Earnings call transcript: Polsat Plus Group reports strong Q1 2025 growth

Polsat Plus Group delivered a robust performance in Q1 2025, with revenue increasing by 3.7% to over 500 million zlotis and adjusted EBITDA rising nearly 5% to 809 million zlotis. The company reported a net profit of 87 million zlotis for the quarter. With a market capitalization of $389.74 million, InvestingPro analysis suggests the stock is currently trading above its Fair Value. Despite a slight increase in the net debt to EBITDA ratio, Polsat Plus Group continues to expand its 5G network and green energy initiatives. The stock price saw a minor decline of 0.17%, closing at 34.78 zlotis.

Key Takeaways

• Revenue grew by 3.7% to over 500 million zlotis.
• Adjusted EBITDA increased by nearly 5% to 809 million zlotis.
• Net profit for the quarter was 87 million zlotis.
• Acquired a frequency block in the 700 MHz band for 363 million zlotis.
• Multiplay customer base expanded to over 2.5 million.

Company Performance

Polsat Plus Group showed solid growth in Q1 2025, driven by its multiplay strategy and expansion into renewable energy. The company maintained its leadership position in the Polish internet market and continued to grow its TV advertising market share. According to InvestingPro’s Financial Health assessment, the company maintains a FAIR overall score of 2.48, with particularly strong momentum metrics. Notably, the multiplay customer base grew to over 2.5 million, representing 44% of the total customer base. InvestingPro subscribers have access to over 30 additional financial health indicators for deeper analysis.

Financial Highlights

• Revenue: 500 million zlotis, up 3.7% YoY
• Adjusted EBITDA: 809 million zlotis, up nearly 5% YoY
• Net profit: 87 million zlotis
• Free cash flow: 1.3 billion zlotis over the last 12 months
• Net debt to EBITDA ratio: Increased from 3.59 to 3.62

Outlook & Guidance

Polsat Plus Group aims to generate approximately 500 million zlotis in EBITDA from green energy by 2026. The company expects to save 25-30 million zlotis in interest in the second half of 2025 and plans to complete the Dzhevo Wind Farm with a 39 MW capacity. The strategic focus remains on expanding the multiplay strategy and renewable energy capabilities.

Executive Commentary

• Mirosov Bastrok, CEO: "We started 2025 very well."
• Maciek Stets, VP Strategy: "We are a leading producer of clean green energy in Poland."
• Katarzyna Ostabtaman, CFO: "This has been a really good quarter for the group."

Risks and Challenges

• Increasing net debt to EBITDA ratio could impact financial flexibility.
• Market competition in the telecom and renewable energy sectors.
• Potential regulatory changes affecting the telecom industry.
• Economic conditions impacting consumer spending and advertising revenue.

Q&A

During the earnings call, analysts inquired about B2C ARPU growth, which the company reported as consistent at 4.2-4.8%. Interest savings of 25-30 million zlotis were confirmed for the latter half of 2025, addressing financial efficiency concerns.

Full transcript - Cyfrowy Polsat SA (CPS) Q1 2025:

Moderator/Operator: Good afternoon, ladies and gentlemen, and a warm welcome to the results call of Polsat Plurz Group for the first quarter of twenty twenty five. Could I please have the next slide? Today’s presentation will be made by mister Mirosov Bastrok, the CEO of Zeferave Polsat mister Mati Stets, the vice president of Zefrave Pulsat responsible for strategy, and miss Katarzyna Ostabtaman, CFO and management board member responsible for ESG. Please post your questions in the q and a panel during the presentation. Please remember to sign your questions with your name and institution as we do not take anonymous questions.

Thank you. Mister Bostrok, the floor is yours.

Mirosov Bastrok, CEO, Zeferave Polsat: Good morning. Welcome to Ceterovipolsat’s first quarter two thousand twenty five earning conference. Today’s presentation will follow our standard agenda. I will start by highlighting the key events of the past few months. Then, Macchi will discuss the operational results of our business segments, and Kasia will present the financial results.

