euro adhoc: freenet AG / quarterly or semiannual financial statement / freenet continues on road to success in tough market environment

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9-month report

15.11.2007

freenet continues on road to success in tough market environment
• Customer growth in all growth segments: mobile telephony +440,000, DSL
and freenetKomplett DSL customers +360,000; contract customers +670,000 (vs.
Q3/2006)
• Profitability and results: EBITDA EUR196.3 million (+60.6 percent); EBT
EUR135.7 million (+36.8 percent) (all vs. Q1-Q3/2006)
• Group result: EUR67.2 million (Q1-Q3/2007)

Büdelsdorf, 15 November 2007 - freenet AG has continued working
undeterred, with full-fledged effort from its sales operation, on its
growth in the strategic fields of DSL and freenetKomplett DSL
service, convergence products and mobile telephony. As a result,
freenet AG - partly by launching more and more aggressively priced
DSL packages and discount deals in mobile telephony - had a
successful third quarter with continued customer growth in the
important lines of business, as profitability continued high.

Compared with the end of the third quarter of 2006, the number of
contract customers rose by 670,000 to 6.32 million. This figure
breaks down to 2.90 million mobile telephony customers, 1.27 million
DSL and freenetKomplett DSL customers, 1.68 million Paid Services
customers and 0.47 million Pre-selection customers. By the end of
Q3/2007, the total number of mobile telephony customers had increased
by 440,000 to 5.45 million, while the DSL and freenetKomplett DSL
customer base grew by 360,000 to 1.27 million (vs. Q3/2006).
"Stronger growth in the DSL segment," says freenet AG CEO Eckhard
Spoerr regretfully, "was prevented mainly by problems in the
activation of freenetKomplett DSL customers by Deutsche Telekom, as
well as the fact that Telekom is offering retail tariffs for DSL
packages that are actually below our wholesale costs of purchase from
this former monopoly operator. We have already taken this matter to
the regulator and hope that a stop will soon be put to these unfair
practices."

When considering the revenue and income for Q3/2007, it should be
borne in mind that the obligatory capitalisation of elements of
customer acquisition and retention costs in accordance with IAS 38,
along with new wholesale terms greatly limits a direct comparability
with the previous year; this had a negative effect on revenues and a
positive effect on operating profits.

Against this backdrop, freenet generated revenue of EUR470.0 million
in Q3/2007, putting it on par with the previous quarter's
performance; the figure represents a roughly 7 percent decline
compared with Q3/2006. Mobile Telephony accounted for EUR301.4
million of revenue, Fixed-Line/Internet contributed EUR168.6 million.
Across the group, total revenue for the first nine months of 2007
totalled EUR1, 389.4 million - a nearly 9 percent decline year on
year.

Based on the changed accounting rules - resulting in declining
revenue and rising profitability - the third-quarter results for 2007
are considerably higher than those for 2006. EBITDA surged by over 40
percent to EUR60.3 million; a 14.5 percent drop compared with the
previous quarter due to the above mentioned problems, along with
shrinking prices and margins across the market while expenditure on
customer acquisition remained high. EBITDA for the first nine months
of 2007 totals EUR196.3 million - a year-on-year increase of 60.6
percent. Income tax charges of around EUR51 million caused a group
result for the first three quarters to decline to EUR67.2 million -
mainly due to changed tax legislation which goes into effect on 01
January 2008 and associated changes to the corporate tax rate when
calculating deferred claims and liabilities. So a reform of corporate
taxation that is in fact positive for the company has led to a
significant, one-off negative effect on group results in the third
quarter.

"The figures for the first nine months," comments Eckhard Spoerr,
"show that we are still within our target range for 2007. One
particularly gratifying aspect is that we have managed to keep our
operations successful despite the turmoil surrounding freenet AG's
future development, while systematically replacing our traditional
lines of business such as narrowband access and fixed line with our
contemporary bundled DSL, mobile Internet and telephony products."

The Q3/2007 Interim Report will be posted under IR / Publications at
www.freenet.ag shortly.

Important KPI's of freenet group
Accounting method: IAS/IFRS

in EURm Q1-Q3 2007 Q1-Q3 2006 Q3 2007 Q2/2007 Q3 2006
Group revenue 1,389.4 1,524.6 470.0 466.9 507.4
Revenue Mobile 883.0 981.0 301.4 302.8 340.2
Revenue Fixed/Internet 506.4 543.6 168.6 164.1 167.1
Group gross profit 436.3 353.3 137.1 157.3 120.4
Group EBITDA 196.3 122.3 60.3 70.5 42.7
Group EBIT 128.4 89.4 31.7 45.9 32.5
Group EBT 135.7 99.2 28.6 51.3 36.3
Net result 67.2 75.7 -22.7 39.9 37.9
Earnings per share 0.69 0.98 -0.24 0.41 0.53
Cash and cash equivalents -4.3 516.3 -4.3 540.6 516.3
Customers total 11.81 13.08 11.81 11.86 13.08
thereof contract customers 6.32 5.65 6.32 6.21 5.65

end of announcement euro adhoc 15.11.2007 08:31:38
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ots Originaltext: freenet AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:
Andreas Neumann
IR-Manager
Tel.: +49 (0)40 51306-778
E-Mail: ir@freenet.ag

Branche: Online
ISIN: DE000A0EAMM0
WKN: A0EAMM
Index: TecDAX, CDAX, Prime All Share, HDAX, Midcap Market Index,
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