Cyfrowy Polsat SA

WSE:CPS

Earnings Call Analysis

Telecom's Growth and 5G Push, Green Energy Ambitions

In Q3 2023, the telecom experienced a 3.1% rise in average revenue per user (ARPU) in the B2C segment to PLN 73.5, driven by a multiplay approach and 5G tariffs, sustaining its customer loyalty with churn at just 7.5%. The B2B segment's ARPU grew 2.2% to nearly PLN 1,500 with 68,800 business clients. In the prepaid vein, despite a slight user dip, ARPU in the prepaid segment remained stable at PLN 17.9. Meanwhile, the company is expanding its green energy footprint, aiming to install 1,000 megawatts in renewable capacity and produce 2 terawatt hours by 2026. They've introduced new wind farms, expanded solar power production, and move towards a leading role in green hydrogen, enhancing their sustainability profile.

Company's Strategic Focus and Q3 Highlights

The company presented the third quarter results, highlighting the execution of strategic goals, operating results, and financial performance. Key sectors include the Media segment, with strong positions in television and online through Interia.pl, and a solid audience share for their main channel, Polsat. Executives also emphasized the successful delivery of synergies, doubling EBITDA in their online segment, and maintaining a 29% market share in TV advertising and sponsorship.

Progress in Multiplay Strategy and Customer Loyalty

Operationally, the company is advancing its multiplay strategy, reporting 2.45 million multiplay customers, representing 42% of the total customer base. These customers exhibit a high degree of loyalty, as reflected by the low annual churn rate of 7.5%. ARPU for B2C and B2B contracts rose, underscoring the company's commitment to enhancing customer value and satisfaction despite challenging market conditions in Poland.

Green Energy Initiative and Financial Results

The company is actively developing its green energy segment, evident in its operational green energy production and hydrogen projects. Notably, they achieved 191 gigawatt-hours of green electricity production in Q3, securing their first revenues in this space. The strategic expansion of renewable energy projects is on track to increase capacity by 2.5 times by 2026, aligning with their 2023+ Strategy goals.

Financial Health and Debt Management

Financially, the company grapples with free cash flow pressures due to debt service costs and working capital. Notable movements include a new series of bonds issued and an acquisition contributing positively to the cash flow statement. The company has presented two net debt-to-EBITDA ratios, one inclusive and one exclusive of project financing, to offer a clearer picture of financial leverage. The weighted average cost of debt has decreased, and the energy segment's growing contribution to group results is perceived positively.

Closing Remarks and Upcoming Expectations

Mirek concluded the presentation with a reaffirmation of the company's strategic direction, highlighting achievements in the media and online segments, and the ongoing development of the 5G network. The company looks forward to covering 100% of its internal energy needs by the end of 2024, and it remains positioned to deliver sustainable value to shareholders over the long term.

Future Projections and Developments

Projected slight EBITDA deterioration in 2024 within the TMT segment is mainly forecasted for the first half of the year, attributed to cost pressures and temporary impacts from energy prices. However, expectations are set for positive trends in the second half. The company also announced the latest financing for a new wind farm, underscoring its project's viability and bankability.

Real Estate Ventures

In the real estate segment, the company is in a development phase, awaiting discussions with city authorities to organize the area around planned construction sites. Investors will be informed of any developments as they occur.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon, everyone. Welcome to the results call of Polsat Group for the third quarter of 2023. Our speakers today are, as always, Mr. Miroslaw Blaszczyk, CEO; Mr. Maciej Stec, Vice President, responsible for Strategy, Ms. Katarzyna Ostap-Tomann, CFO and Management Board member responsible for ESG; and finally, Mr. Stanislaw Janowski, President of TV Polsat. After the presentation, we will hold a Q&A session. As always, you can post your questions in advance in the chat section. Mr. Blaszczyk, the floor is yours.

