Good morning, ladies and gentlemen, and welcome to the freenet AG Analyst and Investor Conference Call regarding the results of the first quarter of 2019. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Let me now turn the floor over to your host, Mr. Christoph Vilanek. Ladies and gentlemen, please hold on a second. Mr. Vilanek, please go ahead.
Thank you very much. Warm welcome to everybody. We had some connectivity problems. It was fixed line. This is not our core business, we failed. Thanks for giving us some extra time, again, a warm welcome for our today's conference call on the Q1 results. I'd like to start immediately with the presentation. Overall, my summary is that the first quarter ran exactly as we have planned it, we are perfectly on the factory for the full-year guidance. Revenues are on an absolutely stable level from previous year, even though the old UKW Radio program was phased out. We have compensated that with more service revenues on the other end. EBITDA is up. Certainly, a big proportion of it is from IFRS, even without IFRS effect, we have a slight growth.
Following the projection for the full-year guidance, free cash flow is up, Ingo will give you a brief on that one in a second. Most importantly, the subscriber base year-on-year grew by 320,000 subs, quarter-to-quarter, it was also going up. That is seen on the next page. During the quarter, there's a slight growth in the subscriber base. I'll go into the detail of each of the three components. Postpaid dropped by 0.5%, it was an actively managed activity across a number of elements, which led to that, I would say, negligible little downgrade. freenet TV up a little bit, waipu on the growth path, which indicates that the 350,000 will be a rather easy one, I'll come back to that in a second.
Let me start with the overall situation or the view on the mobile telephony piece, the postpaid piece, which is the most important. As you know, there are four components where we kind of intervened and actively managed during the past quarter. This was not a singularity to the quarter. This is something which we have already done in the fourth quarter, with more emphasis. In the first quarter, we have let go some of the less efficient channels. There is some minor activities online with partners that we have basically reduced, we have cleaned out a couple of affiliate partners where fraud or bad debt from the customers was identified later the year, this is why we switched them off.
Second element to the optimization of margin and customer base is that we have reduced the share of low-end tariff plans, and there is more detail on the upcoming page. We also have seen the hardware industry not delivering significant new innovation. This impacts then the subsidized postpaid business, mainly on our own retail channels as well as on MediaMarktSaturn. We have had a very strong performance with Vodafone in the first quarter, and that also led to the fact that finally we started the second quarter. We have their full LTE plans on any of our plans available in Vodafone. DT AG and TEF was a little lower in the first quarter, that reflects also the last year.
I would say those four elements led to the fact that we have actively managed gross add development, and consequently the net add development led to 0.5% down in quarter-over-quarter. Still plus 1.4% year-over-year. We feel very comfortable with that. On the next page, we've given you some more details on the change in tariff mix. The statement, I think, is very simple: We let go some of the tariffs below EUR 20. That corresponds to my statements on channel mix, and on subsidies from previous page. The share of those ones came down by 5% of total, whereas tariff plans on the higher level, EUR 20 plus, was growing. This consequently also impacts the short term, but even more importantly, midterm, the ARPU. The other step that was introduced in March was, on next page. We have launched our new marketing campaign.
For the past four years, we had our main testimonial, Costa, driving the message of good value for money, attractive pricing, based on research, and a lot of testing. We have now switched to a new, very strong campaign, stressing the fact of what I call the local hero. In our shops, you will be supported in readjusting your phone, changing your phone, doing all kinds of extra services. The campaign tests really well. The services are very much appreciated. It addresses not only the needs of existing customers, but also of the regular footfall. Tracking and recognition and brand perception, all those KPIs tend to prove that this new campaign is really delivering what it was supposed to deliver. I think it also fulfills the zeitgeist of more service and less of a further price war in the market.
