Cyfrowy Polsat S.A. (CPS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm pleased to welcome you on this December afternoon on behalf from Polsat Plus Group. Naturally, we are meeting you to tell you about our strategy for the coming years. This is the conference that we announced a few months ago, about which you also asked on the occasion of our last quarterly results. As promised, we are meeting you before the end of the year, even though I know it took a lot of effort of our team to meet this deadline. Well, as usual, in the Polsat Plus Group, if we promise something we also do deliver. Let me just say that we have some exciting years [Technical Difficulty] of a new strategic pillar. I feel no less excited about it than when together with Mr. Zygmunt Solorz several years ago we decided to enter a new business for us, the telecommunication business. Some time has passed since the decision and our position on the telecommunication market has solidified. Now is the time for new challenges, and it will surely be no less interesting. Without prolonging, I give the floor to Maciej, who has prepared an extensive material for you and who will tell you in detail about the new directions of development of Polsat Plus Group for the coming years.

Good afternoon, and a warm welcome to everyone. This is an exciting day for us because after a lot of hard work, we can finally share with you our strategy for the next years. We call it Strategy 2023+ of Polsat Plus Group. Okay. Let's begin. This is a very good moment to take a look at who we are, to summarize our mission and vision and how we have been executing our strategy so far. As you know, we are a Polish company, and we provide high-quality services at reasonable prices to the inhabitants of Poland. We operate in the segment of commodity services. I think you will agree with me that our services are indeed commodities. It's hard to imagine everyday life without a telephone, without the Internet or without television. For many years, we have been successfully implementing our multiplay strategy, which is the foundation of our development and we control our key assets, telecommunication under the Plus brand and content under the Polsat brand. I believe that over the years, 1 of our biggest successes, especially in light of our presence of the Polish Stock Exchange, is that we have built a stable, financially strong and independent Polish capital group and that we have been consistently and efficiently creating value for our shareholders. Now turning towards the future, let me remind you of what Mr. Solorz said in his statement published in September. He said, that new challenges always create new opportunities. And indeed, nowadays, we observe these new challenges every day on the energy market. And we perceive these challenges as opportunities for the further development of our group. One of the biggest challenges that Poland is facing today is delivering cheap, and more importantly, clean energy to its habitants. But first, let's quickly summarize the effects of our multiplay strategy so far. As you know, the 2 core pillars of our strategy so far were connectivity and content. In the area of telecommunications, we provide high speed and reliable connectivity essential for our work, education and entertainment. We want to ensure easy communication with family and friends according to our strategic motto: For everyone. Everywhere. A few key figures in this segment. We already have 2.4 million customers of our multiplay services. We provide over 20 million services in total, used by every second household in Poland and 70,000 companies. We consistently maintain a very low level of churn, 6.9%, which makes me very proud because it implies a very high level of loyalty and satisfaction of our customers. The pillar of our telecommunications segment is the dynamic development of the 5G network. We are the first and so far the only operator in Poland to develop a true 5G network with transfer speed up to 600 megabits per second based on the dedicated 2.6 gigahertz TDD frequency band. We want all the connectivity services that we provide to be available to everyone, everywhere. As for the content pillar, we believe that attractive content and good friendly user experience is a key to success in this area. We provide entertainment wherever you want, whenever you want and on whatever device you want. Once again for everyone. Everywhere. We have built a very strong position in this business area. We have approximately 25% audience share in Poland. We produce 39 local TV channels, all in Polish. Thanks to the acquisition of the Interia.pl, we have gained solid ground in the online media. Already approximately 20 million unique users of our websites generate 2 billion page views every month, and our content is available through all access technologies from DTH and terrestrial television through VOD to online access via IPTV and OTT. Thanks to all these, our viewers can watch anything they want, anywhere they want, at any time and on any device for everyone everywhere. However, we want to take up new challenges. We believe that today the main challenges lie in the energy sector. We want cheap and clean energy for Poles. And in consequences, we want a clean, natural environment. To address these challenges, we have decided to build a third strategic pillar within our multiplay strategy, the energy pillar. We believe clean and cheap energy is vital for the daily functioning and further development of the Polish society and economy. We want cheap and clean energy to be available for everyone and everywhere. This pillar fits perfectly in our multiplay strategy because energy is another commodity that each and every one of us uses every day. We want to provide clean and cheap energy from solar plants, wind farms, biomass, and in the future maybe even nuclear energy. A direct consequence of providing clean energy is lower CO2 emissions. Lower CO2 emissions mean that we will be able to contribute to the reduction of social costs resulting from polluted air. Please notice that the incorporation of this energy pillar into our strategy is, in fact, implementing in practice the concept of ECG (sic) [ ESG ] with real, tangible social benefits. In this part of the presentation, I would like to discuss all the challenges that we face in each of our strategic pillars. Let's start with our vision in the area of connectivity. We believe that the dynamic development of the 5G technology represents an opportunity for the economic and social development of Poland and the Polish society. We all want high-speed reliable Internet access within our reach, wherever we are. Fast mobile 5G Internet simply means freedom for everyone. Everywhere. I think everybody will agree with me that going forward, 5G is crucial for the provisioning of rapidly growing data transfer in mobile networks. But not only that, I think we are close to the moment when the 5G help us make a huge leap forward in civilization progress, comparable maybe to the introduction of the Internet. We are talking about self-driving cars. And this is not just a concept anymore. Few companies test autonomous vehicles on the road nowadays. If we add IoT, telemedicine and smart cities, these are other examples of 5G application to real life. I also think that 5G is a completely new user experience. If we offer transfer speeds up to 600 megabits per second, as we do today in Plus, then our customers enjoy user experience comparable to fiber optic cables. When we upgrade our 5G network by using the C-band frequencies, then we will be talking about speeds exceeding 1 gigabit per second. So rising customer expectations require further investments, very dynamic investments in both 5G and fiber optic infrastructure. Our strategy in connectivity is focused around the rapid construction of a real 5G network. We launched the first 5G sites in May 2020. Ever since then we have been working very hard to increase the coverage of this network. Today, after only 1.5 years since its launch, we already have approximately 3,000 5G sites [ on air ] in over 800 towns and cities, and we cover over 50% of Poland's population. On the top right-hand side chart, you can see that we outpace our competitors in terms