T-Mobile Polska 2Q 2020 results – consistent growth in challenging environment

After reaching a turnaround in the whole FY2019 and the first quarter of 2020, T-Mobile Polska sustained a positive trend even under hindrance of overall economic slowdown and the obligation to close shops located in shopping malls caused by COVID-19 pandemic. Even under these circumstances the company managed successfully to introduce new ways of working and interacting with clients. As a result, T-Mobile Polska not only increased the customer base by 1.4%, but even exceeded last year’s second quarter results by reaching revenue of 1.6BLN PLN, 3.4% larger than before, with contract base growing by 2.5%. In the second quarter, the contract churn rate dropped to level of 0.6% – the lowest in company’s history.

• Under the pandemics the role telecommunications services play in the work, education and life of our clients became even more prominent. The customers needed reliability and trusted that we could provide them with the highest quality services without interruptions. We couldn’t let them down. I’m proud that T-Mobile, thanks to its employees’ effort rose to the challenge

  – said Andreas Maierhofer, CEO of T‑Mobile Polska.

  After the lockdown ended we introduced a new model of working, based on safety and elasticity which proved to be very efficient. As a result, we continued the growth trends in service revenues, reaching satisfactory results by the end of the quarter.

In spite of hindrances in sales and considerable spending to guarantee necessary level of safety to employees and clients as well as changes to the infrastructure in order to provide employees with remote access to workstations, the company achieved another positive EBITDA development. EBITDA AL kept the positive trend from the first quarter and reached 435 million PLN, growing 1.9% year-on-year. By achieving this outcome the company demonstrated that its strategy proves to be efficient even under tougher circumstances.

 

 

 

During the most intensive phase of the pandemics, T-Mobile introduced a variety of client-centric and CR activities. Among others the operator offered its clients free data packets so they could stay informed and in touch under lockdown, provided them with free streaming services as well as conferencing solutions and productivity business software. T-Mobile also joined the official relief efforts by covering educational platform access with zero-rating and providing schools with software necessary for remote education.

• The developments of April and May challenged our goal to sustain the steady EBITDA growth from previous quarters. Fortunately, our quick and smooth transformation to a new working model enabled us to maintain the momentum and minimize the impact of negative market trends during lockdown. After the ‘unfreezing’ of Polish economy, we successfully regained the commercial momentum and bridged the gap in order to keep up with our long-term growth assumptions

  – says Juraj Andras, CFO of T‑Mobile Polska.

 

 

 

Up to date and close to the customer

T-Mobile's activities in the area of the B2C market were focused on the responding to users' needs in the period of a new, epidemic reality. The increased demand for internet access due to intensified remote work and education has been reflected in the free mobile internet bonuses offered weekly as part of the Happy Fridays action, additional activities and new offers from the operator. In the second quarter of 2020 alone, T-Mobile's customers have taken advantage of T-Mobile's free gifts nearly 3.5 million times, activating packages consisting of more than 23.3 million free gigabytes in total. In the first half of the year, it is as much as over 6.1 million Happy Fridays activations and nearly 44 million free gigabytes.

The operator also decided that the access to remote teaching tools for schools, the use of e-learning platforms of universities and the “Home Quarantine” (“Domowa kwarantanna”) application would not consume data packages of T-Mobile customers. At the beginning of April, T-Mobile also implemented a high speed home Internet and fiber-optic offer for 1 PLN per month for two months. In particular, fiber optic was very popular with customers, which sales are steadily growing from quarter to quarter. This is, among other things, due to the fact that T-Mobile's fiber-optic coverage has been extended to 3.4 million households thanks to the start of sales of services in the POPC2 area of Inea and Nexera operators.

In May, T-Mobile offered "Super Deal" options, thanks to which users could, among other things, for six months pay half subscription fees or access the Netflix platform for free. In June, the operator introduced new tariffs for post-paid customers: among others, options with the Internet without a limit of gigabytes appeared, and discounts for families and duos became even more attractive.

At the end of the second quarter of 2020, T-Mobile was working to refresh its second brand, Heyah, which debuted on the market for the second time, this time as Heyah 01 in the subscription version. The new “zero-one” offer is a tribute to customers who expect simple, modern and competitive services. The brand has not only gained a new, digital image, but most of all, it is distinguished by an original, zero-one structure of the offer, in which the client pays for services every second month. With Heyah 01 customers receive unlimited calls to mobile and landline numbers in the country, unlimited SMS and MMS and a 20 GB data packet for 30 days at a price of PLN 39 once every two months.

