.Grow Strategic Plan 2021-2024
a Bold Next Step on the Value Creation Journey

Orange Polska is today a leader in all key market segments of the Polish telecom market. After having successfully completed Orange.one strategy, we are better prepared for the future, with products that are demanded by customers, assets that support these products and a more efficient cost structure.

The Company is now ready to start the next phase of its value creation journey: .Grow strategy. With this new four-year plan to be completed in 2024, we have shifted our emphasis to growth and monetising our investments.

The .Grow strategy is an evolutionary step to stimulate and accelerate sales and profit growth, while laying the foundation for growth beyond 2024.

Financial ambitions
.Grow will generate shareholder value

With .Grow we are entering a path of faster and more sustainable growth, based on solid foundations. 

While expanding revenues we will benefit from high operating leverage that will accelerate EBITDAaL and cash flow growth. In the process, we will monetise our fibre and mobile investments and generate sustainable returns. This is the key to .Grow and what makes it stand out from past plans and performance. In our previous strategy, the turnaround was generated by huge savings on indirect costs, while direct margin continued to fall. In the coming years, the key driver for EBITDAaL growth will be revenue expansion fuelled by commercial activity. It will make this growth fundamentally healthier. 

We will maximise our core business, at 75% of revenues, and we have identified three main growth engines: convergence, ICT and wholesale. We plan to grow convergence and ICT revenues at a minimum CAGR of 8% and around 10%, respectively. 

Our cost transformation will be continued. Indeed, the same digitisation trends that are enabling our growth leverage will also help us drive costs down further still. At the same time, using AI and process automation, we will improve our customer service: a win-win. We expect inflationary pressure to offset some of this margin expansion, but enough will find its way to operating profit to be able to grow our EBITDAaL margin. 

Our smart capex strategy will focus on growth, especially fibre and 5G, and on efficiency. Despite these significant investments, we aim to keep keep eCapex at a steady annual level of PLN 1.7–1.9 billion on average over the period. This is how our business growth will translate into increasing cash flow generation. 

We intend to resume dividend payments starting in 2022. We propose PLN 0.25 per share dividend payment in 2022 from 2021 profits, provided that Company’s net debt/EBITDAaL ratio will not exceed 2.1x, including the result of the 5G spectrum auction. We consider this dividend level as sustainable floor for the future. In the future, we will conduct further changes to dividends on yearly basis taking into account projections of underlying financial results and long-term financial leverage forecast versus 1.7x to 2.2x leverage corridor. 

Convergent value strategy focused on the household…

Our network, supreme mobile connectivity with 4G and now 5G, plus fibre, is more than just infrastructure. It is the building stone of our consumer business proposition: a comprehensive offer for the household, comprising connectivity and entertainment, based on cutting-edge technology. This is what allows us to grow organically. In the mass market, convergence, or sales of mobile and fixed-line service bundles, will remain the key to value creation, as it addresses household telecommunication needs in a comprehensive manner, increasing customer satisfaction and reducing churn.

We still see a significant potential here for both upselling additional services to households where we are already present and entering new households with our services. Our ambition is to expand our convergent customer base by at least 20%, while achieving a further significant increase in ARPO.

Our differentiators
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Fibre & Mobile

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Convenient Multiservice: selection of attractive content & services in one place

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Customer experience: digital & effortless with human inside

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Simplicity: easy to buy and use

Convergent customers growth fuelled by fibre expansion.
ARPO growth driven by value strategy and upsell.

Our strong core will allow us to bring the 360-degree approach towards the household further, to the augmented home. We like to see our role as provider of enhanced digital services for your home. Obviously, our main service will remain connectivity, fixed and mobile, but we would to explore in the future value-added services, such as entertainment, cybersecurity, work from the home proposition, smart home, green Energy. Fibre & big customer base provide an opportunity to expand value.

