Ladies and gentlemen, thank you for standing by. I would like to welcome you to the Orange Polska Q3 2022 results Conference Call. My name is Leszek Iwaszko, and I'm in charge of investor relations. At this time, all participant lines are in listen-only mode. The format of the call will be a presentation by the management team, followed by question and answer session. Speakers for today will be Julien Ducarroz, the CEO of Orange Polska, and Jacek Kunicki, CFO. Without further ado, I would like to pass the line to Julien to begin the presentation. Good morning, ladies and gentlemen. Welcome everyone to our conference summarizing Q3 and nine months of 2022. I will go through the main business update, and then Jacek will tell us about the financials, and we will move on to the conclusion and take your questions at the end. Going on slide 5. I'm happy to tell you that our business performance in Q3 was strong and consistent with previous periods, despite difficult macro environment resulting from rising inflation and high energy prices. Customer base expansion in our key subscription services was solid and steady. ARPU continued to grow. Handset sales were particularly strong as our commercial actions were well received by our customers. ICT had another strong quarter of revenue growth as we benefit from our diversified portfolio of competencies and demand for digitalization. Wholesale also nicely contributed to our results. As you know, as part of the group strategy, we developed this area of business, so I'm happy that we have a new customer Play that will use our fiber network in regulated zone and built within POPC project. Similar agreement was signed with them by the FiberCo. This will improve monetization of our infrastructure. Financial results were strong with marked growth in revenue and EBITDA despite continued burden from energy prices. We are aware that inflation continued to accelerate, and this is forcing us to act both on the top line and cost savings, at least to partially mitigate its impact. On the front of energy, we have intensified measures to reduce our CO2 emissions by securing more energy from renewable sources and reducing energy consumption. We are also supporting our customers in more energy efficient usage of our services and equipment. Moving on to the next slide. We present here performance of our main financial metrics after nine months versus full-year guidance. I'm pleased to say that we are well on track to reach our objective. Our revenues were up 4% over nine months. This year-on-year dynamic significantly accelerate in Q3 because of our strong performance, but also because it was no longer affected by negative regulatory impact. EBITDA is growing close to 4%. Obviously, we continue to be confident that we are able to deliver growth for the full-year. eCAPEX this year is particularly back-loaded because of phasing in mobile network investment and timing of our asset disposal. For the full-year, we expect to land close to last year level. This result proved that our business is resilient, and once again, we adapt well to a turbulent environment. Going now on the next slide about commercial activity. Our commercial results in Q3 were solid. Net customer addition in convergence and fiber were slightly better than last year, despite intensifying competition. Fiber customer base is 27% higher than a year ago. We now have more fiber than copper broadband customer, which symbolically mark our typical technological transformation started around 7 years ago. Our fiber reach approached 6.8 million households, almost 50% of all households in Poland. Apart from POPC network, we grow it almost entirely through wholesale partnership, mainly the FiberCo. This lead to more operating expenses, but allow us to save OPEX and have a lighter balance sheet. In mobile handset net customer additions were a bit lower. This is due to elevated churn of Ukrainian customer from our flex offer that we acquired in over H1. Customer base expansion in our main brand, both in B2C and B2B, were in line with previous quarters. ARPU in convergence, broadband and mobile continued to grow in the range of 2%-4%. ARPU growth is essential for us to at least partially mitigate impact of inflation, and we need new action to sustain and rejuvenate this space. Going on to the next slide, which we want to explain a bit where we stand in this difficult environment. You know that macro environment is deteriorating. CPI inflation in Poland exceeded 17% and keeps on increasing. This is exacerbated by 20% growth of minimum wage in Poland starting in 2023. We must prepare for its elevated level in the quarters to come. It is affecting us mainly in the four following area. Energy, rental contract for offices, typical infrastructure space and point of sales, labor cost, and finally, as well, labor-intensive services like cleaning or maintenance that we contract from third party. We are launching action to mitigate at least part of its impact. We need to act both improving our top line growth and finding new cost saving. Regarding top line action, we continue with our More for More policy, which we initiated already a few years ago. In Q3, we increased price of the main convergence package in return for more data and content. This was followed by increase of the pay-as-you-go tariff in prepaid in the beginning of October. Yesterday, you might have noticed that we reshuffled mobile tariff in