Having said that, even though it does not belong to the first quarter, but to the second one, this week on Monday, we have launched our new product, this product is addressing a couple of the things that I have just mentioned before. The entire product, freenet FUNK, or FUNK in German, is a product which you can only order after you have downloaded an app. There is no availability in the shops. There's no availability online. Customers have to download the app. Within the app, they can then choose the number. The entire identification process is within the app. They can ask for the delivery of the SIM card. Either they can pick it up, but typically the first three days, we've seen that they ask for a postal shipment.
In the bigger metropolitan areas, there's also same-day delivery cooperation with locally, I think it's things like pizza delivery and so on, that would also deliver the SIM. Customers activate the SIM card through reading a QR code via the app. The entire interaction, the entire choosing, the pausing of the tariffs, et cetera, it's all done within the app. The app delivers also additional information, especially for young people. What is your data consumption on a day? Who is the ones that you talk? How often? What's your overall consumption in voice, SMS, and text, et cetera. It is kind of a hybrid product because you basically, if you choose the day-by-day tariff plan, you're billed every day, and the sole methodology on payment is PayPal. On the next pages, we have given you some indications of what the app looks like.
I highly invite you just to download it and experience it yourself. There's only two tariff plans, two configure. One is unlimited. Unlimited, including text, data, and voice. It's EUR 0.99 a day. You can stop it. You can pause it. People have full flexibility. The second tariff plan is a 1 gig a day plan for EUR 0.69 a day. Again, they can pause it. They can stop it. There's no need to basically cancel the contract. After a certain period, we cancel it automatically, but customers can change that. By the nature of these tariffs, if we would ever do a promotion or if we would ever have to change the prices, by nature, all the customers automatically get the benefit of new pricing, because otherwise, they basically would cancel and reorder. Feedback in the press, on social media has been very positive.
Far, we can basically only read the number of downloads, which we will not disclose, but we have a very positive first day indication. Bild title and many others put it on their front pages of their online apps and activity. I'm sure that next round of second quarter call, we will give you more insights on it, but we're very excited with the positive feedback, external and internal. Let me move on to the TV segment first, page here, which is page 11. This is the trajectory of waipu subscribers. These are customers that take advantage of the full set of private channels, HD recordings, et cetera. You are all aware that there's also a free product with the public channels only. We're doing really well. There's a growth of 150% year-over-year.
There is a plus 34,000 quarter-over-quarter, so we feel very comfortable with the original guidance. We have recently done a survey once again on our customers. The customer age on average is 44 years. It's two-thirds male, one-third is female, which is an indicator of who we relate to in terms of payment. The usage might be a bit different. I myself, I'm the subscriber for my family, and obviously, my wife and my children watch it, so they would count me as a male subscriber. The average is more than 10 years younger than the regular German linear TV consumer. We tend to be a bit younger, but not really an early adopter type of thing.
These people are majority working, and they tend to live in a household with more than two people, which also shows that the multi-room options and the multi-user option is something that is very attractive. Next page, I've shown you what is the current usage that we measure. You should be well aware that any of the subscribers, whenever he or she is using the service, we can identify the hardware, we can identify the type of connectivity. We see even the DSL or broadband provider, and we know all these details. Obviously, we collect those data in order to later on, A, adapt to their individual needs, and also to use it to improve targeting of TV advertising.
The key message here, 80% of the usage is on big screen, which shows that after a little while, people realized that waipu.tv is not a mobile television entertainment, but is the best alternative for cable or satellite, or even DVB-T in the household. I will not go through the entire details of page 14, but we'd like to indicate that there is a constant flow of new feature sets and new benefits. In 2019, as we have lined out before, Apple TV, Android TV will be launched. There will be a full, a pure 100% Android TV solution in the third quarter, most likely with a freenet-branded remote control and a freenet-branded dongle or little set-top box, where the instant restart is about to be launched, and there's a constant inflow of a number of new channels. There's also some ethnic channels about to roll in.
