Good afternoon, ladies and gentlemen. Welcome to Q1 2022 results call of Polsat Plus Group. The presentation of the results will be made as always by Mr. Mirosław Błaszczyk, CEO, Mr. Maciej Stec, Vice President responsible for strategy and new business, Mrs. Katarzyna Ostap-Tomann, CFO, and Mr. Stanisław Janowski, President of Telewizja Polsat. After the presentation, there will be a Q&A session. If you have any questions, you can post them in the chat section in advance. Mr. Błaszczyk, the floor is yours.
Good afternoon, ladies and gentlemen. Welcome to the results call of Polsat Plus Group for the first quarter of 2022. Today, the agenda of our meeting is standard. I will begin the presentation by telling you about the most important events of the quarter. All our operating results will be presented by Staszek and Maciej, followed by the analysis of our financial results by Kasia. After that, I will briefly summarize the presentation, and we'll move on to the Q&A session. Key events of the first quarter of 2022. It is impossible to discuss the events of the first quarter without taking into account the impact of the significant global events that took place recently and continue to affect the politics and economy of Europe and the world at large.
The last two years, marked by the coronavirus pandemic, have caused enormous complications in world production and trade. In addition to the dramatic suffering of the Ukrainian nation, the outbreak of the war in Ukraine worsened the already difficult situation in the world economy. We are facing a huge geopolitical change and the resulting inflation, rising interest rates, broken supply chains, and maybe most importantly, an increase in the prices of energy and raw materials. Under these difficult circumstances, our group successfully implemented the multiplay strategy. We consistently build the value of our customers and keep the churn level at low levels. Thanks to this, our results translate into a stable and recurring growth of revenue.
Moreover, together with ZE PAK, we are involved in numerous activities aimed at the rapid launch of production of clean energy and green hydrogen within the framework of our Strategy 2023+, which in the current geopolitical situation is a hope for the future. We also acquired shares in Port Praski, a unique real estate project located on the shores of the Vistula River in the very center of Warsaw. Finally, as a socially responsible company, we launched numerous activities demonstrating our solidarity with Ukraine and support for its citizens who have found refuge in our country. Let us now turn to our operating results. Staszek, please discuss the performance of our media segment.
Thank you, Mirek, and good afternoon to all of you. As always, I will start off with the online branch of our media operation. As you can see on this slide, we are consistently growing in this area. In Q1 2022, our websites and applications had over 21 million real users, and we recorded 2.2 billion page views on average per month. These results place us clearly in the top three on the Polish online market, together with Wirtualna Polska and Onet. We focus on developing our online product both in terms of offered content and from a marketing angle. We want to continue to strengthen our position on the market, i.e., of internet portals. As a result, our online ad revenue grows at a healthy double-digit pace. In our TV business, we noted good viewership results that are in line with our long-term strategy.
In the first quarter of 2022, our main channel, Polsat, achieved an 8.3% audience share and was the leader in the Big Four group. Our portfolio of thematic channels gained almost 15% of audience shares. As a group, we had 23.2% of audience share. Our position in the advertising market in the first quarter was very good. The market grew by 0.5%, mainly due to a sudden slowdown on the market noticed in March. The outbreak of the war in Ukraine in the last week of February had a clear impact on ad market dynamics in Q1. As far as our position is concerned, our advertising revenues were in line with the market trend, and as a result, our share in the TV advertising and sponsorship market reached 28.4%.
Summing up, I just wanted to say that in context of the situation in Ukraine and unexpected market reaction, from my perspective, this was a good quarter, both in the online segment and in the TV segment. All in all, a stable ad market in the context of a war in a neighboring country is a good result in my personal opinion. Thank you for your attention, and let's see what Maciej has to say about the performance in the B2C and B2B segment.
Thanks a lot, Staszek. I will tell you about the B2C and B2B services segment. As always, our multiplay strategy is in the center of our attention because it allows us to step-by-step successfully build customer value.
