Hello everybody on this Wednesday morning. I'm sure that aside of our second quarter results, you have all read the latest news on the LGI public offer for Sunrise. We have been deciding last night, after the final offer was available, that we would sign an irrevocable to tender our shares. Ingo Arnold will, at the end of his presentation or his part, explain the necessities around the proceeds, the obligations that we have from the past, I'm sure that you have a couple of questions to the topic. In general, we're very happy about the outcome or the potential outcome of this entire story. You all know that last year we have worked hard to stop all cash takeover of UPC by Sunrise. We have seen a significant risk on the value of our shares.
Resulting from the structure overall, we liked the philosophy and the strategy and the idea and the concept of a merger in Switzerland. As a result, we very much appreciate the opportunity for us to sell down our shares at this significant premium, resulting in proceeds of more than EUR 1.1 billion for freenet. Now I'd like to come back to our day-to-day business, and talk a little bit about the first half-year and the second quarter, and I start with the presentation. On page four, you will see the overall KPIs, and I think the word resilience is a perfectly chosen term. We've been, throughout this first six months of the year, independent from the COVID crisis, independent from market pressure. We have been able to develop ourselves, the company, and the operational business as expected, as planned.
On the revenue side, as well as on the EBITDA side, we are very much in line with our projections and the trajectory for the full year guidance. The most important element for day-to-day business is to develop the subscriber base, which was growing to almost 8.5 million in the course of this first half year, which is the fundament for a sustainable business and a sustainable development of financial KPIs, cash flow, and dividend for the upcoming period. When we look at the concrete numbers of the subscriber base, we've been starting at the beginning of the year with 8.367 million subscribers, growing in the first quarter somewhat, and even more up until the 30th of June. The growth is more or less like we thought before.
The postpaid is gaining +14,000 in the second quarter after a positive quarter in the first three months of the year. I think we have promised last year that we will return to growth, and we are delivering on that promise. We have separated here the freenet FUNK growth. This product has been, I would say, refurbished and optimized in the course of the last few weeks, with international roaming, which was one of the negative aspects expressed by our customers, that they would demand international data roaming. This is now included and we have restarted the promotion and the marketing for the product. That's growing as well. Freenet TV with a slight loss. I think that is in relation to what we have said before, and I'll go into some details in a second.
And waipu.tv with +50,000 with a very strong second quarter, pushing hard for cord cutting, and positive customer experience. Since we have spoken after Q1 in detail on the COVID-19 impact, I think it's worth having a look once again. I think the positive element is obvious. The business model as such, the subscriber-based business is one which is solid and robust and does not react heavily on these kinds of pandemics or other crises. We have to admit that some of the changes that we all go through have an impact on the business, and we've listed a couple of those four here on the list. One is that the Digital Lifestyle revenues and the intense sales process which takes place in our shops is impacted. We have lower frequency, lower footfall.
We need to follow the hygienic guidelines, which lead to the fact that the sales pitches and the sales conversations are not as intense and as long as they've been before. We hope we're going to recover. We work hard on other channels to sell Digital Lifestyle. Certainly, we see an impact. The growth has come down. Postpaid ARPU, I think that is very much in line with other reports from big operators. The roaming revenues significantly drop, and that impacts the ARPU in the second quarter. In our B2B businesses, which is small scale compared to the entire business, but still relevant, we see some problems. This is in our public Wi-Fi business, where the hospitality sector doesn't pay, or some of them delay their payments, as well as the entire entertainment and event-based business in Media Broadcast has dropped.
Certainly, we see that everybody's shifting towards online. That leads to higher sales in online as well, because SEA, SEO, and all kinds of display advertising becomes more and more expensive since the market and the inventory is heavily crowded. Overall, I think we've gone properly through the entire period. There's about 80% of our staff is on board back again from early July, working in shifts. We are protecting and deploying the necessary rules. We are in a lucky position that from architecture and from distribution across the country, we are less impacted than other companies. On the postpaid area on page seven, we show you the development of freenet FUNK, which is the app-based unlimited or daily one gig kind of tariff. We have told you after the launch last year that we would take that platform and use it for other products as well.
We have launched only last week our new product, which is freenet FLEX. Same functionality, same customer journey. The customer can download the app, register through his PayPal account. By doing so, avoid all the harmful and stressful processes of handing over ID cards, account numbers, et cetera. The big difference on FLEX to freenet FUNK is that this is a typically monthly product in three versions, 5 GB, 10 GB, and 15 GB. It's all on LTE. The small one is on 21.6 Mb, and the bigger one is on LTE 50. It's all on the Vodafone network. We've only started about 36 hours ago. Within the 36 hours, we see that the uptake is similar to freenet FUNK. The respective promotions and advertising will only start from two weeks from now, but we're very positive with the first reactions of the market.
Having a look at freenet TV, the big effort or the big change in the second quarter was that we have increased the prices from a gross price, EUR 575- EUR 699 on direct debit. That applies for approximately a third of the customer base. The other two-thirds are using e-vouchers or vouchers. We have pre-tested the price increase with the direct debit, it turned out that there is some churn related to the pricing, it's much less than the positive impact of the price increase, or the additional churn on direct debit is lower than 3%. With that increase of 20%, you will immediately realize that this has a positive impact on gross margin and EBITDA. The vouchers have also were planned to change their prices from EUR 69 -EUR 85. We had to replace all the physical vouchers in the physical distribution networks.
