The company – Orange IR

Comprehensive services

We offer a broad portfolio of telecommunication products and services for individual, business and wholesale customers. We are the biggest fixed-mobile convergent operator in Poland, offering consistent connectivity based on different technologies.

#1 network in Poland

We are the #1 network in Poland, with the largest number of both mobile and fixed customers. We offer the highest mobile data transmission speed* as well as fibre lines with download speeds of up to 1 Gbps. We ensure that our customers can use new technologies safely. We operate in harmony with the environment.

*Ranking of speed of mobile Internet in Poland in 2019 by Notel (RFBenchmark)

Safety and reliability

We want the use of the latest technologies to be easy and risk-free. We have created a dedicated expert team, CERT Orange Polska, which monitors threats on the net, responds to them as they show up and supports Internet users.

Orange.one Strategy

Orange.one: A new momentum for Orange Polska

In September 2017, we announced a new strategic plan for 2017–2020 called Orange.one. Our vision is to become Poland’s first choice telecommunications operator for consumers and businesses by 2020, while creating a business model that will generate sustainable growth in both sales and profits. We expect to achieve these objectives by developing services and products of unmatched quality, supported by the comprehensive development of our fibre network and digital capabilities, and by significantly increasing our operational efficiency.

Orange.one reaffirms the key priorities of the previous strategy announced at the beginning of 2016, while giving them a new momentum. To achieve the goal of sustainable turnaround, we will need better execution, clearer focus and more agility. All our business decisions will be driven to a greater extent by value creation, and our customer propositions will be driven by simplicity and consistency. Poland’s telecommunications market is characterised by very intense competition and even though there are some clear signs of a shift towards value-oriented strategies, we do not expect any significant change in the level of competition.

Orange.one strategy

We have right assets at hand

We believe to have adequate assets to implement our strategy, and what we need is better execution to get the proper return and value out of these assets. We have Poland’s largest base of mobile and fixed line customers, who have trusted us. For several years we have continued to heavily invest in our mobile and fixed networks, and their connectivity has been appreciated by both retail and wholesale customers. We operate under a global and broadly recognised brand, which is a major source of competitive advantage, as it is considered innovative and enjoys very high awareness. The Company’s another strength is highly motivated and skilled employees, in whom we invest to make them contribute to value creation.

Strategy for Orange Polska

Orange.one Strategy

Consumer market strategy driven by convergence

The key to success in the B2C market is convergence, or sales of mobile and fixed line service bundles. Convergence addresses household telecommunication needs in a comprehensive manner, increases customer satisfaction and reduces churn. We still see a great potential in convergence for both upselling additional services to the households where we are already present and entering new households with our services. According to our research, about 90% of Polish households still buy telecom services from several suppliers. A fast, modern and reliable network is a critical factor to success in convergence. Our ambition is to have over 5 million households, or about 40% of all households in Poland, connectable to our fibre network by 2020. While implementing our strategy in the mass market, we also account for customers who for some reason do not need or do not want convergence, offering them attractive tariff plans and equipment at competitive prices. In customer acquisition and retention, our guiding principle will be to create value for the Company.

Business market strategy driven by digital transformation

In the B2B market, our main ambition is to become the first choice partner for our customers in digitisation. Digitisation is currently the key transformation process in business organisations with respect to both their internal environment and their products and services. This process involves increased demand for data transmission, business migration to the cloud, increased cybersecurity needs and demand for tailor-made and much more flexible ICT solutions. Development in these areas is our priority. We continue to improve connectivity, which provides the basis for digitisation of both corporations and small businesses. Convergence, which is the key growth engine in the B2C market, is also a pillar of our offer to small to medium companies, often supplemented by an ICT component. In the next few years, the Internet of Things will remain a major growth area. We continue development also in this segment, benefiting from the fact that we are currently the market leader in machine-to-machine (M2M) services.

Our common ambition for both B2B and B2C segments is to achieve the number one position in NPS (Net Promoter Score) ranking on the Polish market by 2020.

Financial goal: Sustainable growth of revenue and EBITDA in 2020

Proper implementation of the Orange.one strategy is to lead to the development of a business model which will enable us to return to a sustainable and stable growth path. In financial terms, this should result in a gradual improvement in trends, generating sustainable revenue and EBITDA growth.

