Earnings Call: Q2 2021

Aug 12, 2021

Dear ladies and gentlemen, welcome to the conference call of Freenet AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Mr. Milanek, who will lead you through this conference. Please go ahead. Hello, ladies and gentlemen. A warm welcome This morning for our first half year results twenty twenty one. Warm welcome to everybody. We get started. As always, you have hopefully our presentation in front of you, Or you can follow it on the screen. We are happy and proud to present a very strong performance for the 1st 6 months of 2021. I think my headline is that the transformation that we have entered into a couple of years ago Finally leads into growth again. We see a very positive development on all adjacent TV and Media businesses, but the combination with this also strong and kind of rehabilitating Mobile business is driving the performance. And not only that, it also drives the fact That as you have all seen from the release, we are also comfortable to increase the prognosis for the full year. Going into some detail, the total subscriber base of full committed contract It's growing by almost 200,000 year over year, 190,400 to be precise. The EBITDA It's on a level of 222,300,000 as of 30th June 2021, a growth Of plus €8,400,000 mainly in absolute terms growing from the TV and Media business, But as a layer, having a stable mobile business and free cash flow is also going up, And that is kind of cleared from the Sunrise dividend and related interest payments. And Ingo Arnold will give more details on this. What were the main topics that kept us busy over the last 6 months? Well, I mean, retail was suffering from the lockdown, but recovery is visible for the last 2 months in June, we were already back up in normal term almost normal terms. Nevertheless, it's great that our retail independent partners have given us a very good award On our performance, we have launched the 1st sustainable product line with Kavis. Networks is our for many years, our internal brand. We have added Green Line, which Now sustainable product and sustainability is not only a buzzword, it's something which we will also show in the second half of this year in a broader scale. And as already mentioned, in July, we've seen regular performance in all our retail channels Doing really great again after the long lockdown. On the TV and media side, I think the Key decisions that we made were one was on Exairing, we have decided to Stop the ownership, the full ownership on our own network. Turned out the technology squeeze over the past 5 years showed that We will now be able to run our own network on certainly fully leased lines, but even more efficient than to run our own ones. This It will be in place from early 2022. The other thing what we've seen is that The media broadcast is gaining more and more of these DAP licenses, not only the national one, But also on a federal level of Northern Westphalia, Hamburg and Saarand, also their B2B business It's doing properly, and they also see some first indications of service contracts On 5 gs campus and like services. On a group level, the share buyback continues. We have so far spent about €75,000,000 So about 5% of the shares held As of end of July, we're in our own ownership. And once again, Ingo will give some more details. We have done, obviously, the dividend payout. And overall, also on the pandemic side, I think we've done well. Give you a flavor, we have had in total 108 cases from the beginning. We have only had 1, A bit more severe case and even this person has recovered. We have vaccinations on all at all locations, and we have made an offer To all our employees to be vaccinated. If we go back to the day to day numbers, and as always, we break it down On the next couple of pages, but an overview, postpaid growing, the Pure app based tariff plan significantly growing, WIPO growing as well and On FreeNet TV and we go, as I said, in more details on the following pages, slows down its Customer losses, nevertheless, makes more EBITDA and profit on the remainder ones. Page number 7, you can see the high margin mobile customer overall development year over year growth Up 210,000 or 3.3 percent, even in these Rather difficult and limited quarters of the pandemic and the uncertainty around it, We were able to grow once again on a quarterly basis. We're very happy about that. The non retail, retail remains at the typical level. I mean, it's about 60% is non retail, 40% is retail. So it has come down year over year. Certainly, it's be accelerated. And I would expect for Q3 and Q4, a slightly different ratio As we can see here, the positive thing is that captive channels is still growing. Nevertheless, I have to admit that also this number I expect for Q3 and Q4 look a bit different due to the fact that One driver was certainly Mediasatone being under specific pressure and it also has Dramatically recovered from the reopening. So I expect this number to go the 27% To go up again at least a bit. On 3 Net TV, we keep saying that we run the company based on EBITDA and specifically gross margin and at the end of the day, EBITDA, you can see here, in a comparison EBITDA From 1st 6 months 2020 to 2021, we had almost 50% growth based on the 2020 numbers. And you can also see down there, and we want to be super transparent here, that the quarterly losses, if you want to say so, Are going down. I mean, in absolute terms, it was 33,000 from Q in Q1. And now it's 23,000. So it's not only a percentage But also in absolute terms, I'm doing really, really well. On the right hand side, We have listed 3 dots around the B2B business. One was the regional DAB Plus platforms which I've already mentioned. The second one is once again we've won the Bundesliga Transportation of the signals to the main channels, which is A quite prestigious thing and creates trust in the market that we are able and capable to run technical, right, Quite challenging things. And the 5 gs campus that we have opened close to Berlin has had proof of Concept running during the European Championship, the 5 gs connectivity for the headquarter of the national team. Next page, Page number 9, which is Waipu. Once again, you can see here that we've done a Good proportion of growth once again. I think Q2 did really, really well. We know from last year that Q3 is always a bit the challenging period. I think we're going to see the same again this year. Looking at the July mid August numbers, it's just a result of summer period, low advertising From our side, but also low interest in Motion Pictures Entertainment overall. In total, we feel really comfortable with the development. Nevertheless, we are Already here mentioned before that we go for a good balance on growth and profit. We could certainly be more aggressive in growth, but that would lead into more aggressive offers. And we think it is more appropriate To do straightforward offers, no free, low long free trial periods, etcetera, etcetera. And these numbers are therefore very, very solid and will remain on that level. If I look personally on the second half of the year On mobiles, we have we are about to change the internal organization even more directed to Customer lifetime