Dear Shareholders,
Despite unprecedented challenges resulting from the Covid-19 pandemic, 2020 was a successful year for Orange Polska. We delivered on our financial commitments thanks to exceptional measures related to cost savings, our value strategy, strongly supported by fibre, and the concerted efforts of all our teams. Overcoming such difficulties makes us more confident as we enter a new strategic period.
OPL operations relatively resilient to the pandemic
The Covid-19 crisis has tested our ability to adapt to dynamically changing external conditions. We reacted very swiftly, organising remote work for around 10,000 employees within just a few days and ensuring continuation of all business processes without disruption. I would like to thank all our teams for this effort, undertaken in exceptional circumstances. As the majority of our profits are derived from subscription services, our operations proved relatively resilient to the pandemic. Data and voice connectivity has become more essential than ever to the needs of consumers and businesses.
Responding to social needs
At the beginning of the pandemic, we were able to put our social responsibility values into action in areas where connectivity has become especially crucial. We lent our support in response to the community’s needs in numerous initiatives around the country. To mention just a few: we upgraded our network performance in hospitals and other critical public institutions. We provided various hospitals and medical centres with smartphones and free data allowance. For our elderly customers, we put in place delayed payment mechanisms and offered free shipping for online orders. Finally we supported pupils and teachers in the transition to online learning through a special Orange Flex offer, supplies of modems and tablets, and webinars organised by the Orange Foundation.
Towards a different working model
The pandemic has forced our teams to work remotely. We do have hopes that the life will return to normal as soon as possible however we believe that this experience is likely to permanently change our work environment. Engaging all our employees we have been developing hybrid work system that we called SMILE (that stands for Safe, Mobile, Integrated, Leading, Efficient). We received feedback from more than 900 of our people with different initiatives how to improve it. The new model is based on the introduction of 2/3 days of flexible working for the majority of our teams. It requires the development of various new digital skills and new tools in our offices. We will start work to optimise our office space after the pandemic.
Orange fibre network reaches 35% of Polish households
The crisis proved more than anything that the decision we made a few years ago to heavily invest in fibre was the right one. Our fibre customer base increased almost 40% last year to reach 725,000. Customer take-up accelerated, especially in the second half. Fast fixed broadband is increasingly seen as an essential household utility, and this trend was accelerated by the pandemic. Our strong fibre results were also driven by further extension of the fibre footprint, where our investment process shifted more towards mid and small cities where demand is higher, and by our improved sales performance. Our fibre services have reached five million Polish households, fulfilling our strategic ambition set in 2017. This is a unique infrastructure asset that will constitute our competitive advantage for decades to come. Encouraged by the big potential of this market we plan to extend our footprint, preferably with a different business model. We are looking to work with a financial partner to roll out open-access fibre as a joint venture.
Our value strategy is working in fixed and mobile
The shift to value in our commercial approach has been one of our key strategic priorities. In 2020 we successfully combined strong growth of customer numbers with improving trends in the average revenues they generate (ARPO). Growth of our fixed broadband customer base doubled versus 2019 to 95,000, with ARPO marking a spectacular turnaround increasing by almost 5% (as compared to c. 2% decline in 2019). Mobile handset customer base growth was the highest in 3 years. ARPO trend improved to -4% year-on-year (from -6% in 2019), despite a significant negative impact from roaming. Excluding roaming, the decrease was contained to less than 1%. The key drivers of these improvements were tariff increases made in 2019. In fixed broadband, results were additionally boosted by the growing share of fibre, which generates by far the highest revenue per customer of all technologies. As a result, revenues from key telecom services (combining convergence, mobile and fixed broadband), which are essential to our margin generation, more than doubled their growth rate in 2020 to 2.9%.
OPL as strategic partner in digital transformation of business customers
As part of our strategy we are strongly developing the ICT area, as we see significant synergies with our core telco services for business customers. Polish entreprises digitise their businesses, which means that on top of connectivity and infrastructure they also need software engineering, cloud and other digital enablers. The basis of our development is organic growth coupled with carefully selected acquisitions to complement our competencies. Our acquisitions of BlueSoft in 2019 and Craftware in 2020 perfectly filled gaps and increased our competitive edge against both other