freenet AG

euro adhoc: freenet AG
quarterly or semiannual financial statement
freenet AG on course for growth with its core mobile telephony business

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6-month report


freenet AG on course for growth with its core mobile telephony business
•       Around 6 million mobile telephony customers
•       Sales of EUR 435 million in Q2 2008
•       EBITDA of EUR 123 million in H1 2008 

Büdelsdorf, 7 August 2008 - freenet AG is on course for growth in its core mobile telephony business: In the second quarter, the number of customers increased by 170,000 to approx. 6 million. This is equivalent to a gain of 749,000 (around 14 percent) compared with the first half of 2007. Customer growth in the first half is reflected in the number of contract customers (now running at almost 3.1 million) as well as prepaid customers (now approx. 2.9 million).

In Mobile Telephony, freenet AG has succeeded in boosting sales by EUR 6.6 million compared with the previous quarter, namely to EUR 283.3 million. Gross profit in the Mobile Telephony segment has also improved in the second quarter of 2008 to EUR 82.6 million - a gain of EUR 8.9 million or 12.1 percent compared with the first quarter of 2008. The company's good positioning in the Mobile Telephony segment bodes well for the future, particularly in view of the fact that the acquisition of the debitel Group by freenet was completed at the beginning of July with the entry in the commercial register.

In the first half of 2008, Group sales declined by EUR 42 million compared with the corresponding previous year period, namely from EUR 919.3 million to EUR 877.3 million. It has to be borne in mind that the decline in sales in the Narrowband segment alone (which is shrinking due to technology reasons) amounted to EUR 43 million. In the other segments, sales overall were maintained at the previous year level despite difficult conditions in the German Internet and telecommunications market, with a continuing erosion of prices, extremely competitive complete packages and regulatory restrictions.

The forward-looking Mobile Telephony, Portal and Hosting segments held up well in the second quarter. As was the case with Mobile Telephony, the segments reported an increase in sales compared with the previous quarter. The Portal segment reported sales of EUR 14.2 million, a gain of 11.6 percent compared with the first quarter of 2008 (Q2/2007: plus 6.5 percent). Hosting sales increased by 5 percent compared with the previous quarter, to EUR 22 million (Q2/2007: plus 11.8 percent).

Gross profit of the Group improved this year, to EUR 147.5 million in Q2 2008 - a slight increase of 2.2 percent compared with the previous quarter.

EBITDA for the first half is reported as EUR 122.6 million, a decline of approx. 10 percent compared with the previous year. Compared with the first quarter of 2008, EBITDA declined by EUR 15.3 million to EUR 53.7 million, a fall of around 20 percent. This decline is mainly attributable to the EUR 11.4 million increase in personnel expenses; a non-cash-effective accrual difference for the company's stock appreciation program was responsible for almost all of this figure (EUR 10.6 million). Marketing expenses also increased by EUR 2.7 million compared with the previous quarter.

EBIT declined in the first half by around 63 percent to EUR 35.4 million. Of this figure, EUR 9.2 million was attributable to the second quarter. The downturn in EBIT compared with the previous year period is mainly due to much higher depreciation in relation to capitalised customer acquisition costs. This depreciation is not cash-effective. In the second quarter, cash flow from operating activities increased by EUR 16.4 million compared with the first quarter, namely to EUR 64.1 million (plus 34.4 percent).

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

in EURm                                Q2/2008 Q1/2008 Q2/2007 1stHY08 1stHY07
Third-party revenue                    435.0   442.3   466.9   877.3   919.3
Gross profit                           147.5   144.3   157.3   291.7   299.2
EBITDA                                 53.7    69.0    70.5    122.6   136.0
EBIT                                   9.2     26.2    45.9    35.4    96.7
EBT                                    8.6     24.5    51.3    33.2    107.1
Group result                           10.2    12.3    39.9    22.5    89.8
Third-party revenue for the group*     435.0   442.3   466.9   877.3   919.3
1. Revenue mobile telephony            283.3   276.7   303.1   560.0   582.1
2. Revenue broadband                   78.1    80.0    64.8    158.1   122.7
3. Revenue portal                      14.2    12.7    13.3    26.9    28.4
4. Revenue hosting                     22.0    20.9    19.6    42.9    38.5
5. Revenue B2B                         20.9    29.9    29.5    50.8    68.0
6. Revenue narrowband                  19.6    24.8    40.0    44.4    87.5
Total customers freenet group (mill.)  10.96   11.36   11.86   10.96   11.86
Thereof contract customers (mill.)     6.33    6.41    6.21    6.33    6.21
Mobile telephony customers (mill.)     5.98    5.82    5.24    5.98    5.24
Thereof contract customers (mill.)     3.09    3.03    2.84    3.09    2.84
Thereof prepaid customers (mill.)      2.89    2.79    2.40    2.89    2.40
Active narrowband customers
(internet+teleph) in million           2.09    2.56    3.76    2.09    3.76
DSL customers in million               1.10    1.19    1.22    1.10    1.22
Paid service customers Hosting (mill.) 1.24    1.23    1.16    1.24    1.16
Paid service customers Portal (mill.)  0.54    0.57    0.48    0.54    0.48 

* 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

Further inquiry note:

freenet AG
Sofia Lazaridou
Telefon: +49(0)40 51306-778

Branche: Online
Index: Midcap Market Index, TecDAX, CDAX, HDAX, Prime All Share,
Technologie All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard
Börse Berlin / free trade
Börse Hamburg / free trade
Börse Stuttgart / free trade
Börse Düsseldorf / free trade
Börse Hannover / free trade
Börse München / free trade

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