Freenet Ag Unsp/Adr

Good morning, everybody. Thanks for joining today's conference. It's my last one on annual results, but it's a special pleasure to present the record year 2024 to you. As always, I will start to give an overview on the main development, and then Ingo will give a detailed view on the financials. And there's two numbers which I'd like you to be aware of. The first number is 196,000 euros. This is the EBITDA that we generated per FTE. And the other one is, I think, also a remarkable number. It's 961,500 euros. That's the free cash flow that we generated on every opening day of our shops over the full year, so on 302 days in 2024. I think those are remarkable numbers, which we do not report like that, but I did a little calculation the last couple of days and I thought they're worthwhile to mention. Having said that, let me start with the overview on a successful year. I think, as you all know, we have created a new regime concerning the network operators' contracts. So the mobile communications sector is not only fit for the future, but also in Q4. We will elaborate on that in a couple of slides. We did really well. We did better than we did for the first three quarters. And the second thing is we started to see an EVTA contribution to IPTV. And also on that, we will have a couple of more thoughts and statements following up. It was the strongest postpaid net ads ever since 2018. And once again, my pool netted just under 600,000 new customers on NetAds, which is about the double of the equivalent of Magenta TV. So the story remains valid that we are doing about 200% of what Magenta does. On EBITDA and free cash flow, I already gave two ratios, but the majority of you will have seen that the proposal for dividend is now up to 197 euros, which is the equivalent of 80%. And also, we are planning a share buyback program for the full year. That's coming from the summary going into the four key numbers. Subscribers crossed the 10 million amount or the 10 million number plus 6.9%. Revenues are up 4%. In the DA, 521.5 million with a special effect, which we will explain. And free cash flow is up to 292, which is also up plus 5.7% to 2023. On the mobile, yeah, as I've said, and as you're all well aware of, we have signed long-term contracts. These long-term contracts are not changing the margin as such but it changes the way to plan the way to do campaigning and the safety or security that we we can plan long term specifically with telefonica deutschland we have seen in the fourth quarter an increase of net ads specifically on Telefonica, for sure more on the lower end of the market, but this is what we're aiming for because we were for years and years missing Telefonica's SIM only portfolio, which is now available to all our customers and for sure and finally we have 5G across the board. Second thing, and I think that is certainly also helping a lot, we have after the repositioning and framing everything under the brand of Freenet, we've done a lot of better and more exhausting marketing campaigns. Specifically, we did a lot of promotions and sponsoring in German Bundesliga, German the ICANN League, which is a format for younger people, but also the Handbell Championships, European and World Championships. And all the numbers that we can see show that brand recognition is increasing, but not only that, more importantly, pre-net becomes for more and more customers. first choice and remains in the relevant set of choice. I think those marketing campaigns have really paid back and also contributed significantly to the success. If we look at the channel mix, then specifically the captive channels have increased their volumes and I think that is also important to know that our dependence from third party not increasing, but in small effort, stepwise decreasing. Part of it is what we call the APS, the assisted personalized shopping, so the full integration of our captive channels on and offline. We have 100% the same offers in the shops as we do on our own websites. Once again, this allows better and faster steering of offers and a faster reaction on competition. Looking at the pure numbers of subscriptions, we end up with plus 182,000 net ads, which is far beyond the original guidance. And you all are aware that this came mainly from the last quarter with plus 103. And this is a remarkable step up based on new tariff plans in SIM only with CFD, a full-size portfolio. We have for sure, I wouldn't say overspent, but we have spent a lot of money in the first quarter. We also wanted to test and see how fast we can grow. You've all seen our guidance for this year. I think the fourth quarter shows that with a little bit of energy, with a little bit of more spending on marketing side, but also online in CEO and SEA, we are very successful and we can easily step up to this net ad number that we see here in the quarter, which is also our goal for this year with a stronger net ad guidance than before. Coming to IPTV, Raipu, What did we see here in the first quarter? What was the specifics of the fourth quarter? This was the first quarter where Telefonica did promote their own product. So we saw no gross ad contribution from Telefonica, and we also saw some churn from their customers that are on the Waipu product. We have agreed with Telefonica not to disclose any specific numbers, but when we look at the current sales numbers for Q4, we can share with you that our net sales were still beyond the fourth quarter of 2023, if we do not count or if we take into consideration the loss in sales from Telefonica and also the churn. So we are very, very positive about this. Overall, it is doing really well, and we also have done, which is already in 2025, we've just recently increased the prices by 2 euros. And once again, we did not see any reaction on customer side. We did not have additional return or so. And certainly the goal for 2025 for us is on the one hand side to grow according to our midterm ambition. But more importantly, we want to show that excelling slash WIPO TV will contribute. significantly to our EVDA because there was still doubts also from your side expressed that WIPO is a good product but cannot contribute EVDA. So we have seen a positive result, positive EVDA contribution in 2024. But in 2025, we will focus not only on pure growth, but also on EVDA and free cash flow contribution. And the first quarter was like proof of