Cyfrowy Polsat Group sums up its performance in Q3 2020

Roll-out of the nationwide 5G network, more members of our smartDOM loyalty scheme and more contract services, further acquisitions

In spite of the state of epidemics, which continued in Q3, Cyfrowy Polsat Group closed the third quarter with results which exceeded the analysts’ expectations

Major events included the roll-out of the nationwide 5G network, using  the spectrum from 2600 MHz frequency band and TDD technology, with a plan to provide network coverage over a territory inhabited by 11 million people, commencement of the review of the strategic options related to potential sale of the Group’s telecommunication infrastructure, acquisition of 100% of shares in the broadcaster of Fokus TV and Nowa TV channels, as well as quick integration of Interia.pl web portal with Polsat Group.

The Group’s revenues exceeded PLN 3 bn, adjusted EBITDA reached PLN 1.1 bn while net profit increased to PLN 345 mn. The Group also started the process of pay-out of a record high dividend in the total amount of PLN 640 million.

At the same time Zygmunt Solorz and the Group became involved in the struggle against the epidemics by, among others, donating nearly PLN 50 million to support the society, the healthcare system as well as the Group’s customers, viewers and employees.

“We are a Polish company and it was extremely important for us to engage – in the difficult times of the pandemics – in providing aid to the healthcare institutions and the society. Jointly with our main shareholder, Zygmunt Solorz, we have already donated several dozen million zloty to that cause,” says Mirosław Błaszczyk, the CEO of Cyfrowy Polsat and Polkomtel, the operator company of Plus mobile network.

“Due to the nature and the diversity of our operations, our business has proven resilient to the current situation. At the same time, during the third quarter of the year we were able to rebuild the performance of our media segment which was hit hardest by the spring lockdown,” says Mirosław Błaszczyk. With a stable financial situation and while thinking about further development of the Group, we carried out big investment projects. We acquired Interia Group, while Fokus TV and Nowa TV channels were added to TV Polsat’s portfolio. We have also launched sale of solar energy solutions under ESOLEO brand and  thanks to intensive roll out of our 5G network as many as 11 million of Poland’s inhabitants will be  within the network’s coverage area already next year.”

Plus has made the decision to go forward with nationwide roll-out of the 5G network. In May 2020 Plus launched the first in Poland 5G network while using the spectrum from 2600 MHz TDD frequency band and 700 transceivers in 7 cities across Poland. The network supports Internet speeds of up to 600 Mbps. Several months of observations of user experience and the best results achieved during the 5G speed tests, as confronted with other operators, led to the decision to expand network coverage. The existing 7 cities will be joined by more than 150 cities and towns, resulting in as many as 11 million people being able to enjoy the services of the fastest in Poland 5G network.

Acquisition of Interia.pl Group was followed by a fast integration of the portal within the Polsat Group’s structure. The strategic investment is aimed at enabling  Polsat Group to take an important position in the Internet – to strengthen the Group’s foothold in the dynamically growing online advertising market and form an additional channel for distribution and monetization of the content produced by the Group as well as to provide a perfect channel for communicating with its existing and future customers. Starting from 1 October the advertising operations of Interia.pl Group are fully supported by Polsat Media, while the web portal’s advertising unit has been merged with Polsat Media. The process of integration of Polsat’s and Interia’s news services has been implemented and also the integration of the sports and entertainment .segments has commenced.

Polsat Group has also started operations on the solar power market. In July it added photovoltaic systems to its offer under the new ESOLEO brand. ESOLEO offer means numerous benefits: lower electricity bills, equipment from renowned manufacturers, comprehensive support in handling all the related formalities, preparation of a system’s design, assistance in obtaining a loan with no upfront payment required, fast installation and an opportunity to enjoy the available subsidies. Information on ESOLEO offer can be obtained nationwide in over 1000 Plus and Cyfrowy Polsat points of sale and customer service as well as on www.esoleo.pl website and also by calling a dedicated 222 136 222 information line.

Since the beginning of the pandemics Polsat Group has been involved in numerous initiatives supporting the society and it has also introduced numerous benefits for its customers while actively joining the fight against the coronavirus. The Group  has been involved in many areas by supporting the healthcare institutions, education, digitally-excluded children, senior citizens as well as by ensuring solutions for millions of its customers and thousands of its employees. Zygmunt Solorz and Polsat Group donated a total of more than 50 million zloty to these causes, while the actions which were conducted jointly with Polsat Foundation included purchase of 200 thousand coronavirus tests, along with the necessary lab equipment, for over 16 million zloty, donation of 20 modern ventilators worth 3 million zloty to isolation hospitals, purchase of protective equipment, a dedicated commercial block aired in Polsat TV to raise money, as well as 2200 tablets for the digitally-excluded children (more information here)

Over 15 million contract services and more customers joining smartDOM loyalty program

“In Q3 2020 we continued our strategic investment in Interia Group and we assumed control over Fokus TV and Nowa TV channels. Moreover, we successfully continued to pursue our multiplay strategy.  The number of members of our smartDOM flagship loyalty program increased by 100 thousand. It was yet another quarter of strong growth of the number of provided contract services – by nearly 600 thousand year-on-year. Thanks to this the total number of contract services  exceeded 15 million. Once again we have been able to reduce the churn ratio – down to 6.1%, which is indicative of the high satisfaction of our customers with the quality of the services that we provide,” comments Maciej Stec, the Vice-President of the Management Board responsible for strategy in Cyfrowy Polsat and Polkomtel.