[Miroslaw Blaszczyk, executive]

Good afternoon, ladies and gentlemen. We will start today's presentation with the key highlights of the third quarter. Afterwards, Staszek and Maciej will present the operating results of our business segments, and Kacha will give you an overview of our financial performance. I will close the presentation with a summary of this past quarter, and then we will answer your questions. Next slide, please. Let me present the key events that took place in the third quarter of 2023. Next slide, please. In the TMT space, there were two major events that I would like to share with you. Firstly, we have entered into a strategic partnership with Google Cloud. As part of this cooperation, Google has signed its first in Poland PPA agreement for the purchase of clean green energy. This energy will come from the wind farm Przyrów, which are currently developing and which will be commissioned in the second half of next year. Additionally, Polsat Plus Group and Google Cloud will closely cooperate in the area of cloud solutions, which will help us accelerate our technological development and digital transformation. The second key event of this quarter was the finalization of the 5G auction in October. As a result, we won Block A in the 3.6 gigahertz band for the asking price of PLN 450 million. As you know, we already operate a 5G network based on our 2.6 gigahertz TDD spectrum with 3,500 base stations and 20 million people in its footprint. Thanks to the new 5G frequency, we will be able to further develop Poland's fastest and wider 5G network from Plus. Next slide, please. Moving on to the key events in our new green energy segment. On July 1, we took control of PAK-PCE Group and started consolidating in the results. Already in Q3, the green energy segment generated PLN 26 million of EBITDA. Also in August and September, we commissioned our first day wind farms in Kazimierz Biskupi and Miloslaw. The farms have total installed capacity of 27 megawatts and production capacity of 98 gigawatts hour. For this fall, we expanded the capacity of our photovoltaic farming in Brudzew by an additional 12.4 megawatts, which brings the total installed capacity in solar power to 82.4 megawatts. We are also moving forward in the execution of our strategy related to green hydrogen. We opened to the public Poland's two first hydrogen refueling stations. One is located in Warsaw and was opened in September and the other is in Rybnik and was opened last week. Next slide, please. In the third quarter of 2023, we are also pretty busy in the final department. First of all, we successfully placed another issue of sustainability-linked bonds, the series E bonds worth PLN 820 million. Today, we are the largest private issuer of corporate bonds in the Polish market. And since the beginning of the year, we have used and traded sustainability-linked bonds with a total nominal value of PLN 3.5 billion. Also in the third quarter, we took part in the buyback announced by Asseco Poland, and as a result, so the stake of approximately 13% for PLN 851 million. This transaction provided an additional liquidity caution, which supports our investments in the development of green energy products. And last but not least, we have secured financing for the development of the wind farming Przyrów by signing an investment loan agreement for up to PLN 360 million. Next slide, please. Ladies and gentlemen, these were the main events of the third quarter. Moving on to the operating results. First, Staszek will discuss the results of the Media segment. And afterwards, Maciej will present our performance in the B2C and B2B service segment and the new green energy segment. Thank you. Staszek, over to you.

[Stanislaw Janowski, executive]

Thank you. Good afternoon, everyone. I will present the results of Media segment, television and online. Next slide, please. As always, I will start with online segment in which we are consistently and effectively building our position through our horizontal portal, Interia.pl. Today, Interia is one of the top 3 leading Internet publishers in Poland, both in terms of users and page views. In the third quarter, 20.5 million real users visited our website, generating an average of 1.9 billion page views per month. What is the most important for me is that we have delivered the announced synergies. We doubled EBITDA as we promised 3 years ago when acquiring Interia. We continue to develop Interia both in terms of our content and online advertising. Next slide, please. In our TV business, we recorded solid viewership results in the third quarter, in line with our long-term strategy. Our main channel Polsat had 7.2 of audience shares and our thematic channels had 15.1%. As a result, the total viewership of our channels reached the level of 22.2% in the third quarter. Let me remind you that we achieved this result despite the ongoing negative impact of refarming to the new terrestrial television standard that took place in the first half of last year and was mandatory for a commercial broadcaster, but not for the public television. In 2024 for all broadcasters in Poland will use the new standard. Next slide, please. The growth dynamics of the TV advertising and sponsorship market was very high in Q3, which is a very good sign for us. In Q3, the broad market recorded a high growth rate of 5.8%. Our advertising revenue also grew at a mid-single-digit rate. In third quarter, we increased our advertising revenue by 4.7% year-on-year to PLN 288 million. As a result, our share in the TV advertising and sponsorship market settled at a high level of 29%. Analyzing our results over a long time horizon, I'm pleased to say that we achieved solid viewership results in 9 months of 2023. Our main channel gained 7.7% of audience shares, while our thematic channels had 14.3%. This means that the entire portfolio of TV Polsat channels had 22% of audience shares in the commercial group. This is lower than the result last year, mainly because of the negative impact of the switch to DVB-T2 standard. Next slide, please. In the 9 months of 2023, the TV advertising market recorded a very good growth dynamics, increasing by 4.6%. Our TV advertising revenue grew in line with the market since the beginning of the year. We recorded a very good growth of 4.4%. As a result, our share in the TV advertising and sponsorship market in 9 months of 2023 amounted to 28.6%. Overall, both the viewership figures and our position on the advertising market in the third quarter and 9 months are very good. Despite the negative regulatory impact, we were able to maintain good viewership results, but are in line with our long-term strategy and we maintain a high share in the TV advertising market. I am very happy with the performance of our online business. Interia is steadily catching up to its competitors and at the same time, generating very good financial results. Thank you very much. Maciej will now discuss the results of our B2C and B2B services segment and our new green energy segment.

