Hello everyone, and welcome to the Q4 and Full Year 2024 Results presentation for Tele Columbus. My name's Lydia, and I'll be your operator today. After the presentation, there'll be an opportunity to ask questions. If you'd like to participate in the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to your host, Carmen Becker. Please go ahead.
Thank you, Lydia, for the introduction. Good morning, ladies and gentlemen. This is Carmen Becker speaking, and it's my pleasure to welcome you on the name of Tele Columbus management team to today's conference call following the release of our fourth quarter results and full year results for fiscal year 2024, which ended on 31st of December. This call is limited to 120 minutes. In case of any follow-up questions, please let me know. I'm here today with Markus Oswald, Chief Executive Officer, and Nicolai Oswald, Chief Financial Officer. Now, I would like to remind you that if any lenders or rating agencies are on the call right now, that this is a public conference call in which only publicly available information will be discussed. I would therefore ask you to refrain from questions containing information not belonging to the public domain.
This conference call is intended for capital markets participants only and not for press representatives. If any journalists are on the line right now, we would highly appreciate if you were leaving the conference call now. Press representatives are welcome to call my colleague Sebastian Artymiak to discuss any outstanding questions. Having said that, it's my pleasure to hand over to you, Markus. The floor is yours.
Thank you, Carmen, and good morning to everybody on the line. Welcome to our Q4 and fiscal year 2024 result presentation. Looking at the table of content, it is the key messages, as usual, operational update and KPIs. Then Nico will take over on the financial performance, and then we have enough time for your questions. When we look at Q4 and the year 2024 on the operational side, really happy to see our internet sales continuous growth here. Significantly growing on the internet base. This is our—this was, besides the TV migration, one of our biggest topics to make Tele Columbus fit for growth on the IP side. We are still, and now it's quarter over quarter over quarter, the fastest growing internet operator in Germany. Compare it on a year-on-year basis on the revenue side, it is in growth as well on service revenue side, 12.3%.
Compare quarter Q4 to quarter Q4 the year before, it's 18.5%. The complete year was on the IP side a very good year. When we look at also our structure inside IP sales, it is also on the one hand side, when you look at our gross ads, what are the megabits customers are choosing, it is mainly 55% are choosing 500 and more megabits. Also we are happy to have a 3P share with TV on its side, along our expectation, but it is also near to 50% right now. Fit for growth on the IP side, very important. This is also our base for this year and the outlook for the coming years. TV migration, second biggest topic on operational business, we are in line with our expectations, near to 50% retained customers, and now working above 50% for 2025.
Revenues, and this is impacted by the bulk migration. Revenue on 2024 was EUR 426.3 million . Bulk migration has a big impact. Besides the IP growth, there was a slight growth by B2B, but nevertheless, there was due to the bulk migration also then coming to normalized EBITDA, a slight downsizing of our EBITDA by 3% on a year-on-year comparison. Reported EBITDA down to EUR 138.5 million, but this is completely linked to the A&E transaction, which happened in March last year, the TV migration, and of course, again, fit for future NetCo/ServCo transformation and split of these companies, a lot of work was done on this project. I will also give an update on that, and Nico can add to that as well.
CapEx, excluding leasing, increased by 18%, investing into the future, into our network, and into customer growth, mostly of course consumer growth, which comes with CPEs and commissions. On the other side is the network infrastructure, which is the heart of our infrastructure and the heart of our future growth. Cash-wise, the cash position on December 31 was near to EUR 60 million. In addition, the remaining undrawn shareholder loan of EUR 85 million was there. Liquidity position slightly better than originally planned, but also due to selective capital allocation and network capital management, which we did over the year. Coming now to, I think I already mentioned it on page seven, what was our focus and the most impacting topics of 2024. It was our and is our strong internet performance. The bulk migration or the TV business is in focus.
We have done the NetCo/ServCo separation and now looking to phase II and III. We also want to give you later on again a footprint in market footprint, what is going on our FTTH deployment, because looking at IP growth, it is of course mainly driven by our network on the DOCSIS 3.1 network, but at the same time, we are making our company ready for acceleration on FTTH rollouts. I come later on to that, completely in line with our expectation, what IP growth is coming out of the growing FTTH footprint. Next page is exactly what I mentioned before, fastest growing internet operator in Germany. Here is a comparison also with our competitors, double-digit growth now fifth quarter in a row and a perfect development on the IP side, exactly what we are looking for and also bringing the company into shape to deliver that further.
A comparison, so we actually managed to nearly 80,000, so it's something around 77,000 net adds on the IP base, which is 30% growth compared to the year before, which was already achieved above 90% growth. On a high level, a growth of 30% again, coming to not only subscribers, but also to revenues. Here you see what I mentioned before, Q4 compared to Q4 in 2023, 18.5% growth. In line with year-on-year comparison, 17.1%, so revenue growth in line here as well. Here is again, so also you just continue with work, but we reached a milestone by reaching individual RGUs who really bring revenue into the company of 700,000 now. Compared to that, also the telephony growth, which is exactly what we are looking for. Here also the second bullet point on that slide is what I mentioned before.
In our footprint of near to 200,000 FTTH networks, it's 188,000 exactly. We have roughly 80,000 RGUs, which is a penetration of 44%. Compare that to the overall penetration. This is exactly underlying our strategy. We have a perfect DOCSIS 3.1 network, which is high capacity, perfect segmentation. People can take 1 Mb out of it, exactly what also the demand of the housing association is. When we are looking then on that comparison, we see exactly that uplift of 244%. We will progress, and I will come later on to the housing association business. We will progress on upgrading housing associations with FTTH to underline that strategy.
Like I mentioned before, we managed over the last quarters to bring up also the gross adds or the share of high bandwidth products in gross adds, the inflow, and also coming with inflow APRUs and with higher APRUs, the 500 Mb coming from numbers from 40% the year or 2023, managed to do that in Q1, Q2, and Q3 with something around 45%-50%. In Q4, also supported by Black and Cyber Weeks, we managed now a number of 56% of 500 Mb and more, which is great. When we are looking also at our bundle rate, which is then related with 3-Play offers, so net sales with TV, for example, we also are well established on around 50%, like I said before.
