Cyfrowy Polsat SA

WSE:CPS

Earnings Call Transcript 2023-Q4

[Agata Wiktorow-Sobczuk, executive]

Good afternoon, everyone. It is my pleasure to welcome you to the earnings call of Polsat Plus Group for the fourth quarter and the full year of 2023. Can I have please the next slide.

The composition of speakers for today is slightly different than usual. The presentation will be delivered to you by Mr. Miroslaw Blaszczyk, CEO of Cyfrowy Polsat; Mr. Maciej Stec, Vice President, responsible for Strategy; Ms. Katarzyna Ostap-Tomann, CFO and Management Board member, responsible for ESG; and finally, Mr. Piotr Zak. As I am sure most of you know, Piotr holds the position of CEO at Telewizja Polsat since the beginning of this year.

After the presentation, we will hold a Q&A session, but I encourage you to post your questions in the chat section in advance. Thank you very much. And over to Mr. Blaszczyk.

[Miroslaw Blaszczyk, executive]

Good afternoon, ladies and gentlemen. The agenda of today's presentation will follow the standard pattern. I will begin with the highlights of 2023. After that, Piotr will talk about the media segment and Maciej will present the results of the B2C and B2B services segment and the green energy segment. Kacha will then give you an overview of our financial performance in the past year, and I will sum up the presentation and tell you about our objective for 2024. Next slide, please.

2023 was a year marked by quite a number of significant events for our group. So I have decided to divide the key events into 3 parts: telco and media, green energy and finally, development in the area of finance. Next slide, please.

Telco and media first. As you already know, we entered into a strategic partnership with Google Cloud. As part of this collaboration, Google signed a 10-year power purchase agreement to buy green energy from our Przyrów wind farm. We also cooperate with Google Cloud in the area of cloud solutions. This is a big opportunity for our business going forward. We continue our efforts to expand the coverage of Poland's widest 5G plus network.

By the end of 2023, over 23 million people, that is almost 70% of the population of Poland were within the range of our 5G Plus network and already 6 million are covered by the superfast 5G Ultra Plus network with maximum download speeds of up to 1 gigabit per second. The C-Band, spectrum dedicated to 5G in Poland was finally distributed, and we will use this frequency to continue to develop our Plus 5G network.

In the Media segment, in January this year, Polsat-Interia Group became the leader on the online media market for the first time in history. We also strengthened our position on the TV and online markets by acquiring the naEKRANIE.pl website and 4FUN TV channels.

Next slide, please. We are strongly committed to development of our green energy business. We gained control over the PAK-PCE Group in July 2023 and launched the first 2 wind farms at Kazimierz Biskupi and Miloslaw in September. We also installed an additional 12.4 megawatts of generation capacity at the Brudzew photovoltaic farm. We are making rapid progress in the implementation of our Strategy 2023+.

As of today, 4 more wind farm projects are under construction, 2 of which are at the very advanced stage. We are also building 4 more hydrogen refueling station. The Czluchów wind farm began technical commissioning in February 2024, and we completed the installation of turbines at the Przyrów wind farm ahead of schedule. We also made significant progress in the field of sustainable transportation.

We put into operation the first publicly accessible hydrogen refilling station in Poland, in Warsaw and Rybnik. We completed the delivery of 20 NesoBuses of our own production to Rybnik and we secured new contracts for the long-term lease of 10 NesoBuses in Gdansk and the delivery of 26 NesoBuses to Chelm.

Next slide, please. In terms of finance, we have successfully completed the process of refinancing our debt. We entered into loan agreement for PLN 7.3 billion and EUR 500 million in term loans and the revolving credit facility of up to PLN 1 billion. We successfully placed 3 sustainability-linked bonds issues with a total nominal value of PLN 3.890 million. In addition, we are very successful in raising financing specifically dedicated to the implementation of our green energy projects.

In 2023, we obtained over PLN 1.1 billion in investment loans to finance the construction of renewable energy sources, totaling 145 megawatts of installed capacity. I'm especially proud of the fact that all of our new debts, both bank loans and bonds are either sustainability linked or dedicated to the development of green projects. I think this demonstrates our strong commitment to responsible finance and sustainable development of Polsat Plus Group. In conclusion, 2023 was quite a challenging year, marked with a significant effort on our side to implement our strategic plans. Looking at the first month of 2024, I'm optimistic for this year.

