euro adhoc: freenet.de AG / quarterly or semiannual financial statement / Q1/2006: freenet continues on expansionist course

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Disclosure announcement transmitted by euro adhoc.
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09.05.2006

Q1/2006: freenet continues on expansionist course • Revenues up +37
percent to 200.1 million euros (vs. Q1/2005) • Maintained market
position with 75 thousand new DSL customers in first quarter • EBITDA
of 27.5 million euros despite massive investments in growth • 20
million euros in earnings before taxes freenet.de AG / Hamburg - The
freenet.de AG, Hamburg, continues its expansionist course in the
present year, in a market environment that - while it is fraught with
increasingly tough competition in all lines of business - also holds
great opportunities for the company. First-quarter revenues rose
significantly year on year, by 37 percent to 200.1 million euros,
which put them nearly on par with the excellent level of the (usually
most revenue-intensive) fourth quarter of 2005. All segments improved
their sales performance vs. Q1/2005 except Telephony (37.6 million
euros), which posted a slight decline in revenue due to difficult
market conditions. Internet access contributed 98.0 million euros, or
nearly half of the group’s revenue (up by +16 percent vs. Q1/2005).
B2B Services followed at 36.4 million euros (+1620 percent vs.
Q1/2005) and the portal business including Digital Services with
revenues 28.1 million euros (+40 percent vs. Q1/2005). The two latter
segments have lastingly established themselves as additional
important revenue mainstays for freenet, after last year’s
acquisition and successful integration of Next-ID and the Strato
group. To stand its ground in the DSL market against what freenet
perceives as distorting competitive advantages granted to other
competitors by Deutsche Telekom AG, and to safeguard future growth,
freenet.de AG considerably stepped up its marketing expenditure
during the first quarter of the present year, to 13 million euros -
up by 50 percent vs. Q1/2005. By the end of the first quarter, the
number of DSL customers recruited with this high marketing
expenditure and through acquisition costs rose by 75 thousand to 775
thousand (vs. 465 thousand at the end of Q1/2005); the number of
narrowband customers is at a solid 2.7 million.

Stronger customer growth in the DSL business was prevented by new
offers which hit the market in February and which freenet believes
could only be based on extremely discounted "Net Rental" wholesale
conditions granted to very few providers - conditions that would not
have been available to freenet to the same extent even had it signed
the contract in question and which therefore impeded freenet’s growth
considerably. However, freenet trusts that the Federal Network Agency
will soon put an end to Deutsche Telekom’s special terms. At the same
time, freenet.de AG increased the number of its subscription
customers to 2.7 million and that of its active members to 7.7
million. In all, freenet.de AG had 9.9 million customers at March 31,
2006, 520,000 customers more than a year earlier.

Another factor that impacted results is the delay in the completion
of the merger between freenet and mobilcom already approved last
summer by the Annual General Meetings of both companies. Only a
closer dovetailing of the two companies’ resources and market
positioning would allow us to better maximise synergy potential and
seize growth opportunities in the market. In this tough competitive
environment and despite artificially imposed differences in the
playing field, the management of freenet continues to rely on growth,
even though it may occur at the expense of the profits for fiscal
year. Accordingly, the results seen in Q1/2006 are down slightly: At
27.5 million euros, EBITDA is roughly 4 percent below the previous
quarter and 25 percent below that of Q1/2005.
Amortisation/depreciation was also down slightly year on year and vs.
the previous quarter, to currently 8.3 million euros. This resulted
in earnings before taxes of 20.0 million euros, after 20.3 million
euros in Q4/2005. Group result for the first quarter of 2006 amounted
to 12.1 million euros. This again reinforces freenet’s position as a
rapidly growing and yet profitable company in a very sophisticated,
promising market. The company’s liquidity improved again during the
first quarter, rising by 29 million euros from 163.7 million to 192.7
million euros, enhancing freenet’s financial scope for further
investments and/or acquisitions.

Q1/2006 Q4/2005 Q1/2005
Revenues 200,068 204,894 146,256
Segment Internet Access 98,027 92,734 84,187
Segment Voice 37,584 39,254 39,914
Segment B2B Services 36,365 42,512 2,114
Segment Portal 28,092 30,394 20,041
Gross profit 74,065 74,154 73,842
EBITDA 27,467 28,535 36,588
Earnings before taxes (EBT) 20,031 20,339 28,056
Group result 12,096 13,861 17,429
Capital and reserves 294,590 282,494 268,814
Balance sheet total 586,435 548,045 463,664
Cash and cash equivalents 192,672 163,673 90,925

Financial data per IFRS; in TEUR / Source: freenet.de AG

end of announcement euro adhoc 09.05.2006 07:29:04
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ots Originaltext: freenet.de AG
Im Internet recherchierbar: http://www.presseportal.de

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

Branche: Online
ISIN: DE0005792006
WKN: 579200
Index: TecDAX, CDAX, Prime All Share, HDAX, Technologie All Share,
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