Connectivity

Customers want fast, reliable and safe broadband access, and from their point of view the technology by which the service is delivered is less important.

It is our strongly held opinion that fulfilling customer needs requires first-class connectivity in both mobile and fixed. Mobile alone will not be sufficient. Fast fixed broadband is necessary to address the data demands of streaming services and heavier and heavier traffic, and at the same time to provide a desirable customer experience on the mobile network. In addition, a substantial part of our operations is dedicated to serving business customers who specifically cannot rely on mobile technology alone.

We have completed six years of investments, reaching five million households within the range of the service at the end of 2020, which fulfilled our strategic goal. That number includes the majority of households in big cities and also a significant proportion of smaller cities. It also includes around 200,000 households in more rural areas, where fibre access is covered by the government POPC programme (subsidised by EU funds).

Our FTTH network rollout strategy provides not only for the construction of our own infrastructure but also for wholesale agreements with other fibre network operators, where it is technically possible and economically viable. At the end of 2020 our network coverage included 950,000 households via the infrastructure of other operators.

In 2020 we covered around 800,000 additional households, broadly maintaining the very fast pace of deployment from the previous year. Last year we continued to focus on smaller cities and also on single-family houses as opposed to multi-family residences. Single-family houses constituted more than a third of total deployment in 2020. A substantial part of that deployment was carried out on other operators’ infrastructure. In total, at the end of 2020, single-family houses accounted for 15% of our total fibre footprint. On one hand, single-family houses carry a much higher construction cost; on the other hand, we notice far higher demand for our services due to much lower competition. The fibre service adoption rate in single-family houses at the end of 2020 approached 30%, compared to 14.5% for the whole fibre network.

To explore new opportunities and to better monetise our fibre investment, in 2018 we signed an agreement with T-Mobile granting wholesale access to our fibre network. The agreement covers around 1.7 million households located in deregulated zones, with access points built in multi-family residences on Orange Polska’s own infrastructure. This wholesale cooperation will contribute to faster monetisation of our investments in the fibre network, maximise usage of our infrastructure while avoiding fibre network overbuilding by other operators and accelerate convergence of telecom services in the Polish market based on fibre. The agreement is not exclusive: We maintain the right to offer the same terms of wholesale access to our fibre network to other operators.

We closely monitor our fibre network rollout with respect to monetisation: the number of customers and the value they bring. This depends mainly on the level of competition and our sales effectiveness. Investment in fibre is by nature long-term, but in our view this is future-proof technology, the parameters of which can easily be upgraded if necessary.

2020 was absolutely a record year for fibre customer take-up. We took advantage of the strong market momentum, accelerated by the pandemic, and capitalised on high demand for fast fixed connectivity – which is becoming a basic utility. Fibre generates the highest ARPO of all technologies and is a key driver of a turnaround in overall ARPO in fixed broadband. Customers more-and-more eagerly choose higher-speed options, which are additionally paid. We also charge customers in single-family houses PLN 15 per-month more to recover the higher deployment costs.

After completing refarming of the 900 MHz spectrum in 2018, last year we completed refarming of the 1800 MHz in 2020 and continued in 2100MHz. Refarming of the 2100MHz is being continued in 2021. The plan is to turn off 3G in this band by the end of this year, with the 2100 MHz band becoming fully allocated to LTE or LTE/5G. After finishing the refarming of the 2100 MHz band, the total bandwidth allocated to LTE services will increase to 50 MHz.

To strengthen network capacity we continue to pursue spectrum aggregation. Almost 85% out of over 11,600 LTE sites enabled carrier aggregation at the end of 2020, a significant advance on 2019. Around 4,000 of our base stations provide LTE technology on four layers of spectrum (800 MHz, 1800 MHz, 2100 MHz and 2600 MHz). In the years to come, 5G technology will become another important element of our mobile connectivity strategy. This will involve allocation of new spectrum, particularly in the 3.4-3.8 GHz band and 700 MHz.