euro adhoc: freenet AG / quarterly or semiannual financial statement / freenet AG reports operating result (EBITDA) of EUR69 million for Q1/2008

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3-month report

08.05.2008

freenet AG reports operating result (EBITDA) of EUR69 million for Q1/2008
• Revenue at 442.3 million euros in Q1/2008
• 5.82 million mobile telephony customers - numbers of prepaid and
contract customers rise
• Number of customers in Web-hosting and paid services rises compared with
previous quarter

Büdelsdorf, 09 May 2008 - During the first three months of 2008,
freenet AG generated an operating result (EBITDA) of 69.0 million
euros - a 5.3 percent improvement on Q1/2007 and 22.1 percent higher
than the previous quarter. The mobile telephony segment contributed
47.4 million euros to the total, hosting accounted for 9.4 million
euros, while the fixed-line/Internet segment including all holdings
generated 12.2 million euros. However, EBIT, along with earnings
before and after taxes, fell due to a surge in
depreciations/amortisations resulting from the obligatory
capitalisation of parts of customer acquisition costs. As a result,
EBIT is down to 26.2 million euros - a 6.8 percent drop compared with
the previous quarter and down 48.4 percent vs. Q1/2007. Of this,
mobile telephony contributed 25.7 million euros, hosting 7.2 million
euros and the fixed-line business, which includes broad and
narrowband, the portal business, B2B services and the holding
activities, accounted for -6.7 million euros. Earnings before taxes
(EBT) amounted to 24.5 million euros, 12.5 percent below the previous
quarter. Group net income for the first quarter of 2008 was 12.3
million euros. Only limited comparisons are possible with 2007 - in
which group net income after taxes for the whole year totalled just
16.5 million euros - as the income taxes reported under IFRS in 2007
were influenced by numerous special items. Mobile telephony The
number of mobile telephony customers grew to 5.82 million at the end
of March 2008 - a year-on-year increase of nearly 700,000 customers
or 13.6 percent, and of around 120,000 vs. the previous quarter. This
growth was fuelled both by contract customers (which now total 3.03
million) and prepaid customers (2.79 million), and made it possible
for the company to maintain its market share in the mobile telephony
segment. However freenet, too, is affected by the drop in calling
charges across the market, and the success of discount providers.
Accordingly, freenet registered a slight decline in mobile telephony
revenue for Q1/2008, which amounted to 276.7 million euros, vs. 279.0
million euros in Q1/2007. Broadband The latent asset-stripping
scenario associated with freenet had a negative impact on new
customer acquisition: distribution partners were lost who -
understandably considering freenet´s uncertain future at the time -
sought to cooperate with other companies when planning the year
ahead. freenet also parted ways with some distribution partners as
part of a quality campaign triggered by increasing complaints, across
the market and mainly about multi-level marketing schemes which seek
to win new customers for various telecoms companies, often with
disreputable methods. Further, the first quarter of 2008 was marred
by ongoing cancellations of customer relationships because of
Deutsche Telekom AG´s problems and delays in processing and switching
customers in 2007. This resulted in a considerable `backlog´ of DSL
customers wanting to switch - which freenet actively brought down by
several tens of thousands to a normal level, as part of its
comprehensive quality campaign. Accordingly, the number of freenet
DSL customers was down in Q1/2008, declining by around 90,000 vs. the
previous quarter to 1.19 million. Despite numerous inactive or rather
non-switchable customers, freenet improved its revenue and gross
earnings in this segment. Turnover rose to 80.0 million euros, up
38.1 percent compared with Q1/2007 and 3.4 percent above the previous
quarter. Gross profits increased by nearly 12.2 percent year on year
to 19.6 million euros; compared with the previous quarter, this
represents growth of 31.5 percent. The gross margin was 24.5 percent.
Other segments freenet AG added more customers in the hosting and
portal segments than during the previous quarter; the number of Web
hosting customers grew from 1.20 million in the previous quarter to
1.23 million in Q1/2008, and the number of customers in portal paid
services grew from 540,000 in the previous quarter to 570,000,
meaning that freenet added roughly 60,000 contract customers in these
areas. Turnover from portal operations dropped to 12.7 million euros,
a 15.9 percent year-on-year decline and nearly 20 percent vs. the
previous quarter. freenet AG´s portal operations, which with its
e-commerce/advertising business is one of the two mainstays of the
business, laboured under declining ad bookings, mainly due to
restrained advertising by banks, probably because of the financial
crisis. Internal cost allocations were also down as a result of the
subdued DSL business in Q1/2008. Meanwhile, paid services - the
second mainstay of earnings in the segment - continue to do very
well, with revenue on a steady rise since Q1/2007. Still, they proved
unable to compensate for the reduced turnover from
E-Commerce/Advertising. At the end of the first quarter, freenet AG
had 11.36 million customers across all segments.

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

in EURm Q1 2008 Q4 2007 Q1 2007
Third-party revenue 442.3 473.9 452.4
Gross profit 144.3 146.1 141.9
EBITDA 69.0 56.5 65.5
EBIT 26.2 28.2 50.9
EBT 24.5 28.0 55.8
Group result 12.3 -50.6 49.9
Third-party revenue for the group * 442.3 473.9 452.4
1. Revenue mobile telephony 276.7 301.0 279.0
2. Revenue broadband 80.0 77.4 57.9
3. Revenue portal 12.7 15.9 15.1
4. Revenue hosting 20.9 21.4 18.8
5. Revenue B2B 29.9 33.4 38.5
6. Revenue narrowband 24.8 27.8 47.5
Total customer freenet group in million 11.36 11.68 12.68
Thereof contract customers in million 6.41 6.48 6.12
Mobile telephony customers in million 5.82 5.70 5.12
Thereof contract customers in million 3.03 2.99 2.80
Thereof prepaid customers in million 2.79 2.71 2.32
narrowband customers (internet+teleph) in million 2.56 2.96 4.79
DSL customers in million 1.19 1.28 1.17
Paid service customers hosting in million 1.23 1.20 1.12
Paid service customers portal in million 0.57 0.54 0.47

* Netting between segments is the reason behind the difference
between the figures shown for sales in the individual segments and
the corresponding figures for the overall group.

end of announcement euro adhoc
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ots Originaltext: freenet AG
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Further inquiry note:

freenet AG

Andreas Neumann

IR-Manager

Tel.: +49 (0)40 51306-778

E-Mail: ir@freenet.ag

Branche: Online
ISIN: DE000A0EAMM0
WKN: A0EAMM
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