Q&A with CEO

Q: 2020 was obviously defined by the pandemic, how did Orange Polska cope with this unprecedented challenge? What could be its long- term implications for your business?

A crisis like that tests the ability to adapt to unprecedented external challenges. We had to immediately revise our priorities and give top focus to the safety of our employees and our customers, as well as to business continuity. We reacted very swiftly, organising remote work for around 10,000 employees within just a few days and ensuring continuation of all business processes with only minor disruption.

Fortunately the majority of our revenues and profits are derived from subscription services so our operations proved relatively resilient to the pandemic. This crisis particularly validates the investments in network quality that have always been in the centre of our strategy. As connectivity has become absolutely crucial we rushed to provide social support – for example by upgrading network performance in some hospitals, providing them with smartphones, supporting teachers and pupils in the transition to online learning through a special Orange Flex offer, and supplies of equipment and webinars organised by the Orange Foundation.

However that does not mean our business didn’t suffer. Many of our plans had to be cancelled or postponed. Reduced mobility among the population impacted roaming and prepaid business. The biggest change was to our plans regarding the disposal of real estate. We have achieved our 2020 financial goals despite the pandemic, but it would be much more difficult had we not launched exceptional mitigating measures in both operating costs and capex.

We all do hope that our lives will be gradually returning to normal, but I believe that the pandemic will change certain areas of business forever, for example work environment. After the pandemic we will introduce a permanent hybrid work system in Orange Polska and we will work to optimise the usage of office space.

Q: 2020 has completed Orange Polska’s .one strategy. How successful was it in your view? What went very well and what could have been done better?

Orange.one strategy was a great success. In fact, it’s not an exaggeration to call it a revolution. Why? Because we managed to reverse multi-year negative trends in our key financial metrics. The strategy brought a turnaround and proved that constant downward trends are not a fatality. What is very important is that we delivered on all our financial goals, which means that we are credible.

There were three key pillars of success. Firstly, massive investments in fibre network which provided the basis for our commercial expansion based on fixed-mobile convergence in the mass market and on convergence and partnership in digital transformation in the business market. Secondly, our value strategy. As the first operator in Poland we adopted ‘more for more’ pricing policy and strictly followed value approach in all our commercial activities. Thirdly, business transformation towards higher efficiency across all areas through the simplification of business processes and, wherever possible, their automation and digitisation.

Being a customer-obsessed business we are particularly proud that we have become the most recommended operator on the Polish market as measured by NPS. This was our strategic goal and we achieved it. Please note that we were still number three in 2018.

At the same time we are aware that in some areas, even though we made clear progress, there is further room for improvement. One example is digitisation of customer relations. Share of online sales is increasing but below the pace of our ambitions. Also, in certain adjacent areas like sale of devices I think that we should be able to secure a greater share of this market away from the retail chains. We will address these topics in the next strategic period.

Q: Orange Polska will soon present its new strategy. What should we expect, a continuation of the previous strategy or new directions?

I just mentioned that Orange.one was a success, so there’s no reason to change its main pillars. We see room for further fibre in Poland, we will stick to our value strategy and continue to increase efficiency, but we will put a new dimension to some of these activities and obviously add new elements.

Certainly, the new major element will be the 5G network development, which opens up new perspectives in both business and consumer markets. We also want to become a more innovative company, focusing to a greater extent on artificial intelligence and virtual reality. Furthermore, there are growing volumes of data globally which need to be stored and analysed, and we want to be involved in this process. We see development opportunities for our company in the area of digitisation of e.g. sales and customer-relations processes. Importantly, we strive to consider the impact of our operations on the economy, society, and the environment, so sustainable development will be another major element. We intend to diversify our energy mix, so that a portion of it will come from renewable sources.

Let me leave further details for the announcement time.

Q: The key theme in the industry over the new next few years will be implementation of 5G technology. What opportunities do you see here for Orange Polska?

For us 5G is a natural extension of previous generations of mobile technologies. In its basics 5G will make mobile data transmission much faster but more importantly for its future applications it will have much lower latency (the time needed for two devices to communicate) as well as much bigger capacity (the number of devices that can be connected to the network at the same time). 4G is not able to handle the constantly growing number of connected objects, all of which are transferring more and more data. Development of 5G will be much more gradual than it was the case with previous technologies, and its benefits will reveal themselves over the longer term. For mass-market consumers, today 5G does not carry the step change similar to the ones caused by 3G and 4G, which were the possibility of sending pictures and watching and sending video.