Next slide, please. This is all from me for now. Let's take a look in more detail at the operating performance of our business segments, starting with Piotr and the Media segment. Piotr? Please go ahead.

[Piotr Zak, executive]

Hello, and good afternoon, everyone. As Agata said, I've been acting CEO of Telewizja Polsat for the last 3 months. And it is my great pleasure to present to you today the results for the Media segment for television and online. So let's get on with it. Next slide, please.

Let's start with our viewership and our position in the advertising market in the last quarter of last year. Our total audience share in this time period was 22%, with our main channel, achieving 7.5% audience share and our thematic channels 14.5%. The advertising market in this period of time grew by 0.4%, whereas we outperformed the broad market with revenues from television advertising and sponsorships increasing by 1.1%, which gave us a total market share of 28.6%.

Thank you for the slide, and let's move on to the next one, please. We always emphasize that it's important to look at the television market in a yearly perspective to cut out any kind of seasonal effects and smooth those out over the year. So when we look at 2023, we're in line with our long-term strategy. So our total viewership results were 22%, with our main channel being at 7.6% and our thematic channels at 14.4%. When we look at the advertising market, we can see that it grew by 3.3% in last year, whereas we outperformed it just slightly at 3.4% growth. And again, this gave us a total market share of 28.6%.

Next slide, please. I also want to tell you guys a little bit about 2024. We started off the spring schedule with a blast. We created a lot of formats that people know that people love that people have seen in the past. This allows us to maintain a stable viewership base while also allowing us to optimize cost through the experience that we've had in the past. So a lot of the returning formats are things like Dancing with the Stars, Love Island, Ninja Warrior. I'm sure -- or I hope these are all things that you guys have seen before.

Next slide, please. Let's now turn to our second business leg in the Media segment, which is our online presence. And this is something we invested into in 2020 with the purchase of the Interia.pl Group. And as you can see on the slide, Four years later, we have an average monthly number of users, which is 21 million active users every month, which generate a total of nearly 2 billion page views every month. So these are really huge numbers in terms of reach. And actually, for the first time ever, in January of this year, the Polsat-Interia Group was #1 among online publishers, thanks to 21.1 million active users, which was an amazing result for us.

Let's go on to the next slide, please. I would also like to take this opportunity to share with you the results of the synergies that we have achieved over the last 4 years since the purchase of the Interia.pl Group. And so back in 2020, we announced that we would grow our EBITDA by PLN 20 million in a 1-year time frame. And in the medium- to long-term perspective, we would actually double them. And so what you can see at the bottom left hand of the slide, is that by 2021, we grew our EBITDA by exactly PLN 20 million. And by 2023, we grew the EBITDA by 97% relative to the base year of 2019. So I'm happy to say that we've actually achieved what we set out and what we promised to do back 4 years ago.

Additionally, since 2020, the Polsat-Interia Group was one of the very few Internet publishers to actually be growing in terms of real users, whereas most of the competition has been slightly decreasing over that time period. This brings me to the end of my presentation. So let me just quickly recap the media segment before we move on to Maciej.

I'm very satisfied with the results from both the last quarter of last year as well as all of 2023 in total, both for online, both for television. We're stable. We have lots of ideas. We started 2024 off with the blast, and hopefully, that will continue throughout the year. So that's all for me. Thank you very much. And let me hand over everything to Maciej for the B2C and the B2B segments. Thank you.

[Maciej Stec, executive]

Thank you, Piotr. I will present the results of the B2C and B2B Services segment and then the Green Energy segment. Next slide, please.

In the B2C and B2B services segment, we are strongly focused on our multiplay strategy. As always, this strategy yields very good results, especially given the difficult environment that our customers have been facing for the past 2 years. Please remember that the pandemic and the Russian aggression on Ukraine have brought about instability, the energy crisis and double-digit inflation. Despite these headwinds, we are able to maintain a high and stable base of multiplay customers.

At the end of 2023, we had almost 2.5 million customers who were subscribed to 7.5 million services from our portfolio. Our customer base is highly saturated with the multiplay product, already 42% of our customers use at least 2 services from our portfolio. One of the most important effects of our multiplay strategy is that it's very supportive in building customer loyalty. Churn among our customers amounted to 7.6% at the end of 2023. This level is a little bit higher than a year ago. However, this is a very good result showing that our customers are happy with our products.

