The Cyfrowy Polsat media and telecommunications group is the leader of the integrated (bundled) multimedia services market in Poland. In keeping with the rapidly changing market environment and consumer expectations, we offer a unique service package including pay TV, online video, mobile telephony and broadband Internet access. Those services can be combined freely on an as-needed basis. Our broad range of bundled services is offered under a diverse array of digital distribution platforms, such as television sets, mobile handsets, computers and tablets. What is more, we also offer our customers electric energy and financial services.
Currently, the bundling of services is one of the strongest trends in the polish media and telecommunications market. Operators develop their offers of bundled services in response to the changing preferences of customers, who are increasingly seeking to receive their media and telecommunications services from one provider at affordable prices, under one contract, one subscription fee and one invoice. Given the high level of saturation of the pay TV and mobile telephony markets, bundling of services is rapidly becoming a significant means of retaining existing customers. Offering bundled services allows operators to increase customer loyalty and, consequently, reduce churn rates. It also contributes to the growth of average revenue per customers.
The Polish multi-play services market is systematically growing. According to estimations by PMR (“Bundled telecommunication services market in Poland 2016”), as at the end of 2016 the number of services sold in bundles exceeded 23 million, i.e. 2 million more than in the previous year. PMR estimates that the total number of subscribers (both residential and business) of bundled services amounted to over 10.1 million in 2016 and each of them had on average 2.3 services.
The multi-play market is consistently growing since 2010 in terms of value. According to PMR estimations, in 2016 operators’ revenue from sales of bundled services grew at a rate of 12.4% Y-o-Y, reaching PLN 10.2 billion. ARPU is characterized by a similar trend – PMR estimates that the average revenue per customer from sales of multi-play packages will increase to PLN 86.6 in 2016 from PLN 84.1 in 2015.
Multi-play services in Poland are provided primarily by cable TV operators and telecommunications service providers. According to PMR, as at the end of 2015 nearly half of the bundled services market was held by four largest players – Orange, Polsat Group, T-Mobile and UPC. With respect to the number of subscribers the share of Polsat Group on the bundled services market in Poland in 2015 was 15.4%. Other important players on the market included the mobile operator P4 and cable operators Vectra, Multimedia Polska and Netia. Neither of the remaining operators offering bundles had market shares exceeding 2%.
Both fixed-line telecommunication operators and cable TV operators offer their bundled services mainly in large and medium sized cities, due in part to the geographical limitations of their infrastructure and the inferior quality of the telecommunications infrastructure in Poland. The multi-play services market in Poland is underdeveloped in less urbanized areas and therefore has the potential to grow rapidly in suburbs, small towns and rural areas. In addition to the low penetration rate of multi-play services in less densely populated areas, Internet services provided by cable operators typically suffer in quality of service due to the severe limitations of the established infrastructure. This creates an opportunity for satellite pay TV providers, such as Cyfrowy Polsat, who are not bound by geographic and fixed network infrastructure limitations as cable TV operators and fixed-line telecommunications service providers, to become the leading providers of high quality multi-play services to consumers in suburbs, small towns and rural areas in Poland.
According to European Commission report “E-Communications and Digital Single Market” published in May 2016, in October 2015 the penetration rate of multi-play services (defined as more than one service within the offer of one operator) in Poland amounted to 37%, while in the European Union average penetration reached 50%, and in the Netherlands and Malta amounted to 87% and 78%, respectively. These data can be underestimated, however, due to the methodology applied in the survey. According to PMR, in the fourth quarter of 2016, 62% of households in Poland declared that they use at least two telecommunication services provided by the same supplier and multi-play packages.
Research by PMR demonstrates that a bundle combining two services remains the most popular option. In the fourth quarter of 2016, 57% of Poles chose this option. At that time, 35% of Poles used triple-play services (a bundle comprised of three services), while only 7% of customers decided to purchase a bundle containing four services. As for the structure of the bundles, fixed-line Internet access services and pay TV dominate, followed by fixed-line and mobile telephony. Mobile Internet access is a component of only a third of purchased bundles.
Development forecasts for the bundled services market
According to PMR forecasts, the bundled services market will consistently grow in subsequent years, both in terms of the number of subscribers and value. The expected average annual compound growth rate in the years 2016-2021 will be 7.4%. In 2021 the number of subscribers using bundled services will exceed 12.7 million. The number of services sold in bundles will come close to 33.5 million in 2021.
