Hello, ladies and gentlemen, welcome to the Digi Communications N.V. Investors 2022 preliminary financial results presentation. A copy of the corresponding report is posted in the investor relations section of Digi's website at digi-communications.ro. The conference is being recorded today, a replay will be available shortly after. Details of the replay will also be posted on the website at digi-communications.ro together with the presentation. For today's call, please submit your questions for the Q and A session at the end of the presentation using the chat box. Before we can start, you are advised that certain statements in this conference call are forward-looking and therefore subject to material risks and uncertainties. Actual results could differ materially from those stated or implied by such forward-looking statements due to the risks and uncertainties associated with Digi Communications N.V., which include, amongst others, various risks related to our business, risks related to regulatory matters and litigation, risks related to investments in emerging markets, risks related to our financial position, as well as risks related to the notes and the related guarantees. I would like to introduce the speaker for today's call, Mr. Serghei Bulgac, the CEO of Digi Communications N.V. Sir, you may now begin the call. Good afternoon, ladies and gentlemen. Thank you very much for joining our 2022 preliminary result presentation call. Without too much delay, I will start going through the slides and the presentation and I hope we'll have the chance to have a good discussion at the end. 2022 was an outstanding year. Our results, our group results reached 1.5, well, reached EUR 1.5 billion. In fact, the results are in line with 2021 results, when we also achieved the sales figure of EUR 1.5 billion. The difference somewhat or the change is that this time, basically in 2022, we replaced fully the effect of Hungary with organic growth both in Romania and Spain. The EUR 1.5 billion top line figure is a result of 80% growth. Again, fully organic. That fully replaced the exit of Hungary from our portfolio of operations. This was based on primarily on the growth of RGUs in Romania and Spain. As you see, we increased our RGUs by 15% to 20.8 million units. EBITDA for the full year amounted to EUR 420 million. This is the first time we are reporting EBITDA. I believe we will continue doing so because we think EBITDA is more informative that in comparison with pure EBITDA. Romania, we surpassed EUR 5.4 million paid TV RGUs, 4.2 million broadband RGUs, and 4.9, almost 5 million, mobile RGUs at the end of last year. Spain exceeded 3.8 million mobile users and 1.1 million fixed broadband and fixed telephony users. 36% growth, which is outstanding. Going on, as you see, we generated close to EUR 1 billion in sales in Romania. We're very proud of this achievement. We exceeded EUR 500 million in Spain. Again, an outstanding result and a big thank you to all our Spanish colleagues, but also customers and partners. In Italy, we generated EUR 27, EUR 28 million in revenues. Our RGU numbers also look pretty round. More than 15.5 million users in Romania and almost 5 million users in Spain. Moving on. One second. We see the results of Q4 in a better focus, in a better spotlight. At the end of the year or in the last quarter, we generated sales of over EUR 400 million on a group level. EBITDA, this time EBITDA EUR 134 million and CapEx of EUR 160 million. Total for the year, revenues and other income amounted to EUR 1,617 million. EBITDA, again, the larger number, EUR 506 million and total CapEx, EUR 554 million. I mean, these numbers, again, look impressive to us, look outstanding. I hope you share our views. We certainly would like to continue on the foundation that was built both in Romania and Spain so far, to provide robust results going forward. Basically revenue. The dynamic of our business is unchanged, more or less unchanged. Revenues are predominantly a function of RGUs, both in Romania and Spain, with I mean, Spain grew 38%, Romania grew 11%. All that is really driven by the RGU growth. I mentioned EBITDA, EUR 506 million, adjusted for. I mean, for IFRS 16, it's a total of EUR 420 million, an increase of 6% year-on-year. Again, in this inflationary environment with costs increasing, we believe this is a good achievement. Of course, the result is not as high as the growth in RGUs or growth in the top line, but still, we believe it's a very good outcome year-on-year. I move on to the slide with customers. We generated 15% growth year-on-year in total RGU numbers. The number one market in terms of absolute growth remains Romania with 10% growth. Well, sorry. Excuse me. Romania and Spain are pretty close in growth in absolute terms. Romania is still the number one growing market. We increased from 14.1 million RGUs to 15.5 million RGUs in the year 2022. In Spain, we grew from 3.6 million to 4.9 million RGUs, comparable increase. Italy has increased 12% to 362,000 RGUs. Segment-wise, mobile is the largest segment in absolute terms, surpassing 9 million users in Romania and Spain, and also having 22% growth year-on-year. Of course, somewhat bigger in Spain on a percentage level, somewhat smaller in Romania for the moment. Fixed broadband is our second