Freenet loses TV subs but gets a boost from rising revenues

A price increase saw German service provider Freenet lose close to 160,000 Freenet TV customers over the year to June but saw TV revenues rise as it reported an otherwise modestly successful second quarter and first half that enabled it to raise its guidance.

Freenet said that “what remains a profitable price increase” was the main factor in the decline in its TV base, contrasting with growth overall in its customer base.

Freenet had 845,000 customers for its hybrid Freenet TV offering at the end of June, down from 1.005 million a year earlier. However its Waipu.tv IPTV offering grew its base from 504,100 to 644,600 over the same period.

Despite the losses in the Freenet TV offering, Freenet saw revenues in the TV segment rise by 10.3% year-on-year to €138.8 million, with an EBITDA margin of 33.8%, up 4.9 points.

Freenet said that TV was continuing on a profitable growth trajectory, with Waipu.tv driving its growth. Regarding the price adjustment in the Freenet TV service, the operator said that “further stabilisation” in this segment can be expected going forwards.

The rise in revenues enabled the operator to cite “the highly positive performance of the TV and media segment” as one of the key factors behind its ability to raise its guidance for the full year.

The company now expects EBITDA of between €430 million and €445 million and free cash flow of between €215 million and €230 million.

Analysts from Jefferies observed that the Freenet TV numbers were “still reflecting churn on the earlier price increase” and that management had “talked about stabilisation ‘in the next few months'” on an earlier earnings call.

The analysts said that the growth in revenue would be based “likely on a combination of IPTV intake, the DTT price increase, and lumpy projected revenues”.