Management Presentation Q results

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1 Management Presentation Q results Christoph Vilanek, CEO and Joachim Preisig, CFO 9 August 2017 Analyst and Investor Conference and Call 1 Management Presentation Q August 2017

2 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 presentation. This presentation does not constitute an offer to sell or a solicitation to purchase any securities of freenet AG. Any such decision must not be made on the basis of the information provided in this presentation. freenet AG does not undertake any obligation to publicly update or revise information provided during this presentation. 2 Management Presentation Q August 2017

3 Strong performance in all business segments Group Increase of Q Group revenue (+3.9% yoy) and EBITDA (+3.9% yoy) reflects the fact that our Mobile Communications core business continues to be sound and also reflects the expanding valuable digital lifestyle revenue from 29.3 million euros in Q to 37.9 million euros in Q Gross profit at million euros considerably higher than Q (+5.6% yoy) Mobile Communications Continuous growth in customer ownership (+1.9 per cent or 175,000 yoy) driven by further increase of postpaid customer base (+2.6 per cent or 169,000 yoy) Postpaid ARPU continued to stabilise at 21.4 euros 0.3 euros above Q figure Strategy of focusing on valuable customers in Mobile Communications business again confirmed TV and Media Approximately 2 million freenet TV capable receivers installed with first revenue and profit contribution from DVB-T2 end-users starting in Q Relevant contribution to Group revenue and gross profit driven by DVB-T B2B business freenet.tv and waipu.tv met internal targets in terms of users and subscribers, guidance for paying users to be reconfirmed today 3 Management Presentation Q August 2017

4 Continuous postpaid customer growth (+2.6% yoy) [in million] Q Q Q Q Q Postpaid No frills Customer Ownership The positive development in customer ownership is essentially attributable to the particularly valuable postpaid customers 6.56 million (increase by 169,000 participants yoy) No frills customer base increased to 3.03 million (+6,000 participants yoy) Decline in prepaid customer base to 2.39 million (-10.4 per cent yoy) again attributable to network operators deactivating unused SIM cards (technical churn) Total customer base at million stable development compared to Q of million (-0.8 per cent) 4 Management Presentation Q August 2017

Postpaid ARPU keeps its level [EUR/month] 2017 21.9 2016 21.1 21.5 21.1 21.4 21.4 21.4 21.6 21.3 21.

4 euros stable in line with previous years levels Data revenue share at 35.1% No frills ARPU At 0.

5 Postpaid ARPU keeps its level [EUR/month] Q1 Postpaid Q2 Postpaid Q3 Postpaid Q4 Postpaid Postpaid ARPU At 21.4 euros stable in line with previous years levels Data revenue share at 35.1% No frills ARPU At 0.3 euros higher than in second quarter 2016 Prepaid ARPU In line with Q at 3.1 euros 5 Management Presentation Q August 2017

6 Digital lifestyle remains a source of growth [in EUR million] Q Q Q Q Q Q Q confirms again growth potential for full year 2017 Growth results from 3 dimensions: Widening portfolio Increasing share of wallet Improving targeting and BI Digital Lifestyle revenues continually growing Management Presentation Q August 2017

7 Conditional access stepwise introduced since July 3rd Installed base (in million) Paying users Introduction of conditional access All hardware shipped with hardcoded 96 days trial period after activation Logically STB go into conditional access over a period of 2-3 months; majority in by end of July Subscriber development More than 500,000 vouchers and subscriptions sold prior to July 3rd switch off Sales of new STB and C+ modules continued Guidance for end of year reconfirmed Update per 1 st June: Installed base: 2 million Paying users: ~500,000 > >1,000,000 ~160,000 >500,000 >800, Management Presentation Q August 2017

8 Operational KPIs build excellent fundament for further growth... Brand awareness grew to 65% and will help to exploit additional sources of customers PR and media equivalent value totals to more than 60 million euros Almost 500,000 fully registered users, more than 400,000 newsletter subscribers, 2.7 million unique visitors in Q2 on webpage of freenet TV 4,011,931 million have been sent in Q2 with an open rate >44% >2.5 Webshop certified by Dekra and Trusted Shop >500,000 >800,000 >1,000,000 8 Management Presentation Q August 2017

... as well as growing coverage does Koblenz 91.000 HH Freiburg 191.