Next slide, please. We provided over 13 million contract services to our customers at the end of 2023. The total RGU base recorded a decrease of 1.5% year-on-year on the back of a lower number of pay-TV services. As you can see on the graph, mobile telephony and Internet RGUs remained at high stable levels. We provide 6.2 million mobile voice services and about 2 million mobile and fixed Internet access services. Our pay TV base remains under pressure mainly because of our decision regarding our pay TV offer.

Please recall that about 2 years ago, we replaced the [ low-end ePlus ] service with full value TV packages available in Polsat Box Go. I expect the pressure from this factor should fade by the end of this year. Additionally, we provide pay-TV services in IPTV and OTT technologies, which partially offset the decline in the pay-TV base. Next slide, please.

For many years, our efforts have been focused on building customer value, and I believe we are very successful in this respect. In the fourth quarter of 2023, ARPU per contract customer increased by 2.6% to the level of PLN 73.6. The effects of the multiplay strategy are visible in the growing saturation of our customer base with services. The RGU saturation per customer ratio is 2.26. The main drivers behind this growth are the multiplay strategy and also 5G tariffs.

We launched our 5G network as the first operator in Poland back in 2020 using our unique 2.6 TDD gigahertz spectrum. Ever since then, we are expanding the footprint of our 5G network. Today, already 23 million people in Poland that is 70% of Poland's population are within the range of our 5G network. Additionally, 6 million people can use our 5G Ultra Plus network, which operates on aggregated frequencies and offers download speeds up to 1 gigabit per second. Following the 5G auction, we now have the C-band at our disposal. This is a capacity spectrum, and we will use it to improve the quality of our existing networks were necessary. Next slide, please.

In the context of prepaid services, as you can see on this slide, we maintain a high and stable base of provided services and a high and stable level of ARPU per prepaid RGU. At the end of 2023, we provided 2,065,000 services in this segment.

I would like to draw your attention to the fact that we decided to exclude from our prepaid RGU base, the volumes resulting from the sale of the promotional Polsat Box Go Start package. As a reminder, we launched this package as a gesture towards viewers of the free Polsat Go service, which we decided to close in mid-2023. The start-up package is offered the price of PLN 30 per year, making it a low margin and significantly affecting the overall picture of our performance in the prepaid segment.

Excluding the low-margin start package in the fourth quarter of 2023, ARPU amounted to PLN 17.4, while for the entire year 2023, it was PLN 17.6. I would like to emphasize that this is a very good result, especially considering the highly competitive prepaid services market today. Next slide, please.

Turning to the B2B customers segment. As you can see, we report consistent, stable results in this area. We had approximately 69,000 B2B customers at the end of 2023, and the scale of this base remains at a relatively unchanged level. ARPU per B2B customer increased by 2.5% in fourth quarter of 2023 and amounted to almost PLN 1,500 per month. We are able to maintain a high base and growing value of our B2B customers in a high competitive market, thanks to our broad offering of communication and ICT services.

Going forward, our cooperation with Google Cloud will be an opportunity to further develop our offering for B2B customers. Next slide, please. Let's move on to our operations in the green energy segment. Next slide, please.

As part of our Strategy 2023+, we have 2 goals in the area of green energy. First of all, we want to become a leading producer of clean green energy from renewable sources. Our second goal is to become a leading producer of green hydrogen. The pictures that you see on the slide are authentic photographs of our projects, the wind farm on the left in Czluchów, 33 turbines already constructed and in the face of technical commissioning. Underneath is our solar power plant in Brudzew. On the right-hand side, you have our very first hydrogen refueling station located in Warsaw. And on the bottom is the prototype of our 0.5 megawatt alkaline electrolyzers that we are developing ourselves. Next slide, please.

On this slide, I would like to quickly recap our progress related to construction of renewable energy sources. In 2023, we finished the construction of the Cambria solar power plant. Thanks to this, we expand our capacity in solar to 82.4 megawatts. We are working on the Przykona solar farm together with ZE PAK, this project is still at an early stage. We are working towards obtaining all the necessary environmental and construction permits. I expect this project to be implemented in 2026.

In terms of onshore wind energy in the third quarter of last year, we have completed our first wind farms, Kazimierz Biskupi and Miloslaw with total capacity of more than 27 megawatts. These farms have all the necessary licenses and they produce electricity commercially. The next 2 wind farms in our pipeline, Czluchów and Przyrów, are very advanced. You can see on the circles next to each project that most of the CapEx has already been spent. The Czluchów wind farm started technical commissioning in February, so it's already producing energy. We have finished the installation of the last wind turbine on the Przyrów wind farm ahead of schedule.