I will conclude the presentation with a brief summary, and then we will move on to the q and a session. Let’s move on to the key highlights of the past quarter. We started 02/2025 very well. Let me begin by underlining very good financial results of our group. Our revenue increased by nearly 4% to 3,500,000,000.0 zlotis, and adjusted EBITDA rose by almost 5% to 809,000,000 zlotis.

In the first quarter, we made a partial prepayment of our bank loan in the amount of 681,000,000 zlotis using funds from the sale of a 10% stake in Asseco Poland. We are observing very good trends in the b two c and b two b service segment. We continue to successfully implement our multiply strategy in this segment. As a result, RPU per b two c customer increased by 4.2% to 77.7 zlotis, and RPU per business customer grew by 1.2% to over 1,500 zlotis. At the same time, we maintain a record low churn rate, which was only 6.8% in the first quarter.

We also acquired one frequency block in the 700 megahertz band, which we won in the auction for 363,000,000 zlotis. We’ll use these frequencies as well as the block in the 3.6 gigahertz band acquired at the beginning of last year to expand our five g network. It was also a very good quarter for the media segment. The success of the spring programming schedule translated into very good viewership results for our TV channels. We recorded a 22.1 market share.

Additionally, we achieved excellent results in the TV advertising market, which Maciek will show you in a moment. I’m also very pleased that Polsad Interior Group was once again the leader in the Internet market in Poland. In the green energy segment, EBITDA increased by nearly 16% to 57,000,000 zlotis. Work on the Gzevo wind farm is progressing very quickly and is well ahead of schedule. I’m pleased to inform you that 45 out of 63 turbines are already assembled.

Moreover, last week, we started the technical commissioning of the first wind turbines on this farm. In the hydrogen chain area, in the first quarter of this year, we won tenders for the delivery of total of 41 hydrogen powered buses to Krakow, Rebnik, and Dreshov, and we are participating in further tenders. Before I pass the floor to Maciek for the operating results, let me say once again that the first quarter was a very good one for Polsat Plus Group, both in terms of operating results and financial results. Maciek, please go ahead.

Maciek/Mati Stets, Vice President of Strategy, Zefrave Pulsat: Thank you, Mirek. Hello, everyone. Indeed, just as Mirek said, we started twenty twenty five really well. Let me begin by discussing the results of the media segment, now. Next slide, please.

In the first quarter of twenty twenty five, we achieved excellent results in both viewership figures and on the TV advertising market. As you can see on the slide, our channels reached, 22.1% market share in the commercial target group, which is a great success. Our main channel post has recorded, 7.5% audience share, while our thematic channels reached 14.6%. We also performed very well in the advertising market. While the market grew by 1%, we grew over four times faster by 4.1%.

As a result, our share in the TV TV advertising and sponsorship market increased to 28.7%. Let’s move on to the next slide. We are also seeing strong performance in our online segment. We have a strong and stable presence in the online market with 21,000,000 real users and 1,900,000,000 page views. We are successfully maintaining our strong position in this market.

In the first quarter of twenty twenty five, Polsat Interior Group was the number one online publisher in Poland, and we were also the leader in the mobile category. Small screen devices are very important to us because today, more and more content is consumed on smartphones. Let’s take a look at the next slide. The very good results of the segment were driven by a successful spring programming schedule and attractive sport events. We based our spring lineup mostly on well known proven formats such as must be the music or dancing with the stars, popular TV series of or our own production, cabaret shows.

And, additionally, the sports rights that we acquired last year are very popular among our viewers. Formula one races, Bundesliga and La Liga with two leading Polish players are very successful. Also, the UEFA conference and the Europa League, were widely viewed, especially given that two Polish teams came quite far. Summing up, it was a very strong quarter for our media segment. We posted growing viewership figures and solid growth of advertising revenue.

Combined with cost control, this translated into very good financial results of the segment. Next slide, please. Moving on to the b to c and b to b services segment, I can say that we had a very good quarter in this segment as well. Let’s look at the results. Next slide, please.