The peak you see in Q2, which was more normal and estimated, and also that we are going down back to something around 50%, was also driven by the bulk migration in Q2. Here we are on that topic, bulk migration. Again, just to remember, 42% of our footprint was on bulk. The other footprint already was on individual, so we know where we have to transfer to. 48% is the customers. We are now looking at 50%-55% for the year of 2025. How we reach that? We have different measures in place. Biggest channels are here also our direct sales approach with door-to-door agents, which we will ramp up in addition. There are some factors in, so we have an SD switch-off, which supported our TV business to get in touch with the customers. HD is progressing here in comparison.
Now this is also the year of hard disconnecting our customers. We set up several projects with housing association in that kind as well, but looking also for external support, so external capacity for blocking or disconnecting activities. Related to these, here are the numbers. We have a loss of 38%, 38.7% on our RGUs on the TV business. Our expectation a little bit higher, what remained in it is not TV access bulk in like it's named, it is bulk similar. There are still over 200,000 customers in a kind of bulk contract, which is good. Compared to that, also a stable performance on the premium TV business. Third biggest topic for, yeah, first of all, operational excellence was also the split between ServCo and NetCo. This is done, implemented, and we are now heading into phase II and III of that project.
Done and implemented means that all employees are also by lift- and- shift and reorganization topics are now in the company where they have to belong to. Part of it is going into ServCo, part of it is going into NetCo. We are preparing the carve-out accounts for ServCo as well for NetCo, and also the contractual separation between both companies and third parties. Thinking out of a NetCo perspective, we have a variety of ISPs in Germany who will then have access to our network. One of these ISPs is in the future or right now ServCo. We have Telefónica on our network as well.
I think today it was just announced that partner Vitroconnect, we signed a contract to have more opportunities and possibilities to sign other ISPs on our IT platform to add to our performance on IP, what you saw before, wholesale contracts and wholesale contributions and net adds to that. Next picture is again, what is, was, and will be our strategy. Again, here you can see on the left side the normal building of today. No, actually both possibilities we are now looking at. We have on the left side DOCSIS 3.1, the green part here in that case is a Tele Columbus network, which is in more than 2 million cases and households a case at DOCSIS 3.1 network. Here you can see our net adds coming from the share of more than 500 Mb and the relationship since decades with housing associations.
Same time, Deutsche Telekom is in with DSL and other ISPs on the DSL network. In comparison here, also Telefónica is on our network on DOCSIS, but they are also on the DSL network of Deutsche Telekom. This continues until the point housing association is coming to us or we are going to a housing association, both possible ways, and saying, "Okay, what is your future perspective of your network?" Two answers, "Oh, we are still in progress of thinking about it because we have several other topics." You know that from beginning of next week, the new chancellor and a new coalition in Germany is stepping in. We have a new heating law. We have several other topics which are in some cases for housing associations more important than the fiber network because they are running on a 1 Gb-ready network.
This is a good part on the existing one because we are getting our growth out of that. On the other side, you have housing associations who are saying, especially because of heating changes, isolation of all renovation cycles, "Oh, it's a good time, Markus, to talk to you because we think about our network." It might be also that they have an approach by Deutsche Telekom or by some other of our competitors. After that, it is normal they call us and say, "Hey guys, what's going on? What is your fiber strategy? We are thinking about it and good to have you on board." If you're just an example that we just signed also with such a housing association a contract, funny enough, because we announced it also in our intranet. This was, I think, the fourth contract in a row with this housing association.
First level four wiring in that building took place by Tele Columbus 35 years ago. A big relation, a deep relationship with that housing association. When they look for future networks, they approach us and say, "Okay, what's going on?" This is the respect also to the waterfall, but coming back to the FTTH network, like I mentioned, we have now 188,000 FTTH networks already in place. The green line again. Here we are, as well as on the other green line, looking for open access and offering open access and accelerating it now step by step over the years. This is a difference, DOCSIS 3.1, 1 Gb-ready, FTTH 1 Gb-ready or whatever, 5 Gb symmetric in the future, but the DSL network, VDSL network maybe, still remains the same. This is what underlines our strategy.
There will be only one network operator who is offering FTTH in the future. There is an open access question by the housing association, which is completely fine with us because it completely contributes to our storyline retail business together with wholesale business, bring our network penetration up. This is what we also see in our plans. This is exactly our strategy. There will be one fiber operator in a building. Because it will be only one, it is also the ask of the housing association in that case, open up your network for other providers, which is completely in line with our strategy. We have long-lasting contracts. A fiber contract is 10, 8, normal case is 10-15 years. Normal case is it is followed up by another 10-15 years follow-up, like I mentioned before. We already signed 35 years ago.
Again, 15 years a contract. With this housing association, the relationship is then 50 years, half. Yeah, when you look at our churn rate on housing associations, it is marginal. It is 1%-2% on an annual basis. This is then linked exactly to what we are doing. We have now 188,000 already built FTTH networks. We have contracts in our pipeline, in our role for the future, 395,000 signed and not in negotiations, but also it could be or it is often the case we signed a deal and the upgrade will take place when the wish of the housing association is. Now the contracts are lying on the tables. Planning is done or will be done because it might be only an upgrade in 2028 or the upgrade starts in 2029.
We are customer approval 100,000 and we are in process of 70,000 left to address is for me a little bit hard to say. It is 1.6 million, but left to address, you could also understand, "Oh, we have to go to the customer." No, that means that we are in constant talks with customers, of course, but they are in the middle of that process. "Oh, we have to think about it and please wait. We have to decide and find our strategy." To be honest, other topics like heating system, like whatever, are more important for us. Let's talk in two years because our current left side of the picture contract is still running five years. We have a DOCSIS 3.1 network, which is completely fine for us because it's delivering for us 1 Gb .
This is the storyline of our business on the housing association business, which underpins, underlines our strategy. It was to be a little bit more precise on that because in the last quarter, we get a lot of questions on these topics again. For that, it was for us normal that we put it in that presentation and take the time to explain it again in that round. Happy also to discuss other questions on that. Okay, that's for the time my part. Now I hand over to Nico.
Thank you, Markus. Good morning to everyone. Just looking onto the financial performance, a bit more detailed. First, page 17, we look at the quarterly development of our revenue and the revenue composition. It's clearly seen on the top that bulk migration had a big impact on the revenues.