The two big steps that we have achieved, or the team in Munich has achieved during the quarter was that finally we have signed and installed and launched the cooperation with Axel Springer SE. At least the Germans are well aware of the "Bild-Zeitung" and the Bild family, comprising also "Auto Bild," "Computer Bild," and many others. We have over six months work with "Bild-Zeitung" or with Bild Verlagsgruppe on a 24/7 channel that is delivering political information, the regular news, everything that you all know from Bild, and their sub-labels, such as car mobility documentaries as well, but also a lot on computer technology.
The channel, if people choose the channel on the remote control, there's immediately a live program, which indicates there's a constant lineup or program, and then people can also, with one click, switch into the full library and stock of "Bild-Zeitung." The good thing about that, and it's our pilot program with this kind of complexity. The entire thing is based on the robot that the team has created and is about to be patented, so that we can basically plug into any moving picture library and create a program out of it. We are not only the technical solution provider, but we also do the media selling here on those channels, and I think it's the first of hopefully a number of new channels that we launched. We have done ADAC before. We have done Mediakraft Networks before and Rocket Beans.
I think Bild should be a lead-in of a new dimension of television in Germany. The second real achievement, which is very positive and from freenet point of view, a revolution. Finally, after 25 years being a service provider to the network operators, we become the operator and they become our service provider. O2, Telefónica Germany has launched only last week, their own OTT/IPTV solution based on a sales cooperation with the team of EXARING/waipu in Munich. They act as a sales partner, which I think is very exciting. There was long work with those guys. There was a public tender on the solution. As far as I know, there were Telefónica internal solution. There were many others that they have looked at, and finally, they have decided that working with the guys of waipu, delivering our original product to their customers is the best of all.
I'm really very positive about it. Obviously, we will not be able to communicate a lot of details there because that's subject to Telefónica giving a disclosed number of customers that they have acquired for us. Obviously, for the entire story of waipu, this is a breakthrough moment, and we are talking to a couple of other big partners that also would like to have waipu as a product for their own sales force. Last but not least, a glimpse on the freenet TV, so the antenna B2C business. There as well, if we compare by the end of the year, we have crossed the 1 million ARPU used, and a slight surplus in the first quarter.
I think this proves that that one drop in Q3 was a unique event that happened, and we have explained that before, but we're positive for the full year that we will have a remainder of customers higher than 1 million. After that, quality at products and the performance, I'd like to hand over to Ingo Arnold for the financial review.
Thank you, Christoph. Hello, everybody. From my side, first of all, I start on page 18. First of all, I would like to confirm what already Christoph told you. I think what we published here today and what we saw in the first quarter is a total confirmation of the guidance for the full year, what we gave. We are fully on track on this. What you see on 18 is the revenue stable at EUR 689.9 million. The gross profit, which is slightly increasing because of some IFRS 16 effect from EUR 223 million to EUR 227 million. Without this effect, it would be also stable. Also, if we look into the EBITDA, there is this EUR 11.4 million increase quarter by quarter, but this is based on IFRS 16. If you just compare the EBITDA without IFRS 16 is very stable around EUR 96 million, EUR 97 million.
If we change to page 19, we did it the first time with our last figures that we announced also to give a more detailed view in the segment and to show what the inter-segment allocation effect is. On page 19, on the upper end of the side, you just see the figures including it. There you see that mobile is very stable, TV and media slightly increasing, other holdings slightly decreasing. What I think what is more important is to talk about the line without inter-segment allocation. What you can see here is that mobile shows an increase of EUR 8.7 million. Yes, partly this is because of lower gross ads and lower costs for SAC and for SRCs, but it is also a good margin, what we saw.
It's a perfect confirmation that this business is very stable and that we do not see any problems, any pressure in this here. I do not understand these comments, what we see very often, because, again, it's a proof of the concept, and it is a proof that this business here is very stable. If we look and if we change to TV and media, here we see that there is a decline of EUR 6.1 million. This is mainly driven by the analog radio business here in the first quarter. As you know, last year, this was not stopped in the first quarter, we had the analog radio business last year. During the year, this effect will go down because there will not be any positive EBITDAs. There were no positive EBITDAs in 2018.