growing segment with 18% growth, again, surpassing 5 million RGUs. Pay TV is the second but the slowest growing segment with a total of 5.4 million RGUs at the year-end. Sorry, just, Oh, excuse me. I'd like to go back for a second. While we don't have slides here, while we don't have a presentation here, basically two markets are missing from these slides. Excuse me. We are a bit confused between our pages. Well, and the two markets, of course, are Portugal and Belgium. We are busy in both markets. As we were discussing in our previous calls, Portugal is more advanced. We are effectively building at this moment our mobile network and our fixed networks there. In Belgium, we're still in design and in preparation phase. We expect the build-out to start in the coming months. This is, like, a full overview of what we have done so far. In terms of what we want to do, I think for 2023, just to give you, let's say, a very rough, a very broad outlook, we want to continue our projects, nothing that we started is going to stop in 2023. However, the focus of our activity shifts, as we were discussing earlier, from Romania to markets outside of Romania, Spain, Portugal, Belgium. As build-out, as development of the fixed networks, has reached a maturity point in Romania, we do not expect this activity to be so important or so large in our operations going forward. However, we will continue development, developing and growing our mobile networks. Certainly, we also expect continued growth in the mobile segment in Romania going forward. In terms of Spain, Portugal and Belgium, again, we will continue our projects as we do now. We hope to continue expanding our mobile user base across the three markets. Of course, Portugal and Belgium have yet to start, but also expanding into fixed services in the three markets. Again, percentage-wise or effort-wise, we do expect that markets outside of Romania will overtake Romania in terms of CapEx, in terms of resources used, but also at some point in time, maybe three to five years from now, they should surpass Romania in terms of overall results. So, this is it. This is also a short outlook going forward. I hope it is helpful to all of you. I will go briefly to the financing page. What you see here, a total gross debt of EUR 1.27 billion, net debt of EUR 1 billion. Leverage of 3 x on a gross basis and 2.3 x on a net basis. In 2023, we have relatively small maturities, EUR 33 million, mostly coming in Spain. In 2024, we have maturities of EUR 120 million. As you see, a relatively conservative financial profile for the next 22 months. Well, this is it. This is my presentation. I hope it was concise, but also helpful. We invite you all to ask the questions, and I hope we can have a fruitful discussion or helpful discussion for all of us. We have our first question from Alvaro Mata. It's about the CapEx plan for 2023. This year our CapEx amounts... Excuse me, this year, meaning last year, in 2022, our CapEx amounted to somewhat over EUR 550 million, EUR 554 million to be more precise. We do expect CapEx to remain more or less flat for 2023 as well. As I said, there will be structural changes within the CapEx figure, we will spend a bigger portion of this money outside of Romania. Romania will use less than half of these funds. Okay. Excuse me. One second. Net leverage target in the medium term. Well, ideally, I mean, we're not, we do not favor big debt. We do not favor high leverage. On the other hand, you always have to balance your growth efforts, your growth intentions with your resources. All in all, we do expect leverage to remain, let's say in the medium term, in the 2x to 3 x area. When I stared answering the question, I think the intention was to say that we prefer two or less. However, probably it's more realistic to expect to have it between two and 3 x. Another question from Alessandro Cortano. In Q1, in context of high inflation, how do you see the price adjustment for services, also the impact on margin? Well, this is certainly an expected question, and this is something we discussed continuously in our previous calls. At this moment, we do not have plans to change our prices. We do not have plans to increase our prices. Basically, we are managing the inflation with our efforts, trying to optimize our cost structure and so on. So far, we are okay from this point of view. If there be further impact on the margin, possibly. I mean, some of the costs we are able to manage, some of the costs we're able to absorb. Yeah, ultimately, yeah, probably the effect will be a somewhat smaller margin. Hi. For a fixed product in Belgium. Sorry, a question from Russell Waller. For fixed product in Belgium, will you build or wholesale? If you want to build, would you consider joining one of the existing fiber roll JVs? We are early on in Belgium. We are open to all options, we're not closing any route for ourselves. Again, as we have previously discussed, as we discussed on our previous phone calls, conference calls, excuse me, our, let's say, the scenario that has the highest probability of achievement is our own network. We are not closed to any of the wholesale discussions or partnership discussions in terms of either, oh, sorry, backbone networks or last mile local loop access networks. We are open to all these