Hello, and good morning, everybody. I'd like to welcome you to our Q1 2024 Analyst Investor Call. My name is Dominic Großmann. I'm responsible for investor relations at United Internet, and here with me today, I have our CFO, Ralf Hartings. Briefly about today's program, Ralf will first take you through our presentation with the business development in Q1, and we'll also give an outlook for the rest of the year. Afterwards, we will be happy to answer your questions. So far from my side, Ralf, please go ahead. The floor is yours.
Thank you, Dominic, and also warm welcome to our webcast on our 3 months figures, 2024. Let's get into our numbers. On slide 2, we have summarized our major KPIs for you. Our customer contracts increased by 200,000 to 28.65 million in the first 3 months of 2024. Our revenue increased by 2.2% to EUR 1.565 billion. EBITDA increased by 7.3% to EUR 342 million. However, it is important to note here that we have already invested more than EUR 42 million in our rollout of our 5G mobile network in the first quarter. Our EBIT declined by 0.8% to around EUR 187 million.
In addition to the explained negative effects on earnings, this was due to higher depreciation amortization as a result of investments in the rollout of our fiber optic network at 1&1 Versatel, and the rollout of the 1&1 Mobile Network. This increase in depreciation and amortization is to be offset by gradually increasing cost savings from this year onwards. EPS decreased from 0.43 EUR to 0.35. This was due to a reduced EBIT and a lower at equity result from our minorities, as well as the increase in interest rates in general. I will continue now on page three. Let's now turn to our segments, starting with Consumer Access. In this segment, we increased our contract portfolio by a total of 40,000 contracts to 16.3 million year to date.
Mobile internet contacts increased by 40,000 to 12.29 million, while broadband lines remained stable at just over 4 million. Page five, revenue in the Consumer Access segment increased by 0.3% to EUR 10.024 billion. This growth was attributable to the increase in service revenues, which rose by 4.2% to EUR 821.9 million. Hardware sales were slightly weaker, which is due to a strong prior year quarter, where some spillover effects from Q4 2022 were a major factor. The access sub-segment increased its EBITDA by 11.6% to around EUR 225 million, while costs for the rollout of the mobile network, 1&1 Mobile Network sub-segment, rose by more than EUR 23 million in absolute terms.
On page eight, let's take a look at the Business Access segment, where we were able to increase sales by 4.1% to around EUR 142 million. EBITDA in the segment increased by 1.4% to EUR 35 million. The high quality expansion of our own fiber optics had a positive effect on EBITDA development as expected, despite the startup losses from the new 5G business, 5G business area at 1&1 Versatel. At a comparable EBITDA, taking the startup losses like for like, the EBITDA growth amounted to 5.7%, despite higher investments in Q1 2024. Our EBITDA margin remains almost stable at 25%. Let us now turn to Consumer Applications.
On page eleven, accounts in the Consumer Applications segment decreased by 670,000 from December 31, 2023, to 42.06 million due to seasonal factors. The decline resulted from a 730,000 decrease in free accounts, while pay accounts, i.e., paid contracts, increased by 60,000 contracts to 2.86 million. On page twelve, we are looking at revenues in the segment. We increased sales here by 13.4% to EUR 71 million in the first three months, mainly driven by our paid users, as well as a positive development in the advertising market. These figures do not include energy and De-Mail, which you'll also find on this slide. Our EBITDA increased by 20.2% to EUR 23.8 million.
Both the price increase in Pay-Mail, as well as the increased number of paid subscribers, delivering a 20.2% year-over-year growth rate in Q1. For the full year, we expect to see good revenue growth, increasing profitability. However, we intend to invest into future growth of existing and new data-driven business models. On page 14, in the Business Applications segment, we increased our contract portfolio by 100,000 contracts to 9.49 million. The increase came mainly from our operations abroad. Revenues in this segment increased by 5.4% to EUR 373 million. The increase resulted from strong on Web Presence and Productivity and cloud solutions. In Q1, Sedo's low margin aftermarket business seems a bit weak, but this is just a phasing effect due to an underlying product change. Excluding the aftermarket business, revenue growth amounted to 12.8%.
