freenet AG: freenet continues to impress in financial year 2022 and proposes a dividend of 1.68 euros per share

freenet continues to impress in financial year 2022 and proposes a dividend of 1.68 euros per share

• EBITDA growth of +7.0% in financial year 2022 (478.7 million euros) driven equally by the Mobile Communications and TV and Media segments
• Cash conversion remains characteristically high: free cash flow rises to 249.2 million euros (+6.3%)
• waipu.tv reports record net new customer growth of almost 100 thousand customers in Q4/22
• 2022 dividend proposal: 1.68 euros per share (previous year: 1.57 euros per share)¹
• 2023 guidance underlines financial ambition for 2025 (EBITDA ≥ 520 million euros)
• CEO Christoph Vilanek’s contract extended

Büdelsdorf, 22 February 2023 – freenet AG [ISIN DE000A0Z2ZZ5] today announced its preliminary results for the 2022 financial year.

freenet’s performance unaffected by external circumstances

The past financial year once again demonstrated the resilience of freenet’s business model in the face of unpredictable factors outside the company’s control. The products and services offered by freenet (Telecommunications, Internet, TV entertainment) are indispensable and irreplaceable for private households in the short and medium term. As a result, the core Mobile Communications business appeared unfazed by external circumstances, as reflected by the Group’s revenues, which remained stable year-on-year at 2.6 billion euros (previous year: 2.6 billion euros). The company’s subscriber base² grew to more than 9.0 million over the same period (end of 2021: 8.8 million), with the number of waipu.tv subscribers rising much faster than anticipated (+247.5 thousand). As a result, the TV and Media segment performed very well and is becoming an increasingly integral part of the Group’s profitability base.

 

KPIs Group level: Increase in EBITDA reflects higher revenues quality and target achievement

In EUR millions/as indicated 2022 2021 Change Q4/2022 Q4/2021 Change Revenues 2,556.7 2,556.3 +0.0% 667.7 675.5 -1.2% EBITDA 478.7 447.3 +7.0% 116.4 107.4 +8.4% Free cash flow 249.2 234.4 +6.3% 62.0 61.5 +0.9% Subscriber base (in ‘000s)^{2, 3} 9,042.4 8,785.1 +2.9% 9,042.4 8,785.1 +2.9%

 

Both operating segments contributed equally to the sharp year-on-year rise in EBITDA, with robust customer growth in the TV and Media segment, a fundamental increase in high-margin revenues from services and the exceeding of targets in the Mobile Communications segment all particularly responsible for this positive performance. freenet ended the 2022 financial year with EBITDA of 478.7 million euros, at the upper end of the guidance range raised during the course of the year (470-480 million euros; previous year: 447.3 million euros). The same was also true of free cash flow, which reached 249.2 million euros (guidance: 240-250 million euros; previous year: 234.4 million euros). During the year under review, the company clearly achieved its financial ambition of generating a compound annual growth rate (CAGR) of >4% from the 2020 financial year until the end of 2025 (CAGR 2020-2022: 6.0%).

This means that freenet is on the right track to reach its strategic target of generating EBITDA of at least 520 million euros and free cash flow above 260 million euros from the 2025 financial year onwards. Shareholders are also set to profit significantly from this growth thanks to the company’s dividend policy of distributing at least 80% of its free cash flow.

 

KPIs Mobile Communications segment: EBITDA up +8.8%

In EUR millions/as indicated 2022 2021 Change Q4/2022 Q4/2021 Change Revenues 2,251.3 2,270.8 -0.9% 580.9 599.7 -3.1% thereof SR, postpaid 1,547.3 1,542.3 +0.3% 387.7 386.6 +0.3% thereof SR, no-frills/prepaid 118.6 108.9 +9.0% 30.3 27.5 +10.0% EBITDA 402.7 370.1 +8.8% 110.2 92.5 +19.1% High-value mobile customers
(in ‘000s)³ 7,386.8 7,266.0 +1.7% 7,386.8 7,266.0 +1.7% thereof postpaid customers 7,273.7 7,178.0 +1.3% 7,273.7 7,178.0 +1.3% thereof app-based customers⁴ 113.1 88.0 +28.5% 113.1 88.0 +28.5% Postpaid ARPU (in EUR) 17.9 18.1 -0.8% 17.8 18.0 -0.9%

 