value, we are reorganizing the tasks even within the executive boards. I myself will focus on what we call customer interactions with anything that is directed and directly to the end consumer, Being telemarketing, customer care and sales, and Antonio's Forme is Doing a new unit or focusing on a new unit, which we call customer lifetime development. So it's not only about the product lifetime, which was in the past kind of the key KPI. We are trying to form An entire basket of products for the customer and market it even more professional To increase share of wallet, we will also most likely, in the next presentation in 3 months' time, also show how we do that On a campaign level, retail is back up and running, and we will We foresee a stable development within the lines of our existing guidance. Whereas on the right hand side, TV and Media, we see good development on our radio business and expect More ad sales in the second half of the year. And WIPO TV will launch its first own branded WIPO TV stick. This stick will have will replace the existing remote control in the household, But adapting to what the Germans are used to, you press 1 and you get the 1st national program. You press a WIPU Take button, you press a WIPU button, you press a Netflix button and so on and so forth. And I think that's going to be Very interesting to see how it is taken up by the end consumers. To be honest, the limiting factor not doing the launch right now is The chipset availability, so we will launch it by the end of September. Having said all that and Going back to the initial statement of transformation delivering also on financial KPIs on Page 11, This is how we do adjust our guidance and our prognosis for the full year Postpaid development, I think you've seen where we are. We think it's going to be a moderate growth. We see on the FreeNet TV, a slowdown of the losses, but it's going to it's remain It will remain a moderate decrease from the 900,000 of the past year. That is It still remains the case, but showing the EBITDA development, you can see that this is not free cash flow or EBITDA at all. And on Waipu, we see a solid growth, I would see even say significant growth, Seeing now 645 already by the half of the year. So my personal ambition was Would be going to €700,000,000 by the end of the year. If we look at the EBITDA, The existing guidance was EUR 415,000,000 to EUR435,000,000. We adjusted in 2 dimensions. One is that we think it's going to be more likely for it's going to be Definitely beyond €430,000,000 our personal feeling now is it's going to be on the upper end of the new guidance $430,000,000 to $445,000,000 I personally think it's going to be closer to $440,000,000 So we have Slightly decreased the spend, but we have definitely Raised it and we raised it. It's going to be beyond the Exiti former €435,000,000 The same goes for the free cash flow, still a bit more vague than the EBITDA, depending on a couple of things that Might impact it, but overall also an increase and outcome beyond the level that The existing upper end of the guidance was published. So having said that, I'm Very happy once again about the development. I think it pays back the passion, the readiness to transformation, The first positive mood across the entire company, and I'm very happy that It now also becomes visible in the numbers. And saying the numbers, I hand over to Ingo for more detail. Yes. Good morning, everybody. I start with the big picture on Page 12. I'm Very happy to show such a positive development. If we look into the group revenues, It is a stabilization in comparison of Q2 2021 to Q2 2020. We saw that the losses, what we had to show in the first quarter Are no longer in the books here because retail is back, as Christophe already said, on a gross profit level, you see that operations are very stable, and I'm happy about it. If you put into consideration that last year, we still had the gross profit Effect from FreeNet Digital, if you put this out, the gross profit in the Q2 2020 It was $208,300,000 and now we have a gross profit of $210,300,000 So gross profit up, Revenue stable and definitely group EBITDA up. We see a Quarterly EBITDA here of EUR113,500,000, if you compare it with the adjusted figure of Q2 2020, it is an increase of nearly 4%. Having said that, I Move to Page 13, where you can see the development in the mobile business. And yes, definitely, the headline what you see here is totally correct. It's rock solid. And the Generation of free cash flow is still very high out of this business. Revenues are slightly up On a service revenue level, again, here in the postpaid business, on a gross profit level, We are slightly above the figure from Q2 2020. So it is Positive development compared to the Q1 where it was slightly down, so gross profit up. And On the EBITDA side, a similar picture where you see that the EBITDA is up And the level on which we are is very stable because there was the €92,000,000 level in the first And it is the same in the second quarter. Moving to some separate KPIs of the mobile segment here on Page 14, Christoph already talked you through the customer base development, And I think it is very important to put into consideration the growth here in Fang and Flex tariffs, the act tariffs, what we have Because these tariffs are also very profitable and the profitability definitely is comparable to what we see in the normal postpaid business. On the ARPU side, yes, we see that there is a stabilization after the losses, especially from roaming in the last We see a normalization here. The pity for us here is that the gain in roaming revenues does not Give us any upside in EBITDA, but I think we're definitely happy that we see the stabilization in the ARPU here. And this is also something what we guide for the whole year. Digital Lifestyle revenues Strongly significantly up here on a quarterly level, more than 10%, 14.4% up In a quarterly comparison, so we are very happy that we have here A lot of options, 24 month contract also here, and this helps And retail is back. This helps in addition. So moving to the TV and Media segment, Page 15. The revenue up to SEK 69,000,000 here in the quarter, Which is comparably to what we saw in the Q1. Gross profit on a level again of EUR 44,000,000. So if you compare it with the last four quarters here, you see that this is something like the new normal. I think this is something what I forecasted already in the last analyst call here. And on the EBITDA level, I we see a significant increase here because also some of the cost measures And cost savings were working very properly here. Looking into the Divisions of the Media segment on Page 16. What we see here in FreeNet TV, All in, an EBITDA increase of SEK 3,500,000, so it doubled the development from the 1st quarter. In Media Broadcast B2B Business, we see not such a strong development. This has to do with the new initiatives, what Christoph was talking about. So we started these initiatives and we had some, Let me say starting cost here to do the businesses and to close the contract, so we will see the positive effect In the following quarters then. On BIPU TV, we see a continuously move In the right direction, so now