03.05.2017 - 18:00 Uhr

freenet AG increased revenue, gross profit and EBITDA in the first quarter of 2017 and confirms guidance for 2017 and outlook for 2018

  • Solid core business Mobile Communications based on continuously expanding customer ownership (+2.1 per cent compared with previous year) and approximately stable postpaid-ARPU (21.1 euros)
  • Group revenue up by 11.9 per cent to 838.0 million euros (previous year: 749.2 million euros)
  • Gross profit has increased by 18.0 per cent to 227.0 million euros (previous year: 192.3 million euros)
  • Group EBITDA has increased by 13.1 per cent to 100.9 million euros (previous year: 89.2 million euros), including 9.7 million euros from the holding in Sunrise Communications Group AG (previous year: 0.2 million euros1)
  • Confirmation of guidance for 2017 and outlook for 2018

Büdelsdorf, 3 May 2017 – freenet AG [ISIN DE000A0Z2ZZ5] has today published its interim statement for the results of the first quarter of 2017 and has confirmed guidance for the financial year 2017 and the perspective outlook for the financial year 2018.

In the first quarter of 2017, the company generated Group revenue of 838.0 million euros, an increase of 11.9 per cent compared with the previous-year figure of 749.2 million euros. The increase is primarily attributable to the revenue of 74.7 million euros generated in the TV and Media segment (previous year: 10.4 million euros2). In the reporting quarter, the Mobile Communications segment contributed 762.8 million euros to the Group revenue (previous year: 727.4 million euros), resulting primarily from the increase of 2.1 per cent in customer ownership compared with the previous year (9.56 million customers as of 31 March 2017 compared with the corresponding previous-year figure of 9.37 million customers) in conjunction with approximately stable postpaid-ARPU of 21.1 euros in the first quarter of 2017 (previous year: 21.5 euros). In addition, the revenue generated by the marketing of digital lifestyle products and services also increased compared with the previous year.

The increase of approximately 193,000 customers with customer ownership in the Mobile Communications segment compared with 31 March 2016 is mainly attributable to the significant growth in the number of customers who have signed up for two-year contracts (postpaid customers) included in the above figure; the number of these customers increased by approximately 182,000 (plus 2.9 per cent) to 6.54 million at the end of the reporting quarter. The number of no-frills customers increased by approximately 11,000 customers (plus 0.4 per cent) compared with the previous year, to 3.02 million customers as of 31 March 2017. The average monthly revenue per user generated in the no-frills segment (no-frills ARPU) amounted to 2.5 euros in the first quarter of 2017 (previous year: 2.4 euros).

The gross profit of the Group of 227.0 million euros in the reporting quarter was considerably higher than the corresponding previous-year level (192.3 million euros), due primarily to the contribution of 38.4 million euros made by the TV and Media segment (previous year: 4.9 million euros2). The gross profit margin in the Group accordingly increased by 1.4 percentage points to 27.1 per cent (previous year: 25.7 per cent).

Group EBITDA amounts to 100.9 million euros in the first quarter of 2017, representing growth of 13.1 per cent compared with the previous year (89.2 million euros). It is spread over the segments of Mobile Communications (100.1 million euros, previous year: 90.7 million euros1), TV and Media (3.3 million euros, previous year: 1.1 million euros2) and Other/Holding (-2.5 million euros, previous year: -2.6 million euros). With regard to segment reporting, it must be borne in mind that the EBITDA generated in the TV and Media segment in the first quarter of 2017 was affected by higher marketing expenses in the context of the process of changing over to the new transmission standard DVB-T2 HD on 29 March 2017. In addition, freenet AG will not generate initial revenue or contributions to earnings from private customer business of the Media Broadcast Group before the third quarter of 2017 due to various factors, including a free test phase following the sales start of the TV product freenet TV. Disregarding the earnings of 9.7 million euros attributable to the holding of freenet AG in Sunrise Communications Group AG (previous year: 0.2 million euros1), which are attributed to the Mobile Communications segment, Group EBITDA amounts to 91.1 million euros (previous year: 89.0 million euros2).

The depreciation and amortisation increased to 35.0 million euros in the first quarter of 2017 (previous year: 21.8 million euros) mainly as a result of the increased inventories of property, plant and equipment and intangible assets in connection with the purchase price allocation of the Media Broadcast Group carried out in the previous year.

After taking account of the interest result of -12.4 million euros (previous year: -12.0 million euros) and after deducting the taxes on income of 6.7 million euros (previous year: 4.1 million euros), the consolidated profit for the reporting quarter amounted to 41.7 million euros, and declined by 9.4 million euros compared with the previous year (previous year: 51.1 million euros). Earnings per share are stated as 0.35 euros (previous year: 0.40 euros).

The cash flow from operating activities amounted to 78.3 million euros in the first quarter of 2017, representing an increase of 5.0 million euros compared with the previous year (previous year: 73.4 million euros). The increase is mainly attributable to the higher Group EBITDA (disregarding the EBITDA contribution attributable to the holding in Sunrise Communications Group AG) as well as the lower tax payments compared with the previous year. The cash flow from investing activities is stated as -21.5 million euros for the first quarter of 2017 (previous year: -799.3 million euros). The change is primarily attributable to the outflows recognised in the previous year for the acquisition of the shares in Sunrise Communications Group AG as well as the Media Broadcast Group. In contrast, the payments in the first quarter 2017 increased due to the investments in the DVB-T2 network. The cash flow from financing activities amounted to -18.7 million euros in the reporting quarter (previous year: 959.6 million euros). The change compared with the previous year is mainly attributable to the inflows recognised in the previous-year quarter from the refinancing as well as the repayment of shareholder and bank loans of the Media Broadcast Group. The free cash flow3 amounted to 56.4 million euros in the first quarter of 2017, representing a decline of 10.0 million euros compared with the previous year (66.4 million euros).