It is only something which we will see in a lower way in the second quarter, but what we will not see in the third and fourth quarter. We see the other holding. There we also see a decrease of EUR 2.9 million in the EBITDA. This is based on some project costs, what we have, some personal costs. It is also a one-time effect, more or less. I do not expect it to continue in the other quarters. We have these effects in the first quarter to show here. If we change to page 20. On page 20, I think, first of all, if you see the revenue in the Media Broadcast, this is something what you see here is decreasing. This again, is the analog radio business. In all the other segments here, and without this analog radio business, you see slight increases in the revenue.
If we move to the gross profit. Here again, you see that the mobile, without inter-segment allocation, is plus EUR 9 million. Therefore, you see that the EUR 8.7 million, what I showed before from the EBITDA, this has nothing to do with savings on the SG&A side or something like this. It's a real profit, which is from the business here. If we change to Media Broadcast, here we see in the gross profit, the minus EUR 4.2, again from analog radio business mainly. We see that EXARING, in terms of gross profit and also in terms of EBITDA, it is very stable to what we did last year. We are steering it in this way. As you know, we are steering EXARING by EBITDA budget, what we grant them.
They have to deliver as much gross adds and as much growth, which is possible in the framework of EBITDA, what we give to them. Moving to the free cash flow on this page. This is better than last year's EUR 7 million. You see here, the new leasing part, which is increasing here in this bridge. What you see is the EBITDA is EUR 11.4 million higher from IFRS 16. You see that the leasing is higher. The out payment here is something like EUR 11 million, EUR 12 million higher. This is something that compensating effect. If you see the other changes in comparison to last year, you see slightly increasing interest payments because we have a higher gross debt here. What you also see is a lower number of CapEx.
We only paid out EUR 6.8 million in the first quarter 2019, which was EUR 11 million in 2018. This is because we had less CapEx to pay for Media Broadcast. Changing to the mobile business on page 21. Christoph already explained that we focus on profitability here. It was definitely also driven by the finance department here, that we wanted to focus on quality here and that we wanted to focus on profitability. We accepted to see a loss in net adds here in the first quarter. This is something what we steered and what we wanted to have there and what we accepted. We are aware and we are very confident that in the long run, this will optimize our profitability here. The ARPU, it is EUR 18.8 in the first quarter, so it is stable.
As you know from the past, it is possible EUR 0.20 lower, EUR 0.20 up. In all these cases, we talk about a stable ARPU, this is what we also do here. In the second quarter, it is also possible that it increases by EUR 0.20. It is stable, no big change. Moving to the digital lifestyle revenue. This is something what we see here, that it is a little bit saturated. We have to be quite frank here. What we do at the moment, we stabilize the revenues in this part of the business. What we try to do, and this is also part of the margin increase, what we saw in the first quarter in the mobile business, is that we try to optimize the profitability of this portfolio.
This worked fine in the first quarter. We try to do so also in the following quarters. Moving to page 22. Most of the parts here we already discussed. What is important is if we look into the revenue, is that the postpaid service revenue quarter-on-quarter is increasing. It is another sign that the business is very stable. From EUR 383 million to EUR 387 million, and all in, the service revenue is likely increasing from EUR 417 million to EUR 420 million. Moving to the TV business. This is on page 23. On the page 23, most of the impact what we show here, we already discussed. Therefore, I would like to directly move to 24, because here we see a little bit with more transparency, in what segment of the TV business we saw the moves.
What we see here in terms of gross profit is that the loss, what we see in Media Broadcast in comparison to last year's quarter. It is mainly driven by the analog radio business, what I already described. You have a EUR 5.7 million loss in the gross profit B2B, and you have a EUR 3.6 million loss in the EBITDA B2B. What is important to know here is that we started a personal restructuring because of selling the business. I think we already reported about it. We will have a significant reduction of personal cost here, starting on the 1st of April. You do not see these effects in the first quarter. You will see the effect first time in the second quarter. Yes, you have this decrease here and this abbreviation in the first quarter, but this will not continue in the following quarters.
