Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 1&1 AG (WBO:DRI, Financial) reported a strong increase in gross profit for the access segment, rising by 5.7% from the previous year.
- The company achieved a significant milestone with over 1,000 active masts connected to their far edge data centers, with more than 5,000 additional sites in development.
- 1&1 AG (WBO:DRI) is building the first open run network in Europe, which allows for independence in choosing hardware and software partners.
- The company has a broad ecosystem with over 100 partners, 50% of which are based in Germany, supporting their network build and operations.
- 1&1 AG (WBO:DRI) achieved a free cash flow of EUR20.8 million in 2024, a significant improvement from the negative free cash flow in 2023.
Negative Points
- Revenue for 2024 slightly decreased to EUR4,064.3 billion from EUR4,096.7 billion in 2023, with a notable drop in low margin hardware revenue.
- The company experienced significant customer migration challenges, leading to a loss of subscribers during the transition to their own network.
- 1&1 AG (WBO:DRI) faced increased costs of sales and distribution, impacting their overall financial performance.
- The EBITDA for the 1&1 mobile network segment showed a loss, attributed to increased startup costs and expenses related to network construction.
- The company anticipates a decline in EBITDA for 2025 due to the expiration of the national roaming agreement with Telefonica, which previously provided one-off payments.
Q & A Highlights
Q: Can you discuss the subscriber trends for Q1 2025 and how they compare to your full-year expectations?
A: Ralph Dommermuth, CEO: We are currently migrating 50,000 customers per day from the Telefonica network to our own network. This process is causing a temporary loss of customers, as some use this as an opportunity to cancel inactive contracts. We expect a slight decline in mobile phone contracts in Q1, but anticipate more stable growth by the end of the year as migration efforts decrease.
Q: Can you break down the EUR450 million CapEx guidance for 2025, including any spillover from 2024?
A: Sascha D'Avis, CFO: The CapEx includes investments for capacity expansion and network development. The spillover from 2024 is significant, and we are also investing in new site build-ups. We are not disclosing the exact number of sites or antennas planned for 2025 to avoid being held to specific targets.
Q: What is your strategy regarding network coverage and potential RAN sharing?
A: Ralph Dommermuth, CEO: We aim to reach 25% to 50% population coverage. While we are open to RAN sharing if it makes sense, we currently have no offers on the table. Our focus remains on building our own network infrastructure.
Q: Can you provide an update on your negotiations with Rakuten and the impact on your guidance?
A: Ralph Dommermuth, CEO: We are in ongoing negotiations with Rakuten regarding compensation and damages, but these are not included in our guidance. We maintain confidentiality on these discussions.
Q: How do you foresee the 5G segment contributing to profitability, and what is the timeline for this?
A: Ralph Dommermuth, CEO: We expect to reduce 5G-related costs by EUR100 million in 2026, but the segment will not be profitable immediately. The timeline for profitability depends on frequency costs and network utilization. Our focus is on building a future-oriented, state-of-the-art network.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
