freenet AG (FRTAF) (Q2 2024) Earnings Call Highlights: Strong IPTV Growth and Strategic Partnerships

GuruFocus News
3 min read

In This Article:

  • Revenue Growth: Increased by approximately 3% for the quarter and first half of the year.

  • Gross Profit Increase: Up by 6.7% in the quarter, driven by valuable service revenues.

  • EBITDA: Stable with cost control, despite increased personnel and marketing expenses.

  • Mobile Subscribers: Growth of 26,000 in the first half of the year.

  • ARPU (Average Revenue Per User): Expected to remain stable for the full year 2024.

  • IPTV Net Adds: 191,000 in Q2, totaling 330,000 for the first half of the year.

  • Free Cash Flow: EUR 151.2 million for the first half, with potential for guidance increase.

  • Marketing Investment: Additional EUR 20 million planned for the year, with EUR 12 million spent in the first half.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • freenet AG (FRTAF) successfully concluded long-term agreements with all three network operators, expanding their 5G mobile tariff portfolio.

  • The company reported strong IPTV development with significant net adds and new agreements, contributing to a robust customer base.

  • freenet AG (FRTAF) achieved a stable ARPU for the full year of 2024, indicating consistent revenue per user.

  • The company is launching new discount brands and campaigns, such as Happy SIM and Dr. SIM, to enhance market presence.

  • freenet AG (FRTAF) maintained a strong service level during the European football championship, showcasing operational efficiency and customer satisfaction.

Negative Points

  • The mobile segment experienced low uptake, with only a modest increase of 26,000 net adds in the first half of the year.

  • The company faces challenges in the competitive environment, particularly in the low-end SIM-only market.

  • Media broadcast customer base continues to decline, although at a slower rate, impacting overall segment performance.

  • The broadband business did not meet expectations and is not a strategic focus, resulting in limited growth.

  • freenet AG (FRTAF) anticipates higher marketing expenses, which could impact EBITDA in the short term.

Q & A Highlights

Q: Following your new long-term deals with all three MNOs, can you comment on the commercial trends and the impact on ARPUs or subscriber share? A: Christoph Vilanek, CEO: The new agreements allow us a wider range with Telefonica, including access to Blau's tariff plans. This change targets the lower price end of the SIM-only market, which was previously dominated by Drillisch. We see this as a volume driver rather than an ARPU driver, with profitability slightly improved but not significantly impacting revenue overnight.

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