It is to be driven by the following factors:

significant growth of convergent customer base and convergent services,
more focus on value generation,
successful development in adjacent business areas (ICT, Orange Energy, Orange Smart Care, sales of equipment), and
a diminishing share of legacy services in total revenues.

The improving revenue trend will contribute to an improvement in the EBITDA trend, which will be also driven by operating leverage and continued cost optimisation. We forecast a reduction of underlying indirect costs by 12–15% by 2020 versus 2016. Savings will be generated across all cost groups, including labour, outsourcing, general & administrative, energy and network maintenance costs. They will result largely from comprehensive transformation of Orange Polska’s processes at each stage of our business model: networks, products and services, distribution and customer care. The transformation of our processes will aim at their simplification, automation and digitisation.

The intended capex will reflect our connectivity programme and business transformation needs. Our capex ambition is to spend at least PLN 2 billion annually by 2020, including ambition to spend ca PLN 2.8 billion on fibre network deployment in 2018–2020 to cover more than 5 million households by the end of 2020.

Current performance and expectations validate strategic objectives

We believe that our financial performance in 2018 and 2019, as well as our expectations for 2020 fully validate our Orange.one strategy. In 2018, we reported the first improvement in our operating profitability measure (adjusted EBITDA) after twelve years of decline. The upward trend continued in 2019 (while adjusted EBITDA was replaced by EBITDAaL as the key measure of operating profitability). In 2018, the growth resulted exclusively from cost savings and higher gains on sale of real estate, whereas last year it was also driven by revenues, which grew for the first time in a long period. The reversal of prolonged negative trends has been mainly a result of the implementation of our convergence strategy, monetisation of fibre network investments, steady focus on value generation in our commercial activities, ‘more for more’ pricing strategy and very high cost savings. Operating profitability is improving despite continued structural pressure on high-margin traditional fixed line services, the erosion of which almost fully filters through to profits. The ambition to sustain this growth in 2020 has been significantly affected by the COVID-19 pandemic. We estimate that despite a 1.7% increase in revenues in the first half of 2020, it will not be possible to attain full-year revenue growth. The results of the first six months were strongly supported by very good performance in ICT, driven by contracts concluded before the pandemic and the consolidation of BlueSoft. In the second half of 2020, we expect pressure on the business market, especially in the ICT segment, a further decline in roaming revenues, and a potential further decrease in equipment sales. However, we are reiterating our full-year EBITDAaL growth guidance, as the results of the first six months, during which EBITDAaL increased by 8%, represent a significant contribution towards meeting the challenges in the second half of the year. Additional measures to mitigate the negative impact of the pandemic on the Group’s performance (e.g. a change regarding jubilee awards, enabling release of balance-sheet provisions) have been a major support in this area.

Our services

We are one of leading telecommunication providers in Poland, operating in all segments of the Polish telecom market.

The Orange Polska Group owns the largest telecommunication infrastructure in Poland, providing modern fixed and mobile services, brodband and data services, as well as multimedia services.

In addition, we offer comprehensive ICT (Information and Communications Technology) solutions for business, provide leased lines services, sell telecommunication equipment and carry out telecommunication infrastructure development. We also sell electricity to both residential and business customers.

Orange Love convergent offer

Orange Love, our flagship convergent offer, is a predefined bundle of fixed and mobile services, addressing telecommunication household needs in a comprehensive manner. It is available on any broadband technology (fibre and copper), and also on LTE positioned as home broadband. The Orange Love portfolio consists of several packages: Mini (fixed broadband + SIM card), Standard (fixed broadband + SIM card + home phone + TV package of around 100 channels), and two richer packages called Extra and Premium, designed mainly for customers looking for much richer TV content and more abundant mobile data packages on the SIM card. The basic packages can be extended for additional SIM cards (at a lower price) or value-added services, such as Orange TV GO or multiroom.

Convergence is the source of competitive advantage for us. It increases customer loyalty and allows us to upsell more services, winning a higher share of household media and telecom budgets. It also increases customer satisfaction and reduces churn (as churn rate is significantly lower than among single service users).

At the end of 2019, our B2C convergent customer base stood at 1.37 million, and the total number of services provided in the convergence scheme among B2C customers exceeded 5.6 million. On average, each convergent residential customer uses more than four Orange services, and this ratio is on a stable upward trend owing to upsell of additional mobile and TV services.

