Cyfrowy Polsat SA

WSE:CPS

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, a warm welcome to the 2022 results call of Polsat Plus Group. As usual, today's presentation will be made by Mr. Miroslaw Blaszczyk, CEO; Mr. Maciej Stec, Vice President, Responsible for Strategy; Ms. Katarzyna Ostap-Tomann, CFO; and 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, and welcome, everyone. This is the agenda of today's meeting. I will begin the presentation with the key highlights of 2022. After that, Staszek will tell you about our performance in the Media segment and Maciej will present the operating results of the B2C and the B2B segment. Then he will bring you up-to-date on our activities in the Clean Energy segment. Kacha will discuss on the financial performance in 2022. I will end the presentation with short summary and our objectives for 2023. Let's start with the key events of 2022.

2022 was a year of many challenges, both globally and locally. A number of factors made business difficult in the past year. War in Ukraine broke out, we all faced the global energy crisis and Poland saw the highest inflation in over 2 decades.

Despite unfavorable macroeconomic and geopolitical conditions, we continue implementing our Strategy 2023+ in 3 areas: connectivity, content and clean energy.

In the area of connectivity, we effectively implement our multiplay strategy, which is focused on building value and loyalty of our customers. We already have 2.5 million multiplay customers. ARPU per contract customer increased by 4% last year, while ARPU in the prepaid segment grew by 8%. Our churn rate remained very low, just 7%. This reflects the loyalty of our customers.

In our second strategic pillar, content, we invest in attractive, high-quality content and sports rights. We are the only operator on the Polish market to offer access to Disney+ as part of our TV packages. In terms of sports, last year, we extended our cooperation with Volleyball World for next 10 years. We also expanded our TV production facilities. In 2022, we built one of the most modern TV studios in Europe in an area of 2,400 square meters and 18 meters of height. The studio offers huge production possibilities. We also consistently strengthened our position in online media by developing our Internet portal interia.pl.

The last pillar of our Strategy 2023+ is the production of clean energy and green hydrogen. The dynamic development of this new segment is very important to us. We are currently working on the construction of wind farms with total capacity of almost 300 megawatts. The pace of construction of these farms is truly impressive.

We are building the full value chain of green hydrogen economy from green hydrogen production, storage and transport through the construction of a network of hydrogen refueling station to everyday use, such as our hydrogen bus. We are well on the way to completing this chain this year, but I will leave the details to Maciej.

Thanks to our initiatives, we are reducing CO2 emissions. In 2022, our Scope 1 and 2 carbon footprint was 84% lower year-on-year. Also, 100% of the energy we use comes from low and zero emission sources, biomass and solar.

I believe that the dynamic implementation of our green projects will enable us to make an even greater contribution to reducing greenhouse gas emissions and improving environmental quality in the future.

When discussing the highlights of the past year, it is important to mention the acquisition of the controlling stake in Port Praski, a unique development project in Warsaw.

Another step in this area of our business was the conclusion of joint venture agreement with HB Reavis for the construction of office towers in this unique location. In 2022, we paid out PLN 661 million in dividends, that is PLN 1.2 per share. And finally, in January this year, we executed the record high issuance of sustainability-linked bonds in the amount of PLN 2.67 billion. I'm proud to say that this was the largest corporate bond issued by a private company in the history of the Polish capital market and also the first bond issued in Poland linked to sustainable development goals fully in line with international standards. And now I will give the floor to Staszek who will present the operating results of the Media segment in fourth quarter and in 2022.

[Stanislaw Janowski, executive]

Thank you, Mirek. Good afternoon, and welcome. In the online segment, we continue to build our position on the Polish online market very effectively. For our horizontal portal, Interia, which we acquired almost 3 years ago, we are among the top 3 players on this market alongside Wirtualna Polska and the RASP Group.

In the fourth quarter of last year, we had over 21 million real users and 2 billion page views on average every month. We delivered all the synergies that we announced during the acquisition of Interia in 2020. I'm very happy with the evolution of this product over the past years. We will continue to strengthen our position in the market of Internet portals by supporting Interia from the editorial, content and advertising angles.

Let's now look at the performance of our TV channels in the fourth quarter of 2022. The viewership of our TV channels in this period was pretty good considering that we are still under the negative impact of the compulsory switch to the new FTA broadcasting standard. This impact is clearly visible in lower year-on-year viewership figures for both commercial broadcasters, Polsat and Warner Bros Discovery.

