freenet (FNTN) Q3 2024 earnings summary

Executive summary

• New MNO contracts fully implemented as of July 1, 2024, enabling full 5G offering and strong net adds in mobile (+79,300 YTD, +54,000 in Q3) and IPTV (+461,200 YTD, +48% yoy).

• Revenue guidance for 2024 upgraded to moderate growth, with EBITDA and free cash flow guidance also increased.

• Waipu.tv subscriber base expected to reach 2 million by year-end, supported by new partnerships and marketing initiatives.

• Freenet TV customer base expected to decline as planned, reflecting portfolio management strategy.

• Closure of Gravis business as of June 30, 2024, resulted in a €50.6 million loss from discontinued operations.

Financial highlights

• 9M 2024 revenues grew 2.9% year-over-year to €1,816.4 million, driven by waipu.tv and stable mobile service revenues.

• Gross margin improved to 39.3% (9M 23: 38.0%) from higher TV contribution and new MNO contracts.

• EBITDA for 9M 2024 reached €713.2 million (+6.4% yoy), with guidance narrowed to €500–515 million for 2024; free cash flow guidance raised to €270–285 million.

• TV and Media segment revenues up 15.6% to €291.0 million, offsetting a 12% decline in freenet TV subscribers.

• Mobile service revenue slightly lower year-over-year due to reduced roaming, but gross profit in mobile increased due to higher customer numbers.

Outlook and guidance

• 2024 revenue guidance updated to moderate growth, with EBITDA narrowed to €500–515 million and free cash flow to €270–285 million.

• Multi-year forecast to 2028 anticipates EBITDA above €600 million and free cash flow over €330 million.

• Dividend policy remains at 80% of free cash flow, with increasing dividends expected.

• Share buybacks to be considered annually for unallocated free cash flow.

• Postpaid customer base expected to exceed 100,000 net additions by year-end; waipu.tv target of ~2 million subscribers.