our EBITDA is EUR 5,400,000 higher than last year. Still the development each single month generates a positive EBITDA here. And for the whole year, We expect something like an EBITDA of around EUR 5,000,000 what we already forecasted. Moving to 1x Corzus, how we called it here, this is the impairment of the fiber optics network, This right of use, what we capitalized when we bought Exa Ring in 2015, I think what we did in 2015 and the balancing was totally incorrect because that time the situation was different And the value of the network was much higher than it is today with the environment which has totally changed. So what is possible today? Today for us, it is possible to By the network capacity out there in the market and the operating costs all in for us are Lower than for the network, what we had before here. And I think we already discussed it in the last So it should not be any surprise to you, but we are I think it is the here what we did in the balance sheet and what was necessary is to depreciate here The right of use to 0 and this had a negative effect of EUR 30,000,000, but no cash effect, definitely not. And I think in the long run, it should be more positive than negative for our results. On Page 18, you see the free cash flow, which is significantly up here. It is corrected by the Sunrise payments. What we received last year, we Received a dividend of CHF 46,000,000 in the Q2 of 2020. So this is falling away. But on the other side, we did not have that many interest payments, which was CHF 5,600,000 in the first half of twenty twenty. So all in, change in working capital, Which is minus SEK 20,400,000 better than last year. Tax payments on the level of last year. CapEx, Slightly higher, some investments in digital radio here. So we are not stopping any investments here. We do our business even on the back of the pandemic. No changes here. On the lease side, something comparable to what we saw last Yes. Interest payment here, slightly up. This is the reason is that we in the figure of 2020, We do not show the interest payments for Sunrise. So if we would correct it, Then the interest payment last year would have been SEK 23,000,000 and then you definitely see, and this is what you would expect, Reduction of interest payments. So all in, a very strong development of the free cash flow. Therefore, what we did for the rest of the year and what we did with our guidance is that we increased the guidance here. And what we do forecast here on a quarterly basis to date is something like SEK 50,000,000 to SEK 60,000,000. I think there were some Disruptions last year where the Q3 was very high, this was extraordinary because we got some payments, Which were not expected earlier. So for this year, I do expect a stable development for the last two quarters, And I do expect something between SEK 50,000,000 and SEK 60,000,000 a quarter. Moving to the balance sheet figures on Page 19. Yes, since we saw the Sunrise Day, it looks very strong here, A equity ratio even after the dividend payment of 41.3 percent, a leverage of 1.9 And if you only look into the bank leverage, how we call it here, it is 1.0. At the end, I would like to come back to the share buyback program. So Christophe already mentioned That EUR 60,000,000 here are still open in the buyback program. So if you see the pace, how we do the buyback, I think, yes, we are totally on track. We do still expect To spend the whole EUR 135,000,000 what we announced, and I think if we do it in the pace how we do it today, This would work during the year. So yes, it is on track and the share buyback is ongoing. And I'm optimistic that we reach the whole volume. Okay. That's from my side. Thanks a lot. And now I think we are open for your questions. And the first question is from Joshua Metz, Exane. Your line is now open. Hi, guys. Thanks very much for taking the question. Just 2 for me. The first is the standard one on mobile competitive environment. I know there's been some more Sub brand activities in Vodafone this quarter, but if you could comment on how you see the pricing environment out there and It depends potentially as well over the last couple of months into the Q3, that would be great. And then the second one was just a bit of a follow-up on the Excellent write down. So I guess my question is, why has the value of this asset dropped at a time when the 5 to the home Assets generally are attracting more interest from 3rd parties. I understand that it may be simpler for you to use a wholesale deal going forward to provide Services for Waipu, but are there any other usages you could look to for the Exa Ring business? And then lastly, could you just confirm Your economic ownership of that fiber asset and what it will be used for going forward. Thank you. Okay. Thanks. Well, I think overall, there is Not much activity on the competitive landscape side. I think you've seen the numbers in Deutsche Telekom. I mean, they Just remain to be the premium offering. They don't fool around with pricing, which remains their key weapon. Vodafone has launched their Simon Fox, which is a SIM only tariff plan. So far, we understand it is that they felt that they don't do Kongs, that they don't do Clamobile like we do. So they felt that they need a second brand on that level. A personal comment, I think it is a super smart idea That they have implemented the fact that the price for the end consumer is a result of where this Individual was before as a network. I think that's a very smart idea, but it is Rather difficult for the individuals because from our own research and from the day to day life in the shops, we know that people are not fully aware of Where they come from? So it's difficult for them to understand whether they're going to pay 8.99, 9.99, 9, 11.99 or 14.99. And for those of you that have not seen the tariff plan, it's like Well, it's always the same data ratio included, but it depends on whether you are I have been a Telefonica customer, mobilecom, digital customer, telecom customer, Vodafone customer. I think it's rather difficult, and we don't see them a lot in the market. We've seen a release, but we don't see big campaigns, and we can we do not Realize any pressure at any end. Conversions is still the main Pet from Vodafone as well as Telecom. We all know that Srini Gopala from Deutsche Telekom has done that successfully in many other countries, but it also shows that More difficult in Germany. They did a couple of campaigns. They also were visible with Magenta T4, for example, on New release TV sets and all the numbers that we have heard of behind the curtains were also Okay. But maximum okay. I would call them rather disappointing. So I think that is on that end. And the other thing that we've seen is that First time, at least to my knowledge, Ralf Dommermuth from United Internet said that he Believe that he's going to be ready with first offering on his own network at the turn of 2022 to 2023, It sounds to me that it will be very local at the day of his obligations, but it will only change the market if at all or Has an impact on the market, if at all, in 2023. So in that sense, I guess, Working on under stable conditions and being focused on good customer