If we exclude the bulk revenues, we do see a stable performance compared to last quarter after a pretty decent growth. We had the push down basically from Q2 to Q3 on the bulk, and that is slowly decreasing as we can see. We are now down to roughly EUR 3 million on a run rate quarterly basis as of Q4. As Markus mentioned, we still have the 230 left on bulk light contracts, and we will see how we can level this off. Hopefully, these will remain as a portion going forward. On the other revenues, excluding the bulk, we see unfortunately a flat development compared to last quarter, but that is clearly explained by certain one-offs we have seen in Q3.
IP growth, internet growth underlying was still strong, up to almost 2 million growth on the IP side, which was then slightly offset by construction revenues and some cleanup on the pass-through fees, which are related to Marienfeld. Maybe a recap on Marienfeld, what does it mean? That was a reduction on non-two-way -upgraded foreign signal footprint, where we took a strategic decision to disinvest on this one because there is basically no EBITDA contribution. It is a wash on the revenue side. And the signal fee costs, where we said there is no strategic value to us because we do not or we cannot sell IP, internet, and phone, the strong ARPU-driven products. There was only a TV-only product available. Therefore, we decided to get rid of it last year, and that is the full year impact also shown later.
If we look at year-on-year revenues, that's one I comment on the next slide. Here, first, there was also some cleanup activities in relation to the pass-through fees in regards to that. Therefore, we had basically a one-off situation bringing us to EUR 98.3 million in Q4 for the total excluding TV access revenues. On the bottom, if you look at the revenue composition, I think it's pretty straightforward. Continuous development on the rising internet and phone share. We're now well above the 50%, have reached 55% in the revenue composition. TV is slightly down, and the greenish ones impacted by the one-offs. Therefore, I think the importance of the weight on the internet and phone business continuously going up is the positive sign on that.
If we look on the page 18 in terms of EBITDA bridge a bit more closely, what's the impact year-on-year coming from the EUR 193 million, slightly down to EUR 187 million, basically driven by operating revenues down in total, the first block, EUR 26 million. While TV was down EUR 45 million, I mean, we've discussed it extensively. We still see a strong uplift of EUR 30 million growth on the internet and phone simply from the higher RGU base. This growth continues. It's very important that going forward, and we come to, let's say, outlook on 2025 and 2026. Once the TV disconnection has been washed out, there will be a full annualization impact in 2025.
As of 2026, we do expect this growth to then impact top line and bottom line on the IP side because that is what we prepared for and have basically developed the company into. Internet is strong, EUR 30 million up. The other part is some EUR 11 million down on the other topics, which is basically related to Marienfeld, as I mentioned earlier, and also one-time construction. Both have basically no or very limited EBITDA impact. On the revenue side, this is the main drivers leading to a EUR 26 million decline. On the other operating income, we had some various one-offs. I think we discussed all of them in the quarterly calls. Also partly Marienfeld up, some network fees, some leasing impacts, some deals here and there, some settlements where we could release provisions. All in all, positive impact of roughly EUR 5 million.
Direct costs heavily impacted positively on roughly EUR 20 million. Similar again, signal fees strongly impacted by the Marienfeld churn and also by the construction revenues on if we do not have them on the revenue side, we obviously do not have construction costs on the cost side. All this basically improved by EUR 20 million. The rest personnel increased due to more FTEs on payroll and the salary increases. We will come to it later, but I want to reference it here. Markus mentioned operational excellence. We have already signed and communicated a restructuring program in December. Therefore, also on the non-recurring expenses, which we come to on the very last page, we have taken a EUR 6 million restructuring accrual, which was booked in December.
This is also then referring to operational excellence working on the personnel costs going forward to make this company fit for growth and put it into a slightly better position. The remaining others, small deviations on the marketing side, we did have some partial reclass into non-recs due to the bulk migration. This was shifted into the non-recurring expenses, which will hopefully go away then once this is fully completed. On the reported EBITDA, we already mentioned it's, of course, year-on-year slightly lower. We have the non-recs mainly in relation to the A&E transaction, TV bulk migration, and transformation activities. There will be some more details coming later on. If we look on the CapEx levels for 2024, it's an 18% increase. We just focus on the yearly development here today.
You will find quarterly detailed information in the toolkit, which is uploaded, which is including and excluding leasing. A lot more information is available for anyone who's interested in the details. Focusing on the yearly development here, we see the uplift now reached EUR 216 million. Basically, the continuous increase we've seen quarter on quarter in the past three quarters, up EUR 23 million in the network investments, which were significantly higher than in 2023 driven by fiber rollout. Also in line with the increasing net sales, we've seen a EUR 12 million increase in the end customer-related CapEx. Basically commissions and CPEs. IT and operations, not too many changes in total, but we've seen slightly more projects and therefore a higher capitalization ratio on IT costs. One example is the preparation and implementation of the wholesale platform. Markus mentioned it.
NetCo is getting ready to have more players on the network. That is one prerequisite that we needed to work on. That was just one example. These projects obviously help to shift costs also into investments and have, yeah, a better share in terms of total spend on IT. A summary on the 12-month performance, which was in light of the bulk migration and transformation. We spoke about the revenues, which were down, impacted by the TV losses. As I mentioned previously, we've had growth on the IP side, on the individual IPs, and also shifting bulk customers to individual customers. Again, full year impact to be expected of the TV migration in this year. Once this is washed out, we are going back to pure top-line growth driven by the higher internet and phone customer base.
On the reported EBITDA, slightly down based on the operational performance, gross profit was pretty flat compared to last year in absolute terms. We've seen basically the slight improvement on the non-recs, but still, nevertheless, on very high levels. This going forward to be substantially smaller. Looking into that in just a minute. On the CapEx investments, we've spoke in details. Please have a detailed look at the toolkit, which gives you much more information. On the operational cash flows, a strongly improved uplift, basically two sides to it. We had a selective capital allocation and were conscious in terms of where and how to invest. We've done a lot on working capital management, had improvements on inventories, on receivables, had also an impact from our direct debits the way we work with our banks.
A lot of details also available in the toolkit in terms of cash flow performance. Coming to page 21, just basically three topics. One on the prognosis for 2025. We do expect stable revenues with internet and phone growing and compensating the TV losses that we still see from an annualization impact. We do expect a low double-digit million growth on the reported EBITDA. Also on the reduction or driven by the reduction of non-recurring expenses, obviously working also on improvements on reported EBITDA. We might come up with a bit more details in the Q1 call, which already takes place in four weeks' time. On the investments, we do see a significant lower investment compared to 2024, which would be a decline in mid-double-digit million range.