[Maciej Stec, executive]

Thank you, Staszek. Hello, everyone. I will start with the operating performance in our B2C and B2B services segment. Next slide, please. We are consistently pursuing our multiplay strategy in the B2C and B2B services segment. This is reflected in the high base of multiplay customers, which amounted to almost 2.45 million customers. Let me underline that this is already 42% of our total customer base. This means that 2 out of every 5 customers have more than 1 service contracted from our portfolio. Our multiplay customers have a total of 7.4 million services. A natural consequence of our multiplay strategy is the high level of loyalty among our multiplay customers. This is reflected in our consistently low level of churn, 7.5% per annum at the end of the third quarter. Given the unfavorable and difficult market conditions in Poland today, I'm very satisfied with this result. Let's move on the next slide, please. We have a high and stable base of services that we provide to our contract B2C customers. At the end of the third quarter, we provided almost 13.1 million contract services. The number of mobile telephony and Internet access services remains at a stable level, 6.2 million mobile voice RGUs and 2 million Internet access RGUs in both fixed and mobile technologies. The 2% decline that you can see on this slide is driven by a lower number of pay-TV services. As you know very well by now, this is still the effect of the price repositioning of our online services. We replaced the low-end ePlus service with the full value product Polsat Box Go. Additionally, pressure on the pay-TV RGU base is partially mitigated by a growing number of TV services provided in the IPTV and OTT technologies. Next slide, please. Our multiplay strategy is centered around building customer value and our efforts in this field are reflected in the consistently high and growing level of our contract B2C customer. In the third quarter of 2023, ARPU increased by 3.1% to level of PLN 73.5. The two mind triggers of ARPU growth are the multiplay strategy and the growing popularity of 5G tariffs. We support ARPU by effectively upselling and cross-selling products to our existing customer base. And thanks to this, each of our customers subscribed to 2.24 of our services. 5G on the other hand offers the opportunity to build value based on excellent parameters of the 5G network and on the more-for-more strategy because 5G users tend to consume visibly larger data packs. Let me remind you that over the past 3 years, we have been consistently rolling out our 5G network based on the dedicated frequency in the 2.6 gigahertz TDD band. Today, this is the broadest and fastest 5G network in Poland covering already 20 million people and offering transfer speed up to 600 megabits per second. With the 5G auction completed, we will gain the new 3.6 gigahertz frequency. Thanks to this, we will be able to improve our 5G network, and I think this will continue to be our competitive edge on the telco market. Let's move on the next slide, please. In the prepaid segment, we maintained a high and stable RGU base high RPU. In the third quarter, the number of provided prepaid voice services was still a little lower than last year, which, of course, is the effect of our support for Ukranian refugees in the form of 3 prepaid starters. The decline was compensated by a higher number of pay-TV services associated with our new tariff, Polsat Box Go start. As a reminder, we launched this offer for customers migrating from the ad-based service Polsat Go, which was discontinued a couple of months ago. ARPU in the prepaid segment remains at a high and stable level of PLN 17.9 in the third quarter, flat year-on-year. Can I have the next slide, please. Looking at our B2B segment, we have a high stable customer base, and we focus on value creation in this segment. In the third quarter, we had 68,800 business customers, and we posted growing ARPU of nearly PLN 1,500, up by 2.2% year-on-year. At this point, I would like to bring up our cooperation with Google Cloud that Mirek told you about in his introduction. I'm very happy about this partnership because it offers many opportunities and potential to create state-of-the-art flexible cloud solutions for our customers and expand our offering for our business customers in the future. Okay, let me quickly summarize the results of B2C and B2B segment. We are consistently pursuing our multiplay strategy, and we almost have 2.5 million multiplay customers. We posted high stable basis over 13 million contract services and over 2.8 million prepaid services. Already 42% of our customers are multiplay customers. We continue to build customer value. ARPU in B2C was up by 3.1% and in B2B up by 2.2% and we focus on maintaining high level of loyalty and satisfaction among our customers. And what is important, this is reflected in a consistently low level of churn at 7.5%, although we experienced the unfavorable and difficult market conditions in Poland today. That sums up the B2C and B2B segment. So let's turn to the energy segment -- green energy segment. Next slide, please. I'm very excited because this is the first time that we are officially reporting the operating and financial results of the green energy segment. A very quick reminder. We are pursuing two strategic goals in the green energy segment. First of all, we want to become a leading producer of clean green energy. To achieve this goal, we are investing dynamically in renewable energy sources. Our target is 1,000 megawatts of installed capacity and about 2 terawatt hours of production capacity by 2026. Our second goal is to become a leading producer of green hydrogen. Step by step, we are completing a full value chain based on green hydrogen. Next slide, please. Let's review the execution of our renewable energy projects. When we took control of PAK-PCE in July, there were three operational units, the two biomass blocks in Konin and the 70-megawatt solar power plant in Brudzew. In the third quarter, we expanded the solar power plant in Brudzew by an additional 12.4 megawatts, and this is the Cambria project. The photovoltaic farm in Przykona is still in permitting phase. We are working on this farm together with ZE PAK and we need about 15 months to construct this firm from the moment when we get all the necessary permits. I expect that this farm will be launched at the turn of 2025 and 2026. What makes me extremely happy is that in Q3, we launched our two first wind farms in Kazimierz Biskupi and Miloslaw. These firms have total installed capacity of 27 megawatts and production capacity of 98 gigawatt hours annually. They have already generated some energy in Q3, but they were only operational for a little over a month. We should see much higher energy generation