freenet’s debitel acquisition boosts 2008 revenue by EUR1b

26 Mar 2009

German multi-service operator (MSO) freenet has posted its 2008 full-year results, recording revenues of EUR2.87 billion (USD3.87 billion), up by more than EUR1 billion or 70% compared to the EUR1.69 billion generated in 2007. The group’s acquisition of rival operator debitel in July 2008 is the main driver behind its leap in revenues during the year; EUR1.09 billion income was recorded in the fourth quarter of 2008 versus EUR417.5 million in the same period a year earlier. However, freenet’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the year amounted to EUR207.1 million, representing a decline from EUR231.7 million in 2007, which the company attributed to one-off costs of EUR73.5 million in the fourth quarter incurred from the restructuring of its mobile communications segment. Group results from continued operations, excluding its DSL business, which is up for sale, and debitel Netherlands, improved significantly in 2008, rising by nearly 144% to EUR148.4 million, up from EUR60.9 million in 2007.

The company’s 2008 mobile communications revenue doubled year-on-year to EUR2.65 billion and gross profit for the segment totalled EUR468.9 million. Joachim Preisig, spokesman of the freenet board of managing directors, said: ‘The positive development seen in the results is the consequence of a consistent consolidation process. By systematically exploiting the resulting synergy potential, the company will be able to increase its value creation in the long term as well.’

Meanwhile, freenet’s resold mobile subscriber base increased from 5.7 million at the end of 2007 to 19.12 million a year later, driven by the group’s takeover of rival mobile virtual network operator (MVNO) debitel. Of the total, 46.2%, or 8.83 million customers were post-paid. However, compared to 19.98 million on 30 September 2008, the company lost 85,000 mobile customers during the fourth quarter. freenet’s decision to divest its DSL business has also had a negative effect on the segment’s customer base, which declined from 1.28 million at end-2007 to 940,000 million a year later, while active narrowband customers declined to 1.41 million in 2008, compared to 2.96 million in 2007.

Germany, debitel, freenet