Due to COVID, we could not do that on time on May 1st, but still are struggling with the replacement. There, we are not in a good position to estimate the impact on churn or new uptake. Overall, we feel very comfortable. The number of subscribers has come down to just beyond 1 million. As we told you before, there is another 14,000 to leave from the satellite business. There's a couple of USB sticks subscribers also going down. Definitely we will drop below the 1 million, and then we will have to look at the churn. Overall, you can easily do the math that this price increase will be able to compensate even a 6%-7% additional churn. We are focusing here on margin and absolute return more than sticking to the magic 1 million.
On waipu.tv, we have listed here the quarterly gains over the last 2.5 years. The second quarter, once again, showed a slight accelerated increase in the waipu.tv subscriber development. We did a stay home campaign, told the customer that now it's time to switch. It's time to get access to additional channels, connected TV and things alike. We have produced only in July, we've had more than 200 million ad impressions on our connected TV, and only yesterday, Exaring/waipu.tv has announced that we cut a deal with Netflix, and there is a combined offer now from waipu.tv with Netflix. This applies for any of the existing waipu.tv customers. They can switch to the combined tariff plan. We start in second week of September to do this combined offer in our shops and in all our other channels.
We think that this is a great step forward. We can deliver to the end consumer everything they want, video on demand with best quality from Netflix, linear, top 60 channels from Germany, + 40 exclusive channels on connected TV. I think overall, this is extremely strong proposition, and I think the fact that Netflix chose us to be a partner is a great signal of respect for the platform and for the technology, as well as the distribution power of freenet. Nevertheless, we are missing big TV events such as Olympic Games, football tournaments, and things alike. I think everybody is a little bit fed up of watching TV and looking into the PC screens. We see that usage and also the switching ambition these days is lower than last year in Q3, and we are all facing also extremely good weather.
We are not foreseeing a strong growth in Q3, but the front load of Q1 and Q2 will deliver great results. I also would like to mention that waipu, for the first two months now, has delivered a positive operational EBITDA, and we are not planning to return to losses anymore. This was already kind of introduction to the outlook for the third quarter. On the mobile, I think we see that everything goes a little bit step by step back to normal. This implies that churn numbers go up a little bit compared to May, June. We also see more cross ads. The up and cross-selling is more challenging, as I mentioned before, because of the shift towards online and direct channels.
Once again, we are adapting to that situation, and learn how to handle it and learn how to teach the customers also to give us calls to get into virtual contact with our shop reps. We do a lot of testing there, and all the signals and all the KPIs that I have seen over the last four weeks tells me that we overall see further growth in the mobile segment in TV and media. I think that I won't repeat all the elements. The big change in the vouchers will be July and August. By yesterday, I saw a very positive development, but still, I'm prudent on a projection, how much churn we will generate by the price increase. Waipu .tv, I just said I expect a flattish development in Q3 due to the mentioned reasons.
On DAB, we are planning to launch the second multiplex by third of October and preparing five channels with our partner, Absolut Radio . On the new second national multiplex, there is space for 16 programs. Eight have been sold to third party. Four are now planned for internal purposes, and there is another four where we have a list of interested companies and media players. We are positive by the end of the year to fill all the 16 programs/channels of the second multiplex. Having said that, I'd like to hand over to Ingo Arnold for the numbers.
Hello everybody, good morning. I start on page 11 with the group figures of the company. As Christoph already mentioned, the revenue was stable in the second quarter of 2020. It was not as good as in the first quarter where we had an increase of the revenue, because what we saw in the second quarter was some effects from roaming, which are not relevant for our profitability, but we do see it in our revenues, and if you look into the mobile revenues, also in the service revenue there. Good luck for us that our margin on roaming is very low. If you look into the gross profit, what we see here is that in the second quarter, it was relatively stable compared with last year's quarter, and also relatively stable compared with the first quarter.
The decrease, what we saw in the first quarter, which was based on a special effect from the first quarter 2019, is not renewed here. We are on the stable level, what we promised. On the EBITDA side, we even increased our figures because we were very successful in cost saving measures during the second quarter. If you see the EBITDA without any special effects, then you see that we could increase the EBITDA from EUR 109.5 million -EUR 114.7 million. All in, very positive results here. If we move to the mobile segment, here we see the slightly negative effect on the revenue in the second quarter. This is based on the lower revenues from the Digital Lifestyle business. All in, it is relatively stable. Even if we see the effects also from the roaming side. Gravis, again, had very successful quarter.
We still see a lot of interest from the people to move back into the Gravis stores. What we also see and what we learned during the crisis, is that Gravis is very successful in online sales. On the gross profit side, we see something comparable here to what we saw on the group side, as the media is relatively stable. We see comparable effects here to the group side on the mobile business. We see a slight decrease in the gross profit, which is based on the lower revenues in the Digital Lifestyle business. On the EBITDA side, we see the positive effects from the cost savings. Also on the mobile side, quarter by quarter, we see an increase compared to the second quarter of 2019 by nearly EUR 4 million.
Looking into the operational KPIs of the mobile business, we see the increase of the customers. So after we had these decreases in the first two quarters 2019, we still see a steady increase now again since the third quarter 2019. With the positive outlook from Christoph, it looks easy for us to confirm the guidance here for a moderate increase during the year in the postpaid customer base. On the ARPU side, yes, the decrease looks a little bit bigger than in the last quarter. If you put into consideration the negative effect from the roaming, which is an effect of EUR 0.30, so otherwise it would be EUR 18.40 without the effect. If you compare Q1 to Q2 2020, you see that is a very stable development, even compared with Q4 2019.
For a longer period now, we are on a level of something like EUR 18.50. In the Digital Lifestyle revenues, I already mentioned, a slow decline in Q2, compared with the last year's quarter by EUR 1.8 million. Switching to the TV and media segment, I think we are very happy here, because we know that there was a lot of skepticism in the last years, if we could manage to stabilize it and even grow it. Now we see, especially from the waipu.tv side, that it is possible to grow this business and stabilize it on the other side in the Media Broadcast. What we see on the revenue side is a revenue of EUR 65.2 million in the second quarter of 2020, which is mainly driven by higher revenues from Exaring or waipu.tv.