Yeah, that's one thing which is important that as we expect to come back into stronger growth mode in 2026, top line and also then impact on bottom line. I think that's the current situation that we are just managing also cash. The long-term projections are still valid. I think it's important, as Markus mentioned, that growth is possible on the DOCSIS 3.1 network. So fiber a bit later here and there is not hurting the growth story at all. As we mentioned, we are in close contact with housing associations to decide on the best possible point in time when each and every project needs to be done. In terms of financing activities, I think we've mentioned this plenty and almost in every call that we are from time to time looking and considering to raise additional financing opportunistically.
This would be an additional funding in terms of accelerating on our CapEx program. There is nothing decided, nothing agreed. It's just an information because there are always rumors in the market. Today, there is nothing that we can disclose. We will disclose information if and when this becomes relevant. As always, because the question always comes up and I pre-anticipated this time, the bridge on non-rec because it is a big bucket in both years. Just to give you some overview and slight ideas, it was roughly EUR 49 million or it was EUR 49.7 million in 2023 and EUR 48 million last year. It was a bit higher than we previously communicated in Q3, but that is mainly the impact.
As I mentioned, as we signed the restructuring deal with our works council late in December, it was agreed that the restructuring accrual, roughly EUR 6 million, needs to be taken into the books in December. That was basically an increase compared to our last Q3 communication where we were not sure if the deal would be signed in December or January. As we managed to get it done, that is also included now in the light blue bucket of personnel and other. Basically, what you can see is 2023, we had the A&E and refinancing project and then personnel with interim and other provisions. On the other side, those were the two main topics. The green one, bulk migration, was just preparing and not really meaningful while we had four serious topics in 2024. Basically, the remainder of the A&E, which was signed on 19th of March.
We had then a lot on the TV bulk migration topic and then a lot of work into support, external support, consulting lawyers for the NetCo/ServCo separation. Of course, then personnel topics and restructuring topics that I mentioned. That basically concludes our presentation today. We would open up for questions.
Thank you. Please press star followed by the number one if you'd like to ask a question. Ensure your device is unmuted locally when it's your turn to speak. If you change your mind or your question's already been answered, you can withdraw from the queue by pressing star followed by the number two. Our first question today comes from James Ratzer with New Street Research. Please go ahead. Your line is open.
Yes, good morning, Markus and Nicolai. Thank you for taking the questions. Thank you for all the information you've given. I mean, lots of questions I could ask, but I'll try to keep it to two at this stage. You have talked in the presentation about progress you're making on the ServCo /NetCo separation. It would be great if you could share any more comments specifically around what your intentions are for potential corporate activity with regards to either division. Are you interested in selling a stake or the whole of either of these businesses, particularly maybe on the ServCo side? Anything you can say on what your current intentions and kind of plan A would be when the separation is fully complete. Also any comments you can give on the EBITDA split between the two divisions would be very helpful.
The second question I had was just regarding your internet performance. I mean, obviously, you're putting up extremely strong KPI numbers at the moment. Interesting to hear about the kind of competitive dynamic because the blended ARPU has been gradually slipping through the year. I think in Q4, it was kind of down 0.7%. You exited 2023 with that figure growing closer to 2%. It would just be interesting to hear you kind of finding that there's more competition from some of the other broadband players. How are you thinking about the pricing dynamic going into 2025 and 2026? Thank you.
Thank you, James, for your questions. On the ServCo/ NetCo, we do not want to comment on any speculations here at that point. Like we mentioned before, we want to be able to have optionalities for potential refinancing coming up. To this, we stick because this split, first of all, gives us, for us, it is also a program for running for operational excellence to be prepared for the future. First of all, this is the influence into the company and also contributes to process optimization, IT optimization, and, and, and. On the other side, this we already said is exactly that optionalities are important for the future. This is it, James, that I want to comment on that topic right now.
Maybe if I can add on your question on EBITDA split, I mean, that's what we've put down. We're working on the carve-out sections basically to truly get this into our books. There's still some cleanup and homework to do. Once this is fully ready, we will disclose as soon as we can information to the market on the performance. This company, then as long as ServCo and NetCo are still under one roof, this will be more towards a segmented report in terms of ServCo and NetCo, but this is not where we are today. Please, I have to ask you to be patient a bit more until we are fully ready and able to have consistent numbers going forward. On the second point on IP performance, I mean, IP market in Germany has always been very competitive.
That is not something that is completely new to us. There have been, obviously, with the turmoil on the TV side and bundles and everything, people have been aggressive. We have seen that competition is fierce. It is still hard to make people move, but that is, I think, what we do quite successfully with our product offerings, with our tier splits, with our bundles, and also the pricing strategies. We have had good weeks in November, Black Weeks, Cyber Weeks, where we obviously see pressure also on promotions. All in all, I think it still works that we can move people from any other competitors to us. We have great market shares and win ratios in the footprint where we are available.
Keep in mind, and hopefully we'll see this in four weeks' time, that in Q1, we had a price increase on quite a substantial portion of our subscriber base that took place and was effective beginning of February. We should already see a first impact in Q1 and then hopefully also going forward once this is for the quarter fully, not annualized, but fully functional. We do see measures with upsell, cross-sell, and also price increases to bring ARPU up. Also over time, we expect that the FTTH penetration will drive higher tiers and also with that higher product pricing and ARPU uplift. That will gradually improve, hopefully, full ARPU on the full company on both technologies, cores and FTTH.
Thank you. Thank you. Nicolai, on that last point, are you able to say what the weighted impact is of the price increase from February across your base?
Yeah. I think we mentioned how many people would be affected. I think it was, out of my head, 150,000-160,000 customers by a couple of euros. Let us disclose this in four weeks' time if that's okay for you.
Got it. Thank you.
Our next question comes from Vivek Khanna with Deutsche Bank. Please go ahead. Hi, Vivek, your line is open. Please go ahead.
Good morning. Can you hear me okay?
Yeah. Yeah, Vivek.
Okay, fantastic. Excellent. Good morning. Good morning. A couple of questions, if I may. First, with regards to NetCo separation, I was just wondering if you would give us a sense as to when you think that process will be completed. The other thing I wanted to just tackle, I'm assuming you would consider to raise debt financing once the NetCo is created, even before the fiber rollout has progressed materially, just based on the fact that NetCo would clearly have an existing cable wholesale customer base for which to potentially fund some of the interest payments. Thinking about how you're thinking about that and from a timing perspective. That's my first question. The second question is on CapEx. I was wondering if you could provide some little bit more additional color on the guidance with regards to a mid-double-digit decline.
