Equity story. Q2 17 results. Investor Presentation. September Cyfrowy Polsat S.A. Capital Group

Transcription

1 Equity story Q2 17 results Investor Presentation September 2017 Cyfrowy Polsat S.A. Capital Group

2 1. Polsat Group: unique composition of media and telco assets

3 Unique market strategy based on complementary business pillars own content production and broadcasting 1st Polish private TV broadcaster with strong local identity established 1992 ca. 25% audience share 24 popular TV channels, 17 in HD standard full range of entertainment for every family member sports, news, entertainment, movies, hobbies diversified distribution of TV channels 4 free-to-air, 20 sold to other cab/sat tv production multiplay product mobile operator top quality mobile network operator technologically leading mobile operator on a wellbalanced 4 MNO market most-advanced LTE network, continuously 1 step ahead of peers 9.4m mobile telephony services provided, 72% contracted 2.0m mobile internet services provided, 91% contracted enjoying competitive advantage through control of key frequencies 30% of <1GHz coverage bands 40% of 1.8GHz capacity bands satellite pay- TV online video 3.5m households provided with 4.9m pay-tv services subscriptions ranging from PLN , contract-based model addressing also most price-sensitive customers initial value-for-money positioning allows for incremental value creation currently main competitors focused on high-end market or big-city customers very strong brand perception NPS of +28 clearly outperforms peer providers far the highest (97%) brand awareness among pay-tv providers biggest Polish pay-tv platform cross-selling opportunities IPLA the leading Polish online video platform up to 3.5 million unique viewers monthly unique local content as a key differentiator vs global OTT players CP GO expanding DTH offer onto online channels offered to all own DTH customers for an incremental monthly fee potentially to be offered to other customers well-positioned for online video opportunities 3

4 With finalized 10-year visionary project aimed at creating the biggest Polish TMT group Polsat Group today FTA TV broadcasting launch 1992 joining the group 2011 pay-tv 2003: pay-tv launch 2008: IPO LTE strategy frequencies acquired 2007 LTE 1800 launched 2010 joining the group 2016 (1) mobile telco mobile TV 2011: acquired by major shareholder 2014: joining the group joining the group 2011 video online joining the group 2012 Note: (1) currently Aero2 4

5 Full control over key assets in each value chain broadcasting pay-tv & Internet mobile & Internet online video ad sales and brokerage house loyal viewers diversified distribution well-established brand unique local content TV production studios broadcasting licenses multiplay offer based on own products contracted customers well-established brand own and commissioned exclusive sales channels customer equipment factory satellite broadcasting infrastructure multiplay offer based on own products contracted customers well-established brand own and commissioned exclusive sales channels countrywide mobile infrastructure unique portfolio of frequencies potential for upsell to pay-tv and mobile customers delivery through fix and mobile technologies key local content on exclusivity basis internally developed online platform 5

6 Successfully addressing market segments with a growth potential Poland: a largely scattered country geolocalization of the Polish society 53% of society in rural & suburban areas and our multiplay customers 73%: our offer effectively targets this segment rural cities <20k cities 20-49k cities 50-99k cities k cities >200k focus on rural customers was a bull s-eye hit 2003: CP launches DTH offer 6,7 6,8 84% 7,2 8,1 8,8 48% 10,2 11,0 11,5 11,7 11,0 11,0 11,1 11,1 46% 31% 32% 6% Cyfrowy Polsat other DTH providers cable and IPTV LTE successfully competes with fixed access underdeveloped Polish multiplay market 2010: LTE pioneered by Polsat Group 9,0 10,1 11,3 12,2 13,3 13,8 14,4 15,0 15,6 16,1 16,6 54% 48% multiplay almost nonexistent in rural areas 37% 45% 50% 50% 51% 51% 63% 69% 87% 72% 28% 46% 52% mobile access fixed access Poland Germany EU Sweden Spain UK France Belgium The Netherlands Source: PMR, company s data, operator s reports, UKE based on E-Communications and the Digital Single Market, Special Eurobarometr 438, European Commission, May

7 SmartDOM is our key proposition for the underdeveloped Polish multiplay market reliable mobile services the best LTE Internet for home and mobile usage other products for households banking products, electricity, insurance, security and many others production and aggregation of attractive content extensive portfolio of end-user devices 7

