The conference is now being recorded. Good morning, ladies and gentlemen, and welcome to the freenet AG Q1 2024 Conference Call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Christoph Vilanek. Please go ahead.
Good morning, everybody. Thanks for joining today's update. This morning I read a comment which said, like, "Everything on plan and a bit boring." I think that's true, but I'm happy that it's true. If we look at this first quarter, as expected, we have invested into the growth of waipu.tv and released a new record net add quarter. As part of this, as a consequence, the EBITDA is a bit below the previous year, but that is Ingo will outline that in full detail in our plan, and is not an indicator for a change for the full year. It's just a part of the seasonality that we were expecting, given the circumstances. I'll talk quickly through the closing of the GRAVIS business.
And again, Ingo will then lay out what this means in terms of revenue guidance, et cetera. And, as I already mentioned, no doubt about the guidance. We fully confirm everything that is guided, revenue as such is not guided, but EBITDA. If we look at page five, on mobile, I think what you easily detect is that, similar to any other of our market participants, also our growth slows down. I think there is more and more stability in the market. The source of new postpaid, which over the past so and so many quarters was former prepaid customers, I think this is slowing down.
I think that is something which we have seen with any of the others that have already reported their numbers. We still see a small growth of 20, which is less than it was previous year. But it's still a small growth, and we still expect for the full year to end up somewhere around +100,000. ARPU's are according to our plan and fully stable again in Q1, and are expected to be stable for the full year.
What we have recently launched, I think it's worth mentioning, even though it won't be a big deal, but there is only Magenta who today gives a outside EU tariff plan in the German market, and we have now agreed with one global company located in Berlin to offer low price roaming in non-EU countries. So customers can download the app and then collect an eSIM if they do travel. Again, I do not expect it to be a significant contributor to either revenues or bottom line, but it's a hygiene factor, and aside from Magenta, nobody has it for the time being. On page six, already in the release outlined and clear focus is waipu.tv.
We have told you with the preliminary results early March that we expect a second or another record quarter this quarter. So we have a net add of close to 139,000, which is more than we had in Q4. It compares to + 83 in Q1 2023. So we've again had a significant growth of almost 60%. We have, I'm sure you also looked at the numbers of Deutsche Telekom this morning. They report plus 70,000.
So once again, we are in the area of double-digit growth, which is still our ambition, even though I expect with their investment, EUR 100 million a year in content of Bundesliga and EUR 50 million on European Championship, that I guess in Q2, we will see them to become stronger. But still, given our level of investment and a very consistent management of acquisition costs, we expect the growth in Q2 to be at least at the level of Q1 again. So once more, we believe that if this continues, we can reach the line of around 2 million by the end of the year. I think we will have in the Q&A a couple of questions on the Nebenkostenprivileg discussion.
I'll... I'm happy to answer them. My basic statement today is that we still have not seen a straight impact or measurable impact because people are still in the period of reflecting on the change, and legally, they can only go away by first of July. On Media Broadcast, I think that is shrinking as planned and as expected, still with price increase, but also with B2B activities that the team is there, acquiring or winning in diverse industries. The EBITDA contribution remains to be stable at the order of magnitude of EUR 100 million per year. If we then have a look on waipu.tv a bit more detailed, you can see that we have had a very good success with the combined offer with WOW! which is the entertainment offering of Sky Germany. We have signed an agreement now with Disney+.
I mean, there is rumors that in the U.S., some of those companies, specifically Disney, Paramount, want to join their forces. Obviously, end consumers are not likely to do three, four, or five subscriptions. In Germany, we see that these companies do not run for single campaigns, but they like to cooperate, and the biggest cooperations right now are with Sky, with MagentaTV, and with waipu.tv, which I think also proves that we are doing a fine job, and we are now well known to these partners also as acquisition machines, which is part of the freenet DNA and is now repeated in the TV segment. The fact that we are still increasing number of channels and HD becomes kind of a hygiene factor, we constantly measure the usage, and also eliminate some of the channels so that the customers are not overwhelmed.
And all the features to sort channels to exclude channels from your own EPG are well-established features that make the product totally convincing to the end consumers. EPG, NPS, still on a super high level, and as already mentioned, now we have crossed the 1.5 million line and added almost 140,000 subscribers during the quarter. Sorry, I have a problem here with my presentation. Let me then step to the GRAVIS topic. I think for the past years, we've always mentioned that GRAVIS is not contributing significant to our EBITDA. It is an interesting, it was and is an interesting distribution line for Apple devices. There is a number of changes to the Apple business.
One is that what they call CPU, which is Macs and MacBooks, has come significantly down. This is not due to less demand, but to a longer lifetime of the devices. So we have seen in GRAVIS, CPU revenues coming down by 25% this year versus previous year. Last year, we have had a almost break-even result, but January, February, March showed that we are going definitely negative this year. We have spoken to a couple of potential partners to merge their shops with ours, to exploit synergies in headquarters and central functions.
