Orange Polska Sa

Good morning. Thank you for standing by and let me welcome you to Orange Polska results conference for quarter of 2025. My name is Leszek Iwaszko and I'm in charge of investor relations. At this time all participant lines are in a listen-only mode. The format of the call will be a presentation by the management team followed by the Q&A session Speakers for today will be Ludmila Klimok, the CEO of Orange Polska, and Jacek Kunicki, CFO. I'm passing the floor now to Ludmila to begin the presentation. Thank you, Leszek.

Good morning, and welcome to our conference to summarize first quarter of 2025. So let's start with slide four, with key highlights. So it was a quite important particular quarter for us. First and foremost, we announced and started to execute our new Lead the Future strategy. With this strategy, we target to grow shareholder value through high financial outputs, high cash flows, and higher dividends. And to achieve this, we will mix well-proven mechanism with new sources of growth, including new wave of cost transformation to boost our efficiency. Another important event was obviously the auction for 5G 700 MHz band. And we are very pleased that we have secured two blocks at the best possible price. This spectrum is very important as it will open new opportunities for us to deliver to our customers, to consumers and to businesses the best quality of 5G connectivity for handsets, for wireless and for new use cases which we will develop. As you recall, a month ago, We have presented our plans in these areas in detail. Another vital consequence of the auction is also a much lower than our previous expectations price for the renewal of licenses for 800 MHz spectrum, which is scheduled for 2031. But switching now to current business and to Q1 performance, let me tell you that results for the quarter were solid and in line with our expectations. We are quite satisfied with our commercial performance as we achieved good growth of customer basis. across all main segments and services and growth of ARPOR. On the business market, we are very glad that our IC&S revenues are back to growth, although we should state that the market environment in this area is still volatile. And as As an output, our financial results are very solid, especially if we look at operating activity as demonstrated by more than 2% revenue growth and almost 3% of EBDL growth. And as usually, let's zoom now on highlights of our commercial activities on the next slide. So, talking about our commercial performance. Q1, the first quarter, reflected solid customer demand and our focus on value. but also intensive market competition, especially in fiber and convergence. In convergence, we are very happy that both customer volumes and ARPOR grew at a solid pace. ARPOR was benefiting from our value approach in pricing and good demand for TV content and growing popularity of higher speeds of fiber. The options with higher speeds, which we are actively promoting, already constitute close to 60% of our new sales. In the same time, fiber customer base increased 15% year-over-year. It is a very good dynamic. considering intensive and diverse competitive landscape. Six broadband ARPOR growth accelerated to 4.6% year-over-year. One of the reasons which was contributing to it are higher ARPOR customers of fiber operators acquired by us in last quarter of last year. and accordingly contributing now to the results in Q1. For mobile, customer base continues to grow at 3%, which is very solid given market saturation. Customer net additions in first quarter were really outstanding with both segments, consumer and business, contributing to this achievement. and we are very pleased that our value strategy translates into our pull growth. Please note that in January, we once again implemented price increase on the consumer offers, which has helped us to achieve these results. These solid results demonstrate that we maintain good balance between volume and value in our commercial activity despite very active competitive environment and this is essential for our future value creation. We have recently launched a new improved TV offer in combination with Fiber. It will help us to encourage new households, new customers to choose offers from Orange, which is our strategic ambition. Thank you for now, and I hand over the floor to Jacek.

Thank you, Izmira. Good morning, everyone. Let's start the financial review on slide seven with highlights of our performance. We've generated a very solid increase of both revenues in EBITDA in the first quarter of the year, making a good start of 2025. Revenues are back to growth with outstanding dynamics of the core telecom revenues exceeding 7%. Strong core business performance resulted in higher direct margin And in turn, this drove an almost 3% year-over-year growth of the EBITDA. The net income has reached almost 200 million zloty in Q1. It decreased year-over-year due to a different timing of real estate sales. And these are expected to be much more back-ends loaded in 2025 as compared to the phasing that we have achieved in 2024. Our e-CAPEX exceeded 400 million zloty in the first quarter of the year as we progressed full speed with the EU-subsidized fiber rollout for the white zones and with transformation projects to drive efficiency gains. It was also influenced by the above-mentioned timing of real estate sales. We're comfortable with this result, and thus we reiterate that 2025 e-CAPEX guidance in the range of 1.8 to 1.9 billion zloty. Finally, the organic cash flow was seasonally low, reflecting payments for peak commercial and investing activity that occurred in the last quarter of 2024. In addition, it too reflected the timing of real estate sales that is different between the two years. Let's now review our results in Q1 in more detail, starting with the top line. We're pleased that our revenues are back to growth in Q1. We're even more pleased when we look at the structure of this growth. Core telecom services, so the key driver of our profits, grew by over 7% year-over-year. And while the 7% may be a bit flattering comparison, the underlying growth amounted to just over 6.5%. And we're more than pleased with this trajectory improvement. The acceleration versus the tempo achieved in the previous quarters was achieved due to four important drivers. First, consistent growth of all our key customer bases. Second, upward price adjustments. As we raised postpaid tariffs in Q1 of this year, and we increased the prices of prepaid twice during the last five months. Third driver is the upsell of additional services like content or additional mobile themes to convergents and to our convergent customers. And finally, the use of AI driven customer value management in everyday commercial tactics. Our next key area of growth is IT and IS. Its revenues finally increased year over year after we have registered a weaker performance throughout last year. The key driver of this was an increase in integration and resale of software licenses. So obviously the contribution to profits was much smaller than the contribution to the supply. Sales of IT subsidiaries were broadly stable that year over year, as the market continues to be quite challenging. Finally, revenues from equipment dropped by 14% year over year, affected by a market decline, but also by the lower price mix of handsets that we have sold in Q1 as part of our commercial tactics. To sum up on the top line, we're very happy with the pace of growth of the core telecom services. We're satisfied with IT and IS improvement. even if we note that more progress is still required throughout the year to get this revenue line to the proper growth trajectory that we wish to have over the Lead the Future strategy period. Let's now look at our profitability on slide number nine. Our EBITDA in Q1 grew by almost 3% year over year. It benefited from a solid growth of the direct margin, which has more than compensated for the increase of indirect costs. The growth of the direct margin was driven by strong and consistent growth of core telecom services that I have just described. Direct margin was at roughly 55.8% of revenues, so it is in line with the strategy slightly above the 55% level that we would like to maintain or improve throughout this new strategic period. Our indirect costs have increased year over year. They were driven up by salary increases and cost pressures stemming from inflation. These were partly compensated by cost savings and favorable forex impacts. The ratio of indirect costs to revenues was at 29.8%. And obviously, while we aim to bring this below 29.5%, hence more work is needed to increase the efficiency of our operations in the mid-term. To sum up, we're satisfied with the EBDA result for Q1. It gives us the confidence to deliver the full year objective and The direct margin growth and indirect cost efficiency is obviously our recipe for the shareholder value creation in the new strategy, and we will continue to execute this in the subsequent quarters of 2025. Thank you very much, and I hand the floor back to Dimila for the conclusions.