Management Presentation Q2 2018 results Christoph Vilanek, CEO and - PowerPoint PPT Presentation

Management Presentation Q2 2018 results Christoph Vilanek, CEO and Joachim Preisig, CFO 09 August 2018 | Analyst and Investor Conference Call 1 | Management Presentation Q2 2018 | 09 August 2018

Cautionary statement This presentation contains forward-looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of freenet AG could differ materially from the expectations regarding performance, results and timing expressed in this presentation. This presentation does not constitute an offer to sell or a solicitation to purchase any securities of freenet AG. Any such decision must not be made on the basis of the information provided in this presentation. freenet AG does not undertake any obligation to publicly update or revise information provided during this presentation. 2 | Management Presentation Q2 2018 | 09 August 2018

Positive 1 st half year 2018 performance ▪ +5.4 per cent yoy in group revenue before IFRS 15 and +3.8 per cent yoy in recurring EBITDA ▪ All operational and qualitative KPI targets achieved ▪ Financial investment Sunrise with good performance Group ▪ New strategic investment in CECONOMY closed ▪ 2 new board members assigned, Chief Commercial Officer and Chief Customer Experience Officer ▪ Continuous growth in postpaid customer base (+4.0 per cent or 264,000 yoy) Mobile ▪ Postpaid ARPU stable at 21.5 euros Communications ▪ Digital lifestyle revenues + 14.5 per cent yoy ▪ freenet TV with 1,140,000 paying user (RGU within expected range) ▪ Media Broadcast TV B2B contribution/ gross revenues in line with full year prognosis ▪ One-off effect amounting to 7.3 million euros effect from the partial sale of VHF infrastructure will be compensated by corresponding lower revenues in VHF in 2 nd half of 2018 TV and Media ▪ waipu.tv with new high in number of registered customers per quarter + 215,000 up to 824,000 per June ▪ waipu.tv subscibers up from 133,000 in Q1 2018 to 174,000 in Q2 2018 3 | Management Presentation Q2 2018 | 09 August 2018

Postpaid net adds in Q2 2018 amount to approx. 60,000 [in million] 9.59 9.60 9.59 9.60 9.57 6.83 6.77 6.71 6.65 6.56 Q2 2017 Q3 2017 Q4 2017 3.03 2.95 2.88 2.83 2.74 Q1 2018 Q2 2018 Postpaid No frills Customer Ownership Key drivers ▪ Continued improvement of customer structure based on increase of postpaid customers by 4.0 per cent yoy or +264,000 ▪ Shrinking no frills customer base (-287,000 yoy) because of new ID regulations and waiving super discount offers ▪ Online share of contract related transactions 45 per cent 4 | Management Presentation Q2 2018 | 09 August 2018

Most important postpaid ARPU stable [EUR/month] 2017 2018 2016 Postpaid 21.7 21.6 21.5 21.5 21.4 21.4 21.4 21.1 Q1 Q2 Q3 Postpaid ARPU 21.5 euros . Data revenue share at 35.5 per cent. No-frills Prepaid 3.5 3.4 2.7 2.4 3.1 3.1 Q2 Q2 No-frills ARPU 3.5 euros as a consequence of offer policy Prepaid ARPU 3.4 euros – again due to lower base 5 | Management Presentation Q2 2018 | 09 August 2018

Digital Lifestyle revenues constantly increasing [in EUR million] 49.0 42.6 42.4 41.0 37.9 36.3 Strong performance ▪ + 4.5 million euros or + 12 per cent year on year Main drivers Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 ▪ 164.2 Increasing focus on entertainment 137.1 products namely freenet Video 106.0 78.3 ▪ Integrated multi-channel-platform 55.0 42.4 ▪ Digitization of all customer interfaces 2012 2013 2014 2015 2016 2017 6 | Management Presentation Q2 2018 | 09 August 2018

freenet TV outlook 1.2 million paying user including Satellite DVB-T2 HD Paying user and RGU ▪ Total revenues 13.3 million euros >1,200,000 during Q2 1,138,000 ▪ Paying user growing to 1.1 million 1,022,000 > 1.0 mio. 975,000 RGU Sat > 2.5 3 ▪ Initial shipments of respective CI+ > 2.5 1,001,000 modules only in May; testing of 945,000 902,000 advertising, promotions and product placements during month of June 1.7 – 2.2 454,000 ▪ Real uptake only from Q4 due to 1.2 – 1.5 > 1,200,000 summer season > 1,022,000 > 974,600 > 454,300 Full year outlook remains on 1.2 million 30.06.2017 31.12.2017 31.03.2018 30.06.2018 31.12.2018 paying user Paying user Thereof RGU 1 1) RGU as the abbreviation for “Revenue Generating User” refers to freenet TV subscribers who purchased and also activated th e freenet TV access 7 | Management Presentation Q2 2018 | 09 August 2018

waipu.tv massively broadened its technical reach in Q2 2018 Aside of Android and iOS apps serving Google Chromcast and Amazon Fire, waipu.tv is now available on four more platforms • iPad • Android Tablet • Fire Tablet • Web-Client (Browser-Version) Apple TV as well as direct access to Samsung is planned before end of 2018 Platform extensions 8 | Management Presentation Q2 2018 | 09 August 2018