And we had learned that all the others run into similar problems, and if two companies that suffer from the same disease, even bringing them together would not create enough synergies in order to make the company sustainably profitable. And this is why we have decided to end the Gravis business. It is important also for you to know that over the years, the value in terms of generating postpaid customers has come down significantly. The first two or three years, we were on, like, 30,000-50,000 annual subscribers won through GRAVIS. The last two years, we talked about, like, 1,000-2,000 a year. So this is not something that is really moving the needle in our mobile business.
We have agreed with the workers' council on the close down by the end of June. We have informed Apple about it. We are now in a position to sell all the products that have been in stock, which also reduces the damage on the cash free cash flow line. But once again, Ingo will give you more details. It's a sad thing, but I'm still happy that we have agreed with the workers' council in a smooth and fast process. Even people in the shops are relieved because it was not a fine thing to wait every day for customers that have not shown up. Having said that, I'm giving a straight forward to Ingo for the financial details.
Yeah. Good morning, everybody, from my side. I start on page 10 with the group results. I think what you can see on a revenue level is that revenues are stable despite the GRAVIS revenues are already decreasing in the first quarter. So we lost. With GRAVIS, we lost something like EUR 20 million of revenues in the first quarter. And this could be overcompensated by high-margin service revenues, which increased noticeably. So I think it's all in, it's also on the revenue level, it's a good picture. And yeah, with the effect on the gross profit, which could be increased by 3.4% year-over-year, and this reflects the strong development of the service revenues in both segments, in mobile and in TV.
Therefore, our gross margin could be increased to 37% by 1.2 percentage points. On an EBITDA level, maybe a little bit disappointing also compared to the consensus, but definitely compared to the gross profit, we see a slight decrease in EBITDA by 3%. This is based on the investments in waipu.tv. Here we invested into growth, and therefore, we have much higher marketing costs. On the one hand, it is brand marketing, on the other hand, it's let me call it sales or acquisition marketing costs, what we do have here. And what we also have is an increase in personnel expenses, what we have discussed, I think, during the whole year 2023.
And all the time we told you, yes, there will be an effect. There will be an effect of something like 4%-5%, but, during the year, this should be partly mitigated, because the increase of the minimum wage last year already happened, mid of the year. So, I think there will be slightly higher effects in the first half of the year, but, the effect from higher personal expenses definitely will be lower during the second part of the year. Moving to the segments, starting with mobile. I think here you have the clear picture on the revenues, what I already explained. You see a growth of service revenues by 2%, from EUR 416 million to EUR 424 million.
And on the other hand, you see the decrease in hardware revenues by something like EUR 22 million, and this is because of the announcement of the closure of GRAVIS. So, we anyway saw decreasing revenues at the beginning of the year, but after we announced the closure, we even saw another dip. Gross profit here in mobile there is an increase by 0.8%. And yes, this is based on the service revenues, but I think if you lose EUR 20 million of revenue, even in a low-margin business, yeah, then you have an effect in gross profit, and it is even if you only have a gross margin of something like 5%, then you lose something like EUR 4 million on it.
So I think this is clear here. And if we look into the EBITDA, we see a decrease by 2.5%, which is also driven, on the one hand, by GRAVIS, where we lose something like EUR 1.5 million of EBITDA. On the other hand, what we see here in mobile is that personnel expenses are higher, which is based on an increase of wages by something like 4%-5%, what we already announced, which is here in mobile, an effect of something like EUR 1.5 million.
On the other hand, there was a one-off in debt collection in the first quarter of 2023, where it was possible to sell receivables, which were already classified as bad debt, but it was possible to sell them last year, which was a positive effect in the first quarter of 2023 by EUR 1.5 million. So this is definitely a one-off in comparison to last year. Bad debt all in the first quarter in mobile, it was slightly higher, but it was not a relevant big effect, what we saw here. So slightly increasing bad debt, but it was an effect of something like EUR 0.7 million-EUR 0.8 million only in the first quarter.
Mobile EBITDA for the whole year, because as it is a little bit disappointing in the first quarter here, I would still say that, I think personally, I do expect something like, at least something like EUR 417 million, what we already had last year. So this is above EUR 410 million, but in this presentation here, we are a little bit more conservative in the figures. Moving to the KPIs of the business, ARPU and mobile were already discussed by Christoph.
Digital lifestyle revenues, I think it is worth saying that we changed a little bit the reporting here, because what was part of digital lifestyle in the past were already part of the mobile devices what we sold, but then we had to decide, was it in connection with a digital lifestyle sale or not? And so it was. I think it left some room for interpretation, also internally, and therefore, we decided to leave all mobile devices what we sell out of the digital lifestyle revenues. I think this is only consistent and gives you a better picture because the mobile revenues, the devices what we sell, are only low margin. And what we do say here about digital lifestyle is that it is high margin, and so we have more options.
We sold more options and so on, and we do have more subscriptions here in the 45 million, what we report in the first quarter. On page 13, TV and media revenues definitely is very strong based on higher subscriber numbers with waipu.tv and higher marketing revenues, what we generated here. On a freenet TV level, yeah, we saw the decreasing number of customers, and we see we do still see it. But I think we still get some positive effects from the full year price increase from year-end 2020, and so this definitely helps here to keep it slightly or nearly stable. Gross profit also here, an increase by 8.2%, which is in line with the increase of the revenues. And in EBITDA here, a decrease of 5%.
