Freenet : presents promising figures for its TV business and publishes guidance for financial year 2017

Büdelsdorf, 12 April 2017 - On the occasion of a capital market day for analysts and investors, the Executive Board of freenet AG [ISIN DE000A0Z2ZZ5] has today presented initial results for end user business with the new TV products freenet TV and waipu.tv, and has published the guidance for the financial year 2017.

Since the launch of the nationwide change-over to the new digital-terrestrial transmission standard DVB-T2 HD on 29 March 2017, freenet TV subscribers have been able to receive not only the 20 public-sector channels, which continue to be free-to-air, but also up to 20 private full-HD channels via the new antenna TV for a charge of 5.75 euros per month. In addition, the users are also able to access further TV programs, the catch-up services of the individual stations, programme services, apps and radio programmes directly via the station list.

The installed base for the reception of DVB-T2 amounted to an estimated 1.2 to 1.5 million at the end of the first quarter of 2017, and is expected by freenet AG to rise to more than 2.5 million by the end of 2017. freenet AG reported approximately 160 thousand paying freenet TV users as of 31 March 2017 - although the obligation to pay fees only starts on 1 July 2017. By the end of the first half of 2017, freenet AG expects to see the number of freenet TV users rise to more than 500 thousand, and also expects to see an increase to more than 800 thousand subscribers and an average monthly revenue per user (freenet TV ARPU) of approximately 4.5 euros net by the end of 2017. The growth drivers of freenet TV end user business include the process of exchanging old set-top boxes, the conversion of second and third TVs as well as other communication devices to DVB-T2 HD, e.g. via a USB dongle as well as the planned disconnection of analogue cable TV in certain regions of Germany.

In parallel with its digital-terrestrial option freenet TV, freenet AG has since the end of September 2016 also been marketing internet-based TV (IPTV) under the brand waipu.tv. The IPTV product is based on an exclusively used fibre-optic network which is approximately 12,000 kilometres long, and thus currently reaches approximately 23 million households in Germany. Via an app, waipu.tv permits rapid and uncomplicated transmission of linear TV in SD and HD quality (more than 50 stations) as well as video-on-demand and streaming services to TVs at home. waipu.tv is available as freeware with limited functions, as a 'Comfort' version for 4.99 euros per month and as a 'Perfect' version for 14.99 euros per month.

At the end of the first quarter of 2017, freenet AG had approximately 150 thousand registered waipu.tv users, including approximately 25 thousand paying users. Compared with the end of 2016 (approximately 7,500 paying waipu.tv users), there has been a more than threefold increase in the number of paying subscribers. By the end of the first half of 2017, freenet AG expects to see a further increase in the number of registered waipu.tv users to more than 250 thousand, and also expects to see an increase in the number of paying users to more than 50,000. For the whole of 2017, the company is predicting more than 500 thousand registered subscribers, including approximately 100 thousand paying users. According to freenet AG, the average monthly revenue per registered waipu.tv user (waipu.tv ARPU) will be approximately 6.0 euros in the financial year 2017.

'The entry into the TV business was for us a milestone as well as a Herculean task, and we are very pleased that this entry has been so successful', says Christoph Vilanek, CEO of freenet AG. Joachim Preisig, CFO of freenet AG, adds the following: 'The initial figures relating to TV private user business mean that we are looking forward to the next few months with optimism. This is also reflected in our guidance for the current financial year.'

With regard to the development of the key group-wide performance indicators, the Executive Board is predicting slightly higher consolidated revenue both for the financial years 2017 and 2018, always compared with the respective previous year. In the opinion of the Executive Board, the consolidated EBITDA will increase to slightly more than 410 million euros in 2017 and will also record a further slight increase in 2018. In addition, the company expects to see group-wide free cash flow of approximately 310 million euros, which is roughly in line with the corresponding previous year figure. According to the expectations of the Executive Board, the free cash flow will see a slight increase compared to the previous year in the financial year 2018.
For the TV and Media segment, taking account of the different consolidation periods of the Media Broadcast Group (9.5 months in the financial year 2016 and 12 months in the current financial year), the company aims to achieve slightly higher revenue as well as slightly higher EBITDA for 2017, both figures compared with the previous year.

In the Mobile Communications segment, the Executive Board is predicting stable revenue and stable EBITDA for the financial year 2017, both figures compared with the previous year. The targets for the development of postpaid ARPU and customer ownership are unchanged in the financial year 2017. For the Mobile Communications segment, the company continues to expect that postpaid ARPU will stabilise at the previous year level, and also expects to see a slightly higher customer ownership compared with the previous year.

The consolidated EBITDA and free cash flow are managed without consideration being given to the interest of freenet AG in the results of Sunrise Communications Group AG, and also disregarding the dividend payment of Sunrise Communications Group AG. Accordingly, the guidance for the financial year 2017 does not include the anticipated EBITDA contribution related to the holding of freenet AG in Sunrise Communications Group AG or any contribution to the group-wide free cash flow of freenet AG attributable to this holding.