8 Unique convergent offer, based on own products and infrastructure In-Home Out-of-Home +Multimedia Key content x x Smartphones x x x x TV soft launch x x x initiated x 3 Broadband rd party x x x x x product re-sale 3 Voice rd party x x x x product MVNO (limited scale) re-sale soft launch TV x x initiated x 3 Broadband rd party x x x x product MVNO (limited scale) re-sale 3 rd party Voice product MVNO re-sale (limited scale) x x x x Source: Operator s websites; products and services provided with its own infrastructure, or using MVNO model 8

9 2. Merging two customer bases provides us with the opportunity

10 Our market strategy naturally focuses on our own customer bases 3.3 million cross-sell 3.6 million 5.8 million unique contracted customers jointly million prepaid RGUs a natural source of new contract customers CPS contract customers core product: DTH pay-tv PLK contract customers core product: mobile customers of other pay-tv and telco providers upsell opportunities Source: company s data 10

11 The strategy results in ARPU growth and strong customer loyalty (ARPU in PLN) Constantly growing base of multiplay clients Total number of contracted RGUs ARPU per contracted customer Churn % 9.0% 8.6% 791 Q2'15 Q2'16 Q2'17 Q2'15 Q2'16 Q2'17 Q2'15 Q2'16 Q2'17 Q2'15 Q2'16 Q2'17 Source: company s data 11

12 Diversified portfolio of well-established local brands allows for broader market targeting broadcasting pay-tv & Internet mobile & Internet online video established 1992 valued for rich content proposition in FTA and cab/sat markets targeted at audience group where achieves ca. 25% viewership results initially positioned as mass consumer entertainment TV established 2003 brand awareness: spontaneous: 85% supported: 97% NPS at +28, clearly outperforming peers valued for professionalism, valuefor-money proposition and broad offer targeted at households: a provider of full range of entertainment for each family member established 1996 brand awareness: spontaneous: 86% supported: 98% NPS at +26, strong results vs peers valued for high quality, technological advancement and LTE pioneering targeted at individuals & B2B recently repositioned: stronger focus on technological excellence and requirements of individuals established 2008 valued for rich content proposition available on any portable and media devices relatively young brand, created independently of the remaining brands of the Group targeted at younger generation, more familiar with online video distribution 12

13 3. Resilient business model with strong cash generation

14 Focus on contracted services and customer loyalty provides stable and resilient business model prepaid services 18% RGU structure contract services 82% avg contract length: 24 months total revenue pro forma for Midas acquisition ~9 710 revenue decomposition advert. revenues 11% prepaid services 7% other 6% contract services 76% (1) Source: company s data; from 2017 onwards market consensus Note: (1) Company compiled market consensus 14

15 Stable revenue combined with low CAPEX needs and OPEX under control results in strong FCF OPEX EBITDA total revenue ~9 710 (1) OPEX and EBITDA CAPEX intensity going forward (2) 34% 66% weight in total revenue % <10% % (1) (1) TV & pay-tv telco blended + continued deleveraging and successful refinancing adjusted recurring free cash flow ~ ~1 860 ~ market consensus Source: company s data; from 2017 onwards market consensus (1) Note: (1) Company compiled market consensus, company s guidance for FY 17 assumes FCF no lower than in FY 16. (2) Applicable for

16 Strong financials allow for aligning deleveraging with dividends since 2017 onwards Deleveraging remains our priority but profit sharing is in sight possibility of dividend payout 3.2x market consensus ( ) > x 1.75x company guidance > bank covenant Q2'17 mid-term goal FCF potential post refinancing scheduled debt repayments space for further deleveraging and dividend payout Source: company s data 16

17 4. Strong track record

18 Our strategic investments impacted positively value of Polsat Group May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 CPS stock performance since IPO compared to WSE indexes 2,5 IPO 2008 joining the group 2011 joining the group 2012 joining the group 2014 joining the group % (1) 2 1,5 37% (1) 27% (1) 1 0,5 38% (1) Indexed: May 6, 2008 = % (1) 0 CPS WIG WIG-Media Orange WIG-Telekom Note: (1) Growth between May 6, 2008 and August 31,