Mobile services

We offer a variety of both post-paid and pre-paid services. As a result of our ongoing investments in the mobile network, 4G coverage for all bands was 99.86% of the population on 98.25% of Polish territory at the end of 2019. On July 1, 2020, Orange Polska launched 5G technology via 1,600 base stations. Almost 6 million customers are covered by our 5G network.

We offer a broad range of tariff plans to our B2C and B2B customers. Our post-paid offer for B2C customers consists of four major tariff plans (‘Mobile Plans’) at a fixed price of PLN 35, 45, 55 or 75, depending on the selected data pool. All our Mobile Plans feature unlimited calls to all fixed and mobile networks in Poland as well as roaming calls within EU. All agreements are concluded for a fixed period of time, typically 24 months. Our customers can also buy handsets in instalments at any point during the lifetime of their service agreement. Our offer is complemented by a wide portfolio of other devices: tablets, netbooks, laptops, modems, routers and TV sets.

Our pre-paid offering, integrated under the brand name of ‘Orange na karte’, enables customers to get access to our network upon the purchase of a starter pack (SIM card + pool to be used for mobile services). In the pre-paid scheme, there are no monthly subscription fees and customers can top up their accounts at any moment.

Orange Polska’s mobile services base has been steadily growing. At the end of 2019, it reached almost 15.3 million, which is an increase of over 3% versus the end of 2018. This figure included 10.2 million post-paid customers and 5 million pre-paid customers.

Broadband access and TV services

We provide comprehensive data services using ADSL, VDSL and FTTH (Fibre To The Home) fixed technologies as well as mobile technology. B2C customers are offered agreements for 24 months or an indefinite period, with download speeds of up to 300 Mbps, up to 600 Mbps or up to 1 Gbps.

Total number of fixed broadband customers exceeded 2.6 million at the end of 2019. Our fixed broadband customer base is undergoing major technological transformation. Mostly non-competitive ADSL technology is being increasingly replaced by growth technologies, mainly fibre and wireless for fixed, owing to our investments in the network connectivity.

At the end of 2019, more than 4.2 million households were connectable with our fibre network. Our fibre services were available in 142 cities in Poland compared to 117 cities at the end of 2018. In 78 cities, our fibre network reached over 50% of all households. Our fibre customer base stood at 520 thousand at the end of 2019.

We provide TV services using both IPTV and DTH (satellite) technology. We have adopted a strategy of a TV content distributor, co-operating with all content providers. Currently, Orange TV offer consists of over 190 channels, mostly at HD resolution; three channels are provided at 4K quality. In the beginning of 2020, we provided access to the Netflix streaming platform, so that Orange TV customers can pay for both Netflix subscription and Orange services on a single invoice. In 2019, we offered our TV customers an option to order additional TV packages at any time without a loyalty agreement. The take-up of Orange TV services has seen steady growth, reaching 994 thousand customers at the end of 2019, mainly as a result of the development of the IPTV technology.

Orange Flex

In May 2019, we launched an innovative offer called Orange Flex. It is fully digital and managed with a smartphone app, which enables customers to adjust their mobile plans using their smartphones and subsequently change packages depending on their needs with no loyalty agreements involved. Customers can choose from among four tariff plans which differ in data transfer limits. They can change these plans (as often as every month), as well as buy additional services in real time or even temporarily disable the service with no consequences. Customers effect payments with a payment card attached to the application, so there is no need for invoices.

Orange Flex was developed from scratch and based to a large extent on feedback from our customers. Flex combines the flexibility of pre-paid offers with the convenience of post-paid ones. A breakthrough feature is that customers can activate a new number in a few minutes with no interaction with an operator using eSIM technology. We believe that this highly innovative offer sets a new benchmark for the future of telecommunications services, which are to be marked by full flexibility and digital experience.

Fixed voice services

As Orange Polska, we offer fixed voice services including local, domestic-long-distance, fixed-to-mobile and international calls. These are available both in PAYG or minute-packages in the subscription. At the end of 2019, we had 3.1 million fixed voice customers, including 1 million customers using these services in the VoIP technology.

Our fixed voice customer base (excluding VoIP) has been gradually eroding. The decline can be attributed mainly to structural demographic factors and the popularity of mobile services with unlimited calls to all networks. It is also a result of our convergence strategy, which stimulates partial migration of customers to VoIP.

Data solutions for business market

We are the main provider of leased lines in Poland, both analogue and digital options, with a standardised transmission band. Our key customers include other telecom operators, government ministries, financial institutions and ISP providers.