B2C, repealing entirely the low-end tariff plan and increasing remaining tariffs by 5 PLN. In return, we offer more data and a new feature, Cyber Protection, which is a unique solution on the market, increasing security of our customer against cyber attacks. In parallel to top line action, we continue to transform our costs. We fully hedge energy costs for the next year via green PPA with rates favorable versus the market. Hopefully energy costs will not grow in 2023. I'm saying hopefully because one of these agreements has a condition precedent that needs to be met. We also look at other cost areas to take more radical stance in some of them, for example our properties. Just one example, we are going to sublease part of our headquarters as we need less office space. The environment is very volatile and we need to be very agile and prepare ourselves for different scenarios. This is all from me for now. I hand the floor to Jacek Kunicki. Thank you, Julien. Good morning, everyone. Let's start the financial review on slide 10 with highlights of our performance. Our financial results in Q3 were very good, with strong growth of revenues and profitability. Another quarter when solid underlying performance has mitigated the headwinds from a challenging environment. The top line growth accelerated to more than 8%. This was due to solid growth in all core areas and also due to comparable base for the wholesale termination rates. The EBITDA rose by almost 4% year-on-year. We benefited from high operating leverage and ongoing cost savings. They have mitigated the impact of surging energy prices. Looking at net income, please note that last year we benefited from a substantial gain in Q3 on sale of shares of our FiberCo. Excluding the spin-off impact, the net income was +8% in Q3 year-over-year. It was driven by higher EBITDA and less depreciation. Q3 CapEx was up since last year. The year-over-year growth reflects more investments in mobile and less fiber asset sales to the FiberCo. Finally, the year-over-year evolution of cash flow reflected an exceptional decrease of working capital last year in Q3, while the year-to-date cash generation has stayed plus 12% year-over-year. Let's now review our performance in more detail, starting with the top line. As I mentioned, the revenue performance was strong this quarter. It expanded by 8% year-over-year. When comparing the dynamics with previous quarters, please note that it was no longer affected by negative regulatory impacts. Mobile and fixed termination rates have been cut in July 2021, so starting with Q3. It is the year-on-year comparison is no longer impacted by the different rates of the MTRs and the FTRs. Our underlying performance was consistent with the prior quarters and based on sustainable demand for our services. Firstly, core telecom services continued to benefit from a simultaneous expansion of their customer bases and their ARPU. These are key for results as they generate a high variable margin. The pace of growth has decelerated slightly compared to the dynamics of the previous quarters. It's due to rising comparable rates of the ARPU and in particular its roaming part, which has regained momentum from H2 of last year onwards. Secondly, IT and IS had another strong quarter with more than 20% revenue expansion. We have once again demonstrated our ability to make the best of market opportunities and adapt to a rapidly changing environment. Finally, equipment revenues were up by 17% as our commercial actions attracted customer demand. The other revenues category was boosted by higher output prices in energy retail. Now let's switch to operating profitability on slide 12. Our EBITDA increased by 3.9% year-over-year in the Q3. The strong performance was achieved due to very good growth of the direct margin and limited growth of indirect costs. The sustainable expansion of the direct margin is absolutely key to the EBITDA growth due to the high operating leverage. This is how we are converting the strong core revenues into profits. Small growth of indirect costs was an outcome of surging energy costs and continued cost savings to mitigate them. Q3 energy costs grew by over PLN 60 million year-over-year due to a steep price inflation this year, which results from the market crisis. We have been able to mitigate roughly two-thirds of this impact with savings in indirect costs, generated mostly through headcount and process optimization as well as less advertising, promotional, and G&A expenditures. Looking forward, please note that elevated energy prices will continue to weigh in on our profitability in Q4. However, as mentioned by Julien, we are adequately hedged for 2023 via purchases of energy from wind farms at attractive rates when you compare them to the forward prices, which are currently available on the market for 2023. Over to cash generation on slide 13. We generated around PLN 830 million of organic cash flow in the nine months of this year. It was PLN 90 million or 12% more than last year. If we look on the year-on-year evolution, there are three key elements to this good result. First, higher EBITDA translated into PLN 113 million more cash from operating activities before working capital. Secondly, around PLN 200 million lower net cash CapEx, including the sale of assets to our FiberCo JV. The CapEx profile in 2022 is significantly back-end loaded due to the timing of mobile access network renewal, and this is visibly