of network quality. Download speed in Warsaw in our network is 322 megabits per second, which is almost 3x higher than in other mobile networks. Turning to the bottom left chart, like I already said before, the world of 5G possibilities is really impressive. And this is no longer only a vision of the future. These solutions are being tested here and now and are being systematically improved. And finally, the most important thing in our telecommunications business, and the effect of launching 5G, is the reversal of the trend on mobile ARPU. Our customers want and appreciate 5G and are willing to pay for it. Moving on the next slide, our vision on the content pillar has been clear for many years. We believe in locally produced, attractive content and in the best sports. And these 2 elements are the key differentiators of our offer. Just as all our other services, we want our content to be available anywhere at any time and on any device. And that's why we introduced a set of new platforms for our customers this September. We believe the user experience on these diverse platforms is the essential aspect. They have to provide easy access. They have to be comfortable to use, and they have to have a friendly recommendation system. I think the motto that summarizes our strategy in this business segment best is the old saying, content is the king. In the content pillar, our strategy is focused on the creation of unique Polish content. Like I said before, we produce locally Polish language unique content, and we also invest in the best sports. All this content is available on any device, be it a television set, laptop, tablet, smartphone or a set-top box. Okay. The new kid on the block, energy. I think our vision here is also very clear. The Polish energy sector has to transform towards clean energy, and this situation creates new opportunities. And it's a perfect moment for new players such as us to enter the game. We, the Poles, needs cheap and clean energy for our families and in order to keep our economy competitive. Cheap and clean energy is also essential to ensure a balanced energy mix. Poland is a country where 6 months of the year are rather cold and glum, and the other 6 months are usually warm and sunny. For this reason, I think we should invest in both renewable and stable energy sources. I think the key issue related to clean energy, a social benefit. Let's stop poisoning ourselves. A reduction of emissions of carbon dioxide, nitrogen oxide and harmful particles such as PM2.5 means less diseases, higher standard of living for everyone and lower social costs. This brings me to my next statement, that ESG idea can be and are worth translating into a real and profitable business, because we strongly believe that clean, green, cheap energy can and will provide a higher rate of return on investments made in this segment. Let me give you a wider perspective on why we want to engage in the clean energy business. Let's take a few minutes to look at the Polish energy market. The truth is that the situation is dramatic. Ever since the '90s in Poland, we emit about equivalent of 400 million tons of CO2 annually, as you can see on the graph on the right. This is because in Poland, 70% of energy is still produced from coal and lignite. This energy mix means that we emit 1 ton of carbon dioxide equivalent per 1 megawatt hour. And so far, we have done nothing to change this picture. We only produce 18% of our energy from renewable sources, which is a poor figure compared to other developed economies. This dirty energy mix has huge economic consequences. It translates into uncontrolled, skyrocketing energy price increases. Please look at the chart on the left. Over the last 4 years, energy prices in Poland have increased twofold from PLN 159 in 2017 to PLN 357 in 2021. This is a direct result of Polish dirty energy mix, because over the same period the average annual price of CO2 certificates increased nearly tenfold. Let's take a closer look what this means for us. Basically, this means that the price of CO2 certificates currently accounts for 2/3 of the price of coal-based energy. From 2017 to 2021 the basic price of energy was more or less, I can say, stable at the level of PLN 125, PLN 135. What has changed in the CO2 certificates component from PLN 25 in 2017 to over PLN 230 today. Additionally, please notice that the changes that are currently taking place around us, especially in our regulatory environment, tend to support clean energy projects. To begin with, starting from the 1st of July 2025, coal-based energy will no longer be supported on the capacity market, which means that the attractiveness of the investment in green energy will be even higher. Secondly, the European Union is consistently pursuing its climate policy and climate neutrality by 2050, which means that the high pricing levels for CO2 emissions will be maintained. In light of this, the only way to control energy prices is to improve Poland's energy mix. And thirdly, as you probably know better than I, capital markets and financial institutions are seeking opportunities to engage in projects which implement ESG concepts in practice, not just on paper. We not only want to comply with ESG principles and bring them to the life, but more importantly, we have an idea how to make a profitable business out of it. To briefly summarize, the case is simple. For the past 30 years, we have been emitting the equivalent of about 400 million tons of carbon dioxide annually. And the energy mix in Poland is strongly biased towards coal, which makes up 70% of energy sources in Poland. As a result, the energy price in Poland has increased over twofold over the past 4 years. And today, CO2 certificates account for about 65% of the price of the energy. A dirty energy mix simply doesn't pay off. What's more, coal-based energy will cease to be supported on the capacity market starting from July 1, 2025. in a word, we need cheap and clean energy in Poland. We need a rapid transition towards clean energy sources. We want to be a part of this transition, and we believe it creates new opportunities for Polsat Plus Group. Clean Energy is essential, as I hope I have already convinced you, but we can do more. We are working on a very innovative project, green hydrogen. This next part of my presentation is perhaps a little bit back to the school. But I think it's very important to help you understand the options and possibilities that hydrogen entails. So what exactly is hydrogen? First of all, hydrogen is abundant, and it's everywhere. Hydrogen constitutes 75% of the mass of the universe. If you go back in time to chemistry class, you might remember that hydrogen is the first element in the Mendeleev table and has a symbol H and atomic mass equal to 1. On Earth, hydrogen does not occur in a pure form. It always bonds with other elements. Hydrogen is odorless, colorless and nontoxic. It's 14x lighter than air and interesting fact is that hydrogen has thermal conductivity that is 7x better than that of air. Hydrogen is also pure fuel. And this is key from the point of view of our strategy. Did you know that you can travel 100 kilometers by car on just 1 kilogram of hydrogen? So it seems that hydrogen is a strategic element. First of all, it's a fuel that can be used in all kinds of transportation: cars, trains, marine and air transport. These last 2 are the biggest polluters at the moment. You cannot apply batteries in ships and airplanes because they are simply too heavy, but you can use hydrogen. Hydrogen is not only a fuel. It's a 0 emission fuel because the product of hydrogen combustion is water, and there are no greenhouse gas emissions. Current technology allows for storage of hydrogen in composite cylinders. This characteristic presents a lot of potential, because instead of wasting excess green energy, for example from wind farms at night, we will be able to use it to produce green hydrogen and store that for later use. Moving on, hydrogen can be converted into energy. A reaction combining 1 cubic meter of hydrogen with half a cubic meter of oxygen produces 3.55 kilowatt hours of energy. Another important thing is that hydrogen can be transported either in liquid or gas form over long distances, both using pipelines