Q: Do you see changes in consumer behaviour resulting from the difficult macro situation?
2022 was a very good year for us on the consumer market with consistent performance in line with the goals of .Grow strategy. In particular, our fibre customer base increased by more than 20%, as demand was stable and we further expanded our network’s reach. In all key services we managed to simultaneously grow customer base and ARPO. In convergence, which is our flagship offer for Polish households, the customer base grew by a further 5%, even though more operators are now pursuing this strategy. This was accompanied by a 3% rise of ARPO. In mobile, taking into account all our brands, growth of customers was slightly better than in the previous year. It is important to add that the churn rate was stable.
All this was achieved despite a drastic negative shift in the geopolitical and macro environment related to the outbreak of war in Ukraine and inflation at its highest rate for 25 years. Simultaneously, the competitive environment in Poland tightened further with the emergence of a new significant convergent player, following acquisition of UPC by Play. Also, please note that we are actively implementing our commercial value strategy. I believe the demand for our services is structurally stable, as they are absolutely essential to the life of consumers. In addition their weight is relatively small in household budgets.
It does not mean that we don’t see the negative impact of this significantly challenging macro situation. We see an increasing number of customers being more cautious in taking on larger commitments. For example, in our Christmas promotion, a larger proportion of customers than in previous years preferred the monthly discount rather than a free gift of significant value. We have structured some offers to offer a lower entry point, which then grows later in the contract, which relieves some customer worries. In Q4 we also launched handset sales on 36-month instalments. This increases affordability.
Let me finish by emphasising that we create a product portfolio for every customer group and strive to constantly improve it. On the one hand, we care for the most demanding ones: in January we launched a fibre speed offer of 2 Gbps. On the other hand, we selectively approach more price sensitive customers with fibre based on our B brand Nju.
Q: What are the key goals and challenges for 2023?
Mitigation of inflationary impact has become critical in recent months, and not only at Orange Polska. We are increasingly feeling the impact of inflation on our operating costs, and to counteract this and to protect our profitability we need persistent and diligent execution of our commercial value strategy. I would say this is our key goal and challenge for 2023.
We have been pursuing a ‘more for more’ pricing policy since 2019, but we intensified it in 2022 due to rising inflationary pressures. We increased the prices of the majority of our key services in H2, and now the key task is to maximise customer migration to these new tariff plans. The new tariffs were accompanied by a novel condition providing for an automatic increase in the monthly fee after the term of the contract. It is to encourage customers to sign subsequent loyalty contracts and prevent a growing gap between the prices in our current offers and those paid by customers who make use of old price lists even though their contracts have long expired. In May 2022, we included so-called inflationary clauses in new customer contracts. We have until mid-year to execute them and are seriously considering this.
We will obviously also be focused on further volume growth of customers. In fibre, we will benefit from further expansion of the footprint and we want to increase penetration of our services on the existing reach. We continue to aim at combined rise of customer base and ARPO.