On the gross profit side, we see an increase to EUR 44.6 million in the second quarter of 2020, which is 5% above the figure of the second quarter 2019. We see comparable effects on the EBITDA side. Here also, a very successful quarter. If we look into the details of the media business on page 15, what we see here, first of all, I would look into the B2C business of Media Broadcast, which is freenet TV. On the gross profit side, in the first quarter, we saw a decline by EUR 0.4 million, but in a very strong second quarter, we saw an increase of EUR 0.5 million compared with last year. All in the first half, it is a very stable gross profit picture in Media Broadcast freenet TV.
On the EBITDA side, it is even a slight increase by EUR 0.4 million, because we had some lower marketing spendings here. On the Media Broadcast B2B business, which is, for example, digital radio, but also some networks what we do here, we see a slight decrease in the gross profit on half year period by EUR 1 million, but it was minus EUR 1.4 million in the first quarter and in the second quarter it was compared with last year, an increase of EUR 0.4 million. All in a slight decrease by EUR 1 million, which is reduced on the EBITDA side by some cost measures to minus EUR 0.9 million. It looks very stable without any big differences. On the Exaring side, this is different because here we see very positive signs.
Already in the first quarter, we saw an increase in gross profit and EBITDA. Now on the EBITDA side, we have EUR 3.9 million higher results than in the first half year 2019. This is influenced by the two positive quarters, month May and June, which Christoph already mentioned. We are very happy here to have positive figures now, but to tell the full story here, if we would start big marketing campaigns, what we do not plan at the moment, and if this would make sense to increase the number of customers, it could be possible also in the future to have slightly negative figures here, at least on a monthly base. Basically the business is EBITDA positive now. Moving to the cash flow.
What we see here that we exaggerated and our plan here, and we guided EUR 75 million-EUR 85 million for the second quarter 2020. What we reached was EUR 90.8 million. I think, I do fully confirm the guidance what we published at the end of February, but here are still some risks on the tax side and on the CapEx side, because at the beginning of the year, we guided tax payments of EUR 50 million. Now, half of the year, it is only EUR 13.7 million, and we guided a CapEx of EUR 40 million, which is at the moment only EUR 17.3 million. In both positions, it could be possible that the figures we published at the beginning of the year are reached. I think, yes, we work hard on all these things and definitely, I do confirm the guidance.
On page 17, we show the net debt and equity ratio and the leverage. The equity ratio increased to 28.6%, which is above our target of 25%. We have a net debt leverage now of 4.4x. The leverage, if we would have paid the dividend, it would be near to 5.0x, something like 4.9x. I think it was the correct decision to leave it out, to pay the dividend, to sustain at once. If we put into consideration the Sunrise, with a value here of EUR 85, and our participation in Ceconomy, the leverage would only be 2.2x. I would give you some insights on the promissory note, what we placed some weeks ago. It was a very successful transaction. There were some risks because it was not clear how good the markets would work, but our books filled very fast.
There was a lot of interest. At the beginning, we targeted a volume of EUR 300 million. We could place a volume of EUR 345 million with an interest rate of something like 1.6% in average. There is a step down, and the step down on a leverage level of 3.0x, which looks here very difficult to reach, but it is not that difficult to reach because the definition of the leverage in the promissory note is different to the market definition. It is, for example, without IFRS 16. If our business works as it is planned for the next month, then it would be possible to reach the step down, and then we would only pay 1.3%. The transaction optimized our financial situation dramatically because there were some risks when we decided not to pay out the dividend.
Now, I think for the future, it's much easier to confirm our guidance, our dividend policy, to pay out 80% of the free cash flow in the future. If we see the structure, the maturity structure now of our bank debt, what you can see is that we optimized it because it was not that good situation, what we had starting into 2020 when we saw that in a period of 12 months, there was a maturity of all in EUR 700 million, and there were some risks. These risks were even clearer when we had the COVID-19 phase now. We changed it, and so now the structure brings up to 2025, only something like EUR 200 million a year, which is due there, and this is easy to handle with our working capital line or with the cash flow, what we earn during the year.
Very good structure now. Moving to page 20. I think page 20 and 21. It's questionable if I should talk about it, but I think it is necessary to do so, because there is an offer out now from Liberty, but at the end of the day, we have to wait, because there are some conditions, it's based on some conditions, and we have to wait if it will really work or not. I think it's good for us that during 2020, we created a very comfortable situation for freenet. We are not obliged to the transaction, which was announced this morning because we optimized our financial architecture very much during these months because it was necessary to do the dividend suspensions. It was necessary to do the refinancing.
What we do have now or what we will have now at the end of the year, is expected leverage of 4.1x or when we put into consideration the investments what we have, then it would be 1.9x. Moving to page 21, you see how comfortable our situation is. At the end of Q2, we have liquid funds on our balance sheet of nearly EUR 220 million. We expect some additional free cash flow during the year. We have still some promissory note repayments. We will have some liquid funds at the end of the year, which will be above EUR 200 million. There in the first half of 2021, there will be additional free cash flow.
There will be another repayment of EUR 200 million, which I showed you on the maturity profile before. Even after all of this, at the end of the second quarter next year, when a dividend payment is stated, then we would have available funds of more than EUR 400 million if all the business runs as is planned. We would be in a good situation to pay out the dividend, which is planned with 80% of the free cash flow. Without any charts, I give you some aspects on the Sunrise sale from my side. I think we declared it as a financial investment already during some quarters now.