and in cylinders. And the last thing, since hydrogen is everywhere, it gives a chance to those countries who do not have access to fossil fuels to build independent fuel sectors for themselves. As you can see on this slide, hydrogen has broad applications in transportation, in heating and providing power for buildings and industries, and as a feedstock for industries. As you can see from this diagram, according to a report by Hydrogen Council, applying hydrogen where possible can ultimately reduce global CO2 emissions by as much as 22 billion tons per year. That's even by 60%. Let's take a look at hydrogen applications that already function. Today, passenger vehicles such as Toyota Mirai and Hyundai Nexo are manufactured in series production. The Toyota Mirai is the blue car, a very comfortable luxury car, I drive 1 myself. The gray one in the middle is the Hyundai Nexo, a comfortable SUV for the family. What are the advantages of hydrogen-fueled cars? First of all, they have a range of about 650 kilometers on 1 tank which feeds about 6 kilograms of hydrogen. According to Toyota's data sheet, the Mirai uses about 0.79 kilograms of hydrogen per 100 kilometers, a parameter that Toyota has significantly improved by even 20% over last 3 years. This car goes from 0 to 100 kilometers per hour in only 9 to 10 seconds and refuelling only takes about 3 or 4 minutes. Yes, 3 or 4 minutes. Hydrogen cars are nothing more than electric cars, but with their own energy source. Hydrogen reacts with oxygen to produce the energy needed to run the battery. It's a very ecological car because it has a very small battery, only 1.6 kilowatt hours and CO2 emissions related to its production are limited. For comparison, Tesla has an 80-kilowatt hours battery. Toyota Mirai is not just a 0 emission car. The signs on this side door say that it cleans the air. How does that happen? Hydrogen cars are equipped with special filters that purify the air used in the reaction with hydrogen. So the more you drive a hydrogen car, the more you purify the air. In short, the hydrogen cars is the leap into the future, while offering the same user experience as traditional diesel or petrol-fueled cars. Banking on hydrogen is becoming a worldwide trend. Japan's former Prime Minister, Shinzo Abe, said that Japan will be the leader of epochal technological changes such as materialization of a hydrogen society. The Minister for Economic Affairs and Energy in Germany, Peter Altmaier, said that Germany aspires to become the world leader in the development of hydrogen technologies. Australia's Minister for Energy, Angus Taylor, said that Australia wants to be a hydrogen supplier to the world. And finally, the most valuable opinion, I think, of Takeshi Uchiyamada, the Chairman at Toyota Motor Corporation. I don't know if you know this, but this is the man responsible for the hybrid car. When he started this project, nobody believed in it. And today, hybrid cars are common and are so far the most ecological car available. Now he wants to build hydrogen cars. Anyway, his quote presented on this slide is a perfect description of our strategy. If you are passionate about what you think is right, keep moving forward. I'm convinced that we can create the right conditions for mass adoption of hydrogen for a better society for our children. That's exactly what we want to do in Polsat Plus Group. The world banking on hydrogen are not just mere declarations. Formal official hydrogen strategies assuming a rapid development of the hydrogen sector are being announced. Less than a month ago, Poland announced its hydrogen strategy, and I think it's an ambitious one. We want to have 2 gigawatts of hydrogen electrolyzers by 2030, between 800 and 1,000 new hydrogen fuel buses and at least 32 hydrogen stations in Poland. I think it's a very good plan. Hydrogen-based public transport will keep reduce air pollution in Polish cities when the problem of smog is huge. Additionally, a nationwide network of stations will help popularize hydrogen cars. Also, the strategies of the European Union and German clearly show that hydrogen-based society and economy is not a science fiction. In order to build the assumed hydrogen generation capacity in the set time frame, investments needs to be made today. The EU's goal are 6 gigawatts of electrolyzers in 2024, very ambitious, and 40 gigawatts by 2030. Germany alone wants to install 5 gigawatts of electrolyzers by 2030 and to double that by 2040. So it seems they are serious about being the leader in hydrogen technologies. Let me just say once again that developing and introducing hydrogen-based solutions is critical because it will contribute significantly to the implementation and achievement of the global goal 0 emissions economy by 2050. A quick summary. Green hydrogen can change the world, and we want to be part of it. As you can see, the world supports hydrogen. Green hydrogen will play a significant role in the global energy transition. The EU proclaimed a rapid development of the green hydrogen market, declaring the installation of 6 gigawatts worth of electrolyzers by 2024 and 40 gigawatts by 2030. Green hydrogen equals decarbonization and better quality. It can reduce global CO2 emissions by as much as 60%. Hydrogen is very convenient in transport. It offers fast refueling, long ranges and excellent user experience. Along with the decreasing cost of infrastructure and increasing effects of scale, production of green hydrogen will become materially cheaper. We believe green hydrogen is the future's new 0 emission fuel and it creates new opportunities also for us. We want to participate in the global change and together reach the goal of 0 emission economy by 2050. I've talked for quite a long time about what we want to do. Now let's talk about how we are going to do it. And the way we are going to do it is we are going to invest in green assets belonging to ZE PAK, another Polish listed company. We think that ZE PAK announced an excellent green transformation strategy last year, and our support will accelerate the ongoing transition. ZE PAK's first strategic goal is the transition towards a clean green energy from lignite-based production, from black to green energy. ZE PAK's strategy assumes shutting down all coal assets by 2030. And the second strategic goal is investing in green hydrogen as future's new zero-emission fuel. ZE PAK has a very ambitious plan. It wants to build Europe's first nationwide and complete value chain in building an economy based on green hydrogen. This is an investment into our future into CO2 emission reduction and into clean air. The implementation of the strategic goals of ZE PAK will be founded on fair transformation, decarbonization and advanced technologies. Let's look at the goal number 1 in more detail. Together with ZE PAK, we want to become a leading producer of clean energy. We want to install 100-megawatt in biomass boilers. Actually, we are already halfway there because ZE PAK is already operating a 50 megawatts biomass boiler. The other 50 megawatts are to be installed early next year. We want to install 600 megawatts in solar power plants. ZE PAK already operates a 70 megawatt solar power plant that was constructed this year. We also plan to invest in onshore wind farms. Here, our goal is 250 megawatts in total and the construction of these farms have already been initiated. We are also interested in thermal waste treatment. Waste is a huge problem, not only in Poland but worldwide. We want to invest in 2 installations and these projects are already ongoing. We also have 2 more projects on our radar, offshore wind farm and SMR reactors. Earlier this year, ZE PAK engaged in cooperation with Danish company Orsted, 1 of the largest offshore wind operators in the world, and we would like to support this project. We will also support ZE PAK in its analysis of small modular reactors, which are not only a clean energy sources, but also a stable energy source. We want to invest about PLN 5 billion in the next 5 years into the projects we've talked about. That is biomass, solar, onshore wind, and waste. These investments will lead to the installation of about 1,000 megawatts of capacity to produce clean green energy, which in turn translates into