive offers to the market, including Fixed-line Internet Access from Plus and cable TV based on IPTV technology, along with the new EVOBOX IP set-top box. These moves added strength to the Group’s multiplay strategy.
“We have a long-term vision of what our Group should be and how it should develop. Our mission is to create and deliver the most attractive TV content, telecommunication products and other services for households. We use latest technologies and take care that our products and customer care are top quality,” says Maciej Stec, Vice-President of the Management Board responsible for strategy at Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. “We have been consistently developing attractive services to meet expectations of our customers. Now we have opened ourselves to new markets – fixed-line Internet access and IPTV. We want the broad portfolio of our services to be available to all Poles and to all families. Our strategic idea for the coming years is: “Television – For Everyone. Everywhere. Internet – for Everyone. Everywhere. Phone – for Everyone. Everywhere.” In the coming years we will be betting on continuous strengthening of our smartDOM strategy which combines the extensive portfolio of services with the thrilling content that we deliver. All of it is available at attractive prices and in top quality. This is the direction which we want to continue following,” adds Mr. Stec.
Major operating figures1 for Q1 2019
- Already one out of three of the Group’s customers uses bundled offers thanks to the effective implementation of the multiplay strategy:
- Stable growth of bundled service customers – up by 283 thousand (18%) YoY, to the level of 1.85 million, or 33% of our contract customer base.
- The number of services (RGU’s) used by this group of customers increased to 5.57 million.
- Further reduction of churn to a record-low level of 7.2%.
- Regular growth of the number of contract services – up by 535 thousand YoY, to 14.33 million (contract services account for 84.4% of all services provided):
- Another period during which the number of mobile services increased – by 455 thousand YoY to 7.5 million in total, which is outcome of the favorable influence of our multiplay strategy, sustained interest of customers in Plus’s simple tariffs which were launched in February 2018 and high sales to B2B segment (m2m solutions).
- Thanks to the sustained demand for Multiroom services, and the successfully selling paid OTT services, the total number of pay TV contract services increased by 93 thousand YoY and numbers 5.1 million now.
- High, stable base of Internet access services at 1.8 million. During Q1 2019 retail customers of Cyfrowy Polsat and Plus network transferred ca. 264 PB of data. Nearly 100% of Poles live within the coverage footprint of the Group’s LTE network, with LTE Advanced coverage extending over an area inhabited 73% of the country’s population.
- Stable base of 5.7 million contract customers:
- Growth of saturation of services per customer – up by 5.4% YoY, with each customer using 2.5 of the Group’s services on the average.
- Average revenue per contract customer (ARPU) increased by 1.2% YoY and reached PLN 82.9.
- Stable prepaid base of 2.6 million with stable and high ARPU of PLN 20.1.
- According to our long-term strategy, the Polsat TV Group’s channels remained at the leading positions as regards audiences in the commercial viewer group, achieving viewership of 23.4%, including 11.2% by Polsat’s main channel and 12.2% by the theme channels.
- Polsat TV Group’s revenue from TV advertising and sponsoring increased by 0.5% YoY (while market-wide TV advertising market dropped by 3.1% during the same period) and reached the value of PLN 271 million, thus the Group’s share in the TV advertising market increased to as much as 28%.
“First quarter demonstrated that customers appreciate, like and willingly use more and more items from the growing portfolio of our services. This has been demonstrated by nearly 300 thousand new customers of our multiplay services and in excess of 500 thousand additional contract services, as compared to the analogous period last year. It is yet another quarter when satisfaction and loyalty of our customers was high, as clearly evidenced by the record low churn rate of barely 7.2% annually,” says Mirosław Błaszczyk, the CEO of Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. “By trying to meet customers’ expectations, we continue to expand the portfolio of the services we offer. Apart from delivery of LTE-based Internet access – in both, mobile and home variants – we have started offering Internet access relying on fiber-optic technology while using Netia’s network infrastructure. Another novelty, that we introduced several weeks ago, is cable TV based on IPTV technology, together with the EVOBOX IP set-top box which is manufactured at our plant in Mielec. Together with the service the customers have been given access to a programming offer which is equally attractive as the one available from our satellite TV platform (DTH) – only this time without the need for installing a satellite dish – and they have the possibility of deciding about the way in which the TV signal will be delivered to their households. Moreover, for Ukrainian citizens we have implemented attractive prepaid offers which we communicate by means of advertising campaigns carried beyond our eastern border.”
“In Q1 2019, we had good audience results which were consistent with our long-term strategy. Our revenue from TV advertising increased by ca. 3%, in spite of market-wide decline on the TV advertising market. Despite a weaker opening of the year – resulting from the effect of high base in 2018 – we maintain our forecast assuming a low, single-digit growth of the market in 2019,” says Maciej Stec, Vice-President of the Management Board responsible for strategy at Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o.
Major financial figures for Q1 2019
including IFRS 16
- The Group demonstrated strong financial performance in Q1 2019:
- Revenue: PLN 2.8 bn,
- EBITDA: PLN 1 bn,
- EBITDA margin: 37.2%,
- Net profit: PLN 300 mn,
- Free Cash Flow for the 12-month period: ca. PLN 1.4 bn,
- Total Net Debt/EBITDA LTM ratio: 2.66x (excluding IFRS 16).
“Free cash flow remained under pressure of settlements on account of the investments from the end of 2018 and it was in line with our forecasts and announcements – at a high level of ca. PLN 1.4 billion for the 12 month period. During Q1 we repaid nearly PLN 600 million of our loans while taking care that our debt level is reduced regularly. In spite of the unfavorable market sentiment, which made our achievement even more remarkable, we successfully completed the process of refinancing of our series A bonds, obtaining even more favorable terms and longer maturity period for the bonds. Interest savings should exceed PLN 50 million over a period of 7 years. Let me just remind you that very consistent implementation of our strategy enabled us to offer a very attractive and foreseeable dividend policy to our shareholders, and according to our estimates continued pursuit of this strategy will enable us to reduce our debt level and continue the investments and the development activities by the Group,” adds Ms. Katarzyna Ostap-Tomann.
“We opened 2019 very dynamically by entering new markets, presenting new services and offers, implementing the new dividend policy and issuing new bonds whose terms demonstrate that the capital market trusts our company very much. All that motivates us to further hard work and consistent implementation of the strategy which has enabled us to build the biggest Polish company in the media and telecommunications industry. I am very happy to be part of so thrilling and important developments, to be working with such a professional and motivated team, and to be managing a so successful business project,” sums up Mirosław Błaszczyk.
1 Without operating data for Netia Group which are published separately from the results of Cyfrowy Polsat Group