In the B2C business, here we had some additional sales of hardware, et cetera, in the first quarter 2018. What we also have, and I think most of you are aware of this situation, we have something like a glide path here in the conditions with the private channels. We have slightly increasing costs with the private channels year-by-year. I think it's not increasing every year. This year, there will be this slight increase, and we will also see this in the following quarters, but the effect will not be as big as in the first quarter. Moving to the balance sheet on page 25. What you see on page 25 is that the equity ratio is slightly decreasing.
This is only linked to the start of IFRS 16, because you have a higher asset value here with EUR 4.9 billion, and therefore, the equity ratio is increasing. In itself, there is no other reason for this. We have the net debt, and we show it now in a very conservative way, and this net debt is increased from EUR 3.8 to EUR 4.2. Without IFRS 16, it would be decreased, but because of the effects from IFRS 16, it was increasing. In the last column here, you still see if we would deduct the market values of the equity investments what we have, it would only be EUR 2.4. I think I already talked about it in the last call. It is important for me to talk about the pressure on us again here, because sometimes I think it was a little bit overvalued from you.
I think it is important for us, and it is still our target to reduce the net debt to levels below EUR 3.5. We have a healthy balance sheet here, it is not necessary to do something in a very short period. All the financials what we have, all the covenants are in line with what we plan to do in the next month and what we guided and so on. I think, yes, it is our target to reduce it, and I stick to it definitely. We do not feel any pressure in our daily action here out of this. That's the financial figures from my side. I would like to start the Q&A now.
Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. In case you wish to cancel your question, please press nine star again. Please press nine star now to state your questions. The first question comes from Christian Fangmann from HSBC. Please go ahead with your question.
Good morning. It's Christian. I have a couple of questions. First one on the postpaid net trend. I mean, the results were a bit weaker than expected. I get the point regarding refocusing on more valuable customers, and you've shown the pie charts that are very helpful. If we look out for the rest of the year, and also given your new launch of Mobicom Digital Funk, what can we expect in terms of trend for the rest of the year? Are they staying around the 0 level, or are you anticipating a step up in the rest of the year? I know you can't give me exact guidance, but at least a rough indication would be helpful, I think. Then I think the other one was on TV revenue. That was a EUR 10 million drop year-over-year, just from a reported standpoint.
What is a bit of a black box for us is clearly the legacy B2B business. Now, obviously, without the analog radio business. What is the trend for that part of the business? I think if you could give a bit more granularity around that, it would be helpful. Then lastly, maybe, on waipu.tv, with the new cooperation that you have now with O2, isn't your waipu.tv target a bit conservative? Are you seeing that it could be substantially higher, or was it already part of your guidance anyway? I think that's it for now.
Thank you, Christian. I think all valid questions. First one on the postpaid. The guidance was that we were planning to be a bit higher than at the turn of the year, and I think it still remains on that level. If I compare our development with the one of Deutsche Telekom, I think they've lost 1% quarter-on-quarter. We are down 0.5% for maybe somewhat different reasons. We still believe that the market overall will absorb the volumes that we planned. We stick to the guidance, which said that by the turn of the year, we will be a bit higher than on the 1st of January. That also indicates that we foresee growth again mainly in the second half of the year, because that also corresponds a little bit to our churn rates, et cetera.
I think freenet FUNK is a little bit of a hybrid, because in a way, it's a postpaid, and in a way, it's pay per use. We will need to see how we incorporate that depending on the size it will deliver, but that's something which we have not made our mind up. On the TV revenues or media revenues, the downgrade by EUR 10 million is the UKW business, which was dropped. Given the fact that last year we had two quarters, first and second, with UKW revenues, that is the driving force for the drop this year. For the first half year and the second year, this will wash out. The increase on waipu.tv will not fully compensate this year. Overall, I would say year-on-year, I would assume a wash for the full year.
