Cyfrowy Polsat sums up its results for Q1 2017. The Group recorded an increase in the number of contract services, as well as revenue and EBITDA

Date: 
11 May 2017

Cyfrowy Polsat Group has just published very good operational and financial results for Q1 2017. As a consequence of the consistent pursuit of its long-term development strategy, the group has recorded growth of both its operating and financial results, which exceeded analysts’ expectations. The Group’s revenue reached nearly PLN 2.4 billion, EBITDA was PLN 929 million, while EBITDA margin increased to 39%. In the course of its efforts aimed at regular deleveraging of the Group, Cyfrowy Polsat decided to go forward with the early redemption of all Litenite Notes for the amount of PLN 945 million. At the same time, while anticipating that free cash flow generation will continue at a high level also in 2017, the Management Board presented a recommendation concerning dividend payment for 2016 in the amount of PLN 0.32 per share.

Key operational and financial figures for Q1 2017

  • Stable growth of saturation of the contract base with integrated services:
    • Already 23% of the Group’s contract customers use a multiplay offer,
    • Over 1.3 million customers of integrated services,
    • Low churn ratio of 8.5% in Q1 2017.
  • Stable contract customer base – exceeding 5.8 million, with the average number of services per customer at the level of 2.28. Average revenue per contract customer increased by 2.4% YoY, reaching PLN 89.1.
  • Strong growth in the area of contract services – up by 593 thousand YoY, with the total number at 13.3 million. Contract services account for over 82% of all services provided:
    • In the mobile telephony segment the number of contract services increased by 249 thousand YoY. The growth is owed to the favorable influence of the multiplay strategy and also to the temporary intensification of migration of customers from the prepaid segment.
    • Thanks to good sales of Multiroom and paid OTT services (including IPLA package subscriptions), the number of contract pay TV services increased by 226 thousand, to nearly 4.8 million.
    • The base of mobile Internet access services increased by 119 thousand YoY, to nearly 1.8 million.
  • Prepaid segment statistics remained under the influence of the anti-terrorist act, which obligated customers to register their prepaid SIM cards:
    • Promoting transparent reporting standards, Cyfrowy Polsat Group decided to eliminate all unregistered SIM cards from its reported statistics as of the beginning of February 2017 in order to fully reflect the impact that the obligatory prepaid SIM registration had on Q1 2017results. At the end of the first quarter the Group had 2.83 million registered prepaid SIM cards, as calculated according to the 90-day usage definition that the Group applies, while the total number of prepaid RGUs, including pay TV services, was 2.88 million.
    • At the same time, ARPU in the prepaid segment increased by as much as 5.7% YoY in Q1 2017 reaching PLN 18.7, which to a significant degree results from the decision to eliminate the unregistered SIM cards from the reported base.
  • Polsat Group’s TV channels enjoyed high popularity in the commercial viewer group, gaining an audience share of 24.3%, which included a 12.7% share achieved by the main channel and an 11.5% share generated by thematic channels.
  • Revenue of Telewizja Polsat Group from TV advertising and sponsoring was growing, on a year-to-year basis, at a faster pace than the overall growth of this market, i.e. at 1.9% vs.  0.3% for the total market in Q1 2017. Revenue from advertising and sponsoring amounted PLN 234 million in Q1, leading to the increase of the Group’s share in the TV advertising market to 25.7%.
  • The average monthly number of users of IPLA, the biggest web TV in Poland, was 3.5 million.
  • Very good financial results of the Group:
    • Revenue: PLN 2.389 billion,
    • EBITDA: PLN 929 million,
    • EBITDA margin: 38.9%,
    • Free cash flow, after payment of interest on loans and bonds: PLN 1.987 billion over a 12-month period,
    • Overall net debt/EBITDA ratio decreased significantly, to 2.88x.

“Similarly as in the past years, in 2017 we continued the consistent and effective implementation of our development strategy, resulting in the stable growth of the saturation of our contract customer base with integrated services, growth of average revenue per customer and a very low churn ratio, which demonstrates increasing satisfaction of customers with the services that we provide,” says Tobias Solorz, the CEO of Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. “Also the viewership results of Polsat Group’s TV channels are in line with our long-term strategy, while the Group’s revenue once again grew faster than the TV advertising market. Very good operational results of the two segments led to a dynamic growth of the Group’s revenue and a very high EBITDA margin.”

Segment of services provided to individual and business customers

“The number of contract services and their share in the total number of services has been growing systematically, in line with our assumptions – right now contract services account for over 82% of all services we provide,” sums up Tobias Solorz.  “We continue to develop our integrated services offer. At present we offer 9 diverse services and products that can be combined within our smartDOM program and this way generate tangible savings for customers. Effective upselling of further services results in a very high ARPU growth dynamics and growth of customer satisfaction in a competitive market environment.”

Q1

2017

2016

YoY change

Total number of RGUs (EOP)
(contract + prepaid)

16,216,128

16,531,833

-1.9%

CONTRACT SERVICES

 

 

 

Total number of RGUs (EOP), including:

13,337,038

12,744,166

4.7%

Pay TV, including:

4,785,947

4,560,267

4.9%

Multiroom

1,031,294

957,952

7.7%

Mobile telephony

6,785,002

6,536,366

3.8%

Internet

1,766,089

1,647,533

7.2%

Number of customers (EOP)

5,847,401

5,893,225

-0.8%

ARPU per customer [PLN]

89.1

87.0

2.4%

Churn

8.5%

9.8%

-1.3 p.p.

