Boost in Freenet's Revenue and Profits
Freenet Reports Slowed Growth in Waipu.tv Segment, but Overall Revenue and Profit Increase
Freenet, the German telecommunications company, has reported a slowdown in the growth of its Waipu.tv segment, but overall revenue and profit increased in the first half of the year.
The growth momentum of the Waipu.tv segment has slowed down primarily due to structural changes in the German TV market and the end of a key distribution partnership. The abolition of the ancillary cost privilege, which previously directed TV subscriptions through landlords, and the end of Freenet’s marketing partnership with Telefonica for Waipu.tv have contributed to this slowdown.
Despite this, Freenet added 161,000 customers in the first half of the year, with 61,000 for Waipu.tv. The company did not provide any information about the overall growth or performance of its business beyond the Waipu.tv segment.
Operating profit in the reporting period increased by half a percent to 257.4 million euros. The current price war in the German mobile communications industry is a factor contributing to the decrease in the average revenue per mobile contract customer (ARPU), which fell by around 2% to 17.40 euros in the first half of the year.
However, Freenet reaffirmed its forecast for an operating profit of 520 to 540 million euros and a free cash flow of 300 to 320 million euros. The company's overall annual target for average revenue per mobile contract customer (ARPU) was lowered, but the exact reason for this was not specified.
In contrast to the Waipu.tv segment, Freenet's broader business and other revenue streams drove overall revenue and profit increases. Revenues from the Waipu.tv business segment increased by 6.5% to 204.8 million euros. Operating profit in the mobile segment fell by around 1% to 210.6 million euros due to higher marketing costs.
In summary, the end of the distribution partnership and the loss of a major marketing partner have slowed the growth of the Waipu.tv segment, but Freenet's overall revenue and profit increased in the first half of the year. The slowdown in the Waipu.tv segment reflects market liberalization effects and the loss of a major marketing partner rather than a fundamental decline in demand.
| Factor | Waipu.tv Growth Impact | Freenet Revenue/Profit Impact | |--------|-----------------------|------------------------------| | Abolition of ancillary cost privilege (mid-2024) | Slows Waipu.tv growth due to tenant choice independence | Endures but mitigated by broader customer base | | End of Telefonica marketing partnership (Q3 2024) | Significant reduction in Waipu.tv new customer inflow | Negative effect on TV segment, offset by other sources | | Price war in mobile sector | Shrinking ARPU, increased discount customer share | ARPU down but overall revenue up from increased customers | | Other revenue streams (mobile, TV) | N/A | Strong revenue and profit growth |
These figures are key indicators for dividend payments. Ingo Arnold's contract has been extended until the end of 2029, and the board of directors will be reduced from six to two members from September 1, with Robin Harries and Ingo Arnold as the only members. Group earnings rose by nearly 1% to 1.21 billion euros.
Community aid could be provided to help stabilize the growth of Freenet's Waipu.tv segment, given the impact of the end of distribution partnership and key marketing partnership.
Finance for research and development could be instrumental in enhancing Freenet's broader business and other revenue streams, contributing to overall growth and profit increase.