A downgrade on first and second, and then a slight upgrade from the day-to-day business in the second, and then a wash. The last question that I have seen was, or I've heard, was waipu.tv. Again, the sales cooperation with Telefónica was not part of our plan, because back then, the contracts were not signed. I cannot guarantee whether we will only show our internal revenues or whether we will also show the subscribers and users on Telefónica, because that's something which we have not discussed yet. Certainly they will also have to report on it, and we don't know exactly what the granularity will be, because part of their customers will have it as a triple play offer, et cetera. We have to come back. Definitely, the 350 was a standalone without Telefónica.
The revenues that are generated will be reflected in our business. I think we have to beg your patience till after the second quarter.
Thanks, Christoph. As a follow-up to that one, is my understanding right that the customer ownership is with you and not with O2? Is that correct?
It's actually a split one. We can address those customers within the waipu.tv platform, and that includes any revenues generated out of upsell, cross-sell on VOD, and on advertising. O2 also has those customers in their own ownership, because at least that was the intention, that typically they would sell it into their customer base. It's a double customer ownership. We can market those customers within the TV application.
Okay.
The next question comes from Usman Ghazi from Berenberg. Please go ahead with your question.
Hello. Thanks for taking my question. I've got three questions, please. The first one was just on waipu.tv. You mentioned in the presentation that waipu.tv is approaching breakeven. I was just wondering if you could perhaps give a bit more clarity. Given that EBITDA for waipu.tv this year, I think you guided to slightly above minus EUR 10. Are we talking about breakeven at some point this year on waipu.tv, or is it a more further out statement? Second question was just on the personnel costs in the TV and media business. Am I right to understand that in H1, the loss of the EBITDA from the analog sale is offset by the personnel cost. In H2, when you will just have a net benefit from the personnel cost reductions, given that the loss from the analog sale was already booked in H2 last year.
Final question was just on the mobile gross profit. Obviously encouraging development, given the reduction in SAC and SRC. When you do look to go back into the market, do you expect the benefit on the EBITDA from the SAC and SRC to reverse out through the end of the year, or is there a structural reason why that might not happen? Thanks.
Usman, thanks for your questions. On the personal cost at Media Broadcast, yes, your interpretation is totally right. In the second half of the year, there should be a positive EBITDA effect from the decrease of personal costs. This is totally right. Concerning the mobile gross profit, a lot of things were running fine for us in the first quarter. We had different positive effects, as I already mentioned, also from digital lifestyle, but also from SAC and SRC. You are totally correct here. I do not expect every quarter now with such EBITDAs, and as we already said, we would like to pick up on the growth here again. I would not expect to see it again.
Parts of it, yes, should be stable for the year and should not be eaten off by increasing net adds during the year. This would only be a small effect, which would be stable. On the waipu.tv, your question was, I'm sorry?
On waipu, the guidance has been that waipu is on our EBITDA minus.
I get it. What we do at the moment is we steer the business with an EBITDA target. We tell the management minus EUR 15 million EBITDA a year is fine, and they should grow the business as fast as possible. What we see at the moment is that there is still a dynamic, and there's a big dynamic, it makes a lot of sense to use the money to grow the business. It could be possible to be breakeven this year, but then I would not see any growth. This would not make sense with a starting business to steer it in this way. I would not promise to have a breakeven next year or this year.
As long as we steer it in this way, as long as we see the dynamic, I would expect a better EBITDA in 2020. I would expect something which is below minus EUR 10. Then in 2021, I think there's a good chance to see a breakeven.
Thank you very much.
Thank you.
The next question comes from Heike Pauls from Commerzbank. Please go ahead with your question.