management is The name of the game for any of the players. To your second questions on the fiber network, we have to go back 5 years ago when We acquired Exel Ring, and we have thought about how this entire venture would work out. One of the founders or founding partners was the owner of that network. And he had his shares for the usage of the network for 10 years Free of charge, except for maintenance and electricity, etcetera, etcetera. So that was the deal. And back then, fiber network across the country was rather limited. And for The quality of service in IP, which we thought is necessary in order to compete with satellite and cable, We felt it's necessary to have that network. So net fiber network capacities, technology has Kind of like made a single fiber line being 70 times more competitive Then back 6 years ago. And I'm sure you are familiar with the technology that has enabled this. So this means that we have we own a fiber duct And 2 micro ducts for ourselves, and we couldn't use the capacity at all. And it was not foreseeable that we would use it The next couple of years, even though we are growing, but still technology acceleration is much faster. So then we've certainly looked into other deployments of it, but the original contract did not allow us Dark fiber and other applications, but it would be TV limited in games. But we had the option to buy the entire network with these 14,000 kilometers of 2 micro ducts And then get the freedom to do anything on our own. So we had the choice of doing either the one or the other. But the investment and even a co investment with 3rd party in the fiber turned out not to be Quite feasible for our type of asset light and more short term Type of business model, we are not an infrastructure player at all. So we have ruled out that option. And then it became clear that we need to revalidate The value of the fiber network with its maintenance and running cost versus The capacity that you can lease in the market right now. So I think overall, that has just changed. And the activity the connectivity Fiber to the home is nothing to do has nothing to do with that network. So it was just a it's a process of the last, To be honest, 18 months with all validations, including 3rd party validations of Buying the options to buy, to resell it, to combine forces, and it turned out that this one is The absolute best solution because we remain to be focused on what we do best, B2C business and not going into infrastructure. Thanks. I was really clear. Maybe just to clarify then the last question was, the economic State that you have in firstly, Exa Ring and then secondly, Waipu TV at the moment, can you just confirm what that is after This discussion? Yes. Debt is now is it 71? No, it's 65%. 65%. 65%. 65%. For both assets effectively? Yes, it's the same. I mean, BIPO is just a product of Exterio. Yes, absolutely. Great. Thanks very much. The next question is from Gerald Tan, UBS. Your line is now open. Yes. Hi. Thanks My first question is really just about the guidance because the midpoint of your EBITDA guidance only suggests roundabout plus 1.5% EBITDA growth in the second half after you've done plus 3.9% in the first half. So can you clarify if there are any headwinds to watch out for In the coming quarters or are you simply being conservative? And the second question is really just on Exa Ring. So could you clarify What's happening in terms of the CapEx and OpEx impact in terms of moving over to lease lines from 2022? And can you clarify which network you're going to be using going forward? So is it Deutsche Telekom? Is it Versatile? Or is it something else? And my third question is really just a bigger picture question in terms of mobile. I mean, how important is ownership And how important is your partnership agreement with MediaMarkSaturn. So I'm just asking because if you look at your mobile business Over Q1 and Q2 of this year, it was very resilient and you still saw very solid mobile net adds. Therefore, can you migrate more of your business online and be less reliant on stores and shops? Alternatively, our stores still an important element in terms of supporting the online business. If you can maybe just talk about that, that would be great. Yes. Thanks for these questions. I got to take the 1 on retail and Maybe on the fiber technology, and Ingo will explain the financials again. On the retail, and I summarize retail in our own shops and even MediaMarktSatorn. I think what we've learned and established and taken benefit of is that On retail, you have a different this is a different target group. That's People that want to talk to somebody, they don't want to do research online. They don't want to compare. They don't want to Try to figure out which price comparison is the correct one. These are people that are feel more comfortable Going into a shop, having an individual in front of them, talking to this individual and trying to better understand What the right choice for the individual is. This is also our USP, our proposition. If you enter our shop, you have all the networks and not a single one. And if you want to would you go to a single branded shop, obviously, they will sell you the network that is So that is our proposition. This proposition remains a profitable one. The major difference is 2 things. 1 is the prices are less comparable than online. The second is that based on these non comparable prices, the margins tend to be better. And online is a highly competitive field. If we change a single price or a single offer, we do an extra, we reduce the Initial fees, we change. We give something on top. We allow a late payment. All these kind of Promotions that are run online, they kind of are copy pasted by any of our competitors within a second. It's basically a competitive game of robots fighting each other. And against All the claims from who else want to talk about it, online is not cheaper than retail, if you do retail We don't do flagship stores in the high street. We don't do still 400 square meters marketing shops in pedestrian zones. We do a very tight and brutal strict measurement on each and every of the locations on a monthly basis, Whether we cover the cost, whether we include recruiting, training, etcetera, etcetera, and we only run shops who at the end of the day are profitable. The major difference from a customer experience and also from what I call customer lifetime value is That when we have somebody in the shop, they typically take 1 or 2 options on top of their tariff plan. They take a If they take a mobile handset, they most likely take a scratch protector, they take a cover, Etcetera, etcetera. So the margin on those kind of accessory product is way higher than at the end of the day, We can do much more than we could do online. So Having said that, it's a clear combination and a clear strategy of omnichannel. We will remain to be working on retail. We are Super convinced that this is a and we know it from the numbers that is a profitable channel. You have to do it As consequent, as analytically as you do it in online, and then it absolutely makes sense. And it's also, as a matter of fact, for our big partner, MediaSaturn. There, it's the same if you do it