euro adhoc: freenet AG
quarterly or semiannual financial statement
freenet
continues on road to success in tough market environment
Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement.
9-month report
15.11.2007
freenet continues on road to success in tough market environment Customer growth in all growth segments: mobile telephony +440,000, DSL and freenetKomplett DSL customers +360,000; contract customers +670,000 (vs. Q3/2006) Profitability and results: EBITDA EUR196.3 million (+60.6 percent); EBT EUR135.7 million (+36.8 percent) (all vs. Q1-Q3/2006) Group result: EUR67.2 million (Q1-Q3/2007)
Büdelsdorf, 15 November 2007 - freenet AG has continued working undeterred, with full-fledged effort from its sales operation, on its growth in the strategic fields of DSL and freenetKomplett DSL service, convergence products and mobile telephony. As a result, freenet AG - partly by launching more and more aggressively priced DSL packages and discount deals in mobile telephony - had a successful third quarter with continued customer growth in the important lines of business, as profitability continued high.
Compared with the end of the third quarter of 2006, the number of contract customers rose by 670,000 to 6.32 million. This figure breaks down to 2.90 million mobile telephony customers, 1.27 million DSL and freenetKomplett DSL customers, 1.68 million Paid Services customers and 0.47 million Pre-selection customers. By the end of Q3/2007, the total number of mobile telephony customers had increased by 440,000 to 5.45 million, while the DSL and freenetKomplett DSL customer base grew by 360,000 to 1.27 million (vs. Q3/2006). "Stronger growth in the DSL segment," says freenet AG CEO Eckhard Spoerr regretfully, "was prevented mainly by problems in the activation of freenetKomplett DSL customers by Deutsche Telekom, as well as the fact that Telekom is offering retail tariffs for DSL packages that are actually below our wholesale costs of purchase from this former monopoly operator. We have already taken this matter to the regulator and hope that a stop will soon be put to these unfair practices."
When considering the revenue and income for Q3/2007, it should be borne in mind that the obligatory capitalisation of elements of customer acquisition and retention costs in accordance with IAS 38, along with new wholesale terms greatly limits a direct comparability with the previous year; this had a negative effect on revenues and a positive effect on operating profits.
Against this backdrop, freenet generated revenue of EUR470.0 million in Q3/2007, putting it on par with the previous quarter's performance; the figure represents a roughly 7 percent decline compared with Q3/2006. Mobile Telephony accounted for EUR301.4 million of revenue, Fixed-Line/Internet contributed EUR168.6 million. Across the group, total revenue for the first nine months of 2007 totalled EUR1, 389.4 million - a nearly 9 percent decline year on year.
Based on the changed accounting rules - resulting in declining revenue and rising profitability - the third-quarter results for 2007 are considerably higher than those for 2006. EBITDA surged by over 40 percent to EUR60.3 million; a 14.5 percent drop compared with the previous quarter due to the above mentioned problems, along with shrinking prices and margins across the market while expenditure on customer acquisition remained high. EBITDA for the first nine months of 2007 totals EUR196.3 million - a year-on-year increase of 60.6 percent. Income tax charges of around EUR51 million caused a group result for the first three quarters to decline to EUR67.2 million - mainly due to changed tax legislation which goes into effect on 01 January 2008 and associated changes to the corporate tax rate when calculating deferred claims and liabilities. So a reform of corporate taxation that is in fact positive for the company has led to a significant, one-off negative effect on group results in the third quarter.
"The figures for the first nine months," comments Eckhard Spoerr, "show that we are still within our target range for 2007. One particularly gratifying aspect is that we have managed to keep our operations successful despite the turmoil surrounding freenet AG's future development, while systematically replacing our traditional lines of business such as narrowband access and fixed line with our contemporary bundled DSL, mobile Internet and telephony products."
The Q3/2007 Interim Report will be posted under IR / Publications at www.freenet.ag shortly.
Important KPI's of freenet group Accounting method: IAS/IFRS
in EURm Q1-Q3 2007 Q1-Q3 2006 Q3 2007 Q2/2007 Q3 2006 Group revenue 1,389.4 1,524.6 470.0 466.9 507.4 Revenue Mobile 883.0 981.0 301.4 302.8 340.2 Revenue Fixed/Internet 506.4 543.6 168.6 164.1 167.1 Group gross profit 436.3 353.3 137.1 157.3 120.4 Group EBITDA 196.3 122.3 60.3 70.5 42.7 Group EBIT 128.4 89.4 31.7 45.9 32.5 Group EBT 135.7 99.2 28.6 51.3 36.3 Net result 67.2 75.7 -22.7 39.9 37.9 Earnings per share 0.69 0.98 -0.24 0.41 0.53 Cash and cash equivalents -4.3 516.3 -4.3 540.6 516.3 Customers total 11.81 13.08 11.81 11.86 13.08 thereof contract customers 6.32 5.65 6.32 6.21 5.65
end of announcement euro adhoc 15.11.2007 08:31:38
Further inquiry note:
Andreas Neumann
IR-Manager
Tel.: +49 (0)40 51306-778
E-Mail: ir@freenet.ag
Branche: Online
ISIN: DE000A0EAMM0
WKN: A0EAMM
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