I think we announced it with the full year figures in at the end of February already, that here we plan to do additional marketing investments into brand and into sales at waipu.tv, which is planned to be EUR 20 million during the year, and which is something like EUR 5 million in the first quarter. So therefore, I think we are totally happy with the EBITDA here, because this is definitely what we already planned when we started in the year. All what we see here is also part of the guidance, what we gave already. Moving to the free cash flow, maybe a positive surprise. No big effects in the net working capital, but better than last year, 2023 first quarter by something like EUR 4 million.
Yeah, but it is. We discussed it during the end of last year. The free cash flow was a little bit low in the fourth quarter, so we had some positive effects from the end of 2023. What we do see here in the first quarter, taxes, as it was before, CapEx is lower. I think we have to wait and see here what happens during the year, because it's lower than we expected, definitely, and lower than we expected in our full year figure, what we presented. I think it is too early to change here the full year view, but, from today's point of view, yeah, I would forecast a lower CapEx figure than we originally thought. These payments in line with what we saw before.
Interest payments, slightly lower than last year, but this is more or less a phasing effect. In May, we have some majorities where we have to pay interest, on a P&L level, interest, in-interest is, is relatively stable. Moving to the balance sheet, on page 15. Yeah, I think it's something what we repeat from quarter to quarter. It's a strong balance sheet. We have a high equity ratio. We have a very low leverage, but I think, you have to put in mind that, in May, just yesterday, we had. Well, the day before yesterday, we paid the dividend, so the leverage will increase slightly after the dividend payment, and then I think it will be decreased during the year.
On my last page here, we show the guidance, which we call confirmed. I think what is important to know here on the revenue line, what we do guide is a stable revenue and we stick to it. But definitely after the classification of GRAVIS as discontinued, 2023 has to be adjusted. So the adjusted revenue of 2023 after mid of the year will be something like EUR 2.2 billion-EUR 2.4 billion. This will be something like the revised revenue afterwards. And yeah, we stay to a stable outlook, and this is what we guide for 2024. All other parts of the guidance, I think we saw not any big changes in the first quarter.
I think we never said that often expected, Christoph and myself. And so, there was. I think it was all what we planned before we gave the guidance. I think we are totally in line, and therefore, we are happy to confirm it today. So this is the presentation from my side, and I hand over to the operator again to start the Q&A, please.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone keypad. In case you wish to cancel your question, press nine and the star key again. So please press nine and the star key now to state your question. The first question comes from Stephane Beyazian, from Oddo. Please go ahead.
Yeah, thank you very much. I've got three, if that's possible. The first one on GRAVIS. Should we factor some charges with the closure in the second quarter? And is there any read-across that we can make for the freenet shops from what's happening with GRAVIS? Was there any reaction from some of your partners regarding the closure? A second question on waipu, is it possible to have an idea of that extra marketing phasing over the next couple of quarters? I mean, is that a relatively similar level of extra marketing spending that we should expect every quarter, or is there perhaps more weight on some quarters than some others?
And just perhaps one question on the overall, you know, market competition, and I think one competitor mentioned that you were possibly more aggressive. You know, any color on what's happening in terms of market intensity, competitive intensity? Thank you. In mobile, obviously.
Let me Hi. Let me start with the last one. I also read that comment, and I have no reference to it. I cannot see that either Telefónica or us have done more aggressive stuff than in the past. But I will not comment on how I see the respective owner of that message. We have not done anything more aggressive. We are fully in line with the previous year. We see that in the online marketing, it was always a competition. It is a competition for low-end and low ARPU customers, and that remains a matter of fact. We see now that all the three network operators provide 20 GB, 50 GB, 100 GB deals for approximately the same amounts, and same monthly cost.
The other trend that we see is that we see more and more offers on SIM-only and without a 24-month contract period. But I think these are not new effects. This is just the same that we have seen in 2023. So I don't consider the market as being more aggressive than past year. And I cannot see any changes, significant or relevant changes in terms of channel mix, network mix, or alike. Second question was on the marketing spend phasing. I would just reconfirm what Ingo said. I think it's gonna be evenly split across the four quarters. This is at least what we've planned.
I would not exclude that opportunistically we might change something, but when I look at the first and now the second quarter, everything is booked. It's very equal. So for your Excel sheet planning, you should just assume an equal split among the four quarters. And the first question was whether the closing or discontinuation of GRAVIS will have any impact on the other shops in the end or partners. Well, first of all, and this is we were very careful in the communication just because, A, it's true, and B, we were sensitive about it.
This is not a statement on, retail has a problem, and this is not a statement on, online market or, or, the follow-up of the post-corona crisis is impacting it. It's a, it's, it's a pure statement on a single-branded shop, such as Apple, and Apple is the only single-branded shop that you will find in consumer electronics. It's very hard to manage if you are not the company, the yourself or the brand yourself. I have said that before, you have to live from a hardware margin order of magnitude of 9%. You have tons of regulations that Apple is giving you in order to secure quality and customer experience.