…with fibre as a key driver of value
We will further significantly expand fibre reach (m households)

The main success factor will be further expansion of our fibre reach
We intend to increase it by 2–3 million households by 2024, that is by 40–60% compared to the end of 2020. Over the last few years we have heavily invested in fibre network rollout, establishing fibre as a synonym of fast and reliable Internet in Poland, which has been reflected in Orange Polska’s perception as the Internet provider of choice. In the coming years, we will rely more on wholesale access to the networks of other operators. These will be mainly the network constructed by FiberCo and the networks built the within the Digital Poland Operational Programme (POPC). Fibre generates much higher average revenue per user compared to copper technologies. This can be attributed mainly to broader opportunities to sell content and to higher speeds, which are much better perceived by customers and are an increasingly popular choice.

Fibre & big customer base provide opportunity to expand value

Fibre
Mobile
TV/OTTs
Security
Green Energy
Gaming & Fun
Smart Devices
Other

New wholesale strategy to maximize value

Wholesale fibre customers
>6x

New opening in Fibre starting with the highly value accretive FiberCo

National roaming extended to monetize existing mobile technology

Entering the MVNO market

The new opening in wholesale will maximise the monetisation of our asset. As part of .Grow strategy, we intend to open wider for business opportunities in wholesale. On the one hand, it is a natural consequence of our investments in the mobile and fixed infrastructure and our ambition to achieve their better monetisation. On the other hand, we see wholesale potential resulting from the development of the fast Internet access market, entry of other market players into the convergence market and gradual deployment of 5G mobile networks. 

It is our ambition to increase the number of customers serviced by other operators at least six times versus the end of 2020, when their base stood at 26 thousand. In addition, we intend to provide greater access to our transport infrastructure. This will include rendering services to Światłowód Inwestycje (FiberCo). We also see potential here for other mobile infrastructure operators interested in connecting their base stations to our fibre network. 

Next level in ICT acceleration …

Orange Polska is the leader in all business segments of the telecommunications market and a leading player in the ICT market. Upon the implementation of .Grow we will become the leader in consultation and integration of comprehensive transformation services for business, enabling companies and institutions to operate effectively in the new digital world. We want to maintain dynamic growth of ICT revenues, at around 10% annually by 2024. We will achieve it by leveraging on our key resources, that is mobile and fibre networks, enhanced by a broad portfolio of services comprising the entire value chain of digital transformation. The key role in this process will be played by further stable growth of our subsidiary Integrated Solutions, the third largest integrator in the Polish market. And we will achieve acceleration in ICT by monetising our investments in new areas and competences, that is in BlueSoft and Craftware. The highest growth is to be achieved in the areas of cybersecurity and software & applications, based on both the expertise of our subsidiaries and the competence developed for internal needs. We will intensify migration to cloud. In terms of adoption of cloud solutions, Polish companies are still below European average. 

…enhanced by 5G as a catalyst for new business
Orange

5G technology will be a new catalyst for the ICT market, particularly in the Internet of Things domain. The new network will be faster and more efficient. It will be able to support millions of connected devices at the same time. Companies will be the first to take advantage of its capabilities. For enterprises, the Internet of Things brings measurable benefits: from increasing effectiveness to reducing energy consumption. The 5G network will enable them to connect all objects in the factory, machines, production lines, temperature or pressure sensors, security systems, into one common network that will allow them to talk to each other in real time. This will be possible thanks to private 5G networks, built with the specific needs of a given company in mind. We want to be the market leader in mobile private mobile networks. Together with our customers we want to create over 40 campus networks by 2025. 

Digital transformation

As part of .Grow, we want to release our internal potential resulting from digital transformation. We will be heading in the direction expected by our customers, while improving our internal efficiency by leveraging more on big data and artificial intelligence. Our ambition is to be the digital operator for Poland. We want to increase the share of digital sales to at least 25% and we intend to use digital care in over 75% of customer interactions. This is a major shift towards efficiency: automating routine tasks, making customer contact with Orange easier, better and more suited to our customers’ needs, wherever they are, whenever they want.