We offer a broad service portfolio for small to medium companies as well as sophisticated solutions for large corporations.

Regulatory environment

General rules

The Polish telecommunications market is subject to sector regulation established at the EU level and transposed to national legislation. It is supervised by the National Regulatory Authority, the Office of Electronic Communications (UKE). As a general rule, the telecom market is divided into separate markets for wholesale and retail services (so-called “relevant markets”). UKE analyses the level of competition within each of these markets and, based on this analysis, decides on the necessary level of regulations. As a former incumbent operator on the fixed services market, Orange Polska is designated an entity with significant market power and is subject to regulations in certain market segments. As such, this regulatory regime has a significant impact on some of the services we provide. On the mobile market, regulations are equal for Orange Polska and other big market players. Our activities are also subject to supervision by the Office of Competition and Consumer Protection (UOKiK).

Core regulations

We consider the following regulations to be the most important for our business at the moment:

Access to wholesale broadband services (also known as Bitstream Access, or BSA) and physical access to the last mile infrastructure (Local Loop Unbundling, or LLU) are mandatory under cost orientation obligation (verified by Margin Squeeze/Price Squeeze tests) and non-discrimination rules (including Chinese Walls); and this legislation covers both fibre and copper lines. Orange Polska is not obliged to provide BSA on fibre and copper infrastructure in 151 deregulated municipalities, while LLU is not required in 51 deregulated municipalities.
Regulation of call termination services in the fixed network – Orange Polska is not the only operator subject to this regulation (around 200 operators are regulated) but its regulation is the most restrictive in terms of termination rate and wholesale access conditions.
European regulations regarding roaming prices in the European Union – Since 15 June 2017, retail prices for roaming services have to be equal to domestic retail prices. Operators are protected against abusive use of roaming through the “fair use” policy. As roaming price regulations have a negative impact on both revenue and profitability, Orange Polska has applied to UKE for the right to use surcharge mechanisms for customers who abuse “Roam Like at Home” rules.
Regulation of international calls – Since 15 May 2019, prices for international calls within the European Union should not exceed EUR 0.19 per minute for calls and EUR 0.06 per SMS message. The regulation applies to consumers only and will remain in force for five years.

Obviously, as a business entity, we must also comply with administrative decisions and general laws and regulations. Recently the legal environment has been changing dynamically.

Further amendments to telecom rules are pending both at European and national level.

Recent trends in regulatory environment

The regulatory regime over the past few years has been evolving toward a policy of balanced intervention. This is mainly related to changes in the structure of the overall telecom market in Poland and a much higher degree of competition in particular segments (e.g. the emergence of cable operators as important players in retail fixed broadband).

In particular, the Office of Electronic Communications (UKE) has issued decisions that will ensure symmetrical access to cable ducts and regulate access to in-house wiring operated by the largest infrastructure owners. The relevant regulatory obligations have been imposed not only on telecom operators, but also on the biggest cable TV operators.

We also expect a significant change in Fixed Termination Rates (FTRs) and Mobile Termination Rates (MTRs). In the European Union regulations there are provisions for the implementation of a single wholesale rate for termination of voice calls on fixed and mobile networks in EU countries. The final level of the fees is not known yet. Member states will have to implement the new rates at the beginning of 2021.

Organisation

Orange Polska S.A.

The Orange Polska Group comprises Orange Polska S.A. and its subsidiaries^(*). The Group is part of the Orange Group based in France. Orange Polska shares are listed on the Warsaw Stock Exchange. The Group is the principal provider of telecommunications services in Poland. The Group provides mobile and fixed telecommunications services, including calls, messaging, content, Internet access and TV. In addition, the Group provides ICT (Information and Communications Technology), leased lines sand other value-added telecommunication services, as well as sells telecommunication equipment. Furthermore, Orange Polska provides data transmission services, develops telecommunication infrastructure and distributes electricity and financial services.

The Orange brand is highly appreciated by Polish consumers for the choice and quality of the services offered. Currently, mobile and fixed voice, mobile and fixed broadband, data transmission as well as multimedia services: mobile television, mobile portal and music content are provided under the Orange brand. For more information about the Orange portfolio please visit www.orange.pl.

Orange Polska’s registered office is located in Warsaw at 160 Aleje Jerozolimskie St.

(*) The full list of subsidiaries is provided in the annual IFRS Consolidated Financial Statements of the Orange Polska Group (Note 1.2. Entities of the Group) – see: Results center.

