Spectrum

Orange Polska is Poland’s leading telecommunication provider, operating in all segments of the Polish telecom market and holding licences for 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2600 MHz frequencies. Spectrum is a scarce and unique natural capital, to which access is regulated at the national and European Union level. Our access to the spectrum required for rendering telco services is at the regulator’s discretion. The amount of spectrum that is at our disposal influences the competitiveness and quality of the services we render.

Energy

Expansion of the telecommunications infrastructure in response to the growing demand for information flow entails higher demand for electrical energy in our industry. In order to compensate for this environmentally unfriendly trend, we take steps to optimise energy consumption. We also reduce electricity consumption through replacement of older technical devices with modern energy-efficient ones, modernisation of cooling systems, introduction of energy saving functionalities, and so on.

We manage natural resources efficiently, monitoring the consumption of energy and other resources, as well as carbon dioxide emissions related to our operations.

Debt and equity

We aim to maintain a responsible capital structure to support our business operations and finance capital expenditures. Equity and debt are balanced to remain within the frame of a safe financial structure and good credit standing.

Since 2014, our external funding needs are sourced from our majority shareholder Orange S.A. Such a policy allows for synergies in processes and cost efficiencies, as Orange S.A. is one of the largest telecom companies in Europe with ready access to a broad range of financing sources. The funding is provided on an ‘arm’s length’ basis, supported by market benchmarks.

All of our foreign currency denominated debt is hedged against currency fluctuations and more than three quarters of debt is effectively switched into fixed rate debt.

At the end of 2018 the duration of debt stood at 2.2 years on average. However, in February 2019 we signed refinancing agreement for important part of our debt. This will be effective as of May 2019 and will extend average debt duration to 3.0 years. This is allowing us to maintain a balance between optimal costs and stable financial structure.

Our leverage is closely monitored and the ratio of net financial debt to adjusted EBITDA is a key measure of financial structure and liquidity.

Network Infrastructure

Our activities require significant manufactured capital: our mobile and fixed line networks, service platforms and IT systems are the foundations of the products our customers rely on. Maintaining a reliable and fault-free network is critical to our business success. We have to respond to changes in technologies and invest in the right mix of technologies - for example, we are currently making significant investments in the rollout of the fibre network. In our view this is necessary for us to stay competitive in the market and be in a position to offer the best convergent services. Over the last 10 years we have invested more than PLN 25 billion in fixed assets.

Software

We run a number of service platforms that combine our network and IT resources to underpin many of the key products we offer. Our internal IT systems enable us to manage our processes, handle customer information and deliver our products and services.

Points of Sale

We reach our customers and sell our products through various distribution channels: traditional points of sale (POS), telesales, active sales, alternative channels and on-line sales. This wide distribution network ensures that everyone has access to our products and services. Our distribution network is constantly evolving in line with changing customer preferences. We optimise traditional shops and open new modern Smart Stores. Online is the fastest growing channel. At the end of 2018 we had 731 POS all over Poland, including 23 Smart Stores. 146 of our POS are adapted to the needs of customers with disabilities.

Employees

Engagement of adequately skilled employees plays a critical role in increasing long-term value generation. We invest in our people so they can succeed and contribute effectively to our business. We value diversity, providing equality of opportunities which we believe leads to higher skills-set and higher innovation - diverse workforce fosters greater innovation, helps us to better understand and serve our customers and empowers our people to deliver their best. Orange Polska Group has 13,545 employees (including NetWorkS!), while outsourced staff number 4,344.

Innovation

We have created Orange Labs to support development of new technologies and innovations. It is part of the international Orange Labs network, which includes over a dozen research and development (R&D) centres and laboratories. Orange Labs co-operates with external partners to develop, select and implement innovations, undertaking R&D tasks for both Orange Polska and the Orange Group. Any financial settlements between Orange Polska and Orange Group are done on an ‘arm’s length’ basis, supported by market benchmarks. The main areas of activity are: Digital Personal Life, Software Infrastructure, Ambient Connectivity, Digital Society, Data & Knowledge Trust & Security and Internet of Objects. R&D and co-operation with start-ups are very important to our business; we spend around PLN 50 million on research and development annually. We follow the Open Innovation model. As a result, our social impact is not limited to the direct influence of our innovations on the lives of people and communities, but is also reflected in the transfer of know-how to our partners.