over 2 terawatt hours of energy every year. All this will help reduce CO2 emissions by 2 million tons annually. Let me just remind you total emission in Poland reach 400 million tons of CO2 equivalent each year. Alone, we want to reduce this by 2 million tons. I think this is an ambitious goal, but a very important one. As for goal number 2, together with ZE PAK, we want to become a leading producer of green hydrogen. In order for the hydrogen to be green, it's need to be produced from green energy. Of course green energy will be available to us, thanks to the execution of goal number 1. We want to install 100 megawatts electrolysis plant, which will enable the production of 40 tons of green hydrogen per day. We expect to install the first electrolyzers in the second quarter of 2022. Once we produce green hydrogen, we will need to store and transport it. We plan to do this using cylinder manifolds. And we will be storing and transporting hydrogen in the form of gas. If you want people to use hydrogen, we also need to engage in distribution. So the next step is the construction of the network of green hydrogen refueling stations. We want to construct at least 30 refueling stations nationwide, about 200 kilometers apart, and we have already applied for the first permit. And the last but not least, we want to engage in the production of Polish hydrogen buses. ZE PAK has already developed a beautiful prototype of such a bus, and the manufacturing plant is already in preparation with the capacity to produce at least 100 green hydrogen buses per year. I will repeat, hydrogen is fuel of the future and the strategic projects for Poland and for Europe. We plan to invest about PLN 0.5 billion in this project over the next 5 years. The investment will be phased to match the rate of development of the hydrogen value chain and hydrogen market in Poland. It's not every day that the business initiative has a tangible positive impact on people. It makes me really happy that the execution of our energy will not only help develop our business, but it will also contribute a better quality of life for people. Through this strategy, we will execute ESG concepts in practice. For the environment, we want to contribute significantly to the reduction of greenhouse gas and harmful particle emissions and help accelerate Poland's transitions towards clean energy. For the society, our activities should bring about cleaner air, which in turn means better health and higher quality of life. And for our business, we are entering into new profitable operations which will help us to strengthen our multiplay strategy through the energy pillar and develop our relations with our B2B and B2C customers. And as the Polsat Plus Group, we have actively supported the Polish society for many years, and we take responsibility for important social and environmental matters. We develop our business in a sustainable manner to the benefit of all our stakeholders. All right. Let's summarize all our strategic goals and investments in 1 place. In the connectivity pillar, our goals are to continue developing our multiplayer strategy, to contribute building customer value and to maintain the high level of customers' loyalty that we enjoy today. Strategic projects in this area include the construction of the 5G network together with Cellnex and the development of our fiber optic network. These investments will be financed from operating cash flows. We generate about PLN 1.5 billion per year in free cash flow, which should be more than enough to meet the investment needs in both the connectivity and content pillars. In the content pillar, our goals are to produce local attractive content, to acquire attractive rights to maintain our TV market position, and to develop our online business around Interia.pl. Our strategic projects in this area are centered around organic growth of pay TV services and content monetization. Once again, these projects will be financed using current cash flows. In our new energy pillar, we have 2 main goals. The first is to produce cheap and clean energy by installing about 1,000 megawatts of power capacity to generate over 2 terawatt hours of production capacity. And the second is to reduce CO2 emissions by about 2 million tons per year. In order to achieve these goals, we plan to invest in the green asset of ZE PAK and additional green energy projects. The acquisition of ZE PAK's green assets will consume about PLN 0.8 billion. And over the next 5 years, we plan to invest PLN 5 billion in green energy projects and PLN 0.5 billion in green hydrogen. What's important here is that we are implementing ESG concepts in practice. And this opens up the possibility to receive attractive debt financing for even up to 75% of the investments. But that is not everything that we prepared for today. So let me talk for a while about another investment opportunity. As we will still have some spare cash on our balance sheet, we want to invest it into Port Praski. Port Praski is a flagship project for Warsaw, our capital city. It's a uniquely located, beautiful district in the very center of Warsaw. It has a direct access to Vistula River. I'm absolutely sure you will not find another such an attractive location in Poland. And probably it would be hard for you to find it also in other European capital cities. What's also very important, the Polish real estate market is still relatively cheap, especially if you compare the price levels to other European capital cities. Therefore, investing our cash in real estate in Poland makes a lot of sense, especially given the inflation rate in Poland is close to 8% per annum at the moment. If you look at the next slide, you will see the spectacular plot of land in all its glory. Port Praski is 38 hectares in the very center of Warsaw. It's circa about 800,000 square meters of building area. It has a residential area, a business area and direct access on an existing underground station. Moreover, if you buy an apartment in the middle of the area, you will be able to come to your flat with a private yacht and park it just in front of your window. Top-class premium location to live and to work. On this slide, you can show a mix of pictures of existing and planned buildings. Definitively, the architecture of the old Praga is preserved, while the newly raised buildings provide wonderful experience. Moreover, if you look at them up, you will notice that Port Praski indeed is located in the very heart of Warsaw. I truly believe this investment will pay off. And I encourage you to visit this area once you visit Warsaw. You'll be really impressed. Okay. I have spoken for a while. Let's summarize our strategy 2023+. So as I explained myself, we want to expand our multi-play by the very important energy component and to take advantage of the unique business opportunity. Our multiplay strategy will, in the future, be composed of 3 pillars: connectivity, content and clean energy. Our legacy business, based on connectivity and content, is very healthy and generates a very stable recurring free cash flow of circa about PLN 1.5 billion per annum. It's more than enough to remunerate our shareholders on a regular basis. Therefore, some excess funds will be invested into developing the third pillar, which is clean energy. We have a very precise plan there. Therefore, we can estimate that our investments, as described earlier, will generate an incremental recurring EBITDA of circa about PLN 500 million, PLN 600 million per annum already in 2026. Moreover, as we still have some cash resources to be invested, we have decided to take advantage of this unique investment opportunity and purchase Port Praski, a top-class real estate. In case of these investments, we may identify alternatives on what to do with this asset in the future. However, at the moment, no final decision is taken. Therefore, be sure we will return to you in the future with more details on the next steps. Ladies and gentlemen, that's it from me. I know this has been a very long presentation, and thank you very much for your patience. But the topics are really exciting for me. Right now, I will now give the floor to Kacha as the CFO role, to explain how we will finance all these investments. Kacha, the floor is yours.