Yes. Hello, good morning. I hope you're well. I have two questions. Firstly, on your TV cooperation with Telefónica. Will it also work with Telefónica's new cable product, i.e., can their customers, in theory, get an internet-only cable line and combine it with waipu.tv in sight ? The second question is on Sunrise. I wanted to know whether it is possible, based on the legal situation, to, in theory, pool your voting rights with other Sunrise shareholders under this law without basically acting in concert. Thanks.
Well, on the first one, certainly, I think it is the origination of the Telefónica Germany ambition to go into OTT/IPTV is that they have, I think, a customer base of 2 million in DSL. The potential access to the cable network would enlarge that potential. Furthermore, if in our customer base of waipu, we can see and identify whether the customer has a copper or a glass fiber or a cable connectivity, and we can go give them a very specific offer, either to change, but also to address them, and to let them know that cable might be more expensive than our offering. I would highly anticipate that this is definitely Telefónica's ambition, and that is also something which we foresee if the cable market is opening. It's definitely creating an extra opportunity. On Sunrise, that's a tricky question.
I would say, whatever our opinion will be and whatever our voting will be at the end of the day, we would certainly announce it prior to the actual event. Whoever shares our opinion
Is free to express the same opinion. In that sense, it's not the pooling. I think what is not according to my understanding of the Swiss law, we could not go to others and ask them whether they vote with us, but an exchange of opinions is not only possible but already happening.
Okay. Fully understood. Thank you.
The next question comes from Ulrich Rathe from Jefferies. Please go ahead with your question.
Yeah, thanks very much. I have three questions, please. The first one is, when you describe the net adds, the post-paid net adds in the first quarter, you focus very much on decisions you've made, discretionary decisions, it sounds like. Obviously, there is a sort of bit of a competition, in particular, I think from Telefónica at the moment in terms of promotional activity. Could you comment on what extent that has directly influenced your trends and/or your decisions in terms of what Telefónica has decided to do and what you're seeing in the market? That's the first question. Second question is, it's a slightly technical thing, but on the slide on the ARPU in mobile, I noticed that in the new definition, the ARPU without hardware, so the one we are now focusing on, that actually has declined.
Admittedly only by EUR 0.20 year-on-year, but it has declined to EUR 18.8. The ARPU in the old definition is shown as actually having grown by EUR 0.30 year-on-year. Could you explain the discrepancy in the trends between the old and the new definition? I think that's not directly a question of the hardware sales, but also of the structure of the tariffs and the subsidy clawback. I'd be interested in the reasons. My last question, if that's all right, is I noticed you changed the inter-segment allocation for the full year retrospectively in the fourth quarter. In the first quarter, you said some of the inter-segment allocations are going a different way from the full year.
Does this mean that the full year inter-segment allocation that we're actually seeing as reported, irrespective of what the quarters of 2018 looked like, that the full year one isn't representative of the full year inter-segment allocations to expect in 2019? My understanding was the full year 2018 allocations were actually the clean ones that were representative of what is to be expected in 2019, but I'm not entirely sure after the first quarter now. Thank you.
Thanks, Ulrich. On the first ones, on the net adds. I think on the charts we said that all these effects and measures are interrelated, and it's very difficult to fully separate them. We have seen on blau and also on some of the O2 promotions, aggressive price downs. As a consequence, we always have to decide for ourselves whether we follow such a, or we mirror such a promotion, or whether we step back. As a consequence, the share of higher value tariffs reside from it. Yes, you can ask the question, well, what was prior? Who was following whom? Were we stepping back prior to their activity or the other way around? I couldn't tell you, to be honest. I think, to be honest, also the level of promotions every now and then is a little bit overstated.
If we look at approximately 8 million so-called new subscribers acquired a year in Germany, a 2-week promotion by O2 or in MediaMarktSaturn is a drop, not in the ocean, but in the lake. Yeah. Yes, we look at those. We have also seen, I can give you a different indicator. Last year, we had a very prominent new player in the field, which was Check24. They really have grown heavily last year. According to our knowledge, they do not publish anything because they're private, their level of acquisition on mobile dropped by 20%. If we look at today's hit list on best price, you will find 20 different tariff plans from the Drillisch United Internet group. We take a decision whether we would follow this and say we put in a new offer, we have tested it actually early April.