Provide some sort of range. That would be very helpful. The final question is on broadband churn. I mean, clearly, you're doing very well, but I'd be just curious to know, whatever little churn you have, what are the customers saying for the reason for their churn and who are they going to? If that data is available, that'd be very helpful. Thank you.
Thank you, Vivek. On the first one, on the NetCo completion, I mean, we gave you an update and said NetCo/ServCo separation is phase I completed. Everything is in place. Contracts are in place. Master service agreement, anchor tenant agreement, that's all in place and that's already been lift. We said that we lifted and shifted the people in the respective companies. So that is all prepared and up and running. Phase II basically means also that there is some more activity around subsidiaries which were neither fully controlled or not on our own footprint that had not been migrated. That is phase II of some smaller legal entities that we still want to migrate and bring into NetCo or ServCo. That is basically phase II of the current discussion, what we are preparing, hoping to achieve the next milestones here. The big chunk is basically done.
We're focusing on processes and operational excellence to bring this up to life and improve performance, first internally and secondly in terms of further separation, preparing contracts and everything that we said. There are still certain contracts that sit in the top co-holding, for instance, that need to be pushed down into the respective ServCo or NetCo organizations. This is the next steps we do. It's currently done via intercompany contracts, but this should be clearly shifted and pushed down to improve separation even further. That is in terms of the organization where we stand. In terms of timing and debt financing, again, this comes also to the financing discussions that we've always said. We're in a stage where we basically prepare and do the homework to have optionalities.
One was to have NetCo/ServCo in a separate way, which gives you opportunities to either finance or sell stakes or the full thing on equity and/or do a refinancing in terms of debt going forward. There is nothing that we can share. It is still on the working level that we do the homework to have these opportunities. Opportunistically, if market is right, if the timing is right, we would then continue, obviously, in close discussion with our shareholders or main shareholder how to proceed and when to proceed. There is nothing new, nothing new to announce. There is simply us focusing on preparing that we are in good shape to use any opportunities that may arise. In terms of CapEx and guidance, Vivek?
Yes.
Let me finish on the other two questions and then we'll see. In terms of CapEx guidance, again, I mean, that's the guidance we can currently set out. I'm happy to have a look in four weeks' time how this will develop going forward. As of now, I think it's the closest that we can disclose to the market. I would leave it with that if that's okay. On the IP churn, we do see obviously churn as everyone else in the market, but they are on slightly lower levels compared to one or two years ago. We're constantly improving churn still as we speak. That's one of the main focus areas also from the customer base management team. We did have very little churn, which is good news on the price increase that we had seen.
It was lower than anticipated, which is good news because there was already an increase for the second time for these customers. We were not sure how they would react. In the end, that was very good and gave us a decent proposition in terms of service pricing and portfolio. This is good news going forward, also with looking at the next price increase for the next cohort that will eventually join. This is what we see. We are constantly analyzing, obviously, churn reasons. One is off-net moves. One is never payer. Then you also have people who die or disappear. There are a lot of churn reasons behind. Out of my head, I do not have specific reasons from the product churn itself. I think we can follow up, Vivek, on that with the product team if that is helpful.
No, that's very helpful. Can I just ask you a quick follow-up question? What can we infer from your guidance on reported EBITDA to adjusted EBITDA, if I may ask you?
Also, again, I mean, let us push this a quarter forward, four weeks from now, and maybe we can share more information on that. In terms of reported EBITDA, it was a clear guidance. We also aim to have improvements on the normalized EBITDA, but I'm not in a position to really give a clear guidance with a very precise amount here today.
Thank you. We'll move on to our next question from Polo Tang with UBS. Please go ahead. Your line's open.
Thanks for the presentation. I have two questions. The first question is just on MDUs. In slide 15, you make the point that you have the right to upgrade 1/3 of your level four footprint to fiber. However, there is still 2/3 of your footprint yet to be upgraded. From what you can see, how much traction is Deutsche Telekom getting with MDUs? I am just asking the question because at the Deutsche Telekom Capital Markets Day in October, Deutsche Telekom was suggesting that they were seeing increased success in being able to access MDUs and deploy fiber. I am just interested in your perspective. Also, just connected with MDUs, you talked about being open to open access and a willingness to wholesale. What is the wholesale rate if someone does want to access this level four infrastructure that has been upgraded to fiber?
The second question is really just a different take or a different perspective on competitive dynamics in German broadband. Looking at slide eight, the whole market seems to be slowing down in recent quarters in terms of net adds growth. What is your perspective in terms of what is happening here? Thanks.
Yeah. Happy to take these questions, Polo. First of all, this is what we can say when we are in conversations with our customers is that we do not see big churn or other topics with approaches of competitors looking at our customer base. Like I always say, of course, we are losing contracts, 1%-2% on a yearly basis right now, but we are gaining contracts. At the same time, that leads then to that 1%-2%. No, not to that 1-2% because when I look at the end of the year, I think there was a slightly gross also here that is just churn rate. Sorry for that. The relationship to housing associations is very constant.
Knowing that we are now rising our penetration in these buildings, it is also change a running system where you already have 1 Gb- products is not the biggest favor of housing associations. This is all I can say to our customer base and experiences with competitors. Sorry, to make that point, what was your second question on that?
Open access wholesale rates.
Yeah. Right now, we have on the wholesale platform Telefónica, but this is related to our DOCSIS network. What I said, I think we are now working on the Vitroconnect platform, also on other deals to bring customers on. The weight is right now limited, but this is a path of growth of the company for the future to underline that again. We will see the annualization effect, like also in our prognosis of TV in this year, but we see on the other side the IP growth. For me, then TV, to be honest, after this year is washed out and we are on a stable business on that side or also with the growing sales activities, maybe also in the growing mode here.
Then the growing story or the growth story of the company comes in line with DOCSIS 3.1 performance on IP growth and fiberization of the network, which will accelerate this. Acceleration point two is then as well the wholesale platform. This is work to do in the future as well.
If I may add, Polo, I think you were referring to any rate cards for wholesale access fees.
Correct.