If I look into the investment from this financial investment point of view, I have to say, if it works and if the transaction will work, it would be a very successful transaction, because then our positive total shareholder return would be something like 70%, including dividends and interest, what we paid. It would be a very good transaction. In Euro, there would be a shareholder return of more than EUR 500 million. This would be perfect. The proceeds would be something like EUR 1.1 billion. There will be the necessity for us to repay our bank loan of EUR 610 million, which is linked to the Sunrise investment, and we have to repay the last promissory note in March 2021. EUR 800 million of the proceeds will have to be used for repayment and for reducing our net debt.
On the other side, there will be a remainder of something like EUR 300 million. I think there we have to decide if there will be some possibilities to reinvest into the business. We do also definitely think about a shareholder participation here. We also in the past, sometimes we discussed if a share buyback would make sense. These are discussions which we already started. I think this is something which could happen in the future. Without using the remainders, only putting the proceeds into consideration, our leverage at the end of the year would be 1.6x. From the 1.6x, you see that in comparison to the sector, it's really low. It is totally different to the four times whatever, leverage what we had before.
This would be, yes, in my eyes, a perfect balance sheet where we have all chances or we would have all chances to maneuver in the future.
On the balance sheet there or in the income statement, what we would expect is a net income from the deal, from the deconsolidation of more than EUR 300 million. Also the EPS would increase dramatically in 2020 if the deal will really happen. This is all what I had to add, and now I would open the floor for Q&A.
We've received the first question. It is from Joshua Mills of Exane. Your line is now open. Please go ahead.
Hi, guys. Thank you very much for taking the questions and congratulations again for holding out for a better deal from Liberty. Two questions from my side. The first is on the use of proceeds that Ingo just mentioned. EUR 300 million, it sounds like some of that may be used for share buybacks or similar. What other M&A opportunities do you see, and how could you reinvest cash more quickly within your existing companies? Be interested to know whether you see mobile or TV as a priority with regards to the use of proceeds there. Secondly, on the mobile trends for the second quarter, EBITDA was obviously up and outperforming expectations. Gross profit is still coming down, it looks like a fixed cost-driven beat.
How sustainable is that, and do you think that you can continue to grow EBITDA for your mobile business in the second half of 2020? Thank you very much.
Yeah. Thanks, Josh. Thanks also for your comment on the development with Liberty. Well, I think if we want to invest into business, I think the TV business, specifically the IPTV, is the growth opportunity that we see. This is why we would allocate funds there as a prime choice, I'd say. As Ingo mentioned, and as it is our policy and has been our policy over the long period of time, we would not like to over-invest. We are measuring every single investment in subscriber acquisition, content, et cetera, et cetera, on its return. We are not holding back investments right now, but certainly with the indicated leverage, there is more freedom, and there is more. Certainly we look at things a bit different than up until yesterday, where leverage was tight. We want to continue our business policy.
That also relates to your second question. Yes, you have, I think rightly managed, there's no reason to beat around the bushes here. The gross margin is under pressure. That's a result of many different aspects, channel mixes, mix in tariff plans, channel distribution, et cetera. We have been able to compensate this with cost savings. I think the real challenge these days is to conserve these savings that have occurred as a result of our approach, but also as a result of the crisis. How can we conserve this? We don't realize in the business and in day to day that we have cut something out. We are not missing anything. The question is, why do we usually spend more? What is it really?
Is it luxury stuff or is it maybe projects that have been conducted in the past which did not lead to success? I think cost discipline is definitely even more in our focus for the mobile business than it was in the past, and this is why we think the cost reductions are sustainable and will remain at this level for the second half of the year.
Thanks. That's very clear.
Maybe one more. Sorry, one more on the share buybacks. It is obvious that as a result of the potential transaction, the dividend payments from Sunrise would vanish. They were significant and contributed to our payout. I think the share buyback is also a logic to protect not only the relative but also the absolute level of the dividend. This is why I think this is certainly something which we will consider and to indicate it the next days with all the major investors in order to understand their expectations.
Thanks. Can I just ask one follow-up on the mobile point? It looks from the outside like the tariffs you sell on your online channel rather than your offline in-store channels are slightly cheaper, and I'd assume slightly lower gross margin than those that you sell in-store. Is that the case? Is that what's putting the pressure on the mobile gross margin? If so, could you give us maybe a just a rough estimate of how different the profitability is from selling in-store versus online?
Well, thanks for the question. As always, as a former consultant, my answer is it depends. The freenet FLEX, the freenet FUNK, and the majority of the SIM-only tariff plans are somewhat cheaper. They are perceived cheaper because we do not invest into a hardware subsidy. The total life cycle of a freenet FLEX and a freenet FUNK is equal or even better than the typically low-end mobile tariff with a subsidy. There is no straight rule to be deployed among the channels. It is very much on the individual combination. I think I would leave it there. It's not a black and white equation.
Very clear. Thank you.
Thank you. The next question is from Christian Fangmann of HSBC. Your line is now open. Please go ahead.
Yeah. Good morning, guys. It's Christian. I have a couple. One is on your free cash flow guidance. It seems like you're really ahead of the first half. Listening to Ingo's comments, there are some risks. Just making sure that I interpret that correctly, there are some upside risks, I guess, because of the cash tax payments in the second half, and also CapEx was relatively low compared to the EUR 40 million guidance for the full year. I think at Q1 you mentioned to be more towards the lower end of your free cash flow guidance and it looks like you don't mention that again. Can you maybe clarify what we expect in terms of the free cash flow in the second half and the risks that you mentioned? Another question on the deal and the proceeds.