We put our offer EUR 0.02 below a Drillisch offer, it took 4 hours for Drillisch to go EUR 0.01 below ours. I mean, this is kind of the daily games, we have decided that we test it. We see whether the others react and what the volumes are. We also take the decision to step out of it. I think we described our activity. I cannot really give you the answer whether it's one or the other or who was first. It's kind of an overall mix, as Ingo said, we sit down every other week on the offers. There is the controlling guys that say, well, life cycle on this offer resulting from the real air time CPO, the acquisition cost, the delivery cost, the promotion effort, the price downs. This is how it looks like.
It's like peak column tables every other week. Ingo was a bit more rigorous than they were before, and I think it proves to be right, we will continue in that policy. On the ARPU, your observation is an obvious one. The level of hardware within it is a result of the hardware pricing. Implicitly, the hardware price, it's an indicator of the acquisition mix from hardware. If you do a lot of iPhones and a lot of Samsung S10, it's a bit different than if you look at it. EUR 0.20 by 6 million customers is about EUR 1 million. If you look at this, if you have 50,000 or 80,000 a month, the mix is different, this immediately impacts this hardware included ARPU.
Ulrich, hearing your question about allocation, I ask myself if transparency makes the life more complex or not. What I think, what I understood, and therefore I try to answer your question is, I think the main way of doing these allocations in the past was that the mobile business, there was a profit on the mobile side, there was a decrease on the TV and media side because on mobile, there were a lot of marketing things and so on, what they did for TV and media. This was already decreased in 2018, this will further decrease in 2019, and this is what you see if you see the figures of the first quarter, there is still an effect, that if you watch into the figures without inter-segment allocation, there you see that the mobile results are increasing by it.
This is still the same effect what we saw last year. There will be this effect in this year because the allocations will be lower during the year. I think it is something what we planned, and what is mirroring the business.
That's fair, I can, I understand what you're describing there. It's simply not the same allocation. It's allocation overall sort of changes.
Yeah.
2018 wasn't just sort of the new normal, it was just a step in that direction.
Okay, definitely.
Thank you.
At the moment, there seem to be no further questions. Ladies and gentlemen, if you would like to ask a question, please press nine and star. The next question comes from Martin Jungfleisch from Kepler Cheuvreux. Please go ahead with your question.
Yes. Hey, thanks for taking my question. I've two. First one is on the focus on more valuable customers that you mentioned. If I look correctly, other players such as Drillisch, they also want to focus on higher value customers. I suppose that the MNOs want to keep their higher value customers in their retail brands. What makes you confident that your strategy will be successful? You also mentioned that you had a lower performance with DT and O2 in this quarter. Can you also provide some color on how the relationships with the operators have developed over the past few quarters? The second question is on your TV and media segment. You mentioned that you're getting close to break even.
What you say is a good midterm EBITDA margin assumption for the TV and media segment, given that you expect further increase in content cost, how do you rate the operating leverage in that business? Thank you.
On the first one, well, my conclusion would be that everybody understood that discounting and feeding Schnäppchenjäger is not a wise strategy. I think overall the market, the regular German consumer is ready to pay anywhere between EUR 20 and EUR 35 net a month. I think everybody, well, hopefully, more and more will come back to a reasonable level. In that sense, I feel very comfortable to be on the same page as our dear colleagues. As I mentioned before, I just looked into the DT figures this morning. They have had quarter-on-quarter, also a loss of 1% in their mobile postpaid base. On Telefónica, we cannot see it because I think they will be short landing. Yeah, I think the market is ready to pay for a reasonable service. Overall relationship, I think there's no big change.
Vodafone is currently the ones that it's the easiest to work with.