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09.08.2004 – 07:41

freenet AG

euro adhoc: AG
Quarterly or Semiannual Financial Statements
freenet registers steep customer growth in Q2/2004 and confirms earnings forecast (E)

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freenet registers steep customer growth in Q2/2004 and confirms
earnings forecast AG / Hamburg - AG registered significant
customer growth in Q2/2004, massively increasing the number of paying
customers by nearly 1 million to more than 8 million. Two divisions
contributed to this growth: the base of contract customers grew by
more than 110,000 customers (70,000 of them DSL customers) and the
by-call sector added 864,000 customers during the second quarter -
despite a decline in Internet-by-call customers.
Compared with the same quarter last year, Earnings before interest,
taxes and depreciation/amortization (EBITDA) rose by 20 percent to
30.3 million euro and, as expected, are below the result of Q1/2004
(41.3 million euro). Earnings before taxes (EBT) also improved
considerably year-on-year, by 35 percent to 20.9 million euro (31.8
million in Q1/2004). For the first six months of the year, EBT
amounts to 52.7 million euro, which already puts it well above total
EBT for the year 2003 (47.7 million euro). Group result for the first
half of 2004 improved by 109 percent to 32.2 million euro (vs. 15.4
million euro for the first half of 2003).
"Our results are fully on plan and are in line with our expectations.
Despite an intensified competitive environment since early August,
due among other things to T-Online and T-Com’s aggressive broadband
campaign with discounts and subsidies, we confirm our earnings
forecast for the year 2004 - the upwardly adjusted forecast of this
spring, that is," declared AG CEO Eckhard Spoerr. The
forecast projects EBITDA of 130 million and pre-tax earnings of 90
million euro.
Despite payments that came due to mobilcom AG for the fixed-network
takeover, the company’s cash and cash equivalents rose by 11.2
million euro to 155.6 million euro.
Successful - but costly - new customer acquisition in the DSL
segment, accelerated customer migration from narrowband to broadband
(heavy surfers who used to pay by the minute are increasingly
switching to attractive freenetDSL rates), seasonal effects and
slashed prices in the battle for by-call market shares resulted in
reduced revenues and narrower gross margins. Shaped by these factors,
consolidated revenues amounted to 109.6 million euro (vs. 119.5
million euro in Q1/2004). freenet expects that revenues will rise
again by second half 2004. AG also signed a resale contract with Deutsche Telekom AG,
T-Com. Under the terms of the agreement, the Hamburg-based Internet
telecommunications company can now market freenet-branded DSL lines
with transmission speeds of 1, 2 and 3 megabits and invoice them
itself, as opposed to marketing DSL rates only. "This opens up new
distribution and revenue potential and lastingly enhances our
position in the DSL market," said Eckhard Spoerr, commenting on the
contract signing.
                                            Q2/2004 Q1/2004 Q2/2003 1.half04 1.half03
Revenues                                 109,624 119,476 120,334 229,100  133,730
Segement: Internet access      64,355  76,760  76,403  141,115  81,435
Segment: Voice                        35,944  34,630  35,749  70,574    35,749
Segment: Portal                      8,091    6,790    6,762    14,881    14,771
Segment: B2B Services            1,234    1,296    1,420    2,530      1,775
Gross profit                          53,404  67,093  41,287  120,497  52,755
EBITDA                                    30,272  41,327  25,204  71,599    28,957
Erarnings before taxes (EBT) 20,904  31,759  15,517  52,663    18,095
Group result                          12,978  19,178  14,121  32,156    15,365
Cash and cash equivalents      155,589 144,418 118,302 155,589  118,302
Financial data per IFRS; in TEUR / Source: AG

end of announcement            euro adhoc 09.08.2004

Further inquiry note: Andreas Neumann Tel.: +49 (0)40 51306 778 E-Mail:

Branche: Online
ISIN:      DE0005792006
WKN:        579200
Index:    Prime Standard, TecDAX
Börsen:  Frankfurter Wertpapierbörse / regulated dealing
              Niedersächsische Börse zu Hannover / free trade
              Berliner Wertpapierbörse / free trade
              Bayerische Börse / free trade
              Hamburger Wertpapierbörse / free trade
              Bremer Wertpapierbörse (BWB) / free trade
              Börse Düsseldorf / free trade
              Baden-Württembergische Wertpapierbörse / free trade

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