04.05.2018 - 15:00 Uhr

Q1/2018: freenet AG confirms guidance for the financial year 2018 on the basis of stable results in all segments

  • Slight increase in total revenue to 873.7 million euros before IFRS 15 effects due to higher hardware revenue
  • After adoption of IFRS 15 revenue is stated with 689.6 million euros
  • Increase of 5.6 million euros in EBITDA1 to 106.5 million euros
  • Further increase in postpaid customer base to 6.77 million customers; continuous increase in customer base in the TV and Media segment
  • Confirmation of guidance for 2018

freenet AG has today announced the results for the first quarter of 2018 and confirming the guidance for the financial year 2018.

In the first quarter of 2018, the Group has reported a further increase in its key performance indicators compared with the previous-year period. Due to the application of the new accounting standard IFRS 15 (which is mandatory since 1 January 2018), the first quarter of 2018 has for the first time seen a difference between the actual revenue to be reported and the revenue which would have resulted without the application of IFRS 15. Without the effects relating to the change-over to IFRS 15, there would have been a slight increase of 35.7 million euros in revenue to 873.7 million euros  on the basis of higher hardware sales. The decline in actually reported revenue to 689.6 million euros is exclusively a consequence of to the application of IFRS 15.

In the Mobile Communications segment, Customer Ownership has increased by 0.4 per cent to 9.60 million customers. The particularly valuable postpaid customer portfolio increased by 3.5 per cent to 6.77 million customers; this has confirmed the sustainability of the company’s core Mobile Communications business. The monthly average revenue of the particularly valuable customers (postpaid ARPU) stabilised further at a level of 21.4 euros, no-frills ARPU amounted to 3.2 euros and prepaid ARPU also amounted to 3.2 euros. Without the effects relating to the change-over to IFRS 15, there would thus have been an increase of 42.2 million euros in Mobile Communications revenue to 805.0 million euros. The revenue actually reported as a result of the IFRS 15 change-over amounted to 621.0 million euros in the reporting quarter.

There was a positive development in the first quarter of 2018 in the key performance indicators in the TV and Media segment. Both the DVB-T2 HD product freenet TV as well as the IPTV product waipu.tv have reported a continuous increase in customer numbers since they were launched. At the end of the first quarter of 2018, freenet TV reported 1.02 million subscribers – the forecast is for more than 1.2 million subscribers for the financial year 2018. The internet-based product waipu.tv reported more than 133,000 subscribers at the end of the reporting period, equivalent to an increase of approx. 31,000 (+ 30 per cent) subscribers in Q1/2018. At the end of the first quarter of 2018, the approximately 610,000 registered waipu.tv customers reflect the attractive nature and increasing popularity of the product and the brand. In the reporting quarter, revenue in the TV and Media segment amounted to 71.5 million euros, which was slightly lower than the level reported for the previous-year quarter due to lower hardware and licence revenues in the DVB-T2 business.

The group gross profit of 223.5 million euros is slightly lower than the figure seen in the comparison quarter. On the other hand, the gross profit margin has increased by 5.3 percentage points to 32.4 per cent mainly as a result of IFRS 15.

In the first quarter of 2018, EBITDA increased by 5.6 million euros compared with the same previous-year period, to 106.5 million euros. EBITDA exclusive Sunrise amounted to 96.6 million euros, representing an increase of 5.5 million euros compared with the previous-year quarter. This growth was essentially attributable to the Mobile Communications segment (100.2 million euros) as well as the TV and Media segment (7.8 million euros).

Free cash flow2 was stable in the reporting period at 54.8 million euros. Net financial debt3 as of 31 March 2018 amounted to 596.7 million euros and was thus roughly in line with the corresponding figure reported for the previous-year quarter. The debt ratio amounted to 1.1 as of 31 March 2018 and was thus within the strategic range of 1.0 to 2.5 (as was also the case as of 31 March 2017).

Joachim Preisig, Finance & Controlling Director of freenet AG, comments on the results as follows: “With the change-over to the new accounting standard IFRS 15 as of 1 January 2018, there has been for the first time a difference between the actual revenue to be reported (taking account of IFRS 15) and the revenue which would have resulted without IFRS 15 effects – mainly as a result of the disclosure of network operator commissions received as a reduction of cost of materials, instead of (as has previously been the case) in revenue. However, compared with the previous-year quarter, revenue excl. IFRS 15 effects has increased slightly and has thus again shown that the business of freenet AG is stable and sound.”

For the financial year 2018, freenet AG aims to achieve stable consolidated revenue before IFRS 15 effects. However, as a result of the accounting standard IFRS 15 which has been applicable for the first time since 1 January 2018, reported revenue will be much lower. In addition, the company expects to achieve EBITDA excl. Sunrise of between 410 million euros and 430 million euros as well as free cash flow excl. Sunrise of between 290 million euros and 310 million euros. Postpaid ARPU and Customer Ownership are forecast to remain stable in 2018, whereby the particularly valuable postpaid customer numbers should continue to increase. In TV business, the Group intends to expand its product offering, and expects to achieve more than 1.2 million freenet TV subscribers as well as more than 250,000 waipu.tv subscribers and a significant increase in the number of registered waipu.tv customers.

The quarterly statement as of 31 March 2018 can be found under Investor Relations at https://www.freenet-group.de/investor-relations/ir-mitteilungen/index.html.

1) Earnings before interest and tax, including the earnings elements of the companies included in accordance with the equity method (EBIT) excl. depreciation and deferred taxes from the subsequent recognition of companies included in accordance with the equity method and plus depreciation and impairments.

2) Cash flow from operating activities reduced by the investments in property, plant and equipment and intangible assets, plus the inflows from disposals of intangible assets and property, plant and equipment.

3) Long-term and short-term debt from the balance sheet, less liquid assets, less the interest of the freenet Group in the market value of Sunrise Communication Group AG as of the reference date (source of price data: Bloomberg).

 


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