United Internet and 1&1 have reported soft Q2 results and cut guidance for 2024, with weaker mobile retail growth and higher network costs. 1&1 service revenue growth is now expected to slow from +4% YoY in H1 to +2% YoY in H2, impacted by the mobile network outage in May and an increasingly competitive German market environment. We cut our 1&1 cash flow forecasts by c.-5% and reduce our target price by -€2 (to €27/ share) – but remain bullish on the name as wholesale cost savings drive FCF grow...
United Internet, 1&1 and IONOS have reported decent sets of Q1 results, with all financial guidance confirmed and steady progress on the mobile network build. The key remaining uncertainty for the network build is access to low-band spectrum; recent reports have suggested that BNetzA will present its preliminary decision to extend the existing licences on Monday (13 May 2024).
United Internet, 1&1 and IONOS reported Q3 results this morning followed by management calls, where the focus was on 1&1's mobile network build. In this Quick Take we provide an update on that network build and the strong operational performance in the quarter.
United Internet and its listed subsidiaries reported Q1 results this morning. Revenue trends at 1&1 and IONOS were weaker than expected, but all full year guidance has been confirmed implying that growth trends should improve throughout the year. 1&1 remains wedded to their mobile network build and continues to expect to have 1.2k sites by end 2023. In the Quick Take we review the results and share our latest thoughts on valuation.
Unimpeded by the ongoing IPO process, we take an independent look at IONOS and the IPO valuation range. We remain cautious on the outlook for the IONOS business, which we value at a €3.5bn EV after leases – below the current IPO range (€3.8-4.4bn after leases). From a United Internet perspective, the sale of IONOS shares at a premium to our fair value represents modest upside and – more importantly – raises the prospect of a 1&1 minority buyout.
1&1 and United Internet had a poor 2022 as concerns and lack of visibility on the network build continue to grow. We believe this is misunderstood – as either 1&1 goes ahead with the network build which should generate long-term EBITDA growth and mirror what Iliad has been doing in Italy (our base case), or it walks away and reverts to being an MVNO which would also generate substantial upside. An IONOS IPO could also be a further support for United Internet.
On Tuesday United Internet hosted the IONOS CMD, ahead of a potential IPO of the business next year. The company provided new disclosure on the IONOS business and set out new financial targets. In this Quick Take we run through those numbers, and share initial thoughts on the value of the asset and how this could impact United Internet.
Q2 EBITDA was ahead, but this was offset by service revenues and broadband net adds slightly below expectations. All guidance has been re-iterated for the full year and the network build seems on track for an FWA launch later this year and a full mobile launch in H2 2023.
United Internet and 1&1 have reported decent Q1 results with EBITDA ahead of expectations. 2022 guidance has been kept intact for both companies and there is no change to our thesis on either (or that the German market is remaining rational), with a clear preference for 1&1.
1&1 and United Internet have taken a significant step forward with their mobile project and shown a real sign of commitment to the network build with a significant ramp-up in capex, which we benchmark against Rakuten’s spending. They have also announced a larger tower deal than we were expecting with Vantage Towers, which is positive for Vantage.
United Internet and 1&1’s Q3 results are both marginally ahead of expectations and all FY guidance has been re-iterated. Nothing new has been reported at this stage on the network build, except to say that negotiations with tower companies are ongoing.
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
1&1 and United Internet have reported a decent set of Q2 results; upgraded their 2021 EBITDA guidance and also announced a new network partnership with Rakuten to help build out their German network on OpenRAN technology, which is being reported as worth €1.9-2.3bn.
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