Thank you, Maciej. I can see that you have planned a lot of work for us in the coming years. We won't certainly be bored, but also a new experience awaits us. Together, we will have to learn to look at the new business in the long term, a business with different challenges, longer investment cycles, but also greater stability in the long term. One will certainly have to be a bit more patient with the payback period. Nevertheless, the rationale behind this strategy is very convincing for me as well. Because what I have learned so far from our talks with Maciej means that if our investments are successful, we will have another stable source of highly profitable business, additionally secured in a very long time horizon. Personally, from the perspective of this group's CFO, I like this perspective. For my part today, I will tell you about what we have been working intensively on together with the financial team in recent weeks, the transactions that we concluded this morning. Then I will talk about the group's financial policy for the future, which of course must be adapted to the outlined strategic challenges. Finally, I will comment on the dividend policy for the next 3 years, which the management Board of Cyfrowy Polsat has also adopted today morning. The payment of a stable dividend was our promise to investors and we also want to fulfill this obligation. Next slide, please. So first of all, the planned acquisition of 67% of shares in PAK Polska Czysta Energia. What I want to emphasize strongly here, we want to buy only green assets from ZE PAK. Some of you asked me in the past if we were planning to buy ZE PAK, and I always consistently replied that we were not interested in investing in coal assets, and this transaction fully corresponds to my declarations from the past. So once again, we want to buy 67% of 0 and low-emission assets concentrated within the PAK Polska Czysta Energia Group. This is obviously a related party transaction, so we decided to hire Deloitte Advisory to conduct an independent professional valuation of these assets, so that both the shareholders of Cyfrowy Polsat and the shareholders of ZE PAK feel comfortable. The agreed purchase price for a 67% stake is approximately PLN 800 million and may be subject to some adjustments. After the settlement of the transaction, we will consolidate 100% of the PAK PCE Group's result, as a consequence of which we will also consolidate the debt of companies associated with PAK PCE. The total value of this debt is slightly above PLN 350 million net. We want to settle the transaction with our own funds and its conclusion is conditional upon obtaining corporate approvals on both sides of the transaction and the finalization of structural changes within the ZE PAK group. Putting in short, the changes refer in particular to the biomass assets that have to be transferred to the purchased PAK PCE group. After the transaction, the owners of PAK CPE will be Cyfrowy Polsat with 67% stake and ZE PAK with 33% stake. So as Maciej said, we will jointly implement the transformation plan initiated by ZE PAK using the experience of ZE PAK employees and management. Here, we have the second of the concluded transactions illustrated. A slightly more complicated transaction that required more preparation on the part of my team, but still a very rational decision, in my opinion, especially considering how quickly cash is devaluating today. As a CFO, I applaud such issues conservatively. So nowadays I definitely prefer investing excess cash in the real estate, especially as attractive as Port Praski is. In this case, the planned transaction will be divided into 3 stages. First, after obtaining the relevant corporate approvals, Cyfrowy Polsat would acquire from Embud 2 a 67% stake in Port Praski. Then in the second stage, Cyfrowy Polsat will provide additional capital to Port Praski, because it would in the third stage buy a minority stake in the ownership of special purpose vehicles from Tobe Investments. This transaction is also a related party transaction. So I decided that both the buyer and the seller would rely on an independent valuation prepared by Deloitte. As a result, we also obtained a fairness opinion which confirms that the price we pay is fair. The total value of funds allocated for the settlement of the first and second stage amount to circa PLN 880 million and will be subject to additional adjustments. However, I would like to draw your attention to the fact that Port Praski has no debt [ to date ]. Moreover, it has significant positive cash resources with a net value of PLN 170 million which we will fully consolidate, from the perspective of the consolidated financial statements, simplifying the picture somewhat. The transaction will, therefore, burden our balance sheet with a net amount of approximately PLN 700 million. The financing of this transaction will also be settled with our own funds and only the conditions precedent in this case relate to obtaining appropriate corporate approvals by both parties to the transaction. So 2 great deals, 67% of the value of PAK's green assets and 67% of the phenomenal real estate investment. Everything is financed from our own resources, and we are basically ready to settle the transaction at any time as soon as possible. Regardless of the closing date, we know that PAK PCE will continue to implement its investment plan, in which Maciej is already very strongly involved, so as to accelerate the implementation of this ambitious strategy. Now let's move to the next part of the presentation in which I will tell you how we intend to save the financial policy in the coming years. On this slide, I would like to outline briefly the changes that await us as a result of the decision to implement a new strategy, which will undoubtedly remodel our business. First of all, because energy activities are characterized by the separation of individual projects, we will conduct detailed management accounting of each single investment. The PAK PCE Group is created on the basis of separate SPV companies for each individual investment. Thus both the scale of the investments made and the rate of return will be visible at the level of reports of individual companies, which you will be able to find in the national [ court ] register. You will be able to accurately monitor what return the solar farm generates, how much we earn on a given wind farm, et cetera. Secondly, entering new areas of activity based on the requirements of IFRS 8 will result in the separation of 2 additional reporting segments. In addition to the B2C, B2B segment and the Media segment, in the future we will report to you on an ongoing basis on the results of activities in the field of clean energy production as well as the value of our real estate investments. Thus it will be possible to monitor and evaluate the individual components of our business. Thirdly, we have made sure that you have clear guidelines as to the remuneration due to you in the future, hence, not by accident, the dividend policy adopted today for the next 3 years, which, in my opinion, is shaped as a natural continuation of the previous dividend policy. Fourth, please remember that we strictly control the level of debt, which is also required by the Articles of Association. I would like to mention here that most likely, we will talk to you in the future about the reformulation of the debt limits applicable to us at the moment, but maybe I will tell you about it on the next slide. Another slide, please. This slide illustrates the framework of our thinking about financial policy for the coming years. Here, you can notice a slight change of accents which I bring to your attention. What I want to emphasize at the beginning is the fact that the investments that we plan to implement will be phased in time and are largely independent of each other. What does it mean? This means that we will take care of planning our investments so that Polsat Plus Group remains a healthy business that generates cash, a business that is able to remunerate its shareholders with a stable dividend on an ongoing basis. So let's move on to financial policy. First of all, we set ourselves 2 main goals. First of all, our financial policy is to serve the implementation of the 2023+ strategy. We have achieved a lot so far. Nevertheless, we want to continue building the value of this company. And as you perfectly know, building value of the company requires investments. At the same time, however, we have assured you many times that Cyfrowy Polsat will be a dividend company, and we want to keep this commitment. Hence, we plan to pay a stable dividend also in the future. This is the second of the main goals of our financial policy. However, we slightly changed the accents when it comes to additional goals. A very successful transaction with Cellnex Telecom caused our net debt to drop significantly in the middle of this year. So now we stop talking about the company's debt reduction, which has been our priority for the last few years. Currently, we will rather talk about keeping debt at a safe level. For the group generating such a stable repeatable free cash flow as Polsat Plus Group does, the level of safe debt is certainly significantly higher than the level we are currently at. Let me remind you here that in November, we reported a leverage of only 0.65x EBITDA. We accept and we do anticipate that in the future we will again use more leverage in order to be able to implement the strategy outlined by Maciej. I will certainly make sure that the amount of debt stays on the safe level. Most likely -- I emphasize most likely because it depends on [ the peace ] and success of the announced investments. We will quite quickly exceed the leverage level of 2x again. And therefore, in the future, we will refer to you as a request to consider changes in the company's Articles of Association so as to be able to implement the strategy 2023+. We will come a good time for this dialogue, then we will submit a specific proposal for consideration by the General Meeting of Shareholders. I would also like to remind you that we have initiated a share buyback program, which we treat as an additional flexible tool for rewarding shareholders, and at the same time, our additional buffer for temporary cash allocation. In this case we want to maintain full flexibility, so we do not parameterize our plans in this area at the moment. And here, we have illustrated what we promised you: the parameters of the new 3-year dividend policy already adopted by the company's management board this morning. The basic principles of this policy should not surprise you. So we're slightly raising the minimum level of each annual payment. So far, it was 93 groszy. Currently, we would see the possibility of sharing with you a dividend of at least PLN 1 per share. As usual, being honest with you, I must emphasize that each time, the management Board will assess the current business conditions and future prospects before recommending a specific dividend payment to the AGM. Nothing changes here. This is how we have operated in recent years, and I think that you know our way of thinking about this issue very well. This ends my part. Thank you for your attention, and I pass it on to Maciej.

