Freenet Ag · XETR:FNTN
Freenet — Investor Day (November 2021)
50 slides from Freenet's investor day presentation, Nov 4, 2021
Slide 1: Capital Markets Day 2021 – Our ambition for 2025
CAPITAL MARKETS DAY 2021 Our ambition for 2025 04 November 2021
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation contains forward-looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of freenet AG could differ materially from the expectations regarding performance, results and timing expressed in this present
Slide 3: Agenda
AGENDA 1 S T R AT E G I C O U T L O O K 2 0 2 5 10:45-11:30 (45 MIN) (CHRISTOPH VILANEK, CEO) 2 FINANCIAL AMBITION 2025 11:30-11:45 (15 MIN) (INGO ARNOLD, CFO) 3 Q&A ON AMBITION 2025 11:45-12:15 (30 MIN)
Slide 4: Strategic Outlook 2025
CHRISTOPH VILANEK STRATEGIC OUTLOOK 2025
Slide 5: Vision, Mission & Strategy
VISION, MISSION & STRATEGY
Slide 6: freenet Group vision unchanged: always the right choice
FREENET GROUP VISION UNCHANGED ALWAYS THE RIGHT As freenet Group we want to be the right choice for all our stakeholders - our employees, our customers, our partners and our shareholders. We CHOICE. are aware of our responsibility to society, and we take this into account through long-term thinking
Slide 7: Our mission adopting digital aspects
OUR MISSION ADOPTING DIGITAL ASPECTS GROWTH THROUGH PRODUCTS, SERVICES AND CUSTOMER-CENTRIC INTERACTION Customer Centricity Digital First Demand Driven Customer Proximity ▪ Distribution of selected own ▪ Both for internal business ▪ Competent advice ▪ Making use of the omni- products or sourced good
Slide 8: Our dedication and ambition for 2025
OUR DEDICATION AND AMBITION FOR 2025 … TO GROW … TO CHANGE WE WANT … TO FOCUS … TO STAY IN FRONT … TO GET FASTER … TO REMAIN THE ONE INDEPENDENT, RELIABLE AND SUSTAINABLE OMNICHANNEL PLAYER Capital Markets Day 2021 04.11.2021 8
Slide 9: Our holistic digital lifestyle strategy supports…
OUR HOLISTIC DIGITAL LIFESTYLE STRATEGY SUPPORTS… DIGITAL LIFESTYLE GROWTH includes telecommunications, Internet, Energy, TV, through continuous optimisation and expansion of as well as all services, applications and appliances our digital lifestyle product and service portfolio, that can be control
Slide 10: A transformation from a sales machine to management of a customer base
… A TRANSFORMATION FROM A SALES MACHINE TO THE MANAGEMENT OF A CUSTOMER BASE 2010-2016 2016-2020 2021-2025 SAC (subscriber LCE = CLTV = Major KPI acquisition cost) & SRC Product lifecycle Customer Lifetime Value (subscriber retention cost) (12/24-months-view) (long-term, cross-product) Distribution
Slide 11: Necessary mindshift for all functions
NECESSARY MINDSHIFT FOR ALL FUNCTIONS Active customer base management across entire customer lifecycle …Instead of pure sales machine with focus on new customers Data-driven and creative customer approach across all touch points …Instead of manual and classic sales approach Awareness of corporate re
Slide 12: Change from midterm to long-term view
CHANGE FROM MIDTERM TO LONG-TERM VIEW Product Lifecycle (LCE) Customer Lifetime Value (CLTV) Mobile LCE Consumer Internet Mobile Electronics LCE Mobility TV & TV Entertainment CLTV LCE DLS Finance Energy Insurance Product profitability (24 months) Compound margin optimisation on customer level acros
Slide 13: Data sources for the freenet smart pricing model
DATA SOURCES FOR THE FREENET SMART PRICING MODEL DETERMANTS WITHIN THE REALTIME MODELLING PERIOD – tenure and total lifetime instead of contract length Individual combination of ▪ Offer - such as promotion, BEHAVIOUR – service calls, touch points used, location and time preferences hardware, tariff
Slide 14: Data driven one-to-one marketing