strict And consequent and with daily measurement and with incentives for the shop reps, etcetera, etcetera, it's a profitable business, and we will not get let Go. A quick one on the so called new network of Exel Ring. That is We need long distance connections between The big cities between our data centers and the big cities to the peering points. And that may, in one or the other case, Deutsche Telekom that may be completely unknown ones. In part, it's even our old partner who still is offering it to us, but now on a different Contractual level. So it's not that we rely on any individual, but We lease long distance and we do the peering at the local level still running everything from our data management And from our own data center. So in that sense, the only difference is in the past, we had one single partner, and now we have about a dozen. That's the difference, but it's still our own network. It's not that we are on the line where thousands of others Certainly bottlenecks would appear at any end. It's still our own network, but it's kind of a puzzle a jigsaw puzzle Of individual pieces instead of 1 single ownership and 1 single partner. Yes. And therefore, the because you Asked about the CapEx. There will be no change in the CapEx to what we saw before from this. And then you asked about The guidance and how conservative it could be for the second half of the year, what headwinds We may do expect here for the second half. I think on an operational side, from what I see today, I do not expect any headwinds. And therefore, yes, The guidance or the midpoint of the guidance may be may could look a little bit conservative. On the other hand, and we discussed it in different quarters now, I think on the cost side, We still would like here to be on the safe side because what we saw in For the first half of the year, where some money what we get from the governance for this short term work, This was not there in the second half of twenty twenty, but it will also not be hopefully in the second half of twenty twenty one. And what is still open is the development of bad debt. The situation is still Very, very positive, very good. The payment behavior of the customers is much better than before, but Comparable to the second half of twenty twenty, in that time, The behavior already was that good. So I do not expect any big headwinds and but I'm Still a little bit cautious on the cost side, what will happen in the second half. So but on the operational side, and I think this is the Important message here. I do not see any headwinds, which are part of the guidance here. Thanks. The next question is from Orest Rathe, Jefferies. Your line is now open. Thank you. I'd like to, first of all, clarify a comment in the Results report where you talked about help from lower bad debt allowances allowances for receivables. Is there any release of the provisions you have taken for this In this or is it simply that the ongoing sort of natural allowances that you book are simply lower Without releases of what you've booked in the past. Second question is, the Freenet TV subscriber losses. You talked about the stabilization within a couple of months at the time of the Q1 results. If I look at consensus estimates for this, I mean, this sort of this negative number, sort of a decline of this customer base until all eternity In market expectations now, could you clarify what you think about the longer term there as you think That base will actually stabilize without a negative number in front of the net adds over the foreseeable future. And if yes, how do you intend to sort of drive that? Is it simply catering out the price increase? Or do you think you will continue to raise prices and will accept The customer loss for the benefits that you described in the waste prices last time. And then my last question, if I may, is I'm not entirely sort of clear on what you expect for the postpaid net adds in the second half. You sort of reaffirmed the guidance. But does this mean that you expect these net adds to accelerate versus the first half? Or do you think what you've seen now is more or less representative what you think is might happen in the second half? I think in the report, you're talking about additional campaigns, gearing up for additional campaigns, which would suggest that Thank you, Ulrich. Maybe I could start with your first question. None of the provisions What we built in the Q4 2020 are released. So we still have these provisions of 5 point €6,000,000 in the books. Maybe to the postpaid net adds, I think what we guide is a moderate growth. I think what we are seeing at the moment in our eyes is a moderate growth. I think Maybe there are some positive surprises in the Q1 and the Christmas business what we do not see at the moment. But what I would expect From today's point of view, it's something like a comparable development in the upcoming quarters here. And then your question about our expectation, I think we have a guidance out for 2021 now. We just started the budget process for 2022. But I do not expect any decreases in EBITDA from today's point of view, but This is a little bit early, and it is not as strong as the guidance, and you may understand it, Ulrich. So I think we you will get a new guidance, but I do not see any signs from today's point of view Why? It should be lower than what we see this year. That's good. Can I just follow-up the question on the Freenet TV Customer intake, there seems to be a bit of a disconnect in terms of what you're saying that you expect The address, the customer address to sort of stabilize compared to market expectations, it actually is negative for until 2025? So I was wondering, Would you sort of say that Well, I mean, the so we look at this On a daily basis, obviously, but we reported on quarterly. We see now a slowdown in churn Or let's call it attrition. I would prefer the word attrition. And also in summer now, it looks that it slows down. Still, we do believe that mid term, this is going to go down because people are moving, people Identify new technology, IPTV, etcetera, etcetera. We ask all the people that are leaving the service, What is the driving force and so on and so forth. It's technology owned. They're very satisfied with the product, but then they realize that they could do it on IP. The majority actually goes to IP. So that is a result of better connectivity and Bigger, speed allowances and offerings. So in that sense, I would still believe that over the next 3, 4 years, it will step by step go down, But it will remain on a very high EBITDA contribution level at the one hand side. And sooner or later, we will start to Kind of cannibalize ourselves and move these customers into our own IP services. And I think in my operational role, I think this More as a total customer development and not so much as a at the end of the day, is it 20 or an IP and 20,000 less on BringNet TV, but I'll be making more money in total with the customer base. So I think it might look a bit contradicting, but mid term, certainly, this will step by step go down. I think when we talked to you and your colleagues, we still said that in by the end of this year, it could well be another minus And certainly, we also