In the b to c and b to b segment, we consistently execute the multiplay strategy, which consists in upselling and cross selling services to our customers. At the end of the first quarter of twenty twenty five, already over 2,500,000 customers use our multiplay offering. This customer base, increased by 2.4% year over year. This means that multiplay customers account for 44% of our total customer base. As mentioned, we successfully upsell products and services to this customer group, and as a result, at the end of the first quarter, they had 7,800,000 services in total, up by 300,000 year over year.

Our churn rate, the key indicator of our customer loyalty, continues to decline. At the March, churn fell to 6.8%. In my view, this is the best proof of the high quality of our services and satisfaction of our customers. Next slide, please. We also saw continued growth of our base of contract services to 13,300,000 in q one, 2025.

We added 210,000 voice services, bringing the total up to 6,500,000. Our Internet base also grew by 45,000 services. This increase was driven primarily by the expansion of fixed Internet services. Our pay TV base is still facing some pressure, but we mitigated this with a growing number of pay TV services in IPTV and OTT technologies. These newer technologies are helping us offset the decline in traditional pay TV services.

Can I have the next slide, please? One of the focal points of our multiplay strategy is building customer value, and we have been doing that successfully over the past several years. In the first quarter of twenty twenty five, ARPU per contract b two c customer increased by 4.2%, reaching 77.7. This was driven mainly by strong sales of mobile and Internet services as we saw on the previous slide. We also observed the growing saturation of our customer base with services thanks to the effective cross selling and upselling.

At the end of first quarter, this ratio increased to 2.32 services per customer. So a very good quarter in the b two c segment. Our RPO is growing organically. We are building value, and at the same time, churn remains on record low levels. Next slide, please.

In the prepaid segment, we maintain a high base of 2,430,000 provided services in a highly competitive market. However, our key focus is to build value in this customer segment. So despite the decrease in the RGU base, we are satisfied that we maintained a high ARPU of 17 PLN per service in the first quarter. In my opinion, this is a solid result in this tough segment. Next slide, please.

I’m also very pleased with our performance in b to b segment in the first quarter. This is also a very competitive market segment. As you can see, we consistently maintain a high and stable base of about 68,000 b two b customers. At the same time, ARPU per b two b customers increased by 1.2%, exceeding, 1,500 zlotis, thanks to the tailor made services that meet the exact needs of our customers. Next slide, please.

Now let’s move on to our third business segment, green energy. Next slide, please. As you remember from our previous conference a couple of weeks ago, we have already achieved the two goals in the area of green energy announced as a part of our strategy twenty twenty three plus. Firstly, we are a leading producer of clean green energy in Poland. Secondly, we have completed the full value chain based on green hydrogen, which we can now scale and adjust to market demand.

Most importantly, we maintain our financial goal for this segment. We would like to generate approximately 500,000,000 zlotas in the green segment starting from 2026. Next slide, please. Our green electricity production increased by 40% year on year, thanks to the launch of new wind capacity. In the first quarter of twenty twenty five alone, we produced 278 gigawatt hours of electricity.

Wind energy production more than doubled, reaching, hundred five gigawatt hours. Of course, this was, the effect of commissioning an additional capacity of 23 megawatt at, the Sherhof and Zhukov wind farms in 2024. I’m also extremely happy with the progress that we are making at the construction site of the Dzhzevo Wind farm. Already, 45 out of 63 turbines are assembled. What’s even more exciting, last week, we started technical commissioning of the first turbines at Zhevo, and we produced the first energy from this farm.

Next slide, please. I’m pleased to report that in the first quarter of twenty twenty five, the green energy segment generated EBITDA of 7,000,000 zlotis, up by 15 n percent year over year. This growth was primarily driven by higher production volumes resulting from the expansion of our wind farms. With 39 megawatts of capacity, the Zhejiro Farm will double our capacity installed in wind power and will contribute significantly to EBITDA once we finished and launched commercially by the end of this year. So to summarize, very good operating results and a very good quarter across all our business segments.

In the media segment, viewership increased to 22.1%, and advertising revenue grew by 4.1%. This translated into very good financial results of this segment. In the b to c and b to b services segment, the multiplayer customer base grew to nearly 2,530,000 customers. ARPU per individual contract customer increased by 4.2% to 77.7, and churn is at the record low level of 6.8%. We are seeing stable solid results in the prepaid and b two b segments.

