Q: 2022 was another successful year for Orange Polska’s operations on the business market. What were the key drivers? What has improved as compared to previous years?
I am very pleased that 2022 was another very successful year for our operations on the business market. Revenues in this area increased by as much as 9% in 2022. This encompassed all telecom services both for small businesses and large corporations; IT and IS services, which are often very synergetic to telecom activities; and the sale of equipment. It was an outcome that stemmed from consistent execution of our strategy across all business lines. I would like to mention three key factors in particular that contributed to this strong performance.
Firstly, mobile services. We have successfully combined further expansion of customer base with acceleration of ARPO growth. ARPO increased by more than 4% (vs. only 1% in 2021), as a result of our more for more value strategy and a continuing post-pandemic recovery of roaming. Customers liked our flexible tariff plans which include various value-added services that can be changed during the lifetime of their contract. That gives them a variety of choices and the opportunity to bundle according to their needs. Despite a market that remains very competitive, we were able to strengthen our leadership position in all customer segments.
Secondly, ICT. I am pleased to report that 2022 was another very strong year for those product lines. Growing revenues by more than 20%, we have outpaced our own expectations. We have successfully built our value chain to meet demand for digital transformation in Poland. Digitisation of business is the number-one trend among corporates from many industries, having realised that this is the key driver of their modern competitiveness. Companies’ approach to data analytics and modern communication solutions is leading to demand for cloud adoption. And thanks to our sturdy foothold in connectivity (resulting from massive investments in fibre) and wide portfolio competencies in the ICT area (built organically and through acquisitions), we are uniquely positioned in Poland to take advantage of that trend. I am especially pleased with an increase of more than 30% in cybersecurity revenue – an obvious acceleration compared to 2021. We are now one of the main market players in this area, providing security solutions along the entire data journey. While our high revenue growth is translating into profits, the obvious challenge that we face is significant inflation in labour costs in this industry, which is putting pressure on our profitability.
Finally, I would like to mention solutions based on IoT. This is an area which is still in the very early stage of development, but in which we see huge future potential. We doubled the volume of this business in 2022. Our City Management Platform is increasingly appreciated by local governments. Already more than 100 cities use intelligent metering, monitoring and analytic platforms for lighting, water, waste and transport management. This is especially important amid inflation and growing energy prices. I think it is safe to say that today we are the first-choice provider of Smart City solutions for Polish communities. And this is just the beginning. Much more potential in this area will be unlocked with 5G technology.
Q: In 2023 we may finally receive the dedicated frequency spectrum for 5G technology. How can that influence your area?
Announcing our strategy close to two years ago, we had anticipated that dedicated 5G spectrum would be available to us much sooner. Some of our plans and ambitions were based on this new resource and potential, so they had to be partly postponed because of that. That doesn’t mean we were idle – just the opposite. In the beginning of 2022, we opened our headquarters 5G LAB, where we are developing 5G use cases, demonstrating their benefits to our customers and encouraging them to adopt.
5G will open a whole array of new opportunities for business customers, that will be gradually revealed over many years to come. I do not exaggerate when I say this is going to be a revolution. What’s more, it concerns both private and public sectors. 5G will enable the creation of digital ecosystems for business transformation called Campus Networks. Many sectors will take advantage of that opportunity. Manufacturing processes will be automated, and because production robots will communicate between each other, these processes will be much more efficient. Analysis and monitoring of data generated in the production will be conducted in real time and will be much more accurate. It will improve quality control, supply chain management and preventive maintenance. This means higher productivity and a higher competitive position on the market. What is particularly important is that such private ecosystems mean that networks are safe, as their elements are separated, dedicated and located at the customer’s premises.
The other key group of beneficiaries are cities. Rapidly growing urban populations create mounting problems related to transportation, environmental pollution, traffic jams or waste management. Smart City solutions based on IoT are already available based on 4G technology, but 5G will give it another boost: 5G will allow fullscale implementation of such solutions as traffic-light management, smart water or electricity metering, and installation of sensors measuring air quality. These systems can generate savings for cities and improve the quality of life for citizens.
This will yield the emergence of completely new markets that will benefit our sector, as we monetise these opportunities. We are pleased that the consultation process for the new 5G auction finally began and we are looking forward to its finalisation as quickly as possible to fully unlock this potential.