The last 2 wind farms, Drzezewo and Dobra, are under construction. We expect to complete both by the end of 2025. Drzezewo was the biggest wind farm in our portfolio with over 138 megawatts capacity and 63 turbines. We have signed contracts with Vestas for the supply and installation of turbines and on, therefore, construction works on the site. And finally, the Dobra wind farm, it's a small farm with 2 turbines and total capacity of 7.8 megawatts still at an early stage of development.

Even though nothing is changing in the last box on the slide, energy from waste processing. Let me assure you that we are in touch with the city of Rybnik. We are looking for an appropriate location for the waste processing plant, and we need to gain social acceptance for this project, which is not easy task. So to sum up, our pipeline of projects will result in about 330 megawatts of installed capacity already in 2024, only 3 years after the launch of our strategy and twice as much in 2026, 740 megawatts.

Next slide, please. On this slide, you have the elements of our value chain of an economy-based on green hydrogen, and we are implementing each of them gradually. In the area of green hydrogen production, we are working on the launch of the first 2.5 megawatt PEM electrolyzers, manufactured by Cummins. We expect the electrolyzers to start producing 1,000 kilogram of green hydrogen daily by the end of the second quarter.

To give you a better idea of how much there is 1,000 kilograms of hydrogen is enough to refuel 25 of our NesoBuses and each NesoBuses can cover a distance of up to 450 kilometers on one refueling. That is over 10,000 kilometers. Coming back to our electrolyzers. The development of our prototype alkaline electrolyzers is in its final stages, and I hope it will also start production by the end of the second quarter.

This is the electrolyzer you saw on my first slide, half megawatt electrolyzer 200 kilograms of hydrogen production daily, modular construction, allowing for a lot of flexibility. In terms of storage and transportation, we are already using 8 trailers to transport hydrogen to our refueling stations. We are still waiting for the delivery of 2 more trailers and that will satisfy our needs in this area. We are building a distribution network for green hydrogen. We have already put into operation the first in Poland public hydrogen refueling stations in Warsaw and Rybnik. Work on the next 2 stations in Gdansk and Gdynia are already advanced, and we plan to launch this station before the end of second quarter. We are also building hydrogen stations in Lublin and Wroclaw. These stations should be ready at the turn of the second and third quarter of this year.

We are also consistently building our market position and our Neso brand in the field of public transportation. As you know, in 2023, we won the tender offer for the delivery of 20 NesoBuses to Rybnik, and we have secured a long-term lease agreement for 10 NesoBuses with the city of Gdansk. This delivery is planned for the third quarter. Only a few weeks ago, we won a new tender offer for the delivery of 26 NesoBuses to Chelm. This delivery is divided into 3 tranches and will take place in 2025. This shows that policies are interested in eco-friendly transportation solutions, and there is a lot of potential in this area. Next slide, please.

Let's move on to the operating results of the green energy segment. In the fourth quarter of 2023, we generated 179 gigawatt hours of green energy from our renewable sources, 150 gigawatt hours from biomass, 8 gigawatt hours from solar power and over 21 gigawatt hours from wind power. As you know, we had the energy segment in our group only in the second half of the last year. And during that time, we generated a total of 371 gigawatt hours of green electricity, 307 gigawatt hour from biomass, 36 gigawatt hours from the sun and almost 28 gigawatt hours from the wind.

Let me point out that energy generation from renewable sources is subject to seasonal effects. In the first and fourth quarters, energy generation from solar power is very low, while wind farms are very effective during those periods. Also, please remember that we only launched our wind farms in September.

I already mentioned this, but let me repeat, the Czluchów wind farm with almost 73 megawatts of capacity, started technical commissioning ahead of schedule, and it's producing energy as of February. So in the results of the first quarter, you will already see production from this farm. We also completed construction on Przyrów wind farm. The last turbine has been installed and [ Drzezewo wind farm ] will also start technical commissioning. We are progressing very fast. The farms are being completed ahead of schedule, and they will start contributing to our results faster than we originally planned. Next slide, please.