An additional factor impacting our audience shares in Q4 was UEFA World Cup in Qatar, which was broadcasted by the public television in November and December. Total audience shares of TV Polsat channels reached the level of 21.6% in the fourth quarter, and this includes 7.8% for our main channel and 13.8% for our thematic channels.

Even though viewership figures were under pressure, we did very well on the advertising market. For the fourth quarter of 2022, we posted growing revenue from TV advertising and sponsorship up by 2% year-on-year, while the broad market showed a dynamic of minus 0.3%. As a result, our share in the TV advertising and sponsorship market increased to 28.4%.

It's always better to look at the results of our Media segment over a longer time horizon because I think it gives a more accurate picture. So let's take a look at our performance in the full year. Of course, the negative impact of the refarming to the DVB-T2 standard is also clearly visible from this perspective.

In 2022, our total audience shares were broadly in line with our strategic target, reaching the level of 22.5%. Our main channel, Polsat was one of the leading channels with the audience share of 7.9%. Our portfolio of thematic channels gained 14.7% of audience shares in 2022.

Despite the various headwinds, our performance on the advertising market was very strong in 2022. We increased our revenue from advertising and sponsorship by 1.3% in the full year while the broad market declined by 1.1%. Our share in the TV advertising and sponsorship market grew to the level of 28.7%. I'm very satisfied with our performance in this area.

To end my part of the presentation, I wanted to show you a few pictures of our newest TV studio, what we have built. As Mirek mentioned, it's one of the largest and most modern studios in Europe with 2,400 square meters in area and 18 meters in height. It offers huge possibilities in terms of content production.

The photos that you see here were taken during the announcement of this year's spring scheduling and hopefully, they give you an idea of how amazing this facility is.

To briefly sum up, 2022 brought many challenges with it, and I'm very satisfied with the result of the Media segment despite all the headwinds. Even though our viewership results were subdued by regulatory decisions, we were still able to deliver very strong results in the advertising market, outperforming broad trends. Actually, our ad market shares are the highest ever. I'm also very happy with the development of our online media product, Interia. That's all from me. Thank you for your attention. Now Maciej will present the results of the B2C and B2B services segment.

[Maciej Stec, executive]

Thanks, Staszek. In the B2C and B2B segment, the last quarters were indeed quite difficult with the breakout of the war in Ukraine, inflation, a challenging macroeconomic situation among the global scale. So taking all that into consideration, we are very satisfied with our operating results because they show that our multiplay strategy is resilient and successful.

Thanks to the consistent implementation of the multiplay strategy over the past years, today, we have a high and stable base of customers who use our multiplay products. In Q4, almost 2.5 million customers were subscribers of our bundled offer. This is 41% of our total customer base. So as you can see, the level of saturation of our customer base with multiplay products is very high already.

Also, the number of services used by our multiplay customer increased to over 7.4 million. On the bottom chart, you can see that despite the headwinds that we faced in the past quarters, our reported churn remains very low, only 7%. This demonstrates the high loyalty of our customers and the satisfaction with our products. This is very important, especially today, given that the times are more difficult for everyone.

We provide nearly 13.3 million services to our contract B2C customers, and I'm very happy that we maintain a high and stable base of contract services. As you can see, the number of mobile telephony services and Internet services remained at a stable level over time, the number of pay TV services that we provide is dropping but this is something that we have been signaling clearly over the past quarters.

The decline in pay TV services is the result of our decision to change the pricing strategy of our online video services. Previously, we offered the [ E+ ] service as an addition to our mobile plans with a very low ARPU. Today, our Polsat Box Go online video services offers 2 main TV packages starting at PLN 30 and PLN 40, respectively. This clearly contributes to building the value of our customers.

Of course, the number of customers is important and the number of services is important, but the most important thing, in my opinion, is the ability to generate increasing value from this basis. This is exactly what we focus on in our multiplay strategy.

In the fourth quarter of last year, ARPU per contract B2C customer increased by 3.8% year-on-year to PLN 71.7. I'm very pleased with this result, especially because we continue to increase the value of our customers in difficult market conditions. This increase in our ARPU is the result of effectively cross-selling and upselling our products to our existing customers on one hand and on the other hand, we consistently migrate our customers to higher 5G tariffs. Please remember that in Poland, the 5G auction is still ahead of us. And because of this today, Polsat Plus Group is the only operator in the market who offers real 5G connectivity with speeds reaching 600 megabits per second.