Proof of best quality service with low latency technology Goal waipu.tv faster than cable and other IPTV Deliver „ the fastest“ goal during world championship Delay in delivery by access technology ARD ZDF Sat SD 0 0 Sat HD 0.5 0.5 waipu.tv HD * 2.3 2.3 DVB-T 2 HD 4.5 2.5 Kabel HD 6.5 6.0 Telekom Entertain HD Receiver 7.0 8.0 Zattoo * 41.0 34.0 Solution MagineTV * 45.0 46.0 • Own fibre network, no buffer or proxy *on Fire-TV all information in seconds Source: c‘t magazine • Self developed software in client, server- and traffic-management • Patents pending 9 | Management Presentation Q2 2018 | 09 August 2018

Successful launch of on-demand-content as linear channel waipu.tv can take any content into its CMS and delivers it as a live-channel with the option for the consumer to switch into demand mode to select program and/ or series. Brainpool is one of the most successfull comedian, sit-com and fun-series producer in Germany Successfull formats comprise Anke Engelke, Stefan Raab, Beispiel: Tagesplatzierung MySpass im Senderranking (Viewtime) Carolin Kebekus KPI of „ my spass “ on demand channel in Q2 2018 • Market share of up to 2.3 per cent • Ranks 9 out of 90 channels • Advertising handled exclusively by EXARING AG 10 | Management Presentation Q2 2018 | 09 August 2018

Uptake of registered as well as paying users accelerates Total registered and paying user Q2 2018 performance ▪ By the end of Q2 waipu.tv has attracted more than 824,000 >1 Mio. registered user >1,000,000 ▪ Out of those 174,000 have decided for a paid service 608,800 824,000 ▪ For the first time real time promotions alongside the football 609,000 463,600 championship have been applied 339,400 464,000 with great uptake (conversion tbd.) >250,000 255,300 ▪ Those promotions are taken as proof 133,100 255,000 250,000 102,300 of concept to attract more content 71,900 147,100 174,000 174,000 52,100 133,000 partners with own customer bases 102,000 25,000 52,000 30.06.2017 31.12.2017 31.03.2018 30.06.2018 31.12.2018 Paying user Total user 11 | Management Presentation Q2 2018 | 09 August 2018

Strategic Participation in CECONOMY AG Transaction details ▪ Capital increase of 10.0 per cent resulting in a stake of 9.1 per cent (32,633,555 ordinary bearer shares) ▪ Purchase price of 8.50 EUR per share (level of the ABB-announcement date) results in 277 million euros Rationale ▪ Strategic investment with the aim to strengthen the very successful cooperation, which has been existing for 27 years ▪ CECONOMY, the leading retailer in the market in which it operates, is one of freenet’s most important sales channels ▪ Considerable strategic importance: Focussed on mobile up to now with the intention to extend the cooperation to further areas, including TV access and Digital Lifestyle services ▪ Friendly participation, that will benefit both parties Financing ▪ Bridge loan (bilateral, duration: 18 months, interest rate 1.4 per cent) ▪ Refinancing at favourable market conditions intended; no equity planned ▪ Financing strategy confirmed: Leverage target corridor of 1.0 to 2.5 12 | Management Presentation Q2 2018 | 09 August 2018

Financial statements – Income statement information [in EUR million] 1 st half 2018 1 st half 2017 The increase in Group revenue Q2 2018 Q2 2017 without the effect of IFRS 15 by Revenue without the effect of IFRS 15 1,767.7 1,677.2 894.0 839.2 54.8 million euros to 894.0 million Revenue 1,386.2 1,677.2 696.6 839.2 euros is mainly attributable to increasing hardware sales. Gross profit 445.8 458.6 222.2 231.6 Decrease in reported Group EBITDA 224.4 209.3 117.9 108.4 revenue due to the reclassification Depreciation and amortisation of commissions because of IFRS -66.8 -69.9 -30.2 -34.9 15. Subsequent recognition from Sunrise PPA -9.5 -10.4 -4.8 -5.2 EBITDA grows to 117.9 million EBIT 148.1 129.0 83.0 68.3 euros yoy (+8.8 per cent); influenced by a one-off effect from Interest result - 23.1 -24.6 -12.1 -12.2 the partial sale of VHF infrastructure EBT 125.1 104.4 70.8 56.0 amounting to 7.3 million euros. Taxes on income -17.0 -12.5 -9.5 -5.8 Group result amounts to 61.3 million euros; an increase of 11.1 Group result 108.0 91.9 61.3 50.2 million euros yoy (+22.2 per cent) Earnings per share (EUR) 0.89 0.76 0.50 0.41 13 | Management Presentation Q2 2018 | 09 August 2018