know from the last price increase that the impact on churn was very minor. So once again, Not predicting it, but there is a toolbox being named price increase, which we could deploy anywhere in 2022 again and then save the gross margin, the EBITDA contribution for even longer. Perfect. Thank you very much. The next question is from Martin Haberschmid, Citi. Your line is now open. Yes. Hi, thank you for taking my questions. I have 2 on the TV second, if I may. First on the B2B business, you have won the tender to broadcast The Bundesliga and the Seite Bundelsliger. Could you give us a sense of what that contract contributes to your EBITDA sort of per year? Because I remember and I remember, because you expect €10,000,000 step up by 2023 From the DAB Plus investment. So is that still valid? I think that was worth 2020. And then the second question is on Baipu. I mean, the customer growth in the last two quarters has been below 40,000. And some of that might Well, due to less marketing and hence the EBITDA growth. But could you ever understand how you want to steer that business in the future? At what point should we expect customer growth to accelerate? Or is that sort of 30 ks, 40 ks per quarter a good proxy run rate? And then maybe related to that, I think in the couple of quarters ago, you said that roughly 1,000,000 customers would equal double digit EBITDA. So do you expect that by 2023? Or since you would spend less on marketing, maybe even by 2022? Thank you. Thank you. Let's start with the WIPO TV thing. Well, we're doing about 30 to 40 this quarter. As I said in my statement, I think we could be more aggressive, but then we would waste money. We are very, very detailed we have a very daily Detailed monitoring, majority of customers come online and social media. So we're trying not to overspend And manage customer in that sense product life cycle contribution. So I think we could go could we go up to 50 a Quarter right now, yes, we could, but it would damage the profitability, and this is a balance. So this is how we manage it today. 2nd part of your question was where is the tipping point where this Could kind of go hockey stick or much faster. And I want to be we've known all of us, we've We've known each other for many years, and we are not beating around the bushes. That's the question that I have, and that is the question that I ask my team every day. So what is the tipping point where suddenly we should open the gateway and blow the money in and Grab the customers. And I cannot disclose. We have numbers from Magenta Tifau Promotions. We have Comparable numbers what we did with Samsung and what they did. Fact is that they struggle with the same thing, High stickiness of individuals to the old remaining technology, the addicted to the old remote control. So I think the entire the good thing is that IPTV and the access through fiber or the VDSL or whatever you name it It's becoming more and more present in the market, more and more present with individuals. And they do understand that this is a real alternative, But nobody is really taking heavy benefits, and the uptake is still minor. The fact that this Neebgenkosten Triville Lake will drop and all these things contribute to it, I think The how can I say, the name of the game is to be ready when it's opening and then to boost? And I think that is definitely what we do. So if we suddenly feel that uptake is going up, People do understand that the adoption rate is increasing, then we will certainly be there and ready to spend more money. So as I said, I think you're going to go Close or slightly beyond the 700,000 this year, that would be my target. We will not save money in order to show higher But on the run rate level with $700,000 we would already be 2 digit 1,000,000 on the run on a pure run rate with the EBITDA. The second one on The Deutsche Bundesliger, we cannot disclose anything around that because it's a single point of it's a single contract partner. So if we would disclose anything about gross margin contribution, we basically disclose contractual details and would Even enable our contract or opposite party To nail this to nail us and to change the numbers It's the next round of negotiations. So I don't want to do that. Thanks very much. The next question is from Yumi Falern, Goldman Sachs. Your line is now open. You You can't really store stuff in the gym, but there's like lockers on the 7th floor. No, you have to book a time for the gym. Mr. Falang, your line is now open. You can ask your question. Good morning. Thanks for taking my question. Firstly, just on MSR. Your performance in the quarter was really strong, and I was just hoping to get some clarity on your thoughts over whether ARPU could stabilize through the course of the year. I know since, lockdown has gone wild, you've seen some benefits from increasing data top ups, but do you think that trend is going to persist? And then secondly, on shareholder returns, it seems like there's some growing balance sheet capacity within the business. Do Do you see scope for kind of raising the buyback that you've laid out so far? Thank you. Yes. Good morning, Jamie. Thanks for your questions. Yes, I think we saw this ARPU stabilization. You are correct. I was commenting it. Yes, I think since the beginning of the year, we expect something like an ARPU Stabilization, I do not expect anything more. As you know, ARPU is An important indicator for our business, but not as important as for example, for the network. So and this is what you can see. I think our profitability is fine even with ARPU, which is not growing. So yes, I think a stabilization could be possible, but I would also not be expected if it is €0.20, €0.30 Below the level of last year. So I think we have to see how roaming will develop in the rest of the year. It is still a question how business traveling will develop and so on, if it will really pick up. So I think there are some opments, but all in, I still do expect something like a stable development of the ARPU. Then in terms of shareholder return, I think we there's a clear message out there at the moment. We would like to invest the EUR 135,000,000 in the share buyback program. I think we are good on track To realize the whole volume up to the end of the year, and I think we then at the end of the year, My expectation is not that it will be possible to buy back 10% of the shares with this volume. There would be a small room to do more, but I do not expect something like this. What I would expect is that we ask the next AGM for another 10%. And then I think we have to decide during 2022 If we do a follow-up or not, on the dividend, I think the policy is clear. We promised To pay out 80% of the free cash flow with the increase of the guidance, something like SEK 1.50 Yes. This is something which is, I think, part of the consensus. This is something what I would also expect from today's point of view, but it is linked to the free cash flow. And therefore, I think we have to wait how the full year free cash flow will look like, and then we will publish what the dividend will be. But think we stick to the policy where we have no surprises expected during the year. Thank you. Very helpful. Perfect. The