I think that is all contributing to their brand image, but it is a tough task for any third-party dealer to follow these goals for, like, regular trainings for your staff. They have to be licensed. They have to be certified by Apple. You cannot avoid that. You need to run it on a regular basis. In 10 years ago, we were living from moving parts in a device such as ventilators and hard disks. All this has gone. The number of repairs in total went up, but the value of repairs is going down because of better product. So it's just a pure and purely related to the single brand proposition that these shops have.
You might now ask a follow-up question saying: Why didn't you change to multi-brand? Because, yeah, simple, because Apple once again tells you you're not supposed to do that, and if you're still doing it against their wish, they might exclude you from distribution. So it is a purely related, purely Apple single brand-related topic. So we do not expect any impacts on any partners or internally on any other locations. We are in the process of negotiating with third parties about taking over lease contracts. I think this will be valid for anywhere between 30% and 60% of our today's locations. There will be a number of locations which we cannot find follow-up lease partners, and we'll have to pay out the lease or a penalty fee versus the landlords.
But it's already planned, so I do not expect any severe impact, neither in terms of personnel, notion, or any third-party partnerships.
That's very clear. Thank you. The next question comes from Usman Ghazi from Berenberg. Please go ahead.
Hi, thank you. I've got a few questions, please. Just on the GRAVIS situation, on the GRAVIS kind of impact on the financial, just so I understand. So in the second half, GRAVIS will be put in discontinued, then there will be restructuring charges and lease cash payouts. And that will not impact the guidance because the guidance is only for continued operations. Is that a correct understanding, or is it that the guidance already includes, you know, these costs related to payouts and these payouts and restructuring, et cetera? So that was the first question. And the question is both for, obviously, the EBITDA and the free cash flow guidance.
The second question was just related to the shape of the impact from the cable unbundling. So I think, you know, six months ago, you had mentioned that you expected the impact from the unbundling to be, you know, to benefit freenet over time, rather than a big bang. So I was just wondering, given that what we're seeing from Vodafone, where they are, you know, where they've said that they've contacted 1.8 million MDUs this in Q1, and they hope to get through the backlog by July. Do you still anticipate that the churn pool will go up over time? Or, do you think that as Vodafone, kind of, you know, gets through this backlog of MDUs, you're gonna have the big bang kind of churn event, you know, in July? Thank you.
Yeah. Hi, hi, Usman. I take, I take the first one. I think you, you are totally correct in your interpretation. The guidance is for continued operations, and in the guidance, there were no specific payments for GRAVIS because it was unknown when we published the guidance that the business will be closed. But yeah, it will be discontinued operation, therefore, not part of the guidance. But what is important to say all in, because there is a lot of inventories on the one side, which we, which we do sell now, and what we will sell after the the shop, the stores are closed. On the other hand, we had the payments for for for lease and for for people, which has to be done. But all in, what we do expect on a cash flow level is that it is something like zero that is balanced.
Right. Okay, thank you.
Yeah, second question, Usman. I mean, we have all seen the numbers yesterday from Vodafone, and they reported -653,000 TV subscribers in Q1 of this calendar year, so their Q4. Well, first, double-check, we looked at our number, our net adds and the ones of Deutsche Telekom. And the previous quarters, it was kind of like equal, equaled out, and now it, there is a gap of 450,000. So the question is: Where have they gone? Well, honestly, I can't tell you, so I draw two conclusions. One is they are just cleaning the table, making sure that they are reporting only real customers now, and this is a cleaning which they have put into the fourth quarter because it's, well, it's the best time to do so.
So my guesswork is that they were just, like, recounting and deleting unpaid or unknown or no, not, not real charged subscribers, which is a normal thing, a 5% ratio on this, in this kind of business. First, first statement. Second statement, I, I think they have claimed that over time, they will... That they think they're gonna lock in 50% of their subscribers. So if I look at the numbers that they report as of yesterday, they are close to 11.58 million. If I would assume 50% to be locked in or kept, because people are not ready to change, then, that's-- this would mean about 6 million are at stake for the rest of the market.
And then I look back at a chart or I remind you a chart that we have published in August last year, which said exactly that. We, we thought that about 5.5, 5 point, 4.5 million, today's, cable subscribers will go, to the, to will be available to be, acquired, in a third big wave, and that wave is certainly 24 months-30 months. And if we would, from those, we would only get a third, also 30%, then that would be 1.5 million, and that would be add would add up to the 3 million that we aim for, during the year of 2026. So, so that is my kind of equation. Second statement is we've only started yesterday with our, campaign.
The campaign is called Dieter Wants the Mieter, which basically says that Dieter Bohlen addresses the lease consumers. It's an offer where we ask the customer to join in, take a 12-month contract free of charge, but pay EUR 60 flat for our remote control. It started yesterday, and yesterday, in less than lunchtime, to be honest, and we had 2,200 customers the first day. So this is what makes me positive about the second quarter, and we are still not in a position where the end consumer has no double payment. I'm still, and this is also, I spoke to a couple of people in Magenta TV, same as us, they do not expect like a tsunami wave in July.
