2024 Outlook

2024 is the final year of implementation of our .Grow strategy. The environment continues to be demanding but improving: From a recession-like dynamic of 0.2% in 2023, GPD growth is forecast to improve to around 3%, according to current market consensus. There are prospects for unblocking of EU funds, which should stimulate business activity and our IT and integration services project pipeline. We are pleased that inflation fell to the mid-single digit level and is expected to stay at these levels in 2024. However, part of our costs will be affected by double-digit inflation of the prior year.

We will focus on the execution of our proven commercial value strategy. The goal is to maintain the right balance between growth of the number of customers and growth of ARPO. ARPO is expected to benefit from price adjustments mainly made in prior years. We will continue our value approach in 2024: in January we adjusted our prices in mobile again in the ‘more for more’ formula. The moment of this move was deliberate: it coincided with us announcing the launch of the 5G technology on the newly acquired spectrum. The new spectrum means for us more capacity to carry ever growing data traffic and possibility to offer more abundant data packages for our customers, which will support our commercial strategy. Our key task is to ensure the new tariffs are adopted by our customers and translate into growth of ARPO and revenues. Continuation of ARPO growth is essential to mitigate the impact of inflation.

That needs to be coupled with a further cost transformation to be more agile and effective. One of its key enablers is further digitisation to respond to customer needs more quickly and effectively, and at the same time it makes us leaner and more efficient. In particular, we have an ambitious plan to boost customer sales and retentions through digital channels.

On the business market we will continue to strengthen our position as a partner in digital transformation for Polish corporates, expanding synergies between connectivity and IT and integration services. Being able to use the new 5G spectrum, we will finally be in a position to more intensively develop various new services. We have ambitious plans regarding so called Mobile Private Networks, that we will implement for industrial customers, municipalities and universities. On the other hand, at the start of 2024 it looks that achieving growth in the ICT area may be more challenging than in previous years. It undergoes a cyclical slowdown resulting from the broad IT market downturn and lower demand from the public sector.

Finally, we will be pushing further with our green agenda on both the environmental and social front. Our increased focus will be on reducing CO₂ emissions within scope 3 – which encompasses our entire value chain of suppliers and customers. Within that framework we will be more active when it comes to activities related to the circular economy. We are confident that we have right assets in place to manage this year’s challenges and reach our ambitious goals.

The objective for this year is consistent with our strategy: to deliver growth of revenues and profits.

We forecast our revenues to increase by a low single digit in 2024. We believe the demand for our services will remain solid, as they are essential to our customers. We anticipate further growth of core telecommunication services (convergence, mobile and broadband) on retail markets, coupled with solid revenues from IT & integration and continued good demand for our infrastructure from our wholesale customers. We also expect continued pressure on high-margin legacy services (retail and wholesale fixed telephony). Interconnect revenues will reflect another regulatory cut of mobile termination rates, but with a very limited impact of that on profits. Our energy resale business will have a more difficult year due to lower energy market prices and changes in regulations.

Similarly to 2023, we expect EBITDAaL to be supported by profitable revenue expansion in all key areas of business, our focus on value, and cost optimisation. The inflationary which encompasses our entire value chain of suppliers and customers. Within that framework we will be more active when it comes to activities related to the circular economy. We are confident that we have right assets in place to manage this year’s challenges and reach our ambitious goals. environment is expected to continue to weigh on our operating costs, constituting a key challenge to growth. A large part of our costs is indexed to last year’s inflation (for example rental contracts for space for offices, sales outlets and infrastructure) or subject to pressure resulting from a significant increase of the minimum wage. However we expect this challenge to be lower than in 2023, which makes us more confident on our growth prospects this year. As a result, we expect EBITDAaL in 2024 to grow by a low single digit percentage.

We anticipate our economic Capex (eCapex) in 2024 to be in the range of PLN 1.7–1.9 billion, therefore higher than the exceptionally low 2023 level. It mainly reflects full speed of rollout of our 5G network on the newly acquired C-band spectrum. This rollout is accompanied by a synergetic project of renewal of our mobile access network. Our definition of eCapex excludes acquisition of mobile spectrum.