We just have to be.
Correct.
I'm sorry that that is a bit of a this is not a regulated market. It is purely up to us negotiating with players in the market. We are in discussions and negotiating with certain and several players. This is not information that we can give out publicly because otherwise it would obviously harm our negotiation strategies with the different players. Therefore, I would ask you, I mean, I cannot disclose any information. To give you an idea, I think as from a NetCo perspective, we would say in terms of gross profit and EBITDA margins that we expect it is basically it does not matter if the customer is on a ServCo basically as a ServCo today as a B2C customer on our network or on a wholesale contract on our network.
I think it's a competitive offer that makes it attractive for any current DSL player who is on the telecoms network to switch over to a fiber contract on our network because we think that we offer competitive pricing and give them an advantage to actually move their DSL customers from Deutsche to our network. That is as much as I can disclose today. Please accept this as it would not or would harm our position in terms of discussions with any player in the market for now. Your last question, I think, was on the competitive situation in terms of what's happening in the market and the differences. I mean, we can basically, as we mentioned earlier, it is a very competitive market in general, and we can only comment on our performance.
I think we grab quite a good share in our footprint of what we can do. In terms of the performance explanation on the other players, it's hard for us to comment. I mean, we know some players had issues in their node sizes and network sizes, network performance on coax. That was one issue where we've seen a lot of churn on one player. DTAG currently being the only one slightly growing, but that growth is continuously also going down. It's hard to really comment on the other players. Again, it's a very, very competitive market. Prices hopefully tend to go up again once these bundles and bulk TV for free offers are hopefully washed out again and every player is going back to normal pricing and product portfolio positioning. That would be my comment.
Yeah, but also putting page 8 and 15 together, when you look at that, I would say when you look at the other competitors here also in the market who are looking or who are on the DT DSL network. Our competitors in the building, for example, or in their portfolio, in many cases have to compensate DSL churn by DOCSIS or fiber growth. If the DSL churn is higher than the DOCSIS or their fiber growth, they are losing customers. The good thing is in our position, Tele Columbus is on the winning mode on the IP sales because when DSL is shrinking, and this is what the competitors are facing in the market, our network in the building is growing because either on DOCSIS, 1 Gb- ready, or on fiber, this is where customers from DSL are trending to.
This is, I think, again, the underpinning of our strategy that also with the split NetCo and ServCo, but also with our thoughts about CapEx for the future, investing into consumer growth and fiberization. This is exactly what we want to see, that customers are moving from DSL to our networks. For that, our network right now has enough space to grow.
Coming from 27% or 28% penetration, this is exactly what we want to see to see a four or even higher number in front of it and compare to wholesale then because Vodafone and 1&1 and Freenet or whomever will join our fiber network is doing that as well because they know that when customers and that will take place in the future, looking for high-speed contracts in that building on the right side, they only have one partner on their side in that building. This is open access by FTTH, by PŸUR, or Tele Columbus. This is what we are aiming for.
Thanks.
Thank you. Our next question comes from Mark Chapman with CreditSights. Please go ahead.
Hi. Thanks very much for taking my question. Mostly, I just have some housekeeping ones left. The first is just obviously there was a large working capital inflow. Can you just confirm that you still do not expect that to reverse or should we expect any reversal this year? The second sort of relates to Vivek's question in terms of backing into underlying EBITDA. Just looking at the non-recurring, is it fair to assume that roughly half of the non-recurring should fall away this year because you do not have the refinancing and the migration pieces of that? Anything that I am missing there? The last is just could you confirm if the remaining portion of the shareholder loan has been drawn down in the first quarter, which is the deadline? Thanks very much.
Thank you, Mark. Let me take these questions. On your first housekeeping question on the inflow network and capital impacts, as normal, the only impact we see from seasonality is basically that we have higher payables in Q4, which will be paid out in Q1, and that seasonality will be the same in this year. As we did have very positive impact on networking capital last year based on inventories, receivables, and the impact that we had a different direct debit performance with our banks that we see the cash, we draw the cash a day earlier. This will not be reversed. I would not assume significant positive additional contribution from networking capital this year. This will be more to the normal pattern that we do not have tremendous impact. Inventories are on much better levels now.
There might be small numbers still coming out of inventories as we manage continue going forward. The rest will more or less be broadly the same in terms of the Q4 payables increase that will then be offset in Q1 2026, which will be similar. That is one on the housekeeping. On the non-recs, I probably say yes, it is roughly fair to say. Ideally, this is even slightly lower than what you said. For a rough idea, I think that is fair to assume. On the shareholder loan portion, that is a clear yes. We have obviously drawn the full EUR 300 million before the first anniversary of the shareholder loan, sorry, of the A&E contribution by 18th of March this year. Yes, it has been drawn.
Perfect. Thank you. Understood .
Our next question comes from Charlotte Peat with Schroders. Please go ahead.
Oh, hi. I just had two questions. Firstly, on slide 15 on the 1.6 of the customers left to address, how many of those have contracts that are expiring in sort of next 12 - 24 months? I guess I'm just trying to get an understanding of what the timeline is. Are these customers, for example, that they're very long contracts, therefore there's no point discussing them because maybe they don't expire for another 5 - 10 years? Anything you can kind of add there to give a bit of color would be quite helpful. On the decline in CapEx, can you give, sorry, for 2025, could you give any kind of guidance as to, I expect the fiber, the network infrastructure section will stay quite similarly. The other segments, where is the kind of decline coming from? Anything you can give on that would be helpful.
I will take the first question, which is 1.6. I think the other way to ratio, like I said, 10-15 year contract, we have to add I am not now exactly knowing the number, how many contracts are running out in the next one or two years of that 1.6 million. What I know is that the average duration, remaining duration, this timeline we have in mind, that was over three to four years. Just to make you aware of our sales approach, where a contract is running out, it is normal to be in negotiations with or in contact with these customers at least two years before. Nevertheless, there is another topic because also our housing association key account managers are responsible for campaigning.
What I mean with that is that, for example, door-to-door approaches in housing associations and so on are negotiated or in line with housing associations. During that annualized contact we already have with our housing associations, we are very close to them. This is also a big differentiator to the biggest one or telco in Germany that we then know how they are trending or whatever. First of all, coming back to more detailed information later on, Charlotte. On the other side, I think more than three to four years, and we are very close and not seeing any danger out of fear of missing hundreds of thousands of contracts here, for example.