At the beginning of March, we modified our headline mobile offers in line with the more-for-more approach. We offered larger data packs for slightly higher prices. And we also made our 5G services available to all our customers irrespective of the type of the service they use. I believe that this adjustment in our mobile pricing will support ARPU growth in the coming quarters.

I'm also very pleased with our results in the prepaid segment,, as I'm sure you remember, this base was under the temporary positive effect of the support that we provided to Ukrainian refugees by distributing free prepaid starters to them in the first month of the war.

In Q4, the number of prepaid services that we provided stabilized at about 2.7 million, which is the level observed before the war. Our ARPU in the prepaid segment continues to grow at a healthy pace of 4.8% year-on-year and in Q4 2022, ARPU for prepaid service reached the level of PLN 17.4. This growth was driven by 3 key factors: the change in the model of offering our Pay TV services, which I have already discussed, the pricing adjustments in our mobile prepaid offers and finally, the fact that our customers prefer package solutions over service offers in the pay-as-you-go model.

To finish off, let's take a look at the B2B segment. No surprises here, we have a high stable base of over 69,000 customers, and our aim is to maintain the size of this base going forward. We are also working intensively on building value in the segment by expanding cover offer addressed to other businesses.

ARPU per B2B customer in Q4 exceeded PLN 1,400 growing by 1.7% year-on-year. Before I move on to the Energy segment, let me briefly summarize our performance in the B2C and B2B services segment. We have a high stable base of 2.5 million multiplay customers. Our churn ratio remains very low, only 7% and ARPU in all the segments remains in an upward trend despite the challenging macroeconomic and market conditions. ARPU per contract customer is up by 3.8%, for prepaid service up by 4.8% and for B2B customer up by 1.7%.

Let me just say that I'm very satisfied with these results because they show that our business is resilient and that our strategy works well even in difficult times.

Okay. Let's take a look at recent developments in our third pillar of 2023+ strategy, the Clean Energy segment. Just to remind you, our 2023+ strategy announced in December 2021 is focused on 3 pillars: telecommunication under Plus brand, content under Polsat brand and the third pillar, which we actually build is the clean energy. What is important from the business perspective, all of the pillars are commodities in today's worlds and it's hard to imagine living without these services.

In the Clean Energy segment, we pursue 2 goals. The first one is to become a leading producer of clean, green energy from biomass, solar, wind on-shore and thermal waste treatment. We already have 2 fully operational biomass turbines of 50 megawatts each located in Konin. We already have 70 megawatts installed in our solar power plant Brudzew and we are currently working on the construction of the next photovoltaic farm.

I think we are the most advanced in the development of on-shore wind projects. Our strategy goal was to install 250 megawatts in on-shore wind farms. And with our most recent acquisition, we already exceeded this goal. We have almost 300 megawatts in on-shore wind under construction at the moment.

Finally, we want to install 2 thermal waste treatment plants, and we have already signed a letter of intent with the municipality of Rybnik to construct such a plant in the future.

The 2 last boxes are not directly included in our strategy, but we fully support, ZE PAK in their plans to produce energy from offshore wind farms and nuclear power plants.

Our second strategic goal is to build a full and complete value chain based on green hydrogen. Using the capacity installed in solar, wind and biomass plants, we want to produce green hydrogen. Our target in this respect is to produce 40 tonnes of green hydrogen daily. We are working on expanding hydrogen storage and transportation possibilities. And in the area of green hydrogen distribution, we want to construct a countrywide network of 30 refueling station.

We are about to launch the first publicly available hydrogen station in Warsaw next month and we are already building another station in Rybnik.

As you know, together with ZE PAK, we have developed a unique zero emission bus powered by hydrogen, the NesoBus. After its successful debut and promotion on the streets of Polish cities, we have won the first tender offer for the delivery of such buses to Rybnik. We are also working intensively on our hydrogen bus manufacturing plant, which is located in the economic zone in Swidnik.

And last but not least, we have expanded our corporate fleet by another 50 hydrogen cars.