19 Comfort of our debtholders is equally important for us ratings assigned 2011 joining the group 2014 joining the group 2016 BBB- BB+ BB positive outlook positive outlook BB S&P Moody's 19

20 We are focused on communicating transparently Open dialogue with investors and brokers Management Board and IR team welcoming interactions with investors Our communication was frequently awarded 18 brokers actively covering Polsat Group 2014-Q2 17 avg variance of the previews consensus vs actuals: revenue: 0.7% EBITDA: 2.0% Our IR activity in numbers: ca. 15 national & international roadshows per annum ca. 250 meetings with investors per annum regularly visiting London, NY, Boston, Paris, Frankfurt, Prague, Stockholm, etc. quarterly result calls conducted in English Listed Company of the Year Top Investor Relations Best Managed Companies in Central & Eastern Europe 2015 Best IR dept of a listed company Poland 20

21 5. Appendix

22 Current market position on individual markets

23 Competitive environment Pay-TV market in Poland % share in the total number of paying subscribers (1) cable operators 40.9% 31.8% Other CabSat 20.2% Audience share Other DTT 10.2% Polsat Group 24.5% IPTV 4.6% other DTH operators 22.7% TVP Group 20.6% TVN Group 24.5% Mobile market in Poland share of contracted SIM cards (2) TV ad market share Play 26.2% 25.1% Polsat Group 26.7% T-Mobile 19.7% Orange 29.0% Others 73.3% Source: NAM, All 16 49, all day, SHR%, H1 17; Starcom, airtime and sponsoring, H1 17; TV Polsat internal Note: (1) As of 2016, based on own estimates, sector data and PMR estimates (2) As of Q2 17, own estimates based on data published by other operators 23

24 Market development and forecasts Total Polish mobile market value (PLNbn) Total Polish tv ad market value (PLNm) MTR reductions period +2.1% CAGR 24,2 24,3 25,0 23,7 23,9 25,2 25,9 26,5 27,0 27,4 27,9 3,7 3,7 3,5 3,3 3,4 3,5 3,6 3,6 3,6 3, Total number of pay-tv customers in Poland (million) Polish ad market structure 11,0 11,5 11,7 11,0 11,0 11,1 11,1 11,1 11,0 11,0 11,0 53% 52% 52% 52% 53% 53% 52% 51% 50% Outdoor Print Radio Internet TV Source: PMR; ZenithOptimedia, Advertising Expenditure Forecasts June

25 Long-term business performance trends

26 (thous. customers) Success of the multiplay strategy Opening of the multiplay offer also for customers with low-end TV subscriptions (former Mini segment) is reflected in higher growth dynamics of the multiplay customer base The number of RGUs of smartdom customers increased to 4.09m Low churn level, mainly thanks to our multiplay strategy 9.0% 8.5% 8.6% % 23% 24% Q2'16 Q1'17 Q2'17 # of multiplay customers +18% saturation of customer base with multiplay customers (%) Churn 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q2'16 Q1'17 Q2'17 26

27 quarterly net adds contract RGUs EOP -65 Q1' Q1'14 Quarterly RGU growth of individual product lines -69 Q2' Q2'14-27 Q3' Q3'14-29 Q4' Q4'14-36 Q1' Q1'15-33 Q2' Q2'15-14 Q3' Q3'15 12 Q4' Q4'15 20 Q1' Q1'16 23 Q2' Q2'16 Q3' Q3'16 Q4' Q4'16 55 Q1' Q1'17 26 Q2' Q2' Q1'14 Q1' Q2'14 Q2' Q3'14 Q3' Q4'14 Q4' Q1'15 Q1' Q2'15 Q2' Q3'15 Q3' Q4'15 Q4' Q1'16 Q1' Q2'16 Q2' Q3'16 Q3' Q4'16 Q4' Q1'17 Q1' Q2'17 Q2' Q1'14 44 Q1' Q2'14 91 Q2' Q3' Q3' Q4' Q4' Q1'15 69 Q1' Q2'15 46 Q2' Q3'15 34 Q3' Q4'15 77 Q4' Q1'16 53 Q1' Q2'16 42 Q2' Q3'16 33 Q3' Q4'16 36 Q4' Q1'17 8 Q1' Q2'17 7 Q2'17 Mobile telephony our aspirations: to stabilize the base Pay-TV to sustain organic growth Internet to grow fast based on our competitive advantages 27