impacting this year's cash generation. Thirdly, working capital requirements was higher due to different timing of some payments, and also it reflected the growth of receivables relating to much higher equipment sales this year. Good cash generation further strengthened our balance sheet, which continues to be very solid. Financial leverage stood at 1.2 times EBITDA at the end of September. Obviously, this does not include the PLN 350 million cash outlay for renewal of the existing 2.5 GHz spectrum, which was made in October, or the highly anticipated 5G spectrum purchase. Nonetheless, our balance sheet is very solid, giving us the flexibility needed for the turbulent times ahead. That's all from me, and I hand the floor back to Julien. Thank you very much. Thank you, Jacek. Let me briefly summarize our presentation and present our focus for the next months. Our financial results for nine months were strong, coupled with a satisfactory commercial performance. We are delivering growth despite more than PLN 160 million higher energy costs to date. This was a huge effort to make, and I'm very pleased that we are on our way to reach our full-year objective. As we are now entering the yearly peak season, we are focused on maximizing our commercial goal. Our focus going forward is quite clear. We are working hard to adapt our business to accelerating inflation, which required action on a lot of fronts. We will update you with our effort together with full-year result. This is all from us. We are ready to take your question. Thank you. We will now be moving into the question and answer session. If you are dialed in via the phone and would like to ask a question, please press star two on your keypad and wait for your name to be called. You may also ask a voice or text question using the web platform. Once again, if you would like to ask a question, please press star two on your keypad or press the question button on the web platform. We have the first question coming from Paweł Puchalski from Santander. Paweł, your line is open. Please go ahead. Hello, Paweł Puchalski here. Two questions. First of all, you are well mentioning inflation in every second sentence. I understand that will affect your, what will be the growth of your OPEX in 2023 assuming inflation remains at the current levels? That would be question one. Question two, I noticed CFO said that you are actually trimming your advertising and promotion spending. Well, my understanding would be that you have already cut it in Q3. How much you spent below budget in quarter three? Because maybe that's the part of positive surprises at EBITDA, or I get it wrong. Thank you, Paweł. Thank you for those questions. Maybe starting with the A&P, I think it's fair to say we adjust the A&P expenses to the market pace and to the dynamics. On one hand, we can expect much more A&P expenses in Q4 versus the ones that we've seen in Q3, as this is the high commercial season. If you ask me if this had made a difference for the EBITDA, no. EBITDA grew on the back of a very strong performance in the direct margin. Direct margin was driven up by very solid results. Well, thanks to the core services, also thanks to wholesale services and basically we had all major revenue lines contributing to the good performance through profitable expansion of revenues. You see that. You know, when you compare the evolution year on year, and you see quarter after quarter, you know, core services keep the very good pace of growth. We have, again, double-digit growth in ICT. We have strong performance from wholesale. This is all really contributing to our ability to post another quarter of solid EBITDA growth, and this is in spite of the high costs of inflation. Regarding inflation, well, this is obviously something which will impact everyone's cost base. While we'll do the next year's guidance, you know, when we publish the full-year results, when we have finished our planning, and when we are able to share with you what the outcome will be or what the expected outcome will be. We thought that inflation is partly with us in the results that you see right now, and it will continue to stay with us for the quarters to come. I would say first, obviously we see that this year's costs of energy has grown a lot. As I mentioned, this was PLN 60 million above year-over-year just in quarter three. So we can expect the full-year total to be close to PLN 200 million. This will stay elevated next year. We were able to hedge this adequately, but it doesn't mean that the costs will drop. I would say if we can achieve flattish evolution of costs between this year and next year, this will be something which is already well a good mitigation plan. Obviously, we will have impact on the operating costs in other areas. We spent roughly PLN 400 million yearly on different rentals, telco infrastructure, point of sale, offices, so on. Many of those contracts are in the previous year's inflation, so we don't see the impact of this yet. We will see the impact of some of those contracts hitting the profits of next year. Obviously not all energy can be hedged, so electricity, yes. We spend PLN 20 million on gas, central heating and so on, and other utilities such as cleaning, sewage, et cetera. This will be growing in line with inflation. You can see that there is, I would say, additional factors that will be visible in the future. This is why it is absolutely key for us to maintain a very