discussions. Again, our, let's say, A scenario is building our own networks in partnership with Citymesh. Joshua Mills. There are press reports that you are planning to take remedies from Orange MásMóvil in Spain. Have you confirmed this? If so, what kind of remedies are they? Well, how much will you have to pay, and do you have financing in place for this? Look, look, I'm sorry this is. I mean, reading this, I'm smiling a little bit. We also read the press, probably we read the same press. Apart from this, there's little to comment. We don't have any visibility on the Orange-MásMóvil merger, or if there'll be remedies or if somebody will take and for how much. So far, these are just rumors and press clips. A question from Nora Nagy. Good afternoon. Thanks for the presentation. I have two questions. Do you consider to raise tariffs? This is the first question, and second one, on which cost lines do you experience inflationary pressure? Thank you. I think we touched on this, but maybe we just say it again. No, we are following the inflation. We are following our cost structure. At this moment, we are not considering changing the prices. We're not considering raising the prices. In terms of, in terms of where we are, where what are the areas where the costs grow? Well, last year, it used to be salaries and energy and rents, and this year it continues to be salaries for sure. On the energy market, there is an improvement in Romania this year. The government has passed a series of a number of laws at the end of last year, which somewhat altered the structure of the market and which, let's say, for now or at least for the moment or hopefully for the full of 2023, removed the risk of very high energy tariffs. Far, so good. A question from Mark Chapman. Could you give me some color on your thoughts on refinancing the 2025 bonds? Do you expect to address these maturities in 2023? Thank you for the question. We are thinking, we are considering refinancing the 2025 bonds. Somewhat, we still have a bit of time, possibly not or probably not too much of this. We do not consider this to be a very long period ahead of us. The idea is the following: as we all know, the bond markets have come back early this year. The bond markets are active. We are closely monitoring the situation, and if we find the situation, let's say, positive or, and the opportunity relevant, we will consider refinancing the bond. Whether it will be in 2023 or 2024, it's very difficult for me to say. We don't have immediate plans to refinance now, that's the only thing I can say now. Again, if we find a window, if we think the market is right, we will certainly want to refinance. Joshua Mills. Can you give me an update on the timing of your launch in Belgium and what your market share targets are, both in fixed and mobile? That's a bit, it's a bit premature to ask for a launch date for Belgium. As I said, we continue to be in the planning design phase. We do expect the build-out of the network to start in the coming months, in the coming few months or very few months. It's too early to say of the launch date. Peter Jurik. Could you discuss in more detail your plans for infrastructure build in the countries you are attacking? I think in Portugal you were studying own build versus network lease. What is the latest there? Are you indeed building your own network in Portugal? Similarly, in Belgium, you're discussing designing the network. Is this in relation to fixed as well? No plans to lease in Belgium as well. Lastly, Spain. Can you give us targets on what you aim to get in own wireless network coverage and the same in fixed? Any and all detail in this regard would be useful. I think this is a long and complex question. Speaking... Starting maybe with just as the question, as the question did with Portugal, we are indeed building our own mobile and fixed network. We are at the moment cooperating with Cellnex to put our mobile equipment on their towers. We are open to other opportunities of this kind. Our relationship is not limited to Cellnex from this point of view. Having an existing partner with the mobile sites, with the mobile towers, helps to roll out this equipment quicker. We are also in parallel building our own fixed network in Portugal. We have more or less the same intention in Belgium. It's early on to give, let's say, more details on this, as I said, because we are still in the development and in the let's say research and development phase in terms of Belgium. We should have more visibility within the next three months or so. In terms of Spain, I think there's a mistake in this question because it asks what are our plans in terms of mobile rollout. We don't have any mobile network in Spain, and we certainly do not plan to do so. We are working in partnership with Telefónica, and we are an MVNO on Telefónica's network. No, no work, no plan, no intention to do anything in relation to mobile networks in Spain. However, we in terms of fixed services, we are using both Telefónica's network as a wholesale operator, and we are also building our own fixed networks in certain areas of Spain just to have a balanced mix of presence. Yeah, this is happening at this moment. Okay. I'll go forward. Alvaro Mata, "Will you be paying dividends with 2022 results?" Okay. Well, dividends