from these two farms in the coming quarters, especially since Q1 and Q4 are seasonally very strong for energy production from wind farms. The circles show that the status of each project where the dark blue part represents CapEx that has already been spent. And the dotted part is CapEx contracted under already concluded agreements, for example, for the supply and installation of turbines. As you can see, the development of the Czluchów wind farm is very advanced. The work is progressing according to the schedule, and we expect to commission this farm in the second quarter of next year. The next farm, Przyrów is also advanced. We expect to launch production in Q3 of 2024. This farm will produce energy that will be sold to Google Cloud in the 10-year PPA that we signed recently. We are really proud of the Polsat Plus Group and Google Cloud partnership. I really believe it will be profitable for both sites. In Q3, we have signed agreements with Vestas for the supply and installation of turbines and we've owned for construction works for Drzezewo wind farm, the largest farm in our investment portfolio. This is 63 turbines and more than 400 gigawatt hours of production capacity. Signing the agreement is a huge milestone and from my perspective, it means that we have secured the execution of this project, and it should be operational in the fourth quarter of 2025. The last farm in Dobra, a small firm of two turbines to be commissioned in the third quarter of 2025. Once we complete the projects, this is on this slide, the total installed capacity of our renewable energy sources will add up to 740 megawatts by the end of 2025, that is, 2.5x more than the capacity installs today. Now let's take a look at our hydrogen projects. Next slide, please. The 2.5 megawatt electrolyzer is already installed near the biomass turbines in Konin. There is a delay in the launch to date of production because of global technical issue that our supplier has, but we hope this will be fixed soon. And we will start producing our own green hydrogen in the first half of next year. We are also completing work on our own prototype electrolyzer, 0.5 megawatt electrolyzer with production capacity of 200 kilograms of hydrogen per day. This is plug-and-play electrolyzer. In the area of the storage and transportation, we already have 8 hydrogen trailers at our disposal, and we are waiting for two more in the first half of next year. Today, we have the possibility to transport 7.5 tons of hydrogen daily. In September, we opened the first in Poland, public refueling station in Warsaw. We are very proud of this. And in October, we opened another one in Rybnik. We are already constructing two more stations in n Gdansk and Gdynia and we are also preparing to start construction work in Lublin and Wroclaw. As a reminder, we have received a subsidy of PLN 20 million for the construction of these stations. As for end-user products, we have won two tenders for hydrogen-powered buses in Rybnik and Gdansk. Several NesoBuses were already delivered to Rybnik and we will complete this delivery by the end of this year. The delivery to Gdansk is planned for the second and third quarters of 2024. We have already moved the production of our buses to our own manufacturing plant. It was completed and put into operation in the third quarter. So as you can see, the hydrogen projects are also advancing at a rapid pace. Next slide, please. On this slide, you can see the execution of our hydrogen projects in practice. The two pictures on the left are hydrogen refueling stations. The top one is in Warsaw and the bottom one in Rybnik. On the bottom picture, you can also see the NesoBuses buses for Rybnik parked in the back. On the top right, the hydrogen powered bus factory. On the bottom left, the 0.5 megawatts alkaline electrolyzers, our own prototype were done by Exion Hydrogen. I think that it's very impressive how far we have come in only 2 years since we announced the new Strategy 2023+. Let's go to the next slide, please. On this slide, I wanted to show you the first operating results of the green energy segment. In the third quarter, we produced 191 gigawatt hours of green energy, 157 gigawatt hours from biomass, 28 gigawatt hours from the sun and the first 6 gigawatt hours from wind. Please remember that the newly commissioned wind farms in Miloslaw and Kazimierz Biskupi started production in the middle of the quarter, so the production for a full quarter will be much higher. Also, the Brudzew extension was put into operation in the second half of the quarter, so it didn't contribute significantly to solar energy generation yet. However, it will support production in the future, especially in Q2 and Q3 when generation of energy from the sun is seasonally very strong. What is important, we generated our first revenues from the sales of green energy that we produced. In Q3, we sold 191 gigawatt hours of green electricity for the price of PLN 748 per megawatt hour. And as I said before, as we commission the wind farms one by one, the volume of energy produced will increase a little bit so will the stream of revenue. What's more important, we generated our first revenues from the sale of green energy that we produced. In Q3, we sold 191 gigawatt hours of green electricity for the price of PLN 748 per megawatt hour. Already in the third quarter, our new green energy segment generated PLN 26 million of EBITDA, and we are very happy about it. Next slide, please. I wanted to summarize our efforts in the green energy segment using this slide. The top chart shows you how we are expanding installed capacity in renewable energy projects. Thanks to the dynamic implementation of investments, we will increase the installed capacity in renewable energy sources 2.5x by 2026 from 215 megawatts in 2023 to 744 megawatts in 2026. On the bottom chart, we have shown how our production capabilities are going to increase over time as we implement our projects. If you remember, in December 2021, when we announced our Strategy 2023+, we said that our goal was to achieve energy production capacity up to 2 terawatt hours of clean green energy. And it's clear from this graph that the projects that we are developing today already let us achieve the strategic goal in 2026 as we promised. So in one word, the implementation of the 2023+ Strategy in the green energy segment is exactly in line with the assumptions announced in December 2021. I'm really proud of the team for executing our Strategy 2023+ so effectively and efficiently in such a quick time frame under pressure of unfavorable and difficult market conditions. And thank you for your attention. Now Kacha will show you how the operating performance in all our business segments translated into our financial results for the quarter. Kacha, the floor is yours.

