freenet AG: freenet continues to impress with strong customer growth in IPTV and specifies 2023 guidance

freenet continues to impress with strong customer growth in IPTV and specifies 2023 guidance

• Increase in all financial and non-financial key performance indicators
• EBITDA grows by 3.8% and free cash flow by 6.3% in the current financial year
• Simultaneously, freenet is investing in brand awareness in Mobile Communications & IPTV
• Executive Board expects an EBITDA of EUR 495 to 505 million (initial: EUR 480 to 500 m)
• Corridor for free cash flow narrowed to EUR 260 to 270 million (initial: EUR 250 to 270 m)

Büdelsdorf, 8 November 2023 – Today freenet AG [ISIN DE000A0Z2ZZ5] published its results for the nine-month period 2023 after close of trading (Xetra).

Group: EBITDA increases in the nine-month period despite marketing offensives in Mobile Communications and IPTV

From January to September of this year, freenet achieved an EBITDA of EUR 376.1 million, an increase of 3.8% (prior-year period: EUR 362.3 million). At the same time, free cash flow increased by 6.3% to EUR 199.1 million (prior-year period: EUR 187.3 million). Increased service revenues and an overall stable overhead cost base in relation to growth are the main reasons for the increased profitability. In view of this development and the continued positive business outlook, the Executive Board is raising its guidance for EBITDA in the current financial year to between EUR 495 and EUR 505 million (initial: EUR 480 - EUR 500 million) and narrowing its expectations for free cash flow to the upper end of the guidance range (EUR 260 - EUR 270 million; initial: EUR 250 - EUR 270 million). In relation to the respective mid-points, this means an increase in the expectation of 2%. This already takes into account the company's investments in raising awareness of the "freenet" and "waipu.tv" brands in the form of extensive marketing activities.

Table 1: Key figures of freenet AG

Key figure   Unit   30.09.2023 31.12.2022   Change Total subscribers¹   Thousand   9,361.7 9,042.4   319.3 3.5%                   Key figure   Unit   9M/2023 9M/2022   Change Revenues   EUR million   1,938.8 1,889.1   49.7 2.6% EBITDA   EUR million   376.1 362.3   13.8 3.8% Free cash flow   EUR million   199.1 187.3   11.9 6.3%

 

The number of subscribers¹ increased by 319.3 thousand to 9,361.7 thousand in the current financial year (year-end 2022: 9,042.4 thousand). Strong growth in the TV business accounted for more than half of the customer growth in the nine-month period. Driven by the strong customer growth, Group revenues increased by 2.6% to EUR 1,938.8 million in the period from January to September (prior-year period: EUR 1,889.1 million).

Mobile Communications: Increasing service revenues reflected in EBITDA

The positive development of all key figures in the Mobile Communications segment in the current financial year is evidence of freenet's consistent and successful work in the Mobile Communications business.

Table 2: Key figures for the Mobile Communications segment

Key figure   Unit   30.09.2023 31.12.2022   Change Mobile subscribers   Thousand   7,514.8 7,386.8   128.0 1.7% o/w Postpaid customers   Thousand   7,387.8 7,273.7   114.1 1.6% o/w App based tariffs²   Thousand   127.0 113.1   13.9 12.3%                   Key figure   Unit   9M/2023 9M/2022   Change Revenues   EUR million   1,688.1 1,670.4   17.7 1.1% o/w Service revenues   EUR million   1,276.3 1,247.9   28.4 2.3% EBITDA   EUR million   305.5 292.4   13.1 4.5%

 

Stable postpaid ARPU (average monthlyrevenue per user) of EUR 18.0 (prior-year period: EUR 17.9) and moderate growth in the customer group relevant for recurring revenues (service revenues) in the Mobile Communications segment (7,387.8 thousand; 30 September 2022: 7,235.0 thousand) resulted in rising revenues of EUR 1,688.1 million (prior-year period: EUR 1,670.4 million). Service revenues increased by EUR 28.4 million to EUR 1,276.3 million (prior-year period: EUR 1,247.9 million) and continue to account for the majority of segment revenues (76%). The marketing campaign launched in July with the slogan "freenet, fertig, los!" is intended to sharpen freenet's profile among customers with short, clear messages and thus further increase freenet's brand awareness. All in all, the segment contributed EBITDA of EUR 305.5 million (prior-year period: EUR 292.4 million) to Group EBITDA in the reporting period, an increase of EUR 13.1 million.

TV/ Media: Deliberate slowdown in EBITDA growth due to investments in the "waipu.tv" brand

In the TV and Media segment, there has been a significant increase in subscription customers in the current financial year. As of 30 September 2023, more than 1.8 million private customers pay to receive linear television from freenet (waipu.tv; freenet TV). This is around 200 thousand more customers than at the beginning of the year, although freenet TV continues to lose customers.

Table 3: TV and Media segment

Key figure   Unit   30.09.2023 31.12.2022   Change TV subscribers   Thousand   1,846.9 1,655.6   191.3 11.6% o/w waipu.tv subscribers   Thousand   1,234.9 970.0   264.9 27.3% o/w freenet TV subscribers (RGU)   Thousand   612.0 685.6   -73.6 -10.7%                   Key figure   Unit   9M/2023 9M/2022   Change Revenues   EUR million   251.8 225.6   26.2 11.6% EBITDA   EUR million   85.9 83.1   2.7 3.3%

 

In order to participate even more strongly than before in the structural change in the German TV market towards an IPTV-dominated market, the intention is to invest an additional EUR 10 million in increasing waipu.tv's brand recognition in the current half-year. The profitability-orientated acquisition of new customers remains the focus. Compared to the strong increase in revenues of 11.6% (9M/2023: EUR 251.8 million; prior-year period: EUR 225.6 million), the aforementioned investments will only lead to a slight increase in EBITDA of 3.3% to EUR 85.9 million (prior-year period: EUR 83.1 million). The stable business development of Media Broadcast in the B2B (infrastructure service provider for the media industry) and B2C (freenet TV) sectors had a supporting effect here.

Conference Call

The conference call on the results for the nine-month period and Q3 2023 will take place on Thursday, 9 November 2023 at 10:00 a.m. (CET). All interested parties can follow the conference call via webcast (listen-only mode). A recording will be made available afterwards.

 

Further documents for publication

Nine-month statement 2023

Presentation 9M/Q3 2023

 

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¹ Sum of postpaid, freenet FUNK, freenet FLEX, waipu.tv subscribers and freenet TV subscribers (RGU)

² freenet FUNK and freenet FLEX customers

 

Note

In the interests of clear and transparent presentation, alternative performance measures (APMs) are used in the financial statements of freenet AG and in ad hoc disclosures in accordance with Art. 17 MAR in addition to the disclosures defined by the International Financial Reporting Standards (IFRS). Information on the use, definition and calculation of APMs can be found in the 2022 Annual Report.

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Contact

freenet AG

Investor Relations & ESG Reporting

Phone: +49 (0) 40/ 513 06 778

Mail: ir@freenet.ag

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freenet AG

Public Relations & Corporate Communications
Phone: +49 (0) 40 / 513 06 777
Mail: pr@freenet.ag
www.freenet.de