11.08.2021 - 00:00 Uhr

freenet Group continues profitable development – guidance raised for EBITDA and free cash flow

  • EBITDA grows by +3.9% compared to H1/20 to 222.3 million euros
  • Mobile Communications EBITDA stable, TV and Media EBITDA +28.8% compared to H1/20
  • Free cash flow1 up +11.8% to 112.2 million euros
  • Subscriber base expands by 190.4 thousand customers (+2.2%) compared to H1/20 to 8.681 million
  • Executive Board raises guidance for EBITDA and free cash flow

Büdelsdorf, 11 August 2021 – freenet AG [ISIN DE000A0Z2ZZ5] today announced its results for the first half and second quarter of 2021. 

Group: EBITDA and free casg flow record significant growth

in Mio. EUR bzw. lt. Angabe H1/21 H1/20 Change Q2/21 Q2/20 Change
Revenue1,239.01,271.0-32.0619.9622.1-2.3
EBITDA222.3213.98.4113.5109.73.8
Free cash flow112.2140.7-28.552.790.8-38.1
Free cash flow without Sunrise constribution1112.2100.311.952.747.45.3
Subscriber base2 (in '000s)8,680.88,490.4190.48,680.88,490.4190.4

After the COVID-19 pandemic continued to cause massive disruption to economic and social life in the first quarter of 2021, the situation improved during the second quarter. The measures introduced to limit the spread of the pandemic were gradually eased due to falling case numbers in Germany and the rising vaccination rate. Retail businesses were allowed to reopen as part of this easing, with almost all mobilcom-debitel shops and GRAVIS stores opening their doors to customers again by the end of June. Travel restrictions were also relaxed in stages during the second quarter, which had a positive impact on roaming activity.

Although more significant catch-up effects failed to materialise overall, the freenet Group can still reflect on a highly successful second quarter and first half of 2021. The number of high-value subscribers rose by +0.8% to around 8.681 million (H1/20: 8.490 million) compared to the end of 2020 (8.610 million). This means that the number of own customers increased by 33.2 thousand (+0.4%) in the second quarter and by 190.4 thousand (+2.2%) compared to the previous year. This represents a strong performance in light of the current situation as well as the fact that freenet TV lost almost 160.0 thousand customers in the last 12 months due to what remains a profitable price increase.

Revenue for the first half of the year was primarily influenced by lower hardware sales caused by the temporary closure of mobilcom-debitel shops and GRAVIS stores due to the COVID-19 pandemic. At 1,239.0 million euros, however, revenue for the first six months of 2021 fell by just under 2.5% compared to the previous year (H1/20: 1,271.0 million euros). Due to the low margins in the hardware business, this performance had no impact on profitability. The EBITDA margin rose by 1.1 percentage points to 17.9% (H1/20: 16.8%), causing EBITDA to increase by 8.4 million euros or 3.9% year-on-year to 222.3 million euros (H1/20: 213.9 million euros). This development was mainly attributable to profitability-focused customer growth as well as efficient cost management in all areas.

The positive business performance was also reflected in free cash flow. Without considering the Sunrise contribution1 from last year, this performance indicator relevant for distributions to shareholders rose by +11.8% year-on-year to 112.2 million euros (H1/2020: 100.3 million euros). This 11.9 million euros increase primarily resulted from the rise in EBITDA, lower interest payments due to the massive reduction in debt, and a slight improvement in working capital.


Mobile Communications segment: a rock-solid cash cow

in Mio. EUR bzw. lt. Angabe H1/21 H1/20 Change Q2/21 Q2/20 Change
Revenue1,099.91,136.8-36.9551.1554.2-3.0
   thereof MSR, postpaid763.1758.64.5384.2376.28.1
   thereof MSR, no-frills/prepaid53.260.1-6.926.728.8-2.2
EBITDA183.3182.60.791.591.00.5
High-value mobile customers (in thousands)7,191.26,981.3210.07,191.26,981.3210.0
   thereof postpaid customers7,113.36,939.4173.87,113.36,939.4173.8
   thereof app-based customers377.941.836.177.941.836.1
Postpaid ARPU (in EUR)17.918.3-0.318.018.1-0.1

The first half of 2021 was dominated by pandemic-related lockdown measures, which forced the freenet Group to close its own stores completely for a limited time. The same was also true of other relevant bricks-and-mortar points of sales such as MediaMarkt and Saturn. We were able to offset some of the resulting sales interface restrictions in the Mobile Communications segment by focusing on non-retail-based sales channels. By having the option to flexibly manage our sales channel activities, we were also able to increase the number of high-value mobile communications customers in an otherwise rational competitive environment during the second quarter (+23.6 thousand customers). The customer base grew by just under +0.8% to 7.191 million customers compared to the end of 2020, with a net increase for the first half of the year that was +26.4% higher (+55.8 thousand customers) than in the same period last year (+44.1 thousand customers). Our purely app-based products contributed +21.2 thousand customers to this growth, while the postpaid segment added a further +34.6 thousand customers. This means that the number of freenet FUNK/freenet Flex customers has almost doubled (+86.4%) within the last twelve months, while the postpaid customer base grew by +173.8 thousand customers (+2.5%) to 7.113 million customers.