Thank you, Kasha. I'm really happy that the strategy 2023+ fits into our financial policies, and we will be able to execute our ambitious plan. So let's make a brief summary. On the simple chart, you actually can see our plan in a snapshot. We are building a unique capital group, Polsat Plus Group. The group has been founded and is controlled by Mr. Zygmunt Solorz, who holds over 60% of shares and over 69% of votes at the moment. The group will be composed of 4 pillars, 3 of them being connectivity, content and clean energy, constitute foundations of our multiplay strategy, strategy focused on providing commodity type services to our B2C and B2B customers. The fourth pillar, real estate one, actually is perceived as an investment opportunity for our company where we can create something unique, something beautiful, something for the next generations. I'm absolutely sure it will be a vital project, which we will be proud of in the future. Thank you, ladies and gentlemen. Right now comes the right time to answer your questions.

Thank you, Maciej. Thank you, Kasha. Ladies and gentlemen, right now is the time to ask the questions. [Operator Instructions] I can see Rohit Modi from Citibank has been raising the hand.

Thanks, Grzegorz, and thanks for the opportunity. Just a couple of questions from my side. Firstly -- I'm sorry about the basic question. Firstly, you mentioned that you will be investing through CPE on the energy project and you'll be investing PLN 500 million. Now you own 67% of that company. So the PLN 500 million includes the 37% part of ZE PAK group or it's going to be PLN 500 million of your investment and the similar kind of investment coming from the other group on which you will be generating PLN 500 million to PLN 600 million of EBITDA. Secondly, can you guide us on any kind of cash flow breakeven when you will be achieving cash flow breakeven on these projects? Thirdly, what kind of CapEx phasing do you -- can we expect for the next 3 years on these projects? And just last 1 question on clarification on your dividend. So given we are already at the end of 2021, do we expect 2021 dividend should be PLN 1 or there's a scope of revision when you publish your fourth quarter results?