28 Q1'13 Multiplay supports the continuous growth of the number of services and ARPU Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q1' Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Contract RGUs EOP Contract ARPU (PLN) stable MTRs 28

29 Long term market position of TV Polsat Audience shares TV ad market shares 27.2% 24.6% 24.9% 24.1% 23.6% 23.0% 23.5% 23.4% 23.7% 23.7% 22.7% 21.9% 22.0% 22.1% 22.1% 23.2% 24.1% 25.1% 26.0% 26.9% TV Polsat TVN TVP Source: audience share: NAM, All 16 49, all day, SHR% ; ad market share: revenue from advertising and sponsoring of TV Polsat Group according to Starcom s definition; internal analysis 29

30 Current operational performance a. Broadcasting and TV production

31 Viewership of our channels in Q2 17 Viewership in line with the longterm strategy, in spite of the high base effect in 2016 related to the influence of UEFA EURO 2016 Audience shares Main channels Thematic channels 12.6% 12.9% 12.3% 12.2% 7.4% 6.2% 5.4% Polsat TVN TVP2 TVP1 POLSAT TVN TVP 25.3% Dynamics of audience share results 24.9% 25.1% 22.9% 21.7% 20.5% 19.0% 19.4% Q2'16 Q2' % 10.5% Polsat Group TVN Group TVP Group Other CabSat Other DTT Source: NAM, All 16 49, all day, SHR%, including Live+2 (1), internal analysis Note 1: Audience shares that include both live broadcasting and broadcasting during 2 consecutive days (i.e. Time Shifted Viewing - shifting in time of the consumption of content broadcast on TV in real time by recording it on a storage medium (e.g. digital video recorder) and replaying it at a later time.) 31

32 m PLN m PLN Position on the advertising market in Q2 17 Stable TV advertising and sponsorship market Despite the effect of a high base resulting from UEFA EURO 2016, YoY dynamics of revenue from TV advertising and sponsorship of TV Polsat Group was once again better than the market Our share in the TV advertising and sponsoring market increased to 27.6% Market expenditures on TV advertising and sponsorship +0.1% (CAGR: 0.0%) 1,114 1,129 1,115 Q2'15 Q2'16 Q2'17 Revenue from advertising and sponsorship of TV Polsat Group (1) +9.4% (CAGR: 4.6%) Q2'15 Q2'16 Q2'17 Source: Starcom, preliminary data, airtime and sponsorship; TV Polsat; internal analysis Note: (1) Revenue from advertising and sponsorship of TV Polsat Group according to Starcom s definition 32

33 Current operational performance b. Services to individual and business customers

34 (thous. customers) Continuation of the multiplay strategy Opening of the multiplay offer also for customers with low-end TV subscriptions (former Mini segment) is reflected in higher growth dynamics of the multiplay customer base The number of RGUs of smartdom customers increased to 4.09m Low churn level, mainly thanks to our multiplay strategy 9.0% 8.5% 8.6% Number of multiplay customers % 23% 24% Q2'16 Q1'17 Q2'17 # of multiplay customers +18% saturation of customer base with multiplay customers (%) Churn 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q2'16 Q1'17 Q2'17 34

35 Stable growth in contract services Strong growth in the number of contract services by 539K YoY 252K YoY of additional mobile telephony RGUs mainly due to the favorable effect of our multiplay strategy, temporarily supported by intensified migration of customers from the prepaid segment Pay TV RGUs increased by 203K YoY (effect of multiroom and paid OTT) Further growth in Internet access RGUs by 84K YoY +4% 12.88m 13.34m 13.42m 1.7m 1.8m 1.8m 4.6m 4.8m 4.8m 6.6m 6.8m 6.8m Q2'16 Q1'17 Q2'17 Internet Telefonia komórkowa Pay Płatna TV telewizja Mobile telephony 35

