Freenet Upgrade to Neutral post pull back

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Freenet Upgrade to Neutral post pull back

Freenet UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Is Freenet a beneficiary of elevated competition in the German mobile market?

We do not think so. Initially, in mid-2024, Freenet was able to secure longer-term deals with MNOs

with better economics as MNOs looked to gain share post a step-up in German mobile competition

driven by Telefonica Deutschland looking to compensate for the loss of 1&1 wholesale revenues.

Whilst Freenet is seeing good volume growth (+3% post-paid subscriber growth in 2026E), the

Mobile unit is seeing pricing pressure following a two-year price war in the German mobile market

(ARPUs -4% in 2026E) and there has been a €50m EBITDA shortfall in one of Freenet’s MNO

agreements given volume targets were not met. Additionally, AI may lead to risks for the mobile

reseller model longer-term (consumers could use agentic AI to help select new plans and MNOs could

better utilise AI for customer retention/acquisition rather than use indirect channels).

Q: Will Waipu TV (c10% of Group EBITDA) continue to grow?

Yes, however growth has slowed down. The unit has historically seen +30-40% pa subscriber growth

(+400k net adds pa on average) in the three years prior to 2025 to reach a peak of 2.0m subscribers.

However, we think was 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 with slowing underlying growth as well as a clean-up of non-paying customers/

Telefonica Deutschland deciding to use its own TV product.