next question is from Adam Fox, HSBC. Your line is now open. Thank you very much. I have one question on TV, which is a bit of a follow-up to some earlier ones. You mentioned in your presentation that stable TV gross margin over the last year or so, but you've seen quite a nice step up in TV EBITDA. If we annualize the Q2 number, we get to about the €100,000,000 of contribution that we were talking about last quarter. And I'm just wondering if there's any reason Kind of not to do that really. It seems to me like one big area of uncertainty for the company is the extent to which that profitability increase Can continue. And then the second question was just on sustainability. In your prepared remarks, you mentioned there was a bit more to come on it in the second half And also that you launched a tariff there. So I wondered if there was anything more you could say about that. Thank you. Yes, Adam, thanks for your questions. For the first one, the stable TV development, yes, this is something what I Would expect and your forecast does not look far away. I think it is the only question is what we do with the marketing expenses in the especially in the last quarter because we were saving some marketing money In the last 12 months, so I think we have to decide what we will do. Therefore, I would not officially forecast the SEK 100,000,000, but Yes. It looks reachable. Then the second question. I would be yes, I would confirm that. I think that is definitely the case. On the sustainability aspect, We are thinking about launching a device with a partner that is Fully refurbishable, fully recyclable with even a return payment To individuals when they return it within the period of 5 years, that is an idea. And We will have a meeting later today. Otherwise, I would have confirmed it already that whether all the specific Specifications that we need for that, we'll deploy. I think it's not a remarkable Financial impact, but it will be important for us as a company that with a Yes. Dedication to this important matter in the market. So and step by Into sustainability, I think you will also learn that our CO2 footprint on energy is going to change significantly this year Because we've changed everything to the green power, Even taking into taking or accepting extra cost on this, I think it is becomes more and more a topic. This is what I was mentioning. Brilliant. Thank you very much. The next question is from Chris Graham, Barclays. Your line is now open. Good morning, everyone. Thank you for my questions. Some short ones following up just some clarifications on the quarter. The first one is, can you maybe quantify a little bit What the actual roaming return or tailwind was for revenues and for ARPU during the quarter? And On the other side, how much in government subsidies have you actually received during Q2 to make a bit more comparable compared to The Q2 2020. And additionally, a second topic, with new licenses one, maybe could you give us an update And the outlook for Eurasia segment operationally in terms of revenue and EBITDA contribution going forward? I think for the roaming question, Roaming revenues are still only something like 50% of the level from 2019. And I'm sorry, but may you do the second question again? Then on the quarter in terms of government help, could you maybe quantify that impact? So for the whole year, it was something like EUR 11,000,000 in the first half. Last year, it was EUR 3.5. So it was much higher now. Perfect. Thank you so much. And on the radio outlook, given that you have new licenses, 1, and what's kind of the opportunity there? Maybe you could give us A short update on this? Yes. I mean, the I think the What we do there I mean, these contracts, if you look at Hamburg, this is not this is a 6 digit annual revenue. Fact is that we have an existing service team. We have existing facilities with existing lease contracts For the antennas, etcetera, etcetera. So we are kind of filling the pipeline there, which is contributing To the outlook and if you think about the page that Ingo showed on TV and Media segment, free net TV as well as At the B2B area of media broadcast, they are both going up, but we're not talking about Huge and significant contracts there. It's kind of small bits and pieces, but it becomes More and more important, and we also have to replace step by step the UCaaS FM business. So I think it's signaling that we are doing really well there, that the team is actively working on the transformation from the Forward analog technology to the digital technology, there is about another 6 or 7 contracts out there to be signed within the next 2 years. And then this market is given to the 3 suppliers in Germany, and we're doing really well. Okay. Thanks. That's very clear. Thank you. The next question is from Simon van Lager, Hagen Aufeuser. Your line is now open. Yes. Hi. I'm curious about your guidance. Just again, this bad debt Provisions. Are you expecting the release in the second half of the year? And is this baked into your guidance? And then maybe a follow-up from what you just said. So within the first year or first half of the year, there was an €11,000,000 government help In your numbers, and I thought you expected this to go to 0 basically in the second half. How do you think to make up for this, let's say, loss in the second half? Yes. Thanks, Simon, for the questions. I think, yes, the EUR 5,000,000, I do not expect a release in the guidance what we gave here, but I already discussed the topic. It is a little bit difficult how the behavior of the people develops. And so I think, yes, it is a buffer, an additional buffer what we have here. But I'm not 100% sure If we would not need it, if the behavior changes during the year. With the government help, yes, this is Correct. That in the second half, the EUR 11,000,000 will be missing from today's expectation. But in the second half of twenty twenty, I think there were only the 2 weeks at the end of the year where we get some government help. So also in 2020, there was no government help. So the second half will be comparable. This is what I do expect. Okay. Thank you. And then maybe just a little clarification on the dividends. I think, If I remember correctly, you were always talking about at least 80% of free cash flow. Now you're saying 80% of free cash flow. So is this basically now being a strict rule? Or is it just Nothing that you did consciously. Well, I think the financial policy, which is out is very clear. This is 80% of the free cash flow, but definitely there is room for discussion where we will use. But I think the guidance or financial policy, which is out, which this is clear. But I think whenever we have the discussion, we will have it internally. We will look into the figures what we have. And so the interpretation at the end of the year could be that it will be in at least, but it is not the official wording. Okay, understood. Thank you. The next question is from Mr. Mangazi Berenberg. Your line is now open. Good morning, gentlemen. Thank you taking the question. I've got several questions, please. So if you could bear with me. The first question was Just on the mobile kind of competitive landscape, so it