Obviously, we'll have some EUR 45 million-EUR 50 million lower free cash flow because you don't get the Sunrise dividend in future, assuming the deal goes through. Will you take that into account already in your next 2020 dividend proposal, or is that more, I think, for 2021? I have a small follow-up thereafter. Thanks.
Thank you, Christian. To start with the last one, the payment of the dividend in 2021 will be based on the free cash flow of 2020, where we receive the dividend definitely. For the free cash flow guidance, yes, we are above the upper end of the guidance for the first half of the year at the moment. The risks, what I see is, for example, in CapEx, we had some postponements in the first half because of the crisis. The second multiplex, what we were talking about earlier, the investment period started a little bit later. We see some postponements on the CapEx side. Therefore, I still believe that EUR -40, EUR -45 will be the CapEx at the end of the year. On the tax side, yes, it is something like a risk because it is based on the timing of the authorities here.
I think it maybe sounds a little bit boring to you because I tell you from call to call, but there are still some outstandings, where the authorities have not informed us to pay or asked us to pay or requested us to pay. We are still waiting on the authorities. It is possible that these postponements even last over end of the year. I do not exactly know today.
The EUR 50 million, what we guided there, EUR -50 billion in taxes, it looks a little bit far away to really have the minus EUR 50 million, but I think something like EUR -40 could be possible. This is still a valid forecast, what we have here. Therefore, it could be possible that in the second half, we are more on the lower end of the guidance for the second half and then all in. I can only confirm the guidance range today.
Okay. Thanks. Just following up on your comments during the call, in terms of the Sunrise deal. It sounded to me you were a bit cautious on the positive outcome of the entire deal. Why is that? It sounded a bit like you may not believe it will really take place in the end.
I apologize. That was not my intention to have this between-the-lines messaging or sounding. In fact, there is a regulatory approval necessary from the WEKO and the ComCo. Not even 12 months ago, these authorities have confirmed that a merger would be okay from their perspective. I think there is no real reason that this would change just because of the direction of the deal. There is no any other obligation except for the fact that there is a minimum acceptance rate of two-thirds. Once again, the way I read also the press release from Sunrise, it was made clear that LGI is aiming for that two-thirds, then they would bring in their own business, and after that merger, basically they would own 90 + X of the company.
There is no typical game for those guys that wait for squeeze outs because it's just not going to happen also according to Swiss rules. We are very positive, but I think it is just fiduciary duty to say there is some two conditions. I have no doubt, with the support of the Sunrise board, that this deal will not go through. I'm very positive. I'm sorry for the wrong wordings before.
Okay. Very clear. Thank you.
Thank you. The next question is from Stéphane Beyazian of MainFirst. Your line is now open. Please go ahead.
Thank you. Stéphane here. Is there any feedback you could make on discussion with the carrier partners, as if the crisis has changed in any way their approach to distribution, or your best guess about how this could change their plans going forward? Linked to that, you mentioned some increase in subscriber acquisition costs online. I was just wondering whether you could sort of quantify that a little bit. My second question is on the partnership with Netflix. Is it just possible to make some comments on what could be your expectations about this and where penetration of Netflix is currently in Germany? That could be helpful. Thank you.
Okay. On the first one, I interpret your question on partners, network operators, distribution, as well as hardware. We have had with all the three network operators our annual agreements earlier than the previous years already. I think the first one was signed already in Q1, and the other two were signed in Q2. They are all in line with what we expected. I think the relationship is a very good one these days with any of the three. There is a common sense how to face the market and how to face the challenges. If we look at the commission levels, premium levels, and all the others, I think there is no change as a result from the crisis.
I feel it's more likely a little positive sentiment towards us because those very big companies are more infected by all the limitations of people coming back, reopening the shops. I think we are, as a mid-size player, in a better shape to mitigate the risks and to continue the business. I would see it neutral. I think overall nothing has significantly changed. On the hardware side, Apple is a standalone special animal. We take benefit that their restrictions on the shops are even worse than for any others due to the fact that they're a U.S. company. They are specifically worried. We took an advantage in Gravis. Gravis has delivered record revenues ever since March, I think as a result of the shutdowns of the Apple stores as well as MediaMarktSaturn. We see now that they are coming back with still limited steam.
The fact that Huawei is still in a, let's say, reduced power mode due to all the ban and the questions. The fact that customer experience with these new apps is at least not as seamless as it is with the typical Android. We see the old duopoly of Samsung and Apple ruling again, but that's very much the situation which we are acquainted to over the past four or five years. I would say the answer is there is no relevant changes that impact the business. On the Netflix, the deal is that if we have a combined offer, and we have kind of a wholesale agreement with Netflix, which allows us to moderate the margin across the two products. It will be invisible for the consumer which of the two components has been discounted.
Basically, the approach to waipu existing customers is if you are a waipu customer and also Netflix customer, if you combine the two and run the billing through waipu, you will have an advantage of around 10% on a monthly basis. If you are existing customer with Netflix, you might add waipu because you are used to IP as your prime access to motion pictures. You might now do the cord cutting or the dismantling of your satellite dish, once again, with a little price discount. Furthermore, there's two other aspects which are interesting for midterm development of IP in Germany. The privilege of putting the cable cost into the side cost of lease contracts has now been stopped. I'm sure it will take a little time till end consumers realize and take advantage, but that's one element.
Also, we are very happy that Netflix today announced that the one month free of charge offering is stopped in Germany. Our offer is even more competitive because we can still discount waipu for one or two months and add Netflix. I think overall, there is all aspects of promotion to the existing Netflix base, as well as to the existing waipu base. Once again, their start is now mid-August with 36 degrees Celsius out there. I think the real impact will only be visible from mid-September.
Very clear. Thank you.