RGU saturation per customer

2.28

2.16

5.6%

PREPAID SERVICES

 

 

 

Total number of RGUs (EOP), including:

2,879,090

3,787,667

-24.0%

Pay TV

48,224

35,754

34.9%

Mobile telephony

2,646,477

3,495,733

-24.3%

Internet

184,389

256,180

-28.0%

ARPU per prepaid RGU [PLN]

18.7

17.7

5.7%

 

“In accordance with the assumptions of our long-term strategy, we aim to maximize revenue per contract customer by upselling products and services to the combined customer base of Cyfrowy Polsat and Polkomtel, also under our smartDOM program which has a positive influence on the level of ARPU per contract customer. Our efforts are reflected in stable revenue of the whole segment, growth of EBITDA and a high EBITDA margin of nearly 39%,” comments Katarzyna Ostap-Tomann, the CFO of Cyfrowy Polsat S.A., Polkomtel Sp. z o.o. and Telewizja Polsat Sp. z o.o.

Financial results for the segment of services provided to individual and business customers for Q1 2017

PLN million

Q1 2017

Change YoY

pro forma1)

Revenue

2 130

5%

Operating costs*

1 310

3%

EBITDA

821

7%

EBITDA margin

38.6 %

0.9 p.p.

1) Pro-forma (consolidated results of Aero2 Group - formerly Midas Group - for the full Q1 2016 r.), Cyfrowy Polsat, Metelem, Aero2 (formerlyMidas), consolidated financial results and own analyses
*Costs exclude depreciation and amortization, impairment and liquidation

Broadcasting and TV production segment

In the broadcasting and TV production segment we have been consistently pursuing our long-term goals. TV Polsat Group was once again the viewership leader with an audience share of 24.3% which consisted of a 12.7% share of Polsat main channel and 11.5% share achieved by our thematic channels. For yet another quarter in a row our TV advertising and sponsoring revenue demonstrated higher growth dynamics than the overall TV advertising market – says Maciej Stec, Management Board Member of Cyfrowy Polsat S.A. and Telewizja Polsat Sp. z o.o.

Q1

 

 

2017

2016

Change in p.p./%

Audience share1, including:

24.3%

24.4%

-0.1 p.p.

POLSAT (main channel)

12.7%

12.7%

0.0 p.p.

Thematic channels

11.5%

11.7%

-0.2 p.p.

Revenue from advertising and sponsoring2 (PLN milion)

234

229

1.9%

Share in the advertising market3

25.7%

25.3%

0.4 p.p.

 

 

 

 

Total market - TV advertising expenditures4 (PLN million)

910

908

0.3%

1 NAM, audience share for 16-49 group, all day;
2 TV Polsat Group’s revenue from advertising and sponsoring, acc. to Starcom definition;
3 Our estimates based on Starcom data (formerly SMG Starlink);
4 Starcom, preliminary data, sports advertising and sponsoring;

“TV Polsat Group’s proven and appreciated programming offer, as well as its very good viewership results in Q1 led to the growth of revenue in the broadcasting and TV production segment. A well-balanced programming and investment policy, along with discipline in the area of costs, have resulted in the growth of EBITDA and EBIDTA margin,” says Katarzyna Ostap-Tomann.

Financial results of broadcasting and TV production segment – Q1 2017

million PLN

Q1 2017

Change YoY

Revenue

305

2%

Operating costs *

202

2%

EBITDA

108

7%

EBITDA margin

35.4%

1.5 p.p.

*Costs exclude depreciation and amortization, impairment and liquidation

Cyfrowy Polsat Group’s financial results

Financial results of Cyfrowy Polsat Group in Q1 2017

PLN million

Q1 2017

Change YoY

pro forma1)

Revenue

2 389

4.6%

Operating costs *

1 466

2.8%

EBITDA

929

7.4%

EBITDA margin

38.9%

1 p.p.

1) Pro-forma (consolidated results of Aero2 Group - formerly Midas Group - for the full Q1 2016 r.), Cyfrowy Polsat, Metelem, Aero2 (formerlyMidas), consolidated financial results and own analyses                   
* Costs exclude depreciation and amortization, impairment and liquidation

“Effective implementation of our multiplay strategy and very good operating results of both our business segments were very well reflected in the entire Group’s very good financial performance –revenue growing by over 4%, EBITDA higher by 7% and very strong EBITDA margin of 39%. Stable and very high free cash flows enable the continuation of the successive deleveraging of the Group. Apart from repayments of regular installments, we decided to carry out the early redemption of all Litenite Notes for the total amount of PLN 945 million, which includes the early redemption premium. Moreover, the stable and very good financial condition of our Group has enabled us, the Management Board, to make the decision to recommend a dividend payment for 2016 in the amount of PLN 0.32 per share,” sums up Katarzyna Ostap-Tomann.

Category: 
Last updated 05/15/2017