36 (ARPU in PLN) Effective building of ARPU Contract ARPU continues to grow as a result of the consistent strategy of building customer value, despite the high base effect related to UEFA EURO 2016 Implementation of Roam Like at Home has slightly weakened the ARPU growth dynamics at the end of the second quarter Successful product up-selling reflected in the growth of saturation of RGUs per customer % Q2'16 Q1'17 Q2'17 ARPU RGU/Customer 250% 150% 36

37 (ARPU in PLN) Stabilization of prepaid base Stable base of 2.9m services, reflecting the actual number of users Dynamically growing ARPU, resulting from the elimination of one-time use cards from the base and the expiration of registration promotions The Roam Like at Home regulation will be reflected in the ARPU of the prepaid segment 3.83m 2.88m 2.85m Q2'16 Q1'17 Q2'17 Pay Telefonia TV komórkowa Internet Mobile telephony +8.5% Q2'16 Q1'17 Q2'17 37

38 Historical pro-forma financial performance Full year consolidation of Midas Group results

39 Historical pro-forma results mpln Revenue 9,349 9,412 9,650 Operating costs (1) 5,597 5,771 5,999 EBITDA 3,757 3,677 3,660 EBITDA margin 40.2% 39.1% 37.9% CAPEX (excl. frequencies) CAPEX/revenue 7.4% 8.6% 6.2% FCF 1,004 1,341 1,557 Source: pro forma, Cyfrowy Polsat, Polkomtel, Aero2 (previously Midas), consolidated financial statements and internal analysis, unaudited Note: (1) Costs exclude depreciation, amortization, impairment and liquidation 39

40 Q2 17 financial results

41 Results of the Group revenue 2, % 2,470 EBITDA % 964 Q2'16 Q2'17 Q2'16 Q2'17 1,404 LTM FCF +26.1% 1,770 net debt/ebitda LTM 2.74x Q2'16 Q2'17 Q2'17 Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 41

42 Results of the segment of services to individual and business customers mpln Q2 17 YoY change Revenue 2,140 3% Operating costs (1) 1,342 1% EBITDA 808 7% EBITDA margin 37.8% 1.4pp Revenue level as a result of higher revenue from sales of equipment and higher wholesale revenue as well as lower retail revenue Cost level mainly affected by higher technical costs and IC settlements, distribution, marketing, customer relation management and retention and lower content costs Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis Note: (1) Costs exclude depreciation, amortization, impairment and liquidation 42

43 Results of the broadcasting and TV production segment mpln Q2 17 YoY change Revenue % Operating costs (1) % Results of the segment under pressure from the high base effect resulting from the financial success of UEFA EURO 2016 broadcast by TV Polsat in Q2'16 EBITDA % EBITDA margin 40.0% -0.1pp Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis Note: (1) Costs exclude depreciation, amortization, impairment and liquidation 43

44 (mpln) (mpln) Revenue and EBITDA change drivers Revenue EBITDA YoY change +1% +27m YoY change +3% +29 m 68 2, , % 39% Revenue Q2'16 Segment of services to individual and business customers Broadcasting and TV production segment Consolidation adjustments Revenue Q2'17 EBITDA Q2'16 Segment of services to individual and business customers Broadcasting and TV production segment EBITDA Q2'17 EBITDA Margin Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 44

45 Revenue structure Retail revenue Wholesale revenue Sale of equipment mpln ,587 1,533 3% 1% 27% Decrease of revenue from voice services (mainly due to the change in the model of offering equipment to residential customers, a lower number of prepaid activations, which is related to the statutory obligation of prepaid SIM registration and the resulting elimination of one-time use SIM cards from the base, as well as the high level of competitiveness on the telecommunications market) partially compensated by higher revenue from pay TV services and Internet access services and data services Increase in wholesale revenue primarily as a result of growing revenue from IC settlements. Dynamic of growth of wholesale revenue was distorted to a significant extent by the effect of a high base in the comparative period, as in Q2 16 this item comprised additional revenue related to the multichannel monetization of sports rights to the EURO UEFA 2016 tournament Other revenue % Higher revenue from sale of equipment, mainly due to the growing share of installment plan sales of equipment, as well as to the customers increased preference for more advanced and expensive devices Q2'16 Q2'17 Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 45

