Morning, everyone, and welcome to the Tele Columbus AG Second Quarter 2025 Results Conference Call. My name is Brika, and I will be coordinating your call today. During the presentation, you can register to ask a question by pressing star, followed by the number one on your telephone keypad. If you change your mind, please press star, followed by the number two. I will now hand over to your host, Carmen Becker to begin. Please go ahead when you're ready, Carmen.
Thank you, Brika for the introduction. Good morning, ladies and gentlemen. This is Carmen Becker speaking, and it's my pleasure to welcome you in the name of the Tele Columbus management team to today's conference call, following the release of our second quarter results for fiscal year 2025, which ended on the 13th of June. This call is limited to 90 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 grassroots representatives. If any journalists are on the line right now, we would highly appreciate it if you were leaving the conference call now. Grassroots 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.
Thanks, Carmen. [I'm here] on the line. The table of content is the same, as you know. First of all, we go through the key messages. I will say some words on the operational update and KPIs. Nico will follow on the financial performance, and then we are ready for your questions. Let me introduce our key messages. I'm delighted to announce again that T C is the ongoing fastest growing internet operator in Germany, with our customer base increased by 9.5% on a year-on-year comparison, and the revenue growth at 15.2% quarter- on- quarter. Our internet adds was around 13,000 in Q2. Underlying internet, telephony revenue is supported by our successfully implemented price increase in Q1 2025.
We are able to stay quite stable on our gross add performance, 50% rate above 500 Mb, also 501 GB, and also quite stable on our VP share, a little bit decreasing compared quarter- on- quarter or also to the previous year. This is along with our expectation, and the high percentage last year was impacted by the TV bulk migration. Like TV access RGUs are still above 200,000. Also important to notice, TV access individuals are still under pressure, also due to competitive market conditions. On the financial side, our revenues Q2 2025 are at €105.7 million. One of regulatory TV losses due to the bulk migrations are not yet fully offset by our constant growth on the internet and telephony side. The normalized EBITDA is down to €84.9 million.
Also, year- on- year, due to the TV migration impact, reported EBITDA decreased to €60.2 million, driven by operational performance from normalized EBITDA as non-recurring expenses are on a similar level for half year 2025, due to additional restructuring measures. Nico will comment on that. CapEx for Q2, leasing decreased by 25% to €38.9 million, mainly driven by lower investments in network infrastructure commissions and CPE. Liquidity cash position was €73.3 million as of June 30th, 2025, and selective capital allocation focused on operational excellence and network capital to manage liquidity. Coming now to the operational update and KPIs, looking at that graph, we see that TC AG is the ongoing fastest growing internet operator in Germany.
When you look at the declining graphs of every competitor, nevertheless, Tele Columbus as well, but the difference between us and the competitors is still significantly high, and we are able to perform that 9.5% growth mentioned before. Coming to the comparison on quarters compared to 2023 or 2024, solid net ad performance, despite a very competitive environment. Still, double-digit IT revenue growth continues now at 15.2%, which is also expected to be also proven in the future. We are still growing, and back to the growth path, the dot or the plus of 6,000 between Q4 and Q1 was highly impacted by our price increase measures and also in line with our expectation. Now we are back to double numbers, so +13,000.
Also, on our FTTH performance, with 91 internet RGUs in our 211 sound FTTH homes connected footprint, we are on a penetration rate by 43%, which is completely in expectation and it is proven of our strategy. A lmost 80% of all our new customers choose 250 Mb and more. When you look at the ratio here, we have nearly 50% or still in a high pattern, 50%, 500 and more, 501 GB in the gross ads and the bandwidth share. When you look at the bundle mix, we are also here in a percentage. One and two play is now with something around 60%, and the three play offer still on a high level with 40%. The slight decline we see is also completely in our expectation, and several measures are taken .
In our range, it should always be a mixture between 40% and 50% on our three- play products mix here as well. Bulk like TV net ads, like mentioned before, still are good enough for more than 200,000 RGUs. A slight decline, but nearly stable on the TV individual basis. This is due to the high pressure also on the TV market with competitive offers. Premium TV, nearly the same expectation, nearly the same development like on the TV access side. As on the KPIs, I'm now handing over to Nico on the financial ones.
Thank you, Markus. First, if we look at the revenues and the composition of the last couple of quarters, we see first a continued growing revenues trend quarter- on- quarter. Since the drop last year from Q2 to Q3 and then down into Q4 2024, we have now seen stable continued steady growth going forward, which is mainly driven by the internet and telephony business, which was also supported by the customer price increase that we started in February this year. The rollover impact was still visible in Q2, now being on the higher run rate. We do see that the bulk of revenues have remained almost stable for the last three consecutive quarters, which is also a good sign, reflecting the above 200,000 RGUs that Markus was just mentioning.