In the green energy segment, we are finalizing our strategic investments. Production from renewables energy sources is steadily increasing, and the segment’s EBITDA is growing. We maintain our goal of approximately 500,000,000 zlotus EBITDA from green energy by 2026. Thank you for your attention. I will now hand over to Kasia who will talk about our group’s financial results.

Kasia, the floor is yours.

Katarzyna Ostabtaman, CFO, ESG Responsible, Polsat Plus Group: Thank you. Indeed, like Matjik said, this past quarter was very successful, and our excellent operating performance led to strong financial results. I’m very happy with these results, especially because it is the fifth quarter of growth in a row. Let’s move to the next slide, please. As we look at the first quarter results, you will see that our revenue increased by 3.7% to over 500,000,000.0 zlotis, thanks to very good results across all our business segments.

Growing revenue combined with consistent control over cost resulted in like for like EBITDA growth, but nearly 5% year over year to 809,000,000 zlotis. Net profit for the quarter settled at 87,000,000 zlotis. This quarter, it was significantly impacted by the noncash settlement related to the sale of ASECO shares. Our free cash flow for the last twelve months, adjusted for CapEx expenditures in the green energy segment, remained at an impressive level of nearly 1,300,000,000.0 zlotis. Regarding our net debt to EBITDA ratio, there’s been a slight increase from 3.59 to 3.62 posted at the end of twenty twenty four, mainly due to the fact that we are financing the development of the Dzhajeva Wind Farm using our own funds.

Can I have the next slide, please? Let’s examine the breakdown of our revenue and EBITDA drivers. I would like to underline that this quarter, we have full comparability because the green energy segment was already part of Posad Plus Group in q one last year. The result of the b two c and b two b services segment is especially satisfying. Solid contribution to revenue is driven in particular by higher RPU and higher retail revenue.

EBITDA in this segment is relatively stable year over year, which is a very good signal. In the media segment, higher revenue from advertising was offset by lower revenue from sales of content. Despite this, the segment contributed strongly to EBITDA. This is the result of lower sports license cost. In the green energy segment, growing revenue and EBITDA is the effect of more generation capacity in our wind farms.

Solid contribution from the real estate segment to both revenue and EBITDA is the result of transferring apartments in Port Prasqui to customers. We have already completed this process, and in the coming quarters, I expect to see lower contribution from this segment. Next slide, please. This graph presents the decomposition of free cash flow for the last twelve months. I’m happy to say that our group has a very good cash generation capacity despite still high interest cost.

At the March 2025, we reported nearly 1,300,000,000.0 zlotis of adjusted free cash flow for the last twelve months. After interest and excluded 1,000,000,000 for development CapEx in the green energy segment, this is a very strong result. As I said, interest costs are still a burden. They amounted to almost 1,400,000,000.0 zlotis over the past twelve months. Given the recent interest rate cut in Poland and the early partial prepayment of our bank loan, I expect to see savings at the level of debt service cost of about 25 to 30,000,000 zlotis in the second half of the year.

I would also like to draw your attention for a moment to the outflows related to telco frequency reservations. Over the last twelve months, we paid 433,000,000 zlotis for frequencies, and this includes the renewal, of the 2.6 gigahertz band and the deposit paid for the 700 megahertz auction. I would like to flag that in q two, we will pay the remaining 213,000,000 for the 700 megahertz block. And probably at the turn of q two and q three, we should receive a renewal decision for the 900 megahertz block. We estimate about 700,000,000 zlotis.

After that, there are no more frequency renewals scheduled until 02/1929. As you are aware, we disposed of the entire stake of ASECO shares for 718,000,000 in q one, we adjust free cash flows for this item. Let’s take a look at CapEx on the next slide. We focus on managing our investment expenditures across all business segments efficiently. The b two c and b two b services segment and the media segment are CapEx light.

