Letter of the Chairman of the Supervisory Board

Ladies and Gentlemen,

The year 2020 was extremely challenging and came as a major test for everyone, for Poland and for the world, for the economy and business, and for our Group. No one expected that all of a sudden, in a very short time, we will have to face so many challenges and at the same time find ways to function in a totally new reality. Practically no crisis management plan accounted for such a scale, extent and pace of change.

On the one hand, it has been an extremely difficult experience for the whole society and for us, who are part of it, but on the other hand we can be proud of how we have coped with the challenges and how we continue to cope with them. I can proudly say that in our Group it was not only the business continuity mechanisms worked, but above all it was our employees who stood up to the challenge. In conditions in which strategies and the organization of numerous companies and sectors of business had to be revised instantly, the strategy of development that we have adopted many years ago proved right. Skillful combination of the worlds of media, production and content broadcasting as well as provision of top quality telecommunication, Internet access and TV services with the use of all available technologies have enabled us to effectively respond to the needs of practically all the inhabitants of our country in all types of conditions and regardless of external circumstances, including the situation of a lockdown, remote work and learning, extremely high traffic load in the network, or substantial communication-related challenges faced by the institutions which support us as a society.

The pandemic demonstrated how responsible a role our Group plays in the society and economy as the provider of products for millions of families, companies and institutions. Until now we have been looking at these products as substantially just offering entertainment. At present, we are becoming aware of the extent to which we have enabled numerous businesses to continue their operations or school and university students to continue their education. Thus, the pandemic has increased our awareness of the social responsibility that we have. This has motivated us to put in even more effort into the development of state-of-the-art technologies, both those that enable transmission of content which is important to our customers and those that enhance the quality and the continuity of our services and also increase the comfort of use of these services in a dynamically evolving world which continues to rely in an increasing degree on communications and data transmission. In a world of remote work and learning, a world of exponential development of Internet-based services, a world of growing demand for continuous access to content on all screens available to our customers – from a mobile phone display, through a PC to a TV screen.

In May 2020, after several months of preparations and tests, we launched the first commercially-operating 5G network using the unique 2.6 GHz TDD frequency band. 5G from Plus means greater convenience of use of the network for our customers as well as additional possibilities of using new technologies offered to companies and the economy in such areas as for example the Internet of Things, intelligent cities, artificial intelligence or virtual reality, so as to support our customers now and once we return to the new normal – with new forms of work and learning, with security and access to entertainment, both in its traditional and new forms, such as the developing sphere of gaming.

5G technology will be extremely important in the future for all the inhabitants of Poland. It will strongly support the development of economy 4.0, cybersecurity, electronic payments or cloud and big data solutions which are becoming increasingly vital in the public sphere and which will enable Poland to move to the next stage of digital and civilizational development.

Guided by the needs of our customers and our country and understanding the importance of the services which rely on top quality technological solutions, we have proceeded with the roll out of the 5G network. In 2021, we plan to offer access to our 5G network to at least 11 million inhabitants of Poland concurrently maintaining top quality communications using the existing 2G/3G/4G networks. For us this is a priority. As the leader of LTE technology once and the leader of 5G technology today, we feel an enormous responsibility for the digital development of our country, the quality of education, the ability to assure remote work or higher level of activity of companies in the Internet.

Development of technology was also the underlying reason of the decision to enter the partnership with Cellnex Telecom that we announced in February. This partnership will offer our Group the opportunity to move forward with even faster roll-out of the 5G network in the coming years. It will enable us to increase the number of transceivers in the network, to offer the possibility of an even faster launch of state-of-the-art services while applying a cost-effective approach.

The pandemic has posed big challenges to us, as the society, and has put to test our responsibility and solidarity. As a Polish company, we could not be indifferent to the vast needs that emerged right after the announcement of the first lockdown. We proceeded very quickly with providing aid and we continue our efforts also today in various areas. Polsat Group, jointly with its main shareholder, Mr. Zygmunt Solorz, donated a total of over PLN 50 million to support the society and the healthcare system in the struggle against the coronavirus. Our aid, provided among others in cooperation with Polsat Foundation, was addressed to those who were most in need – to hospitals, doctors, nurses, medical rescuers, our customers, viewers and employees. We offered both, financial support and support in kind. Our major actions included the purchase of 200 thousand coronavirus tests during the early stage of the pandemic, 20 ventilators, protective gear for medical personnel, disinfectants, as well as airing a special block of commercials on the Polsat channel, SMS actions to raise money, or donating electronic equipment to children from foster families and orphanages.