We also empower employees to create innovations and implement their ideas to improve both: customer and employee experience. Program ‘Oz’ is to stimulate innovation driven by everyone in the company and is based on four pillars: continuous improvement, wall of ideas, innovation challenges and intrapreneurs studio. Oz is enabling everyone in Orange Polska to take action, allowing employees to express themselves in a useful manner, receive support in developing their ideas and earn recognition from the company and their peers.

Knowledge about customers and market

Knowledge about our customers and our market is crucial to our success. Building trust and loyalty among our customers and giving them what they want is vital to our sustainability in an increasingly competitive industry. The voice of our customers has a major influence on our business decisions. To deliver unmatched experience throughout the customer journey, we engage in active dialogue with our customers on different levels. We conduct comprehensive surveys which compare our offers, products and network quality to those of our competitors. Our managers are engaged in a “Call Detractor & Promoter” initiative to solve customers’ problems and to better understand our own strengths as well. They also help frontline employees to understand the customer perspective.

Brand
Orange – strong globally…

Orange is a global company, serving over 250 million customers around the world and present in 29 markets. In February 2018, the Brand Finance ranking valued the Orange brand at $22.2 billion, making it the 51st most valuable brand in the world, first in France and eighth most valuable telco brand globally. The Orange brand is our consistent asset across all countries, and one of most valuable. It is also instrumental in demonstrating that we are a digital, efficient and responsible company.

Wherever we are, our brand is first and foremost a human brand, helping us stay close to our customers, in touch with their needs whether they are a multinational company or teenager with their first phone.

Since the beginning, we have been optimistic about technology, while making it accessible to as many people as possible. That’s why our role is “always in touch to connect what’s essential in your life” and the new guidelines for both the Group’s internal culture and its external actions are based on listening and responding to customer needs.

The Orange brand supports our philosophy and brings our role to life through powerful brand experiences that create positive impact.

…and leading in Poland

This approach has changed the way consumers experience our brand through customer care and sales channels. According to external market research conducted in December 2018 (by IQS Agency), Orange was the first choice brand for Polish consumers with respect to Mobile voice (30%), Mobile broadband (20%), Fixed broadband (25%), Packages (24%) and Fibre (24%). It has also brought us high communication awareness for mobile market 52%.

Relations with market regulator, local authorities and the financial community

Good relationships with our key stakeholders are vital to the success of our business. To us, this means building trust, readiness for dialogue, and keeping in touch on an ongoing basis. In particular it is essential for us to establish and maintain constructive dialogue with the telecom regulator and local authorities. As a listed company we take care of our investors and the financial community by providing transparent communication of our financial results and engaging in direct dialogue with them.

Relations with business partners

Orange Polska is a partner or member of a number of industry, business and social organisations. We want our relations with our suppliers and business partners to be based on transparent long-term relationships and adherence to ethical standards and principles. We co-operate with both global vendors and local market players. Our activities include both one-off purchases and long-term contracts with 3,670 suppliers. We follow a competitive and open procurement policy which is ensured by the Procurement Process Rules. The document includes procurement procedures which regulate supplier selection, contracting and confidentiality, and address potential conflicts of interest.

Social impact

It is important for us to maximize Orange Polska’s positive social impact and minimize any negative consequences, which is why we have created a corporate social responsibility (CSR) strategy. Combating digital exclusion is an important element of this strategy, involving not only access to new technologies but also education, particularly of young web users as well as residents of small towns and rural areas. We believe that teaching people to use new technologies for both their own benefit and that of the community is just as important as providing the technologies themselves. Through its initiatives the Orange Foundation has been encouraging people to gain knowledge, participate in culture and build communities with skilful use of the internet and digital technologies. This knowledge not only improves quality of life and contributes to society as a whole, but also benefits the long-term development of our business.