[Katarzyna Ostap-Tomann, executive]

Thanks, Maciej. As Mirek and Maciej said before, this is the first quarter that we consolidated the results of the green energy segment. I'm very pleased because, as all of you see, this brought a positive contribution both at top line and at the bottom line. As you expect, the financial results for this quarter are not fully comparable year-to-year because of the consolidation of the green energy segment. I will explain in detail how the results of our operations in the energy segment impacted our results. Can we have the next slide. Looking at our consolidated results, including the green energy segment, you can see that revenue increased by 5.6% to almost PLN 3.5 billion on the back of the consolidation of PAK-PCE Group. The contribution of the green energy segment was almost PLN 300 million. In the green energy segment, the majority of revenue is generated from the resale of energy and the sale of the energy that we produce ourselves. Additionally, smaller streams of revenue come from sales of heat, green certificates, hydrogen gas and hydrogen powered buses. In Q3, adjusted EBITDA was PLN 775 million, that is, 7.7% less compared to last year. As a reminder, we adjust EBITDA by excluding gains from the sale of associates and subsidiaries. In Q3 2022, this was 113 million related to the sale of a 10% stake in Modivo, while in Q3 2023, we recognized a gain of PLN 220 million, mostly on the sale of a 13% stake in Asseco Poland. Additionally, at the consolidated level, the contribution of green assets to EBITDA was PLN 23 million. Net profit was lower by 55% year-on-year and amounted to PLN 102 million in Q3. In this quarter, the level of net profit was supported by the gain of the sale of Asseco. However, pressure from high debt service cost is similar because despite cuts introduced by MBP, interest rates are still high. I expect that this factor along with a number of noncash valuations, especially related to foreign exchange rates, will be clearly visible in the level of net profit going forward. Free cash flow for the last 12 months amounted to PLN 479 million, down by 37.6%. Please note that this free cash flow excludes development CapEx incurred in the green energy segment. You will see the detailed the composition and the factors that influence the level of free cash flow on a dedicated slide in a few moments. And finally, let's look at our main covenant, net debt to EBITDA. At the end of the third quarter, net leverage, excluding project financing, amounted to 3.4. I will explain the idea of project financing in detail on my last slide dedicated to the group's debt. Level of net leverage in Q3 is, of course, the net effect of the gain on the sale of Asseco shares recognized above EBITDA and the level of our investments in the green energy segment as well as the renewal of the frequency reservation in the 900 megahertz made in July. Let's move to the next slide, please. On this slide, you can see how each of our business segments contributed to the level of consolidated revenue and EBITDA. The strongest contribution came from the newly consolidated green energy segment. On a stand-alone basis, the segment generated PLN 377 million in revenue. As I said, resale and sales of generated energy are the two main streams of revenue in this segment. We generate about PLN 190 million on the resale of energy and over PLN 140 million on the sales of generated energy. This last stream of revenue is the most important for us as this is where we generate a higher margin. This stream is going to gain importance gradually as we commission the next renewable energy projects according to the time line that Maciej presented to you in detail. In the B2C and B2B segment, revenue was lower by almost PLN 100 million. The main reasons behind these are lower handset sales and lower wholesale revenue, which is the result of the successive cuts in MTR rates. I also wanted to comment on the real estate segment. You can see that revenue in this segment is lower by PLN 34 million. This is because there are very few apartments left for sale in the existing projects. We expect to see growing revenue in this segment in the end of the next year when we complete the residential project in Port [ Porwzki ] that we are currently building.