Simplification & efficiency
Orange

To release our potential we need to carry on simplifying, and focus on building those strong foundations for the future. There are several ways that we want to employ digital solutions to become leaner and more efficient.  Big Data and AI will allow us to better position and tailor specific offer for specific customers, translating for example into increase loyalty.  

Big Data and AI can be used in network planning and management. Employing AI for network diagnostics can help us prevent failures based on analysis of data about the network’s behaviour. It can support investment processes, by helping us recommend specific locations for rollout based on actual traffic and customer needs.

In order to make room for the future we need gradually phasing out older access technologies replacing 3G, and by the end of the plan copper. They will be replaced by next generation mobile and fixed networks, improving efficiency and curbing the cost of legacy systems.

We will continue our strategy of optimizing our real estate portfolio. 

#OrangeGoesGreen
Orange

Along with other pillars of our business we want to grow in social responsibility which has always been very high on our agenda. Orange Polska has set ambitious ESG goals for itself and is ideally placed with its services both to help others reduce their own environment footprint and to ensure that no one is left behind. We believe that telecom sector has essential role to play in the transition to carbon neutrality. 

Our primary goal is to be climate-neutral and achieve Net Zero Carbon by 2040, ten years ahead of the EU climate goals. Net Zero covers the entire emissions of OPL: Scopes 1 and 2 (own direct and indirect emissions) and Scope 3 (emission in entire value chain – suppliers, employees, customers). In the first period of action, by 2025, we will reduce our CO2 emissions in Scopes 1 and 2 by as much as 65% compared to 2015. We want to achieve it primarily through increasing the share of renewable energy in the energy mix to at least 60% by 2025 from 0% in 2020. This means that we have to proactively search and support new projects in this area. We will also continue to optimise energy consumption: we have been reducing consumed energy volumes each of the past few years despite constant increase of data volumes on our networks. Deployment of new much more efficient technologies such as fibre and 5G will also contribute here. Average electricity consumption per customer of fibre is around 80% lower compared to copper

To reach 2040 goal we will also accelerate efforts to reduce emissions in the entire supply chain, including suppliers and customers. This will include implementation of the principles of a circular economy. For example we will buy back older smartphones and accept for recycling used or broken ones in every Orange store. 

~65% CO2 emission
reduction till 2025 mainly thanks to renewable
sources

Safe digital inclusion
Orange

Digital inclusion has a particularly important social dimension today. On the one hand, this means making access to high-speed Internet more available, and on the other hand – education and developing digital competencies. We are active in both of these fields. We invest in optical fiber, also by using public funds, so as to reach the areas located far from cities as well. These areas often lack infrastructure and access to modern services. And in addition, we have been supporting the digital education of Poles for over 15 years through our Orange Foundation. Our Orange Foundation is committed to this and implements digital education programs in schools. Over 5,000 children will take part in them each year. Along with our social partners, we also train teachers as part of the project called Lesson: Enter, which is co-financed by the European Union. This is the largest initiative of this type in Poland. 75,000 teachers in total will benefit from the program.

Reducing socio-digital exclusion of vulnerable groups:

  • NPS #1  in senior segment

Digital education:

  • > 5 500 children / year in educational programmes (safety, programming)
  • >75 000 teachers in program enhancing their digital skills in 2020-2023

People and diversity
Orange

We will able to reach our strategy goals, only if we have an open culture. And an open culture must mean diversity. The data prove that diverse teams are more effective and work better. This applies to all levels of an organization, from the frontline to the management board.  We aim to create a supportive environment and promote talents and to pursue more opportunities and greater diversity. Now, we focus on increasing the share of women leaders – up to 35% – and 40% share of female managers. 

Focus on equality in employment:

35% women in leadership

40% women in management

Presentation of Orange Polska strategy
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