46 Operating costs structure Depreciation, amortization, impairment and liquidation Technical costs and cost of settlements with telecommunication operators Cost of equipment sold Content cost Distribution, marketing, customer relation management and retention Salaries and employee-related costs Cost of debt collection services and bad debt allowance and receivables written off Other costs Q2'16 mpln Q2' % 6% 1% 6% 7% 3% 0% 27% Decrease in amortization costs among others due to the termination of the amortization period of certain intangible and legal assets, acquired alongside Polkomtel in 2014, as well as lower costs of depreciation of the telecommunications infrastructure which is connected with the termination of the depreciation period of selected elements of this infrastructure Technical costs resulted from higher IC costs related to the popularization of tariffs offering unlimited connections to other telecommunication networks and higher costs related to the wholesale purchase of traffic in international roaming Lower content costs are due primarily to the high base effect higher costs of sports licenses and internal production were recognized in the comparative period in connection with the broadcasting of UEFA EURO 2016 and was partially offset by higher costs of programming licenses connected with the expansion of the programming packages chosen by our pay TV customers Higher distribution, marketing, customer relation management and retention costs among others due to the recognition of higher marketing costs and higher costs of customer service and retention, which is associated with an increase in per hour rates resulting from an upward pressure on wages on the Polish labor market Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 46

47 (m PLN) Cash flow statement in H1 17 FCF H1 17: PLN 946m ,519.4 CAPEX 1 /revenue 7.9% , , ,362.6 Cash and cash equivalents at the beginning of the period Net cash from operating activities Net cash used in investing activities Payment of interest on loans, borrowings, bonds, finance lease Repayment of loans and borrowings capital Bonds redemption and early redemption fee Loans and borrowings inflows Other Cash and cash equivalents at the end of the period Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis Note: (1) Expenditures on the acquisition of property, plant and equipment and intangible assets 47

48 Clear stabilization of generated FCF mpln Q2 17 H1 17 Adjusted FCF after interest Net cash from operating activities Net cash used in investing activities Payment of interest on loans, borrowings and bonds monetization of UEFA Euro 2016 low CAPEX annual UMTS fee, coupon for CP bonds high EBITDA coupon for CP bonds FCF after interest no adjustments - - Adjusted FCF after interest Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 LTM PLN 1,770 m Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 48

49 (mpln) The Group s debt mpln Carrying amount as at 30 June 2017 Combined Term Facility 10,115 Notes 9% by type Debt structure 2 by currency Revolving Facility Loan 500 Series A Notes 1,018 Leasing and other 29 Gross debt 11,661 Cash and cash equivalents (1,363) Net debt 10,299 EBITDA LTM 3,753 Banking debt 91% Debt maturing profile 2 7,439 PLN 100% Total net debt / EBITDA LTM 2.74 Weighted average interest cost 1 3.3% 1 Prospective average weighted interest cost of the Combined SFA (including the Revolving Facility Loan) and the Series A Notes, excluding hedging instruments, as at June 30, 2017 assuming WIBOR 1M of 1.66% and WIBOR 6M of 1.81% 495 1,068 1,173 1,000 2 Nominal value of the indebtedness as at 30 June 2017 (excluding the Revolving Facility Loan and leasing) Combined SFA Series A Notes Source: Consolidated financial statements for the 6 month period ended 30 June 2017 and internal analysis 49

50 Network roll-out strategic directions

51 Key assumptions relating to mobile network roll-out strategy Implications of the auction Sferia s license Further network development In auction the 800MHz frequency band reached the highest prices in Europe Polsat Group s analyses indicate that cooperation with entities who purchase radio frequencies at such a high price would be unprofitable and irrational for the company as well as its customers A scenario of broader cooperation based on technology and service equivalence could result in a change of these business assumptions Through a majority 51% stake in Sferia, Polsat Group has a 5MHz of block in the 800MHz band, the reservation of which expires on 31 December 2018 Prices from the auction in 2015 will constitute the basis for the valuation of the cost of the renewal of the reservation According to Polsat Group, the renewal of Sferia s reservation at this price it is not economically justified Roll-out based on the existing frequency resources of Polkomtel and Aero2 Continued LTE1800 roll-out supported by 2600 MHz bands and ODU-IDU technology ODU-IDU technology implementation enlarges effective coverage of a single LTE 1800 base station (BTS) even up to 3x Next steps: refarming of 900 MHz (in progress) and eventually 2100 MHz frequency bands 51