Over the past year, we have grown our multi-play customer base by 73,000 new customers. Today, almost 2.5 million customers own already 7.4 million services from the portfolio of Polsat Plus Group. What I'm always happy about is unusually low level of churn. As you can see in this slide, we consistently maintain churn at record very low levels, only 6.8% per annum. This clearly reflects the satisfaction and loyalty of our customers, and especially in the difficult circumstances in which we live, it gives us business stability and shows how important our services are to our customers. Our B2C customers use an increasing number of contract services every year. In Q1 2022, we provided 13.4 million contract services in total, adding 207,000 year-on-year. Mobile telephony remains the main driver of this growth.
The increase in mobile telephony RGU is, of course, the effect of the effective implementation of our strategy to cross and upsell services to an individual customer, and also what I said before, of low churn resulting from our focus on customer satisfaction. The acquisition of Premium Mobile still continues to support the growth rate of our RGU base, in this quarter. The essence of our multiplay strategy is building customer value, and this slide shows our performance in this respect. As you can see, we are going very well. In Q1 2022, we posted once again very strong ARPU growth in the B2C segment of almost 4% year-on-year. ARPU per B2C customer reached the level of almost PLN 70. The drivers behind this growth are invariably the consistent implementation of our multiplay strategy, but also the popularization of 5G tariffs.
Let me remind you that today, Polsat Plus Group is the only operator in Poland who offers 5G on a dedicated frequency band, 2.6 GHz TDD, which means that we offer transmission speeds up to 600 Mbps. We have 19 million people within reach of our 5G network, and we plan to promote this technology, which will support ARPU growth going forward. The consistent building of the value of the existing customer base and the effective sale of products as part of our multi-play strategy is also reflected in the growing ratio of RGU saturation per customer. As you can see, each customer from our base uses on average 2.23 services from our portfolio. Moving on to the prepaid segment, you will notice right away that this quarter, prepaid achieved excellent results, both in terms of base expansion and ARPU growth.
The number of prepaid RGUs recorded a rapid increase by nearly 100,000, and ARPU grew by more than 10% year-on-year. It shouldn't come as a surprise when I say that this rapid acceleration in the number of provided mobile telephony RGU is the effect of our support to the newly arrived refugees from Ukraine. Since the first days of the war, we have been distributing free starters that enable free of charge communication to refugees who cross the Polish border. As a result, our active prepaid RGU base grew to over 2.8 million services in Q1 2022. Turning to ARPU in the prepaid segment, like I said before, we posted very strong growth this quarter, up by 10.3% to the level of PLN 70.2.
This rapid growth is mainly due to changes that we implemented recently in our mobile offer and also in our TV offer. Let me remind you that in the autumn of last year, we reposition our Ipla online streaming service both in terms of branding and pricing. Today, it's called Polsat Box Go and is fully subscription-based. It offers two packages, a movies and series package for 30 PLN, a sports package for 40 PLN. Another trend which we have observed recently, and which is very supportive to building value in the prepaid segment, is that our mobile customers show a growing willingness to choose package solutions instead of offers based on the pay-as-you-go model. Prepaid services, unlike contract ones, react to offer changes almost immediately. Hence, you clearly see that our value-oriented strategy brings tangible effects also in this sub-segment. Okay, the last area is B2B.
Like I said during our previous meeting, this area is characterized by stable results, so no surprises here. We have a high stable base of almost 69,000 B2B customers who generate a high stable level of ARPU at the level of PLN 1,400. No major changes of dynamics recorded here so far. Summarizing the results of the B2C and B2B segment, we successfully implement our multi-play strategy in B2C area, and this is the most important thing for us. We have almost 2.5 million multi-play customers and almost 13.4 million services sold. I'm very pleased with the consistently low churn level, only 6.8%, and also with the effects of our strategy in terms of building customer value. ARPU from B2C customers increased by 4% to the level of almost PLN 70.
If we add to this the prepaid segment with over 2.8 million RGUs and ARPU growth of over 10% to the level of PLN 17, we can see clearly that thanks to our value-oriented multi-play strategy, we are successfully building ARPU across the board. Okay. I would also like to tell you what is happening in our new segment, clean energy. I'm very excited about this segment. As you remember, on December 20th last year, we announced our 2023+ strategy, which is based on three business pillars, telecommunication under the Plus brand, content under the Polsat brand, and the new pillar, clean energy. All the basic commodities that our customers need today.