Looking at the adjusted EBITDA this quarter, the drop in EBITDA in the B2C and B2B services segment is driven mainly by lower revenue while costs in the third quarter remained under control. Positive contribution from the Media segment, mainly on the back of our good performance on the auto market, as Staszek told you. And finally, the Green Energy segment contributed PLN 26 million to consolidated EBITDA. Next slide, please. As I already flagged on my first slide, we decided to modify the presentation of free cash flow slightly. On this slide, you can see two values. Adjusted free cash flow after interest highlighted in blue and adjusted free cash flow after interest, excluding CapEx in the Green Energy segment is highlighted in red. Given the development CapEx in green energy is temporary, and it will last only as long as we're developing our green project. I wanted to give you a sense of what our free cash flow generation would look like if we didn't invest in green energy. Free cash flow after interest and green CapEx was minus PLN 11 million in Q3 and PLN 333 million in 9 months of 2023. In Q3, we adjusted free cash flow by acquisitions, mainly the disposal of Asseco shares in September. And additionally, in the third quarter, we renewed the frequency reservation in the 900 megahertz band for PLN 300 million and paid a debt of 182 million for the 5G auction, which will be credited towards the final price of the C-band. The main reasons behind weaker free cash flow generation are high debt service costs and additional working capital employed. In the third quarter, we had OpEx and control. However, inflationary pressure is a significant factor that determines the level of free cash flow in the full year. Next slide, please. On this slide, we have the composition of our cash flow for 9 months of 2023. We already discussed free cash flow on the previous slide. Net inflows from loans and borrowings remain 9x this last quarter, following the refinancing of our SFA in April. As mentioned by Mirek, at the start of this presentation, in Q3, we issued a new series of bonds with the nominal value of PLN 820 million and ready in par of our Series B and C bonds. This is reflected in the inflows from bond issuance in the amount of nearly PLN 1.8 billion. In Q3, we acquired a 10% stake in PAK-PCE TV channels. The effect of these acquisitions is positive in our cash flow statement because PAK-PCE had over PLN 200 million in cash on its balance sheet, and we started consolidating it in full. As already highlighted, we renewed the frequency reservation in the 900 megahertz in July and this is visible in concession payments on this slide. In Q4, you will see the payments for the 5G auction here. Net loans granted remain the same as for the first half of the year. This is because any loans granted for the development of green energy projects are eliminated on the consolidation level as of the third of July this year. Instead you can see the amount of CapEx spend in this segment. I will talk more about this in the next slide. At the end of September, we had almost PLN 4.2 billion in cash and cash equivalents on our balance sheet. This provides us with a comfortable liquidity position in terms of the execution of our strategic investments in the coming quarters and the payment for the 5G auction. Let's move to the next slide, please. This is a new slide dedicated to CapEx per business segment. I think that it is important to look at CapEx in each segment separately going forward. Firstly, I would like to underline that in the TMT area that is in the B2C and B2B services segment, and the Media segment combined, the ratio of CapEx to revenue remains at a low level of circa 6% or 7%. As you remember, this is what I guided when we sold our mobile infrastructure in 2021 and switched to the CapEx light model. I would like to reiterate this guidance for TMT. The consolidation of the green energy segment means that in the next couple of years, we're going to post high capital expenditures on the group level due to intensive investments in the development of our new business pillar. Investments in renewal energy sources require high front-loaded CapEx while the stream of revenues appears only after the completion of the project. With this in mind, I think that looking at the CapEx-to-revenue ratio for the Energy segment would be misleading. For the same reason, I would like to refrain from analyzing this ratio at a blended group level during the period of high investments in green energy. Next slide, please. We recognized additional debt when we consolidated