On 12 April 2017, on the occasion of a capital market day, freenet AG communicated initial figures concerning the newly developed private customer business of the TV and Media segment. According to this announcement, the number of connected devices for receiving the new digital-terrestrial broadcasting standard DVB-T2 HD, which has been gradually replacing the previous system throughout the country since 29 March 2017, was estimated to be 1.2 to 1.5 million at the end of the first quarter of 2017. Although the obligation for customers to pay for the new DVB-T2 product freenet TV only commences on 1 July 2017, freenet AG reported approximately 160,000 paying freenet TV users on 31 March 2017. The company expects that there will be a further increase in the number of freenet TV customers to more than 500,000 by the end of the first half of 2017. In parallel with its digital-terrestrial service freenet TV, freenet AG has since the end of September 2016 been offering Internet-based TV (IPTV) under the brand waipu.tv. At the end of the first quarter of 2017, freenet AG had approximately 150,000 registered waipu.tv users, including more than 23,000 paying waipu.tv users. Compared with the end of 2016 (approx. 7,500 paying waipu.tv users), the number of paying subscribers has increased more than three-fold. By the end of the first half of 2017, freenet AG expects to see a further increase in the number of registered waipu.tv users to more than 250,000.

freenet AG has confirmed the guidance for 2017 which was communicated on the occasion of the Capital Market Day, and has also confirmed the perspective outlook for the financial year 2018. freenet AG is forecasting slightly higher Group revenue for both financial years, compared with the previous year in each case. In the opinion of the Executive Board, Group EBITDA in the financial year 2017 will increase to slightly more than 410 million euros4, and will achieve further growth in 2018 compared with the previous year. The company also expects to see group-wide free cash flow of approximately 310 million euros5 for the whole of 2017. In the financial year 2018, the Executive Board expects that free cash flow will again increase slightly compared with the previous year.

For the TV and Media segment, taking account of the different consolidation periods of the Media Broadcast Group (9.5 months in the financial year 2016 and 12 months in the current financial year), the company aims to achieve slightly higher revenue as well as slightly higher EBITDA for 2017, both compared with the previous year.

In the opinion of freenet AG, the number of connected DVB-T2 devices will rise to more than 2.5 million by the end of 2017, and will continue to increase slightly in the financial year 2018. By the end of 2017, freenet AG expects that the number of freenet TV subscribers will rise to more than 800,000, and also expects that there will be a further slight increase in 2018 compared with the previous year. In the opinion of the Executive Board, the average monthly revenue per freenet TV user (freenet TV ARPU) will be approximately 4.5 euros, and will be roughly the same in the financial year 2018.

With regard to the new IPTV product of freenet AG, which is marketed under the brand waipu.tv, the company expects to report more than 500,000 registered subscribers at the end of 2017, including more than 100,000 paying users. Looking forward to the year 2018, the Executive Board expects that the number of registered and paying waipu.tv users will increase significantly compared with the previous year. In the opinion of freenet AG, the average monthly revenue per paying waipu.tv user (waipu.tv ARPU) will be approximately 6.0 euros in the financial year 2017, and will report a slight increase in the financial year 2018.

In the Mobile Communications segment, the Executive Board expects to see stable revenue and stable EBITDA for the financial year 2017, both compared with the previous year. The targets for the development in postpaid-ARPU and customer ownership are unchanged for the financial year 2017 and perspectively also for 2018. In the Mobile Communications segment, the company continues to expect that postpaid-ARPU will stabilise at the level of the previous year, and that there will be a slight increase in the number of customers in customer ownership, compared with the previous year in each case.

Group EBITDA and free cash flow are managed without consideration being given to the interest of freenet AG in the earnings of Sunrise Communications Group AG, and without taking account of the dividend payment of Sunrise Communications Group AG, as these are not actively controllable elements. Accordingly, neither the expected contribution to EBITDA from the interest of freenet AG in Sunrise Communications Group AG nor any contribution to group-wide free cash flow of freenet AG resulting from this holding are included in the guidance for the financial year 2017 respectively in the perspective outlook for 2018.

1) Since 24 March 2016, Sunrise Communications Group AG has been included as an associated company in the consolidated financial statements of freenet AG.
2) The Media Broadcast Group was initially consolidated on 18 March 2016.

3) Free cash flow is defined as the cash flow from operating activities less the investments in property, plant and equipment and intangible assets plus inflows from disposals of intangible assets and property, plant and equipment.
4) The expected contribution to Group EBITDA resulting from the holding in Sunrise Communications Group AG is not included in the guidance.
5) Dividend payments of Sunrise Communications Group AG are not included in the guidance.

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Investor Relations contact:
freenet AG                   
Investor Relations
Deelbögenkamp 4c
22297 Hamburg
Tel.: 040 / 513 06 778
Fax: 040 / 513 06 970
E-Mail: ir@freenet.ag
www.freenet-group.de

 


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