freenet (FNTN) Q3 2024 earnings summary

Executive summary

• New MNO contracts fully implemented as of July 1, 2024, enabling a comprehensive 5G and SIM-only tariff portfolio, driving strong net adds in Q3 and October, with mobile net adds at +79,000 by end of September and IPTV (waipu.tv) subscriber growth on track for 2 million by year-end.

• Revenues rose 2.9% year-over-year to €1,816.4 million, driven by strong waipu.tv subscriber growth and stable mobile ARPU.

• EBITDA for 9M 2024 reached €713.2 million (+6.4% yoy), with free cash flow at €219.9 million and adjusted consolidated net income up 16.7% to €231.1 million.

• Closure of Gravis led to a €50.6 million loss from discontinued operations.

• 2024 financial guidance upgraded to moderate revenue growth, EBITDA of €500–515 million, and free cash flow of €270–285 million.

Financial highlights

• All 2024 financial figures exceed 2023, with revenue and gross profit growth led by the TV segment, especially waipu.tv.

• Gross margin improved to 39.3% (9M 23: 38.0%), reflecting new MNO contracts and higher waipu.tv customer numbers.

• EBITDA growth lags gross profit due to high acquisition and marketing costs in waipu.tv; 2024 is considered a transition year.

• Mobile service revenue slightly down year-over-year in Q3 due to lower roaming revenues, but gross profit in mobile increased on higher customer numbers.

• CapEx below expectations due to lower digital radio investments; interest payments slightly up due to higher rates.

Outlook and guidance

• Revenue guidance for 2024 raised to moderate growth, EBITDA narrowed to €500–515 million, and free cash flow guidance increased to €270–285 million.

• By 2028, EBITDA ambition is at least €600 million, with free cash flow above €330 million, despite higher tax payments as loss carryforwards diminish.

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

• Dividend policy remains at 80% of free cash flow, with the remainder allocated to business growth or share buybacks.