In subsequent years, the development of the Polish market of bundled services will be influenced not only by the low level of saturation of this market with services, but also the systematic roll out of infrastructure and improving quality of network access, throughput in particular. Operators’ strategies based on combining telecommunication and media services with services outside the telecommunications sector are also an important factor. The bundled services offers of leading operators on the Polish market comprise, among others, the sale of electric energy and gas, as well as banking, financial and insurance products. Consolidation trends, observed on the media and telecommunications market, may also affect the development of the bundled services market.
Our bundled services offer as an important tool, which helps us to retain existing customers and expand our customer base, while simultaneously increasing customer satisfaction and loyalty. In the long-term, the multi-play offer will enable us to increase ARPU and to further reduce our churn rate.
smartDOM is a unique savings program for the home offering a wide array of products and services, which enable our customers to create a comfortable, safe and modern home. The program is based on a simple and flexible mechanism – a customer subscribed to one service with a specified value who purchases additional products of our Group, obtains attractive discounts throughout the entire term of the contract. This way every customer has the possibility to create a set of services for the family consisting of satellite TV, access to LTE Internet and telephony services.
Successively, the program is being expanded by new products or services. In 2017 we began a new phase in the communication of our strategic bundled offer. The program, marketed under the slogan “smartDOM Home Savings Program,” will ultimately comprise nine products and services, which our customers can combined and hence generate savings on household bills. Apart from our basic, core products and services: mobile telephony, Plus and Plus Advanced LTE Internet and satellite TV from Cyfrowy Polsat, smartDOM customers can also use services such as the sale of electric energy in the Electricity from Plus offer, banking services offered by PlusBank, comprehensive insurance services offered in cooperation with ERGO Hestia and home security services, such as monitoring. Moreover, the offer also comprises telecommunication devices, home electronics and domestic appliances. In the near future the offer will be expanded to include the sale of gas.
All the products and services offered play an important role in the household. Thanks to the unique formula of the smartDOM program the customer can purchase all products and services necessary in the household in one place and generate savings on each additional service bought.
See also: http://www.cyfrowypolsat.pl/smartdom/
In October 2014 we launched a corresponding program addressed to business customers from the SOHO segment. The program smartFIRMA (smartCOMPANY) allows customers to combine mobile telephony, LTE Internet and fixed-line voice services. The program also includes Plus Bank products, electric energy from Plus, as well as a wide portfolio of supplementary services which support and enhance business.
In October 2015 the program smartFIRMA was extended by new categories of services were included, our customers were offered greater flexibility in their choice of product, a brand new fixed-line telephony offer was added and new products and services can be added to the package at any time during the duration of the program. Our business customers can choose up to 6 products, while 5 of them are subject to discounts. The first product is always mobile telephony or LTE Internet access. A 50% discount is offered on the second and third products. Two additional mobile telephony SIM cards can be purchased with rebates of PLN 10 and PLN 20, respectively. Furthermore, customers who run sole proprietorship businesses can purchase Cyfrowy Polsat’s satellite TV as private persons for the home.
At the end of 2016 the broad offer of smartFIRMA was further extended by a monitoring service Safe Company.
We sell our services through an integrated sales network covering the entire territory of Poland. Both Cyfrowy Polsat’s pay TV and Internet offers and Polkomtel’s telecommunications offer are available at a majority of those points. A majority of points of sale offer additional products and services to customers of both operators, such as Energy from Plus.
The sale of Polsat Group’s services also takes place through remote channels. At our disposal we have 5 telemarketing centers (own and external), the role of which is customer retention and the sale of core products.
Our pay TV products and services are also distributed using the direct door-to-door sales channel (D2D), which enables us to directly access selected customer groups, to maintain direct contact with customers, and to expand the reach of the sales network. Sales of prepaid telecommunication services are take place through different channels of distribution. We are a party to several active agreements with non-exclusive independent dealers of its prepaid services, with a total of approximately 60 thousand outlets selling starter kits and scratch cards and approximately 130 thousand outlets selling electronic top-ups.
We systematically restructure and modernize our sales network in order to fully integrate the sales networks of Cyfrowy Polsat and Polkomtel. We aim to unify sales processes with a single point of sales, build common logistics and warehousing systems, as well as fully integrate training and education of our sales channels. The above measures are designed to improve the efficiency of sales and to adjust our sales network to the expanding portfolio of our services.