rigorous stance towards costs and to have new initiatives being launched. Julien mentioned service in the offices. You know, I think there is a wide transformation of the real estate portfolio that we still are in the progress of making. It's also key for us to maintain the value strategy and to make sure that we are able to keep up with the pace of growth of the cost base by adequately adjusting the ARPU pricing levels. For the final outcome of those, you will need to be patient and wait for us to come in with the guidance in February. Next question came to us through text. It's a question from Jakub Viscardi from BOŚ. The question is: What would be OPL's net debt at the end of Q3, including proportionally consolidated net debt of the FiberCo? It's a good question. However, we don't consolidate the FiberCo. I would say the FiberCo is an independent company. It's a co-controlled company, and it has its own credit facility, a non-recourse credit facility. It has its own policy of serving wholesale customers, both OPL, but also other operators. I do believe over time we will see that more and more operators will become significant clients of the FiberCo. Its business case is built and realized based on the explicit assumption of sustainability of that entity. Since there isn't any recourse of the FiberCo debt to OPL, and we do not consolidate its EBITDA, I don't think it's a good measure to compare the net debt or any proportion of net debt of the FiberCo to the EBITDA of Orange Polska. Because please do remember that we do not include the flows, right, flows that the FiberCo is achieving on its serving the wholesale customers. We received three questions by text from Robert Rżepkowski from Haitong. The first question: Having in mind recent changes in your product pricing, what level of ARPU growth would you expect within 2-3 quarters, next 2-3 quarters, having in mind so far it grows at near low single-digit pace, and hard to say it reflects recent price increases? This is the first question. The second question is about equipment sales. Could you explain what particular trend is behind strong equipment sales? Is it a result of customer demand or other result of inflation? Also, could you comment on profitability of equipment sale? If possible, what is it now versus what it was 2-3 quarters ago? Okay. Thank you for those. Starting with the ARPUs, it's fair to say we're happy with the commercial equation that we're happy to combine simultaneously growth of the ARPU and growth of the customer base, conversions in mobile and fixed broadband. These are healthy dynamics. When you look on the level of the ARPU growth, it is single digit. It has slightly decelerated, but as I mentioned, it's due to the growing comparable base last year. This is also linked with the post-COVID roaming recovery that we've been observing since H2 of last year. Now, obviously, when you are analyzing the ARPU drivers going forward, there is the impact of the previously made price adjustments through the More for More strategy, which obviously over time is progressively decelerating. It is fading away. Then you have the future impact of the pricing adjustments that we have done this year through the more elements of the More for More strategy that you have seen. It is, you know, visible through the recent yesterday's change of the mobile pricing. We've changed the pricing of Orange Love in Q3. We've changed the pricing of some of the prepaid tariffs. We've introduced the additional fee, which is going to apply after the end of the contract. All of those elements are there to sustain good ARPU dynamics and to enable us to continue to grow ARPU and customer base in the future at a satisfactory pace. Now, obviously, the level of growth of the ARPU will depend on the pace at which we will monetize and which we will implement those price adjustments. Looking at the patterns of customer usage, I do believe that customers will like the new tariff. They will enjoy the different possibilities that we are giving as these tariffs are not only providing us with an additional ARPU, but we are giving more benefits for the customer. Let's wait and observe. I am hopeful that we will be able to have satisfactory output trends over the future. Julien, you wanted to comment on equipment? Yeah. Also on equipment, I would say if you follow the market, the total market, we cannot say obviously that there is a specific boom. There is always related to one particular brand launch. I will say a little boost when it happened toward the end of Q3. I would say it's our good offer. We had a special combo during summer, which is helping to boost the performance and as well I think an overperformance within the market of equipment that is growing in a low single digit, as you know. I do believe when the full result of Q3 will be available, you will see that our performance was better than the rest of the market. I don't think obviously given the economic context, we can expect a big boom as a category of equipment beyond some one-off, like the launch of a new expected brand. The first question from Konrad Księżopolski about ICT. Would you comment how changed profitability of ICT revenues in Q3 2022 versus a year ago? All right. Thank you for this question. Well, I guess what we have in ICT is that its margin overall, it varies from one company to another. It's not a consistent, I would say block of services. We have services like