Thank you. The next question is from Ulrich Rathe of Jefferies. Please go ahead. Your line is now open.
Yeah, thanks very much. I had three questions, please. The first one is, you refinance EUR 345 million. I think you talked about EUR 700 million, that was also on the slide now, you're now saying there's EUR 200 million left. Could you just sort of clarify how this works? On the cost of the refinanced funds, could you tell us on a comparable basis how much more expensive that 1.6% would be before the step down than the old one? It's a bit difficult to sort of figure out, because the prior press releases were on a different basis, I think, on the cost. The second question is, in the second quarter specifically, did you have any one-off-ish type cost benefits? I understand the COVID impact and how you dealt with that. I'm not referring to that.
I'm referring to sort of one-off items like provision reverses or anything of that sort. Could you just clarify whether there was anything of that sort in the second quarter? The third question would be, you had guided for freenet TV subs to be about stable in the full year in February. Is that still where you're aiming at or has that view changed based on the business development you're seeing at the moment? Thank you.
Okay. Hi, Ulrich. Thanks for the questions. With the EUR 345 million, your calculation is correct. There is a repayment of something like EUR 140 million in 2020. We already repaid EUR 50 million in the second quarter, and we will repay something like EUR 90 million in the fourth quarter. The difference to the EUR 700 million is the repayment, what we do, which is not refinance, which we do from the money what we do have on the balance sheet. The question about the 1.6%, I would say without the crisis, maybe it would be possible to get a rate of something 1.4%. This is possible. I think we all do not know. The documentation and so on, and also the interest rate is comparable to what we reached 2018.
I do say we are happy with what we reached here. I do not see that we overpaid anything here. On the cost benefit side, I think what we received in the first half or in the second quarter of the year, already starting in March, was for, how you call it, Kurzarbeitergeld.
Short-term payment.
We got something like EUR 3 million. This is the only money what we get from outside. Most of the cost benefits what we generated were real cost savings, what we had here internally. With your questions to the freenet TV guidance. waipu.tv. Is it?
I think he was asking on waipu.tv guidance. We said flat on waipu.tv.
No. We said flat on freenet TV, and now what we see at the moment, but we do not have a clear picture at the end of the day, if it really moves down. Yes, our expectation today is that at the end of the year, it will be below 1 million, but at the moment, we still see that it could be stable, but there will be a range, and therefore we have not changed this guidance at the moment. I think as Christoph described from a profitability side anyway, it does make a lot of sense, even with the small churn what we would see. We do not see a reason to change the guidance now, even if we see signs that at the end of the year, it could be below 1 million, slightly below 1 million.
Yeah. I understood your question on waipu. I just give a comment on waipu, whatever the question was about. On waipu, I think we said solid growth for the year. We started out at EUR 408 million, we are now on EUR 504 million. I think, for me, the direction is more going to EUR 540 million, EUR 550 million by the end of the year. Which is definitely a stronger growth that we have originally expected. Once again, I think in both cases we've changed a little bit the direction going for profit more than for meeting a specific hurdle.
If I look at it, I think the price increase, taking some churn into consideration, would still lead to more than EUR 5 million, anywhere between EUR 5 million and EUR 10 million more margin on freenet TV and a constant positive operating EBITDA of Exaring would then give another EUR 5 million-EUR 10 million positive impact if we compare 2021 to 2020. I think that is the name of the game right now.
Brilliant. Thanks for the bonus answer. Thank you.
Thank you. The next question is from Usman Ghazi of Berenberg . Please go ahead, your line is now open.
Hi, thank you for taking my question. I've just got a question on the debt chart, please. You say that even before any Sunrise transaction, you expect net debt to EBITDA to be at 1.9 x in Q4. The EBITDA, let's say if it's EUR 430 million this year, 1.9 x would be EUR 817 million. That's roughly EUR 200 million less in net debt versus where we are today. Certainly, generating EUR 200 million of free cash flow in the H2. I was just wondering, could you run us through that calculation where you expect the net debt to EBITDA to be around 1.9 x by Q4? Just related to that, I wanted to just confirm that you're saying that you expect post the Sunrise transaction, your net debt would then slip down to 1.6x. That was the first question.
The next question was just on, again, on net debt. Your target currently is 2.8 x. Certainly the way the debt market is willing to finance you, it would seem that that 2.8x is sustainable. Again, when you're commenting about leverage, you've spoken about your desire to deleverage as well. Will you look to revisit the 2.8 x net debt to EBITDA target that you have as a company post the Sunrise transaction, or do you still feel that that is appropriate for your business model? Thank you.
Yeah. I start with the last one. I think the leverage target was not linked to the Sunrise investment. It was linked to the business of our company. Therefore, we do not plan to change anything here. Yes, it is correct. Therefore, this leaves some room, and this is the room what we discussed earlier, that we would have room now to invest into new business opportunities or to do a share buyback, for example. On the other question, I think what we do have today, if we put into consideration the Sunrise stake, which is on page 17, you see a leverage of 2.2x. What we do have at the moment, and what we calculated here is that up to the end of the year, it is possible to reduce it by 0.3x by the incoming cash.
I think this still does make a lot of sense from my side. Here the calculation of the 2.2x on page 17 is based on a Sunrise share price of EUR 85. With the pricing of the offer at EUR 110, this will be even lower, and therefore it comes down to 1.6x.
I see. Maybe we can do this offline. I'm just struggling to get a 0.3x terms of leverage reduction through H2 to get to 1.9x, but we can follow up later.
Yeah.
Just to follow up on your question about the overall leverage target. Would freenet be willing to lever up the company? If the 2.8x is unchanged, then there is obviously a big gap between 1.6x and 2.8x. Would you be willing to lever the company or to raise leverage to do a buyback or reinvest, or would this just need to happen, I don't know, more naturally because of higher CapEx or something like that?