DATA DRIVEN ONE-TO-ONE MARKETING TRANSFORMATION FROM “ONE-TO-MANY” TO “ONE-TO-ONE” COMMUNICATION AND OFFERING One size fits all Addressing segments One-to-one in all dimensions ––––––––––––– ––––––––––––– ––––––––– ––––––––– ––––––––––––– –––––––– –––––––– ––––––––– ––––––––––––––––––––– –––––––––––
Slide 15: Smart pricing works not only in theory
SMART PRICING WORKS NOT ONLY IN THEORY LIFECYCLE UPLIFT THROUGH FREENET SMART PRICING MODEL Gross adds Retention Prevention 105% 125% 110% 100% 100% 100% TARGET FOR +5% +10% FULL BASE: >20% +25% Non-smart Smart Non-smart Smart Non-smart Smart SMART PRICING UPLIFT IN LIFECYCLE Capital Markets Day 202
Slide 16: Making use of a new paradigm
MAKING USE OF A NEW PARADIGM DIGITALISATION STANDARDISATION & GUIDELINES & SIMPLIFICATION CONTROL Adapt the existing organisation Establish consistent practices for all More focused guidelines in which and working methods, e.g.: transactional processes. the organization can act quickly and autonomou
Slide 17: Simplified new operating model
SIMPLIFIED NEW OPERATING MODEL FINANCIAL STEERING MANAGEMENT CONTROL CUSTOMER PRODUCT HOUSE ▪ Defines offer, measures success and INTERACTION ▪ Product development and design optimizes ▪ Has the customer in focus ▪ Takes care of the presentation of ▪ Procurement products and offers ▪ Measured by gro
Slide 18: Even greater integration of ESG into decision-making
EVEN GREATER INTEGRATION OF ESG INTO DECISION-MAKING OUR GENERAL (FUTURE) AMBITION In all activities, we will place our responsibility in the ESG dimensions on an equal footing with purely economic considerations ACHIEVEMENTS NEXT STEPS ▪ Gradual improvement of relevant ESG ▪ Develop net zero timeli
Slide 19: freenet to market own sustainable smartphone 'Rephone'
FREENET TO MARKET OWN SUSTAINABLE AND DURABLE SMARTPHONE ‘REPHONE’ LAUNCH NOVEMBER 2021 2021 Sales start Fairphone 4 5G FREENET STARTS REPHONE 2019 Successful sale Fairphone 3/3+ ▪ Produced with 100% green electricity ▪ Replaceable battery ▪ Android operating system 2018 freenet gets largest distrib
Slide 20: Operational Deep Dives
OPERATIONAL DEEP DIVES
Slide 21: freenet becomes umbrella brand
FREENET BECOMES UMBRELLA BRAND Mobile Internet TV Entertainment Communications DIETER BOHLEN SUCCESSFUL GERMAN ENTERTAINER, MUSICIAN & PRODUCER AS TESTIMONIAL FOR NEW BRAND HOUSE Capital Markets Day 2021 04.11.2021 21
Slide 22: Straight and concise new branding
STRAIGHT AND CONCISE NEW BRANDING ALL SHOPS CONSIDERED TO BE “FREENET-DIGITAL.DE“ AS NEW ONLINE FLAGGED AS “FREENET” SHOPS HUB FOR ALL SERVICES Capital Markets Day 2021 04.11.2021 22
Slide 23: freenet omnichannel proposition
FREENET OMNICHANNEL PROPOSITION Owned customer journey 3rd party customer journey Captive channels Non captive channels (Direct customer access, improved up-selling potential and advertising permission) ▪ Own shops ▪ Owned ▪ Inbound ▪ 3rd party ▪ Ceconomy ▪ 3rd party web ▪ Franchise web customer fre
Slide 24: Mobile portfolio brands along segments
Mobile Communications Core I DLS I Internet MOBILE PORTFOLIO BRANDS ALONG SEGMENTS SIM-only / flat rates with data packages MOBILE CUSTOMERS Online distribution only SIM-only / day or monthly flats / unlimited data packages 2018 7,022.9 App distribution only SIM-only flats / diverse data packages 20
Slide 25: Macroeconomic factors challenge mobile business
Mobile Communications MACROECONOMIC FACTORS Core I DLS I Internet CHALLENGE MOBILE BUSINESS PRESSURISING EXTERNAL FORCES 100 ▪ Price erosion ▪ Trend to SIM-only ▪ Saturation ▪ Regulation/ 100-x Compliance costs ▪ Minimum wages ▪ Declining society Capital Markets Day 2021 04.11.2021 25
Slide 26: Internal measures to counter macroeconomic factors
Mobile Communications INTERNAL MEASURES Core I DLS I Internet TO COUNTER MACROECONOMIC FACTORS LAUNCHED INTERNAL COUNTERMEASURES 100+x TARGET: AT LEAST ▪ CLTV concept SLIGHT ▪ Smart pricing GROWTH IN MOBILE ▪ Captive channel CORE expansion 100-x ▪ Digitalisation ▪ Cost efficiency ▪ Marketing simplif