EBITDA in the Business Applications segment, on the other hand, increased by 24.3% compared to the previous year, to EUR 101 million. The operating EBITDA margin rose accordingly from 23% to 27.2%. Right, let's go to page 17. So much for the segments. Here we have summarized the most important KPIs for the group once again and added a few more. We've already covered revenue and EBITDA. Our CapEx amounted to EUR 140 million, after EUR 145 million in the previous year from the investments in our fiber optic network and 1&1 Versatel and the rollout of the 1&1 Mobile Network. As you can see, we have slight phasing in Q1 due to unpaid invoices, which total EUR 60 million. We are therefore maintaining our CapEx forecast for the full year.
Our free cash flow, more on this later, amounted to a negative EUR 142.9 million, primarily driven by our investments. Previous year, EUR 4.1 million, EUR 4.1 million, including a phasing effect from 2023 of EUR 104.3 million. Our net liabilities to bank increased slightly by 7.3% to now EUR 2.615 billion. Our equity ratio was broadly stable. Slide 18 shows you a bridge from our EBITDA to free cash flow. The largest items here is our CapEx of EUR 140 million as a result of investments in the network rollout. Furthermore, we have a phasing effect from Q4 2023, and taxes of each, roughly EUR 100 million, plus additional VAT payments of EUR 53 million, including working capital of EUR 46 million.
This results in free cash flow of -EUR 102.9 million, respectively, negative EUR 143 million after leasing. Finally, a brief word on the outlook. We confirm our guidance for the fiscal year and continue to expect an increase in revenue to approximately EUR 6.5 billion, prior year, EUR 6.213 billion. Operating EBITDA is expected to approximately EUR 101.42 billion. CapEx, excluding any M&A transaction, is expected to increase by 10%-20% above the previous levels, in particular, as a result of the network rollout and the extension of our fiber optic network, and in additional expansion areas and for connecting mobile antennas. Given that we have issued the guidance quite some time ago, I currently would expect our CapEx guidance more at the lower end of the provided range. So much from our side, and we are now available for any questions you may have. Thank you.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. We will take our first question. Your first question comes from the line of Polo Tang from UBS. Please go ahead. Your line is open.
Hi, thanks for taking the questions. First one is just really about spectrum and your mobile network build. So if you don't get access to any low-band spectrum, would your mobile network build plans change in any way, or would they continue as normal? I actually asked this question on the 1&1 call earlier, but it sounds as if nothing would change, even if 1&1 would not get any low-band spectrum. So I just wanted to clarify this point. Second question is just given the recent outcome in Spain, what is your view on whether mobile consolidation is possible in the German market? And my third question is really about use of cash and the structure of the group. So if there is no spectrum auction in Germany, how do you think about use of cash and group structure? So would you consider a spin-off of IONOS, and does a minority buyout of 1&1 make sense? Thanks.
Hi, Polo, and thanks a lot for your questions. So first of all, on spectrum, I think, Markus also made it fairly clear, as well as Oliver, that, our default expectation for spectrum is not to not get any access to spectrum, in the, you know, well, foreseeable future. And I think you've asked the question whether if we would not get any, which is kind of the worst-case scenario that could possibly be. I think the team confirmed that, you know, we still have got our obligations, which we are, you know, in the need to fulfill as currently things stand. Now, I don't know, I'm not the Bundesnetzagentur too, so I don't know if you know they're willing to change things or not, but as we stand here, that's kind of our, our current view.
With regards to consolidation on the German market, well, I don't think we plan on consolidating anyone personally. I don't know if any other people do, but I guess you need to ask them then this question, and look, never say never, I think was a Bond movie once called. I don't know, okay, in all honesty, but I don't see, you know, anything pressing happening or anyway. So I mean, yeah, I can't tell you. And with regards to use of cash also, I mean, look, we've got a lot of money to invest because we're building, you know, the most modern network in Europe, and I think that's a pretty good use of our money. Should we have more excess money, well, we'll then decide what's best for our shareholders, at any given point in time. But so far I'd say, you know, priority number one for the entire group is, to deliver a successful, you know, mobile, most modern network for Europe. And that's it. Okay?
Thanks.
Thank you. We will take our next question. Your next question comes from the line of Titus Quinn from Bank of America. Please go ahead. Your line is open.
