.Grow Financial Ambitions: Growth of results and return to dividend payments

We will expand revenues at an average rate of low single digits between 2020 and 2024. Our core business (which constitutes around 75% of revenues) will be fundamental to achieving this plan. Within the core business there are three main growth engines: convergence, ICT and wholesale. We plan to grow convergence and ICT revenues at a minimum CAGR of 8% and around 10%, respectively. Legacy services, comprising mainly traditional fixed line and interconnect will be in decline. By the end of the plan, legacy will represent less than 10% of total revenues, so their further impact will be very limited. We will also devise new services – new areas of growth. These are small today, but are very future-oriented and will multiply at a high pace. Examples include services based on IoT, big data, campus networks or the augmented home. They are not key to our financial performance until 2024, but their development will be critical for us in the next strategic cycles.

We will expand EBITDAaL at a low-to-mid single-digit pace. This growth will be predominantly driven by the expanding direct margin, as high operating leverage will allow us to benefit from higher revenues. Growth through commercial development will make our fundamentals much more solid and sustainable for the long term. Our cost transformation will continue. Indeed, the same digitisation trends that are enabling our growth leverage will also help us drive down costs further still. At the same time, using AI and process automation, we will improve our customer service: a winwin. We expect inflationary pressure to offset some of this margin expansion, but enough will find its way to operating profit to be able to grow our EBITDAaL margin.

Revenue growth driven by core business

Our smart investment strategy will focus on growth, especially fibre and 5G, and on efficiency. Our capex structure will gradually evolve from the one driven by fibre to higher share of mobile. We will embark on landmark modernisation of our mobile network. It is critical in order to ensure that we cope with the explosion of data, which is already taking place and will only accelerate in the future. It will be done on the occasion of the 5G rollout. While we will continue to expand our fibre footprint it will not require significant direct capex engagement as it will be mainly realised through partnerships. Despite these significant investments, we aim to keep eCapex at a steady annual level of PLN 1.7–1.9 billion on average over the period. This is how our business growth will translate into increasing cash flow generation.

Within the .Grow strategy we intend to resume dividend payments and we have presented a transparent dividend policy. Along with the 2021 results announcement in February 2022, the management recommended a dividend payment of PLN 0.25 per share to be paid in 2022 from the 2021 results. This recommendation was approved by the Annual General Meeting in April. Return to shareholder remuneration underscores the confidence that we have in our growth prospects and in our sound balance sheet. We consider a PLN 0.25 per share dividend level to be a sustainable floor for the future. In the future, we will conduct further changes to dividends on a yearly basis, taking into account projections of underlying financial results and the long-term financial leverage forecast versus 1.7x to 2.2x leverage corridor.