5 freenet TV broadcasting coverage with 4 new city areas by November

9 ... as well as growing coverage does Koblenz HH Freiburg HH Kassel HH Dresden HH freenet TV broadcasting coverage with 4 new city areas by November Dresden + Kassel + Koblenz + Freiburg >500,000 >2.5 Total incremental reach 1.38 million users with in-room antenna equivalent to 657,000 households (HH) >800,000 >1,000,000 9 Management Presentation Q August 2017

visitors Since 28.3.17 1.2-1.5 1.7-2.2 >500,000 >2.

10 Hybrid platform freenet.tv-connect now launched Additional content and Apps Average daily usage increasing New devices with more built-in technology 170,000 users unique visitors Since >500,000 >2.5 + Smart TVs >800,000 >1,000, Management Presentation Q August 2017

11 ..new campaign about to go live to tap potential from cable and satellite > >500,000 >800,000 >1,000, Management Presentation Q August 2017

12 waipu.tv results in Q again on track Total users Free users Paying users By the end of Q2 waipu.tv has reached second largest paying user base in German IPTV According to our research steepest growth curve in the market Conversion rate from free to paying users constantly improved Key drivers of conversion is the use of recording function and big screen ~60,000 ~8,000 Performance per 1 st June: Total users: >260,000 Paying users: >50,000 >500,000 >250,000 ~150,000 >100,000 >50,000 >23, Management Presentation Q August 2017

potential Users by gender in percent 75%

13 Socio-demography proves that waipu.tv reaches broad audience with huge potential Users by gender in percent 75% Age groups by gender in percent >2.5 25% >800,000 >1,000,000 Total users as of Q2 2017; Discrepancies in the totals (100%) are due to rounding differences 13 Management Presentation Q August 2017

Not surprising: The majority of the users are in their

Source: Quelle: Own user survey for Q2 2017, 4,532

14 Not surprising: The majority of the users are in their professional period [in percent] 75% 10% PENSIONERS >2.5 10% TRAINEES / PUPILS / STUDENTS >800,000 >1,000,000 Source: Quelle: Own user survey for Q2 2017, 4,532 users; missing data in percent classified as miscellaneous 14 Management Presentation Q August 2017

15 With the current member of household split waipu.tv reaches more than 600,000 users Number of people in the household in percent waipu.tv user Data by Federal Statistical Office > >800,000 >1,000, single-person households two-person households three-person households four-person households > five-person households Source: Quelle: Own user survey for Q2 2017, 4,532 users; missing data in percent classified as miscellaneous 15 Management Presentation Q August 2017

With intense usage NPS increases Net Promoter Score waipu.

54% Promoter / Fürsprecher (9-10) waipu.tv 1.2-1.5 1.7-2.2 >2.

Own user survey for Q2 2017; 696 users; Discrepancies in the totals (100%) are due to rounding

16 With intense usage NPS increases Net Promoter Score waipu.tv Lovers*: [in percent] How likely would you recommend waipu.tv to a friend or colleague? 54% Promoter / Fürsprecher (9-10) waipu.tv >2.5 34% Passives / Unentschiedene (7-8) >800,000 >1,000,000 12% Distractors / Kritiker (0-6) Source: Own user survey for Q2 2017; 696 users; Discrepancies in the totals (100%) are due to rounding differences Definition waipu.tv Lovers: Top 20 percent intensity of use & Cord-Cutter (Cord Cutter = People using waipu.tv as preferred TV solution at home) 16 Management Presentation Q August 2017

17 Paying users understand waipu.tv as a real alternative to cable or satellite > >800,000 >1,000, Management Presentation Q August 2017