Hello, everyone. Thank you for taking my questions and for the presentation. Just two topics to touch on, maybe first on the De-Mail and energy, which you have now kind of deconsolidated or split out separately. Could you maybe talk a little bit about your change in strategy there, and what are the medium-term plans for the business? That would be very helpful. And then the second topic would be on Versatel, where you're, as you mentioned, are investing as well alongside 1&1 in the mobile network build, and you spent already EUR 9 million in Q1. First question would be, what should we pencil in maybe for the full year as investment, as part of this mobile network build at Versatel?
Secondly, there's the between 1&1 Versatel and 1&1, which I think initially envisaged about EUR 170 million in, I think, revenues until the end of 2025, and EUR 100 million per year thereafter. Can I, do you know, or kind of could we know if you're already receiving those revenues? Has this outlook been affected in any way by a delay in the network rollout? Thank you.
Hi, Titus, thanks a lot for your questions. I'll answer number one and two, and then I think, we probably, the line wasn't super at the time, maybe if you can repeat the third then, but let me answer firstly on DE and Energy. So, as you know, we've got a new CEO in the business. He's had a look at, you know, all different lines of business and we kind of jointly came up with the management team that it's probably good to focus on less things, but do them really well. Given that, you know, energy and De-Mail have been, you know, energy, I mean, has been success from every point of view, but it's not high margin business.
And De-Mail was, you know, the idea to really get email into a, well, I don't know, safe and legally binding medium, which hasn't quite picked up in Germany as much as it was hoped for. So therefore, we've kind of decided to really focus the team not anymore on these activities, but rather going into more future, where we believe we can make, you know, higher returns, for the company and us. And that clearly is the subscription business, as well as the data-driven businesses. One is obviously get advertising yield up, and the other one is maybe enabling e-commerce and things. So, so that's one to focus on. So that's the first. On Versatel, I think you have some 9 million. I think that's for the total of EUR 20 million that we want to invest there. Maybe if you could be so kind and just repeat the last question because I didn't quite get it.
Definitely. Definitely, yes, and thanks, thanks already for these answers. Just on your contract between Versatel and 1&1, which I think initially was envisaged to provide EUR 170 million in revenues until year end 2025, and I think EUR 100 million thereafter. Are you already receiving anything on this? Has this changed in any way given that 1&1 is having a slower network rollout? Thank you.
Yeah. Perfect. Yes, thank you. I got it now. So no, not much has changed. Yes, they're receiving already money and no, the network, you know, slight delay because of the partners that let us down is not impacting that in a significant way. So, I think that's what I'm happy to confirm here. Okay?
Okay. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Stephane Beyazian from Oddo BHF. Please go ahead. Your line is open.
Yes, thank you. After the strength we've seen in the shares of IONOS, are we now in, let's say, at a level where you believe that's a level where you can monetize this stake? Or actually, perhaps, you know, you could be thinking that the contract with the ITZ Bund perhaps might be changing your position on whether IONOS is a non-core asset for the future. Thank you.
Yeah, so thanks for the question. Look, IONOS, we really like IONOS. IONOS is really delivering exactly what they promised to deliver. They are doing really a great job. So generally speaking, for us, it's a great asset to have in the group.... And that's what we, that's what our current position is on that. With regards to the contract with the government, I mean, yeah, that's great. We are pleased that the team was able to close that, and yeah, I think that's just gonna be another good one in the books for our, you know, cloud strategy. And I think that's the current view we have. Thank you.
Just to follow up, if I can, have you been approached by any possible buyer for a stake in IONOS, a possible industrial partner?
Sorry, but any M&A kind of questions, I guess I'm just gonna say the usual, I mean, no comment at this point in time. So, yeah, so that's it.
Fair enough. Thank you.
Thank you. We will take our next question. Your next question comes from the line of Usman Ghazi from Berenberg. Please go ahead. Your line is open.
Hello. Thank you very much for the opportunity. I just had a question on Consumer Applications. I know that, on the last call you had mentioned that a new chief commercial officer had been appointed, to run the business. Could you perhaps give an indication of, you know, any kind of changes that are happening or expected to happen for the rest of the year? That, and, and the, you know, financial contribution that you expect from this segment, for the rest of this year. Thank you.