I think we always said we want to be below 3.0x, and that is kind of our operational limit. Then we will review this under the specific prerequisites of a set of potential investments. There is not a long list of unanswered M&A opportunities that are on my desk right now. I think the market is still exaggerating tech prices. We will only consider things that are very close to our core business. There are some plans, and there are some opportunities which we discussed, but this is less an M&A, more of an operational investment opportunities.
Great. Thank you very much.
Thank you. The next question is from Simon Bentlage of Hauck Aufhäuser. Your line is now open. Please go ahead.
Yeah. Hi. Thanks for taking my questions. The first one would be on free cash flow after the disposal of your Sunrise stake. Maybe you can give us a view on how that's going to change, because obviously there's the dividends, but then there should be some savings on the interest payments as well, and potentially also on the tax side on the received dividends. A bit more color on that would be appreciated. The second question would be on the profitability improvements that you expect in the TV business next year. Did I catch that correctly that you're expecting roughly EUR 5 million positive EBITDA effect from waipu, and then there should be an additional EBITDA effect from the price increase of freenet TV. Maybe you can specify that a little more. That would be great. Thanks.
Hi, Simon. Thanks for your questions. First, coming to the free cash flow question. Yes, there will be missing something like a dividend of EUR 45 million from Sunrise. On the other side, there will be a reduction of the interest cost by something like EUR 15 million. There will be a negative effect of EUR 30 million in the free cash flow. Therefore, Christoph already put it in a context with a possible share buyback because, even with EPS on a stable level, with a lower number of shares, it could be possible to compensate it here. The tax effects all in are very small, so no effects from this side. Your question based on the profitability on the TV business. Yeah, I think there should be an increase in the profitability in freenet TV next year of something like EUR 5 million.
I think for correct calculations, we have to wait on our best budget and we have to wait on the real churn, what we will see and so on. It will be, I think, the figure was quite good, which was EUR 5 million-EUR 10 million. For now, I would use the lower end. On the other side, yes, you are correct. Exaring will be better with more customers and with the first month, which are positive at the moment. This year there will be a figure of something like minus EUR 5 million in the Exaring business, and it should be definitely a zero next year. In the Exaring business, I would also say there is room of EUR 5 million for improvement, something like this.
That's very helpful. Maybe one quick follow-up on the deal. Do you have a timing, or when do you expect the closing of the deal and the cash proceeds then also?
There is an official timeline. In Switzerland, they need to publish a prospectus. My understanding is that this is planned for the end of August. Then there is what they call a cool-down period, then a 20 days first offer period. The regulatory approvals go in parallel. I think in the best case scenario, the first offer period leads to the two-thirds, then the closing would be end of October, early November. If there is some challenges or a phase two on the regulatory, then the closing will be anywhere mid-December. I think it's in a period, best case, early November, end case, before the end of the year.
Okay. That's helpful. Thank you.
Thank you. The next question is from Jonas Blum of Warburg Research. Please go ahead. Your line is now open.
Yeah. Good morning. Thanks for taking questions. I just got two left. First one regarding your Digitalife revenues. Could you just give us some sort of indication what's going to happen in Q3? Do you see them coming back and what's the current willingness of customers visiting your shops, of also opting for cross-selling products? Secondly, regarding the recent news flow around MediaMarktSaturn's Ceconomy, just wondering, since there was some news about potential shop closures, how this potentially impact your midterm outlook on your mobile business? Is there a chance for you to receive some compensation for potential impaired reach throughout this distribution channel? Thanks.
Yeah. On the Digitalife, from today, I would project the third quarter to be at the same level as the second, which was close to EUR 43 million. We won't see growth, but we will see the stable level. I think in the fourth quarter, we should be up again. That's how I would project it. Obviously, we are off the 20% + that we have been seeing the last few years.
No reason to believe it's going down. It's going to stay on that level. On Ceconomy, the shop closures, my understanding, and I say that with all respect to my duties not to disclose details that are not public, but I think I can comment that the closures are more likely to happen in other countries than Germany. In Germany, I don't foresee closures in the sense of a lower number of shops, but I see a reshaping of some of the locations. They might reduce the square meters, and they might change some of the locations, so-called B locations, replaced by smaller A locations. Anyway, the service and solutions part is part of the core strategy and within the service and solution, mobile and telecommunication as such in Germany is a very significant contributor to the gross margin and the profits of the company.
Even if the size of the shops might come down, the absolute size of mobile and fixed network offerings will remain the same. There is no agreement which would compensate for the closure of shops. As I said, I am not expecting anything that really impacts our success within Ceconomy. The thing that we have seen being accelerated through the crisis was the online traffic and the online business overall with Ceconomy, and specifically, we have also been watching a growth on the online contribution from our business in both their channels. I think the Ceconomy is certainly struggling with the overall situation, more in the southern European countries than in Germany these days. I see a lot of operational progress. The comments about the missing strategy are not reflecting reality. There is a positive and a very constructive process to develop and review the strategy.
There was a decision supported by myself as a member of the board that we should postpone the publication of a strategy because it's not wise to do that in the middle of a crisis, what in worst case might lead to a partial or full second lockdown. As I said, on operations, they do really well. When we compare our mobilcom-debitel and klarmobil numbers from this year versus last year, we can see that after a short drop, they have very fast recovered their business in Germany, and they are in full up and running. No real reason for us to worry.
Very clear. Thanks.
Thank you. The next question is from Martin Jungfleisch of Kepler Cheuvreux. The line is now open. Please go ahead.
