It is with great pleasure that I present to you the 2012 Annual Report of the Cyfrowy Polsat Group.
This past year, we pursued both organic growth and strategic acquisitions, while progressing a number of projects that helped us consistently implement the Group’s growth strategy. We focused our entire effort on solidifying our leading position in multimedia entertainment in Poland and in the market for pay television and television broadcasting, as well as on persistently expanding our capabilities in telecommunications and online services.
That we turned yet another year of our operations into a success was confirmed by the Group’s operating and financial results. Subscriptions to our pay television services grew to 3.57 million, with the number of customers using our broadband Internet and mobile phone services having increased to around 150,000 and 145,000, respectively. Our other business segment also delivered as expected. POLSAT, our flagship station, was a leader in audience ratings, having secured a 15.7% market share, with the audience share of our thematic channels having advanced by 11%, to 4.8%. 2012 also saw our share in the TV advertising and sponsorship market rise to 23.2%, with related revenue, thanks to a well-rounded programme schedule and optimum investments in programme content, markedly outperforming the rest of the market.
We are also very satisfied with the Group’s consolidated financial performance. In 2012, our total consolidated revenue grew by 17.4%, to PLN 2.778bn, with net profit standing at PLN 598m.
To ensure an increasingly high level of customer satisfaction, we regularly expanded our pay TV services to include new channels and effectively bundled our products to make the expanded channel packages even more rewarding for customers. We provided viewers with access to pay-per-view sporting events, contributing to the increased popularity of pay-per-view on the domestic market. Building on the success of our VOD Home Video Rental and catch-up TV services, our Online Entertainment zone was also significantly expanded to offer viewers a one-stop-shop for programme re-runs, online channels, and ipla, HBO GO and FilmBox live services. We launched a cross-promotion programme with the Plus mobile network, as part of which we cross-sell services to multiply benefits for subscribers of both operators. In 2012, we also achieved expected synergies in technology, marketing, products and administration between Cyfrowy Polsat and Telewizja Polsat. It was also the year that our new services, MOBILE TV, PPV, VOD, Multiroom HD, ipla, and muzo gained in importance.
Over the past year, Cyfrowy Polsat also managed to considerably bolster its presence in the market for online services. We acquired a 100% interest in the companies that run ipla, Poland’s leading online video service. ipla provides linear access to more than 20 TV channels, HD live broadcasts, and the largest TV-on-demand library in Poland, containing tens of thousands of items, including TV series, films, TV shows, and major sporting events. I pla television services are brought to users of PCs, smartphones, tablets, Smart TV-capable television sets, pay TV, set-top boxes and consoles via dedicated applications. According to recent research, ipla has an average of 2.3 million active users.
Another advance towards growth in the online segment was the launch of muzo, a digital music streaming service. The muzo library is soon to contain five million audio tracks, which will appeal to the musical tastes of some 90% of Poland’s population. muzo’s current selection features the most popular tracks across all music genres, licensed from EMI, Magic Records, SONY Music, Universal Music, and many other music publishers.
To ensure that our services can be delivered through any new technology and device, we launched the DVB-T-based MOBILE TV. We paved the way for the launch a year earlier when we acquired INFO-TV-FM, a company allocated frequencies that are appropriate to supporting mobile TV services based on terrestrial digital broadcasting technology. The new service is also available to users of traditional set-top boxes and television sets, as well as mobile devices, which are gaining in popularity.
In October last year our LTE-based wireless broadband service, the world’s fastest and most advanced technology, was sped up to 150 Mbps. We also managed to extend LTE coverage to 50% of the country’s population.
To cater to changing consumer needs and market trends, we broadened our internet offer to include new mobile devices – computers, tablets, modems and routers. We also launched halo, a proprietary web messenger.
Our set-top box manufacturing plant was also subject to continuous improvement. In 2012, three new types of set-top boxes rolled down the production line, including the HD 3000 and HD 6000 for satellite television services and the T-HD 1000 for terrestrial digital television services. To date, we have manufactured more than four million set-top boxes.
Our long-term objectives continue to be stable growth, remaining at the forefront of the multimedia entertainment and pay TV markets, improved performance in the telecommunications segment, capturing a loyal audience for Telewizja Polsat channels, and as a result, securing an ample share of the TV advertising market. As was previously announced, we plan to develop innovative content distribution channels allowing consumers to choose freely between technologies and devices that can be used to receive our television services. In the long term, we expect the channels to contribute to increasing the number of our service users, our ARPU and customer loyalty. Successful delivery of these objectives, combined with effective financial management, will go a long way toward creating value for our shareholders.
With kindest regards,
Dominik Libicki
President of the Management Board of Cyfrowy Polsat S.A.