As Mirek already mentioned at the beginning of this presentation, it's very important for us to implement our 2023+ strategy as fast as possible. To that end, we are working hard on the construction of a number of solar and onshore wind projects. As you know, the 2 biomass turbines located in Konin are fully operational and have the possibility of producing over 350-megawatt hours of electricity per annum each.

In 2022, the photovoltaic farm in Brudzew, we are very proud of this farm, produced 78 gigawatt hours of green energy. All this energy was used for our internal needs and constitutes natural hedging against energy price volatility last year, and Kacha probably will mention about it more. We are constructing an adjacent solar power plant, Cambria with installed capacity of 12.4 megawatts. We expect to launch this farm already in the third quarter of this year.

And what is important, we also have a very large solar power plant in the pipeline, Przykona with installed capacity of about 180 to 200 megawatts. We are working to launch this project in 2025.

We focus our efforts on the rapid development of onshore wind capacity. This is very important for us. Right now, onshore wind is the cheapest and the most effective way of producing green energy. This is easy to see if you compare the production of a solar farm with that of a wind farm.

Take a look at the expected production of the wind farm in Czluchow, for example, it has a similar installed capacity to Brudzew, a little more than 70 megawatts, but its expected production is 3x higher.

So we have 2 solar wind farms in Miloslaw and Kazimierz Biskupi that are almost ready for launch. They are fully constructed and are waiting for the final administrative decisions. They should start producing energy in Q3 of this year. In 2024, we are planning to launch 3 very big farms. The already mentioned farm in Czluchow, 72.6 megawatts, 33 wind turbines and expected production of 230 gigawatt hours. Przyrow with installed capacity 50.4 megawatts, 14 wind turbines and expected production of 105 gigawatt hours and last Friday, we acquired a new project, Drzezewo 1 to 3, combined with our existing project, Drzezewo 4.

This will be, by far, the largest project in our portfolio with over 138 megawatts installed capacity and more than 400 gigawatt hours expected production. The expected launch of this project is Q4 2025. In our pipeline, we also have 1 smaller wind farm located in Dobra with installed capacity of 7.8 megawatts and expected production of 24 gigawatt hours. We expect to launch this wind farm in the first quarter of 2025.

If you add up all these numbers, you will see that already, by the end of 2024, we will have over 330 megawatts of installed capacity. And in 2025, almost 680 megawatts in clean, green energy projects. And I'm very happy with the progress of this project. And to be honest, I can't wait to share the operating results of this farm's review in the coming quarters.

Moving on to our activities in the area of green hydrogen, quite a lot of it has been going on recently. It's my ambition to complete the full value chain of an economy based on green hydrogen already in 2023. And I think we have a good chance of success.

First of all, we are almost ready to start producing green hydrogen on our own. The installation of the first 2.5 megawatt electrolyzer in Cummins should be completed already in the second quarter of this year, and we can start production of thousand kilograms of green hydrogen daily. We are also in the process of buying a second electrolyzer, which should be delivered in the third quarter of this year. However, our ambition in this area is to produce our own electrolyzers.

We have been developing the prototype of the first Polish alkaline electrolyzer. It will produce 200 kilograms of hydrogen daily, and we expect to complete this project in the second or maybe third quarter of this year. We are also expanding our fleet of hydrogen trailers. They are necessary for the storage and transportation of hydrogen. We already used one smaller trailer with a capacity of 370 kilograms and 2 large ones capable of carrying over a ton of hydrogen each.

We have ordered 7 more hydrogen trailers with a capacity of over 1,000 kilograms each, and we expect them to be delivered [ successively ] by the end of this year.

In terms of green hydrogen distribution, already 2 public refueling stations are under construction. The one in Warsaw should be launched in May this year. So very, very soon. The other one is located in Rybnik we expect it to be ready in the third quarter.

The Polish national fund for environmental protection has granted us a subsidy of PLN 20 million for the construction of hydrogen refueling stations in 5 cities in Poland, Rybnik, Gdansk, Gdynia, Wroclaw and Lublin. I think this is a very big step forward in the popularization of green hydrogen and a clear signal of support from the authorities.

Our NesoBus had its first commercial success. Let me just remind you that the NesoBus is the zero emissions hydrogen powered bus that we designed and developed from scratch in 2022. We won the tender for the delivery of 20 NesoBuses to Rybnik for public transportation. This should be delivered by the end of the fourth quarter of this year, and we are also taking part in similar tender offers in other cities across Poland.