Rohit. I will take them. First of all, for me to correctly understand, we mentioned that we are going to purchase 67% stake in PAK PCE, Polska Czysta Energia, and this is our initial investments on 2/3. Then as far as your other questions are concerned, if we invest 67% in this asset, then we will take over control over this asset and we will consolidate 100% of income statement, EBITDA and balance sheet of this company. So basically whatever EBITDA, we're talking about 2026 in between PLN 500 million and PLN 600 million, we will consolidate it in full. That's the first thing. The second thing about the cash flow breakeven. The first thing is -- first part of the answer is in one of my slides when I was discussing the way in which we go in to control the investment, especially the green energy investments are the investments that are basically fully closed within 1 entity. These investments are including whatever they have. They include it in separate entities. So then we will monitor our cash breakevens of each investment separately. As a whole, I will not be able to give you exactly the date when we will have the cash breakeven because these investments we're talking about some of them are already working like [ brules at ] photovoltaic farm or solar farm or biomass. Some of them are being built, some of them are being planned and some of them we're thinking of them strategically. They will be done in phases. We will invest in them in phases. So you can imagine that we invest now in something. And then it goes on breakeven. At the same time, we're investing in the next investment. So it's really at the moment hard to say what would be the breakeven point for the whole investment if we phase it. And we independently invest in separate entities, and separate entities that will be producing green energy or doing other things that are connected with a green area. And about the dividend. As I stated on the last slide, we are proposing the 3-year dividend policy with the minimum payment of PLN 1 per share. So it doesn't mean that at this moment, that management is proposing PLN 1 per share. The management will give its proposal as usual more in midyear 2022 analyzing the cash position of the company. We did it very, very -- I mean in consecutive way, we were -- we did it all. We had the 3-year policy. We had the minimum at that moment of 93 groszy. And we realized it fully. So whatever I'm saying is minimum PLN 1 and we'll talk about it and declare our proposal probably mid-2022 as far as the 2021 net profit is concerned.

