Cyfrowy Polsat S.A. Ord

Ladies and gentlemen, good afternoon and welcome to the earnings call of Polsat Plus Group for the third quarter of 2024. Could I have the next slide, please? Today's presentation will be delivered to you by Mr. Mirosław Błaszczyk, CEO of Cyfrowy Polsat, Mr. Maciej Stec, Vice President Responsible for Strategy, and Ms. Katarzyna Ostaptoman, CFO and Management Board Member Responsible for ESG. As usual, after the presentation, we will hold a Q&A session. I encourage you to post your questions in the chat section in advance. Thank you. Mr. Bostrick, the floor is yours.

Good afternoon, ladies and gentlemen, and welcome. The agenda of today's meeting is as follows. I will open the presentation with the key events of the third quarter of 2024. After that, Maciej will present the operating results of our business segments and Kasia will present our financial results. After a short summary, we will be happy to answer your questions. Next slide, please. Key events of the past quarter. Let's go to the next slide. I'm very pleased to say that in the third quarter of 2024, we maintained a high growth rate of RRPU in a competitive market. LRPU per B2C customer grew by 5%, while LRPU per B2B customer grew by 4%. As a result, our core revenue stream, retail revenues, recorded an increase by 3.6% year over year. The third quarter was also an excellent quarter in terms of our financial results. We posted a 12.7% increase in adjusted EBITDA. This was driven by the implementation of our strategy 2023 plus and by strong operating performance and cost control. In an effort to provide the highest quality of services, we expanded our 5G plus network to over 3,800 transmitters. Today, over 25 million people in Poland are within the reach of our 5G network, while 60 million can use the 5G Ultra network, which offers transfer speed comparable to optic fiber. We also focus on strengthening the content offer for our viewers. In particular, we acquired exclusive broadcasting rights to the Formula One Grand Prix races in the years 2025 to 2028. We are also moving forward dynamically with the execution of our strategy 2023+. In the third quarter of 2024, we completed the installation of our 2.5 MW electrolyzer located in Konin and started test production of green hydrogen. This is a big milestone for us in the development of the complete value chain of an economy based on green hydrogen. We also won two new tenders for the supply of our hydrogen-powered buses, the Neso bus. Konin contracted five buses, while the Upper Silesia metropolitan area placed an order for eight buses. This brings the total of hydrogen buses sold up to 69 units, which is a very impressive result. These were the main highlights of the past quarter. Maciek will now present the details of our operating performance. Maciek. The floor is yours.

Thanks, Mirek. Today it will be my pleasure to present the results of all our operating segments, starting with the media segment TV and online. Let's move on to the next slide, please. Here we have the viewership results of our TV channels and our position in the advertising market in the third quarter of 2024. In the beginning of the third quarter, we had accumulation of highly popular sporting events, There were the UEFA European Championships and soon after that the Olympic Games in Paris. Our competitors held broadcasting rights to both these events and this had an impact on our operating results in the media segment in Q3, particularly in terms of slower growth in TV advertising. We are very pleased with our viewership figures, which were relatively stable compared to last year, considering the popularity of the UEFA Euro matches and the Olympics. And our main channel, Polsat, recorded 6.7% of audience shares, while our group of thematic channels had 15% in the commercial target group. This gave TV Polsat Group a total of 21.7% in the third quarter, and this result is aligned with our long-term strategy. In terms of market expenditures on TV advertising and sponsorship, the broad market recorded a solid increase of 7.5%, while our advertising revenue increased by 3% in the third quarter, giving us market share of 27.6%. Let's move on the next slide and look at our performance in the first nine months of 2024. As I mentioned, it's always better to analyze the TV market over a longer time horizon because it helps to smooth out seasonal effects such as the accumulated impact of sporting events that I talked about before. Our position in terms of audience shares in nine months is also very good. Our entire portfolio of channels maintained high stable audience shares of 21.8%, where our main channel had 7%, while our thematic channels had 14.8%. These viewership figures translated into a solid growth of our TV advertising revenue by 5.2% year on year to 965 million zlotys. At the same time, the market increased by over 7% as a result of our share in the TV advertising and sponsorship market settled at 28% after nine months of 2024. At the same time, the market increased by over 7%. And as a result, our share in the TV advertising and sponsorship markets settled at 28% after nine