hosting collocation, which are with a high variable and high, let's say direct margin because they do involve some CapEx like data centers. We have IT companies or two IT companies again, which will deliver quite good margin in terms of percentage wise. We have integrated solutions which has been dropping in the I would say margin viewed as percentage of sales because we are reselling a bit more licenses there. This is a company that had to adjust to a rapidly changing demand as the traditional I would say wave of services and orders from the public sector has shrunk over the last two years. They have adjusted wonderfully to be able to grow their EBITDA and to be able to sustain very good dynamics. When we are thinking, does this imply that our ICT subsidiaries, they have unitary margins a bit lower than in the previous year? Yes. However, we see that in all subsidiaries we have a growth of the direct margin and a growth of the EBITDA. This is definitely positively contributing to the EBITDA of Orange Polska. It basically reflects a different product mix where we are simply adjusting to a change in demand. Demand from the public sector, more demand from the lower unit margin, but it gives us an opportunity to grow revenues dynamically and to achieve positive contribution, positive direct margin, and positive EBITDA from this. This is again helping Orange Polska. We need to remember Orange Polska has a large cost base, which is fixed cost base. We have then quite a high operating leverage. In ICT with every millions of PLN of additional EBITDA, this really helping the overall picture. We have a voice question coming from the line of Dominik Niszcz from Trigon. Your line is now open. Go ahead with the question. Good morning. Dominik from Trigon here. My question is on your KPIs, because when I look at Q3, I actually do not see a big impact of Play on TPC and convergence offer. You actually had more convergent clients added in this Q3 than last year. After a couple of months, can you please comment on what how you see the impact of their offer on the market and on your commercial performance? Because you have definitely week-to-week data. If you could comment on this. The second short one is on leasing. You mentioned twice about sub-leasing of your office space. Do you have any agreements already or maybe just a plan? Because the size of this agreement. Thanks. Thank you for the question, Dominik. On the UPC and Play, obviously I'm not in a position to comment on their results. As I stated, we do see our commercial result strong. You mentioned the improved performance. You know, we see our net adds being the result of gross adds and churn align with our plans or indirectly, at least from our perspective, we are delivering what we said despite what you commented of potential change on the market. I think you will conclude when they publish their result. On our side, we are satisfied with our commercial performance in both an economic context that is not easy and as well competition that is obviously looking after convergence, following some move they did. Well, on the leasing, we don't have yet an agreement in place. We are just preparing, and it will be one floor in the main building of the headquarters. I think we wanted to mention that more symbolically, because financially, at the size of our property cost, it will not be a game changer. We just wanted to, you know, highlight some of the initiative and probably when we meet again or later on we will disclose more initiative in this direction of trying to decrease our cost. Obviously this is not at the expense of the employee experience or the employee comfort. This is more as a result of, I would say, our new ways of working and our assessment of what is needed capacity or floor size to accommodate our policy, which is two days in the office per week. We will provide more detail, but again, you know, financially don't look at it as a key initiative of 2023 to mitigate the inflation, but more as one of the many initiative we are currently preparing to mitigate the cost increase in 2023 in the area of rent and facilities. Okay. Thank you. Okay, next question that came to us via text from Marcin Nowak from Ipopema Securities. Regarding price hikes from yesterday, aren't you afraid that due to terminating the lowest postpaid plan, there is a risk of more price-sensitive customers moving away from postpaid to prepaid, to either prepaid or other brands? Okay, thank you for the question. Well, I think the answer is part in the question in the sense of, for us it was both, I would say a readjustment internally between our portfolio, but as well, you know, a confirmation of what we said that we want to continue the market repair and the More for More strategy. For our core portfolio, which is Orange brand, we want to step up the entry price. Then as you said, Orange is quite strong with our brand in the nju prepaid and to some extent, as well, Flex that is performing very well. I would say our repositioning is both a portfolio repositioning to have a clear distinction between the different products, Orange, nju and prepaid, but as well our belief that we shall continue to adjust our pricing in the direction of the More for More and the market repair, especially in this time of high inflation. Yes, I mean, it's risky, but we believe that's the way to go. Considering the impact that we see on the costs, we believe it's the right move. We