Sorry, Usman. I don't know what it is, but you probably have. You need to change your tech equipment. You're always pretty hard to understand, and apologies. I think you've asked about the new CEO in mainly in the Consumer Applications business, whether strategy or something has changed. Is that correct?
Yeah.
I'm happy then to answer. Okay, great.
Thank you.
Yeah, so look, no, no, I don't think I would call it a change in strategy. I think we call it refinement, and it's always around focus, right? The day has got so many hours, and therefore, we here at United Internet, we like to, you know, really get people's attention, you know, to lesser things, but do those great. And that's maybe a bit of a simplification, you could say. And I mean, I've been the CFO there. I've worked there for two years. I think it's a fantastic asset, which has got an incredible data treasure we are sitting on. I think I've spoke about this before. We've collected 20 million consents of people that we can utilize their data for commercial purposes. We need to harvest that better, and we will.
And we've been saying this, I think, for many years now, and I'm now just a year here at the helm of UI, but it's clearly something we, I mean, yeah, I can see big value in. And the second one is where we've seen really good success and progress, is in the subscription business, where we increased prices because we hadn't for, I think, decades, to be honest. And still we were able to acquire a lot more customers and to attract them to subscribe to the service, with, you know, a few simple tweaks. So I think more focus on that, show them there is more value. People get a lot more used to having these little subscriptions every month. That's another strategy we want to pursue, and we believe that with Michael, we've achieved, you know, we really were able to hire somebody very smart and good. So, we have lots of hopes. Okay?
Great. Could I ask a follow-up, perhaps, just on the eSIM strategy here, where, you know, you had said that you would potentially look at selling eSIMs on the new mobile network into this base of Consumer Applications. Has that started or not yet?
Yeah. I wish I could say this has started and is super successful, but look, we are still in the trial period and playing around a little bit. So I think that's gonna take a bit more time to go prime time, unfortunately. But, yeah, you know, we you know, we'll see if there is a, if there is a market, you know, for us to capture, but not, not at this point-
Thank you.
Unfortunately. Okay?
Thank you.
All right, sure.
Thank you. Once again, if you wish to ask a question, please press star one and one on your telephone. Your next question comes from the line of Adam Fox-Rumley from HSBC. Please go ahead. Your line is open.
Morning. Hi, thanks. I was just hoping to follow up on one of your final comments, Ralf, about CapEx. I think you mentioned right at the end of your prepared remarks that you think you'll now be in the lower end of the range. So I wondered if you could just give us a little bit more color on the moving parts that you're seeing there. And then secondly, I should just ask about Tele Columbus. You've still got your catch-up right, if I'm not mistaken. I just wondered if you've any thoughts of change there, or your thinking is still ongoing? Thanks very much.
Yeah. Hi, Adam. Okay, so on CapEx, look, I mean, as I've said in the presentation, it was quite some time ago when we've issued the guidance, and there was, you know, a bit of uncertainty. Is it gonna be in the year then? Is it gonna be the year after? And as we go along, you know, we've just seen it probably more stabilizing, I guess. That's why, you know, in the first place I put out this wider range. But in addition, what I think I've spoke about before in Versatel, we're obviously connecting a lot of the sites, and then we are very opportunistically trying, you know, to connect business parks nearby. And you know, that I've always said, is very discretionary.
So, you know, and again, if, you know, we've already done a few of these business parks, so we can maybe sell more to the ones that we've had, or we can go to more, that's a bit of a trade-off. And, you know, all these things put together, I currently think we're gonna be in the lower end of the range that we've issued. And then on Tele Columbus, I think nothing has changed from the statement. I think it was Mr. Dommermuth himself did at the full year results.
So far, our partner, MSI, has, you know, agreed to put more money into the company, and we do still have a catch-up right, as it's called, to pull equal on our share, again, and that's, you know, some-- it's still some time to go, and therefore, we haven't really made up our minds fully on that. And we will, and whenever we feel that we are at this point. So at this point in time, no changes to what we said before.
Okay. Thanks a lot.
Sure.
There seems to be no further questions. I would like to hand back for closing remarks.
Thank you, Loretta. Thank you everyone for attending our call today. Please do not hesitate to contact us for any follow-up questions. We wish you a nice day. Stay safe, and goodbye.