EQS-News: freenet confirms its 2026 guidance ...

Revenue surged but profits and cash flow declined, raising questions about sustainable growth.

What the company is saying

freenet AG emphasizes a 24.7% revenue increase to EUR 1,512.9 million in the first half of 2026, attributing this primarily to the integration of mobilezone Germany. The announcement highlights customer base expansion, with 8.304 million postpaid customers and 1.832 million waipu.tv subscribers, and claims 'robust' growth and 'strong' cash conversion. Management frames the narrative around confirming 2026 guidance and setting ambitious 2028 targets: at least EUR 620 million in adjusted EBITDA and at least EUR 340 million in adjusted free cash flow. The company guarantees a minimum dividend of EUR 2 per share for 2026, 2027, and 2028, positioning this as a shareholder-friendly move. Negative impacts from a commercial agreement with a mobile network operator are acknowledged but downplayed relative to the growth narrative. The tone is upbeat, focusing on forward-looking ambitions and operational momentum, while the decline in profitability is not foregrounded.

What the data suggests

The reported 24.7% revenue growth to EUR 1,512.9 million is substantial, driven by the mobilezone Germany integration. Despite this, adjusted EBITDA fell 5.9% to EUR 242.2 million and adjusted free cash flow dropped 4.2% to EUR 155.2 million, both impacted by a EUR 22 million negative effect from a commercial agreement. The mobile communications segment's adjusted EBITDA declined 11.6% to EUR 186.2 million, while the IPTV segment improved, with adjusted EBITDA up 36.5% to EUR 18.5 million. Postpaid customer growth was modest at 0.8%, with waipu.tv subscribers rising 4.4%. The cash conversion rate stands at 64.1%, but without peer benchmarks, its strength is unclear. The company projects adjusted EBITDA of EUR 500–530 million and free cash flow of EUR 270–300 million for 2026, but these remain targets, not realised results. The dividend guarantee is contingent on future performance, not a current payout. The data reveals strong top-line growth but declining profitability and only moderate customer gains.

Analysis

The announcement presents a positive tone, highlighting strong revenue growth and customer metrics, but the underlying profitability metrics (adjusted EBITDA and free cash flow) have declined year-over-year. While the company discloses realised revenue and customer growth, a significant portion of the narrative is forward-looking, focusing on guidance for 2026 and ambitions for 2028. The integration of mobilezone Germany represents a large capital outlay, but the immediate earnings impact is negative or flat, as evidenced by the drop in adjusted EBITDA and free cash flow. The dividend guarantee is a positive signal, but its sustainability depends on achieving future targets, which remain projections. The gap between narrative and evidence is most apparent in the framing of 'robust' growth and 'strong' cash conversion, which are not fully supported by the modest realised customer growth and declining profitability. Overall, the announcement is moderately hyped, with positive language outpacing the actual financial progress.

Risk flags

• ●Profitability is declining despite strong revenue growth, with adjusted EBITDA down 5.9% and free cash flow down 4.2%. This disconnect raises concerns about the sustainability of growth and the ability to convert revenue gains into earnings.
• ●The negative impact from the commercial agreement with a mobile network operator is material, reducing EBITDA by around EUR 22 million in the first half and expected to total EUR 50 million for the year. Ongoing exposure to this agreement could continue to weigh on margins.
• ●Dividend guarantees for 2026–2028 are forward-looking and depend on achieving ambitious financial targets. If profitability continues to decline, maintaining the EUR 2 per share dividend may not be feasible, exposing investors to payout risk.
• ●The integration of mobilezone Germany is capital intensive and has not yet delivered accretive earnings, as evidenced by declining EBITDA. There is execution risk in realising expected synergies and operational efficiencies.
• ●Customer growth is modest, with postpaid customers up only 0.8% and IPTV subscribers up 4.4%. The use of terms like 'robust' growth is not fully supported by the disclosed numbers, suggesting a risk of overstatement in management's narrative.

Bottom line

freenet AG's latest results show impressive revenue growth, but this has not translated into higher profits or cash flow, with both adjusted EBITDA and free cash flow declining. The company leans heavily on forward-looking guidance and a minimum dividend guarantee, but these are not yet backed by realised earnings improvements. The ongoing EBITDA drag from a commercial agreement and the slow pace of customer growth temper the bullish narrative. Investors should focus on whether the company can reverse the profitability decline and deliver on its ambitious 2026 and 2028 targets. The most important takeaway is that top-line expansion alone is not enough—sustained earnings growth and cash generation are needed to justify the upbeat outlook and dividend promises.

Announcement summary

(LSE/AIM:0MV2) freenet AG confirmed its 2026 guidance, reporting revenues up 24.7% to EUR 1,512.9 million in the first half of 2026, driven by the integration of mobilezone Germany. Adjusted EBITDA was EUR 242.2 million, down 5.9%, and adjusted free cash flow was EUR 155.2 million, down 4.2%, both impacted by a commercial agreement with a mobile network operator. The company served 8.304 million postpaid customers and 1.832 million waipu.tv subscribers at the end of the first half of 2026. The cash conversion rate was 64.1%. A minimum dividend of EUR 2 per share has been guaranteed for the financial years 2026, 2027, and 2028. The Executive Board expects adjusted EBITDA of between EUR 500 and 530 million and adjusted free cash flow of between EUR 270 and 300 million for the 2026 financial year. The 2028 financial ambition targets at least EUR 620 million in adjusted EBITDA and at least EUR 340 million in adjusted free cash flow.

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