Freenet "Upgrade to Neutral post pull back" (Neutral) Tang

Research evidence excerpt

Freenet "Upgrade to Neutral post pull back" (Neutral) Tang

Freenet UBS Research

A recap on fundamentals

Freenet has two main drivers – Mobile representing c80% of EBITDA with TV the

remaining 20%. In theory, Mobile should be a stable business with growth coming from

TV, but we see risks:

On Mobile, we see longer-term risks to the independent mobile retailer model –

MNOs are increasingly likely to use direct/digital channels rather than third party

channels like Freenet. AI will likely enable MNOs to better retain and acquire

subscribers. Agentic AI may also help consumers choose new plans directly. Near-

term, the Mobile unit is seeing pricing pressure following a two-year price war in

the German mobile market and there has been a €50m EBITDA shortfall in one of

Freenet’s MNO agreements given volume targets were not met.

On TV, the Waipu TV (IPTV) unit has historically seen high levels of subscriber

growth (+30-40% pa in the three years prior to 2025) to reach a peak of 2.0m

subscribers. However, we think this may have been fuelled by a one-off regulatory

change leading to TV losses for cable competitors in MDUs/apartment blocks.

Since then, Vodafone is fighting back and now bundling its cable TV product for

free along with broadband. In 2025, the subscriber base declined by -10% to

1.76m customers due to a clean-up of non-paying customers, Telefonica

Deutschland deciding to use its own TV product, and slower underlying growth.

Freenet has a target to reach >3m Waipu TV customers by 2028 and for the unit to

generate >€120m of EBITDA (€36m in FY-25) but given recent momentum, this

looks ambitious.

Separately, the other TV assets (Freenet TV/Media Broadcast now reported in Other are

either declining or seeing limited growth).

Limited changes to estimates