In order to be able to produce the hydrogen buses, we are working intensively on our hydrogen bus factory in Swidnik. We expect this facility to be ready in the third quarter of this year and it will produce over 100 buses annually. By the way, this facility also has financial support from the Polish National Fund for environmental protection.

So as you can see for yourselves, we are working on all the elements simultaneously, and we are on track to completing the value chain of a green hydrogen-based economy by the end of this year.

To quickly sum up, I believe that the rapid execution of our 2023+ strategy is an investment in the future and the future of Polsat Plus Group and the future of all [ Poles ]. Our activities in the Clean Energy segment translate directly into the reduction of CO2 and harmful particle emissions. The faster we reduce these emissions and the faster we transform the Polish energy sector, the better for all of us because it will lead to better health and better quality of life for everyone.

The important thing to remember is that we are not pursuing this strategy only for ESG or climate-related reasons, we are pursuing the strategy because it's an excellent business opportunity for us, and it will help us build the value of our group in the future. So despite the challenging macroeconomic situation, we continue to dynamically invest in the future of our business and of our country. Thank you very much for your attention. I will now let Kacha present the financial results of our group in the fourth quarter and the full year of 2022. Kacha, the floor is yours.

[Katarzyna Ostap-Tomann, executive]

Thank you, Maciej. Good afternoon, everyone. Looking at the group's Q4 2022 financial results, you can see that despite the challenging market conditions, our revenue is growing. It increased by 5% year-on-year to over PLN 3.4 billion, which closed that the fundamentals of our business are healthy. Revenue growth was supported by growing ARPU and very good performance on the advertising market, factors that Maciej and Staszek have already discussed in detail.

Additionally, revenues are driven by excellent equipment sales. Adjusted EBITDA year-on-year fell by 8%. The reason behind this is inflationary pressure on our cost and high electricity prices. Please note that EBITDA you see on this slide is EBITDA adjusted for nonrecurring events. In Q4 2022, we recognized the gain on the sale of 50% stake in SPVs in the Port Praski project to HB Reavis.

Over the past 12 months, free cash flow declined by 47% to PLN 768 million. I will discuss the drivers behind this decline in detail in a moment but I wanted to underline here that it is not my goal to maximize free cash flows. For me, free cash flow is a tool to help implement our strategy. As you are well aware, we reinvest the cash we generate in the development of the clean energy segment.

Our extensive investment portfolio in this area, which Maciej has just outlined in detail, requires significant CapEx outlays in the initial phases of development. Therefore, please expect that the transition phase of our group when we built our energy business will be characterized by high capital expenditures. Once we complete the announced projects, they will generate stable, high cash flows and EBITDA over the long term.

The last ratio that I wanted to discuss on this slide is the level of net debt to EBITDA. Here, we see an increase to 2.86x. I would like to point out that the low level of this ratio in the comparative period was the result of including the one-off gain on the sale of our mobile infrastructure in EBITDA of 2021. Net leverage at the end of 2022 was influenced by our ongoing investment in the area of green energy production, the dividend payment for 2021, and the payment for the renewal of the frequency reservations.

I draw your attention to the fact that the renewal of the 2100 megahertz reservation was fully settled in Q4 while the payment for the renewal of the 1,800 megahertz reservation was made in January 2023.

In the full year 2022, trends on key financial indicators are very similar to Q4. Revenue for the full year increased to PLN 12.9 billion, excluding the impact of MTR and FTR cuts in the first half of 2021. Revenue grew at the rate of 5.5% year-on-year. I think this is an excellent result given the macroeconomic turmoil and uncertainty on the markets. Also on the full year basis, very strong equipment sales, growing ARPU and solid performance in the ad market are the main drivers of the group's revenue growth.

EBITDA adjusted for nonrecurring events decreased by 8% in 2022 and amounted to PLN 3.4 billion. As a reminder, adjusted EBITDA excludes gains on the sale of subsidiaries and associates in 2021 and 2022 and additionally excludes in 2022, the cost of support for Ukraine. The drivers of the decline are identical as in Q4. Double-digit inflation and highly volatile energy prices have taken toll on operating costs, while revenue continued to grow at a healthy pace.

Of course, in LTM terms, free cash flow and net debt ratio are the same as in Q4.