This is a good trend for us and we try to keep it that way going forward, still managing the last remaining portion of projects that come in. The big drop has been finally probably seen for the last time this summer. As we are now running into the third quarter, the whole TV bulk migration topic should finally be washed out, and we would see then steady growth going forward. In terms of revenue composition, no big change. We are very stable in terms of the share, 55% on internet and telephony, and the TV side on the last decimal slightly changing, but broadly in line with what we have seen in the past.
If we then have a closer look on the EBITDA, I would like first to go and show on the right-hand side, the normalized EBITDA for the six months 2025 is down roughly €8 million down to €85 million, 9% down versus last year's six-month performance. Where does it come from? Basically, still driven on the operating side from the pressure on the top line revenues. We do see the reduction of TV, which was roughly €28 million, down to the bulk migration, which wasn't fully offset yet from the €17 million growth on internet and telephony, including wholesale. Also, compared to last year, we still see the impact from selling the Marienfeld homes connected, which we said is also still visible as it happened last year. In total, revenue is down €12 million, obviously putting pressure on EBITDA as well.
This was then partly offset by operating income, mainly driven to one times from asset disposals, which were slightly higher compared to last year. We had a stronger first half in terms of owned work capitalized. I will come to that in a minute later. That is offsetting some of the revenue drop. We also see positive impacts on direct costs, marketing, and other OpEx. This is also one part driven by the reduced footprint due to Marienfeld and signal fees, but also, the first results in terms of operational excellence, where we do see an improvement on the cost side as well, working against any revenue drops. Personnel, that's a bigger topic here. We still see the impact of a higher FTE number and salary increases versus last year. In the six-month performance, it's a roughly $4 million ticket that is hurting our EBITDA performance.
As Markus mentioned, and we already announced in the last call, that we have executed additional measures in terms of restructuring going forward. This was fully executed basically in June, with signed letters for a very high number of FTEs. We have a clear picture going forward. We have sent quite roughly 2/3 of the people already into garden leave. We had taken a provision of around about $13 million in June, to reflect the restructuring measures that will be seen in the non-recurring expenses and is explained here in more detail. That basically means that we have a clear confidence that going forward on the operational side, we do see positive impacts from this measure. We have already seen a drop on the recurring costs in terms of personnel by $1 million from June to July.
That is already an annualized $12 million impact that has already been booked and is in the bank. This is still to come over the next four to six months, where we continue to execute with additional people going into garden leave and then leaving the company over the next couple of months. This is one of the key measures that we have executed and will improve operational performance going forward substantially. I think this is a very good sign also that we take this seriously, and have executed as it was also expected from us. That having said, we look at the reported EBITDA. I mentioned it in the comparison to the previous half year, where we came from $67 million down to $60 million.
Basically, this is more or less driven by the operational performance on the one hand, as I just mentioned, but also the non-recurring now is still on similar levels to last year. Obviously, the personnel restructuring wasn't completely known at the beginning of the year, as we have developed and executed this during Q2. Therefore, the non-rec is now higher than previously anticipated. I would say that for the second half of the year, obviously, non-recs should become substantially lower. Therefore, we come to the guidance part a bit later. We expect obviously, for the second half, a different pattern in terms of reported EBITDA. Turning to CapEx on page 15, CapEx declined year- on- year due to lower network and customer CapEx. If we look at CapEx excluding leasing, it's on a quarter-by-quarter basis, 25% down, roughly down to €40 million from €50 million last year.
The key factor basically that we had in the infrastructure investments, lower investments with regards to backbone, DOCSIS 3.1 maintenance, w e obviously focus on maintaining a high fiber rollout level, but still nevertheless, the numbers have been reduced versus last year. Again, on end customer-related CapEx, we see obviously partly on the back of lower sales, t he comparison on subscriber acquisition cost is roughly down €5 million out of the €11 million compared to the €20 million last year, the quarter. Partly on the CPE spend, as we could also use more refurbished equipment with lower gross sales, gross add numbers, that is obviously helpful in terms of CapEx spend. Own work capitalized, we mentioned it's a bit higher compared to last year. This is basically also to improve timely monthly tracking to avoid peaks in Q4.