18 New content offerings drive usage and tap new target groups Ranking of channels by internal market share... By the way, I m a very satisfied customer of your offer and can fully recommended, it runs always completely fluently and fast it s really a super App; I can only recommend it to everybody! Yesterday, I watched Game Two and Animal Squad with waipu using Chromecast and I m impressed. Consistently with such a high quality, despite a thick pipe, I wouldn t be able to get RBTV on TV. I guess, Telekom does not throttle waipu. In the commercial breaks, besides, finally you get some advertising Rocket Beans TV Market share of : 0.7% > >800,000 >1,000, WDR Köln 26 SAT1 Gold 27 ARTE 29 Phönix 30 RTLplus 31 KabelEins Doku 18 Management Presentation Q August 2017

19 Consequently new contents are implemented into the platform Coverage based on various themes: One of the biggest and the widest-reach Europe's online TV broadcaster High relevant content in young target groups 600 million video views in a month, approximately 1.6 million viewers per day Around 1,500 of the best online TV-stars are promoted by MEDIAKRAFT Knowledge & News Comedy Beauty, Fashion, Lifestyle million views in Germany 80% male years old 52.9 million views in Germany 66% >2.5male years 15.7 million views in Germany 84% female >1,000,000 >800, years Source: Specification of Mediakraft Networks GmbH 19 Management Presentation Q August 2017

20 CRM and customer journey are driving conversion from free to paying users > >800,000 >1,000, Management Presentation Q August 2017

Next campaign is in progress >2.5 1.7-2.2 1.2-1.

21 Next campaign is in progress > >800,000 >1,000, Management Presentation Q August 2017

22 Impressive technical stability is the fundament of customer satisfaction Uptime of the system since launch % Network downtime since launch 0 seconds Quantity of recorded TV-shows 313,390 Current transmission capacity in the optical network activated Approximate customer latency Available storage space 1.8 Terabit/s 26 milliseconds 2 Petabyte this corresponds to approx. 200,000 parallel HD streams for comparison only: ambitious online gamer need a latency of < 100 milliseconds equivalent to 270 billion DIN-A4 sheet or 16.6 years of HD videos 22 Management Presentation Q August 2017

23 Shareholding in Sunrise Communications Group AG Shareholding in Sunrise 24.56% as of end of Q Sunrise dividend payment of 34.4 million euros in April 2017 After the closing of tower deal increase in dividend outlook for 2018 Promising comprehensive business model Digital TV, Internet, Mobile and Landline network Multiple-brand strategy (B2B and B2C) with focus on customer service Continuous product development and innovations by expanding partnerships in all business areas 23 Management Presentation Q August 2017

24 Financial statements Income statement information [in EUR million] 1 st half st half 2016 Q Q adjusted 1 adjusted 1 Revenue 1, , Gross profit 458, EBITDA Depreciation and amortisation Subsequent recognition from Sunrise PPA EBIT Interest result EBT Taxes on income Group result Earnings per share (EUR) ) Retrospective adjustment due to finalised purchase price allocation of Media Broadcast Group. Group revenue increased by 31.6 m yoy and gross profit by 5.6 per cent yoy both mainly resulting from TV and Media segment contribution. Group EBITDA of m (+3.9 % / 4.0 m yoy) including the contribution of Sunrise Communications Group (9.7 million euros). Thereof 99.9 m in the Mobile Communications segment (incl. Sunrise) and 10.5 m in the TV and Media segment, both slightly increasing yoy, though higher marketing spending in the TV and Media segment. Decrease of 0.8 m in depreciation and amortisation, primarily as a result of lower inventories of licences and rights of use. 24 Management Presentation Q August 2017

25 Group and segment key financials overview 1 st half 2017 [in EUR million] Revenue Gross profit EBITDA +7.7% +11.4% +8.1% Group 1, , % +0.1% +5.6% 1st half 2017 Mobile Communications 1, , st half % % +37.5% TV and Media ) Retrospective adjustment duet to finalised purchase price allocation of Media Broadcast Group. 2) Excluding the profit share of our holding in Sunrise we generated a Group EBITDA of million euros. 3) Excluding the profit share of our holding in Sunrise we generated a Mobile Communications Segment EBITDA of million euros. 25 Management Presentation Q August 2017

26 Financial statements Balance sheet information [in EUR million] Assets Shareholders equity and liabilities Intangible assets Shareholders' equity 1, , ,379.9 Goodwill 1,379.9 Borrowings ,506.1 Trade accounts receivable Cash and cash equivalents Other assets , Trade accounts payable Other liabilities 1, ,143.2 Total 4, , ,262.0 Total 26 Management Presentation Q August 2017

Debt ratio within target range of 1.0-2.5 [in EUR million] 2.2 2.3 1.

