FREENET AG DGAP-News: freenet AG / Key word(s): Half Year Results/Quarter Results freenet Group continues profitable development - guidance raised for EBITDA and free cash flow 2021-08-11 / 18:29 The issuer is solely responsible for the content of this announcement. ----------------------------------------------------------------------------------------------------------------------- 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 flow^1 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 cash flow record significant growth In EUR million/as indicated H1/21 H1/20 Change Q2/21 Q2/20 Change Revenue 1,239.0 1,271.0 -32.0 619.9 622.1 -2.3 EBITDA 222.3 213.9 8.4 113.5 109.7 3.8 Free cash flow 112.2 140.7 -28.5 52.7 90.8 -38.1 Free cash flow without Sunrise contribution^1 112.2 100.3 11.9 52.7 47.4 5.3 Subscriber base^2 (in '000s) 8,680.8 8,490.4 190.4 8,680.8 8,490.4 190.4
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 contribution ^1 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 EUR million/as indicated H1/ H1/ Q2/ Q2/
21 20 Change 21 20 Change
Revenue 1,099.9 1,136.8 -36.9 551.1 554.2 -3.0
thereof MSR, postpaid 763.1 758.6 4.5 384.2 376.2 8.1
thereof MSR, no-frills/prepaid 53.2 60.1 -6.9 26.7 28.8 -2.2
EBITDA 183.3 182.6 0.7 91.5 91.0 0.5
High-value mobile customers (in thousands) 7,191.2 6,981.3 210.0 7,191.2 6,981.3 210.0
thereof postpaid customers 7,113.3 6,939.4 173.8 7,113.3 6,939.4 173.8
thereof app-based customers^ 77.9 41.8 36.1 77.9 41.8 36.1
3
Postpaid ARPU (in EUR) 17.9 18.3 -0.3 18.0 18.1 -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 EUR million/as indicated H1/21 H1/20 Change Q2/21 Q2/20 Change Revenue 138.8 125.9 12.9 69.3 65.2 4.1 EBITDA 47.0 36.5 10.5 25.0 20.9 4.0 waipu.tv subscribers (in '000s) 644.6 504.1 140.4 644.6 504.1 140.4 freenet TV subscribers (RGU) (in '000s) 845.0 1,005.0 -160.0 845.0 1,005.0 -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.
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