Also, with this year having a big portion of FTEs leaving, we obviously made sure that all the recorded hours are booked accordingly and timely, to make sure that we can manage to improve and optimize own work capitalized. To summarize the six-month performance, it is still impacted. I n light of the bulk migration and transformation in terms of revenue, w e mentioned the 4% drop and decline. It's still seen in terms of the TV side, as mentioned, hopefully as of Q3. This is washed out, and then we would be in a proper year-on-year comparison in terms of performance. That should see basically a mode back to growth. In terms of reported EBITDA, we see the decrease due to the lower revenues and higher personnel costs, also with regards to the continued transformation.
As we said on the operational performance, we still have some headwinds which put pressure on the normalized EBITDA, but we're working there and we're seeing the difficult market situation, market environment in terms of TV and internet and phone, but we are working against it and trying to improve as much as possible. In terms of investments, excluding leasing or in proper terms, the right of use assets, they're significantly lower, roughly 20%. We are very cautious and selective in terms of where we focus, in terms of sales and fiber strategy. On the operating cash flow, which is down 38% or €31 million, this decline is basically round about 1/3 from the operational performance, the pressure on the lower EBITDA numbers, but also due to working capital impacts of roughly €20 million, which is spread across receivables, inventories, and other impacts.
There are a lot more details in the documentation on that. After the financial performance, just coming to additional topics in terms of what else is going on, o ne, what is the situation on NetCo, ServCo? We have further progress in terms of optimization. It's now minor, smaller steps. As we've always said, we're more in a housekeeping cleanup mode as the big chunk had already been completed last year. In terms of what happened in Q2, we have further simplified our legal entity landscape. We added additional four rather tiny 100% owned legal entities, which have never been fully integrated into the TC operational systems. We've merged them now into NetCo and spun off the B2C business into the ServCo. We're only talking around about 40,000 homes connected and 25,000 RGUs.
They were obviously previously included in the group numbers, but now they're properly in the NetCo and ServCo legal entities. Second, due to the restructuring on the FTE side, we have reevaluated core processes. We're ongoing in terms of looking at what needs to be done left and right in terms of NetCo, ServCo processes. We now have to readjust based on the additional measures that we're executing. This is basically an ongoing business. Lastly, we are looking to further improve the carve-out accounts discussion in terms of having proper NetCo, ServCo financials. This will still take time, as we're cleaning up over the next couple of months. Similar, on the operational side, we are, as we mentioned, looking on operational excellence on both sides to further improve the numbers. Other finance topics, page 18.
As I just started with NetCo, ServCo, there has always been the discussion of, what's the status on a potential ServCo sale? We also mentioned this in the annual general meeting in July, that there have been discussions and the process was commenced in the first half of 2025. There are currently no active negotiations ongoing with counterparties. We will keep you informed, and there is no more information that we can give at this point in time. With regards to financing activities, also similar to last quarter, we are considerin ag funding mix and looking to optimize in terms for operational performance purposes from time to time. We are looking at our liquidity position, and we consider it as being comfortable and we have levers to pull if required. There is currently no ongoing discussion in relation to the options of utilizing the super senior basket.
Again, we will inform once there is more to say. Coming to guidance, this was a big topic last quarter and in the Q1 release call. We are basically reinstating the guidance. As you know, we have four core KPIs. One is net sales, one is reported EBITDA, one is CapEx, and one is the two-way and non-two-way upgraded homes connected. Basically, we keep three of them unchanged. The one we have to change slightly is the change in terms of net sales. The expectation is now that we are slightly down low single-digit million due to the annualization impact, as we are not fast enough to fully compensate it. It's not really possible, and instead of a slight growth, we expect a slight decrease in terms of net sales. That's the only one that we have truly changed.
In terms of reported EBITDA, a s we had discussed previously and basically unchanged, we expect a slight increase. That's basically not truly coming from the operational performance of normalized EBITDA, but obviously on the reduction of the non-recurring expenses that are much lower despite the continued transformation. It's a different pattern of what we have this year compared to last year. Last year was still impacted by the financing A&E by the TV bulk migration that obviously has left. We had set the separation of NetCo, ServCo, and that is the only one that remains this year, plus the additional FTE transformation measure that we introduced in June. The second half should be much, much lower, and that helps to drive and improve reported EBITDA, but headwinds on the normalized EBITDA, which we are not guiding is still there.
CapEx, as we've seen from the last two quarters, much lower level and we expect this to continue. Therefore, unchanged guidance, that we are seeing a decrease in the mid-double-digit millions. On the two-way and non-two-way upgraded homes, we expect a slight decline. You see the numbers in the [toolkit as well], but the guidance here is unchanged. As we have quite a few subsequent events, I would like to take the time and shortly walk you through this, page 19. I n terms of the effects on the Supervisory Board, based on the annual general meeting on 10th of July , we changed a couple of things. All these subsequent events are described in more detail in the financial report. This is just a quick summary, just to mention a few of them. Basically, what we've done on the Supervisory Board is we changed the number of seats.