is something that we will decide around the general meeting of shareholders, which to my memory is expected to take place in June or around June. This is the time that we will decide on the dividends. In any case, the intention, the expectation is to continue our dividend policy, which and to continue paying dividends in the amount not less than what has been paid last year. That is the intention. Can you confirm you are... Sorry. A question from Peter Jurik. Can you confirm you're still on pause in Italy? Excuse me, I don't understand the question because Italy is a growing market for us, but a market that grows, but a market that is relatively small in comparison to both Romania and Spain at this moment. That also basically having a small base has an okay growth rate of 10%-12%. But again, because the base is small, the result is also small. We are EBITDA positive. We are free cash flow positive in Italy, which is an achievement. In the previous years, we were negative is a cash flow or earlier on earlier we were also EBITDA negative. This is not the case anymore. From this point of view, Italy is, let's say it has been sorted out. Other than that, it's not on pause. Question from Thomas Shorr. Hi. What is the outlook for energy costs in Romania in 2023 versus 2022? We do not expect energy costs to increase in Romania in 2023 versus 2022. However, 2023 will remain higher in comparison with 2021, just like 2022 was. Romania basically stabilized for now its prices. I sincerely hope there'll be no, let's say, further big changes or breaks in the energy market. We expect the market to remain more or less in the same area. Question from Alexander Petrik. How do you expect to handle the upcoming maturities in 2023 and 2024? The EUR 33 million and EUR 121 million. Well, we will handle them from our, from our cash flow and from our cash balances. That is the simple answer to the question. How do you expect to finance your expansion in Portugal, Belgium, CapEx, and/or new debt equity injection? Thank you for this question because, in any case, the first part of the question I did ask in a simple manner. There's also this second part. We have funds on the balance sheet, which will partially be used for further expansion. We also are open to new financings, to basically do new financings, to provide resources for our growth in Spain, Portugal, and Belgium. Mostly we are thinking of debt. Equity injectioi, I doubt. I mean, with the share price, it is certainly not useful to think into that direction. A question from Joshua Mills. How are you prioritizing your rollouts in Spain, Belgium, Italy and Portugal? Which one is the focus and how much CapEx is required for each? Can you afford to do them all simultaneously? We hope so that... Well, sorry, that's the question to the last one, to the last part, if you can afford to do them simultaneously. In any case, you can do many projects at once. It's only a question of how much you really spend on each of them. We probably, we can certainly manage, let's say, the relative or the individual efforts between these markets. Having said this, Spain is a cash flow, is an EBITDA positive market, a market which generates its own cash flow. An important part of Spanish rollout is financed directly by the Spanish operation. In Belgium, in Portugal and in Belgium, we intend to, at least at the beginning, to use existing funds, but also to use debt for the financing. In terms of how much CapEx is required for each, it's a difficult question. I mean, these are sizable investments. We spent EUR 70 million, well, we will spend in total around EUR 70 million for frequencies in Portugal. Our joint venture together with Citymesh will spend around EUR 100 million in Belgium for spectrum. On top of it, we will spend sizable amounts, certainly larger than this, to expand the networks. I believe we've given the guidance that in 2023, the total CapEx will amount to approximately EUR 550 million, more or less on par with this year number. As we progress, I'd rather discuss this question going on and we will discuss with you the capital allocation as it unfolds. One second, just not to lose some questions. Russell Waller, when do you expect to launch a product in Portugal and Belgium? Thank you for the question. Belgium is an easy one. We're really only planning to start building the networks in the coming months, so it's premature for us to answer this question at the moment. We will postpone this for now. In terms of Portugal, the intention is to start providing these services within the next 12 months, maybe possibly even sooner than 12 months. That's roughly the horizon, and I hope you appreciate that there's a lot of work to do, and we do our best to have this date rather sooner than later. This is probably the best guidance we can give at this moment. A question from Brown. We can observe decreasing ARPU in all markets. Do you expect this to continue in 2023 and beyond? Excuse me. My reading of our financials was a bit different. ARPU has increased in 2022 in comparison to 2021 and so on a group level. Certainly, the result of this, or the result of this increase comes from a change in the mix, basically, a bigger contribution of Spain to our to our services portfolio. Other than that, we are not decreasing