DGAP-News: freenet AG / Key word(s): Preliminary Results/Annual Results 
freenet AG: freenet Group reports successful 2020, with postpaid and waipu.tv repeating strong growth in Q4, and 
provides optimistic outlook for 2021 
2021-02-24 / 18:01 
The issuer is solely responsible for the content of this announcement. 
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freenet Group reports successful 2020, with postpaid and waipu.tv repeating strong growth in Q4, and provides 
optimistic outlook for 2021 
- EBITDA (without regulatory effects/MOTION TM) rises to 445.9 million euros (+9.7 million euros) on the back of stable 
revenue 
- Free cash flow within the target range at 237.3 million euros 
- Subscriber base grows by more than 100 thousand customers in the fourth quarter to over 8.6 million contracts (+243 
thousand compared to 2019) - postpaid and waipu.tv both record strong growth 
- Leverage falls significantly from 4.8 (2019) to 1.7 (2020) 
- Further subscriber growth expected in 2021 guidance 
Büdelsdorf, 24 February 2021 - freenet AG [ISIN DE000A0Z2ZZ5] today announced its preliminary results for the 2020 
financial year. 
Group: Performance in line with expectations - guidance met in all respects 
In EUR million/as indicated                    FY 2020    FY 2019    Change    Q4/2020    Q4/2019    Change 
Revenue^1                                      2,576.2    2,609.1     -32.8      670.7      706.1     -35.4 
EBITDA                                           425.9      426.8      -0.9       96.7      101.0      -4.3 
   thereof regulatory effects: 
     International calls/roaming                 -20.0      -12.0      -8.0       -5.0       -5.0       0.0 
   thereof MOTION TM                               ---        2.6      -2.6        ---        1.8      -1.8 
EBITDA without regulatory effects/MOTION TM      445.9      436.2       9.7      101.7      104.2      -2.5 
Free cash flow                                   237.3      249.0     -11.7       17.1       49.8     -32.7 
Subscribers^2                                  8,609.8    8,366.5     243.3    8,609.8    8,366.5     243.3 
(in '000s)

After a 2020 financial year that was full of exceptional challenges posed by the COVID-19 crisis, the freenet Group came through not only unscathed but with flying colours, fully achieving the targets set even before the outbreak of the pandemic. This success is due to the great adaptability and flexibility of our established business model and, last but not least, our motivated employees. The freenet Group's business model, which is focused on long-term customer relationships as well as flexible cost and sales structures, proved to be more than robust in the face of coronavirus in 2020.

Revenue^1 remained stable (-1.3 per cent year-on-year), in line with the guidance issued. At 425.9 million euros, EBITDA also was virtually unchanged from the previous year's level (426.8 million euros) despite delayed regulatory effects (-8.0 million euros vs. 2019) and the loss of the contribution made by MOTION TM GmbH (-2.6 million euros vs. 2019). This meant that the Group met the expectation of EBITDA between 415 and 435 million euros formulated at the start of the year. The TV & Media segment made a major contribution to this performance, with its EBITDA now accounting for almost 20 per cent of Group EBITDA, as did the consistent monitoring of cost efficiency in all areas. Adjusted EBITDA grew by 2.2 per cent to 445.9 million euros (2019: 436.2 million euros) due, among other things, to cost savings, some of which are long-term.

Working capital, which had a significantly positive effect on free cash flow in the first nine months of the year (+23.7 million euros year-on-year) as a result of various effects, suffered in the wake of COVID-19 related store closures in Germany at the end of the year. The free cash flow at 237.3 million euros is within the guidance, but the GRAVIS stores were only able to sell already supplied goods via online channels (often with longer payment terms) in the important Christmas season. This caused working capital to shed all the gains seen in Q1 to Q3 (+23.7 million euros vs. Q1-Q3/2019) in the fourth quarter (-26.2 million euros vs. Q4/2019).

After strong growth in the previous quarters (Q3: +16.3 thousand; Q2: +60.8 thousand; Q1: +63.1 thousand), the number of subscribers^2 grew sharply once again in the fourth quarter of 2020 (+103.0 thousand) to reach approximately 8.610 million customers as at 31 December 2020. The number of own customers rose by 243.3 thousand overall, an increase of 2.9 per cent compared to the same period in the previous year. This meant that the previous year's growth trend actually accelerated in 2020 (2019: +2.5 per cent or 204.8 thousand customers).