PAK-PCE. This debt is mainly from investment loans granted to PAK-PCE and its subsidiaries for the development of specific renewable projects. This is what we call project financing. What is important to understand is that project financing is separate from financing under our senior facilities agreement and issued bonds, and there is no recourse between the two. All the project financing agreements have been described in detail in our report for Q3. Any debt acquired together with PAK-PCE that was not project financing has been repaid in the beginning of October. In the table on the left, you can see that at the end of September, the value of project financing was PLN 525 million. I expect that the indebtedness under project financing will increase in the future. For example, in October, we have secured project financing from the wind farm in Przyrów, and I will be happy to arrange financing for Drzezewo wind farm, which is our largest project. With all this in mind, we decided to present two levels of net debt-to-EBITDA as of today. Net leverage, including liabilities under project financing, was 3.52. However, I think that the more important ratio from the investor perspective is the net leverage, excluding indebtedness under project financing, and this amounted to 3.4 in Q3. Following the cut in interest rates, we recorded a lower weighted average cost of debt of 8.7% compared to 9.5% reported last quarter. Please note that this interest cost is related only to our indebtedness under the senior facilities agreement and under issued bonds and exclude project financing. Let's take a look at the structure of our debt. Again, excluding project financing, following the issue of the Series E bonds in September, the share of bonds naturally increased to 28%. 18% of our debt is denominated in euro and the rest in Polish zloty. The new bonds were assimilated with the existing Series D bonds and are traded under the same ISIN on the catalyst market. This issue increased our bullet payment for the redemption of bonds in 2030. Otherwise, the maturity profile of our debt has not changed. I know that this was a difficult quarter. Many things have changed. I hope I was able to explain everything clearly. The energy segment is fully consolidated now. And going forward, its contribution to the group's result will be gradually increasing. From the financial point of view, all the green energy projects are going according to schedule and, more importantly, within the planned budgets. So on this positive note, I will end my part of the presentation and pass the floor to Mirek for a summary. Thank you very much.

[Miroslaw Blaszczyk, executive]

Thank you. I will quickly sum up this quarter, and then we can start the Q&A session. Next slide, please. We continue to build customer value, thanks to our multiplay strategy. ARPU per B2C contract customer increased by 3.1% and ARPU per B2B customer grew by 2.2% in the third quarter of 2023. In the Media segment, we have a very good position on the advertising market with a market share of 29% in the third quarter, and our viewership results are in line with our strategy. On the online segment, our online portal Interia is among the 3 top portals in Poland. We won a block in the 3.6 gigahertz band in the 5G auction. This new frequency perfectly complements our strategy of building our 5G network. As you know, we have been consistently developing our 5G network for the past 3 years using 2.6 gigahertz TDD band. Today, there are already 20 million people in the range of plus 5G network. On the one hand, we have secured a power purchase agreement for green energy from one of our wind farms for 10 years. On the other hand, cooperation with Google in the field of cloud technology is an opportunity to grow our business by offering high-quality cloud solution to our customers. I'm very happy that we are able to report the first operating results of our green energy unit. In the third quarter of 2023, we produced 191 gigawatts hours of green energy, including 6 gigawatts hours from the newly launched Kazimierz Biskupi and Miloslaw wind farms. At the same time, we are developing a value chain based on green hydrogen. We are opening new hydrogen stations, and we are delivering NesoBuses produced in our own factory. Finally, we are effectively managing the group's finances so that we can dynamically execute our Strategy 2023+ and generate high, stable and recurring cash flows in the future and build sustainable growing value for our shareholders over the long term. Thank you. We are now ready to take your questions.

