On the occasion of a meeting of the board of directors of Czech Radiokomunikace (CRA), Steven Marshall, a representative of the shareholder, London-based Cordiant Digital Infrastructure fund, arrived in Prague. He is Chairman of the Board of the London fund and also Chairman of the Board of CRA.
CRA, whose annual revenue climbed to K2.4 billion in the last fiscal year 2023/24 and ended the year with a net profit of K143 million, will be the first to be appointed by the CRA board. CSK, in addition to its traditional business of broadcasting television and radio, is also making a significant shift into providing data and cloud services. Revenues from cloud services, data centre rentals, telco, infrastructure, IoT and OTT grew 51% for the first time and were up double digits year-on-year.
CRA also invested significantly in the development of data services last year. They consider confirming their leading position in the digital TV market and maintaining a high level of terrestrial TV usage in the Czech Republic as their key strategic objective. Most recently, Digital Audio Broadcasting Broadcasting (DAB+) is also being developed and commercial broadcasters are starting to use it. "If terrestrial TV broadcasting were to be abolished, the cost of making content available to households would be huge," Steven Marshall says in an interview with MediaGuru.cz, among others.
Czech Radiokomunikace has been hinting over the past year that it is strengthening its revenues from sectors other than TV and radio broadcasting. The year 2024 is behind us. How do you assess it from the position of a shareholder? Has the company achieved all the goals it set itself?
The year 2024 was exceptional for České Radiokomunikace, it was the best year since we joined the company. That was three and a half years ago. We achieved solid revenue growth and invested significantly in digital technology, which allowed us to add new TV channels that we broadcast on full-screen DVB-T2 networks. As a result, we have expanded our content for Czech viewers while increasing revenues.
Further investment has gone into digital ad insertion technology, which allows advertising to be targeted in terms of content. We see this as an advantage for both broadcasters and viewers. We were also able to get licences to build DAB digital radio networks, which is similar to what we did in Poland. Czech Radio has already built about 50% of the DAB network in the Czech Republic and plans to continue its expansion. DAB radio is more energy efficient and provides better quality sound than FM or AM radio.
The modernisation of data centres is also continuing. Looking back, five or six years ago we were broadcasting TV signals using older DVB-T and MPEG-2 technologies. We have moved to the latest digital technologies DVB-T2 and HEVC, which are much more energy and frequency efficient. The new digital systems now take up much less space, which has allowed us to transform the original broadcast facilities, which are connected by high-capacity power feeds and fibre optics, into modern data centres. This is ideal for future technological development.
This is confirmed by the tens of millions of crowns invested in the new data centre, which enabled CRA to open the data centre in Cukrák last spring. Up to two billion will be invested in the construction of a data centre in Zbraslav, Prague, which was also supported by the Ministry of Industry and Trade. Is this a strategy that CRA wants to follow in the future?
Yes, new data centres are being built to provide a secure and controlled environment for servers and equipment for companies and government institutions. Eight such data centres have been built in the last three years and have gradually filled up. The latest, the eighth facility at Cukrák, was completed last spring and is expected to be sold out by the middle of this year. There are also plans to expand at Žižkov, not only with new rack positions, but also with new backup batteries and generators, which will increase capacity by 30% by the end of this year.
The site in Zbraslav, Prague, will begin to transform into a modern data centre. After two years of approvals, we have obtained planning permission for the construction. This project will be the most modern data centre in Central and Eastern Europe, accelerating the introduction of innovation, bringing new jobs and enabling data storage on Czech territory. It is expected that it could be completed during 2026. It will be a great asset for the Czech Republic and for CRA, which is gradually expanding its scope to include data centres, cloud and telecommunications services in addition to broadcasting.
How is this activity reflected in the company's overall revenues? We know that in fiscal year 2023/24, data services accounted for 51% of total revenues. How will it be in the following year 2024/25?
Data centre revenues will grow significantly. With the new centres in Cukrák and Zbraslav in the next two to three years, this will be even more significant. This is a really massive investment for Radiokomunikace. We are also well on our way to becoming a leader in the cloud business in the Czech Republic.
We are well on our way to becoming a leader in the cloud business in the Czech Republic.
Steven Marshall
But in addition to that, revenue from providing services related to television and radio broadcasting is also key for CRA. In broadcasting, it's about terrestrial signal distribution, where the business is also affected by political decisions. At the World Radio Conference at the end of 2023, frequencies for terrestrial TV broadcasting were guaranteed until the end of 2030. What do you think will happen after 2030?