COVID-19-related roaming restrictions and lower use of variable ARPU elements (e.g. data top-ups) had a negative impact on postpaid ARPU in the first six months of 2021. Although the easing of restrictions in the second quarter caused postpaid ARPU to recover slightly (+0.2 euros compared to Q1/21) and stabilise at the same level as in the prior-year quarter, postpaid ARPU for the first half of 2021 was approximately 0.3 euros lower compared to the previous year at 17.9 euros. Due to the growth in the customer base, revenue from postpaid services (MSR) rose by +0.6% to 763.1 million euros in the first six months of the year (H1/20: 758.6 million euros). Mobile Communications revenue (-36.9 million euros compared to H1/20) continued to be affected by significantly lower hardware sales in the first quarter of 2021 due to the lockdown-related closure of mobilcom-debitel shops and GRAVIS stores. Gross profit and EBITDA in this segment remained unaffected by this. Effective cost management and persistently positive customer payment behaviour offset the missing sales and caused segment EBITDA to remain at a similar level to the previous year at 183.3 million euros (H1/20: 182.6 million euros).


TV and Media segment: EBITDA up +28.8% in the first half of 2021

in Mio. EUR bzw. lt. Angabe H1/21 H1/20 Change Q2/21 Q2/20 Change
Revenue138.8125.912.969.365.24.1
EBITDA47.036.510.525.020.94.0
waipu.tv subscribers (in '000s)644.6504.1140.4644.6504.1140.4
freenet TV subscribers (RGU) (in '000s)845.01,005.0-160.0845.01,005.0-160.0

The TV and Media segment remains largely unaffected by the impact of COVID-19 and continues on its profitable growth trajectory. Demand for our convenient waipu.tv IPTV product remains high, although the measures to ease lockdown together with the nice summer days have slowed demand somewhat. The IPTV customer base grew by a further 32.9 thousand (2019/2020 avg.: approx. +40.0 thousand subscribers) in the second quarter of 2021 to reach a subscriber base of 644.6 thousand. This corresponds to a +27.9% increase (+140.4 thousand subscribers) compared to 30 June 2020 (504.1 thousand subscribers). As expected, the adjustment effect in the freenet TV customer base seen after the price increase in May 2020 weakened further (Q3/20: -6.3%; Q4/20: -4.3%; Q1/21: -3.7%; Q2/21: -2.7%). The number of revenue-generating users (RGU) was 845.0 thousand, a decrease of just under -15.9% compared with the previous year’s figure (30 June 2020: 1,005.0 thousand customers). Further stabilisation can be expected.

The price adjustment at freenet TV and profitability-focused customer growth at waipu.tv caused revenue in this segment to rise by +10.3% year-on-year to 138.8 million euros (H1/20: 125.9 million euros). This includes a revenue effect of around 1.5 million euros from an EXARING AG (waipu.tv) media barter transaction recognised in the first quarter of 2021 that does not affect EBITDA. With an EBITDA margin of 33.8%, 4.9 percentage points higher than the previous year, segment EBITDA increased by 10.5 million euros to 47.0 million euros. This represents growth of +28.8% compared to the first six months of 2020 (H1/20: 36.5 million euros). This sharp increase was due to price/volume effects, a general improvement in profitability, and continuing efficiency measures (particularly at freenet TV). waipu.tv remains the main driver and was responsible for half of the increase in EBITDA (+5.4 million euros compared to H1/20).


Guidance raised for the 2021 full year

Based on the highly positive performance of the TV and Media segment, considerable stability in the Mobile Communications business and the still positive outlook, the Executive Board is lifting its guidance for the EBITDA and free cash flow financial performance indicators for the 2021 full year. EBITDA of between 430 and 445 million euros is now expected (previously: 415 to 435 million euros), while the Executive Board anticipates free cash flow of between 215 and 230 million euros (previously: 200 to 220 million euros). This represents an increase of 12.5 million euros in each case compared to the midpoint of the previous guidance (EBITDA: approx. +3.0%; free cash flow: approx. +6.0%).

The forecasts for the full year 2021 remain unchanged for all other financial and non-financial performance indicators.


Conference Call

freenet AG will host a conference call for investors and analysts at 10:00 CEST on 12 August 2021. All those interested in attending can follow the conference call via webcast at LINK.

A recording will be made available on the website (LINK) following the event.


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1  H1/20 free cash flow adjusted for dividend from Sunrise (Q2/20: 46.0 million euros) and corresponding interest payments on the syndicated bank loan (H1/20: approx. 5.6 million euros).

2 Total of postpaid customers, freenet FUNK customers, freenet Flex customers, freenet TV subscribers (RGU) and waipu.tv subscribers.

3  freenet FUNK/freenet Flex customers.

 

Note

In the interest of clear and transparent presentation, alternative performance measures (APMs) are used in the financial statements of the freenet Group and in ad hoc disclosures pursuant to Art. 17 MAR, in addition to the disclosures defined by the International Financial Reporting Standards (IFRSs). Information on the use, definition and calculation of APMs can be found in the freenet Group 2020 Annual Report from page 46 onwards.


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Contact:

freenet Group

Investor Relations & ESG

Tel.: +49 (0) 40 / 513 06 778

Email: ir@freenet.ag

https://www.freenet-group.de/en/index.html 

 

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