Slide 27: Digital lifestyle strategy and targets
Mobile Communications DIGITAL LIFESTYLE STRATEGY Core I DLS I Internet AND TARGETS Valorization and monetarization of the customer relationship Added value through cross- and upselling to increase share of wallet Consolidation of relevant revenue streams driving customer Options lifetime value and l
Slide 28: Digital lifestyle – staying on the pulse of time
Mobile Communications DIGITAL LIFESTYLE – Core I DLS I Internet STAYING ON THE PULSE OF TIME News/ Security/ Fitness Smart Home Gadgets Entertainment Insurance/Finance DRIVING VALUE BY INCREASING PENETRATION, WIDENING PORTFOLIO AND FOCUSSING ON SUBSCRIPTION Capital Markets Day 2021 04.11.2021 28
Slide 29: 10-20 percent upside in DLS until 2025
Mobile Communications Core I DLS I Internet 10-20 PERCENT UPSIDE IN DLS UNTIL 2025 DIGITAL LIFESTYLE REVENUE CONTRIBUTION in mEUR CAGR +12% 220-230 >60% (2015-2020) 189.9 188.6 179.8 SUBSCRIPTION 164.2 137.1 BASED DIGITAL 106.0 LIFESTYLE OPTIONS 2015 2016 2017 2018 2019 2020 2025e Capital Markets Da
Slide 30: Evolution of freenet Internet access
Mobile Communications EVOLUTION OF FREENET ACCESS Core I DLS I Internet AGNOSTIC INTERNET OFFERING KEY FEATURES 2022 Full Rollout VDSL Existing Mobile LTE Internet Flats based freenet ▪ Asset-light (no CapEx) incl. Hardware Internet ▪ Internet access only Omnichannel Online/Shops ▪ Technology-agnost
Slide 31: Best prerequisite for convergence opportunities
AS BEST PREREQUISITE FOR CONVERGENCE OPPORTUNITIES MOBILE INTERNET T V E N T E R TA I N M E N T T-Mobile Mobile LTE IP Vodafone Fixed line (VDSL) OTT Telefonica Deutschland Cable Terrestrial 1&1 AG Fibre VBI Satellite 5G 5G Not yet part of portfolio Capital Markets Day 2021 04.11.2021 31
Slide 32: Diversified TV and media portfolio with strong growth potential
TV and Media DIVERSIFIED TV AND MEDIA waipu.tv I MB I DAB+ PORTFOLIO WITH STRONG GROWTH POTENTIAL TV AND MEDIA ▪ IP/OTT TV is an ▪ DVB-T2 is a classic ▪ Wide B2B services in ▪ DAB is gaining undisputed megatrend longtail business with CDN, transmission penetration and ▪ Our current 40% a loyal custo
Slide 33: TV market today dominated by one-to-many broadcast technology
TV and Media TV MARKET TODAY DOMINATED waipu.tv I MB I DAB+ BY ‘ONE TO MANY’ BROADCAST TECHNOLOGY in 000‘ TV households Cable Satellite DVB-T IPTV OTT-TV 2016 17,477 17,705 3,427 2,361 0 (45.9%) (46.5%) (9.0%) (6.2%) 2020 16,795 16,987 2,427 4,083 1,117 (43.6%) (44.1%) (6.3%) (10.6%) (2.9%) 2021 16,
Slide 34: Future is clearly in the OTT unicast world
TV and Media FUTURE IS CLEARLY TAKING waipu.tv I MB I DAB+ PLACE IN THE OTT UNICAST WORLD Technology shift BROADCAST (one-to-many) UNICAST (one-to-one) Capital Markets Day 2021 04.11.2021 34
Slide 35: IP as fastest growing access technology
TV and Media IP AS FASTEST GROWING ACCESS waipu.tv I MB I DAB+ TECHNOLOGY IP TRANSMISSION IN GERMANY in m households 35 Exponential growth scenario > 30 in m subscribers ≥6.0 mn 30 ≥1.6 0.6 25 2020 2025e 2030e > 13.0 mn 20 IPTV/OTT 15 Linear scenario in m subscribers ≥2.2 > 11 10 ≥1.1 mn 0.6 5.2 5.7
Slide 36: For 30 mn potential switchers waipu.tv gets more attractive
TV and Media FOR 30 MN POTENTIAL SWITCHERS waipu.tv I MB I DAB+ WAIPU.TV GETS EVEN MORE ATTRACTIVE TV TRANSMISSON IN GERMANY LAUNCH OF WAIPU.TV 4K STICK in m households 38.6 37.9 37.3 36.8 ▪ waipu.tv gets a permanent place in the 36.2 36.4 living room ▪ Cable and Satellite replacement with waipu.tv
Slide 37: freenet TV longtail business with loyal customer base
TV and Media FREENET TV (B2B/B2C) LONGTAIL waipu.tv I MB I DAB+ BUSINESS WITH LOYAL CUSTOMER BASE FREENET TV: STYLISED EXAMPLE OF MANAGING PROFITABILITY EXPECTATION freenet TV 100% EBITDA ▪ freenet TV (DVB-T2) entered maturity phase ▪ Expansion of relative market share is not expected freenet TV sub