have a follow-up question from Paweł Puchalski from Santander. Paweł, your line is open. Please go ahead. Hello again. You also published different communique today, stating that you will, well, lease 1 million fiber households network to Play. Is this agreement including an early bullet payment from Play, or they would only pay as they connect those clients? Can you give us some more light on this agreement? Well, Paweł, thank you for the question. We will not comment precisely on the contents of the different agreements. But I think it's a very valid question because it sheds light on us being, you know, disciplined in executing the strategy that we have for wholesale. When publishing the.Grow strategy, we mentioned that wholesale is one of the, you know, lines of business that we intend to develop a little bit more dynamically. You see that we are putting this into action. Yes, you know, we will have more fibers that will be leased to operators. Yes, we have done the FiberCo. I think this current news is important because it's a serious player on the market that is going to be a wholesale client for us. I do believe that it is good for the market. It's also good for us. The level of both pricing and margins that we have historically and that we do believe we will also be able to get in the future in wholesale is on a satisfactory level. It's good to balance the value creation by having a strong presence both on the retail front, in B2B, in B2C, including you know, ICT companies. Also to have a strong presence on the wholesale market, to be a credible player that can serve non-discriminatorily other operators, and that, you know, we are in many areas in a unique position to provide those services. This enables us to monetize our infrastructure. It enables us to get additional margin. I think it also is good for the industry and for the economy overall because it prevents too much of overbuild. This is definitely the route that we are pursuing, we are going to pursue, and we're satisfied and happy with the development. It's an important landmark in implementing the.Grow strategy. We will see more moves like this and more margin coming from wholesale as a result of such actions. Cannot comment precisely on the agreement, so appreciate that. We have a question from Wojciech Knap from NN Life Pension Fund. Wojciech, if you'd like to ask the question on the voice, please go ahead. Your line is open. Okay. Thank you very much. I thought that I send it by typing it. I would like to ask question about cable and fiber-based infrastructure. Do you have the same agreement with them that you can use this infrastructure or not? Can you repeat your question? Sorry. Do you have the same kind of agreement as Play have with you? Well, we have. That you can use. Wojtek, thanks for the question. Basically, as you know, for quite some time, we're pursuing this strategy of using access to third-party networks as a good supplement to the own fibers that we have deployed. We have now a substantial footprint, which is on a third-party infrastructure. It's also a substantial customer base that we have on those infrastructures, and we are gaining on those infrastructures. However, what we do is we target the pure fiber infrastructures. As of today, we don't consider or we haven't been selling our fiber FTTH services on coax infrastructure. While we are interested and openly interested in selling our FTTH services on XGTH infrastructure, we have not so far gone as far as to sell fiber to home services on coax infrastructure. Okay, thank you very much. Thank you. One more text question from Jakub Viscardi from BOŚ about PPA contract. Will your new PPA energy contract enter into force already in Q4 2022 as signaled previously, or in 2023? As a result, should we expect decreasing pressure on the regulatory energy cost in Q4 2023, quarter on quarter? Thanks for this question. The answer is we expect it now to enter in Q1 of next year. We have we are looking at Q4 still with elevated level of pricing for the energy purchase. Well, obviously we've secured some of the volumes, but it's not yet fully covered by the renewable energy contracts. One of the contract has experienced some delays in its implementation, and so we do expect that it will start from the Q1 of next year. A follow-up question from Marcin Nowak from Ipopema. Thank you for this question. Yes, it does include regulated areas and also the areas that we have developed through the use of the EU funds, so-called POPC Digital Poland. It's not including the unregulated areas. Generally, when we are thinking about wholesale strategy, we are thinking about granting or being much more open than we have been before in granting the access to other operators. Now, when it comes to the non-regulated areas, it's each time a question of individual agreements, conditions that we are able to reach with the operators or not. On this part, I don't have much more to comment. It's not that we are, you know, totally unopen for this, but nothing to share with you as of today, and we will keep you updated if anything changes in this domain. It appears we have no further questions, so I would like to close the call and thanks everyone for their participation. If you have any follow-up questions, please do not hesitate to contact us directly. Otherwise, thank you again and have a good day and see you back in February next year. Thank you. Thank you very much.