Yeah. Let me take the CapEx question. I think what we said earlier, maybe a bit more detailed in the next quarter, what I can share is that we on the network side will have less investments on less DOCSIS 3.1 upgrades because we're almost done. We have less investments in capacity measures because we've prepared most of it. We've done the OneNET project, which increased a lot on the capacity side. We will have some less slower fiber rollout in line with discussions with the housing associations. On the consumer side, it's basically in line with growth. We did have some one-off impacts last year on the TV side, on CPEs and commissions. All this will be in line with the further expectation of 2025. Less on the TV side, a bit less on the IP side with the CPEs.
That is what we currently see. Basically on the remainder, IT and B2B and other, that will more or less be broadly stable. That is maybe some additional guidance I can give.
Thank you very much.
The next question comes from Zehn Mahmoud with Fidera. Please go ahead.
Hi there, guys. Thanks for the presentation. Just a question on just understanding some of the KPIs. The 395,000 figure, that's contracted wins. That's remained stable from Q3 to Q4. My question is that 395,000 customers, does that relate to the number of customers within those housing associations which you've signed a contract to roll out the fiber and you're ready to do that? Or is it number of contracts that you've signed with individual customers? The context of the question is the 395,000, how does that relate to how do I estimate the amount of CapEx spend associated with that? I think, and that comes on to my second question, which is what is the current spend per installation that you're projecting? I think previously it was said that it was around EUR 1,000 per connection.
Does that 395,000 relate to roughly EUR 395 million of CapEx spend, which is contracted? Of that, is it all customers? Is it 395,000 customers which you expect to have a contract? Or is that the total, is that the maximum amount that can be signed? If only 50% sign up within a building, then you would only expect 200,000 fiber customers to come online. Just a clarification on that, please.
Yeah. Maybe to take that question. First of all, the already built-in FTTH number was before 150,000 or 155,000. This is a rolling forecast or a rolling pipeline. The number stays stable. Nevertheless, from that number, roughly 30,000 shifted into already built. It is coming down from these other numbers. We are filling up the pipeline step by step. Very important, already built-in FTTH, because this is a complete discussion in the German market, what is home's past, home's connected, whatever. These are connected—sorry, also to your question, these are connected households. 188,000 FTTH built households connected to our network. When you look then at the penetration of here and that, I think I mentioned it before, more than 80,000 customers are in. We have right now a penetration of 44% in these households.
Twice over the time, because when we, I think we just added 30,000 households. Here the penetration, because this is when they are coming out of our stock, we are coming with an average penetration of 27% here. We have a migration concept to FTTH, and we see the uplift over one year of 10% or whatever. This is a mess. This is the biggest advantage with Tele Columbus, because looking at our FTTH numbers, we speak about connected households. If we are in or a wholesale partner and wins a customer, the customer is connectable in 10 days, average 10 days, 5 days. If he said, "Oh, I want to be connected in two months," he will be connected in two months. This is a complete difference. This is also the feedback which we get out of wholesale negotiations right now to home's past.
Because in the case of homes passed, fiber rollout with different other companies. I just was in a conference in London three weeks ago. There was another CEO of a fiber company. He speaks about changing from homes passed to homes connected in 6-18 months. This leads to customer churn because customers do not want to wait. This is a complete difference in the Tele Columbus footprint and the attractiveness of our network. Here we speak about customers ready to sell and to be connected. He is connected. Then out of a connected customer, we are looking for contracted customers. I think this is, yeah, I think this should answer your question.
Maybe in addition, your question on the penetration. Yes, these are 100% connectable customers. When we look at penetration, currently 45%. The estimation is that this will go up to 70%, 75%, 80% eventually over time. That will probably take another couple of years. Latest, when we talk about DSL decommissioning, there is only one remaining infrastructure in the building where they can move to. Over time, B2C penetration, our own retail penetration from our own ServCo at the moment, plus the wholesale penetration over time should add up to something depending on, let's say, where the building is. If it is in Berlin and Hamburg and Munich, you would probably assume that 100% of these flats are used and tenants are in the buildings.
Therefore, probably a very, very high portion of these customers will also sign up to broadband because there is not any other options unless you stay on mobile or go to whatever. If you want to have a fixed line connection, that is basically the only network infrastructure that can deliver that speed. It can either be on a retail or on a wholesale customer.
Sorry, yeah, you want to make that point?
Yeah, just in terms of the average cost.
Just on the build cost?
Yeah, that was the last point I was going to make. We definitely never said 1,000 on average. What we did say in all these presentations, it depends on the situation where you are. They are upgrade costs are whatever from EUR 300 to, let's say, EUR 1,200. It depends on average. We've always said that we will be in the range of EUR 650-EUR 700 going forward. Labor costs increase in five, six, seven years. That is the broad range that we've given, roughly in a split 50/50 on level three and level four. The level four costs are pretty similar for all the players in the market. What makes us different is the costs on the public distance that we have to dig and build. The distance is much less.
Therefore, the level three costs for us getting to a building connection, basically the first step to the fiber to the building, is the one where we have the competitive advantage. That is what we roughly assume. EUR 650-EUR 700 is the average that we currently see. That is what we are planning on going forward to achieve.
Also very important to address in comparison to other numbers you hear in the German market. These are the numbers for level three and level four. This is the biggest topic also in the business in Germany. Tele Columbus is the level four experts. Very important, if you compare it to other CapEx numbers, the fiber connection point, which is called the ONT, costs roughly EUR 80. This is in these numbers. When you hear about CapEx costs, home's past, for example, this is without these costs on the level four side because home's past only means the fiber lies in the street. Here, the fiber lies in the living room. This is the difference.
Compare this EUR 600-EUR 800, I would say, because in the size of the building, if the building is higher, you have some, what is the English word for fire protection. If the amount of buildings which are higher is in one month higher, the average cost will be higher. The good thing is we are far below EUR 1,000. We speak about connections, connected households, which is very important comparing to other competitors. It is level three and level four. Thanks for that question to be more precise on that.
Yeah, that's understood. Yeah. Because I think when we look at other players like CityFibre , for example, in the U.K., it's a completely different business model. You're connected. You're essentially on a monopoly in that one building. Penetration, just a quick follow-up, if I may. Once you have installed into this block of flats with 200 people, for example, at that point, the customer, if I'm living there, if I want to compare pricing, I just have a pure, the pure network, which I don't really care about. I just care about the end pricing. Are you the only one who will offer the contract? For example, do you by law, because I think I was talking to another analyst, by law, do you have to open up that to others? Vodafone and Deutsche Telekom on the customer side.
