Freenet Ag Unsp/Adr

Thanks for the opening and a warm welcome to everybody on the phone on this rainy Hamburg morning. Thanks for joining our nine months report conference call here and let me get started immediately with the overview on the BOK APIs. We have been able to grow the subscriber base year over year by 4.8%, which is very much in line with our expectations and exceeds the expectation on the TV side, which I'm going to illustrate a little later in more detail. Same as in EBTA, we are ahead of our nine-month plan, and therefore we have slightly adjusted the guidance. We expect an EBTA outcome just above 500 million, and this is why we have changed the guidance or attempted the guidance to in a small range and revenue is also up you all are aware of the fact that revenue is not a core KPI in our day-to-day business due to its reflection of hardware sales which are typically not so valuable and even better performance on pre-cash flow plus 6.3 percent which also made INGO change the guidance for this point. If we go one step down further into the more operational KPIs, the core driver of value and future sustainability and resilience obviously is the total subscriber base. Year over year, as already mentioned, we've been able to grow it by 400,000, representing 4.8%. If we do a breakdown on the four different fields or the two segments and four different elements, you can see that on postpaid growth was 2.1%, on funk and flex, which are monthly tangible products, it's plus 13%, but certainly on a smaller scale. Y4TV with plus 40%. in a significant growth path and significantly overcompensating the downturn on 3.0 TV, which is both from our internal view very much in line with our planning and expectations. Big picture, mobile net ads plus 170,000 and TV ads plus 263,000. If we go into the post-paid, I think I've already mentioned a couple of things. I think we are on satisfactory level. If you remember at the first conference call this year, we have said that we expect a growth of around 100,000 to 130,000 for the full year. As you can see, we are on that level already by the end of September. October has been also within our expectations. Now it's the final season with Black Week offers and so on and so forth. We still see that the telco market seems to be in a better shape than pure hardware, entertainment and PC equipment. So we are expecting also a slightly positive development also for Q4. What are the things that we are working hard on? You all remember that we have changed about 18 months ago from the old brand Mobil.com DBTEL to the brand of Freenet. It took us six months to get into the same level of brand recognition, so actively prompted recognition, but we now focus heavily on brand awareness and brand awareness So that's the unprompted question on which telco operators or telco providers do you know. We are growing there. 50% sounds a lot. We are still on a comparably small level, but we are on a higher level than we have ever been on Mobil.com. We continue to send that simple, straightforward message pre-met, fertig, lost. to the audience and we have invested more into sponsorships on TV than we did in the past and there is more to come. There's also a couple of sports events specifically the Handball Championship which is taking place in Germany and will be one of the main sponsors and we expect brand awareness and brand recognition to grow even further which is a prerequisite of successful sales and distribution. More or less the same is on WIPO TV. We have also indicated that we will invest about 10 million in above the line activities due in the course of Q3 and Q4 of 2023. This is obviously already reflected in Q3 numbers and will also be reflected in Q4 numbers. You can see that during this last quarter Q3 we have gained about 80,000 net ads Overall, we think that is not only in line with our internal planning, but is also reflecting the strengths of the brand. Right now, we're doing a couple of tests specifically to address cable customers. We are all aware that the cable auxiliary cost privilege will go away in July next year. We are regularly reviewing the awareness of this in the public notion. It's growing and we are trying to push and learn more. Right now, two quarters in Munich are addressed with our out-of-home campaigns, leaflets and even direct mail, where we basically educate the consumers that they can go away from cable by mid-year 2024, and we're expecting a lot of qualitative results within the next few weeks, which will then be reflected in the types of campaigns that we will initiate from January onwards. We are continuing our TV campaigns with the Testimonial of Dieter Bohlen, which is one of the most famous individuals on German TV. So we're doing a really good job there and I'm very happy that we are finding a foundation within the cable audience day to day with a growing awareness. On the FreeNet TV side, you can see that the downturn or the loss of customers is still continuing. We do still interview customers on on the driving force for canceling the contract and it continues to be the reason that these people either move to another place where then they have another equipment or they don't want to continue to pay because their consumption of a private and premium TV is too low to justify the monthly expense according to what they tell us. We still believe that a couple of activities such as the coming hybrid stick and other stuff will help to slow that down. But we have to acknowledge that we are still losing. And I think that is a good point to turn over the page to page eight. We are not only trying to inform cable customers, but also to convert cable customers. There is a total audience of about 12 million households connected to cable. There is a mix of statements and research on how many of those will be ready to change their access technology within the 24 months. I've learned from Vodafone that they expect only 30% to move away There is surveys stating it's more going to be 50%. I think it's too early really to say this is why we do testing. This is why we do interviews and qualitative research. And this is why we expand our presence, not only with Waipu now in media markets, not only with integrating DAZN into our APG, also making sure that the Sky slash WOW app is now available on our TV stick, but we do a lot of press releases, a lot of advertising to really engage with this potential audience that is going to be available for us over the next two years. One addition, I think we have spoken before about a so-called hybrid stick, so a WIPO TV stick on Android platform, which will not only deliver IPTV via WIPO, but it will also deliver DVB-T2, so terrestrial. So it is our weapon to actively self-cannibalize and retain the Freenet customer base within the Freenet group. But it's also the toolbox to attack the cable market because this hybrid stick is also able to handle regular DVBC, so cable signals. So we can basically tell the customer, why don't you move on, get hold of our stick, get hold of our technology and device and install it and decide for yourself. at what stage or what time you want to move. And these people will then continue to have cable, but see on the EPG which additional channels and features that we are able to deliver via our IP. We think this is kind of a Trojan horse which we're trying to bring into private households big time next year. And we will certainly report on the effects and learnings from this. at a later stage. This brings me to the outlook for Q4. I think nothing really surprising. We continue to work in mobile on our marketing campaigns. We are in the last stage of implementing our new retail format RPS, which we also will then give way more detail early next year. We are planning to launch it in March and implement it over six months across all our own retail stores as well as our franchise partners and part of the free retail. We have just closed a session of interviewing with about 60 providers of glass fiber and we are preparing our strategic view and our strategic move into the marketing also of glass fiber internet connectivity, which we also want to start at a slow pace because I think it's early stage next year, but we are definitely ready to play a similar role in glass fiber that we do on mobile as a service provider. And on TV, I think I don't need to repeat that there are a couple of important steps, mainly on Waipu, which will enable us to further growth and accelerate growth. I expect for the end of the year more than 1.3 million subscribers, and our target for next year is to get close to the 2 million or beyond the 2 million subscribers. Having said that, let me hand over to Ingmar Arnold for the more financial focus of the presentation.