our prices in any of the markets. We are relatively consistent and stable with our pricing. But from time to time, and I give you the example of Romania, we could have, let's say, a downward pressure on our ARPUs. Again, it comes mostly from the mix of the users. Just because we have more rural users in Romania, doesn't mean that our prices are lower, but it means that we have more users using our rural packages, which basically have lower prices, and the overall ARPU of the company is somewhat decreasing in that area. Again, our prices are relatively stable and overall in the group level, our ARPU is increasing. A question from Vlad Podea. One second. Sorry. Can you confirm that grants related to electricity supply in Romania were previously included in revenues? If so, can you disclose how much was recorded as income from these grants just in Q4 instead of EUR 24 million for the full year? Sorry, this is a very specific question. No, I don't think. I don't think subsidies or grants, no matter how you call them, were included in the revenues previously. The revenues are provided on a continued basis and consistent basis. Unfortunately, I cannot tell you how much of the EUR 24 million is just for Q4. I'm lacking this figure at the moment. One more question from Peter Juric. It appears you are closest in Portugal as your next place to actually launch your retail product. When do you expect to start offering your first product to the market? Well, again, I can't answer better than to say that within the next 12 months. Adel. Hi, can you provide any revenue EBITDA guidance for the next financial year? We don't provide guidance as such. I try to basically outline the dynamic that we expect for our markets. In Romania, we certainly want to continue growing, and we see mobile segment as the segment with which will provide the, the best results in terms of the RGU growth. All in all, because the market is large already, because the market is mature, we do expect the growth rate to be in the low% numbers. We do expect, on the other hand, to continue growing in Spain. Again, I don't think 38%, the growth rate that was achieved the last year is feasible for 2023. But it's a double-digit growth, and it's certainly a high double-digit growth that we expect for Spain for 2023. While the rest, Italy, I mean, we do expect relatively small growth, and this is less relevant. As we were discussing, Portugal and Belgium are not meaningful in 2023 in terms of revenues. For EBITDA, it's a more complex question. We do expect EBITDA, at least at the moment, to trail behind revenue growth and behind the RGU growth because it is more complex. I mean, we experience both growth, but we also face inflationary pressures, as we were saying, salaries, energy, rental payments. I wish we could generate the growth in EBITDA just as we are generating in terms of revenues. I think it will not be, it will not be just as high. I'd expect also EBITDA to be to continue the dynamic of 2022 versus 2021, more or less. I hope it is helpful. A question from Ioana. What is your approach to the return on investment? When do you think the investment in Portugal and Belgium will start being profitable? When making plans about new markets, how many years do you consider recovering your financial investment? What is your experience in Romania and Spain regarding this? It's a complex question. I don't think we are as articulate or as precise as this question asks us to be. We are a long-term investor in all of our markets. We, our vision is probably five-10 years away at least. Basically the intention is to generate a meaningful market share. I repeat what we were discussing in the previous calls. We believe that having at least 10% is sufficient to be breakeven. Now, how soon, when can we make it and achieve it is difficult to say, and we cannot predict. What kind of fixed contract target do you have in Spain? We don't... I don't know how to say. We don't necessarily have a target. Yeah, we would like not to discuss the number as such. We are offering services equally on our own network and on Telefónica's network. Both services, both products work great. Again, only in places in areas where we see, or in places in areas where we see a bigger uptake for our products, we try to build our networks as well. Far it's complementary. A question from Russell Waller. I think you have said EUR 100 million for CapEx in Belgium and Spain for each country. Is that right? It seems quite low. Does that include equipment and backhaul and all infrastructure, or is it just equipment only? Is it fixed or mobile? Thank you. I did not mention any breakdown by country. The only thing I said that territories outside of Romania will surpass Romania in 2023, and will all in all be more than half of our CapEx. Romania will decrease, and we will represent less than half of the total spend. I did not go into further breakdown. And I would rather not answer this question now in full. Thank you. Which share of your fixed internet customer base in Spain is currently on your own smart network? Sorry. Again, this I On one hand, I don't have the number to say. On the other hand, we have not published these numbers, and we do not expect to do so. I cannot answer this question now. A question from Wasil El -Habib. How are you thinking about the mid-long term balance between fiber wholesaling and building own fiber network in Spain? I think I hope it's clear from my comments, it's an open question. We will see what products works best for us, what products best works best for our customers. It's also basically. Based on this, we will decide. Yeah. There is no target. There is certainly no number behind. When is your MVNO with Telefónica is due to mature get renewed? As we discussed this again in the previous discussions, our contract expires in 2026. Sorry, is up to renewal in 2036. I hope it does not expire in 2036. I hope. I hope you hear me. Nico Hakala. Can you elaborate on how the cash received from the sale of Hungary divestment have been used to this point, and how is the remaining part planned to be used? We use the proceeds from the sale of Hungary for CapEx. As we outlined, the CapEx was relatively high last year, EUR 554 million. The rest of the funds will also be used for CapEx. A question from Piotr Raciborski. Are you considering providing wholesale services to other operators on your own fixed access networks in the future, for example, in Romania or Spain? I think ultimately this is a good question. I'm not sure it's a question for today, but it's a relevant question for the future. We don't have a strategy in this respect, in this regard at the moment. We don't have a decision. When we will have, we'll probably be able to discuss it properly. Question from Alexander Petrzik. Do you expect to extend your RCF maturity? Correct me if I'm wrong, but I think the RCF is maturing in December 2023. Thanks. Yeah. The answer is yes. We will extend the RCF maturity. We most likely will also extend the RCF size. At this moment we have an RCF of EUR 50 million. The intention is to double it, to increase it to EUR 100 million. A question from Oliver Borg. Have you considered hosting an investor day in 2023, to give more detail on your plans for Belgium and Portugal to give an overview for the opportunities you see in each market? No. Honestly, thank you for the question. After we listed ourselves back in 2017, we had an investor day. Now, excuse me, because of COVID, I don't remember, but it was early on, I think somewhere in 2018, so long time ago. In the meantime, we all lived through the pandemic and through a different, totally different life. Thankfully, let's say we are mostly back to, or hopefully back to normal. From this point of view, there is no clear plan, but there is an intention, there is a desire to have such kind of a day and possibly having it, let's say, later on, maybe mid-year or early in early autumn could be helpful as again, we would be just more. I mean, today it's maybe too early to discuss both Belgium and Portugal, but as the time goes by, it will be easier for us to share with you our progress. The broad answer to your question is yes, we will come back. We will come back with planning details on this in the coming future. Question from Ioana. There's a difference, there's a divergence between your results and the price of DG shares. We agree. Considering your generous cash balance and the fact that with just EUR 1 million you can buy back about 150,000 shares. Yeah, one second, sorry. I see the question now in full. Do you think a buyback program and canceling the shares can close the gap between the value of the company and the price on the stock exchange? Excuse me. I don't have an answer to this question. If I knew the answer or if that would be also the solution, we would certainly do it, but I simply do not know the answer to this question. We certainly can and we want to, let's say, not just to increase our share price, but to have our share price reflect if not fully then better our value. We are just, we just don't know what the solution is. We will discuss with our investment bankers or advisors, and if this is the solution, yeah, we certainly may do it, but no decision at this moment. What about the market maker for the Digi shares? We are open to this as well, and we will certainly consider or reconsider this decision in the coming in the coming future. A question from Cristian Popescu: Do you have a rating commitment, for example, keeping BB? No, we don't have a rating commitment. We certainly want to just improve our rating going forward, like probably any company desires. We don't have neither an undertaking nor an obligation to do so. Again, the general intention is to have this rating just better. So far so good. I mean, the questions are not coming anymore with great speed. We will certainly keep the line open, and if there are more questions, we are happy to answer. Yeah. There's a question from Peter Yurik: Apologies if I missed it, but did you provide an ambition or a goal for your fixed network homes passed target in Spain? No, sorry. We did not for two reasons. There is not necessarily such a goal or ambition on one hand, and second, we are not, yeah, we're not publishing it. Thank you. Once again, thank you. Uh, it was, uh, it was pretty intense i-in terms of, uh, in terms of the, let's say, the depths, uh, of, uh, of the questions and the focus. Uh, I hope we, uh, speak again mid-May with our Q1 results. Uh, and yeah, we'll follow with all the necessary updates in the meantime.