It's more likely that during the month of June, people will reconsider. There is the European Football Championship. Nobody will change the system during the championship because they are in panic, slash, if you are a waipu customer, you will see the, hopefully, the goals of the German team earlier than the ones of Magenta, earlier than the ones of Saturn and 15 seconds ahead of Cable. So this is one of the propositions that we shoot out. But I would still expect people to say, "Well, I'm changing the system only after the European Championship because I'm afraid to miss something." And then from July, then we have summertime, so I think it's gonna be a growing trend of people moving away from Cable. Starting in Q3, being stronger in Q4, and then continue throughout the full year of 2025.
Got it. And just a follow-up, I mean, do you expect this to kind of get. You know, there are a lot of people on kind of pre-satellite, pre-satellite as well. Do you expect this to have a halo effect around the free people moving from pre-satellite or is that not?
Well, that's a very good question. We have, according to our survey, even satellite customers realize that there is a new technology which is in some areas more appropriate. I think the difference is from cable, that, on satellite, people perceive that they are not paying anything. They paid once, typically, for the satellite dish. So the pure rational motivation for a German to save money is not there on satellite. This is why I think it's a bit. It's gonna be a bit lower. And there will also people that move from cable to satellite. So I think on satellite, I expect more of a wash, because some cable will go in, but also some satellites will go out.
Great. Thank you.
The next question comes from Ulrich Rathe, from Bernstein. Please go ahead.
Yeah, thanks so much. A couple from me as well, if I may please. The first one is just clarification on the mobile EBITDA in the first quarter. Could you clarify whether the GRAVIS slowdown in sales that you saw already in the first quarter had an EBITDA impact at all? And then also on the same topic, you're saying that the debt collection income has been lower. How would you characterize the debt collection income in the first quarter of 2024? Was it unusually low, or was that normal? Second area question is on the waipu momentum. Just wondering whether you had any comments on the competitive situation versus the two, versus Magenta. How do you see your marketing efforts compared to what you see from them?
Second question in this area is: what's the partner share in the net adds at the moment? And the third question on waipu.tv is: how do you actually scale this investment? Do you have a payback metric? Are you essentially just grabbing eyeballs at this time and then see what happens? Or how do you, how do you essentially, you know, say it's 5 million this quarter, and that's the right number? Or how does this, how does this actually come about? Thank you very much.
Yeah. Hi, Ulrich, good morning. I try to answer your first two questions. Concerning the mobile EBITDA, the GRAVIS effect is something like EUR -1.5 million in the first quarter's EBITDA, mobile EBITDA. And with debt collection, no, I think the figures are comparably to last year. I think there was only this one-off, which was different, and which was a one-off of 2023, and there is no one-off in 2024. So this year we are in line with expectations and also with the figures of the last year.
Okay, and then I'll take the questions on the TV segment. So what do I see? I see Magenta, as I mentioned, I mean, they spent, according to non-public, anecdotal information, about EUR 90 million-EUR 100 million a year for Deutsche Bundesliga. They are now beefing up the European Championship with a couple of semi-exclusive events, which is a total of a couple of games. They are spending a lot of money now in TV advertising. And we've also seen that they have finally changed this to be a product, open access, and not always connected to DSL or fiber of Deutsche Telekom. They have changed the online click journey according to that new rule. So I think we see them with a wider presence, and pushing hard for exclusive content and positioning themselves as the premium offering.
And no doubt, if they put more, they put way more money in, and this is why I expect them midterm to be the market leader in that sector. No doubt, we cannot compete with a company having EUR 20 billion or EUR 30 billion in EBITDA, and marketing budgets that are closer to our TV revenues. So but this is accepted. If we are strong number two, with a reasonable budget, I think, that's what we're here for. And this fits to the financial profile, and to the promise that we give to the capital markets. We see Deutsche. You also mentioned Telefónica. Well, Telefónica, as far as we understand, they will adopt the platform that they inherit from their Spanish mother company.
According to, again, anecdotal evidence, they want to do a beta testing starting after the European Championship in July, August. And they will then start to change their offering to their product as soon as the feasibility and the beta test is confirmed or has gone through the rehearsal and worked well. What we see right now with Telefónica is that their new customer acquisition with O2 TV, powered by Waipu, is slowing down, and this is effect from January onwards this year. We do not, in accordance with Telefónica, we do not want to disclose the number of their subscribers, but I would consider them stable and not growing anymore.
This, the growth that we have had from Telefónica in the last two years, is now replaced by a partnership of ours with MediaMarktSaturn. MediaMarktSaturn is selling the TV product, as of today, in commission-based. But we have also agreed with them that they can act as kind of a sub-service provider for the TV product, in the near future, because they want to also move into subscription business and have direct relationships, which is totally okay. It's the equivalent of the Telefónica dealers of today. So we think that we have found, at the right time, a replacement. MediaMarktSaturn is very happy with the product, and they are highly engaged, with it. The last question that I have made a note of was: How do we deploy the 5 million, or what is the logic?
