United Internet

day and thank you for standing by. Welcome to the United Internet quarterly statement Q3 2025 webcast and conference call. At this time all participants are in a listen-only mode. After the speaker's presentation there'll be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again and Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dominik Grossmann. Please go ahead.

Thank you, operator, and good morning, everyone. I would like to welcome you to our Q3 2025 analyst investor call. Thank you for joining us today. My name is Dominik Grossmann. I am responsible for investor relations at United Internet, and here with me today I have our CFO, Carsten Teurer. Briefly about today's call. Carsten will first take you through our presentation with the business development in the first nine months and will also give an outlook for the rest of the year. Afterwards, he will be happy to answer your questions. So far to our agenda. I would now like to hand over to Carsten. Carsten, please go ahead. The floor is yours.

Thank you, Dominik, and also warm welcome from my side to our webcast on the presentation of our nine-month figures for 2025. First of all, I would like to point out three noteworthy events. Number one, 101 has successfully completed the migration of our customers to our own network. I will get back to this later on. Number two, in October, we were able to complete the disposal of our energy business field. And number three, as mentioned during the IONOS call this morning, our group figures have been adjusted due to a change in presentation of the EdTech business in the business application segment, which is carried in accordance with IFRS 5 as discontinued operation as of September 30, 2025. The prior year was adjusted accordingly. Having said that, let's have a look on the development of our major KPIs. We are happy to report that our customer contracts increased by 480,000 to 29.5 million in the first nine months of 2025. Our revenues subsequently increased by 1.4% to 4.5 billion euros. Group EPTA increased by 1.9% to 966 million euro. despite 34 million higher mobile network rollout expenses compared to the same period before. Our EBIT declined by 11.3% to around 443%. Million Euro. The development in EBIT is driven by higher depreciation and amortization expenses attributable to investments in the rollout of the fiber optic network at 1&1 Versatil and the rollout of the 1&1 mobile network. As a result of improved performance from our associated companies and lower tax expenses, our EPS increased by 3 cents to 0.75 Euro per share. So now we will do a deep dive into our segment development starting with consumer access. And here we go. As mentioned during this morning's one-on-one call, the migration of our customers to the one-on-one mobile network has been successfully completed. This marks a major milestone for our company. What's particularly Remarkable is that, despite the complexity of executing the largest customer migration in the history of German telco market, we not only retained our customer base, but also achieved net customer growth during the transition. This clearly demonstrates the strength and appeal of our one-on-one mobile brands. Overall, the number of fee-based contracts fell by 50,000 to 16.34 million. The decrease is driven by the loss of 90,000 broadband connections to 3.86 million. However, during the same period, we were able to increase our number of mobile Internet contracts by 40,000 to 12.48 million. Despite the biggest migration, we turned a 20,000 Q1 decline into a 20,000 gain in Q2 and doubled momentum with an increase to 40,000 net additions in Q3. I will continue on slide five with the development on segments revenues. Revenue in the consumer access segment is fairly stable and amounts to approximately three billion. Both the development of service revenues and hardware sales have remained flat year over year and are in line with our expectation. That being said, if we turn our attention to APTA on next slide. We can observe that in particular, due to the further year-over-year increase in expenses for the rollout of the 1&1 mobile network segment, EBITDA fell to almost 410 million Euro. The network rollout costs amounted to 201 million Euro compared to 167 million in the same period last year. As shown in the breakdown next slide, The access sub-segment remains robust at around €611 million. The decline is a result of higher advanced payment costs for national roaming due to a lower than expected network growth at Vodafone and the different accounting treatment of certain network components under the Vodafone national roaming agreement, which are all recognized directly in APTA. without having an impact on EBIT in comparison to the former Telefonica contract. The EBITDA margin remains fairly stable. Our rollout cost for the one-on-one mobile network amounted to around 200 million and are in line with the business plan. Moving on to the business access segment. We are able to increase sales by 1.1% year-over-year to 435 million Euro. At the same time, segment EBITDA increased by 2.1% to 123.1 million Euro. There was a corresponding improvement in the EBITDA margin from 28.0 in the previous year to 28.3 this year. In the first nine months of 2025, total startup costs for the new business fields 5G and expansion of commercial areas amounted to minus 16.3 million Euro for APTA declining by almost 6 million year over year. Let us now turn to the application side of the business, starting with the consumer application segment. The number of pay accounts rose by 220,000 to 3.26 million. Here we have to point out the year-over-year development in free accounts with a decline of 210,000, which shows you in particular the successful migration to pay accounts where we added 280,000 over the same period. Overall, we are able to grow our consumer accounts by 70,000 in Q3 year-over-year. The growth of pay accounts in particular led to adjusted sales growth of 5.6% from €218 million to €230 million in the first nine months of 2025. There was also further growth in key earnings figures such as EBITDA, with EBITDA increasing by 5.1% to 80.2%. to 82.9 million Euro. The EBITDA margin remains stable at above 36%. In the application segment, we increased our number of customer contracts by 310,000 to almost reaching 10 million customers in our portfolio for the first time. This increase is driven both domestically and abroad, with our operations abroad performing even stronger. Revenues in this segment increased by 6.2 to 980 million from 923 million a year ago. The increase in revenue was driven by the strong customer growth and increased up and cross-selling. EBITDA in the business application segment increased by 21.5% compared to previous year's number of 290 million to 354 million. The operating EBITDA margin rose accordingly from 31.5 to above 36 as well. So much for the segments. Here we have summarized the most important KPIs for the group once again and added a few more. Our capex amounted to 488 million after 442 million in the previous year, reflecting our continued investments in our fiber optic network at one-on-one versatile and the rollout of the one-on-one mobile network. Please note that we are expecting a very significant proportion of our annual capex in Q4. I will provide a detailed breakdown of free cash flow in the next slide. However, the significant improvement in free cash flow is already worth highlighting. Our net bank liabilities increased by 20% to over €3.2 billion, which relates to a leverage of 2.4 times EBITDA. In addition to our substantial investments, we paid out €328 million in dividend payments and 246 million as part of our voluntary public partial public tender offer for one-on-one shares and additional purchases to increase our stake to 86.5% overall. Our equity ratio amounted to 43.5%. And this slide shows you a bridge of our APTA to free cash flow. The largest items here is our next net capex of approximately 485 million as a result of investments in the continued rollout of mobile network and expansion of our fiber optic infrastructure. Furthermore, we had phasing effects from Q4 2024 of around 110 million. And after accounting for taxes and changes in working capital, our free cash flow before leasing stands at 259 million, respectively 146 million after leasing. And finally, a brief word on the outlook. We are confirming our revenue and EBITDA forecast and are specifying our cash capex forecast with accounting for ATT&CK as discontinued operation. We are now expecting full-year revenues for fiscal year 2025 to amount to €6.05 billion. Operating EBITDA is expected to amount to approximately €1.3 billion, which includes approximately €20 million in costs associated with the transition from Telefonica National Roaming Agreement to the Vodafone National Roaming Agreement. Under the Telefonica National Roaming Agreement, certain network components are activated and depreciated Whereas under the Vodafone National Roaming Agreement, these costs are recognized directly in EBITDA. This change has no impact on the EBIT. Capital expenditures are expected to total approximately 750 million Euro, primarily driven by the continued rollout of our mobile network and the expansion of the fiber optic infrastructure. While this implies a slight spillover of investments in the following year, 2025 is still anticipated to represent the capex peak at United Internet. So much from our side. We are now available for any questions you may have.