I regret to say that, in light of recent events, this clean energy segment has gained a completely different strategic meaning, not only from the point of view of our company, but also from the point of view of the new geopolitical challenges that Poland and Europe face today. Given what I've just said, it's very important for us to rapidly develop the clean energy segment. As you remember, we have two goals in this segment, which we pursue together with ZE PAK. Goal number one is to become a leading producer of clean, green energy. We want to achieve this goal through the production of clean energy from biomass. Our 100 MW biomass plant is fully operational, so this target has already been achieved.
Going forward, we want to install 600 MW in solar power plants, 250 MW in onshore wind farms, and we want to construct two thermal waste treatment plants. We will also support ZE PAK in their offshore wind projects and the analysis of small nuclear reactors, so SMRs. This goal has gained a completely different meaning today, when the price of energy in the contracts for 2023 is about PLN 1,000 per megawatt-hour on the local power exchange. As for goal number two, together with ZE PAK, we want to become the leading producer of green hydrogen. As you know, we are building the full hydrogen value chain. In order to do this, we first need to achieve goal number one. That is, we need green energy. We will install electrolyzers to produce green hydrogen.
We'll organize storage and transportation of 40 tons of hydrogen daily. In order to distribute our hydrogen, we plan to build our own network of 30 refueling stations. As for end user products, we want to produce over 100 hydrogen-powered buses per year, and our own fleet already has 100 hydrogen-powered cars. Now, let me just say a few words on the developments that have taken place in the clean energy segment since we last spoke. As you can see, we dynamically implement new activities aimed at development of our new business segment. First of all, we have obtained access to cable pulling for our solar panel power plant and gas installation in Przykona. PAK-PCE, which we are about to acquire, will construct and operate the solar power plant while our business partner, ZE PAK, is in the process of construction of the gas installation.
Cable pulling means that we will be able to use the same connection to supply energy to the power grid from both sources. A very important strategic development. We are also well advanced in the development on onshore wind farms. We have already received confirmation from our contractors responsible for our wind power plants in Miłosław and Kazimierz Biskupie, with total power of 27 MW, that the timeline of the projects will not be affected by the war in Ukraine. These projects are scheduled for launch in Q3 2023, and other wind farms are also proceeded without delays, so we will keep you informed on next meeting. We are also working on the second goal, that is building a green hydrogen economy. We already have confirmation that the first electrolyzer will be delivered in Q3.
This is a 2.5-MW electrolyzers with pro-production capacity of 1,000 kilograms of hydrogen per day, so it means 1 ton on daily basis. We are really excited to actually install this equipment and start producing our own green hydrogen. Why is this so important? Well, because the hydrogen-powered bus that we have been working on has just received the European type approval and will have its debut shortly. This brings me to the next point. We are working on a contract for the construction of a factory that will manufacture our hydrogen-powered buses in the town of Świdnik. This factory will produce over 100 buses a year. What is also important from the perspective of building a hydrogen economy is the network of refueling stations.
We have submitted applications for co-financing of the construction of several hydrogen refueling stations within the framework of the National Fund for Environmental Protection and Water Management Program. Of course, it's in line with the Polish hydrogen strategy. In summary, we are quickly and successfully implementing our new strategy in the clean energy segment. I think that the current macroeconomic geopolitical environment clearly shows just how important the provision of cheap, clean energy is. Hydrogen is also quickly gaining importance as the fuel of the future, given the issue of fuel independence and skyrocketing fuel prices today. Okay, this brings me to the end of my part. I will now pass the floor over to Kasia, who will tell you how our operating results and the first investment in clean energy translated into our financial results. Thank you. Kasia, the floor is yours.
Thank you, Maciej. Good afternoon, everyone. Indeed, it was quite an interesting quarter, as Maciej told you. Let's see how our operating results are reflected in our financials. Looking at this quick overview of our key financial indicators, please notice that our revenue, excluding the impact of regulatory termination rates cuts, shows a healthy growth of 3.1%, despite the challenges that the first quarter brought in the ad market. As for EBITDA, this time we noted a decline by almost 12%. This was the effect of the accumulation of two external factors. The first factor was the incredible hike in the cost of electricity. I would like to stress that this is a temporary issue in our case, given the fast pace of our current and future investments in green energy.