BlueSoft

One of the market leaders in software and applications for business. It provides IT services in areas such as application development and integration, system customisation, analytics and cloud services. BlueSoft sells its tailor-made solutions to blue-chip clients from a number of sectors, including banking and insurance, utilities, pharmaceuticals, telecommunications and logistics.

Established in 2002, the company was acquired by Orange Polska in 2019. About 650 people, mainly consultants and programmers, work for the company. It generates revenues of approximately PLN 120 million per year. Over 80 companies around the world use BlueSoft’s services.

For more information please visit: www.bluesoft.com

Orange Energia

The largest alternative retail electricity reseller in Poland. The company was established in 2017 and is the only member of the Orange Group operating in the area of electricity distribution. It provides clean energy, 100% from renewable sources (RES), to over 120,000 customers.

For more information please visit: www.orange.pl/view/energia

Craftware

The company has been in business since 2009. It offers the analysis, design and implementation of customer relationship management (CRM) systems. It has extensive experience in the implementation and integration of connected CRM systems, specialising in Salesforce, which is world’s #1 CRM platform used by more than 150,000 companies worldwide. Craftware’s customer base includes blue-chip companies from the pharmaceutical, FMCG, retail and finance industries. Its workforce exceeds 300 people. It generates revenues of approximately PLN 63 million per year.

On December 7, 2020, Craftware was acquired by BlueSoft, a member company of the Orange Polska Group. With this acquisition Orange Polska has expanded its ICT competence in the market of specialised services for enterprises, thus responding to the growing needs of business customers related to digital transformation.

For more information please visit: www.craftware.pl

TP Teltech

The company specialises in the maintenance of telecommunication networks, design and development of telecom infrastructure, as well as provision of burglary and fire monitoring services to Orange Polska and external customers.

For more information please visit: www.tpteltech.pl

Integrated Solutions

One of the largest ICT system integrators on the Polish market. It has been active since 2011, offering innovative solutions in the areas of integration of local and wide area networks (LAN and WAN), unified communication, security of networks and devices, as well as data centers along with cloud computing. It sells its products to transport and logistics industries and holds a significant market share in solutions for public institutions, education, banking, media and a number of other sectors.

Integrated Solutions advises its customers on how to develop their business even further with digitisation and modern technologies. It provides ready-made solutions and ensures the highest level of implementation security.

For more information please visit: www.integratedsolutions.pl

Orange Foundation

The Orange Foundation works for the modern education of children and youth. It teaches young people how to use technology wisely and creatively, so that they can fully develop their potential and competencies necessary in the future. With the Foundation, they learn the online safety rules and the basics of programming, robotics, artificial intelligence and 3D printing. It also supports teachers and parents in developing digital skills. Orange employees are actively involved in the activities of the Foundation as volunteers.

The Foundation was established in 2005 by Orange Polska S.A. to achieve socially useful goals. It has received numerous awards and distinctions for its initiatives since then.

For more information please visit: www.fundacja.orange.pl

History

The timeline below offers a few glimpses into the development of Orange Polska S.A. from a national telephone company to a twenty-first century communications corporation.

Acquisition of 100% shares in Craftware, an ICT integrator, specializing in CRM solutions
Orange Polska is expanding its ICT business by acquiring 100% shares of BlueSoft, software house providing tailor-made solutions for blue-chip clients
Launch of Orange Flex, a fully digital offer supported by a mobile application
Launch of Orange Love, a convergence offer for households
Announcement of the new Orange.one strategy for 2017-2020
The Company commences massive development of FTTH lines
31.12.2013 TP S.A., PTK Centertel and Orange Polska sp. z o.o. merged into a single company known as Orange Polska S.A.
Orange becomes main trade brand
TP S.A. signs a co-operation agreement with TVN
TP S.A. signs a groundbreaking Arrangement with the Regulator
TP S.A. introduces its TV offer (IPTV and satellite)
PTK Centertel, the mobile arm of the Group, launches services under the Orange brand
Consortium increases share ownership to 47.5%
Consortium of France Telecom and Kulczyk Holding SA becomes strategic partner of TP S.A. (35% shareholding)
Privatisation and listings in Warsaw and London (GDR)
Telekomunikacja Polska established
Polska Poczta, Telegraf i Telefon (Polish Post, Telegraph and Telephone) established