Let's now take a look at how the individual business segments contributed to revenue and EBITDA. You can see on the chart on the left that all our operating segments contributed positively to revenue growth in 2022. Excluding the impact of MTR and FTR cuts on interconnect revenue, the B2C and B2B services segment generated an additional PLN 425 million. The Media segment added PLN 160 million to revenue, thanks to a very good performance in the TV advertising market and solid sales of content to third parties.

Our new segment, real estate generated PLN 183 million additional revenue, mainly from the sale of apartments and rent of premises, remind you that we consolidate the results of this segment from Q2 2022.

As for EBITDA, let us focus on adjusted EBITDA, both the B2C and B2B services segment and the Media segment generated lower EBITDA in 2022. As I mentioned in the B2C and B2B segment, this is mainly due to very high energy costs and inflation, while in the Media segment, EBITDA was under pressure from higher content cost, including a one-off cost related to the Men's Volleyball World championships that we broadcast in Q3 after this event was relocated from Russia to Poland.

In Q4 2022, adjusted free cash flow after interest amounted to PLN 146 million. The continued pressure on free cash flows is the result of several factors. Firstly, we have observed pressure on OpEx from inflation and high energy prices. Secondly, interest rates in Poland have risen sharply in 2022, triggering a significant increase in debt service costs. And the third factor is associated with very strong smartphone sales over the past quarters. This translates into incremental working capital employed. We recognized higher installment receivables due to the fact that we sell the majority of end-user equipment in the installment model.

This slide shows the composition of our cash flows in 2022. Please note that the ratio of CapEx to revenue decreased to 8.6% in 2022. This is the blended ratio for the whole group, including the real estate segment. In 2022, we recognized over PLN 800 million in proceeds from the sale of nonstrategic assets. The biggest transaction concerned the disposal of a 10% stake in Modivo. At the same time, M&A activities consumed PLN 745 million. The key acquisitions were 67% of shares in Port Praski and about 40% of shares in PAK-PCE.

In 2022, net loans granted amounted to over PLN 400 million. Out of this, about PLN 340 million were net loans extended to PAK-PCE for the purpose of supporting the rapid execution of our strategy in the Clean Energy segment. As you know, in 2022, we settled the one-off tax on gains from the sale of our mobile infrastructure, PLN 868 million was paid and this was a significant factor that depressed our cash flows in 2022.

The next item on the cash flow waterfall chart is the payment for the renewal of telco frequency reservations. As already mentioned, in Q4, we paid for the 2,100 megahertz frequency renewal. I would like to flag that in Q1 2023, you will see the payment for the 1,800 megahertz renewal in the amount of approximately PLN 850 million.

Net repayment of loans and borrowings amounted to over PLN 900 million in 2022. Apart from capital repayments under our SFA, we also settled some debts of company that we acquired in 2022.

In Q4, we paid out dividends to our shareholders over PLN 660 million in total. And finally, in May 2022 we bought treasury reserves under our share buyback program for almost PLN 400 million. As a result, at the end of 2022, we had over PLN 800 million of cash and cash equivalents on the balance sheet.

This slide presents the analysis of group debt at the end of 2022. At the end of December 2022, the net leverage ratio was 2.86. The growing net debt-to-EBITDA ratio reflects the dynamic execution of our Strategy 2023+. Please recall the vast pipeline of projects under construction that Maciej presented. These projects required high front-loaded CapEx so I would like to flag once again that in the coming quarters, I expect the net leverage to systematically increase in line with the scale of our investments in green energy and green hydrogen. Once we finish our investments in the green energy segment, you can suppose that we will start deleveraging of the whole business as we did in the past.

Weighted average interest cost was 8.5% and did not change significantly versus the previously reported value as interest rates in Poland have stabilized over the past months. Of course, this factor is beyond our control. But let me remind you that about 30% of our exposure is favorably hedged. And the effect of this hedging is over PLN 100 million in positive cash contribution.

The debt structure and maturity profile have changed in Q1 2023. So let's take a look at the current debt structure on the next slide. In January 2023, we issued a sustainability-linked bonds worth PLN 2.67 billion. Proceeds from this issuance were used to partially refinance Series B and Series C bonds. As a result, the [ maturity wall ] for bonds was post 2030. Also the debt structure tranche, today, bonds constitute 28% of our total debt and 72% is bank debt. The currency structure has not changed. All of our debt is denominated in Polish Zlotys.

