freenet generates EBITDA of half a billion euros for the first time and proposes dividend increase

freenet generates EBITDA of half a billion euros for the first time and proposes dividend increase

• Group revenues increased by 2.8% to EUR 2,627.3 million (PY: EUR 2,556.7 million)
• EBITDA growth of 4.5% to EUR 500.2 million (PY: EUR 478.7 million)
• Free cash flow increased by 5.3% to EUR 262.6 million (PY: EUR 249.2 million)
• Proposed dividend amounts to EUR 1.77 per share (PY: EUR 1.68)
• waipu.tv: 400k net new subscribers in 2023 and record growth in Q4 (134k)
• 2024 Guidance: EBITDA guidance leaves room for further increase despite growth investments

Büdelsdorf, 28 February 2024 - freenet AG [ISIN DE000A0Z2ZZ5] today published its preliminary results for the 2023 financial year and its guidance for 2024 after the close of trading (Xetra).

Group EBITDA rises to half a billion euros for the first time in the 2023 financial year

The preliminary results for the past financial year underline freenet's continuous optimisation in the Mobile Communications business and its growth ambitions in the TV business. The company continues to focus on its core competences in the sale of subscription models in Mobile Communications and TV entertainment. The currently prevailing external factors (consumer restraint, high energy prices, high financing costs) had no significant impact on business development.

Table 1: Key figures of freenet AG

Key figure   Unit   31.12.2023 31.12.2022   abs. Change rel. Change Total subscribers¹   k   9,492.7 9,042.4   450.3 5.0%                   Key figure   Unit   2023 2022   abs. Change rel. Change Revenues   EURm   2,627.3 2,556.7   70.6 2.8% EBITDA   EURm   500.2 478.7   21.5 4.5% Free cash flow   EURm   262.6 249.2   13.3 5.3%

 

The number of subscribers¹ increased by 450.3 thousand to 9,492.7 thousand in the financial year (end of previous year: 9,042.4 thousand). Strong growth in the TV business accounted for almost two thirds of customer growth. Driven by customer growth, Group revenues increased by 2.8% to EUR 2,627.3 million (previous year: EUR 2,556.7 million).

With EBITDA growth of 4.5% to EUR 500.2 million (previous year: EUR 478.7 million), the guidance for the 2023 financial year, which was raised during the year (EUR 495 to 505 million), was met. EBITDA is at the centre of the guidance range and reached the half-billion euro mark for the first time. Free cash flow increased by 5.3% to EUR 262.6 million (previous year: EUR 249.2 million) and is therefore within the guidance specified during the year (EUR 260 to 270 million). The positive development of the earnings figures reflects the increase in service revenues in both operating segments and a stable overhead cost base overall in relation to customer growth.

Dividend increase to EUR 1.77 per share proposed

The mid-term ambition of achieving a compound annual growth rate (CAGR) of over 4% by the end of 2025 based on the 2020 financial year was once again achieved this year, as in previous years (CAGR 2020-2023: 5.5%). Against this backdrop, freenet is on track to achieve EBITDA of at least EUR 520 million by the end of the 2025 financial year.

In view of this development and the continued positive business outlook, the Executive Board will propose to the 2024 Annual General Meeting 2024 to increase the dividend by 5.4% to EUR 1.77 per share. (previous year: EUR 1.68), which corresponds to the announced distribution of 80% of free cash flow. The 2024 Annual General Meeting will take place on Wednesday, 8 May 2024, in Hamburg.

The guidance for 2024 EBITDA (EUR 495 to 515 million) assumes no significant financial growth compared to the previous year and in relation to the centre of the guidance range. This is due to investments in increasing waipu.tv's brand awareness, which should lead to even stronger market penetration following the abolition of the ancillary cost privilege (‘Nebenkostenprivileg’) in mid-2024. The decision to forego financial growth in 2024 in favour of accelerated, mid-term customer growth was made deliberately by the Executive Board. Free cash flow is expected to be between EUR 260 million and EUR 280 million, with 80% of the free cash flow continuing to be distributed as dividend.

