Q&A with Maciej Nowohoński, Management Board Member in charge of Carriers Market and Real Estate Sale

Q: One of the elements of the .Grow strategy is a new approach to wholesale. Why is wholesale now more important for Orange?

We could say that there are two elements to that: infrastructure supply and demand for it.

We are the largest telecom infrastructure operator in Poland with a market share of around 40%. This is one outcome of our history as an incumbent operator and of our huge investments in the fibre network over the past seven years. Our network includes around 53k km of ducts, 15k km of fibre in backbone, 92k km of fibre in aggregation network and more than 85k km of access network. And all these parameters are constantly expanding. The access network is increasingly built in fibre – the share of copper is systematically decreasing. If we offer this infrastructure to other operators we will increase its utilisation. The better this infrastructure is utilised, the higher return that Orange Polska will realise on the capital invested. By sharing our infrastructure we are also avoiding duplication of existing facilities, which is in line with the aims of the Cost Directive of the European Commission.

On the other hand we see potential for other operators to be interested in our infrastructure. This will stem from the development of the fast Internet access market, entry of other players into the convergence market and deployment of 5G mobile networks (after the new spectrum is distributed). 5G will not function effectively without fibre. Its backbone is based on the cable even more than 4G because it will use more base stations and radio equipment. So fibre optic infrastructure will be necessary to fully benefit from the advantages of 5G.

An important element in this picture is our strong position on the retail market. Over the past few years we have developed retail offers that are highly demanded by our customers. So we have the tools to effectively compete for retail customers while providing access to our infrastructure to other operators. We are proving that they are not only our competitors but also important business partners

Q: Is the real estate market rebounding after the pandemic? How did the pandemic change it?

As a consequence of technological progress, digitalisation and copper removal, we are gradually freeing up space – or optimising it for its technological use. This allows us to monetise properties, to give them a ‘second life’ through better market usage, adjusted to local needs. Selling these properties supports our savings in maintenance, heating and energy consumption. It also brings better usage of the capital, which is redirected into core business areas like fibre network or mobile infrastructure.

In the past five years we have sold properties worth in excess of PLN 900 million in various places all over Poland. At the moment our portfolio of ready-to-be-disposed properties comprises around 400 pieces of various sizes and locations worth around PLN 1 billion in market value. This value is to be realised over a number of years. Another group of around 500 pieces, with much lower value, is in the preparation process – so there is a long way to go.

The properties are being sold on a project basis with strong co-operation with future buyers in order to optimise the network infrastructure that usually stays on the property in a secured area. The presence of Orange Polska’s infrastructure on the property is a specific feature that makes the selling process more complex. However, in most instances the property’s premium location within its local context compensates for this difficulty. The network presence is a factor that lengthens the selling process in almost all transactions.

Around 80% of our portfolio for sale is comprised of office space and is geographically dispersed. The pandemic had significant impact on the office real estate market in Poland and its new, post-pandemic normal in that area is yet to settle. The conflict in Ukraine is bringing additional uncertainty for business decision makers in the real estate industry, at least in the short-term. High inflation seems to be a factor supporting long-term investments in office property, provided that the business outlook stabilises at a controllable level on the longer horizon.

In order to facilitate business in this complex context Orange Polska took an agile stance with intensive marketing activities, promotions and a solutions-open approach to buyers. This hands-on effort has already brought results. On top of that, we are constantly seeking other valueaccretive ideas that would accelerate the monetisation of property.

Annual Report 2021

Consumer Market

Wholesale Market: More business opportunities

Q&A with Maciej Nowohoński, Management Board Member in charge of Carriers Market and Real Estate Sale

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