The compensation has been changed as we've taken external experts on board. We had a confirmation of the previously court-appointed members, and one additional member was elected to the Supervisory Board. A second topic, which I think is quite important and was long- awaited is the equity measures. We did have, as basically agreed in the amend and extend documentation, and as it was always intended, that the shareholder loan would eventually be swapped into equity. We have started and executed the first of two swaps. One is that new shares had been issued, and we roughly issued an increased share capital by 148 million shares. That was executed in July. Only Cooply as the main shareholder was admitted to subscribe. Therefore, the first equity swap was executed, adding shares plus the € 66 million which were contributed to the free capital reserve.
We roughly took out € 215 million of shareholder loan and increased accrued PIC, and have shifted this from debt into equity. At the general meeting, it was also decided and approved that the company is now allowed to have additional share capital that can be increased by an additional € 222 million. Again, against cash or non-cash contributions, this authorized capital has now been entered, registered in the commercial registry. As this was successfully done a couple of days ago, we are now able and in a position to complete the second debt-equity swap, which will be in the exact same procedure.
Therefore, we expect by probably end of September latest, that the full shareholder loan and the full accrued PIC interest will be swapped from debt into equity. Lastly, in terms of the Management Board, we announced a change yesterday evening, and that basically is my own personal note to you. I will leave the company with the effect of Sunday, 31st of August . The CFO duties will be formally taken over by Markus on an interim basis. This today is my last call. I would like to thank you for the good collaboration in the last two years. This basically concludes the presentation today, and we are happy to take your questions now.
Thank you. We will now begin the question- and- answer session. If you would like to ask a question, you can do so by pressing star, followed by the number one on your telephone keypad. If you change your mind anytime and would like to remove that request, you can do so by pressing star, followed by the number two. When preparing to ask your questions, please ensure your device is unmuted locally. First question comes from [Christoph Stefan] with Tikehau Capital. Your line is open.
Yes, thank you for taking my question. I have three, if I may. The first one, just on your CapEx guidance. I think just taking this into ac count, I guess last year you spent roughly €250 million on a cash basis. This year, I guess the plan is to spend around €200 million. I think last year you managed to connect around 90,000 FTTH households. Is that a run rate that you can still sustain at that lower CapEx level? That would be my first question. The second question, just on your cost-saving program, could you provide a little bit more detail on target savings that you think you can realize? I think you spent roughly €30 million or so now on provisions. Basically, you set provisions and restructuring costs, etc., aside.
Is that a fair kind of annualized run rate that we can assume going forward? Do you expect that to be fully realized in 2026? W e will see a €30-odd million uplift in EBITDA, t hat's the second. The third question, just on your financial policy, I guess. With that CapEx reduction this year, the cost savings, normalized EBITDA minus CapEx could potentially be balanced next year, maybe even slightly positive. Is that what you're targeting for, to reach broadly break-even free cash flow in the near term? Thank you.
Thank you. Let me take this question or the three questions. In terms of CapEx and focus on fiber rollout and your comparison, can we achieve the same fiberized homes connected with a lot less CapEx? Probably no. We rather expect, if you look at the run rate, what we've added in the last two quarters, we are targeting towards 60,000 homes connected in terms of fiberization for this year. There is a slight slowdown, and something that we currently do see in the market as well. I would say that is something that we are targeting for this year. In terms of the cost savings measures, as I mentioned, we have already seen basically a $12 million run rate already this year that we can see.
What we expect after this is fully completed, is that we have a run rate reduction in terms of HR costs versus today, of around $25- $30 million in a fully executed, completed measure, which should come into effect as of Q2 2026. There is additional measures in place that we are discussing in terms of operational excellence, which are non-FTE related, with 30% less FTE. We are obviously looking at our consolidation of office locations in various cities.
That is something that we do see and will have additional impacts on top, going into the next year at different points in time. Similar headcount reductions will bring additional cost savings across the board, across the lines in various other overhead lines. There is a lot more to expect, but this has to be validated and fully seen how we go into 2026. In terms of projections and guidance, as of today, we cannot give any guidance for 2026 yet. This is too early.
Thank you. Your next question comes from Ben Rickett with New Street Research. Please go ahead.