months of 2024. Let's move on the online business. Can I have the next slide, please? We are effectively building our position in the online market. Polsat Interior Group is one of the three largest players in this market in Poland. In the third quarter of 2024, the average monthly number of users reached 19.4 million and the number of page views exceeded 1.8 billion. As you can see, all the players recorded slightly lower results compared to the last year and this is the result of a change in the methodology of measuring performance in the online market. I'm particularly happy with Polsat Interior Group's successes in 2024. This year we secured the top position in the mobile category for 7 out of 10 months. What's more, in October, Polsat Interior Group ranked second in terms of reach among online portals with only a slight loss to the leading position. Can I have the next slide, please? Our autumn schedules are going according to the plan and we are satisfied with viewing figures, but what is very important for us, we are strengthening the offer of our sports channels, which are the key for our whole group. As you can see on this slide, we have an extensive portfolio of diverse sports rights to meet the different expectations of our viewers. As Mirek said in the introduction, we are very proud that we have recently acquired rights to the most exciting and widely viewed Formula One races. We also have a strong position in football. Apart from UEFA Europe League and Conference League, we will also broadcast one of the best football leagues in Europe, like Spanish La Liga and Italian Serie A. And we have also bought the rights to the German Bundesliga and the French Ligue 1. Apart from the new sport rides, we offer a vast amount of other sporting events, tennis, football, volleyball, basketball or ice hockey. All this is available to our customers on 11 dedicated sports channels, Polsat sports channels and 11 sports channels and can be accessed on any device. To sum up the performance in the media segment, we posted good results in terms of audience shares in both the third quarter and the first nine months of 2024 in line with our long-term strategy. We maintain a strong position on a growing TV advertising market despite the temporary headwinds. We continue to strengthen our position in the online market by developing our online leg of the business. Next slide, please. Let's now have a look at the operating results of the B2C and B2B services segment. Can I have the next slide, please? In this segment, we continue to focus on the efficient and consistent implementation of our Multiplay strategy. Our main goal is building customer value and customer loyalty. Our performance in this area is the best demonstrated by the continued growth of our Multiplay customers base and its share in the total customer base. Already, 2.5 million customers, that is 43% of all our customers, use two or more of our products. The number of services contracted by this group reached 7.6 million services in the third quarter of 2024, up by 200%. 2000 compared to last year. As I said, the successful implementation of our multiplayer strategy also results in strong customer loyalty. This can be seen in a consistently low level of churn. At the end of the third quarter, churn decreased to 7.2%. We believe that further saturation of the customer base with bundled services will support keeping the churn rate low in the future. Can I have the next slide, please? We have recorded a good quarter in terms of contracted RGUs. We already provide over 13.1 million contract RGUs to our B2C customers, 75,000 more than a year ago. This was driven particularly by very good sales of mobile voice services, up by 165,000 to 6.4 million. The number of internet access services grew to 2.1 million, recording an increase of 79,000 year-on-year. What's more important, we are steadily increasing share of fixed internet access services. At the same time, the pay TV base remains under pressure from a lower number of satellite TV services provided and fading out of the low margin IPLA product. We mitigate these trends by an increasing number of pay TV services provided in IPTV and OTT technology. Next slide, please. Average revenue per contract B2C customer remains on a dynamic growth path, recording an increase by 5% year over year. At the end of the third quarter, it reached the level of 77.2 slots. The saturation of our customer base with the services is steadily growing and reached the level of 2.28 services per customer at the end of the third quarter. I believe these figures reflect the successful execution of our multiplayer strategy based on a cross-selling and upselling our products. ARPU was also supported by the growing demand for data due to the popularization of 5G. I'm especially pleased with the evolution of ARPU in a challenging macroeconomic environment and continued pressure on the customer. Next slide, please. In the prepaid segment, we provided 2.6 million services at the end of the third quarter. I would like to underline that we maintain a high and stable base in a highly competitive market segment, despite a slightly lower