The second factor is related to the unexpected and sudden slowdown in the advertising market that Staszek talked about earlier. As a result, in this quarter, our advertising revenue did not match our cost in the media segment, as you will see in the next slide. Moving on to cash flow. Last 12 months, free cash flow fell by over 13% to PLN 1.2 billion. This is largely related to our first investment in the development of our new business leg, the clean energy segment that Maciej has already discussed in detail. Our leverage ratio remains at a low level of 1.07 x net debt to EBITDA. On this slide, you can see the revenue decomposition. Despite the unexpected slowdown in ad revenues in March 2022, both segments continued to contribute positively to total revenue growth after the elimination of the MTR cuts.
Let me remind you that the MTR regulation is EBITDA neutral. On the right-hand side, you have EBITDA decomposition. For comparability, we adjust EBITDA, but excluding the result of NetCo in Q1 2021. Here, you can clearly see the impact of the two factors that I have mentioned on the previous slide. Pressure on OpEx from extremely high energy prices and the clear mismatch between revenue and cost in the media segment. Once again, both these factors are temporary. Once we begin our own production of green energy, we will be completely hedged against energy price volatility. As for the media segment, we have the flexibility to adjust content costs fairly quickly to the development of the advertising market. Please also note that we have provided substantial support to the people of Ukraine, and we have decided to adjust EBITDA by this factor.
Polsat Plus Group is a socially responsible company, and we believe we have to help the victims of the war. This slide presents a more detailed picture of free cash flow. Like I said, one of the most important factors that influence the level of free cash flow this quarter were our first investment in green energy projects under our 2023 strategy. Other factors are of a macroeconomic nature and are beyond our control. This quarter, we faced strong inflationary pressure on OpEx and higher debt service cost on the back of increasing interest rates. Additionally, Q1 2022 has shown a decline in our liabilities, which is a temporary effect and should be reversed in the months to come.
Let me just say that we want to put our ability to generate strong recurring cash flows to good use and develop the new energy pillar of our business as quickly as possible. It is because we believe that in future it will become crucial not only for our group, but also for society. In terms of cash flow evolution, I would like to turn your attention to two points on this slide. Firstly, the ratio of CapEx to revenues reached the level of 10.9% in Q1 2022. That is above the guided level of 7% for our legacy business. This is because this CapEx includes some expenditures related to execution of our new strategy. However, we have not yet carved out new segments dedicated to these activities. If we take into account only our old legacy business, CapEx to revenue is approximately 7% as guided.
The second thing to pay attention to is the column showing granted loans of almost PLN 193 million. As you know, we have not yet acquired the 67% stake in PAK-PCE, where the green energy projects are concentrated, and obviously, we do not consolidate this entity in Q1. Therefore, in order to accelerate the implementation of our strategy, we support the development of these projects, which will soon be under our roof, through strictly controlled loans. As always, my last slide concerns the debt of our group. As I have already mentioned, debt service costs are increasing noticeably. You can see on this slide that based on the most recent local interest rate readings, we are looking at an average interest cost of roughly 6.8% in the coming periods.
This is, of course, the effect of the monetary policy of the National Bank of Poland focused on combating galloping inflation. Again, this is an external factor. I want to highlight that we will not be impacted fully as approximately 30% of our interest rate exposure was favorably hedged. To quickly sum up this quarter from the financial point of view, I would say that given the external circumstances, this was quite a good quarter. As the CFO, my strategic goal is at the moment to ensure that we have enough resources to continue investing in new green project, and that we have the means to successfully execute our new strategy. Thank you very much. Mirek, back to you for the summary.
Thank you, Kasia, Staszek, and Maciek for this presentation. It was a challenging quarter, which brought many factors beyond our control, and in this context, I think that we did well in terms of operating and financial performance. Good job. As I said in the beginning of our presentation, this year bring us all significant geopolitical and macroeconomic challenges. The enormous increase in energy prices, disrupted supply chains, uncertainty, instability, and unpredictability in the world markets are mainly the effect of the war in Ukraine. In this difficult environment, we successfully implement our multiplay strategy and our operating results translate into a stable and recurring growth in retail revenue. We focus on upholding our high customer base, and as we underlined many times in this presentation, we consistently build our customer value measured by the level of ARPU.