Thank you, Christoph. Good morning, everybody. I start with the group view, and I think I can quote Christoph also here, because the figures are not really surprising. They have not surprised us, and from your consensus, we could also see that they also have not surprised you. So we are definitely in line with all expectations. On the revenue level, we see again a quarter with an increase. This increase is based both on mobile and on TV. And even with lower hardware revenues, this was possible. And as you know, lower hardware revenues are no problem in our eyes because the profitability is so low. EBITDA on a stable level but I think what is important is that on the other hand we see an increase in this quarter again on a gross profit level so the business is very healthy the business is very sustainable this is something what we saw during the whole year and the gross profit in the third quarter is a confirmation of what we saw in the other quarters. On an EBITDA level, it is only stable compared to Q3 2022. But I think we reported very often and all of us and also you expected a downgrade on TV in this quarter. reduction of EBITDA because we invested into WIPO. On the other hand, in mobile, there is still an increase. The outlook to the end of the year, definitely, and Christoph already mentioned it, we expect something like 500 million or slightly above 500 million. And I think we think this is totally feasible because we had some one-off headwinds in 2022 in the fourth quarter. And these headwinds, we do not expect this quarter, the following quarter. So, 500 million definitely is feasible for us. Next page about the mobile business. Again here, very resilient as during the whole year 2023. We see an increase in revenues mainly driven from higher service revenues and higher digital lifestyle revenues. We see again an increase in the gross profit and also here on the gross profit level a very sustainable level if you compare it with the last quarters. And here also on the EBITDA level we see an increase I think, yeah, definitely. In cost, on the other hand, we see an increase. This is also something what we forecasted and what was not surprising to us because, as everybody, we have inflationary points here, especially on the personal cost side, but I think all in a very, very good result, what we show here. Looking into the KPIs, of the mobile business. I think, do we have something new? No, not really. Digital lifestyle revenue increased, I already mentioned here, in high margin area. Therefore, also EBTA relevant. On an ARPU side, yeah, the ARPU is higher than in the last quarters, but this is mainly driven by roaming and traveling. So I would not see a change here on RPO levels. I would still state that the RPO is stable and this is also something what we saw during the year already. Moving to the TV business on page 13. And here we see the increase in revenues mainly driven by the strong development of subscribers at waipu.tv. I would say it is important to see it and it is also not surprising. On a gross profit level, we see a strong increase based on the revenue increase from waipu.tv We also see an increase here because of the growing number of customers. And if we look into the EBITDA, yeah, we definitely see on the media broadcast side, Freenet TV and media broadcast B2B, we see a stable development. This is also something what we all expected because with the price increase at Freenet TV last year, we have something like a compensation of the loss of customers, therefore still slightly positive. And in the B2B business, we have a very stable business, but with slight cost increases, therefore here a slight decrease. Moving to the free cash flow bridge. Change in net working capital is minus 55 million, so on a comparable level to what we saw last year. Factoring is now down to zero, so I think we expected it up to the end of the year, but we already finished here. Tax payments on a similar level than last year. CapEx slightly lower. we invested this year into digital radio and Baipu in the Baipu platform. On the other hand, last year we had to invest into the renovation of our headquarters in Wittelsdorf. Therefore here also a similar level, leases, no surprises. Interest payments slightly lower than last year because Yeah, we have higher interest rates, but on the other side, we have lower net debt. Therefore, a slight decrease here. So all in, we have a free cash flow of 199 million. And therefore, definitely, I would expect something like 265 up to the end of the year. So the new guidance what we published today. Moving to the financial KPIs on page 15. Yeah, I think from the maturity structure of our debt, we see that there will be some refinancing necessary in 2024. I think what we see is that it will be possible for us to refinance. It is only a question of what the conditions will be. But I do not see any big risks here from refinancing in 2024. On the balance sheet figures, yeah, very healthy, high equity ratio of 41.7% and a low leverage, which is only 0.8% if we only view into bank debt. On the next page, financial guidance, I think we already discussed it during the call. It is narrowed definitely in both financial KPIs here and slightly increased in the EBITDA. So it could be a question why the cash flow, the free cash flow forecast was not increased on the higher end. I think if you look into our balance sheets, you would see that the inventories are very low at the moment. So, definitely, we have to increase it for the Christmas business. So, therefore, we have not increased it here. But basically, it is in line with what we increased at NPT 50A. So, having said this, I would hand it over back to the operator to start the Q&A session.

The first question comes from Tang Polo from UBS.