Hi guys, and thank you for the questions. I had two, please. Firstly, on your broadband subscriber growth, you highlighted the improvement to 13,000 this quarter. I'm just wondering whether you now expect that to improve further in the second half or whether that's the rate we should expect going forward. The second question, I think the German government is looking at proposed revisions to the telecoms law in 2021, in an attempt to accelerate the deployment of fiber and particularly in end-use. Can you talk about how you expect these proposals to impact your own fiber deployment, and also whether you're supportive of the changes?
Ben, Markus here, I will take your question. You're completely right. We are expecting a growth coming from 6,000 growth in Q1, 13,000 growth in Q2. We are looking for further accelerations of that number in Q3 and Q4. Depending on what we saw in the market, I mentioned it in several other talks before, competition, looking at also the performance of our competitors or what we see in the market, paid commissions or paybacks or whatever, w e just saw in MediaMarkt, a campaign by competitors, which is linked to a cashback for customers who are buying in MediaMarkt with €500 and more. We are not willing to [pair] in these offers to our retailers or whatever. We are deeply focusing on our operational excellence side, which also has a focus on consumer sales improving here, channel by channel. This is what we see.
On top, we did the price increase measure in Q1. To cut a long story short, yes, we will see an improvement. This is our expectation. On the discussion on improving the TKG law in Germany, I think with this point paper coming from the ministry, I think it's at an early stage. We are in the middle of discussion with several industry associations, and we are highly involved in discussions with ANGA, for example, but also our biggest partner in our business is the housing association side.
With the GdW Association, which is the biggest industry association for housing, we are in line with our answers here. For us, the current law is enough. More regulatory injections in the market are not needed. I would say we are at an early stage to comment more on that, t oo early stage to comment on that. I think we expect more. Maybe it is worthwhile then in the next call or I think there will be definitely more to say at the end of the year, what will be the impacts on our business?
Okay. Thank you, Markus, so clear. Nicolai, good luck with the future.
Thank you.
Thank you. We now have [John Yards-Gilbert] with RBC. [crosstalk] .
Yeah, hi. Good morning. Thank you for the presentation. I've got three questions, I mean, three topics. The first one on your ability to transfer your bulk TV or your former bulk TV into an individual TV contract. That's the second quarter in a row where your individual TV base has contracted by 6,000. I recall that you do no longer indicate your objective of retention of 50%- 55%. If I'm not mistaken, this retention rate to date has decreased further to 46% as of June 2026. How do you intend to address in practice, the roughly 30% of your former bulk contract base which are no longer under contract, but still receiving the signal fee for free? That's my first question. Therefore, do you expect to see a stabilization or a positive net add in terms of TV individual contracts?
My second question is, and Nicolai, on your comments about the fact that the company forces a comfortable liquidity position currently, it's over what type of horizon? Is that until year-end or for the next 12 months or until 2026? I f you can be a bit more precise. On the equity measures you've announced, I'm just trying to reconcile the figure with these various announcements. If I just sum up, you indicated an increase of €148 million, of which €66 million has been contributed. The €66 million coincides with the capital increase under shareholder loan, which were done in 2023. T here was another capital increase again under shareholder loan, which was made in 2024, for €150 million. T here was the residual €85 million in Q1 2025.
If I sum up the three items that broadly correspond to the €148 million and €222 million you referred to in your slide, does that mean that all these equity increases should be, broadly speaking, all in non-cash or u nlike what you pointed out in your last bullet point, where you say that it could be a new share against cash or non-cash contribution. If I sum up the overall total shareholder loan, which has been raised since 2023, we are more or less already at that level.
Yeah. Thank you. Markus, can you take the first one?
I'll start with the first one on the TV side. What we are seeing in the TV market in Germany is, or starting with Tele Columbus AG, we are now at nearly 1.1 or 1.07 million RGUs on the TV side, bulk and individual together. We are still working on our measures, like I said in the calls before. First of all, it is our normal sales activities, bundling together with our IP growth, managing our increase in sales points or point of sales. Blocking activities are one of our targets, to address this gap which you mentioned. Also, together with housing associations, projects which we are running more on a door-to-door side. TV business is more or less a door-to-door business. Something also happens on the retail side.
The bundling with three projects, I think these are the biggest channels, I would say are in brackets, or [crosstalk] to mention. I would expect for the future, so t he TV in Germany is also, when you look at comparison with IPTV from other competitors, more or less stable business when we are now settled here. We see also on the IPTV side, a decline of competitors on the TV side. In the last reports, when I look from competitors, it will be in the future a tough business.
I would say we are now looking at more or less, 6,000, 5,000. Hope to see also in the future on a quarterly basis, a 4,000 or 6,000 growth. T he biggest drops happened in the past. We are now managing to improve quarter by quarter, sales side, operational side, product side, pricing side, ideas with bundling and the biggest point, project with housing association, either on the blocking side, but blocking is the selling side and sales side to increase TV subscribers.