As of the third quarter of 2023, we started to consolidate the financial results of the Green Energy segment in the fourth quarter of 2023. We generated 179-gigawatt hours of green energy, which we sold at an average price of PLN 690 per megawatt hour. If we look at the second half of 2023, we sold 721-gigawatt hours of electricity at an average price of PLN 721 per megawatt hour. You have probably noticed that despite the high average price in the fourth quarter, the Green Energy segment posted very low EBITDA, definitely below expectations. This was mainly due to a onetime negative regulatory impact. And I'm sure Kacha will tell you more about this. If we exclude this onetime impact, the Green Energy segment generated EBITDA of about PLN 37 million in the second half of 2023. Next slide, please.

This is my last slide and it's a snapshot of the execution of our Strategy 2023+ in the area of green energy. Thanks to the dynamic execution of our green investments, we will increase the installed capacity in renewable sources in 2026 to more than 740 megawatts. That is 2.5x more than in 2023. This installed capacity in 2026 will enable us to achieve our strategic goal in the area of energy production. We will be able to produce up to 2-terawatt hours of clean green energy per year, and this is exactly what we guided for in 2021 when we announced the Strategy 2023+.

Let me just point out that even though the installed capacity in 2026 is going to be lower than we intended, it will be enough for us to reach our goal for energy production. This is because wind farms are more efficient in terms of production compared to solar power plants, and we decided to increase the number of wind projects. Next slide, please.

Ladies and gentlemen, this brings me to the end of my part of the presentation. Thank you very much for your attention. Now Kacha will tell you about the financial results of the fourth quarter and the full year. Thank you again. Kacha, the floor is yours.

[Katarzyna Ostap-Tomann, executive]

Thank you, Maciej. Can I have the next slide, please.

On this slide, you have the key financial results of our group in the fourth quarter and in the full year. As you can see, 2023 was quite a challenging year for us. Revenue increased by 7.3% in the fourth quarter and 5.5% in the full year. Revenue generated by our new segment, green energy contributed significantly to both annualized period. Adjusted EBITDA fell by 17.3% in the fourth quarter and by 10.2% in the full year. The green energy segment contributed PLN 2 million to consolidated EBITDA in the fourth quarter and PLN 24 million in the full year.

I will discuss key drivers of changes in revenue and EBITDA on my next slide. Net profit for the quarter amounted to PLN 130 million, down by 25.3%. And in the full year, we posted net profit of PLN 312 million, down by 65.4%. In 2023, net profit remained under the negative impact of high debt service costs. Please note that interest rates in Poland were very high in 2023. It was 6.75% from January until September, and then they were cut to 5.75% in October and to remain on this level until today.

Additionally, the level of net profit depends to some extent on foreign exchange rates because it includes the impact of noncash valuation of the euro tranche of our debt. In Q4, this was a high positive effect due to the appreciation of Polish zloty. Also, please note that the net profit in the fourth quarter includes a positive impact of the settlement of the acquisition of PAK-PCE in the amount of PLN 67.4 million. Next slide, please.

Free cash flow in 2023 amounted to PLN 334 million and declined almost 57%. Free cash flow is adjusted for nonrecurring events and also for development CapEx incurred in our green energy segment. I will discuss free cash flow in detail in a moment. The net debt-to-EBITDA ratio was 3.51 at the end of 2023.

As I anticipated, this result is steadily growing on the back of our heavy investments in the green energy segment. However, please note that the reported leverage is lower than I guided for last year. This is because we have the positive effect on EBITDA from the sale of shares in Asseco and also the larger part of the payment for the 5G spectrum was postponed to the beginning of 2024.

Going forward, this ratio is going to increase, and I expect it will peak at the end of 2024. It is our intention to start deleveraging the company once the biggest investments in green energy has been completed that is starting from 2025. Next slide, please. Looking at the composition of revenue and EBITDA by segment, please notice that both the B2C and B2B services segment and the Media segment contribute positively to revenue generation.

Despite that, EBITDA contribution from this segment was negative minus PLN 341 million in the B2C and B2B segment and minus PLN 34 million in the Media segment. Revenue growth was not enough to compensate pressure on our operating costs in this segment coming mostly from high inflation and high energy prices. The entire revenue generated by the green energy segment contributed to revenue growth because we started to consolidate this segment in mid-2023. The 2 most significant revenue streams in this segment are the sales of our own energy and the resale of energy.

Our focus is, of course, on the sale of the energy that we produce ourselves because it generates the highest margins, EBITDA generated in the green energy segment in the fourth quarter was lower than expected. This is the result of a negative one-off impact of the regulation on freezing energy prices in 2023, more specifically the mechanism for settling compensation for energy producers and companies trading in energy is benchmark against market energy prices, which declined sharply in the fourth quarter.

