freenet Executive Board formulates financial ambition until 2028 - EBITDA and free cash flow to grow significantly

• Successful digital lifestyle strategy continues
• IPTV as basis for significant growth
• EBITDA of at least EUR 600 million targeted for the end of 2028
• Free cash flow to increase in line with EBITDA development to at least EUR 330 million
• Dividend distribution of 80% of free cash flow will be maintained

Büdelsdorf, November 8, 2024 - The Executive Board of freenet AG [ISIN DE000A0Z2ZZ5] today extended the successfully achieved financial ambition 2025 into the 2028 financial year as part of the publication of the results for the 2024 nine-month period. The key message is that freenet is continuing to focus on its successful digital lifestyle strategy and is aiming significant growth, particularly in the IPTV segment.

EBITDA is expected to increase at an average annual growth rate of around 4% to at least EUR 600 million by 2028 compared to the 2023 financial year, taking into account the expected market developments in the Mobile Communications segment as well as TV and Media. This corresponds to growth of at least EUR 100 million or around 20% over the entire period.

The TV and Media segment is expected to make a significant contribution of at least EUR 80 million, including a EUR 20 million lower EBITDA contribution from Media Broadcast due to the decline in terrestrial TV business (B2B and B2C). In the IPTV business (waipu.tv), the EBITDA contribution is expected to increase by at least EUR 100 million. In this context, a further increase in the penetration of IPTV in the German TV market is assumed, which should lead to an increase in subscribers to around 3.5 million by the end of 2028 based on waipu.tv's good market positioning. Gross profit per IPTV customer is assumed to remain constant, without taking into account potential from targeted advertising, upselling of additional products or optimization of content costs.

Ongoing continuity is expected in the Mobile Communications segment, which should lead to an additional EBITDA contribution of EUR 20 million by 2028. This includes an expected average annual increase in overheads and personnel costs of around 3%, which should be partially offset by a continuation of digitization and standardization efforts. Overall, the cost increases should be more than offset by a EUR 40 million increase in gross profit in the Mobile Communications segment. The basis for the increase in gross profit is the assumption of continued moderate customer growth with largely stable ARPU in the postpaid segment, as well as the continuous optimization of the successful omni-channel sales approach and the long-term secured relationships with the three relevant German mobile network operators. The Mobile Communications segment will therefore continue to serve as the foundation for high consistency and resilience in freenet AG's future business results.

Based on EBITDA expectations, free cash flow is expected to increase to at least EUR 330 million in the same period. This also corresponds to growth of around 20% and a continued high cash conversion rate of more than 50%. This takes into account the gradual increase in current taxes paid due to the almost complete utilization of tax loss carryforwards by the end of 2028.

A dividend policy of 80% of the free cash flow will be maintained in the future. The shareholders of freenet AG will therefore continue to benefit from an increasing dividend. The use of the remaining 20% of the free cash flow for share buybacks will be decided annually after the preliminary results have been determined.

General remarks
The 2028 Ambition presents an outlook based on the knowledge and results of the first nine months of 2024. It should be emphasized that no mergers & acquisitions (M&A) or potential inorganic measures were taken into account in this ambition. Likewise, no expansions to the product portfolio or additional new sources of revenue were included. The expectation for the development of the German IPTV market is in line with the projections and assumptions shared by other market participants. As a result, no major upheaval is expected in cable or satellite TV.

Detailed information on the aforementioned content can be found in the presentation on Financial .

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