By blocking, you mean blocking the signal for those customers [crosstalk]?
Yeah. Disconnecting, blocking or disconnecting, and addressing the people who are not paying for the signal. Exactly.
In a certain way, potentially forcing them to get into individual contracts. Do you expect this to be fruitful as soon as or before the end of this year, or is it going to be more a long process t hat would be potentially visible beyond 2025?
Exactly, yeah. I think this will now be our optimization quarter by quarter, and will follow for the next years. Like I said, we need to have enough point of sales. We need to have the right point of sales addressing especially the TV business. Because when you look at our online channels, customers are more buying IP stuff on the online channel than TV stuff. Quite new ideas, how to bundle our really good product, which can deliver the highest speed in the dwelling units of housing associations.
Good to have good ideas with TV offers here or maybe also with our setup box or whatever. This combination with disconnecting activities with housing association's a fiber upgrade project. When we are upgrading with fiber, again a chance to stand in front of the customer. Use every contact point, be better on the customer care side. Use customer care more on the selling side as well. These are a number of different operational sales excellence stories we have in mind, and as a chance to be better on that side in the future as well.
Thank you.
Maybe just to add one final point on this topic, then I take over the other two questions. If you read the reports from other players between the lines, then you can see what others are doing. They're simply basically bundling as well, the TV as a buy-through, as a compulsory product, having TV access in terms of, if you buy internet and phone. You see a dilution of ARPU because part of the revenue goes into TV, t hat's obviously something that we try to do differently in order to have still a paid TV product. That's going to be the challenge, as Markus just described. You need to be in front of the customer and have a face-to-face discussion, and try to have a true bundle being sold, adding some of the TV revenues to your product line.
Thank you.
Two other questions, liquidity and equity. Liquidity in terms of horizon, obviously we're always very cautious and looking at that there is no risk in terms of going concern. Therefore, I'm not giving you a guidance towards 2026 or anything else, but we say that for the time being, we are fine and we are constantly monitoring, and in discussions also with our own shareholders for any other options that we may or may not have to draw. In terms of the equity measures, I think just to be very clear, all this is non-cash. It's a non-cash contribution where we have a debt-to-equity swap. In total, we are talking about the €300 million shareholder loan that was agreed in the A&E transaction, the €180 million at the beginning in March 2024, plus the €120 million, plus all the accrued interest.
The PIC was round about, let's say, €55 million. All this is going to be swapped. The first portion that has been swapped was giving out the 148 million new shares plus the capital reserve of €66 million. Now the second portion will be swapped with additional new shares being issued. There might be a remainder, a small portion that goes into the capital reserve. Once both measures are executed, the full shareholder loan of €300 million plus all the accrued interest will be swapped and out of the balance sheet in terms of debt to equity.
Okay, thanks for the clarification. It was because on the bullet points three, it was mentioned that the potential increase in share capital by an additional 220 million new shares was indicated against cash or non-cash contribution. I understood. .
I got your question now. That is the formal option. There will be remaining share capital available for additional increases in the near future. The current shareholder loan plus PIC interest does not fully basically take up all the new share capital created. A s you probably know, the share capital created is always based on the existing amount of share capital available. Therefore, that is the maximum amount, which is now still available. That will be partly used to do the second debt-equity swap. After this, there will be a remaining portion of an authorized capital that could still be used in the future. That is maybe the difference between what you thought and what I explained.
Yeah. Can you quantify this remaining available, assuming all the shareholder loan were to be converted in the near term?
Out of my head, I think we are mainly the $250 million. I think we are swapping an additional $140 million, which is mostly new shares. There should be something left of around $80 million, $85 million or something, b allpark numbers. That's the full numbers we will disclose by the end of September. That's around the number that should be remaining.
Okay, thank you very much. Good luck for your next endeavors. Thank you.
Thank you.
Thank you. Just as a reminder, if you would like to ask any further questions, you can do so by pressing star, followed by the number one on your telephone keypads now. The next question we have comes from Bruno Red-Cutting with ADF Asset Management. You may proceed.
Yeah, thanks. Hi guys. I've got three questions. Firstly, just on the reduction in the workforce. C ould you just maybe elaborate the proportion of the workforce you're reducing and where those layoffs are based? I'm just trying to bridge obviously when MSIP bought the business. Obviously, there was a huge increase in FTEs to try and grow and scale the business. This looks to be, to an extent, unwinding that. I'm just obviously understanding if there's a change in strategy perhaps, or your expectations for future growth and CapEx rollout given that. Similarly, just related to the CapEx reduction and also the slowdown in the fiber rollout, any more context around how you see that playing out as well would be helpful. My second question is just on the ServCo . Obviously, you mentioned you launched the process, but there's no process ongoing.