During those difficult times the educational and informational functions were played by information sources considered to be the most trustworthy and reliable in Poland, i.e. Polsat News channel, Wydarzenia (the News) news program, polsatnews.pl portal as well as the Internet services managed by Interia Group, which joined our group during the year. Broadcasting of valuable content and reliable information gained additional value during the pandemic and in the face of the change that the pandemic caused to the lifestyles of our customers, viewers and employees. It seems that in spite of the difficulties, for example with production of new TV and cinema content, in spite of the existing threats, pervasive coronavirus testing and quarantine as well as stringent sanitary regulations, the Group has managed to meet the challenges it faced.

When summing up 2020 in the operations of Polsat Group, one should not only underscore its ability to effectively stand up to the challenge of ensuring business continuity and the right quality of its operations as well as continuous provision of services, but also the fact that it successfully pursued numerous projects, including the efficient roll out of its 5G network. The above-mentioned acquisition of Interia.pl Group was one of the biggest investments. Interia is one of the leading Polish Internet portals whose websites are visited by 20 million users each month. The decision, which is of strategic importance for our development, will contribute to further expansion of the range and presence of our services in the Internet, on the dynamically growing online advertising market and maybe, in the near future, also in the e-commerce area. Moreover, Interia is an additional place for distribution of the content that we produce and a perfect channel for communicating with our customers. Integration of the portal within the Group’s structures is proceeding very smoothly and early positive effects, for example growth of coverage and number of page views, are already visible.

In Polsat Group we are also very much aware of the changes that rapidly occur in the natural environment and the climate. We want to operate in a way which will be most favorable to the environment and the climate. Hence, our decision to become involved in the activities of the Clean Poland Program Association that has been established by Mr. Zygmunt Solorz. And hence the funding to popularize and launch new ways of producing clean energy based on solar panels as well as the plan of Polsat Group companies to switch to using clean and green energy only, the production of which will start soon in the biggest solar power farm in Poland, currently being built with our support. As consumers, employees and entrepreneurs we make choices every day which will influence the comfort of our lives and the lives of future generations. Polsat Group has already made the choice and it is introducing numerous initiatives and carrying out many actions that are aimed at preserving the natural environment and the climate. Thus our plan to use clean, green, zero-emission electricity only, revamping of the car fleet by introducing zero-emission vehicles or the development and popularization of such segments of the business as photovoltaics.

All the efforts we embarked upon last year underscored the stability, the persistence and the potential of Polsat Group as the leader on the markets of content, entertainment, media and telecommunications in Poland. Regardless of the difficulties that we encountered, we continue pursuing our superior goal of sustainable growth of Cyfrowy Polsat’s value for its shareholders by listening to the pulse of the market and the society and by dynamically responding to the changes by offering increasingly advanced services that enable us to effectively compete for our customers’ attention, trust and time.

On behalf of the Supervisory Board of Cyfrowy Polsat I would like to thank our customers for the past year that we spent together and for their enormous trust and loyalty, in spite of all the challenges, as well as for inspiring us to continue along the path of change. I would like to thank the Management Boards and the Supervisory Boards of the Group’s companies, thanks to whom we successfully passed our biggest exam so far as an organization, thanks to whom we were able to assure continuity of services and support to our customers, and thanks to whom we were able to take such bold, fast and decisive actions and, despite everything, we were still able to achieve our goals, including our development goals. Special compliments for all the employees of the Group whose responsibility, efforts, involvement, resourcefulness as well as effectiveness, flexibility and openness – all of which were so important last year – have enabled us to accomplish the goal of being the leader of the media and telecommunication markets.

We have another demanding year ahead of us but I am convinced that with such a team and such assets, which have proven their worth in action, we will continue to skillfully build our business and ensure to our customers support, the feeling of safety, hope and moments of joy with the offer provided to them and, at the same time, continue to create added value for the Group and strong basis for its further development.

Marek Kapuściński

Chairman of the Supervisory Board
Cyfrowy Polsat S.A.