Orange Polska Sa

Please confirm, operator. Michael, can you please confirm we are on the line? We are live? Yes, you are live, Leszek. Please go ahead with your presentation. Thank you. Let me ask Lyudmila to start again the presentation. Okay, yes. Apologies for these technical problems.

Yes, apologies and, yeah, sometimes happening. So, coming back for first quarter result presentation and good start of the year. I was commenting on the environment that we are pretty happy that it is improving, and we see that inflation is coming down a lot, which is helping us on our cost part. Commercial performance was very solid, particularly on quarterly services. We see good consumer demand for both services and handsets, and we are pleased to see that Our 5G services and benefits of 5G encourage customers to replace their phones and consume more data. ARPO continues to grow in all key services. On the other hand, we see slower business activity in the public sector, which is affecting development of our ICT businesses. Our financial results were good, even if the headline revenue figure is down year over year. And the key for us is that revenues from core telecom services performed very well, growing by more than 4%. Our core business is crucial to our profit generation, so that's why it's our key focus. increased by strong number of almost 5% as we benefited from lower energy costs and our efficiency initiatives. In line with our priorities, we are investing in the quality of our networks, rollout of 5G on the C-band spectrum progresses as planned, We already see customers using more data in the areas where network on C-band is becoming available. Fiber rollout with EU subsidies thanks to dedicated programs is now in the execution phase. We will build a network covering 155,000 households in Poland in 125 different municipalities. And this network will be built by mid-2026. New FIBAR footprint will be an opportunity for us to upsell our services in retail and in wholesale. and also we will operate on other networks which will be built with support of this program. So the entire new fishing pool will be additional one million households. And by improving digital infrastructure of the country, this investment is also fighting digital divide, contributing to fulfilling our ESG agenda targets. I would propose to zoom on highlights of our commercial activity on the next slide. So, commercial performance in Q1 reflected solid customer demand, our focus on value, and intensive market competition. In convergence, we are pleased with 5% year-over-year growth of our customer base. It confirms that customers appreciate the quality of our multi-service offer in a demanding environment. We are happy that good volume growth in convergence is combined with solid ARPO increase. which was growing 4.6% year-over-year in the first quarter. It was also supported by good demand for TV content and higher fiber speed options, which are already contributing one-third of our fiber customer base. Growth in convergence is supported, obviously, by fiber uptake, Customer base here increased 14% year-over-year, and fiber is clearly our key driver for 4% growth in ARPO, if we are talking about fixed broadband only. Our mobile customer base continues to grow. Growing between two and three percent this quarter. It was close close to three percent, which is very solid taken into account market saturation mobile also growth slowed down versus Dynamic in 2023 in last year due to two main reasons for this quarter firstly high comparable base in a b2b and I remind you that we increased prices in B2B mobile on the customer base in last quarter of 2022. So in 2023, particularly first quarter, we have quite a high comparable base. And secondly, we see a slowdown in roaming, which is also visible in our poll. These solid results illustrate that we find right balance between volume and value in our commercial activity despite sometimes aggressive offers of our competitors. And it is supported by strong perception of quality of our services and brands combined with adoption of more local marketing strategies. I thank you for now and I hand over the floor to Jacek.

Thank you, Ludmila. Good morning, everyone. Let's start the financial review on slide 7 with the highlights of our performance this quarter. Our financial results in Q1 were solid, with strong growth of the EBITDA and cash generation. The headline revenue figure reflected a cyclically weaker ICT revenues and low energy sales. However, we are pleased with a strong growth of revenues from the core telecom services. Good performance of the core business and lower indirect costs drove an almost 5% year-over-year growth of the EBITDA of the lease. making a very solid start to 2024. The net income reached almost 230 million zloty in Q1. This is a solid result when compared to the quarterly average of last year, just over 200 million zloty. And the year-on-year evolution in Q1 is made versus a high comparable base of the first quarter of 2023. when we recorded very high gains from sale of real estate as two-thirds of the full year total of this category were reported in Q1. Finally, cash generation benefited from a higher EBITDA and from lower payments for the capex versus the ones that we have reported in 2023, first quarter of 2023. Let's now review our results in Q1 in more detail, starting with the top line. So total revenues for Q1 decreased 1.8% year-on-year, as driven down by lower sales of IT and IS and of energy trade. The most important takeaway, however, from Q1 revenues is that revenues from core telecom services are solid and grew by over 4% year-over-year. This growth rate even improved slightly versus the one that we registered in Q4. Core telecom revenues are benefiting from a simultaneous expansion of the customer basis with yearly growth of 3% in mobile, 5% in convergence, and 14% in fiber. And also, they are supported by a simultaneous increase of the main ARPU indicators, with a 1.7% growth in mobile, 4% growth in broadband, and 4.6% increase in conversions. Revenues from the core telecom services are key to our margin creation, and so we're happy with their continued solid growth. Then, as you can see, Q1 revenues from IT and IS services have decreased year over year. The IT and IS revenues undergo a cyclical slowdown, resulting from the broad IT market downturn and from lower demand from the public sector in a post-election period. IT and IS is an important value driver for us, and we are confident in its potential in the future. We anticipate a gradual rebound in this activity starting from the second semester. IT and IS is also our great asset in the long term, increasing our competitive position on the business market. Finally, other revenues were pulled down by lower MTR rates and by a drop in energy resale. The latter decreased as a result of two factors. Firstly, a very high comparable base of Q1 2023, when they were much higher than in the remaining quarters. And secondly, by lower prices driven by the energy market and by changes in regulations. To sum up, Q1 shows the solid growth of the core telecom services, giving us the confidence for the value creation in 2024, while the IT and IS slowdown should ease in the second semester. Let's now look at our profitability on slide 9. Our EBITDA in Q1 increased by a strong 4.9% year-over-year. It benefited both from the growth of the direct margin and from lower indirect costs. The direct margin increased year-over-year, even if slightly slower than in the past. The main drivers of this are firstly, continued solid growth of margin stemming from the core telecom services, and secondly, a cyclically lower margin from IT and IS revenues and from the energy trade, reflecting their revenue performance as discussed a minute ago. Given the strong performance of the core telco business and the seasonality of the IT and IS downturn, we're confident that the overall direct margin dynamics will improve in the subsequent years. Our indirect costs decreased year-over-year, marking an improvement to their dynamics. This was due to two main reasons. Firstly, Our energy costs were 17 million below last year due to lower prices. Secondly, we report a higher net other operating income, mainly due to efficiency gains made in some key projects. We are happy with the EBDA result for Q1. This result gives us the full confidence in our ability to deliver the 2024 objective, as well as in our ability to deliver the long-term goal of the dot-grow strategy that ends this year. Let's now review cash flow and balance sheet on slide 10. Our organic cash flow has substantially increased versus Q1 of last year. It came from two elements. First of all, from the higher EBITDA, which is the main building block for cash generation over the long term. Secondly, from lower cash capex. This reflected lower payments for prior year capex than we had in Q1 of 2023. Our balance sheet remains very sound with financial leverage at 1.1 times EBITDA. and the effective cost of the existing financing of just over 3%. As we speak, we are refinancing an important part of our debt, which is due in May. Following this refinancing, we expect the effective interest rates just above 4% as the new debt will reflect current market terms for financing. This is all from me for today, for the presentation. Thank you for your attention, and I hand the floor back to Dmyra.