Again, any more color on why the process ended, and any expectations we could expect in terms of having a more meaningful update around the financial split between those two businesses, or any event would be helpful. My very last question was just, on the slide, y ou obviously say you're comfortable with the liquidity position, but you have levers to pull. Just any context around those levers would be helpful. Is it reducing spending in the business, either OpEx or CapEx further, or do you actually believe you have inorganic means to raise additional capital away from the super senior basket through selling assets or anything else? Thank you.
Yeah. I'll take your first question on the FTE side. I think it's roughly 300 FTE, which we are reducing. It might be, there will be additional ones, looking at what the future brings. Yeah, this is our targe, or it's always when you build up a team or are looking for that restructuring, it's hard times, but also good times on the financial side in that case. To give you more flavor on that, these are signed contracts. Signed contracts that people will leave, left the company already and now are in front of garden leave, and will leave the company Q3, Q4, Q1. We have an exact roadmap on when they leave, because we have that signed contract. This also gives then an outlook on our perspective on what are the HR costs. I think it's a simple math.
The corridor was mentioned by Nico before. Something between €25 million and €30 million is our expectation for the future, as a complete finishing the program annualized effect. Several other measures, like mentioned by Nico, so we are able to reduce or not any more needed, the 3.1 DOCSIS upgrade. We are now focusing on the fiber rollout. We have improvements on the maintenance side. Completely in line with what Nico said, everything which is related to 300 people on the office side and IT side licenses, and whatever brings additional reductions in the future on other positions.
Let me take the other two questions. I n terms of ServCo, t here is not much more that we can share today. It is what we have said. I think that that is where we are today. In terms of giving out more transparency in terms of financial split, I mentioned that we're still working on carve-out accounts. We're still aligning and optimizing the intercompany relationship. We're still working on the housekeeping, as I mentioned, in terms of the last remaining small steps in terms of legal entity simplification. This is still ongoing. As previously mentioned, we're not setting a point in time, a specific date where we have to do and have to report the split. This is still work being done internally by the teams. Whenever we are ready and confident that we can share that information, we will share that information.
In terms of your question to liquidity, there's always measures that we can pull. As Markus mentioned, we have the operational excellence achievement that we see. This is now being executed and closely monitored. This will bring us on a different run rate going forward into next year. Besides that, I think we' re always in discussions with our shareholders. That is all that I can say today, and basically refer to what we mentioned earlier.
Okay, thank you. I guess a couple of follow-ups just on that, but just on the FTE, just that question. Is it sort of broad-based reductions across the company, or is it back office? Is it sales team? Is it engineers? It'd just be helpful to understand that. I guess, you'll come back to the ServCo. Yeah, sorry.
Yeah. I just wanted to answer this one. It's broad across the base, but obviously, we're trying to limit the impact on sales itself. It is back office sales and other activities, and it's also in the technical areas. The workforce reduction is across every single department.
Got it. Okay, understood. That's helpful. Thank you. Just on the ServCo, I know you don't want to elaborate too much, but obviously, the bond docs have the best efforts. M eans if you guys trying to do the split and then seek to raise capital externally, j ust to understand, there's no language in the docs which you have to abide by strictly in terms of actually executing on that. Is the attempt that you've done on the ServCo, the process you've launched and that process now ended, now means that you have completed that sort of best efforts process or not? Just to understand exactly what's happened there.
Okay. I mean, the best effort documentation, as mentioned in the A&Es, it says 18 months should be looked at in order to separate and then an additional 18 months, we should try to sell. I think with having the separation done in less than 12 months, we have been in excellent shape in terms of trying and doing the first step. In terms of the second step, I think as we mentioned, it hasn't been fully completed yet. There is no strict deadline or timeline that triggers.
It's always in the best effort. What we are doing is also in close collaboration with our main shareholder, that we think whenever it's appropriate and right, that we think or think not about selling part of the assets. It is part of the documentation. Yes, there is best efforts defined, but no more nor less. I think we've achieved a big portion of the first step much earlier. Now we're looking at whatever is possible in whatever timeframe. I would basically say that this is the answer to your question in terms of documentation and timing.
All right, u nderstood. Thank you.
Thank you. Your next question comes from Antonio Barranco with BlackRock.
