Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- freenet AG (FRTAY, Financial) reported a strong Q3 with a notable increase in net subscribers, indicating a positive growth trajectory.
- The company has successfully launched new tariff plans and secured a partnership with Disney Plus, enhancing its service offerings.
- freenet AG (FRTAY) has improved its gross margin, reflecting the benefits of new MNO contracts and an increase in customer numbers.
- The company has increased its free cash flow guidance, demonstrating strong financial health and operational efficiency.
- freenet AG (FRTAY) continues to maintain a stable mobile business with a resilient market share, supported by a diverse range of tariff plans.
Negative Points
- The mobile service revenue showed a slight decline in Q3, primarily due to lower roaming revenues, which could be a concern if the trend continues.
- freenet TV's customer base is expected to decrease, which may impact the company's overall revenue from this segment.
- High marketing costs, particularly in waipu TV, are affecting EBITDA, indicating a need for careful cost management.
- The company anticipates a decrease in EBITDA from the media broadcast segment by 2028, due to expected reductions in TV customers.
- There is an anticipated increase in personnel and SG&A costs, which could pressure margins if not managed effectively.
Q & A Highlights
Q: Can you discuss the competitive dynamics in the German market and the impact of the Black Friday sales period on growth?
A: Christoph Vilanek, CEO, noted that while there are occasional attempts by competitors to change the market dynamics, such as Deutsche Telekom's family and friends offerings, these have not been significantly successful. He mentioned that freenet AG is focusing on SIM-only tariff plans through various white-label shops, which have been performing well.
Q: Regarding waipu TV, what are your assumptions for marketing costs going forward compared to 2024?
A: Christoph Vilanek explained that freenet AG plans to reduce marketing expenses for waipu TV by about EUR 10 million compared to the additional EUR 20 million spent in 2024. The focus will be on maintaining growth while also improving profitability.
Q: Can you provide an update on the lawsuit against the BR regarding the 2019 spectrum auction?
A: Christoph Vilanek stated that while the court ruled in favor of freenet AG, indicating improper intervention by public authorities, he does not expect significant changes to the current spectrum allocations. The ruling serves as a warning for future regulatory processes.
Q: What is the outlook for the media broadcast business, and how do you plan to manage contract renewals?
A: Christoph Vilanek confirmed that there are no major contract renewals before 2028, and the anticipated EUR 20 million EBITDA reduction is based on expected declines in TV customer numbers. The company is negotiating variable costs with tower companies to align with reduced antenna usage.
Q: How do you plan to address the potential inefficiencies in the mobile business's IT systems?
A: Christoph Vilanek acknowledged the challenges of modernizing legacy IT systems in the mobile business. He mentioned ongoing efforts to streamline and update systems, but noted that it remains a complex and long-term task.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
