euro adhoc: freenet AG / Financial Figures/Balance Sheet / Q3/2008 bears out freenet´s strategy with rising revenues, profits and customer numbers

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9-month report

14.11.2008

Q3/2008 bears out freenet´s strategy with rising revenues, profits and customer
numbers
• Quarterly revenue soars past EUR1 billion in mobile telephony core
business for the first time
• EBITDA Q3/2008 doubles to EUR133.5 million
• Q1-Q3/2008: Group revenue reaches EUR1.80 billion; Group result at
EUR160.6 million
• Customer count rises to 24.6 million; over 19 million customers in
mobile telephony alone

Büdelsdorf, 14 November 2008 - freenet AG continues to grow in
conjunction with the debitel Group, first consolidated in the balance
sheet at 5th July 2008. The Group has underscored its corporate
strategy geared toward mobile telephony and mobile Internet with
facts. At EUR1.08 billion for Q3/2008, the Group´s quarterly revenues
first clearly exceeded one billion euros; the new core business of
mobile telephony alone contributed EUR1.01 billion to this figure. In
Q3/2007, freenet had generated revenue of EUR400.3 million. B2B
Services contributed EUR22.7 million, Webhosting EUR22.5 million, the
portal business added EUR9.4 million, and the declining narrowband
business EUR16.3 million to this successful performance. Thus, at
Group level, total revenue for the first nine months of 2008 came to
EUR1.80 billion, vs. EUR1.20 billion in the first nine months of
2007.

The acquisition of the debitel Group has resulted in the
third-largest mobile telephony provider in Germany. With over 19
million mobile telephony customers, freenet AG services approx. 20
percent of the German mobile market, and dominates the segment of
network-independent providers, where it commands 90 percent of the
market. "We´ve managed to establish ourselves as a real alternative
to the carriers and as a constant in the German telecommunications
market," says freenet AG CEO Eckhard Spoerr, commenting on
developments in 2008. "At the same time, our experience, expertise
and market power related to the Web, portal and mobile business puts
us in an excellent position for the emerging mobile Internet market."
In a first step, freenet recently introduced its debitel-freenet
Dashboard software, which provides fast, direct access to the key
mobile applications on the very first level, ensuring maximum
convenience and user-friendliness for mobile phone users. At the end
of September, the company had 24.6 million customers in all,
including nearly 1.8 million paying customers in the Webhosting and
Portal segments, and 1.05 million DSL customers. Nearly half of all
freenet customers are contract customers (11.84 million). The debitel
purchase also boosted earnings considerably. Third-quarter gross
profit came to EUR259.1 million - after EUR120.8 million in Q3/2007
and EUR129.6 million in the previous quarter. This yields gross
profit of EUR512.9 million for the first nine months of the year, up
from EUR382.7 million in 2007. Third-quarter EBITDA, at EUR133.5
million, nearly doubled year on year; for the first nine months of
2008, EBITA amounted to EUR278.8 million, after EUR209.2 million in
2007.

Earnings before taxes (EBT) were down from EUR42.9 million in Q3/2007
to EUR14.3 million; the decline is attributable mainly to a strong
increase in depreciation and interest expenses resulting from the
debitel purchase. For the first three quarters of 2008, EBT totalled
EUR92.3 million, after EUR163.1 million in 2007. Meanwhile, the Group
result rose substantially to EUR138.1 million in the third quarter,
due to deferred tax revenues as a result of the first-time
consolidation of debitel.

Mobile Telephony

In line with the company´s strategy, the acquisition of the debitel
Group has taken the core line of business, mobile telephony, to a new
dimension: freenet boosted its customer count in Germany to 19.28
million at the end of September 2008; debitel accounted for around
13.14 million, the old freenet-mobilcom contributed 6.14 million.
8.67 million of these are contract customers, 10.61 million are
pre-paid customers; the third quarter also saw a rise in the average
revenue per contract customer (ARPU), from EUR26.3 to EUR26.5.

The mobile telephony segment also showed an increase in revenue and
profits. Following the consolidation of the debitel Group at the
beginning of July, quarterly revenue exceeded the one-billion mark
for the first time, rising to EUR1.01 billion for Q3/2008. For the
first three quarters of 2008, total revenue in the segment amounted
to EUR1.57 billion, up from EUR883.8 million for the comparable
period in 2007.