Well, there is a detailed logic on event-driven. We have not spent money now in April. We have on above-the-line marketing, we are starting, as I, as I mentioned yesterday, we're starting, and it takes four weeks, five weeks where we do ATL TV. During and on a daily basis during the championship, we do advertising in stating, "If you want to watch the game tonight in full HD and or in HD, and want to, want to be the one that see the goals first, move today." And to waipu, this is more of a social media campaigning and online campaigning, which will take place every day. Then we will slow down July, August, because we know from the past that this is not the best period.
We will then kickstart again in September, and it will continue till about approximately mid-November, before the FMCG products hit the TV advertising market. The key spending area is TV. On TV, we spend the money in ProSieben Sat.1, as well as RTL. The preference right now, to be honest, is RTL. Why is that? Because sorry, it's ProSieben Sat.1 at this very moment. And this is also depending on their readiness to support us, give us special discounts, and support us in cost per subscriber. We went to both of them and said, "You are taking a big benefit of any cable customers moving to IPTV.
The CPS is much higher, so we want you to first of all contribute in the advertising. And second, we need to start a kind of a renegotiation of cost of content." And, I wouldn't say that they straightaway gave us a discount, but we are trying to trade a marketing spend on the channel with distribution cost. And, we're happy that we can also arbitrage this among the two. It's too early to celebrate, but it looks as if this works out well.
Thank you very much. The next question comes from Joshua Mills from BNPP Exane. Please go ahead.
Hi there, thanks for the question. I had a couple. First one is just on the EBITDA trajectory for the mobile business. I know you're guiding for more than EUR 410 million this year, and I thought it'd be helpful just to give us a bit of an update on what you think the fair starting point for 2023 was, given we've had these issues with debt collection and other one-offs. So if you're guiding for more than EUR 410 million, what's the base we should be thinking about versus 2023? And then what does that growth rate imply? The second question I wanted to ask was around the potential for a new reseller or partnership deal with Telefónica Deutschland. I think you spoke about this in the last quarter. Has there been any update there?
And can you also remind us again of what your red lines are? Is it that you want to be a reseller, not an MVNO? Has anything changed on that front? Would be helpful. And then I think the last one for me, and forgive me if I've missed this, but a while ago you were talking about launching broadband and DSL sales or VDSL sales in the shops. So have you actually gone live with this? And if so, would you be able to share any details on what kind of trajectory you're getting and net add trends as well? Thanks.
Yeah. Hi, hi, Josh. I start with your first question. Yeah, to be honest, I do not want to give any... I think I already said what is necessary from my point of view, because there were one-offs in the first quarter, and definitely we will not see these one-offs from, especially from bad debt in the other quarters. And on the other hand, there is the, I would call it a one-off from GRAVIS, which will not be there again in the following quarters. And then the third part first part is personnel costs, which were compared to last year, went higher.
But during the year, as there were already the increases during the year in 2023, so in the other quarters, the effect will be lower. So I think there's a good operational performance, what you can see in the gross profit, and at the end of the day, the gross profit is the base for the mobile result during the year. And in gross profit, we do quite well already in the first quarter. So I think we are very convinced to see more than EUR 417 million during the year.
Yeah, thanks, Ingo. Taking over agreement or contract situation with the operators. Let me start with DT. We have signed early this year an agreement till the end of 2028 based on the current terms with a special notion to an incentive of doing more business with them. We have signed in April an agreement with Vodafone similar to that with that goes till 2029. And we are still in negotiation with Telefónica. We are not aiming a typically MVNO deal, but we want to continue the current agreement type of agreement that we have, which is a pure revenue share agreement. You said, like, what are the key points for us?
I think the key point is that we expect a potential raise by Telefónica with us or any other partner over the next 18 months. Because there is obviously a huge bunch of 1&1 customers that are on the TEF network and might want to stay. We have clearly indicated to them that we are ready to help to support that effort. But having said that, we also need competitive circumstances, meaning competitive tariff plans, competitive conditions that allow that raise. As of today, we do not have an agreement on what they call the Blau tariff plans, which is their SIM-only plans. Historically, that is also the reason why we did not SIM-only with them.
And that is, if you, if you wanna say this would be a red line or a prerequisite, for the agreement, that is a super constructive relationship. Lots of meetings and discussions, with Marcus Haas and his team. And I am, optimistic that we will find, a good agreement that is, helpful for both. And I think, without, being too detailed, I think it's clear where the potential, customer and revenue pool sits today that is to be conquered, by the two of us. And, last question on DSL. Yes, you're perfectly right. We have started or already, almost 12 months ago, to sell, DSL contracts on our own, cost and, billing, in our shops. I think it is a nice add-on to the portfolio that we've had before, which was a purely commission-based. But we have also seen that we have not discontinued the commission-based.
Therefore, our own DSL is in the low four-digit numbers a month. It's not really a significant growth business. I think, and we are in parallel talking to any of the fiber operators or developers. But overall net add or even gross add in the broadband access has slowed down significantly to previous years. So yes, there is a business, but it's not worth mentioning.
Great. So, first going back to Ingo, I think you said you're confident in doing more than EUR 417 million of EBITDA in mobile, which was the number last year. The guidance, I think, on slide 11, is for more than EUR 410 million. So could you just clarify whether you meant the, you know, the fact that you're gonna beat the EBITDA number from last year and grow year-on-year on a reported basis, or if you're just guiding for the more than EUR 410 million? Thanks.