From today’s perspective it seems that 5G offers more monetisation opportunities on the business market that will beyond simple connectivity. 5G will open whole array of possibilities to automation processes and use of artificial intelligence in various industries from manufacturing to agriculture. All the devices receive and process data much faster enabling steering of manufacturing processes remotely in real time. It will boost robotisation and machine learning. These processes will be functioning in closed ecosystems often on designated slices of the mobile network. 5G services will enhance a variety of smart-city use cases including transportation, public safety and security and citizen services sectors. This means much bigger synergies between connectivity and ICT area, and Orange Polska is very well positioned here to benefit.

We are already active in the area of building so-called campus networks using 5G technology. Earlier this year we signed contracts with Łódź Special Economic Zone and the leading households appliances producer Miele who has its factory near the city of Łódź. The network for Miele will digitise and automate quality control process for manufactured products and conduct training for employees using virtual reality. Our role is complex, starting from design, through delivery, installation to maintenance.

Q: Orange Polska has just adopted its climate policy. It also has a climate officer – probably the only listed company in Poland to do so. Why do you think engagement into a fight against climate change is important for a telecom company? 

In the case of Orange Polska and in my own case, this came from the conviction and motivation that – as inhabitants of this planet – we should realise that we have a problem and that we must address it. The digital industry has a special role to play – our services have the potential to enable the green transformation of our clients across all other sectors. Fast and efficient connectivity and services based on IoT solutions are contributing to the development of smart living, working and manufacturing. According to GSMA estimates, one tonne of emissions by telecom sector could contribute to reducing up to 10 tonnes of CO₂ emissions in other sectors of the economy.

We will do primarily by increasing to 60% the share of renewable electricity in our consumption mix using long-term Power Purchase Agreements directly with the producers of green energy. This means that we have to proactively search and support new projects in this area. We will also continue to optimise energy consumption. Please note that we have been reducing consumed energy volumes each of the past few years despite constant increase of data volumes on our networks. Deployment of new, much more efficient technologies such as fibre and 5G will also contribute here: the average electricity consumption per customer using fibre is around 80% lower compared to consumption using copper.

I strongly believe that this responsible approach goes well with our business. Consumers increasingly pay attention to their own carbon footprint and also the carbon footprint of the products they use. We aim to implement exemplary practices in terms of a circular economy. For example, we will buy back older smartphones and accept for recycling used or broken mobile phones in every Orange store, and we will introduce innovations in our devices to extend their life and reduce energy consumption. All these commitments mean that we are very serious about this topic.

Q: It has now been more than six months since you came to Poland. What is your vision of the Polish market, and Orange Polska, a few years down the road?

Polish telecom market underwent a significant change in 2019 with some operators increasing prices in a ‘more for more’ formula. Taking into account the very low level of prices of telecom services in Poland compared to other European countries and permanent cost inflation in many areas we believe the sector is, and will further be, focused on value and that the competition will be based mainly on the quality of infrastructure, service and the customer experience.

It is interesting to see that Poland is increasingly becoming a meeting point, of interest to large European telecom operators, with two of them entering in recent months. This is a clear sign this market is attractive and offers growth opportunities. Clearly, all of the key market players are heading towards convergent operations, a model that Orange Polska already adopted several years ago. We were pioneers, now others follow us – which means that our strategy was right.

The pandemic showed that customer behaviours and needs are changing and we need to follow that and reap benefits. Fibre connectivity on the fixed side and 5G on the mobile will define key battlefields in many years to come both in B2C and B2B. As I already mentioned with the Orange.one strategy our Company made a breakthrough but for us it is not time to celebrate – especially since the Polish market is very competitive. We need to complete our journey from a legacy to a digital telco. We need to actively look for innovative and creative ways to pursue business opportunities and the FiberCo project is a good example. We are already seeing high synergies between connectivity and ICT, and I am convinced that this trend will grow much further with the arrival of 5G and trends towards digitisation. We are well positioned here with recent investments into software and integration competencies but we need to further build business on that and explore fully market potential. Looking longer term for new simplification initiatives across our entire value chain, we will strongly consider limiting our number of services platforms. Development of 5G and fibre makes previous generations of technologies more and more obsolete and maintaining them is not efficient. I have in mind 2G and 3G in mobile, and the copper network.

To be better prepared for effective competition it is important for us to continue the cultural change in Orange Polska that was initiated by the previous strategy. We need to be even more open in communication and dynamic. People need to be given more empowerment. I strongly believe in flat and simple management structures with less hierarchy.

So there is a lot of opportunity and many challenges ahead of us. I am an optimist and I see a bright future for our company.