[Operator]

[Operator Instructions] Okay. I see a question from Nora. But I don't see the questions yet. Let's give her for a few minutes. The first question from Nora is, why is further deterioration in EBITDA in the TMC segment expected in 2024? What are the key drivers of the pressure maybe negative KPI trends and/or cost inflation?

[Katarzyna Ostap-Tomann, executive]

Thank you, Nora, for this question. The generally slight deterioration in EBITDA that we expect in TMT segment in 2024 is mainly cost -- will be mainly visible in the first half of 2024 before the larger number of our results of our promotions on the revenue stream will kick off -- will kick in. And additionally, some slight pressure in the first half of the year on the energy prices before we start producing 100% of the energy that we use and that's basically it. Also some maybe personnel costs, but that's not -- that won't be a big factor.

[Operator]

And our second question is what's your expectation for energy costs next year? Can you confirm that by the end of 2024, the company should be able to cover its internal energy needs?

[Katarzyna Ostap-Tomann, executive]

Yes, I can confirm that by the end of 2024, we're planning to have enough investments to cover our own energy needs. And additionally, just a reminder, we -- from one of the farms, which is called Przyrów, we have signed an agreement with Google and will be selling all the energy that is produced in Przyrów to Google. So at the end of 2024, we'll have covered all of our internal energy needs plus we'll sell one of the energy from one of the wind farms to external partner. And that's basically it. Additionally, I don't know if there are any questions just for your information, if -- once we end this call, if you would care to look at our current report section in -- on our website because we have just published a current report that we are -- we have banked another wind farm, which is called [indiscernible]. We have signed the agreement just minutes ago, and this is -- the whole report will show you the details. This is a very large financing of the wind farm. I'm really happy. It just shows that our projects are bankable because additionally, when the banks lend us money, they really check this project as far as the engineering side and legal side is concerned. So I'm really happy to announce that.

[Operator]

We have another question from Kevin Lewis. What are the company's expectations for real estate segment in the medium term? When can investors expect a step-up in CapEx spend?

[Maciej Stec, executive]

Now we are in development phase. So as far as you know, we finished cooperation with HB Reavis. HB Reavis limited its operation in Poland. But in the meantime, we've prepared a very good design of these towers in different variants with prepared business plans. So now we are in development phase. We need to wait for discussion with the city about the final option just to organize this area. So to be honest, we will inform you as fast as we know. But the organization of the area around this towers is very important. So we are in development phase, so we would inform you as fast as we can if we have something more -- if we have some more information about it.

[Operator]

A follow-up question from Marcin Nowak. Just for clarification, do you expect a deterioration in TMT segment combined telco and Media or only telco and on adjusted EBITDA basis?

[Katarzyna Ostap-Tomann, executive]

We're talking basically about the B2B and B2C segment. So it's -- I would -- it's telco and Media, but excluding free-to-air and TV Polsat, so excluding the content part and it is on the adjusted EBITDA basis. Just for your information, as a whole -- I mean, as a whole -- I expect that as a whole -- for the group as a whole, this trend will be positive until the end of 2024. So you might expect a bit worse first half. And in the second half, you'll see the positive trend.

[Operator]

That was the last question in the chat section. So I will pass the floor to Mr. Blaszczyk for the goodbye.

[Miroslaw Blaszczyk, executive]

Ladies and gentlemen, thank you for your participation in today's presentation of the results of our group in the third quarter of 2023. I hope that we have answered all your questions. I wish you a nice day and see you at the next presentation, the results of the fourth quarter of 2023. Thank you very much, and goodbye.

[Operator]

Thank you. Bye-bye.

[Katarzyna Ostap-Tomann, executive]

Thank you.

[Stanislaw Janowski, executive]

Thank you very much. Bye.