52 capacity bands coverage bands Stable, favorable competitive position To be refarmed to LTE standard Refarming in progress 1 st step: to HSPA+ standard Possibility of refarming to LTE standard Polkomtel & Aero2 T-Mobile Play Orange 800 MHz total: 30MHz 10MHz until 2031 LTE 5MHz 25 MHz until 2031 LTE 10MHz until 2031 LTE 5MHz until LTE 900 MHz total: 35MHz 5MHz until G/3G 5MHz until G 3MHz G 4MHz do G/3G 6 MHz until G 5MHz until G/3G 7MHz until G/3G 1800 MHz total: 73.4MHz 19.8MHz until LTE 15MHz until G/LTE 12.6MHz until and G/LTE 2.4 2G 10.0MHz until G/LTE 7.2MHz 7.6MHz until until and G 2G/LTE 2100 MHz total: 60MHz 15MHz until G 15MHz until G 15MHz until G 15MHz until G/LTE 2500/2600 MHz total: 120MHz 50 MHz TDD until LTE 15MHz until 2031 LTE 15MHz 70 MHz 20MHz FDD until 2031 LTE 20MHz until Oczekiwana 2031 dostępność: until LTE LTE Dotted squares represent frequency blocks used mainly for voice services, while solid filling represents frequency blocks used mainly for data transmission; 2G: GSM/GPRS/EDGE, 3G: UMTS/HSPA/HSPA+ Source: UKE, own expertise Only main frequencies are presented (excluding: Polkomtel s 2,5MHz 420MHz, each of the 4 biggest MNO s 5MHz 2100MHz TDD) 52

53 Capex excl. frequencies ranged between PLN million in the past Pro forma cash CAPEX and guidance CAPEX guidance decomposition <10% of revenue 34% 66% 13-15% weight in total revenue <10% 2-3% guidance TV & pay-tv telco blended TV and pay-tv; 14% administr. & other; 4% telco IT; 20% CAPEX split Frequencies related payments (PLNm/EURm) telco network (incl. MDS); 62% UMTS annual fee 2.6GHz purchase 1.8GHz renewal 53

54 Additional information

55 Major assumptions of capital resources management policy Main goal Permanent reduction of Polsat Group s debt to the level of net debt /EBITDA <1.75x Reaching the net debt/ebitda ratio of <1.75x will enable the release of securities established in accordance with the existing facility agreement and improve the flexibility of the Group s operations Additional goal Return to regular, predictable dividend payments for the Company s shareholders The assumptions of the dividend policy will be subject to periodic review, especially after the refinancing which is expected to take place in

56 Assumptions of the dividend policy net debt / EBITDA recommended dividend payout ranges > 3.2x no dividend payment proposed 2.5x 3.2x PLN m 1.75x 2.5x 25-50% of consolidated net profit < 1.75x % consolidated net profit net debt / EBITDA: calculated according to balance sheet values, based on the most recent, reported quarterly results net debt includes all the debt instruments, including also the pay-in-kind bonds net profit: consolidated net profit of the Polsat Group for the previous full financial year 56

57 Shareholding structure Shareholder Number of shares % of shares Number of votes % of votes Reddev Investments Limited (1), including: 154,204, % 306,709, % - privileged registered shares 152,504, % 305,009, % - ordinary bearer shares 1,699, % 1,699, % Embud Sp. z o.o. (2) 58,063, % 58,063, % Karswell Limited (2) 157,988, % 157,988, % Sensor Overseas Limited (3), including: 55,092, % 82,005, % - privileged registered shares 26,912, % 53,825, % - ordinary bearer shares 28,180, % 28,180, % Others 214,196, % 214,196, % Total 639,546, % 818,963, % Note: (1) Reddev is an indirect subsidiary of Mr. Zygmunt Solorz (2) Entity controlled by Mr. Zygmunt Solorz. (3) The dominant entity of Sensor Overseas Limited is the EVO Holding Ltd., a subsidiary EVO Foundation. As of July 17,

