Annual Report 2021

2022 outlook confident in .Grow ambitions in a challenging macro environment

2022 priorities driven by the .Grow strategy

Key priorities for 2022

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2022 will be the second year of implementation of our .Grow strategy. It is quite obvious that it will be taking place in a volatile and sometimes challenging macro environment with inflation pressures, the energy crisis and political turmoil. Despite that we are as confident as ever that our strategy is the best suited to make the most of our assets, our knowhow and our values.

We will pursue our value commercial strategy, which is particularly vital in the inflationary environment. However, one must keep in mind that the nature of our subscription business – proven very sound during the turbulent times of the pandemic lockdowns in 2020-2021 – requires more effort to adapt to inflation, especially in the short term.

We hope that 2022 will be the year of 5G. We are counting on the 5G spectrum auction to be completed, so that we can begin the 5G network rollout using dedicated spectrum. It will be a very important element, opening new prospects for services and growth in both the consumer and business markets.

Green will be high on our agenda on both the environmental and social fronts. Signing new PPA contracts is even more important in the context of the energy crisis. We will also prepare the launch of a new hub for digital skills, Orange Digital Center.

Finally, we are pursuing a transformation improving our corporate culture, making it more agile and cost effective, which includes further digitisation of our business processes. As presented in the .Grow strategy, we want to invest in our core asset – people, which includes new forms of co-operation and of the workplace. This is especially important in the post-COVID era.

Inflation to weigh on growth; strategic goals intact

We expect the positive trends in our business that were driving our results last year to also support our performance in 2022. In particular, we expect EBITDAaL to be supported by profitable revenue expansion in all key areas of business, as well as our continued focus on value and further cost optimisation. However, the outlook for EBITDAaL growth is more challenging due to external macroeconomic factors. Inflation in Poland recently hit 9% and the consensus is that it will exceed 10% for the full year. From our perspective the key challenge is the huge increase in energy prices that we have experienced over the past few months, not only in Poland but all over Europe – a situation exacerbated by the war in Ukraine. This creates more uncertainty than usual and because of that we expect EBITDAaL in 2022 to be flat or growing by a low single-digit percentage.

We forecast that our revenues will decline slightly in 2022. The decline will result from regulatory cuts of mobile and fixed termination rates that affect our wholesale revenues (with limited impact on profit margin). Excluding this regulatory impact, revenues are expected to grow, supported mainly by further growth of our core telecom services (convergence, mobile-only and broadband-only), IT/IS and equipment sales.

Our eCapex level should be in the same range as last year with the structure evolving to include a greater share of mobile, as we plan to begin rollout of the 5G network and start a major modernisation of our radio access network.

We are confident in the strength of our assets, growing customer demand and the quality of our services and we are fully confirming all of our long-term strategic ambitions.

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