First of all, terrestrial broadcasting is the most efficient way to deliver large amounts of video content to the general public. If it were abolished, the cost of making content available would be enormous. Many more servers in data centres, higher spending on customer equipment and investment in fibre would be required. In the Czech Republic, it is expensive to roll out fibre to homes and even if it were possible, the costs would be huge. Unlike streaming, where each connection requires dedicated computing capacity, with broadcast we send the signal from a single antenna to hundreds of thousands of homes, which is much more efficient and energy-efficient. If we switched to streaming only, we would consume 10 to 11 times more energy than broadcasting and households would have to pay thousands of crowns a year to receive TV.
Broadcasting will therefore remain a key part of our system. In the next five years, we could add 5G Broadcast broadcasting, making it easier to access content on a phone, laptop or tablet, without the need for data connectivity. The content will be free because the data will not flow over the cellular network, but over the new 5G Broadcast network. This will make content more widely available to people not just on the move, and without having to pay for mobile data.
Another advantage of 5G Broadcast is that it will free up capacity on existing mobile networks, which are currently overwhelmed by downloading video content. As a result, mobile operators will be able to offer better quality of service and increase the capacity of their networks without the need for additional investment in new antennas and towers. This will be a big win for mobile operators and users alike.
Video viewing on 5G should be designed for mobile screens, but if we talk about current trends, we see that many people prefer to watch video content on big screens. Is 5G an appropriate technology for big screens?
For big screens, the best technology is DVB-T2, which is designed for fixed reception. However, 5G Broadcast chips can be placed in cars, for example, and children in the back seat will be able to watch TV. It will work on an iPad and a mobile phone - almost any mobile device. This opens up a whole new range of possibilities for accessing content than we have today.
How widespread can 5G broadcasting be in three to five years?
Very, 5G Broadcast will be widely available and people will be able to receive audiovisual content using 5G Broadcast networks. What will happen in four or five years? I think Apple or Samsung will release, for example, the iPhone 26 Max and the new feature will be that it will be possible to watch TV for free.
In the Czech Republic, it is expensive to roll out fibre optics to homes, and even if it were possible, the cost would be huge.
Steven Marshall
A topic on the broadcasting front in the Czech Republic is also the construction of networks for commercial DAB radio broadcasters. České Radiokomunikace is gradually expanding DAB+ broadcasts for Czech Radio, and in early 2024 it tendered frequencies for a nationwide DAB network and also for regional networks in Prague and in northern and western Bohemia in an electronic auction organised by the CTU. Construction of the full-screen network will begin in mid-2024, when will it start broadcasting?
We have already built networks that cover 50% of the population and are finalising commercial negotiations with radio stations that will broadcast on DAB. We will increase our DAB coverage and add new radio stations by the end of March. We have won the licences, we have got the frequency spectrum, we have divided it into a certain number of radio networks. And we're selling capacity on those networks to anyone who wants to broadcast their content on state-of-the-art DAB+ digital networks. Everything was sold before we even built the network.
Mention should also be made of the acquisitions you've made in the last year. In the broadcasting field, for example, you bought the operator Prague Digital TV. Are you looking at other acquisitions?
Always. At the moment we are looking at several things, but we will see how it turns out. You have to have the right price and the right conditions. If the management team sees an opportunity to expand, they have our support. The local management team is doing a great job, business is going great here. It's not just about growing the company's revenue and profitability, it's about offering a broader service to the whole country and contributing to its economic growth.
What do you have planned for this year?
To continue doing what we do well. That is providing broadcasting services because we still have some capacity to broadcast new TV and radio stations and we can offer more channels to viewers and listeners. We want to continue to develop more modern and new services for our customers in the broadcast segment, which is specifically, for example, digital insertion of advertising in TV. We continue to expand our data centers and telecommunications transmission services, as well as expanding our business with smaller towers used by mobile operators. We want to invest in these things.
Steven Marshall, Chairman, CRA
Steven Marshall has been Chairman of the Board of Czech Radiocommunications (CRA) since April 2021. He is Chairman of the Board of Cordiant Digital, the owner of CRA. Prior to joining Cordiant Digital, he was President of American Tower Corporation - a division of US Tower. He also built National Grid Wireless, which became the largest provider of network neutral tower infrastructure in Europe. After its sale to private investment groups, it became the foundation of Arqiva.
Source: mediaguru.cz