Third-quarter gross profit in the segment increased to EUR218.6
million, which translates to a gross profit margin of 21.6 percent;
the corresponding values for the first three quarters of 2008 were
EUR375.0 million and 23.9 percent - after EUR208.5 million (23.6
percent) in the first nine months of 2007.

Despite these gratifying figures, freenet will have to keep stepping
up its competitiveness in an increasingly difficult market; with this
in mind, the company will do its utmost to exploit any and all
synergies and cost-cutting potential in the months and quarters
ahead. It also remains to be seen how the recession in Germany will
affect people´s telecommunications behaviour. "Nevertheless, we will
see an upward movement in sales of data tariffs in the fourth
quarter," says Spoerr. "We believe there is still enormous future
potential here."

Since the sale process for the DSL business has already been
initiated, income and costs related to this segment have been
factored out of the Group figures and are therefore not included in
any of the above-mentioned figures. Third-quarter DSL revenues
amounted to EUR76.2 million, resulting in gross profit of EUR25.7
million. From an economic viewpoint, i.e. without capitalising the
costs of customer acquisition - the DSL business would have shown
losses of EUR46.4 million for the first nine months of 2008, up from
EUR-73.5 million year on year. The debitel purchase roughly doubled
the number of employees in the Group, including temporary staff, to
7,713 at 30th September 2008. "The task in the months ahead,"
comments Eckhard Spoerr, "will be to systematically advance the
restructuring of the "new" freenet AG. This includes harmonising the
company´s different locations and sales networks as well as
developing a new, balanced brand strategy; in doing so, we will
leverage the strengths of our freenet, mobilcom, debitel brands,
which are very well established in the market, as well as those of
our very successful `no frills´ segment." The Group will also
continue to work on the announced sale of its DSL business.

Q1-Q3/07 Q2/2008 Q3/2007
in EURm Q1-Q3/08 adjusted* Q3/2008 adjusted* adjusted*

Third-party revenue 1,800.7 1,202.6 1,079.2 357.7 400.3
Gross profit 512.9 382.7 259.1 129.6 120.8
EBITDA 278.8 209.2 133.5 67.8 67.4
EBIT 131.7 155.8 51.5 32.7 46.0
EBT 92.3 163.1 14.3 32.1 42.9
Group result from
continued operations 223.0 108.3 161.1 30.8 -4.7
Group result 160.6 67.2 138.1 10.2 -22.7

in EURm Q1-Q3/08 Q1-Q3/07 Q3/2008 Q2/2008 Q3/2007

Revenue for the group** 1,800.7 1,202.6 1,079.2 357.7 400.3
1. Revenue mobile telephony 1,569.9 883.8 1,009.9 283.3 301.7
2. Revenue broadband 234.3 194.9 76.2 78.1 72.2
3. Revenue portal 36.3 40.8 9.4 14.2 12.4
4. Revenue hosting 65.4 58.0 22.5 22.0 19.5
5. Revenue B2B 73.6 101.5 22.7 20.9 33.5
6. Revenue narrowband 60.7 121.4 16.3 19.6 33.9
Customers in million:
Total customers freenet group 24.56 11.81 24.56 10.96 11.81
Thereof contract customers 11.84 6.32 11.84 6.33 6.32
Mobile telephony customers 19.97 5.45 19.97 5.98 5.45
Thereof contract customers 8.67 2.90 8.67 3.09 2.90
Thereof prepaid customers 10.61 2.55 10.61 2.89 2.55
Thereof Netherlands (debitel) 0.69 - 0.69 - -
narrowband customers
(internet+telephone) 1.74 3.42 1.74 2.09 3.42
DSL customers 1.05 1.27 1.05 1.10 1.27
Paid service customers hosting 1.26 1.17 1.26 1.24 1.17
Paid service customers portal 0.53 0.51 0.53 0.54 0.51

* The comparable figures were adjusted due to IFRS 5 (discontinued
operations). ** 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 and
effects from IFRS 5.

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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