Yes. Hi, good morning. Thanks for taking my questions after two, please. The first one is again on your offline and online sales. Do you now see that due to COVID-19, a more continued structural trend for customers to look for tariffs and smartphones online compared to offline? Would this also lead to rethink your store network? Can you comment a bit what your flexibility here is in terms of lease contracts? If you could provide some color on the performance of your partnership with the Expert Group that you have closed recently. The other question is on your use of price comparison platforms. Could you provide some detail on what percentage of gross adds you've gained over these price comparison platforms such as Check24, and how important they have become for your customer acquisition over the last couple of months?
Also if you can share some detail, if there is a difference in gross margins compared to other channels. Thank you.
Okay. Let me start with our own retail platform. I think we've described it a little bit in the last call. First of all, there were about a third of our shops were open, even during the heavy lockdowns. We have been able to convince the local authorities that people need a place to bring their smartphones and tablets, et cetera, et cetera, for repair. I think that was very much appreciated by our customer base, but also by other customers. We measured the transaction volume in an internal currency called sales performance indicators of the retail chain, and I'm happy to share that this only went down to 80% during the shutdown.
We have only lost about 20% of transactions. The majority of those have moved into other channels such as direct online or customer care. The second thing that we've immediately started to work on was to basically reshift the entire inbound and outbound volume, transaction-oriented inbound and outbound volume, such as people calling in, "I want to cancel my contract," or, "I want to review my contract. I want to have a new tariff plan." We have shifted this call volume and contact volume into the shop. Our people were sitting in the shops, in the back office, on the phone, serving their own customers. As a result of this very positive initiative, we are now testing, in some shops, we are testing new opening hours.
During the morning hours, we offer consumers to contact us via phone or video conference and talk to our sales reps, and then open the shop later on for physical contact only part of the day. This is one of the concepts that we are now testing. We have also started with a bigger uptake on online. We have started to, let's say, introduce our shop reps even to people that have ordered online, stating, "Thanks for joining any of our brands. We appreciate that you do this online, and we appreciate you using modern ways of interaction. By the way, there is a shop nearby, and this is the sales rep there, and they're happy to help." I think we are trying to adapt to the changing environment and the changing lifestyle of individuals.
We also learn that after these four months of pure virtual contacts, our customers very much enjoy the fact that we are offering physically, or at least oral contact instead of digital. I think overall, I do not think that our shop network will be impacted on the lease contract. Typically German lease contract is five and up to 10 years. The distribution across the 600 shops is so that basically every other month we have some of them that run out and some of them are renewed. In the period, we have paid all the leases. We have not stopped paying, but we approached all the landlords to review the lease contract as such.
We have preferred to cut new deals and to reduce lease costs with some of the landlords instead of not paying them, because we think obviously it's more sustainable and it's kind of pre-empting the overall real estate situation in German cities on commercial leases. With Expert Group, this relationship works pretty well. They have bigger shops. I think it's not the right time to assess it because they were more brutally impacted by the shutdowns. The last point on online, I think Check24, the difference between Check24 has replaced a lot of the small online shops and online partners. They have absorbed the traffic. The profitability is about the same as if we had a third-party online dealer. The difference is that Check24 is basically acting like an agent. Anything of fulfillment, delivery, et cetera, is done by ourselves.
They have a smaller part of the value chain compared to a typically third-party online dealer. Well, as a result, we pay less money to them, but we certainly need to do all the service and subsidies by ourselves. If I look at the volume that they generate, then I think the biggest third-party channel is by far MediaMarktSaturn. The second biggest is what we would call our captive channels, the combination of our retail shops and online. Check24 is the same size of our own online activities and is by definition so the second biggest single partner that we have on our platform. We have only recently signed a multi-year agreement with them to be their preferred partnership. We cannot disclose all the details.
It's not an exclusive partnership, but it is a strategic partnership with defined volume target and defined quality targets where both parties are committed.
Very helpful. Thank you.
Thank you. The next question is from Wolfgang Specht of Bankhaus Lampe. Your line is open, please go ahead.
Yes. Hello, good morning. One question on Media Broadcast. You mentioned some problems in the B2B business. Do you expect this to normalize in the quarters to come, or do you fear that there's a need for a larger restructuring now that a lot of the employees are already working with reduced weekly hours? Second question goes to the reinvestment of your funds. Could you exclude any co-investment into mobile infrastructure in Germany, to secure your position in mobile?
Okay. The first one is, the Media Broadcast, the B2B business that I mentioned is, I think I was more focused on event-based business. What we do, for example, any Champions League game, football game, and a lot of the Deutsche Bundesliga games, we are providing technical services within the stadium during the transmission. We handle the transfer of the digital pictures from the camera through the stadium towards the individual stations such as ARD, ZDF, or Sky. It's not only this business, but this is one that is heavily impacted when there is no games or much less games. If you tell me what the Bundesliga looks like from September, then I can tell you whether it's sustainable or not. I don't know. We'd just like to illustrate that there is a 25 to 30 people right now that have no job.
They are still busy in refurbishing and servicing material, but this is obviously an element of our business which is impacted. On the second question, we are not intending to co-invest into any infrastructure on the mobile side. If this question directs towards United Internet, I'd like to repeat that we are in very good cooperation with them along fixed network, broadband, et cetera, over all the years. We are also in talks that whenever they start providing services on their own networks, that we are happy to cooperate and happy to resell their products under the service provider agreements that freenet has given within the auction. It's not reality yet. It's still in early stage planning.
Thanks a lot.
Thank you. There are no further questions at this time, so I would like to come back to you.
Yeah. Thanks, everybody, for spending 90 minutes with us. Thanks for your interest and your questions. Live safe and stay healthy. See you next time.
Bye-bye.