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1. Company Snapshot

1.a. Company Description

freenet AG provides telecommunications, radio and multimedia, mobile communications, mobile Internet, and digital lifestyle services in Germany.It provides a portfolio of services and products primarily in the areas of mobile voice and data services.The Mobile Communications segment offers mobile communications services, such as marketing of mobile communications services, which include voice and data services from the mobile communications network operators; sells and distributes mobile communications devices, as well as offers additional services for mobile data communications and digital lifestyle; and planning, construction, installation, and maintenance services for WiFi networks.


The TV and Media segment provides services to end users in the field of DVB-T2 and IPTV; and planning, project management, installation, operation, service, and marketing services for broadcast-related solutions for business clients in the radio and media sectors.The Other/Holding segment offers portal services, such as e-commerce/advertising services; payment services; various digital products and entertainment formats for downloading and displaying, as well as use on mobile devices; communication development solutions, IT solutions, and other services; and voice and data services.The company provides its services under the mobilcom debitel, GRAVIS, MEDIA BROADCAST, klarmobile.de, freenet ENERGY, vitrado.de, FUNK, freenet BASICS, freenet MOBILE, freenet VIDEO, freenet.de, freenet FLEX, freenet TV, waipu.tv, CARMADA, The Cloud, and freenet Business brands.


It operates approximately 520 mobilcom-debitel shops and 40 GRAVIS stores.The company sells its products through approximately 400 electronics stores, as well as online platforms.freenet AG was founded in 2005 and is headquartered in Büdelsdorf, Germany.

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1.b. Last Insights on FNTN

Freenet AG faces challenges despite showcasing strong financial performance and innovation with AI integration and strategic partnerships. The company's recent earnings call highlighted record postpaid additions, but European market volatility and AI disruption weigh on investor sentiment. Freenet's dividend stock status offers stability and income potential, but concerns about economic growth and interest rate cuts persist. The company's ability to navigate uncertain market conditions and maintain consistent returns will be crucial. (Source: freenet AG (FRTAF) Q4 2025 Earnings Call Highlights)

1.c. Company Highlights

2. Freenet's 2025 Earnings: A Mixed Bag with Growth Prospects

Freenet AG reported stable revenues for the full year, despite a miss in Q4 due to the sale of the WiFi business and a one-time effect from the sale of IP addresses last year. The company's adjusted EBITDA was negatively impacted by €13 million from the MNO agreement. Earnings per share (EPS) came in at €0.57, below analysts' estimates of €0.634. The gross profit remained stable for the whole year, despite a miss in Q4.

Publication Date: Mar -01

📋 Highlights
  • Postpaid Net Adds Surge:: Achieved 546,000 postpaid net adds (306,000 organic, 240,000 from mobilezone acquisition), a record for Freenet.
  • MNO Agreement Impact:: EBITDA hit by €13 million in 2025 and up to €50 million from 2026–2028 due to unfavorable network provider terms.
  • Waipu.tv Growth:: Generated €36 million adjusted EBITDA in 2025, targeting 3 million subscribers by 2028 with €20 million advertising revenue boost.
  • Dividend Commitment:: Proposed €2.07 dividend for 2025 and guaranteed minimum €2 annual dividend from 2026–2028, backed by 80% free cash flow payout.
  • AI and Strategic Goals:: Aiming for €620 million EBITDA by 2028 via AI integration, with broadband/energy restart and synergy-driven growth from mobilezone acquisition.

Segment Performance

The mobile business saw a decline in revenues, but an increase in service revenues. The company achieved an all-time high in postpaid net adds, with 546,000 postpaid net adds, driven by 306,000 organic postpaid net adds and 240,000 net adds from the acquisition of mobilezone. In the TV and media business, waipu.tv achieved adjusted EBITDA of €36 million, with 150,000 underlying net adds in 2025.

Guidance and Outlook

Freenet guided for a challenging 2026 due to a base effect and a disputed network operator agreement, which will have a negative EBITDA effect of €50 million. However, the underlying business remains strong, with expectations of €500-530 million on an EBITDA level and corresponding free cash flow. The company aims to become a leading AI telco in Germany, leveraging its small size and flat hierarchy to make quick decisions and implement AI tools across the business.

Valuation and Dividend Policy

With a P/E Ratio of 11.99 and a Dividend Yield of 7.12%, Freenet's valuation appears attractive. The company's commitment to paying at least €2 as a minimum dividend for 2026-2028 provides certainty to shareholders. The implied dividend payout ratio is around 80% of free cash flow, which could lead to a higher payout. Analysts estimate next year's revenue growth at 1.6%, indicating a stable outlook.