I think we have a guidance on a group level, and what I forecast today or what I expect is that in mobile, we will be more than 417. I think from today's point of view, I do not have to add anything.
Great. Thank you.
Thanks.
The next question comes from Titus Krahn from Bank of America. Please go ahead.
Good morning, all. Thanks a lot for the presentation and for taking my questions. Just a couple from my side, please. Maybe first on the personnel costs. I think you mentioned something like 4%-5% year-on-year inflation, but if we, if I'm not mistaken, the personnel cost actually went up something like 10% year-on-year. Could you maybe help us bridge the numbers between this inflation and the actual kind of 10% increase? And, and looking ahead a little bit, for Q2 specifically, I remember you had some one-off bonuses in Q2 last year. So how does that compare to Q2 this year? That's something that will return. Then maybe a quick follow-up on your discussion on the potential Telefónica deal.
I think in the past, if I remember correctly, these discussions were also linked, indirectly to any potential share buyback that you would consider. Could you maybe update us on these kind of thoughts on your side, given your, as you mentioned, quite healthy balance sheet, is there anything that you could consider over the next couple of months? Then maybe last question, just on TV and media. I think, you kind of, on the TV business, I think you used to report the absolute EBITDA trends, for the three different divisions on your slides in the past. At least I couldn't find them for Q1, but could you provide maybe any color on how, how EBITDA trends developed across freenet TV compared to waipu.tv, compared to, your B2B segment? Thank you.
Yeah, hi, Titus. Thanks for your questions. Yeah, you are correct that all in, there's a 10% increase in personnel costs. On the one hand, there's the increase on the wages. On the other hand, there is what we saw in 2023 and 2022 in the last quarter were relatively high long-term incentive program negative EBITDA effects. And so, what we do this year is we try to shift it to all of the quarters to avoid such a big stake or a big effect in the last quarter. So I think we normalize it a little bit during the year.
On the other hand, what we see is that, especially at waipu, I think still the number of people who is working there is relatively slow, relatively small compared to the whole group. But it definitely we have more people on board here. And then there was a few number of one-off payments, which we had to do in the first quarter because some people were leaving, and I think it is normal during a year, but I would say there was a little bit of a bigger figure here in the first quarter. All in, there were no special additional one-off bonuses in this quarter.
And then you were asking about the Tef deal in connection with the share buyback. I think we never put it in this connection. We have never seen it. I think what we said is we have a year of investments for TV, and we have to wait and see how many customers we could gain on the TV side, and if it would be possible to gain more customers than expected, then this would cost more cash during the year.
This is something what we cannot see on a complete level today, and therefore, we said, as it is a transitional year, it looks difficult to do a share buyback, but I think we have to check it again in, I would say, during the second half of the year, and then we will decide if something like a share buyback will be possible. So we do not say never but, we definitely say not in the first half of this year. And then you were asking for the TV and media figures in more detail. Definitely, Tim and his team can give you some additional figures here if you call them. And then, I think if more of you are interested in, we can put it on the charts again, for the second quarter then.
Thank you.
Okay.
The next question comes from Simon Stippig, from Warburg Research. Please go ahead.
Good morning. Thank you for the presentation and the opportunity to ask some questions. First of all, in regard to the TV and media segment, it'd be great if you, or what I want to understand is the almost 140,000 additional net adds, where exactly do they come from? Could you be there a little bit more granular? Especially, you mentioned, for example, the marketing expenses, how what's the relation to the timing? Is that coming from Q4 into Q1? And how did these net adds develop? And you also mentioned that there's obviously no effect of the change of law in the So here, a little bit more color, that would be great. Second question would be in regard to the Bundesnetzagentur.
Early this week, we had the disclosure of the further consultation request, and here I would be interested what you see, what your understanding is there, and what you expect to be implemented then further until the end of the year in regard to this, in regard to the third question, if I may, would be in regard to your deferred taxes. You had here an impact from the Growth Opportunities Act. Could you comment on that? And also, broader, longer term, what you expect in development of your tax rate. And then, a small last question would be, you gave a midterm guidance until for until next year, 2025. And it would be great to get your next timing of a midterm guidance. Can we expect this until the end of the year, or can we expect this next year? And thank you very much.
Yeah, let me start with the first one, on the net adds. Still the biggest single source is direct to consumer through internet, website, display ads and social media. It is hard to connect, strictly connect, above the line advertising, so TV advertising to the individual activations, because people might see the ad and then go in the app shop and hook up. So, part of this, this is also reasoning that we fully expense the acquisition costs straight at the day of the expense, and they are not, as in mobile, typically distributed along the contract lifetime. The biggest single campaign and biggest single successful campaign in Q1 was a combined offer with 12 months of WOW for a special price. It was the single biggest.
