Cyfrowy Polsat Group ended Q1 2018 with very good operational and sales results in both segments of its activity. As many as nearly 1.6 million customers use bundled offers while the number of contract services increased by nearly 0.5 million. Beginning of the year was marked by strong growth of advertising revenues and high share in the TV advertising market. Very good financial results of the entire Group were supported by the quickly achieved synergies with the newly acquired TV channels. The Group has also started the preparations for the coverage of new season of the Champions League and the Europa League, for which it has acquired exclusive rights for t the next 3 years and guaranteed to itself the possibility of broadcasting over 1000 matches via various distribution channels – TV, the Internet as well as on mobile devices.
Major operating figures for Q1 2018
- Bundled offers are used by increasing number of customers thanks to effective implementation of the multiplay strategy:
- Stable growth of the number of customers using bundled services – up by 247 thousand (18.6%) yoy, to 1.57 million (which constitutes 27.4% of the contract customer base).
- The number of services (RGU’s) used by this group of customers increased to 4.70 million.
- As a result, the churn level stayed low, at a mere 8.5% annually.
- Stable growth of the number of contract services – by 459 thousand yoy – to 13.8 million (which constitutes 83.2% of all services provided):
- The number of mobile voice services increased by 213 thousand yoy and reached 7 million as a result of the favorable influence of our multiplay strategy and good reception, by our customers, of the new simple tariffs which were implemented by Plus in February 2018.
- Thanks to the good sales of the basic service packages, as well as of value-added service (Multiroom and paid OTT services), the total number of contract pay TV services increased by 198 thousand and reached 5 million.
- Customer base of mobile Internet access services increased by 48 thousand yoy, reaching 1.8 million. During the first quarter of the year Cyfrowy Polsat and Plus customers transferred 224 PB of data.
- Stable base of over 5.7 million contract customers:
- The ratio indicating the saturation of services per customer has increased (by 5.3% yoy), with each customer using 2.4 of the Group’s services on the average.
- Average revenue per contract customer (ARPU), calculated in accordance with the currently valid reporting standard, the IFRS 15, increased by 2% and reached PLN 81.9 in spite of the negative impact of the Roam like at home regulation.
- Stable prepaid customer base of 2.8 million services reflects the actual number of the service’s users.
- High ARPU of prepaid users – PLN 20.1 – growth by 7.5% yoy, mainly thanks to fading of the effect of the promotions that were offered to customers for registering their SIM’s.
- Polsat TV Group’s channels remained the leaders among the commercial viewer group, reaching audience share of 23.9% (11.9% for the main channel and 12% for theme channels).
- Polsat TV Group’s revenue from TV advertising and sponsoring increased by as much as 15.1% yoy and reached PLN 269 million thanks to which the Group’s share in the TV advertising market grew to 26.9%.
- The Group achieved very good financial results, as calculated in accordance with the currently valid financial reporting standard, the IFRS 15:
- revenue: PLN 2.346 bn (growth by 0.6%)
- EBITDA: PLN 890 mn (growth by 2.0%)
- EBITDA margin: 37.9% (growth by 0.5 p.p.),
- net profit: PLN 292.2 million,
- free cash flow: PLN 1.482 bn during a 12-month period,
- total net debt to EBITDA LTM ratio decreased to 2.87x,
- during Q1 the Group repaid PLN 550 million of revolving loan.
“It has been yet another quarter with very good operational results in both segments. The factors which were essential in the segment of the services provided to residential and business clients included consistent pursuit of the strategy of a multi-play operator and sales of offers within the framework of smartDOM loyalty scheme as well as the customers’ very good reception of the new tariffs offered by Plus. The results in the TV broadcasting and production segment demonstrated impressive growth, both organically as well as thanks to the synergies accomplished jointly with the newly acquired ZPR Group TV channels. The beginning of the year was also very successful for our Group in the area of financial performance,” says Tobias Solorz, the CEO of Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o.