I don't expect this to repeat itself. Firstly, because I don't expect energy prices to fall further. And secondly, because the regulation freezing energy prices should remain in force until only the end of June. Next slide, please. This is a new slide presenting free cash flow, hopefully, in a more transparent way. The definitions and methodology remain unchanged.

Starting from the level of adjusted EBITDA, you can see that we have the biggest pressure coming from the high interest costs. In 2023, interest payments and leasing amounted to over PLN 1.3 billion net of hedging. During this year, we faced a lot of costly frequency renewals in the 1,800 megahertz and the 900 megahertz band, and we have the down payment for the 5G auction over PLN 1.3 billion in total.

As part of the refinancing process, we incurred additional nonrecurring cost of about PLN 100 million. Our M&A activities in 2023 resulted in an outflow of PLN 85 million. Please remember that this is net of cash acquired. Furthermore, in 2023, we sold shares in associates and subsidiaries for a total amount PLN 914 million.

In the first half of the year, we financed the execution of our Strategy 2023+ by granting dedicated loans to PAK-PCE. This is the PLN 210 million in the chart. Starting from Q3, we recognized CapEx in this segment total for the second half of 2023 is PLN 711 million. We decided to adjust free cash flow and show you what our situation would be if there were no investment in green energy. This totals to PLN 334 million at the end of 2023. Next slide, please.

Total CapEx in 2023 was PLN 1.6 billion. If we split this some across our business segments, please note that in the TMT space, CapEx remains under control. The CapEx to revenue ratio was 7% in the full year and rather low 5% in the fourth quarter. This is in line with our guidance on the CapEx-light model of our TMT business. The surge in CapEx during 2023 is the effect of consolidating the green energy segment and the direct recognition of the segment's CapEx in our financials.

Let me emphasize 2 things here. Firstly, please remember that PLN 711 million of CapEx for the full year is actually CapEx incurred only in the second half of the year. That is from the moment we gained control of PAK-PCE Group. I expect that in 2024, this figure is going to be around PLN 1 billion.

The second point I wanted to make is that the substantial amounts constitute development CapEx. Renewable energy projects require very high front-loaded CapEx for development. However, once operational, they have very low operating costs and practically no maintenance CapEx. This means that they are going to generate stable recurring cash flows and EBITDA over an extended time horizon. Next slide, please.

On my last slide, as always, I would like to present the group's debt. Starting from the table on the left, we have repaid the revolving credit facility of PLN 1 billion. We have also obtained new project financing for the Czluchów and Przyrów wind farms. As a result, the carrying value of project financing liabilities increased to over PLN 1.2 billion at the end of the year. We are still working on obtaining project financing for our largest wind farm, Drzezewo.

Net debt-to-EBITDA, excluding project financing, amounted to 3.51. Once again, I would like to flag that you should expect an increase in the ratio in 2024 before we started deleveraging in 2025. We have completed the refinancing process, and we have issued 3 series of bonds worth almost PLN 4 billion. So the structure and maturity profile of our debt will stay the same in the coming quarters. 31% of our debt are bonds and 69% are bank loans. 16% of our debt is denominated in euro. Because of this volatility in foreign exchange rates in the future will translate into potentially significant valuations impacting the level of net profit.

The maturity profile displayed on this slide is almost final for the next couple of years. We redeemed all the Series B and C bonds in February this year. The bank loans mature in 2028, and the bonds mature in 2030. Next slide, please. That's all for me. To sum up, 2023 was a challenging year in many respects, and I'm looking into 2024 with optimism. Thank you, and over to Mirek for the summary.

[Miroslaw Blaszczyk, executive]

Thank you, Kacha. Let me make a quick summary of 2023 and share our ambitions for 2024 with you before we move on to the Q&A session. Next slide, please.

In the Telecommunications segment, we consistently executed our multiplay strategy. As a result, we increased [ ARPU revenue ] per contract customer in the B2C and B2B segment and maintained a high stable level of ARPU on the highly competitive prepaid market. Thanks to this strategy, we also maintained a low churn rate.

In 2023, we expanded our 5G and 5G Ultra Plus networks using the unique 2.6 gigahertz TDD frequency and aggregating 1.8 gigahertz, 2.1 gigahertz and 2.6 gigahertz TDD bands. Thanks to these efforts, in 2023, we are able to offer our customers the widest and fastest 5G network with download speeds up to even 1 gigabit per second. Our new partnership with Google Cloud is an excellent opportunity for us to grow our business in high-quality cloud solutions for our customers in the future.