seems like Vodafone is struggling a little bit. And obviously, they'd like to improve their performance through the second half of the year. I mean, that kind of dynamic typically bodes well For yourselves, obviously, they might want to spend more money with you. This is I mean, are you seeing any movement from them To incentivize you to do more, that was the first question. The second question was On the license spectrum license consultations that are going on, I know there are some discussions that the 600 megahertz spectrum on which media broadcast currently relies on could be actually given to mobile operators. So Is due to increase the low band spectrum so that there isn't spectrum scarcity in the auction, but any kind of Views on that or any other changes that could happen as a result of the new license options Would be very helpful. The third question was going to Waipu. And I was just thinking that I guess with the service now No longer held back by the limitations of new fiber network. I mean, why could you not look to expand The service beyond Germany to the other DAC regions, given there is a Good proportion of German speaking audience outside of Germany in this region. Thank you. Okay, Usman, yes, thanks for your questions. I think that's well, on Vodafone, I think You pushed the right button. I mean, the fact is that I wouldn't say they are struggling, but I would say that, I mean, they have to replace The United Internet losses on the wholesale, they are I think Hannes is not too happy with some of these the performances. We were very early on ready to sign a full year bonus agreement with us. They're giving us a lot of benefits and they remain, in terms of size and volume, the best and most important partner for the remainder. So in that sense, you're definitely right. At the same time, I need to explain that any time any of the partners feels the pressure from competition to do more, They typically do it in parallel on their own activities, the branded activities as well as on us. So I think the We take benefit from it. It's very positive. It is they were also the first ones to give us 5 gs, Even though it's still a minor business in Germany, it's important for us to signal we are part of the game. This is also giving a signal to Deutsche Telekom that they need to move. Otherwise, they might lose market share on our In our customer base. So everything that you have said is right, but it is not A driver of EBITDA, but it's a driver of volume and gross margin, but also on the pressure spendings go up. The second question on the DVBT spectrum. Yes, you're right. In principle, there are talks about it. There is an existing license and a license contract that is Within steps and hurdle rates going up to 2,030, as I said, We are we start to test what I call internal cannibalization replacement From DVB T2 by IP Technology, the good thing is it's now 2021. Even in the absolute worst case, which is highly and it's totally unlikely, but in the worst case, it would they could Come back and reduce the spectrum in 2025. So we have 4 years minimum, 4 years to go. In reality, 9 years to go. And we are working on how can we ring fence our customer base and then transfer it to WIPU, Profitability of a WIPO customer and a customer of media broadcast at this Very moment is about the same. So I think it's good that we have the balance. It's good that we Run a double technology strategy, and we have seen from the last time that they have taken away part of the license that there will be Compensation fees to be paid. There will be a transfer period, etcetera, etcetera. So We are I think it's our obligation and our dedication to do a scenario planning, but it's nothing that is Concrete and giving us any headache. I think it's a long way to go. There's also new technologies like DBBI, there is some others, and there is a strong interest of many lobbies to work on this. So but with a very long term vision, I think you're right. And you can be assured that we have it on our agenda as well. The 3rd topic was WIPO TV. The expansion into other countries is not so much a technology topic. It's a topic of specific regulations and licenses And competitive landscape. In Switzerland, the German channels are Typically combined in one single license agreement for IP. So we could kind of easily go there and say, well, for the German channels and some others, we will easily do the same Kind of the same cost per subscriber in terms of content cost. Nevertheless, in Switzerland, you have a competitive landscape, Which is different. There is 2 established players, mainly Satu. But even Satu is not able to grow anymore because the UPC Cablecom with Sunrise are now fighting back. There is the strong product of Swiss Telecom. And furthermore, Switzerland, the German part of Switzerland is only 4,000,000 people. So we do not consider this as a Proper option because of more because of the competitive landscape. Different from Austria, we've actually Had expansion plans into Austria about 30 months ago. The specifics of Austria was that IPTV offerings just ignored license payments to German speaking channels. The fun thing is that they have now stopped it, And it becomes now less profitable. And once again, you need a specific partner there. So We have done intense talking to a local partner. We were in contractual mode, But then step back again due to the change in the licensing agreements. In Austria, the public channels are even stronger than the German ones. So it is more or it's not more. It's definitely not a technology topic. It's a topic of Profitability, in context of licensing costs and brand awareness. So The only way would be a JV. And we have gone through that exercise with Sunrise And a media company in Austria and depots at the end of the day rejected and we found it not Attractive enough to run it by our own. Great. Thank you very much. Thank you, Usman. So we have no further questions. I would like to hand back to Mr. Vielanyk for some closing remarks. Yes. Thanks to all of you for giving us the opportunity to talk about our results. Looking at the share price development, sometimes you wonder what you need to do in order to impress the market in a positive manner. I think We are in a very good mood. We're very happy with our supervisory board and our executive team last night when Ingo could Propose an increase of the guidance. I was a bit more explicit today that I think we even with the new guidance, I'm more likely to believe that we're going to be on the 440. So I think it's definitely an improvement. We wouldn't have done it if we were not positive Also for the outlay of 2022, we don't want to have a bumpy road. We want to have a curve and a trajectory into the right direction. I hope that we could convince at least you as the most detailed specialists and analysts In this field, that given our history of promises and delivery, that this is going to be the start of a regrowth of Also in terms of EBITDA and value, that would be grateful if you let us know if there's any more questions or Any doubts that we can then clean up with the team of Tim and Ingo in order to do so. So thanks Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.