euro adhoc: AG
quarterly or semiannual financial statement / Q1/2006: freenet continues on expansionist course

@@start.t1@@--------------------------------------------------------------------------------   Disclosure announcement transmitted by euro adhoc.   The issuer is responsible for the content of this announcement. --------------------------------------------------------------------------------@@end@@


Q1/2006: freenet continues on expansionist course • Revenues up +37 percent to 200.1 million euros (vs. Q1/2005) • Maintained market position with 75 thousand new DSL customers in first quarter • EBITDA of 27.5 million euros despite massive investments in growth  • 20 million euros in earnings before taxes AG / Hamburg - The AG, Hamburg, continues its expansionist course in the present year, in a market environment that - while it is fraught with increasingly tough competition in all lines of business - also holds great opportunities for the company.  First-quarter revenues rose significantly year on year, by 37 percent to 200.1 million euros, which put them nearly on par with the excellent level of the (usually most revenue-intensive) fourth quarter of 2005. All segments improved their sales performance vs. Q1/2005 except Telephony (37.6 million euros), which posted a slight decline in revenue due to difficult market conditions. Internet access contributed 98.0 million euros, or nearly half of the group’s revenue (up by +16 percent vs. Q1/2005). B2B Services followed at 36.4 million euros (+1620 percent vs. Q1/2005) and the portal business including Digital Services with revenues 28.1 million euros (+40 percent vs. Q1/2005). The two latter segments have lastingly established themselves as additional important revenue mainstays for freenet, after last year’s acquisition and successful integration of Next-ID and the Strato group.  To stand its ground in the DSL market against what freenet perceives as distorting competitive advantages granted to other competitors by Deutsche Telekom AG, and to safeguard future growth, AG considerably stepped up its marketing expenditure during the first quarter of the present year, to 13 million euros - up by 50 percent vs. Q1/2005. By the end of the first quarter, the number of DSL customers recruited with this high marketing expenditure and through acquisition costs rose by 75 thousand to 775 thousand (vs. 465 thousand at the end of Q1/2005); the number of narrowband customers is at a solid 2.7 million.

Stronger customer growth in the DSL business was prevented by new offers which hit the market in February and which freenet believes could only be based on extremely discounted "Net Rental" wholesale conditions granted to very few providers - conditions that would not have been available to freenet to the same extent even had it signed the contract in question and which therefore impeded freenet’s growth considerably. However, freenet trusts that the Federal Network Agency will soon put an end to Deutsche Telekom’s special terms. At the same time, AG increased the number of its subscription customers to 2.7 million and that of its active members to 7.7 million. In all, AG had 9.9 million customers at March 31, 2006, 520,000 customers more than a year earlier.

Another factor that impacted results is the delay in the completion of the merger between freenet and mobilcom already approved last summer by the Annual General Meetings of both companies. Only a closer dovetailing of the two companies’ resources and market positioning would allow us to better maximise synergy potential and seize growth opportunities in the market. In this tough competitive environment and despite artificially imposed differences in the playing field, the management of freenet continues to rely on growth, even though it may occur at the expense of the profits for fiscal year. Accordingly, the results seen in Q1/2006 are down slightly: At 27.5 million euros, EBITDA is roughly 4 percent below the previous quarter and 25 percent below that of Q1/2005. Amortisation/depreciation was also down slightly year on year and vs. the previous quarter, to currently 8.3 million euros. This resulted in earnings before taxes of 20.0 million euros, after 20.3 million euros in Q4/2005. Group result for the first quarter of 2006 amounted to 12.1 million euros. This again reinforces freenet’s position as a rapidly growing and yet profitable company in a very sophisticated, promising market.  The company’s liquidity improved again during the first quarter, rising by 29 million euros from 163.7 million to 192.7 million euros, enhancing freenet’s financial scope for further investments and/or acquisitions.

                                            Q1/2006 Q4/2005 Q1/2005
Revenues                                200,068 204,894 146,256
Segment Internet Access        98,027  92,734  84,187
Segment Voice                        37,584  39,254  39,914
Segment B2B Services            36,365  42,512  2,114
Segment Portal                      28,092  30,394  20,041
Gross profit                         74,065  74,154  73,842
EBITDA                                  27,467  28,535  36,588
Earnings before taxes (EBT) 20,031  20,339  28,056
Group result                         12,096  13,861  17,429
Capital and reserves            294,590 282,494 268,814
Balance sheet total              586,435 548,045 463,664
Cash and cash equivalents    192,672 163,673 90,925

Financial data per IFRS; in TEUR / Source: AG

@@start.t2@@end of announcement                                                 euro adhoc 09.05.2006 07:29:04

ots Originaltext: AG
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Further inquiry note:
Andreas Neumann
Investor Relations
Tel.: +49 (0)40 51306 778

Branche: Online
ISIN:      DE0005792006
WKN:        579200
Index:    TecDAX, CDAX, Prime All Share, HDAX, Technologie All Share,
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Börsen:  Frankfurter Wertpapierbörse / regulated dealing/prime
              Börse Berlin-Bremen / free trade
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              Baden-Württembergische Wertpapierbörse / free trade
              Börse Düsseldorf / free trade
              Niedersächsische Börse zu Hannover / free trade
              Bayerische Börse / free trade

Weitere Meldungen: AG

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