Financial and operational results of T-Mobile Polska in the first quarter of 2019 - Positive effects of the development strategy implementation: stable EBITDA result, despite the negative impact of one-off events, increase in the customer base

At the end of the first quarter of this year, T-Mobile Polska served 10.82 million customers. This number shows an increase of 314 thousand compared to the comparable quarter of the previous year. This gain should be attributed primarily to increasing customer loyalty and further reduction of the churn rate. Importantly, the operator noted an increase above all in the subscription base, i.e. the group on which the operator focused his actions in the recent months. In this segment, the churn rate amounted to only 0.8%, which means that it reached the level of the record-breaking third quarter of last year.

 

 

• The increase in customer trust in the T-Mobile brand, visible already at the end of last year, in the first quarter resulted in customers staying with us longer, which translated directly into an increase in the base by 314 thousand SIM cards and to a significant increase in revenue from the mobile segment (+2.8% (y-o-y)). In general, it allowed us to maintain stable results even in the face of a consequence of force majeure event – a fire which affected the Annopol data center

  – said Andreas Maierhofer, President of the Management Board of T-Mobile Polska.

• The stable result of the first quarter and the excellent reception of our new advertising campaign, focused on removing market nonsenses, show that the consistent implementation of the strategy adopted in 2017, based on customer focus and quality of services, yields excellent results. Customer satisfaction is constantly growing, and more and more people are choosing coming to T-Mobile and staying with us longer. In the next quarters we will continue with this approach and compete for the market with even greater efficiency

  - he added.

Stable financial results despite the disadvantaged environment

During this time, revenues from mobile services increased in total by 2.8%, and the operator recorded increase in revenues from services in both the private and business sectors. The company generated a EBITDA After Lease profit[1] in the amount of PLN 398 million, an increase of 0.5% in annual terms[2]. Importantly, this result was achieved despite the significant pressure under which T-Mobile revenues were put as a result of a fire affecting the Annopol data center and reducing the low-margin wholesale operations. As a result of these factors, revenues in the first quarter of 2019 amounted to PLN 1.496 billion PLN.

 

 

• Overall, our total revenues show decline compared to the previous year due to changes in the wholesale business strategy and the negative impact of a force majeure – a fire which affected our data center operations in February. But most importantly we see a 2.8% year-on-year growth of the revenues from mobile services, which nicely reflects growing customer base, and is a major driver of achieving stable EBITDA result in operationally very difficult quarter

  - said Juraj Andras, Member of the Board, Financial Director of T-Mobile Polska.

Good operating results and increased popularity of non-voice services

In the first quarter of this year, T-Mobile continued its activities aimed at further adapting the offer to client expectations and improve customer satisfaction, which resulted in an increase in service quality assessment and a continuation of the positive trend in customer retention. The operator improved the churn score by 0.1 pp. compared to the last quarter of 2018 and evened the record result from the third quarter of 2018, achieving the churn rate of 0.8, which significantly supported the growth of the post-paid customer base.

The sales offer, supported by an intensive communication has also been received by the market very well, as well as the sales of subscription-free phones, in promotion of which the T-Mobile expertise in the area of smartphones was underlined.

In addition to traditional telecommunications services, added services have gained popularity, including Smart Car service. Since its launch in December 2018 it has already been bought by over 5,000 customers. T-Mobile also conducted preparations for launching a convergent offer, under which it offered employees access to Internet access test offer based on business partners' infrastructure.

The development of the business market

In the segment of small and medium-sized enterprises, the Magenta BIZNES offers enjoyed constant popularity. Customers more and more often decided to take advantage of additional services and tariff variants when renewing the contract. The unlimited internet offer to the office, based on the LTE network, also enjoyed a growing popularity.

Customers from higher segments were also more eager to reach for ICT products. In the first quarter, T-Mobile together with its subsidiary T-Systems consistently built a portfolio of professional services for clients from the corporate sector. This resulted in the conclusion of a number of new contracts, including support and maintenance for public sector clients such as the NFZ or KRUS, NIK and PFRON. In comparison with the compared period from last year, sales of solutions in infrastructure projects, among others, also increased significantly, e.g. OPI (Information Processing Center), NCBIR and PKP as well as the construction of the Dynamic Passenger Information System in Tychy. Strategy based on further development of IT services in selected areas, including cybersecurity or digitalization and automation of processes will be continued in subsequent quarters.

The highest quality network

In 2019, T-Mobile continues the work to increase the band aggregation network coverage. Since the beginning of this year, band aggregation has been made available on over 400 new stations, which means that there are currently 7,500 of them reaching nearly 65% of the country's population. Nearly 1250 of them offer aggregation of 4 bands (800MHz, 1800MHz, 2100MHz, 2600MHz). The first quarter of this year is also a continuation of the project of changing the use of frequencies in the 1800MHz range, initiated in 2018. By the end of April, this process was completed in 69% of stations supporting this this technology. The completion of the entire project, the effect of which will result in T-Mobile independently using the 1800MHz frequency throughout the country is planned later this year.

 

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[1] EBITDA After Lease – profitability indicator introduced after adoption of IFRS16 to ensure year-on-year comparability. Reflects all the leasing costs.

[2] For the comparison needs a EBITDA AL has been calculated retroactively for the 1Q2018 period, amounting to 396 million PLN