Combined CapEx to revenue ratio for these two segments was 10% in the first quarter. This is a little higher than, what we usually see, but this is a temporary increase related to IT and fixed network projects. I expect this ratio to meet our guidance of 6% to 7% in the full year. We spent PLN 157,000,000 in the green energy segment, most of the development of the Dreservo wind farm. As Matijk said, the construction of this wind farm is progressing very quickly.

And after we complete this project, CapEx in this segment should decrease significantly as maintenance CapEx in renewal energy sources is generally low. Next slide, please. Lastly, let’s address our group’s debt. Our net debt to EBITDA ratio, excluding project financing, stands at 3.62. Including project financing liabilities, this ratio was at 3.85 net debt to EBITDA LTM, a little higher than at the February.

Weighted average cost of interest on loans and bonds was 8.2% at the March, but this does not yet reflect the interest rate cuts that look play that took place in May. If we were to take current variable rates, this average cost should be below 8%. In February, we made an early prepayment of our bank debt in the amount of 681,000,000 zlotis. We prepaid the newest installments due in 02/2025, and we have prepaid part of the installments for 02/1926. This is reflected on the debt profile maturity that you see on the bottom of this slide.

The debt structure by instrument and currency remains broadly stable. In conclusion, this has been a really good quarter for the group. We posted a set of solid financial results. CapEx and net leverage are under control. I’m especially happy with our free cash flow.

I think this is a very impressive result. Thank you for your attention. Mirek, over to you for the summary.

Mirosov Bastrok, CEO, Zeferave Polsat: Thank you very much. Let me briefly summarize this quarter. The first quarter was a very good quarter for the Polsat Plus Group, a strong start to 02/2025. We achieved very good financial results with adjusted EBITDA increasing by 4.8% to 809,000,000 zlotis. We achieved very good operating results in all our business segments.

In the b two c and b two b service segment, we consistently implement our multiplay strategy, resulting in RPU per b two c customer increasing by 4.2% year on year with a record low churn rate of only 6.8%. In the media segment, our TV audience share increased to over 22. We maintain a high share in the TV advertising market, and Polsad Interior Group remains the leader in the Internet market. Great results also in the green energy segment. We achieved 57,000,000 of EBITDA in the first quarter, which is 16% more than a year ago.

We are focusing on finalizing the construction of our largest wind farm, Djersevo. In summary, we have achieved the goals of our strategy February. We consistently implement the multiplayer strategy, and we monetize our investment in green energy. Thank you for your attention. We will now be happy to answer your questions.

Q&A Moderator: Thank you very much. I have two questions coming from Laura from Arsta on the on the question and answer panel. The first one is, at which level do you see the b to c ARPU growth in the coming periods?

Maciek/Mati Stets, Vice President of Strategy, Zefrave Pulsat: Okay. This is me. Hello. Matti here. As you know, we don’t forecast, but I can give you directionals.

So if you take a look that last year, our our ARPU growth was 4.8%. In q one twenty twenty four, it was 4.4%. And the q one twenty twenty five, it was plus 4.2%. So I believe you can easily predict our ARPU and churn and the goals for this year.

Q&A Moderator: You. And a follow-up question from Norah to the presentation. Could you please confirm that you expect interest savings of about $2,530,000,000 in the second half of twenty twenty five?

Katarzyna Ostabtaman, CFO, ESG Responsible, Polsat Plus Group: Yes. That’s the correct estimation. Shall the regulators or National Bank of Poland not decrease the rates any further, then we expect 25 to 30 in the second half of the year as interest savings.

Q&A Moderator: Those were the only two questions that have been posted so far. So if there aren’t any more, thank you for your participation, and and I pass over to mister.

Mirosov Bastrok, CEO, Zeferave Polsat: And, gentlemen, thank you for your participation in today’s presentation of the results of the group, and I hope that you have answered all the questions. I wish you a nice day, and I hope to hear you from you during the next presentation of the results of our group for the February. Thank you, and goodbye.

Maciek/Mati Stets, Vice President of Strategy, Zefrave Pulsat: Thank you very much.

Katarzyna Ostabtaman, CFO, ESG Responsible, Polsat Plus Group: Thank you.

Q&A Moderator: Thank you. Bye.

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