1&1:Quarterly Results/2025 Q1

Earnings call summary

D'Avis said they currently have 1,000 activated sites, they are adding 200 to 300 sites per quarte and will have 2,000 at the end of the year (Q&A). "In Q1, we have in total 1,000 sites on air. And, each quarter we will, add 200 to 300 sites. So in the end of the year, I think we will see 2,000 sites activated," he said.
D'Avis said they will see 25% coverage at the end of the year, but pointed out that it's a tough target (Q&A). "We will see 25% coverage at the end of this year. It's a tough target, but we think that we can achieve that.," he said.

CFO Sascha D'Avis said the decline in mobile contracts by 20,000 quarter over quarter was in line with their expectations and was due to the ongoing customer migration.
D'Avis pointed out that the decline in broadband contracts by 20,000 sequentially was driven among other things by the competitive environment but was in line with their expectations as well.
In Q2, they expect to see the same level of net ads as in Q1, maybe a little better (Q&A). "In Q2, I expect, in the mobile business, I think more or less the same level of net adds as in Q1, maybe a little bit better than in Q1. As I mentioned before, we are very happy with our migration process," D'Avis said. "So, for the mobile business, it will be maybe a little bit better as in Q1. For the broadband business, I would expect slightly lower net growth as in Q1, but fully in our expectations."

D'Avis said at the moment they are migrating 50,000 customers per day.
Due to the migration they are experiencing higher customer churn than usual.
Migration will be huge in the first, second and third quarter. It will tail off in Q4.
At the end of Q1, they had migrating 6 million customers to own network (Q&A).
D'Avis said that it's possible in the next quarte to see more customers not having coverage due to movements (Q&A). "But what we could see in the next quarters is that there are more customers without network coverage. But we are not exactly knowing which customers have the problem with the coverage because of their movement profile. Basically, you have better reception at home and what we know is the residence and address of the customers. What we don't know is the movement profile. And this is more relevant in terms of network coverage. So, at this point, we are very happy with the results that we see, as I mentioned before."

D'Avis said EBITDA in the 1&1 segment of -67 million euros was in line with their expectations.
D'Avis pointed out that cash CapEx of -27.6 million euros was in line with their expectations. especially the phasing in of the 2024 and 2023 CapEx.
D'Avis said EBITDA will decrease slightly over the year due to the migration. " This is due to the fact that the national roaming costs and the Vodafone contract are expensed directly. The Telefonica contract, as mentioned before, there were one off costs that we amortize over five years," he said.
D'Avis pointed out that the CapEx for Q1 2025 is fully in line with their expectations and business plan, especially with regards to phasing in effect from 2024 and 2023 (Q&A).
Responding to an analysts who flagged Q1 EBITDA that was better than analysts estimate and could signal conservative guidance for the full year, D'Avis said the 2025 EBITDA guidance is not conservative.

D'Avis said at the moment they don't know if they will need the full 800 million euros, adding that they expect they can finance the network expansion from their own cash (Q&A).
The 800 million loan gives them flexibility if there will be an auction in 2028 (Q&A).
D'Avis pointed out that it's a long-lasting loan, and details such as interest rate are in arm length. Similarly, the duration of the loan is not known to the public (Q&A).

D'Avis said there is no change in their comments since the Q4 presentation, adding that they are waiting for offers from other operators (Q&A).

D'Avis said they see strong competition through promotions, particularly from Telefonica (Q&A). He said they are offering very attractive offers under their U2O2 portfolio and Ebara plan.
D'Avis said they are reacting rationally to this competition. They offer attractive tariffs that are competitive but at reasonable prices (Q&A).
D'Avis said the investment for their network expansion will mainly be in the second half of the year (Q&A).
D'Avis pointed out that CapEx is more backloaded (Q&A). "Why is it back loading? Sometimes there are acceptances necessary before the final invoice can be issued or suppliers' invoice are late and so on and so on. So there's a backlog that will be dissolved in the next three quarters. Besides that, the investment for the capacity expansion of our core data centers will be more in the second half of the year," he said.
D'Avis added that a lot of projects will end in second half.

D'Avis said the 2025 guidance doesn't include any compensation payments (Q&A).
D'Avis said discussions and negotiations around it are ongoing but they don't have anything to share at the moment (Q&A).

Key Items	2025^[1]	Y/Y Growth
Service Revenue	€3,303.1 million	0.00%
EBITDA	€571 million	-3.35%
EBITDA 1&1 Mobile Network Segment	€-265 million	-0.11%
Access Segment Revenue	€836 million	-2.35%
Cash Capex	€450 million	54.85%

Management noted that Visible Alpha consensus estimates are similar to the estimates below while Bloomberg consensus estimates, in which up to 8 analysts participated, have estimates for 2025 that don't reflect their forecasts in total. "This means, for example, that the guesstimate for Capex for 2025 is well above our guidance," the company said^[2].

Key Items^[3]	Q1 2025	Y/Y Growth	2025	Y/Y Growth
Revenue	€1,023.7 million	-0.1%	€4,067.2 million	0.07%
Service revenue	€823.6 million	0.2%	€3,302.9 million	-0.01%
EBITDA Access	€212.1million	-5.6%	€828.3 million	-3.25%
EBITDA 1&1 Mobile Network Segment	€-71.7 million	69.0%	€-255.8 million	-3.58%
Depreciation and ammortization	€-80.5 million	25%	€-321.3 million	14.16%
EPS	€0.21	-56.4%	€0.92	-23.37%
EBIT	€57.4	-51.3%	€57.4
Access Contracts	16.36 million	0.4%	16.37 million	-0.12%
Mobile Internet contracts	12.42 million	1.1%	12.46 million
Broadband contracts	3.94 million	-1.8%	3.90 million
Capex (Cash-Capex)			€-449.6 million
Free Cash Flow			€-31.4 million
Net adds Y/Y
Access	273,000		-20,000
Mobile	303,000		23,750
Broadband	-30,000		-47,500

Buy, €19.10 to €18.90: Analyst Simon Stippig of Warburg Research expects a weak quarterly report for 1&1.