FINANCIAL RESULTS FOR 2019
Netia has presented its financial and operational results for the fourth quarter and for the full year 2019. The last quarter of the previous year brought an increase in the revenues, while EBITDA stayed relatively high. The company continued positive operating trends, both on the B2C and on the B2B market.
In the whole year of 2019, Netia Group recorded revenues of PLN 1.297 billion (-6% year-on-year). In Q4, the revenues amounted to PLN 325 million (vs. PLN 320 million in Q3 2019).
In the whole year of 2019, EBITDA on the IAS17 basis amounted to 357 million (-2% year-on-year), and in Q4 alone – to 89 million (-7% quarter-on-quarter and +8% year-on-year). Thus, the EBITDA margin remained at the level of 27%. EBITDA under IFRS16 amounted to 457 million for the whole year of 2019 and to 115 million for Q4 alone (-4% quarter-on-quarter).
Total capital expenditure of Netia Group in 2019 increased to the amount of PLN 352 million (vs. 300 million in 2018). In 2019, the Company continued the project for upgrading the network to the fiber optic standard (gigabit links) called the 21st Century Network. As a result, over 1.4 million access lines of Netia Group allow for the provision of services at speeds up to 1 Gb/s.
Throughout 2019, settled investments under this project amounted to PLN 91 million. Total investment liabilities not included in the financial statements as on December 31, 2019 amounted to PLN 69 million.
The increase in capital expenditure – related mainly to connecting new Clients – and the access network modernization project brought OpFCF (free cash flow) to the amount of PLN 5 million (-92% year-on-year). Net debt at the end of 2019 amounted to PLN 240 million (+25% year-on-year), which constitutes a leverage of 0.67x of EBITDA (acc. to IAS17) for 2019.
Acquisition as a means of business strengthening
At the turn of 2019, Netia Group increased the reach of its own modern access networks (primarily for the B2C segment) by nearly 85,000 locations through acquisitions of local operators from Kraków (ISTS) and Łomża (IST), for the total amount of ca. PLN 44 million.
What is more, in Q1 of 2020, Netia took over the RASP data center in Kraków for PLN 34 million. This acquisition will strengthen the position of Netia Group in southern Poland within the scope of the broadly defined ICT services.
B2B – development i.a. thanks to ICT
Revenues generated by Netia in Q4 2019 in the B2B commercial area amounted to PLN 177 million, which means a 2% increase quarter-on-quarter.
The company recorded stable revenues or increases in all categories. The increase in the revenues in relation to Q3 2019 was mainly driven by inflows from data transmission services and ICT solutions (registered in the line: Other services). At the same time, the Company is maintaining an upward trend in sales projects related to advanced ICT products (NetiaNext), on which the transformation of this business area is based.
Packages as the driving force for B2C
In Q4 2019, on the B2C market (individual and SOHO customers, excluding Petrotel) Netia generated revenues in the amount of PLN 140 million (vs. PLN 141 million in Q3 2019), which indicates a stabilisation, supported by strengthening of a positive trend in the number of broadband and TV services provided within own networks and mobile services.
As at the end of 2019, Netia provided 1.362 million services on the B2C market (-5% year-on-year and -1% quarter-on-quarter). The general decrease in the number of RGUs can be attributed to further erosion of the base of services provided within foreign networks (WLR, BSA, LLU) by another 17 thousand locations, with a simultaneous increase in the number of services provided within own networks by 10 thousand locations. As a result, already 57% of all services on the B2C market are provided within Netia’s own networks.
Thanks to the consistent modernization of the access networks to the gigabit standard, the percentage of broadband services provided within own networks increased over the year by another 5 percentage points and at the end of 2019 amounted to 71%.
At the end of 2019, the number of landline voice services amounted to 431 thousand (-16 thousand quarter-on-quarter), the number of broadband services amounted to 547 thousand (-2 thousand quarter-on-quarter) and the number of mobile services – to 146 thousand (+1 thousand quarter-on-quarter).
The database of TV service users continued to grow steadily. At the end of 2019, Netia was providing 237 thousand TV services assigned to the B2C market (increase by 8 thousand in comparison to Q3 2019). Throughout the whole 2019, the database of TV subscribers on the B2C market grew by approximately 28 thousand (+13%).
The sale of TV services and faster Internet connections (up to 1 Gb/s) contributes to the maintenance of the ARPU index at a stable level of approximately PLN 56 per month. The average number of services per customer is constantly growing – at the end of 2019 it was 1.68x.