I would also like to draw your attention to the fact that this is the first sustainability-linked bond on the Polish market that is fully in line with international ICMA standards. The margin on the Series D bonds is linked to not only to net leverage, but also depends on the fulfillment of KPI 4 from our sustainability-linked financing framework.

We have committed to increasing the share of energy from zero emission sources, understood as solar and wind energy in the energy needs used internally by Polsat Plus Group to 26% in 2026. The table that you can see on this slide also shows three other KPIs that we intend to link with external financing in the future.

In my opinion, this is a clear declaration on our part that the green transition is very important to us, and we want to contribute to it as much as we can. This brings me to the end of my part of the presentation. Even though the macroeconomic conditions in which we have to function today are tough, despite all the challenges and headwinds, I'm really satisfied with our financial performance in 2022. Thank you very much. Maciej, I pass on to you.

[Maciej Stec, executive]

Thanks, Kacha. This time, before Mirek's summary and outlook for 2023, I wanted to say a few words. What is fantastic about the 2023+ Strategy is that despite adverse market conditions, we are investing in the future. I can say that we are investing in dreams. We are investing in the needs of our customers. Our products and services are necessities.

As a Polish company, we want to provide our customers with high-quality essential products, but we also want these products to be innovative. The way I look at our Strategy 2023+ is that we invest not only in the future of our group and the future of the [ Poles ], but we also invest in innovations. Our aim is to be innovative in all our strategic pillars, and we want our innovations to be practical.

So in the Connectivity pillar, we invest in the newest 5G technology. As the only operator in Poland, we have a separate dedicated frequency band for 5G, 2.6 gigahertz TDD and thanks to this, our 5G network offers real 5G parameters with transfer speed up to 600 megabits per second. Already 20 million people living in 1,000 locations are within the coverage of our 5G network, and they can benefit from the state-of-the-art technology.

Independent speed tests show that our 5G is indeed the fastest mobile technology in Poland.

In the Content pillar, we steadily develop our production facilities. Last year, we built one of the largest and the most technologically advanced TV studio in Europe. You can see it on the top middle picture on this slide, like Staszek said, it's really impressive, and it has huge possibilities, including filmmaking. This studio is the seventh in our studio companies located in Warsaw. Such extensive production facilities help us produce attractive, diversified content while controlling cost at the same time.

Our strategy is to offer high-quality content to our viewers. With that in mind, we signed a contract with Disney+ and today, we are the only operator on the Polish market to offer this exclusive content in our service bundles. We also focused on providing sports content that is the most interesting for [ Poles ]. We have a wide portfolio sports wise, including the UEFA Champions League. And in 2022, we signed a 10-year contract with World Volleyball. Volleyball is a big deal in Poland. We are world champions in 2014 and 2018, and we won the silver medal in 2022. Polsat has been the sponsor of [ Polish ] Volleyball for almost 30 years.

I've already talked a lot about the Clean Energy segment. So I'll try not to repeat myself here. I wanted to show you actual pictures. I'm really proud of this pace at which we are developing in this new area, especially wind onshore, almost 300 megawatts of capacity installed in only 3 years is really an achievement.

The top picture shows how the blades are installed on the wind turbine in Miloslaw. The middle picture is our first hydrogen refueling station in Warsaw. We plan to open it to public in May, so very, very soon. It has an amazing modern design. I think it really is a step into the future. The last picture is the NesoBus, our very own hydrogen-powered bus that we developed and designed from zero, from the scratch in only one year. I'm very proud of this project. The NesoBus has already won the first tender offer for municipal transport in Rybnik, and I hope that [indiscernible] will follow soon.

So as you can see, we invest in practical innovations that will change lives for the better in the future. I'm very proud that we are able to accomplish so much in such a short period of time, and I hope that going forward, we will be just as effective in executing our Strategy 2023+. Thank you, and I give the floor to Mirek.

[Miroslaw Blaszczyk, executive]

Thank you, Kacha, Staszek and Maciej. Allow me to quickly summarize the year 2022 and share with you our objectives for 2023.

In 2022, we achieved our objectives despite unfavorable macroeconomic and geopolitical conditions. We focused on consistently and effectively building the value and reality of our customer base. ARPU increased in all business segments and churn remained very low. We continue to invest in attractive content and a rich portfolio of sports broadcasting rights for our viewers.