Major operating figures[1] for Q3 2020:

• The number of customers using multiplay services,  provided as part of our smartDOM flagship loyalty program, increased by 100 thousand (5%) yoy, reaching 2.048[RU1]  million in total, which is equal to 37% of the contract customer base.
  • The number of services (RGU’s) used by this group of customers increased to 6.28 million.
  •  Churn ratio decreased to a very low level of 6.1% annually.
• Dynamic growth of the number of contract services – up by 582 thousand yoy, to nearly 15.2 million. Contract services account for 85% of all the services that are provided.
  •  Growth of the ratio showing service saturation per customer – up by 5.4% yoy, with each customer using 2.72 services from the Group’s portfolio on the average.
  • Average revenue per contract customer (ARPU) increased by 2.5% yoy and amounted PLN 86.9.
• Prepaid base of  2.7 million with growing ARPU in the amount of PLN 21.5.
• Polsat Group provides a total of over 17.8 million pay TV, Internet access and telephony services (RGU’s), with the number of RGU’s having increased by ca. 600 thousand year-on-year.
• Polsat Group’s TV channels unchangeably remained in the leading positions in terms of audience shares in the commercial viewer group, achieving 24.6% share in Q3.
• Polsat TV Group’s revenues from TV commercials and sponsoring amounted PLN 252 million in Q3, which resulted in the Group’s share in the TV advertising market increasing to 29.0%
• Thanks to the acquisition of Interia Group, Polsat Group has become the leading player on the Internet market in Poland. The web pages of Polsat Interia Group[RU2]  are currently visited by 18.5 million users, with the average monthly number of page views of nearly 1.5 billion. Interia.pl web portal maintains a stable position among Polish horizontal services, reaching 68% of Polish Internet users.

“After a difficult second quarter, in the third quarter we saw a rebound on the TV advertising market, just as we expected. All our flagship shows were back on-air in autumn while the programming costs have been adjusted to the condition of the advertising market. Our main channel was the audience leader in the commercial viewer group while the results of the entire Group reached the top level of our strategic assumptions, coming close to 25%. We noted  positive advertising  revenue dynamics as contrasted with the market which was slightly in the red,” sums up Stanisław Janowski, the CEO of TV Polsat.

“Following the acquisition of Interia Group, we took the leading position on the Internet publishers market. The number of page views of all of Polsat Group web services increased tenfold year-on-year, to 1.5 billion. A nearly twofold growth of the number of unique users, to 18.5 million, has in turn put us among the top three online publishers. The extremely efficient process of integration of Interia within the Polsat Group’s organizational structure is worthwhile noting, while our teams, who made it happen, deserve gratitude. I am convinced that our cooperation with Interia will continue to be as efficient as it has been to-date, adds Stanisław Janowski.

Polsat Group’s financial performance exceeded market expectations

Polsat Group’s revenue increased in Q3 to over PLN 3 bn,  adjusted EBITDA reached PLN 1.1 bn while the net profit increased to PLN 345 million. In October the Group started the payout of a record-high dividend in the total amount of PLN 640 million.

“In the spite of the continuing epidemics, the quarter was very good for us from the point of view of financial results while our performance  clearly exceeded the market analysts’ expectations. The factors having positive impact on the performance of B2C and B2B segments included such items as stabilization of retail revenue and good sales of equipment. Distinct rebound on the advertising market and consolidation of Interia’s results contributed to the growth of revenue in the media segment. Very strong financial performance of this segment as a whole has compensated for the loss at EBITDA level that we noted in spring. Smaller number of on-going sports events, compared to the autumn of 2019, as well as our prudent approach to investments in the autumn programming schedule were reflected by the 40% growth of EBITDA,” says Katarzyna Ostap-Tomann, a Management Board Member responsible for finance at Cyfrowy Polsat and Polkomtel.

“I am glad that our strategy works and the Group is successful thanks to which we can offer compensation to our shareholders while at the same time caring for our further development, which is expressed by our entry into the online segment and by our very ambitious plans related to rolling out a nationwide 5G network,” sums up Mirosław Błaszczyk.