“Our offer of bundled services, which relies on a mechanism offering attractive discounts for each additional product or service from the Group’s portfolio, has been enjoying unwavering interest while recording very good sales results. Already as many as 1.6 million customers have “bundled together” 4.7 million services this way. The offer has positive influence on the churn ratio, the service saturation ratio as well as the ARPU per contract customer,” sums up Tobias Solorz. “In addition, the new offers which Plus introduced in February have been very well received by customers, thanks to which we have recorded substantial growth of the number of contract services. Simultaneously, for some time now we have been working intensively on having the Champions League and the Europa League matches on our TV channels from the upcoming 2018/2019 season and we will soon present the details of the offers of Cyfrowy Polsat, Plus network and IPLA web TV.
“Growth of the number of contract services and the number of customers using bundled offers have led to very good and stable financial results in the segment of services provided to residential and business customers. The results have still remained under the unfavorable influence of the Roam like at home regulation, exerting pressure on revenues as well as leading to higher cost of the traffic purchased from foreign operators. If not for this factor, the EBITDA for this segment would have demonstrated growth,” comments Katarzyna Ostap-Tomann, the Management Board responsible for finance at Cyfrowy Polsat S.A., Polkomtel Sp. z o.o. and Telewizja Polsat Sp. z o.o.
TV broadcasting and production segment
“During the first quarter of the year Polsat Group’s TV channels were among audience leaders in the commercial viewer group, reaching the share of 24%, which is aligned with our long-term strategy. Just as forecasted, we observed dynamic growth of the TV advertising market, with Telewizja Polsat being a major beneficiary of this trend. Our revenues from TV advertising and sponsoring surpassed the market level once again – this time with over 15% growth dynamics versus 9.6% for the whole market. The synergies coming from the cooperation with the newly acquired TV channels have also contributed to this result,” says Maciej Stec, a Management Board Member of Cyfrowy Polsat S.A. and Telewizja Polsat Sp. z o.o.
The permanent program items of Polsat channel enjoyed high interest during Q1 2018. The premiere episodes of ”Pierwsza miłość” (The First Love) series and the Monday’s ”Mega Hit” movie slot were very popular with viewers. ”Wydarzenia” (The News) from 6.50 p.m. and ”Nowy Dzień z Polsat News” (“New Day with Polsat News) block of news programs, shown in the mornings from Monday to Friday, also enjoyed high audiences. In addition such soap operas as ”Świat według Kiepskich” (“The World according to Kiepski), ”Przyjaciółki” (“The Friends”) and ”W rytmie serca” (In the Rhythm of the Heart) were also very popular with viewers.
The programs being part of our seasonal programming offer also had big influence on the audience results. ”Twoja Twarz Brzmi Znajomo” (Your Face Sounds Familiar), ”Nasz nowy dom” (Our New Home), or the series of entertainment shows called ”Kabaret na Żywo” (Live Cabaret), broadcasted on Sunday evenings, also attracted big audiences. The renewed ”Dancing With The Stars. Taniec z Gwiazdami,” ”The Story of My Life”. Historia Naszego Życia” and the reality show called ”Wyjdź za mnie” (Marry Me) also proved successful.
Cabaret and entertainment programs also enjoyed popularity during the first quarter of the year. Big audiences were attracted to”Opolska Noc Kabaretowa. 800 lat Opola” (Opole Cabaret Night. 800th Anniversary of Opole), which was shown on January 7, ”Kabaret Paranienormalni. Żarty się skończyły” cabaret show which was broadcast on February 18, and ”Świętokrzyska Gala Kabaretowa” cabaret gala on January 21.
“The results achieved by the TV broadcasting and production segment remained under the influence of the dynamic, 15%, growth of revenue from TV advertising and sponsoring, which resulted from both, organic growth as well as fast implementation of the synergies associated with the newly acquired ZPR Group TV channels. As usual, the consistent implementation of the long-term operational and financial strategy of Polsat TV, assuming balanced programming policy and strict cost control, has had positive influence on the results. This has enabled us to generate very high growth EBITDA in this segment– by as much as 25% year-on-year,” says Katarzyna Ostap-Tomann.
Financial results of Cyfrowy Polsat Group
“Excellent operating and sales results have enabled us to generate very good, and above all healthy and stable, financial results for the whole Group. We are seeing growth in all basic financial parameters, and what is important, EBITDA has grown in spite of the negative impact of the Roam like at home regulation, valued at PLN 25 million. We continue to enjoy high cash flows, enabling us to positively view the future operations of our Group,” sums up Katarzyna Ostap-Tomann.