Thank you very much, Kacha. Ladies and gentlemen, do you have any additional questions? I can see Nora Nagy is asking question. Nora, the floor is yours.

Also a couple of questions, please. Firstly, do these new areas of investments influence somehow the timing of the investments related to your legacy business? Secondly, are you going to use derivatives to hedge the volatile energy prices? And this is realistic to assume then a more volatile bottom line in the future versus currently. And thirdly, shall we somehow treat the Port Praski investment as a new area for you? Or this is somehow related to clean energy strategy pillar?

Kacha, take first questions and then I will take second and third one.

Okay. Nora, I'm really sorry, but after you read the third question, I actually didn't specifically remember everything that is in the first one. So if you would be so kind to me and repeat the first question, please.

So the first 1 was the timing of the investments related to legacy business. Are these impacted somehow with the new investments related to clean energy and [ restate ]?

No. It's absolutely not impacted. The legacy business is going as it should have been and the timing of its investments are -- is not impacted in any way by the new investments in the new energy business.

And I will answer your second and third question. The second question was about volatility and hedging energy prices. Let me clarify here that we would like to produce the energy. So in fact, for internal usage of energy, we will have our own energy, so it will be naturally hedged. But this is, in fact, our third segment in our multiplay strategy, so to the telecommunications, connectivity, content and energy. So we will produce the clean and cheap energy for our B2B customers and for our B2C customers. So in reality, we will have natural hedging for our own consumption. So this is the second question. And third question, in terms of Port Praski. This is like, I can say, site investment for us, which we treat it as an investment opportunity. As I mentioned, we have like free cash. In the meantime, I can say because all energy investments will be phased during these 5 years. So we would like to invest in Port Praski as a flagship investment for Warsaw City here, and this is really fantastic and beautiful area, 38 hectares in the center of Warsaw with a Vistula River view and access too. So this is more than 800 square meters of buildings. So that's how it operates. So these are for us site investments [ surrounding ] investment opportunity.

May I have a follow-up to the last question. If I remember correctly in your presentation, you mentioned that you are going to present 4 different segments [ in Europe ] in the upcoming period. So we are going -- so we will be able to see a return. So this also refers to Port Praski?

Yes, exactly. In fact, we strengthened our multiplay strategy. We like nowadays we report connectivity segment. So this is like a segment of B2B and B2C business. So then we report Content segment. This is like Media segment, so TV and online. So then we add like in multiplay strategy, energy investment and then, of course, we will report you also Port Praski as the separate business, but decisions concerning [Technical Difficulty] [ capare ] schedule and the scale of the investment as well as an expected rate of return to be determined -- will be determined in the future. So we will make a separate meeting about it.

Ladies and gentlemen, at the moment, I don't see any additional questions or anybody else raising the question. So in this context, I pass the floor to Mr. Miroslaw Blaszczyk.

Thank you, Grzegorz. Thank you for participating in today's presentation of the Polsat Plus Group strategy. And I hope that our group's plans for the future will be approved by you. In closing, I wish you a merry Christmas and happy New Year. Thank you very much.

Thank you very much. Thank you very much.

Thank you.