Mobile Communications: Rising service revenues reflected in segment EBITDA

The positive development of all key performance indicators in the Mobile Communications segment in the 2023 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   31.12.2023 31.12.2022   abs. Change rel. Change Mobile subscribers   k   7,539.6 7,386.8   152.9 2.1% o/w Postpaid customers   k   7,418.3 7,273.7   144.6 2.0% o/w App based tariffs²   k   121.3 113.1   8.2 7.3%                   Key figure   Unit   2023 2022   abs. Change rel. Change Revenues   EURm   2,282.7 2,251.3   31.4 1.4% o/w Service revenues   EURm   1,707.4 1,665.9   41.5 2.5% EBITDA   EURm   417.4 402.7   14.7 3.7%

 

The number of postpaid customers has grown moderately by 2.0% to 7.42 million since the end of the previous year (7.27 million). The number of users of app-based tariffs (freenet FUNK and FLEX) increased by 7.3% compared to the end of 2022 (113.1 thousand) to 121.3 thousand. Overall, freenet continued to benefit from the ongoing trend of customers moving from prepaid to flexible postpaid contracts and customers' desire for independent advice. At EUR 18.0, postpaid ARPU proved to be stable compared to the previous year (EUR 17.9). Monthly recurring service revenue increased by 2.5% to EUR 1,707.4 million (previous year: EUR 1,665.9 million) and continued to account for the majority of segment revenue.

Overall, the Mobile Communications segment generated revenues totalling EUR 2,282.7 million, 1.4% more than in the previous year (EUR 2,251.3 million). Overall, the segment contributed EBITDA of EUR 417.4 million to Group EBITDA in the reporting period, an increase of 3.7% (previous year: EUR 402.7 million).

TV and Media: Strong customer and sales growth thanks to waipu.tv

The TV and Media segment recorded an increase in TV subscribers to almost 2 million. In particular, the number of subscribers to waipu.tv grew strongly in the past financial year. waipu.tv gained around 400 thousand net new subscribers (previous year: 247.5 thousand). At the end of the year, the number of subscribers rose to 1.369 million (previous year: 0.970 million). With waipu.tv, EXARING has now established itself as the second-largest provider on the German IPTV market with an attractive value-for-money proposition. As expected, the number of revenue-generating users (RGU) of freenet TV fell noticeably by 101.8 thousand from 685.6 thousand to 583.8 thousand in the twelve months of the past year. As a result of a price increase at the end of 2022, the revenues generated by freenet TV nevertheless remained stable compared to the previous year.

Table 3: Key figures for the TV and Media segment

Key figure   Unit   31.12.2023   31.12.2022     abs. Change   rel. Change TV subscribers   k   1,953.0 1,655.6   297.4 18.0% o/w waipu.tv subscribers   k   1,369.3 970.0   399.2 41.2% o/w freenet TV subscribers (RGU)   k   583.8 685.6   -101.8 -14.9%                   Key figure   Unit   2023 2022   abs. Change rel. Change Revenues   EURm   345.4 313.3   32.1 10.2% EBITDA   EURm   110.2 105.4   4.8 4.5%

 

Overall, the strong growth of waipu.tv more than compensated for the decline in freenet TV users, with the number of subscribers to TV products totalling 1,953.0 thousand at the end of the year, significantly higher than at the end of the previous year (1,655.6 thousand). Media Broadcast also gained new customers in the area of B2B services and continued to make the largest contribution to revenues and segment EBITDA. Overall, the TV and Media segment increased its revenues by 10.2% year-on-year (EUR 313.3 million) to EUR 345.4 million and achieved a 4.5% increase in EBITDA to EUR 110.2 million (previous year: EUR 105.4 million). The lower EBITDA growth compared to revenues is due to investments in waipu.tv's brand awareness in the second half of the past financial year.

 

2024 Guidance: EBITDA guidance leaves room for further increase despite growth investments

Financial KPI   Unit   2024 Guidance 2023 Revenues   EURm   stable 2,627.3 EBITDA   EURm   495-505 500.2 Free cash flow   EURm   260-280 262.6 ARPU (postpaid)   EUR   stable 18.0             Non-financial KPI   Unit   2024 Guidance 31.12.2023 Postpaid customer base   m   moderate growth (+) 7.418 waipu.tv subscribers   m   significant growth (+++) 1.369 freenet TV subscribers (RGU)   m   noticeable decrease (--) 0.584

Conference Call

On Thursday, 29 February 2024 at 10:00 a.m. (CET), the conference call on the results for the financial year and the fourth quarter of 2023 will take place. All interested parties can follow the conference call via webcast (listen-only mode). A recording will be available afterwards.

Further documents for publication

Event page for the 2023 financial year

Presentation FY/Q4 2023 

The 2023 Annual Report of freenet AG will be published on 28 March 2024.

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

² freenet FUNK and freenet FLEX subscribers

 

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.

Contact

freenet AG

Investor Relations & ESG Reporting

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

E-mail: ir@freenet.ag

fn.de/investors

freenet AG

Public Relations & Corporate Communications
Phone: +49 (0) 40 / 513 06 777
E-mail: pr@freenet.ag

www.freenet.ag