Orange Polska Sa

Ladies and gentlemen, good morning, thank you for standing by and I would like to welcome you on Orange Polska full year 2022 conference call. At this time all participants are in a listen-only mode. The format of the meeting will be the presentation by the management team followed by Q&A session. Let me introduce speakers for today's conference starting from Julien Ducarot, CEO of Orange Polska, to his right Jolanta Dudek in charge of consumer market, Maciek Nowochoński in charge of wholesale activities and real estate sales, Bożena Leśniewska in charge of B2B operations and Witold Drosz in charge of corporate affairs.

next to me Jacek Konicki our CFO let me now hand the floor to Julien to begin the presentation thank you and good morning ladies and gentlemen welcome everyone on our conference summarizing fourth quarter and full year 2022 let's start on slide five 2022 was the second year of our dot-grow strategy implementation. We did not expect an easy year for us, but the accumulation of challenges was unprecedented. Outbreak of the war in Ukraine, global energy crisis, Polish inflation hitting 25-year high. Despite this very turbulent environment, our performance was strong and we met our objective. Commercial results were solid in most areas despite intensifying competition. In the wake of inflation, we escalated our value strategy. It was another strong year in B2B, both in telco and ICT services. Our new opening in wholesale strategy resulted in robust performance in this area. Financial results were strong across the board. We met all our commitments despite huge burden from energy costs. I'm especially proud to confirm that we will deliver our 2025 climate goals securing CO2 emission reduction targets three years ahead of our plan. At the same time, we hedge the vast majority of our energy costs for 2023. Similarly, we continue to change as a company. We need to be ready to meet future challenges and take advantage of new opportunities. We have boosted digital transformation on many fronts. It will support our revenue generation and cost savings. Last year's performance proved that our business has strong fundamentals and we are able to swiftly adapt to changing external conditions. It was a collective effort of all teams of Orange and I would like to thank them for this commitment. Let's look at financial highlights on the next slide. In 2022, we delivered on all our financial commitments despite a very turbulent environment. Revenue increased by 4.7% and this was much more than we were anticipating in the beginning of the year. Strong revenue performance was a key enabler to mitigate a huge spike in energy costs and allow us to deliver almost 4% EBITDA growth. Please note that we are reporting growth of our operating profitability for the fifth consecutive year. Since 2018, we increased our EBITDA as much as 18% despite a lot of challenges. Economic capex in 2022 were in line with the guidance showing refocus from fiber to mobile. Those results show that we are consistent in delivering growth and we have good prospects ahead of us based on our dot growth strategy. Let's look in more detail how we executed it in 2022. So let's look now on our strategy and our four core pillars. Starting with our core business, its performance was excellent in retail and wholesale market. Announcing DotGrow, we declared a new opening in wholesale and last year demonstrated that this strategy is working very well. In new opportunities, we are focusing on growing our ICT products. Last year, we increased our ICT revenue by almost 25%. I'm excited that last year we saw a promising growth in our smart city services. IoT solution enhance quality of life for local communities and support more efficient resource management. Becoming more digital as a company is a key part of our transformation. Cloud is an important part of it. Over the last year, we have accelerated with its adoption by migrating our system to Google Cloud. This makes us more agile, especially in marketing. Externally, we are making the digital journey for our customers easier and more efficient. In 2022, we increased digital sales by 20%. Now, half of our customers contact us via digital tools. At the same time, we know that brick and mortar stores are important. Two weeks ago, we have opened a unique green showroom in Varshow, showcasing greener solutions, including 30% of refurbished devices on display. It has been a particular year for our responsibility pillar. Thanks to greener energy mix and the further optimization of energy consumption, we cut our CO2 emissions by 14%. It's good for the planet and it's good for our cost. We have also reinvented our circular effort. We encourage our customers for reusing, repairing, recycling and refurbishing smartphones and wearables. Unfortunately, last year was also marked by the outbreak of the war in Ukraine. I was impressed by the engagement of Orange teams that dedicated their time and energy to carry humanitarian aid. Let's go to the next slide and more in detail. The basis of the success of our strategy lies in the strength of our core business. It consists of three stable, growing engines. B2C, business to consumer, business to business, and our wholesale activity. All of these engines constantly deliver growth of revenue, but more important, direct margin. 7% growth over the two years is a strong achievement and key enabler of improvement of our profit. Why is it so important to have those three engines? It shows that we are more diversified and therefore more resilient to external factors linked to those business lines. Wholesale activities are an additional way, along retail, to monetize our core infrastructure in an open model for the market. Thank you for now and I hand the floor to my colleagues who will tell you about the performance in their respective markets.

Good morning everyone. Let me walk you through our last year's achievements in our key telecom services. Let's start with fibre. Our fibre customer base increased by more than 200,000 in each of the past three years. This demonstrates that the demand for the best connectivity remains strong. We now have close to 1.2 million retail fibre customers. This is more than the number of copper broadband customers. This is a symbol of our technological transformation. Our fibre services are available to more than 7 million households, that is nearly 50% households in Poland. This means that we already reached the low end of the strategic ambition for 2024. In line with our strategy, we grow our fibre footprint mainly through wholesale partnerships. Our largest partner is obviously FiberCo, which already has a network of almost 1.3 million households connectable and the rollout goes as scheduled. Why Fiber is so critical for us? It is a powerful tool to build long-term relationship with the customer and increase value through an upsell and more services supporting convergence. On the next slide, switching now to convergence and mobile, it was another solid year for both groups of services. Convergent customer base rose by a further 5% last year, even though more operators are now pursuing the strategy which we initiated many years ago. We win customers with our simple and attractive offer. In mobile, we combine a steady piece of customer base growth with ARPO improvement. In 2022, our mobile handset customer base increased by another 4%. It was consistent with prior years. This is a strong performance given that the Polish market is matured and very competitive. According to our estimates, we maintain our share in the market. They are a few drivers of this performance. On the mass market, the main orange brand is complemented by our B brand new. Additionally, our digital offer flex hit a record increasing its customer base by more than 60% last year. B2B was also a solid contributor, which will be commented by Bożena in a moment. ARPO in convergence and mobile only increased by 3% in 2022. In mobile, this growth rate visibly improved compared to 2021. In the second half of the year, we intensified our more for more value strategy in almost all key services in B2C and B2B. This will gradually filter to our revenues. Our key focus for 2023 is execution of the strategy. ARPO growth is absolutely essential for us to at least partly mitigate the impact of inflation. That is all from me and I hand the floor to Maciej.