We offer the best 5G services with data speeds of up to 600 megabits per second, and we expanded the availability of our fiber-optic broadband access offer in line with our motto, For everyone, everywhere. As promised, we have been dynamically pursuing our strategy in the area of Clean Energy and green hydrogen production. Despite the difficult situation on the Polish debt market, we have successfully issued sustainability-linked bonds worth PLN 2.67 billion.

In 2022, we completed the acquisition of a 67% stake in Port Praski, signing a JV agreement with HB Reavis in order to develop office space. And finally, in 2022, we paid a high dividend to our shareholders.

In 2023, we aim to continue to dynamically implement our Strategy 2023+ across all our businesses. In the area of connectivity, we'll consistently pursue our multiplay strategy. Our aim is to further build customer value expressed through high ARPU. Additionally, we will maintain high customer loyalty. We will also expand the footprint of our state-of-the-art 5G network and our broadband fiber-optic network.

In the area of Content, our primary focus will be the [indiscernible] in investment in attractive content for our viewers, especially highly popular TV series and sports. We'll continue to develop our Polsat Box Go platform. We will also strengthen our position on the online media market through our online portal, Interia.pl.

In the Clean Energy segment, in 2023, we will continue the dynamic development on the renewable energy projects. It is our ambition to complete the full value chain of an economy based on green hydrogen in 2023, which I think will be an amazing accomplishment.

In 2023, financial discipline is going to be key given that macroeconomic conditions are still difficult and unfavorable. Despite that, our aim is to maintain high margins. We'll also work on arranging new external financing in order to be able to execute our 2023 strategy quickly and effectively. And finally, let me repeat what Kacha said. In 2023, we will invest free cash flows from the TMT business into development of our new segments of operations, the Clean Energy segment.

Ladies and gentlemen, this brings me to the end of today's presentation. Thank you very much for your attention. We are now ready to answer your questions.

[Operator]

[Operator Instructions] I see Nora Nagy has a question. Please go ahead, Nora.

[Nora Nagy, analyst]

I have 2 main questions, please. Firstly, about the current status of 5G allocation in Poland. And also does the timing of the auction influence your CapEx planning in the Clean Energy segment in 2023 and secondly, what's your outlook for the TV and advertising market for this year? Do you expect improving EBITDA contribution year-over-year?

[Maciej Stec, executive]

Maciej Stec, I'll take the first question, and Staszek will probably take another -- second question. So in terms of 5G, the regulator has announced the second round of consultation of the 5G auction in the beginning of April. I think this may delay the allocation of the 5G auction until the end of this year or even later. But what is important, the financial terms are very reasonable because the asking price is PLN 450 million per block of 100 megahertz. And there are 4 blocks, what means there is 1 block per operator. So I think that there is no incentive for a bidding war in this auction. Besides, we have the real 5G network already. It reaches 20 million people in 1,000 locations. This gives us more flexibility in the auction, I believe.

So just to go to your question, the auction and its timing does not influence our plans in the Clean Energy segment, we are focused very strongly on building photovoltaic and wind farms because they will generate stable streams of cash flows and EBITDA over 30 years plus. So this is key for us, as you could see in our presentation. So our goal, especially in onshore wind was beaten by 50 megawatts. So nowadays, we will focus just to build 300 megawatts of the cheapest green energy in Poland. So we would like to do this as fast as we can just to bring money to our results -- financial results. So Staszek, maybe you can take another question.

[Stanislaw Janowski, executive]

It's Staszek. In terms of advertising market, with TV advertising market in Poland, we estimate at a low single-digit growth in 2023 and online advertising in 2023, we estimate at middle single-digit growth. And of course, we'll be aiming at improving this Media segment contribution to the EBIT.

[Operator]

Are there any further questions? If there are no questions, I will pass the floor over to Mr. Blaszczyk for a final word.

[Miroslaw Blaszczyk, executive]

Thank you. Ladies and gentlemen, thank you for your participation in today's presentation of our group's results in 2022 and the presentation of our goals for 2023. I hope that we have answered all the questions, and we look here in May when we present the results for the first quarter of 2023. Thank you very much, and have a nice day.

[Stanislaw Janowski, executive]

Thank you very much.

[Katarzyna Ostap-Tomann, executive]

Bye.

[Maciej Stec, executive]

Bye.