concept for us. And in the first quarter, we see that EVDA is coming in so it's a mixed goal for the team there in order for everybody to understand the product will contribute as we have foreseen this in the long term plan for 2028 the total subscribers are now on one million and ninety four thousand and nine hundred and forty thousand we missed my personal ambition of two million somewhat And I know that everybody will ask, is this a fatigue on the market? I think also Deutsche Telekom made some comments there. I would like to remember you that I remind you that we have always said that the Nidenkorten Privilege or fall of it will have an impact, but it is a kind of a silent impact. It generates an overall sentiment towards changing, but we did not and did never expect kind of a flood of new customers. But we see that the constant inflow will continue, so we will definitely hit our mid-term ambition, which we have communicated also on WIPO, not only for 2028, but also the Step up in 2025, 6 and 7. So we're very positive. Once again, still this year, we'll go first significant contribution, the ABTA side, and this is also necessary because on the other hand side, we will not, even though we don't talk about it a lot, we know that FreeNet TV is now down to 500,000 subscribers. We are still losing subscribers. These customers step by step move out. We still do not see a floor there, but a slow decrease of customers is continuing for the full year. The last page, page number 10, that's the one on ESG. I think the transition plan for Scope 1 and 2 is adopted. We're doing really well. We will have reduced our CO2 emissions by 63%. By 2023, the major levers are our fleet of cars that we do not only have as service cars, but also we offer to all our individual employees cars. This is doing really well and we are trying to migrate all our locations to renewable energies. main actions last year was to establish the e-car policy. You can imagine how difficult it is in Germany. Germans are really very much into cars. But we've put that through. We are not the most popular executive board team anymore, at least within our own staff on the car side. But they had to accept it. And we have also installed it on some of our facilities, the PV system. So we are on track and doing really well. I think having said that, I would like to hand over to Ingo to give you a deeper look into the numbers.

Thank you, Christoph. Good morning, everybody. I start with the group overview on page 12. I think definitely a conservative headline because here we link the headline to the adjusted EBTA where we do not count the sale of the IP addresses. So I think and therefore, yes, It was a transition year, and without the IP addresses, the EBTA was coming in on a stable level only. But I think we sold the IP addresses, and therefore, I think it's definitely not wrong to talk about a record year with a record EBTA where we could increase the EBTA to more than 520 million. So I think, yeah, it was. It was very, it was a very, very good year in terms of revenues. We saw the strong increase of WIPO slash EXARING revenues. On the other hand, relatively stable mobile revenues. In the gross profit, I think here we saw the biggest move from 915 million to 974 million, which is resulting from, I think, from one-third from Vaipu, one-third from mobile, one-third from IP addresses, but all in a very, very successful year, and we are very happy that we can present these figures today. On the mobile side, next page, we see what I already announced, a stable development of revenues in mobile. The most profitable service revenues could be increased even in the quarter. But yeah, the increase was only a slight increase. But I think what is not here reflected is the customer intake of the second half of 24 or only partly. Therefore, we do expect some positive effect in 25 here, even on the service revenue side. The gross profit is higher all in, is higher than last year. I think maybe a little bit disappointing in the quarter, but I would like to remind you to what we published in Q4 23 where we had an exceptional performance bonus. So I like to remind you that you were so surprised in Q4 23 that the result was that good. So I think this makes it more difficult here in Q4 to show an increase. So all in therefore on the quarter, it's a decrease of gross profit. But if you look into the full year increase of more than 20 million, and if you build an average of gross profit from the 703.4 million, then you have an average gross profit per quarter of something like 175. And if you compare this with the gross profit of the fourth quarter, 24, which is more reasonable from my point of view. You see that the gross profit is higher than in the average of the year, even in the quarter. On an EBITDA level, not all of the gross profit is arriving here. I think it's a development what we saw during the whole year. So on the one hand, we see basic effect on the HR side. We had to increase salaries based on the inflation of what we saw here in Germany in the last year. This was one negative effect. On the other hand, also not surprising, bad debt went up during 2024. And so both effects were negative. for the EBITDA and therefore not all of the gross profit was arriving there. Coming to some KPIs of the mobile business, the RPU, yeah, I think what we see here, I would still say it's a stable RPU, but what we also see is that the development, what we saw in the third quarter, that it is repeated. So we see a small decrease in the RPU of 20 cent for the whole year. It's a decrease of 10 cent. So yeah, I think we have to look what happens during 25. But yeah, maybe there will be a small decrease by 20 cent also in the next year, what I would call stable. But I think with the increase of the of the on the net at side, this will be more than compensated with the mobile subs. I think Christoph already commented on it. The digital lifestyle revenues. Yeah, maybe slightly disappointed in Q4, but if I think salespeople It is difficult to sell everything. And so what we saw during the fourth quarter was a very strong focus on postpaid contracts. So therefore, we have the very, very successful quarter in increasing the number of cross ads on the mobile side. And so therefore, maybe the focus was not 100% on digitalized revenues, but all in. it is still something what we forecasted as stable digital lifestyle