Key Risks and Opportunities

The disputed network operator agreement poses a significant risk to Freenet's EBITDA. However, the company is in discussions to renegotiate the contract, and Ingo Arnold stated that only one partner has a similar contract structure. On the other hand, Freenet's focus on AI and its potential to drive growth and profitability is a key opportunity. The company's ambitions for 2028 include an EBITDA of over €620 million and a free cash flow of over €340 million, implying a dividend of around €2.30.

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freenet AG (FRTAF) Q4 2025 Earnings Call Highlights: Record Postpaid Additions and Strategic ...

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.40%)

6. Segments

Mobile Communications

Expected Growth: 2.5%

Freenet AG's Mobile Communications segment growth of 2.5% is driven by increasing demand for mobile data services, expansion of 5G network infrastructure, and strategic partnerships to enhance customer experience. Additionally, growing adoption of IoT devices and rising mobile payment transactions contribute to the segment's growth.

Television and Media

Expected Growth: 1.8%

Freenet AG's Television and Media segment growth of 1.8% is driven by increasing demand for digital media, expansion of fiber-optic networks, and strategic partnerships. Additionally, the rise of streaming services and online content consumption contributes to the segment's growth, as well as the company's focus on providing high-quality content and innovative services.

Other/Holding

Expected Growth: 1.2%

Freenet AG's Other/Holding segment growth of 1.2% is driven by increasing demand for digital services, strategic investments in innovative technologies, and expansion into new markets. Additionally, the company's focus on cost optimization and operational efficiency has contributed to the growth.

7. Detailed Products

Mobile Communications

Freenet AG offers a range of mobile communication services, including mobile phone contracts, data plans, and mobile internet services.

Fixed-Line Communications

Freenet AG provides fixed-line communication services, including landline phone connections, internet, and TV services.

Digital Lifestyle

Freenet AG offers a range of digital lifestyle products and services, including streaming services, online storage, and cybersecurity solutions.

Internet of Things (IoT)

Freenet AG provides IoT solutions and services, enabling businesses and individuals to connect and manage devices, machines, and sensors.

Wholesale

Freenet AG offers wholesale services to other telecommunications companies, enabling them to resell Freenet's products and services.

8. freenet AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Freenet AG operates in a highly competitive market, and there are many substitutes available to customers. However, the company's strong brand recognition and customer loyalty help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Freenet AG's customers have a high bargaining power due to the availability of alternative service providers. The company needs to focus on customer retention and loyalty to maintain its market share.

Bargaining Power Of Suppliers

Freenet AG has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong relationships with suppliers also help to mitigate any potential risks.

Threat Of New Entrants

The threat of new entrants in the telecommunications industry is moderate, as there are significant barriers to entry. However, Freenet AG needs to continuously innovate and improve its services to stay ahead of potential new entrants.

Intensity Of Rivalry

The telecommunications industry is highly competitive, and Freenet AG faces intense rivalry from established players. The company needs to focus on differentiating its services and improving its operational efficiency to stay competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.11%
Debt Cost 5.53%
Equity Weight 73.89%
Equity Cost 7.40%
WACC 6.91%
Leverage 35.34%

11. Quality Control: freenet AG passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Proximus

A-Score: 6.6/10

Value: 9.1

Growth: 3.4

Quality: 5.2

Yield: 8.8

Momentum: 6.5

Volatility: 6.7

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A-Score: 6.2/10

Value: 4.0

Growth: 4.0

Quality: 5.9

Yield: 7.5

Momentum: 6.0

Volatility: 10.0

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Freenet

A-Score: 6.2/10

Value: 6.2

Growth: 3.2

Quality: 7.7

Yield: 9.4

Momentum: 2.5

Volatility: 8.3

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Value: 4.3

Growth: 2.6

Quality: 4.4

Yield: 8.8

Momentum: 8.0

Volatility: 9.3

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United Internet

A-Score: 5.8/10

Value: 6.4

Growth: 4.4

Quality: 3.1

Yield: 7.5

Momentum: 9.0

Volatility: 4.3

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Tele2

A-Score: 5.5/10

Value: 3.4

Growth: 3.2

Quality: 6.1

Yield: 8.8

Momentum: 8.5

Volatility: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.78$

Current Price

27.78$

Potential

-0.00%

Expected Cash-Flows