6 Debt ratio 1 Net debt 2 1) Debt ratio is defined as net debt² divided by the EBITDA of

2) Financial debt minus cash and cash equivalents minus market value of freenet s share in

27 Debt ratio within target range of [in EUR million] Debt ratio 1 Net debt 2 1) Debt ratio is defined as net debt² divided by the EBITDA of the past twelve months. 2) Financial debt minus cash and cash equivalents minus market value of freenet s share in Sunrise Communication Group AG on the reference date (Closing price of the Sunrise share at the Swiss stock exchange on reporting date, converted from CHF to EUR by Bloomberg at the officially fixed exchange rate) 27 Management Presentation Q August 2017

28 Financial statements Cash flow information [in EUR million] Cash flow from operating activities Cash flow from investing activities 1 st half st half 2016 adjusted 1 Q Q adjusted thereof net capex Cash flow from financing activities Change in cash and cash equivalents Free cash flow ) Retrospective adjustment due to finalised purchase price allocation of Media Broadcast Group. 2) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. Cash flow from operating activities at m declined by 9.6 m yoy, mainly due to effects from working capital and taxes, which should be compensated in the following quarters. Cash flow from investing activities amounted to -8.4 m, which is 31,3 m lower than in Q2 2016, mainly due to a payment of 22.1 m made in Q for an additional holding in share capital of Sunrise and a decline in net capex (due to higher investments in DVB-T2 in the previous year). Improvement in the cash flow from financing activities in Q mainly attributable to the repayment of corporate bond in Q and the refinancing process carried out in the previous year. 28 Management Presentation Q August 2017

29 Detailed Bridge from EBITDA to free cash flow Q [in EUR million] EBITDA Change in net working capital Tax payments Capex Sunrise EBITDA (no cash) Sunrise dividends Other Free cash flow FY FY 2017e > ~ Management Presentation Q August 2017

30 freenet AG financial guidance Group revenue Group EBITDA Free cash flow (FCF) 1 Dividend payout Perspective % of FCF incl. Sunrise Guidance 2017 > m 2 (+ Sunrise) ~310.0 m 3 (+Sunrise) 50-75% of FCF incl. Sunrise Results ,362.4 m m (incl. Sunrise m ) m (incl. Sunrise m ) 1.60 /share 4 Guidance 2016 > m 2 ~300.0 m % of FCF 1) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. 2) The expected EBITDA contribution of Sunrise Communications Group AG is not included in our guidance. 3) Dividend payment from Sunrise is not included in our guidance. 4) The Annual General Meeting resolved on 1 June 2017 the distribution of 1.60 euros per dividend-bearing share for the financial year Management Presentation Q August 2017

31 freenet AG KPI guidance Mobile Communications waipu.tv freenet TV Customer ownership Postpaid ARPU Total Users Paying Users ARPU 1 Installed base/ Hardware Paying Users ARPU 2 Perspective 2018 Guidance 2017 Results 2016 Guidance 2016 > 500,000 > 100,000 ~ 6.0 > 2,500,000 > 800,000 ~ , n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 1) waipu.tv ARPU refers to number of waipu.tv paying users. 2) freenet TV ARPU refers to number of freenet TV paying users. 31 Management Presentation Q August 2017

32 Thank you. Hollerstrasse 126 Investor Relations Büdelsdorf +49 (0) Management Presentation Q August 2017

Management Presentation Q results

Management Presentation Q results Management Presentation Q1 2018 results Christoph Vilanek, CEO and Joachim Preisig, CFO 04 May 2018 Analyst and Investor Conference and Call 1 Management Presentation Q1 2018 04 May 2018 Cautionary statement