Slide 38: Media Broadcast – Germany's largest service provider in the media industry
MEDIA BROADCAST - GERMANY'S LARGEST SERVICE PROVIDER IN THE MEDIA INDUSTRY ▪ Event broadcasting, e.g., Bundesliga or Basketball ▪ Operation of nationwide TV and radio infrastructures with availability of up to 99.95% on SLA ▪ Management and operation of distribution networks based on different techn
Slide 39: Plan, build & run of independent 5G campus solutions
TV and Media PLAN, BUILD & RUN OF waipu.tv I MB I DAB+ INDEPENDENT 5G CAMPUS SOLUTIONS ▪ Media Broadcast has set up a private 5G standalone campus network near Berlin (Nauen) ▪ Test environment for 5G applications for Media Broadcast, other service providers and customers ▪ Provider-independent "5G
Slide 40: DAB+ radio expansion – source of new revenues
TV and Media DAB+ RADIO EXPANSION – waipu.tv I MB I DAB+ SOURCE OF NEW REVENUES 1ST NATIONWIDE 2ND NATIONWIDE LOCAL & REGIONAL STRONG TAILWIND DAB MULTIPLEX DAB MULTIPLEX MULTIPLEX FOR DAB+ RADIO ▪ Number of DAB+ households (+11% yoy), penetration (+30% yoy) and usage (+20% yoy) increased significan
Slide 41: Second national multiplex
TV and Media 2ND DAB MULTIPLEX OCCUPIED waipu.tv I MB I DAB+ BY JOINT VENTURE „ANTENNE DEUTSCHLAND“ SECOND NATIONAL MULTIPLEX Constant revenue from third party programs STREAM MUX 1 Ad marketing own programs (growth opportunity) Capital Markets Day 2021 04.11.2021 41
Slide 42: High revenue potential for alternative advertising marketer
TV and Media HIGH REVENUE POTENTIAL waipu.tv I MB I DAB+ FOR ALTERNATIVE ADVERTISING MARKETER ▪ German radio advertising market is dominated by REVENUES RADIO ADVERTISING (GERMANY) In mEUR two radio marketers today: RMS and AS&S. 832 841 848 816 784 789 797 768 ▪ Annual volume of the radio advertisi
Slide 43: Media Broadcast Ambition 2025
TV and Media waipu.tv I MB I DAB+ MEDIA BROADCAST AMBITION 2025 Terrestrial TV Radio Events/Networks (B2B/B2C) Current EBITDA contribution 65% 25% 10% Ambition 2025 (in absolute terms) Capital Markets Day 2021 04.11.2021 43
Slide 44: Financial Ambition 2025
INGO ARNOLD FINANCIAL AMBITION 2025
Slide 45: By 2025, aim to increase Group EBITDA to at least 520 million euros
BY 2025, WE AIM TO INCREASE GROUP EBITDA TO AT LEAST 520 MILLION EUROS BASED ON ORGANIC GROWTH. CAGR IS EXPECTED TO B E > 4 P E R C E N T Capital Markets Day 2021 04.11.2021 45
Slide 46: TV and Media segment main contributor to growth
TV AND MEDIA SEGMENT MAIN CONTRIBUTOR TO GROWTH EXPECTED EBITDA CONTRIBUTIONS BY SEGMENT in mEUR CAGR >4% ≥520 5-15 35-65 426 30-60 2020 Mobile TV & Media Cost efficiency 2025e Communications FREE CASH FLOW EXPECTED TO RISE IN LINE WITH EBITDA Capital Markets Day 2021 04.11.2021 46
Slide 47: Organic growth expected in all divisions
ORGANIC GROWTH EXPECTED IN ALL DIVISIONS MOBILE COMMUNICATIONS TV AND MEDIA in mEUR in mEUR Mobile core business 5-15 waipu.tv 25-35 Media Broadcast B2B/ Digital Lifestyle 10-20 0-10 freenet TV freenet Internet 15-25 DAB+ 10-20 Total Mobile Total 30-60 35-65 Communications TV & Media Capital Markets
Slide 48: Keeping shareholder return at high level
KEEPING SHAREHOLDER RETURN AT HIGH LEVEL FREENET GROUP AMBITION 2025 SHAREHOLDER REMUNERATION POLICY1 >260 mEUR ▪ EBITDA-to-FCF 80% Free cash flow conversion remains high >4% ▪ CapEx-light model Distribution scenarios 1 2 3 maintained ▪ Tax payments increase based on higher net Full payout as Fixed
Slide 49: Q&A on Ambition 2025
QUEST IONS? Q&A ON AMBITION 2025
Slide 50: Thank you
THANK YOU. FOR FOLLOW-UP QUESTIONS REACH OUT TO: freenet AG Investor Relations [email protected] www.freenet-group.de Tel.: +49 (0) 40 513 06 778