The positive trend across almost all performance indicators during the past financial year demonstrates the crisis resilience of the Mobile Communications business. Stable postpaid ARPU (17.9 euros; previous year: 18.1 euros) and moderate growth in the number of postpaid customers relevant for recurring revenues in the Mobile Communications segment (7.3 million; previous year: 7.2 million) ensured that revenues remained virtually unchanged at 2.3 billion euros (previous year: 2.3 billion euros). The slowdown in growth for the mobile customer base caused by the entry into force of the new Telecommunications Act (TKG) at the end of 2021 was negligible over the last 12 months (2021: +99.3 thousand; 2022: +95.7 thousand). The revenues from services rose by +14.8 million euros to 1,666 million euros (previous year: 1,651 million euros), once again making up the majority of segment revenues (74%). The only factor levelling off this revenues growth at segment level was the decrease in low-margin hardware revenues. Overall, the segment contributed +8.8% more to Group EBITDA (2022: 402.7 million euros; previous year: 370.1 million euros).

 

KPIs TV and Media segment: Double-digit revenues and EBITDA growth

In EUR millions/as indicated 2022 2021 Change Q4/2022 Q4/2021 Change Revenues 313.3 284.5 +10.1% 87.7 75.1 +16.8% EBITDA 105.4 91.8 +14.8% 22.3 19.7 +13.2% waipu.tv subscribers (in ‘000s)³ 970.0 722.5 +34.3% 970.0 722.5 +34.3% freenet TV subscribers (RGU)
(in ‘000s)³ 685.6 796.6 -13.9% 685.6 796.6 -13.9% TV subscribers (in ‘000s)³ 1,655.6 1,519.1 +9.0% 1,655.6 1,519.1 +9.0%

 

The TV and Media segment delivered a strong performance during the 2022 financial year, with revenues rising by 10.1% to 313.3 million euros (previous year: 284.5 million euros). This growth was primarily driven by high net new customer growth for waipu.tv (2022: +247.5 thousand), which reported another record quarter (Q4/2022: +98.2 thousand) to take its year-end customer base to 970.0 thousand (end of 2021: 722.5 thousand). waipu.tv increasingly established itself as a value for money leader in the German IPTV market in 2022. As a result, the total number of TV subscribers grew by +136.5 thousand to around 1.66 million (end of 2021: around 1.52 million) despite the anticipated decline in freenet TV subscribers (RGU), which fell by -111.0 thousand. The TV and Media segment therefore contributed more than 50% of freenet’s overall net new customer growth (+257.3 thousand) in 2022. Media Broadcast’s infrastructure (B2B) business also performed very well and made another considerable contribution to the +14.8% increase in segment EBITDA to 105.4 million euros (previous year: 91.8 million euros).

2023 guidance confirms financial ambition for 2025

In EUR millions/as indicated	2022 reference value	2023 guidance
Financial performance indicators
Revenues	2,556.7	stable
EBITDA	478.7	480-500
Free cash flow	249.2	250-270
Postpaid ARPU (in EUR)	17.9	stable
Non-financial performance indicators (in millions)
Postpaid customers	7.274	moderate growth (+)
waipu.tv subscribers	0.970	significant growth (+++)
freenet TV subscribers (RGU)	0.686	noticeable decrease (--)

CEO Christoph Vilanek’s contract extended

The Supervisory Board of freenet AG has decided to extend the CEO contract of Christoph Vilanek until year-end 2026. Chairman of the Supervisory Board Marc Tüngler commented: “Christoph Vilanek has strategically positioned freenet for the future by entering the TV and Internet business. He is fully on track to realise our ‘freenet 2025’ ambitions.”

Conference call webcast

The conference call covering the preliminary results for the 2022 financial year and fourth quarter of 2022 will take place on Thursday 23 February 2023 at 10:00 (CET). All those interested in attending can follow the conference call via webcast (listen-only mode). A recording will be made available following the event.

The presentation is also available online. The 2022 Annual Report will be published on 24 March 2023.

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¹ Subject to approval by the Annual General Meeting.
² Sum total of postpaid, freenet FUNK, freenet FLEX, waipu.tv subscribers and freenet TV subscribers (RGU)
³ Key figure shown as at the end of the period
⁴ freenet FUNK and freenet FLEX customers

 

Note

In the interest of clear and transparent presentation, alternative performance measures (APMs) are used in the financial statements of freenet AG and in ad hoc disclosures pursuant to Art. 17 MAR, in addition to the disclosures defined by the International Financial Reporting Standards (IFRSs). Information on the use, definition and calculation of APMs can be found in the Annual Report.

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Contact:

freenet AG
Investor Relations & ESG Reporting
Tel.: +49 (0) 40 / 513 06 778
Email: ir@freenet.ag
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