base RPO per prepaid services remains stable at 17.8 zlotys, which is, in my opinion, very good result in the prepaid market. Next slide, please. In the B2B segment, as in all other customer segments, we focus on building customer value and foster customer satisfaction and loyalty. Thanks to this approach, RPO per B2B customer increased by 4% year on year, exceeding 1500 zlotys. We maintain a stable base of over 68,000 B2B customers and I'm very satisfied with these results because the B2B market is highly competitive in Poland. Before we move to green energy, let me briefly sum up our results in the B2C and B2B services segment. This was a very good quarter for us. We are consistently growing our multiplayer customer base and our RGU base increased by 75,000 year on year. I'm also extremely pleased with RPU and churn, which reflect our efforts targeted at building customer value and loyalty. RPU in both B2C and B2B is growing at a healthy pace, 5% and 4% respectively, while RPU in prepaid remains high in a competitive environment. At the same time, churn decreased to only 7.2%. Next slide, please. We are dynamically progressing with the implementation of our strategy 2023+. The contribution of the green energy segment to our group is already significant, but it will continue to grow over time. Next slide, please. We already have over 337 megawatts installed in all our renewable units, out of which 150 megawatts is in wind power capacity, the most efficient and the cheapest renewable energy source. We are currently focused on finishing our biggest wind project, Drzezewo, with over 138 MW of capacity. Regarding the green hydrogen value chain, as Mirek mentioned earlier, I'm pleased to announce that our 2.5 MW PEM electrolysis has started test production. As a reminder, this unit has the capacity to produce 1000 kg of green hydrogen per day. Also, our half-megawatt alkaline electrolyzers, designed from scratch and capable of producing 200 kg of hydrogen daily, is in the final testing phase. Additionally, we launched our fourth publicly accessible hydrogen refuelling station in Gdynia. Two more stations in Wroclaw and Lublin are almost completed, and we plan to open them by the end of this year. We are preparing for the construction of more stations with the support of EU funding. 30 of our Neso buses are already in use in public transportation in Rybnik and Gdańsk, and another 39 units are contracted by Chełm, Konin and the GZM Metropolis in Upper Silesia. Next slide, please. As you can see on the slide, the implementation of our renewable energy projects, especially wind farms, translates into dynamic increases in production of clean green energy. In the third quarter, we already produced more than 300 gigawatt hours of electricity from our all renewable sources, up by 57% year on year. Since the beginning of 2024, total production amounted to 722 GWh, that is 49% more than a year ago. The main growth driver was the increase in wind generation capacity. As I already mentioned, our priority at the moment is the completion of Drzezewo wind farm. With 139 MW of capacity, this project will double our wind power by the end of next year. The construction of this wind farm is progressing according to the schedule and we will start installing turbines from the beginning of 2025. Next slide, please. The increase in production is directly reflected in the financial results of the green energy segment. In the third quarter of 2024, we sold over 300 gigawatt hours of clean energy that we produced ourselves for an average price of 594 zlotys per megawatt hour. In nine months of 2024, we sold 722 gigawatt hours of energy products for an average price of 600 zlotys per megawatt hour. As a result, the green energy segment generated 82 million zlotys of EBITDA in the third quarter of 2024 alone, while in nine months of 2024, EBITDA exceeded 200 million zlotys. I'm extremely pleased with this result. I would like to remind you that we guided for 500-600 million zlotys of incremental EBITDA per year from the green energy business in 2026 and we are on track to deliver this promise. Next slide please. So to wrap up our performance in the green energy segment, we are dynamically executing our strategy 2023 plus by launching our renewable energy projects according to the schedule and within assumed budgets. We have already achieved our goal for 2024 337 megawatts of installed capacity, almost half of which is wind power. Once the Dzerzebo wind farm is completed in 2025, we will double installed capacity in wind farms. What's more important is that already this year, our renewable energy sources have the potential to produce over 1.3 terawatt hours of energy, while in 2025, this figure will exceed 1.7 terawatt hours. To reach our strategy goal in 2026, 2 terawatt hours. The good operational and financial results of this segment allow me to sustain our guidance that in 2026 the green energy segment will generate incremental EBITDA of 500-600 million zlotys. Thank you very much and I pass the floor to Kasia who will show you how our operating results translated into our financial results. Kasia, please go ahead.