As a customer, do I have a choice to go with Vodafone if they offer it in the building? The network is your underlying network. How would it work?
Yeah. Let's take page 15. Let's assume you are in the top of the building here. Can you switch to and hear exactly what you see and finding the FTTH rollout here? You are sitting in the third floor here. Here exactly is what you can choose. You might be in Germany, a DSL customer coming with 100 Mb or 250 VDSL Mb. You are a customer from Deutsche Telekom. You also could be a Vodafone customer, for example, who is wholesaling or the wholesale partner from Deutsche. Now you want to choose. This is what I explained before for open access. By law, we are not forced to offer open access. By strategy, yes. We love open access because on the one hand side, we are offering by ServCo as well, the retail stuff.
On the other side, we will step in with wholesale partners. Our aim is that in the future, it might be possible if you have a Vodafone DSL contract, you might change if you love Vodafone and whatever. You might change when Vodafone signs a wholesale deal with us with a Vodafone fiber contract in that building. Or you say, "Oh, I type in my address, and I see on the page of Tele Columbus, they offer for EUR 40 1 Gb or 2 Gb symmetric in the future. And so I want to change from DSL 100 Mb for EUR 50 maybe or EUR 45 to a 10x faster access." This is the game we are playing in.
Sure. Because then ultimately, you just go about penetration rate for your NetCo.
Exactly. Exactly. You as a customer in the building, because we also get the question, "Oh, when you compare your prices for fiber, for example, with fiber prices from these or that competitors," it is very important to know that in that network on the right side, FTTH, for example, you will be, if we are rolling out the FTTH network, you always play with our network. You are a retail customer by Tele Columbus, or you are a wholesale customer with ISP, but using the Tele Columbus network. The same we offer on the DOCSIS side here already also. This is where we are gaining our customers from right now, changing from 200 Mb, from 100 Mb to 500 Mb or 1 Gb on DOCSIS.
That is basically the long-term infrastructure game on the NetCo side, which makes it interesting. Eventually, for NetCo, it does not matter if it is a retail customer today, which is on ServCo, still under the same roof, or if it is later on simply on the NetCo side, because NetCo will receive the infrastructure fee for providing the network services either to ServCo today or to any other future wholesale player going forward. Eventually, if we talk about DSL decommissioning, once fiber is available in the building, that discussion has started. It will take a couple of years, that is for sure. Eventually, the customers will have to decide where to move. Their provider will have to decide, "Do I want to lose that customer forever?
Am I willing to at least keep the B2C retail revenue share and simply lose only my infrastructure fee, which I cannot provide due to the inferior technology? That is going to be the long-term game. That is what we are aiming for.
Yes. Okay. Thank you so much. Thank you both .
The next question comes from Laura Homsey with MFS. Please go ahead.
Sorry, can you hear me?
Yeah.
Hello?
Hi. Yes, we can hear you.
Sorry, just a housekeeping question. In terms of the term loan outstanding, could you maybe just provide the figure? Because I can't really reconcile the number that was in the Q3 report, which was around EUR 561 million. And then now in the Q4, it seems to have declined to EUR 492 million, given this is obviously accruing interest.
Yeah. Maybe if I can refer you to the full annual report that is being uploaded to the website, there should be a section with detailed information on all the developments. There is also some instrument derivative, which is included in the financing instruments, which has values that are floating or fluctuating around quarter by quarter because they have to be reevaluated at every single closing point. Please have a look. If you do not find the information, then please follow up.
Okay. Great. I'll do that. Thank you so much.
You're welcome.
As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. We have a question from Martino Santicoli with Tikehau Capital. Please go ahead. Your line's open.
Yes. Hi. Thank you for taking the question. I just had a question related to the fiscal year 2024 performance versus the business plan that was shared following the ANE and Capital Markets Day. I understand the driver behind the underperformance in TV, but I was wondering if you could comment a bit on the underperformance in the IP side of the business despite the very strong results that you have achieved.
Thank you, Martino. In terms of comments, I think what we have seen is we've had headwinds on the top line. I think we've discussed this in the last quarters already. At the same time, we obviously adjusted for costs and investments in order to offset. In terms of operational performance and cash and liquidity, I think we are in line as we've basically adapted any capital allocation, as we've also mentioned on the very first summary page. I think that is what we can share. I mean, obviously, TV was a bit difficult to predict. We know where we are. We are working against it and hopefully see improvements going forward. On the IP side, I think the performance is strong. Could it be better? It could have always been better, yes.
I think we are in a good position to continuously show this growth quarter over quarter. Yeah, and further impact, I think we can discuss throughout the year.
Thank you.
Thank you. We have no further questions. Thank you. I will turn the call back over to Markus for any closing comments.
Yeah. Yeah. From my side, thank you again for your participation and for these questions. I think what for us is important in this year focus topics is really operational excellence we are now focusing on. It is, again, the IP business, the growth to continue that story, to make Tele Columbus, yeah, ServCo as well as NetCo, more efficient. These are the biggest topics. Looking for the future, for me, it is really the washout in this year of the TV impact of the business. The IP growth continues. Having from 2026, really the perspective to grow quarter by quarter in different other steps than in the past. This is really underlined by our rollout strategies.
This was also very important for us, the OneNet project to align the networks, to bring them in shape, to bring them acceleratable, and also that with planning capacities, with building capacities in Germany to be prepared for further rollout. This is also what we are looking when we speak about CapEx investing that in growth in fiber, but also in improvement of processes, IT, and sometimes. This is what we are looking for. This makes the story of Tele Columbus so interesting for us as a management team, but of course, also for you as lenders, investors, and analysts. Thank you for that. Have a good day and speak to you soon. Nico also wants.
Yeah, just thank you all. I mean, we hear each other in roughly a month. Just to remind you, we will release at the end of May our first quarter results. In the meantime, if you do have follow-ups after this call, happy to take your questions, sign up on the IR website, send questions to our IR email, or contact me directly. I am happy to have any specific follow-ups if needed. Thank you all.
This concludes today's call. Thank you for joining. You may now disconnect your line.