Release Date: May 12, 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) successfully migrated 50,000 customers per day to its own network, which is expected to enhance long-term operational efficiency.
- The company maintained stable high-margin service revenue at EUR822 million, aligning with expectations.
- 1&1 AG (WBO:DRI) confirmed its guidance for 2025, expecting stable contract base and service revenues.
- The company has a strategic plan to achieve 25% network coverage by the end of 2025, indicating progress in infrastructure development.
- 1&1 AG (WBO:DRI) reported a free cash flow of EUR15.8 million in Q1 2025, despite the challenges faced during the quarter.
Negative Points
- The company experienced a decrease of 40,000 contracts in its customer base during Q1 2025, with higher churn rates due to the ongoing migration process.
- Revenue declined slightly by 0.6% to EUR1.019 billion, with a notable decrease in low-margin revenue from smartphones and routers.
- EBITDA in the 1&1 mobile network segment showed a negative impact, reflecting increased costs for network rollout and operation.
- The cost of sales increased by EUR32 million, primarily due to higher depreciation and additional costs related to the mobile network segment.
- The consolidated result after tax expense decreased to EUR47 million in Q1 2025 from EUR83 million in Q1 2024, indicating a decline in profitability.
Q & A Highlights
Q: Could you provide some color on the cost phasing specifically in the network segment and any updates on low bandwidth access discussions with other operators?
A: With increasing migration to Vodafone national roaming, EBITDA will decrease slightly over the year due to direct expenses in the Vodafone contract. There is no change in our comments from March regarding low bandwidth access; we are waiting for the office to negotiate.
Q: Can you comment on the competitive dynamics in the mobile and broadband market, and the impact of the Federal Cartel Office decision on your network rollout?
A: We see strong competition, mainly from Telefonica, offering aggressive tariffs. We remain competitive but rational in pricing. The Federal Cartel Office has requested comments from Vantage and Vodafone on discrimination against 1&1, with no current updates. Our CapEx is backloaded, with more investments expected in the second half of the year.
Q: How has the competitive environment affected your gross sales development, and when do you expect to meet the 25% coverage requirement?
A: Our net adds were in line with expectations, with 6 million subscribers on our network. We are migrating 50,000 contracts a day, leading to slightly higher churn. We aim to achieve 25% coverage by the end of this year.
Q: Could you provide more details on the KPI trends and the inter-company cash injection?
A: We expect significant migrations in Q2 and Q3, with all customers on the 1&1 network by year-end. The mobile business may see slightly better net adds than Q1. Regarding the cash injection, we have not discussed deleveraging as we have minimal leverage on our balance sheet.
Q: Can you provide more information on the EUR800 million loan agreement and the expected mobile net adds in Q1?
A: The loan from United Internet is for building the 1&1 mobile network, with a first drawdown of EUR290 million. We may not need the full amount, as we expect to finance network construction from cash generation. We aim for 25% coverage by the end of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