revenue. Moving to TV and media, what we see here now is the increase in the revenues to nearly 400 million for the year. Nearly 50% of it is based on waifu TV now. So you see the increasing trend here. On the gross profit side, it is also very similar. The increase of the gross profit is based on the increasing number of customers at Vaipu and of the increasing service revenues what we see here. And in EBITDA, We do see the decrease for the whole year, but we see stable results in Q4. The decrease is based on a restructuring program, what we did with media broadcast during the year, on the one hand. On the other hand, also on the HR side, we increased the number of customers with XRing. So these two negative effects on the personal side, On the other hand, it is something what we discussed more than once. The increase of customers also increased the marketing cost or slash the acquisition cost. This is what we did. This is what we announced. And because of these increased costs, we have the strong increase in customer numbers. So I think we are very happy with the figures what we see here because this is definitely something what we budgeted from the beginning of the year and so therefore not surprising for us. The free cash flow on the next page. Yeah, also here you see some effects from the more aggressive Customer gain in the fourth quarter you see the increase of working capital Which is nearly 72 million it is in in the year before it was 7 million less so yeah, I think this is this is normal that from IFRS the acquisition cost will be shown over the period of over the period of the subscription and and but but the cash is already shown at the beginning so therefore you see the negative effect here in the working capital from the from the growth in the fourth quarter especially but this will definitely help in the future then on the on the texas side you see i think we we forecasted for years we forecasted uh higher taxes and increasing taxes. And at the end of the year, very often we still had low figures. So now maybe for the first time we are near to 40 million, but I think this is normal. The prepayments, what we do have to do are increased because the profit is increasing. So I think this is a normal effect. We do not like it that much to pay taxes, but I think we have to do so. On the capex side, we saw a very low figure here in 2024 with 38 million. I would not like to talk about phasing, but I think it is not a normal level what we saw during 2024. Therefore, we expect an increase in 2025. These payments nearly on the same level and without gravis so they were higher in earlier times but now they are on a normal level with the 60 million interest payments no big changes which leads us to a free cash flow of 292 million which is totally in line with the with the guidance what we gave On the right-hand side, what you can see here is what we like to do with the money, with the cash that we generated. I think, again, we stick to our promise to pay out 80% of the free cash flow as a dividend, which is calculated to 197 now for the year 2024. I think it is important to say that 12 cents of the 197 is related to the sale of the IP addresses. So without it, it would be 185. What we also have potential is to do a share buyback. I think we also have discussed not only once in this circle here, so I think we see a potential to do a share buyback on the strong figures up to 100 million. Strong figures, you can see on the next page. I think maybe what is important to mention here, you see the revolving credit facility. I think this was originally due at the end of 2025. We pre-renewed it. up to 2029 so we here on the on the on the cash side and on the financing side very very safe up to 2029 on the balance sheet on the right hand side i think still very strong figures very low leverage very high equity ratio and a a good cash balance what we see here Coming to my last page here, it's about the guidance 2025. Yeah, I think the headline is this is no mistake that we write ambitions because I think it is on the one hand, the guidance is totally in line with the ambition, what we gave to it at the end of 21 for 2025. On the other hand, it is also in line with the Ambition, what we published in November for 28, because we are on a path to reach it. And I think what we guide here for 25 is fully in line what we expected during publishing the Ambition 28. So on the group level, We guide revenue, a moderate growth here again. We guide an EBITDA of 520 to 540. What is important to know here, this is without the 14 million of an additional IP sale at the end of this year, which is already signed with a partner. And then we have a free cash flow, which is including the IP addresses and where we guide a range of 300 to 320 million. Why have we left the IP addresses in? Because from our point of view, it makes it much easier for all shareholders to calculate the dividend because we will pay out or we will calculate our 80% dividend definitely on the base of a free cash flow, including IP addresses. What we also did first time, we also guided the segments to make it even more transparent for you. We have a revenue here with moderate growth also. We see an adjusted EBITDA, which is similar to the reported EBITDA here of 420 to 440 million. And we forecast post-paid customers to increase again with a moderate growth. I think we have to wait and see what happens. Christoph already mentioned that the fourth quarter was very strong. What is normal is that the first quarter could be, could come in a little bit lower if you have such a record quarter. Let's wait and see what happens. But therefore, we are here on a safe level to guide a moderate growth. From the postpaid ARPU, I already explained something around the ARPU. I would here guide a stable development. Segment TV and media revenue noticeably a growth. In the EBITDA 115 to 135, which is a strong increase here. Freenet TV, again, a decrease. We still do not see that we find a flaw here. And with Wipo-TC subs, we see a noticeable growth, even with losing Telefonica customers here. So therefore, I would hand over to the moderator again to start the Q&A.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press 9 and star on your telephone keypad. In case you wish to withdraw your question, press 9 and star a second time. And the first question comes from UBS. Please go ahead with your question.