Focus on efficiency

The Orange.one strategy added a new dimension to our approach to efficiency at Orange Polska. All our business decisions and actions are now driven by value creation. Our ambition is to be an agile company, digital and flexible, with a strong online presence and highly automated processes, as well as a proven ability to cut costs and find efficiency savings. This approach is reflected in both our commercial activity and our financial results.

In 2020 we continued with our redefined commercial approach: to become more selective and more balanced between volume and value. In 2018, we took a major step by introducing the first luer tariff increases on the consumer market according to a ‘more for more’ formula. This followed a number of value-accretive moves in the prior years: reduction of handset subsidies, simplification of tariff structure, cancellation of value-dilutive promotions and bonuses, and changes in tariff features encouraging customers to migrate to more expensive tariffs. In 2020 we also continued to optimise the distribution channel mix and make savings on advertising and promotion costs.

Direct margin (the difference between revenues and costs directly linked to revenues) was down PLN 72 million year-on-year as positive impact of strong performance of core service revenue lines was more than offset by pandemic-related lower roaming revenues and additional provisions as well as ongoing pressure from legacy fixed voice.

In line with our strategic priorities, we continued to push forward with our comprehensive transformation programme to simplify, and where possible to automate and digitise our business processes. We cut our indirect costs by a further 4% in 2020. These savings on top of results of continued optimisation initiatives in many areas (labour, CRM, general expenses) were significantly supported by exceptional measures taken by the management to offset negative impact of the pandemic. These included mainly curtailment of jubilee awards scheme (resulting in PLN 64 million reversal of provisions for employee benefits) and renegotiation of certain terms of Social Agreement with trade unions. The social plan currently in force, signed in December 2019 and covering the years 2020-2021, enables us to continue with employment optimisation at a significant pace. According to the plan up to 2,100 employees may opt for voluntary departures in these two years, which constitutes 17% of the total workforce at the end of 2019. In 2020 labour costs decreased by 9 % (year-on-year).