At the same time, we are working to align our cost base with the new challenges. I think Maciej made it very clear that we are not wasting time in implementing our 2023+ strategy. Not only do we focus on the effective implementation of the multiplay strategy in the telecommunication and media segments, but we are also intent on the dynamic development of the clean energy segment. I think that our 2023+ strategy fits the dynamically evolving economic environment, our customers' needs, as well as the stable and planned development of our business. Ladies and gentlemen, this is the end of the presentation of our group's financial and operating results for the first quarter of 2022, and now we are ready to answer your questions. Thank you very much for your attention.
Thank you. We will now begin the question and answer session. To ask a question, please post your question in the chat section or raise your hand. Ladies and gentlemen, as a reminder, in order to ask the question, please post it in the chat section or raise your hand. I can see Mrs. Nora Varga-Nagy asking a question. Nora, the floor is yours.
Thank you. Good afternoon. Two questions from my side, if I may, please. Firstly, could you please update on the status of the upcoming 5G auction in Poland? Secondly, were there any EBITDA margin support coming from clean energy in this quarter? If yes, to what extent? Thank you.
Thank you very much. As far as the 5G is concerned, we're still waiting for the decisions of the regulator. Basically, just as a reminder, I mean, we're offering 5G services on our 2.6 TDD, and we have 19 million inhabitants of Poland who already can use this service. So the coverage is 19 million. 19 million people that can already use this service in Poland on 2.6 TDD. You know, basically, this is not so crucial for us at the moment. We're waiting patiently for the regulator. However, we're doing our business and we're doing real 5G on other spectrums.
As far as the EBITDA margin on clean energy is concerned in Q1 2022, basically, at the moment, what we have at our disposal, this is the solar panel farm, which at the end of March started producing larger quantities of energy. In Q1, the participation wasn't really very significant. However, we see at the moment that it's really working at full speed, and it's producing a lot of energy, so we're really happy.
Thank you, Kasia.
Thank you. Thank you very much. May I have a follow-up question to the second one?
Absolutely.
Thank you. You were mentioning in your presentation that a clear route is planned for clean energy. Can you please tell us a timeframe?
Well, I would say, you mean the acquisition of 67% of the PAK-PCE group, which will give us basically the pillar of clean energy in our group. This is what I understand you're asking about.
Yes.
Okay. I would say it will be probably towards the end of third quarter, maybe beginning of the fourth quarter. I'm rather focusing on the third quarter.
Okay. Thank you very much.
Thank you. Right now, I can see Mr. Rohit Modi from Citibank has new question. Rohit, the floor is yours.
Thanks, Grzegorz. I'm sorry if it's been answered because I got disconnected for a brief period. Just wanted to check on overall market environment currently. There has been a slowdown in terms of your ARPU growth, and that looks like a market phenomenon, not specific. Just trying to understand, is this something that we should take into account going forward, that there'll be a slowdown, there's a saturation in the market? Also on the take-up side, do you see convergence, take-up has been declining or do you see more competition coming in from UPC/Play? Please just give more color on that. Thank you.
Okay. Hello. Maciej Stec. No, we are very satisfied with ARPU growth. We are building customer value. Our ARPU grew by 4% to 70 PLN per customer. It's according to our plan. As far as you know, in terms of macroeconomic factors, the market is under pressure in terms of cost, like, for example, energy. We don't have too much problem because we are hedged on the energy quite well. But of course, inflation, people, salaries and stuff like that. This is like sector problem. That's what we focus and that's what we deliver every quarter. We are focusing on building value. We will just analyze different scenarios for next steps for the market.
We will inform you so. Nowadays, we are very satisfied for first quarter results. ARPU, PLN 70 per customers and saturation of the RGUs is 2.23. There is space just to build the business even on our customer base when we add very low churn, 6.8%. Customers are very satisfied from our services. Especially, we are proud of this because it gives us, you know, credible credibility and future for our services even in this difficult time.
Thank you very much, Maciej.
Thank you.
Ladies and gentlemen, I do not see any other questions, so I pass the floor to Mr. Błaszczyk.
Thank you. Thank you for your participating in today's presentation of financial and operating results of the Polsat Plus Group. Have a nice day. Thank you very much one more time.
Thank you.
Thank you.
Thank you very much.