Integrated Report 2018

  • Introduction
    • Message from CEO
      •
    • About the report
      •
  • Company and our stakeholders
    • About our company
      •
    • Our stakeholders
      •
  • Business model and value creation
    • Business model and value creation
      •
    • Key resources
      •
    • Business model
      •
    • External environment
      •
    • Internal environment
      •
  • Strategy
    • Q&A with CEO
    • Our strategy
  • Results
    • Q&A with CFO
    • Outputs & outcomes
    • Financial review
  • Risk
    • Risk management
    • Risk exposure
  • Corporate governance
    • Our approach to corporate governance
    • Our governance structure
    • Governing bodies activities in 2018
  • Selected financial data
  • Appendix
    • GRI table
    • Defining the Reports content
    • Sustainable Development Goals
    • Methodology
    • Glossary
    • Independent Limited Assurance Statement
    • Contact information
Results

Acting in an effective and responsible manner

Focus on efficiency

Our commitment

To be an agile and flexible company with proven ability to find efficiency savings; constant transformation of indirect costs Process optimisation and automation, IT spending optimisation as well as facilitation of commercial initiatives, especially in convergence
KPI Performance
Indirect cost


Delivery on our commitments in 2018

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 has been reflected in both our commercial activity and financial results.

In 2018 we continued with our redefined commercial approach:
to become more selective and more balanced between volume and value. We focused on pushing convergence as the key commercial offer at the same time as significantly reducing handset subsidies. This approach resulted in a much lower volume of customer acquisition and retention transactions bundled with handsets, optimisation of the distribution channel mix, and significant savings in advertising and promotion costs. All of which contributed to a reduction of over 6% in commercial costs, the largest cost category.

Direct margin evolution was significantly affected by turmoil on the debt collection market in Poland that resulted in lower prices for sold receivables. Excluding this effect, the direct margin trend improved, driven mainly by further reductions to handset subsidies (albeit this factor contributed much less than in 2017), our value strategy in service pricing, and the national roaming contract with Play.

In line with our strategic priorities, we have introduced a comprehensive transformation programme to simplify, and where possible to automate and digitise our business processes. We committed ourselves to cut indirect costs by 12-15% by 2020 (versus 2016). In 2018 we accelerated our optimisation of indirect costs: we cut them 10% (almost PLN 400 million) and we reached the planned target two years ahead of schedule. The savings almost doubled, year-on-year. This was a consequence of numerous transformation projects across many areas of operations (e.g. labour, customer care, IT and network, property and general expenses), and record high gains on sale of real estate. At the end of 2017 we signed a new, much more ambitious Social Plan covering 2018-2019. As a result our labour costs decreased by 7% (year-on-year).

We locate optimisation opportunities at every stage of our business model. Examples of the cost savings initiatives introduced in 2018 include:

  • We were the first operator on the Polish market to introduce Artificial Intelligence. It is now used for 95% of customer interactions with Call Center
  • We have just finished migration of our fixed customers to a new billing system. The old mainframe has been decommissioned
  • Paperless electronic contracts are being introduced for our customers in all distribution channels
  • Our omnichannel distribution network is already supported by a brand new SAP supply chain management system


Indirect Costs (yoy change in PLN and %)

Indirect Costs