Hi guys. First, Nicolai on the base, as all the people on the call, in future professional projects. I guess I know that you cannot comment much more on the ServCo sale, but let me try to rephrase the question. T here something that you have learned in what seems like a process, in terms of how you think about value creation in the company, future monetization, or changes you view on, or any views about how the asset is perceived or the different portions of the asset are perceived in the market, and how that changes your views, if in any way, about how you're thinking about addressing the capital structure in the future and future value creation. Thank you.
Thank you, Antonio. Not 100% sure what the question was, i f we learned something out of the process. I mean, I don't think anything has changed. The clear idea, long-term strategy is what it is. We have an infrastructure partner who is more interested, I would say, in infrastructure. Long-term targets are clear and nothing has changed there. It's just a matter of timing, market, and when is the time right to do what, and what is the price that may or may not be in the market? I think there is nothing changed in terms of strategy and focus. Again, we have a long-term partner and there is no rush, no need to do anything if the timing is not right.
To rephrase what Nico had said, Antonio, it is also that the feedback we got or we also get off our conversations is that looking at Tele Columbus , we are the fastest growing IP operator in Germany. Our first view on our asset is bringing subscribers and RGUs on the network. We are strong on the DOCSIS side. I think we have an excellent, perfect segmented network on the DOCSIS side. We are achieving our targets when we fiberized with a high penetration and the possibility, of course of having a customer base and not fiberization of our network looking for a customer base, but then having the ability to transfer current customers to the base and then even increase it. T his collaboration of the housing industry, having the lowest of them or one of the lowest fiberized per home costs in the market in Germany.
I would say the good thing or everything of our strategy, look at your network and optimize on the operational excellence side, which now is also delivered with several programs. I think that gives us really the support of our strategy. I think this is what we really, as a team, as a management team, together with our shareholders, also get from the market.
Yeah. I guess if I may have a very quick follow-up, I'm not too late for the point, and I think Nicolai, you also touched on the direction of my question. I guess what I'm trying to understand is, it sounds that there was a view that ServCo may attract a certain level of interest in the market. The question is whether you think that that hypothesis is still the case, that you think that ServCo on a standalone basis is an attractive asset and it's a matter of waiting for the right market conditions.
It is an attractive asset, and now we are looking for the right timing together with our shareholders.
T hank you very much.
Thank you. Just a quick reminder, for any further questions, you can press star followed by the number one. We now have James Hogarth with PVTL Point.
Hi, thanks for hosting the call today. One very quick question from me. In terms of the decline in operating cash flow that you've had over the first six months, this kind of reduction of €31 million or so, you mentioned obviously around €20 million of that was from working capital. Can I just confirm, are you expecting that working capital to reverse entirely or part of it, and over sort of what timeframe over the second half of the year? I guess related to that, how do we think about operating cash flow, or how do you think about operating cash flow for the next six months in terms of the current run rate? Thank you.
Yeah. Thank you for your question. As mentioned previously, also in Q1, we do expect partly a recovery in terms of the second half, which is also related to some of the seasonality that we see in our business. Yes, I expect some of it to be recovered in Q3 and Q4, probably not all of it. That will be the short answer. In terms of operating cash flow for the next six months, we have given some of the guidance and the biggest topics are already addressed in terms of EBITDA reported, CapEx and now with some comments on networking capital. More than that, I'm not in a position to give out more details, sorry.
Yeah, that's fine. Thank you very much.
Thank you.
Thank you. We currently have no further questions, but as one final reminder, you can register a question by pressing star followed by one on your telephone keypads now.
Okay, when there are no further questions, let me close off today on a personal note regarding the change in the Management Board. As previously mentioned by Nicolai, he will leave the company on his own request and completely by mutual agreement, on next Sunday. What I want to say here in that round, Nico, as the supervisor above and speaking for the entire management team, we'd really like to thank you. Your achievements, your commitment to the company, I only can quote it with extraordinary or outstanding. Best for you, for your career, for your personal life, and hope to see you soon.
What I would also like to announce that on Monday, September 1, Joachim Lubsczyk from Alvarez & Marsal will once again support the Management Board as Interim Manager. Thanks to his interim work in the past, he already knows the company very well. He will be able to pick up where he left seamlessly, and will support the Management Board also on some of the topics that Nico will hand over to me. As a team, we also go into the future in that case with Joachim on that side supporting us. Thanks to all of you on the line, and have a good day. Thank you very much.
Thank you, Markus. Thank you all.
Thank you, all. I can confirm that does conclude the Tele Columbus AG Second Quarter 2025 Results Conference Call. Thank you all for your participation, and you may now disconnect.