In June T-Mobile announced availability of 5G network for all customers using latest tariffs. No additional payments or packets are necessary to take advantage of the 5G coverage and the fifth generation network signal has been made available to 6 million inhabitants of 46 cities and towns.

Business division growing across all segments

In the B2B area T-Mobile achieved growth in sales across all segments. Naturally, the rising need for remote work and a push towards digitalization resulted in a heightened demand for connectivity and collaboration solutions. T-Mobile joined the relief efforts in this area, providing businesses with licenses for productivity software as well as conferencing solutions free of charge.

In the corporate segment in the second quarter, T-Mobile Polska recorded growth in revenues from both mobile and fixed services. The latter has been reinforced by the fact of broadening the range of T-Mobile’s own fiber network. Despite the challenging environment, Polish companies continued the push in the area of digitalization. This trend has also been reinforced by businesses turning their attention to digital tools seeking new business models in the wake of new market situation. T-Mobile experts were supporting the clients in such endeavors, providing smart solutions enabling cost optimization and elasticity. All of the above lead to a substantial rise in T-Mobile’s and T-Systems revenue coming from ICT. In the analyzed period the company was consistently developing its capabilities in this area by continuing investment process in the new data center located in Warsaw.

In Q2 2020 the small and medium business segment saw introduction of 5G to MagentaBIZNES coupled with an incremental refreshment of the offers. In the analyzed period the penetration of B2B base with Magenta BIZNES plans grew substantially. At the same time churn factor dropped to new record-low levels. The operator’s strong bet on digital sales channels in this segment proved to be very beneficial under the lockdown as online sales volumes in the second quarter doubled (y-o-y). T‑Mobile also broadened reach of its fiber offering based on infrastructure partners’ networks. In result the company recorded growth in both revenues and client numbers also in the small and medium enterprise sector.

Network development: 5G, better speed and quality

In the second quarter of this year, T-Mobile completed two important projects in the area of radio network. The change in the model of using the frequencies it owns, initiated in May 2018. In effect the sharing of 1800MHz band with Orange was completed. As a result of this project, the entirety of this band dedicated only to T-Mobile customers, increasing the capacity of the LTE network and improving average data transfer speeds. Also in the second quarter, 5G technology was made available to T-Mobile customers at 1,600 base stations using the 10MHz band in the 2100MHz band.

Regardless of the ongoing projects, T-Mobile continues to expand and modernize its radio network. The number of stations supporting band aggregation increased to 9660, of which nearly 3500 stations support 4-band aggregation and 4000 support aggregation of 3 frequency bands. Investments carried out by T-Mobile continue to translate into the highest quality of services provided to customers. In the RFBENCHMARK application report, T-Mobile dominated as a leader through the majority of the year in terms of data transfer speed. In the Speedtest application, in each of the months of the second quarter T-Mobile achieved the best results in data transfer rates, regardless of technology, and for the LTE network alone. Also in the second quarter of this year, T-Mobile received the “Best in test” certificate for the best mobile network in Poland. This certificate was awarded to T‑Mobile for the fifth time in a row.

COVID-19 and responsible business conduct

In the second quarter of 2020, in the area of corporate responsibility, T-Mobile was focused on supporting various social groups during a pandemic. The company became a partner of the PCPM Medical Rescue Team, operating at the Polish Center for International Aid Foundation, and joined the campaign of the Legia Foundation #GOTOWIDOPOMOCY. The operator also launched two free hotlines: for medical workers with psychological support (an initiative prepared with the Dawka Wsparcia organization) and the Talking Phone for Seniors (implemented with the Open Ideas Foundation). In addition, the company supported several medical facilities by handing over phones and tablets with SIM cards, and using 3D printers for preparing protective helmets for medical personnel.

At the same time, T-Mobile continued its current corporate responsibility strategy, modifying some of its activities into online activation. An example of such an approach are initiatives implemented under the WE CARE campaign, such as the creation of an ecological e-guide for employees or a series of webinars and workshops with external experts on topics related to environmental protection, zero waste or responsible consumption.

The company's activities in the field of CR were appreciated during this period in two prestigious competitions. The company received the highest, golden award in the CSR Leaves competition organized by the “Polityka” magazine and the title of the "Debutant of the Year" in the Ranking of Responsible Companies prepared by “Dziennik Gazeta Prawna” together with Deloitte, Responsible Business Forum and Kozminski University.