In the media sector, we maintain a strong position in the TV advertising market with nearly 29% market share. The viewership was in line with our long-term strategy and we consistently strengthened the position of the Polsat-Interia Group in the Internet media market. We are making significant progress in the area of green energy and green hydrogen. The year 2023 saw the launch of the energy production from our 2 first wind farms and the development of a value chain-based of green hydrogen.

We started the production of NesoBuses in our hydrogen bus factory in Sweden. We opened the first in Poland public hydrogen refueling station in Warsaw and Rybnik. We secured tenders for the delivery of eco-friendly NesoBuses. On the financial front, we successfully completed the process of debt refinancing and issued PLN 3.890 million of sustainability-linked bonds. We also acquired project financing for renewable energy projects, which will support the dynamic implementation of our strategic green projects. Next slide, please.

Looking ahead to 2024 in the area of connectivity, our focus will remain centered around our multiplay strategy. Our goal is to grow ARPU and maintain a low level of churn. We are also going to develop Plus' 5G network using the combination of our existing frequencies and the new block in the 3.6 gigahertz band. In the content pillar of our business, our goal is to maintain a very good position on the TV advertising market, high viewership figures of our channels and further strengthen Polsat-Interia Group's presence in the online media market.

In the Green Energy segment, our target is to commission the wind farms in Czluchów and Przyrów, according to the schedule and in line with the budgets. We also intend to initiate the production of green hydrogen at our electrolysis plant located in Konin, and we are looking at expanding our network of hydrogen refueling stations.

In terms of finance, our priority for 2024 will be cost control at group level and maintaining financial discipline in the implementation of our Strategy 2023+. We are also working towards obtaining project financing for the last 2 wind farm in our pipeline Drzezewo, which is by far the biggest farm with 63 turbines.

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

[Agata Wiktorow-Sobczuk, executive]

Thank you very much. I have 2 questions visible on the chat -- in the chat section. If anybody has any further questions, please kindly post them in the chat section. The first question comes from Nora Nagy, Erste Bank. Only one question from my side, please. The real estate segment contribution was minor, PLN 5 million to group EBITDA, but with a much better margin 9.1% than energy, minus 0.4%. How long do you expect this trend to continue?

[Katarzyna Ostap-Tomann, executive]

As far as the margin contribution of the segments, the energy segment is not representative for the year-end because we had some annual settlement of the compensations and the margin of this segment will be different in 2024. So I don't expect this trend to continue. As far as the real estate segment is concerned, it's just a quick reminder that in the real estate segment, we do the revenue recognition once the building is finished, and we hand over the keys to the customer. So this is -- it's hard to say it's seasonal, but it's not a recurring thing month after month because the different apartments when we sell the different prices. So this is something that I would also say it's not a trend.

[Agata Wiktorow-Sobczuk, executive]

Thank you. The other question comes from [indiscernible]. I would like to ask what is the purpose of a significant level of cash kept by the group at the 2023 year-end? The second question, what level of leverage do you expect at 2024 year-end? And would it be the peak?

[Katarzyna Ostap-Tomann, executive]

As far as the cash question is concerned, just a quick reminder, we have postponed or some of the payments that we were supposed to do in Q4 2023 were moved to 2024. In January, we paid for 5G, for example, also in Q1 2024, we settled B and C notes. So basically, in some part, the purpose was just to do some other settlements in Q1, and it was just the timing. And of course, the rest is for the financing of our green energy investments in 2024. As far as the leverage is concerned, at year-end, we expect it to peak over 4.5. In total, I'm sorry, and over 4 as far as the leverage of TMT is concerned.

[Agata Wiktorow-Sobczuk, executive]

I don't see any further questions in the chat section. So thank you, and I will pass over to Mr. Blaszczyk.

[Miroslaw Blaszczyk, executive]

Thank you for your participation in today's presentation of the financial and operational results of the Polsat Group in 2023 and our plans for 2024. I hope we answered all the questions. I wish you a quiet day and to hear a presentation of the results of our group for the first quarter of 2024. Thank you, and goodbye.

[Agata Wiktorow-Sobczuk, executive]

Thank you. Bye.

[Katarzyna Ostap-Tomann, executive]

Thank you.

[Piotr Zak, executive]

Thank you. Bye.