Again, we have agreed with the partner, Sky, that we do not disclose the individual number, but it took a significant share of the 140. There is a monthly acquisition in our shops and with our third-party retail partners, order of magnitude, mid-1-digit thousand a month. And there is a similar number of coming from MediaMarktSaturn. So I would say retail, brick and mortar, is maybe, it's fair to say that it's about 20% of the 140. And obviously the rest of it is direct to consumer. I think that remains to be the same in the near future.
Once again, I think we are all pushing hard on advertising, making the end consumers aware of the fall of the bulk as I described before. It's hard for me to predict how people will react, and I think the word of mouth of "Had you already changed? What are you doing?" It's hard to predict the way it happens. If you look at cable distribution in Germany, it's also a couple of Bundesländer that are heavy on it, and others are not. So I hope this gives some flavor to it, but I'll take a note, and the team will take a note that maybe by half year, we will show a kind of a breakdown of sources, at least by bucket, so that you get a better understanding on it.
Second one, Bundesnetzagentur. Well, I mean, this is now a consultation paper, which is ready to be commented till the eighth of July. And then will be reviewed and fully go into a place in September. Are we totally happy? No. I think we have improved our position. The Anbietungsverpflichtung, as such, is not in there, but there is a stronger statement on the fact that network operators must provide technology-agnostic access to their networks to third party, that they also have the obligation to negotiate and offer it. And it's a bit stronger statement that if they are not willing to do that in a reasonable time or conditional framework, that we may go back and claim the BNetzA to assist.
I think it is definitely better than it was. But it's all an intermediate stage, and we will continue to push for a more straightforward and tougher formulation than is in there. But again, I think it's better than it was, but it's no big change. And before Ingo talks about the tax, I think, yes, we have a 25, a 2025 year guidance out there. I tend to say it's not a guidance, I tend to call it an ambition. And Ingo and myself, we have talked a lot the last few weeks on, like, what is a good timing.
I think a good timing would be when we have a better insight on the TV side on what the impact of Nebenkostenprivileg is, because we will then detect what whether we can even accelerate or whether we have to slow down or just linear continuation of current growth paths, and that for obvious reasons, as mentioned, reasons has a strong impact on EBITDA short term and midterm. And that is also... Having said that, I think it's also then important to say, what is the kind of horizon? So if we say 25, 26 are the years where we believe that the cable customers are in a big migration that might lead to an high spending. We will not change the ambition for 2025, that is for sure.
But it could then cause anything like, "Okay, guys, we go for 2028 because we think that six and seven are investment years, and we want to display the outcome of the investment," or alike. So I think I'm not promising it, but I think we might be ready to do so before the end of the year. I think that is, we will then make a statement on this, because then we are missing out an ambition.
Yeah, around your question about taxes. You are correct that the tax loss going forward is reduced year by year. It is difficult to say how long it will last because it is based on the results what we do have. So I think best estimation now is based on the new Modernisierungs Wachstumsgesetz, which is out there. I think in the up to the end of 2025, our tax rate will even be lower than in 2023, because there was a minimum taxation rate of something around 12.5%. But there is a new taxation rate, which is relevant at the moment, which is only 10.5%. And this will last until the end of 2025.
From the end of 2025 to the end of 2028, it will be something like 20%. And then starting in 2029, which is our best guess to date, we will have to pay the normal tax rate of something like 30%.
Great. Thank you very much. That was very informative and useful. Just one little follow-up in regards to the first question you had at waipu.tv. Is there any collaboration I think we had that in previous call. Is there any collaboration with housing companies that you can actually access their tenants directly?
Yes, you have a good memory. Yes, we were talking to a couple of those, specifically Vonovia. The thing that we've learned is, these guys do not have the addresses of their end consumers connected to cable access. They just flatly charge if the customers use it or not. Second is, they have no advertising allowance or ad opt-in for the customers, therefore, you can they cannot address or hand over addresses to us. And third, and that is kind of the spooky or comedian thing, any of the bigger ones have units that call themselves CRM services. And we're talking to all of those, but we have learned that with the two limitations I mentioned before, we really wonder what they do.
So the bad thing is, no, it definitely doesn't work out, and you won't go to the small ones because it's not worth doing it. And the good thing is that I think it's the same problem for Vodafone and Tele Columbus. And if I may add one, I also need to be a bit sarcastic in the other direction. I had recently a conversation with Ernst about their TV products, and they were examining waipu as a potential alternative for their current solution. And then I spoke to Ralph Dommermuth, and he told me what he is expecting and what the conditions were.
And then I spoke back to the team, and I think that that Ralph Dommermuth claims that they have a 270 or 280 thousand TV subscribers, and then we looked at our subscriber base, and turned out that we have on his network already 350 thousand. So I think why should I do a cooperation if I can take the shortcut and just acquire the customers? And the same goes for the housing associations. It's just a detour that is costly, painful, and not fruitful, so let's go straight for the customers.
Great. Thank you very much.
Okay, guys, I realize that there is no more questions on the list. Let me check with you and the operator if there is any more questions.
We don't have any more questions.
Great. Well, then thanks, thanks, everybody, once again, for the good conversation, interesting questions. Looking forward to hear and see you, soon again, and wish we all- we all wish you a nice weekend.
The conference is no longer being recorded.