Mobile Communications segment: Further strong customer growth in fourth quarter of 2020 


In EUR million/as indicated                                       FY  2020  FY 2019   Change      Q4/      Q4/   Change 
                                                                                                 2020     2019 
Revenue^1                                                          2,306.1  2,335.5    -29.3    602.4    633.8    -31.4 
   thereof revenue from services, Postpaid                         1,521.6  1,540.9    -19.3    381.0    381.2     -0.2 
   thereof revenue from services, No-                                119.7    134.3    -14.6     29.9     32.1     -2.1 
   frills/Prepaid 
EBITDA                                                               354.8    367.3    -12.4     77.6     85.4     -7.9 
   thereof regulatory effects: 
     International calls/roaming                                     -20.0    -12.0     -8.0     -5.0     -5.0      0.0 
   thereof MOTION TM                                                   ---      2.6     -2.6      ---      1.8     -1.8 
   thereof inter-segment allocation                                   -9.1     -7.4     -1.7     -2.3     -1.8     -0.5 
EBITDA without regulatory effects/MOTION TM/inter-segment            383.9    384.1     -0.1     84.9     90.5     -5.6 
allocation 
Postpaid customers (in '000s)                                      7,078.7  6,902.9    175.8  7,078.7  6,902.9    175.8 
Postpaid ARPU (in EUR)                                                18.2     18.7     -0.5     18.0     18.5     -0.4 
freenet FUNK/Flex customers (in '000s)                                56.8     34.3     22.5     56.8     34.3     22.5

Although most of the Group's own stores and other key bricks-and-mortar sales channels like Media Markt or Saturn remained closed for several weeks, the freenet Group achieved its moderate target for postpaid customer growth in the Mobile Communications business in 2020. The Group registered net new customer growth both in the six-week lockdown in the first half of the year and during the rest of 2020. The crucial factor here was the exceptional flexibility of the omnichannel sales model and its ability to adapt rapidly to the "new normal".

After encouraging net growth in postpaid customers during the third quarter (+65.5 thousand), this figure grew even more significantly in the fourth quarter (+73.7 thousand). This means that the postpaid customer base has grown by 175.8 thousand customers since the start of the year and is now well in excess of the 7.0 million mark. As a result of this customer growth, revenue from postpaid services in the fourth quarter (381.0 million euros) reached the same level as the previous year (381.2 million euros) and the previous quarter (381.9 million euros), even though postpaid ARPU continued to suffer from the negative impact triggered by COVID-19 (lack of roaming revenue). In addition, delayed regulatory effects (international calls/fee reduction [MNP]) were responsible for postpaid ARPU for the full year being just under 2.7 per cent lower than the previous year's figure at 18.2 euros. Revenue from postpaid services fell accordingly by 1.3 per cent to 1,521.6 million euros in the period under review (2019: 1,540.9 million euros), with the negative trend abating recently.

In addition to the postpaid customer base, the customer base for the fully app-based freenet FUNK/ freenet Flex tariffs rose sharply during the past year, increasing by 65.7 per cent to 56.8 thousand customers (2019: 34.3 thousand). As a result, the total number of these relatively high-profitability mobile communications customers grew by almost 200 thousand to 7.135 million during the year, providing a strong foundation for the performance of the Mobile Communications segment to remain stable in future.

Mobile Communications revenue remained stable overall at 2,306.1 million euros (2019 (adjusted for MOTION TM): 2,335.5 million euros). By contrast, fourth quarter revenue was down on the prior-year quarter (-31.4 million euros compared to Q4/2019) due to COVID-19-related store closures from 16 December 2020 onwards and the resulting lack of (hardware) revenue from the Christmas season. However, this effect did not directly impact EBITDA due to the lower margin.

Segment EBITDA came to 354.8 million euros in 2020, down slightly by 3.4 per cent compared to the same period in the previous year (2019: 367.3 million euros). Due to a preventative measure (loss allowances on receivables from customers in anticipation of a deterioration in payment behaviour due to COVID-19), the fourth quarter deviated from the otherwise stable business performance and quarterly trend during the year. Excluding regulatory effects, the earnings contribution of sold subsidiary MOTION TM GmbH and segment allocations, adjusted EBITDA was on a par with the previous year at 383.9 million euros (2019: 384.1 million euros).

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February 24, 2021 12:02 ET (17:02 GMT)