58 KPIs retail customer services SEGMENT OF SERVICES TO INDIVIDUAL AND BUSINESS CUSTOMERS 1) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Total number of RGUs 2) (contract + prepaid) CONTRACT SERVICES Total number of RGUs, including: Pay TV, including: Multiroom Mobile telephony Internet Number of customers ARPU per customer 3) [PLN] , Churn per customer 4) 9.1% 9.5% 10.1% 10.2% 10.0% 10.0% 9.8% 9.0% 8.5% 8.3% 8.3% 8.5% 8.6% RGU saturation per one cusotmer Average number of RGUs, including: Pay TV, including: Multiroom Mobile telephony Internet Average number of customers PREPAID SERVICES Total number of RGUs, including: Pay TV Mobile telephony Internet ARPU per total prepaid RGU 5) [PLN] Average number of RGUs, including: Pay TV Mobile telephony Internet ) Customer - natural person, legal entity or an organizational unit without legal personality who has at least one active service provided in a contract model. 2) RGU (revenue generating unit) - single, active service of pay TV, Interneet Access or mobile telephony provided in contract or prepaid model. 3) ARPU per customer - average monthly revenue per customer generated in a given settlement period (including interconnect revenue). 4) Churn - termination of the contract with Customer by means of the termination notice, collections or other activities resulting in the situation that after termination of the contract the Customer does not have any active service provided in the contract model. Churn rate presents the relation of the number of customers for whom the last service has been deactivated (by means of the termination notice as well as deactivation as a result of collection activities or other reasons) within the last 12 months to the annual average number of customers in this 12-month period. 5) ARPU per total prepaid RGU - average monthly revenue per prepaid RGU generated in a given settlement period (including interconnect revenue) 58

59 Key financial data mpln 2014 Q1'15 Q2'15 Q3 15 Q Q1 16 Q2 16 Q3 16 Q Q1 17 Q2 17 Revenue Retail revenue Wholesale revenue Sale of equipment Other revenue Operating costs Content costs Distribution, marketing, customer relation management and retention costs , Depreciation, amortization, impairment and liquidation Technical costs and cost of settlements with telecommunication operators Salaries and employee-related costs Cost of equipment sold Cost of debt collection services and bad debt allowance and receivables written off Other costs Other operating income.,net Profit from operating activities Gain/loss on investment activities, net Finance costs Share of the profit of a joint venture accounted for using the equity method Gross profit for the period Income tax Net profit for the period EBITDA EBITDA margin 37.0% 38.5% 39.6% 38.5% 33.8% 37.5% 35.8% 38.3% 40.1% 35.6% 37.4% 38.9% 39.0% 59

60 Glossary RGU (Revenue Generating Unit) Customer Contract ARPU Prepaid ARPU Churn Usage definition (90-day for prepaid RGU) Single, active service of pay TV, Internet Access or mobile telephony provided in contract or prepaid model. Natural person, legal entity or an organizational unit without legal personality who has at least one active service provided in a contract model. Average monthly revenue per Customer generated in a given settlement period (including interconnect revenue). Average monthly revenue per prepaid RGU generated in a given settlement period (including interconnect revenue). Termination of the contract with Customer by means of the termination notice, collections or other activities resulting in the situation that after termination of the contract the Customer does not have any active service provided in the contract model. Churn rate presents the relation of the number of customers for whom the last service has been deactivated (by means of the termination notice as well as deactivation as a result of collection activities or other reasons) within the last 12 months to the annual average number of customers in this 12-month period. Number of reported RGUs of prepaid services of mobile telephony and Internet access refers to the number of SIM cards which received or answered calls, sent or received SMS/MMS or used data transmission services within the last 90 days. In the case of free of charge Internet access services provided by Aero 2, the Internet prepaid RGUs were calculated based on only those SIM cards, which used data transmission services under paid packages within the last 90 days. 60

61 Contact Investor Relations Łubinowa 4A Warsaw Phone: +48 (22) / +48 (22) / +48 (22) ir@cyfrowypolsat.pl