1&1 Drillisch Aktiengesellschaft / Key word(s): Strategic Company Decision/Forecast
1&1 Drillisch sets course for the future: Expansion of cooperation with 1&1 Versatel and Deutsche Telekom as well as acceptance of Telefónica's improved national roaming offer. Preliminary figures 2020 and forecast 2021
- Broadband advance services in future from a single source via 1&1 Versatel
- FTTH coverage expanded to include Deutsche Telekom's fibre optic connections
- Purchase of high-performance FTTH / VDSL advance services at attractive terms and conditions with long-term advantages; 130 million Euro non-recurring, not cash effective write-off for existing VDSL contingents required in 2020
- Improved offer of Telefónica for national roaming and new prices for MBA MVNO advance services accepted with retroactive effect as of July 2020
- Preliminary 2020 figures confirm forecasted growth in customers and revenues as well as operating EBITDA
- Forecast 2021: Service revenues: ca. 3.1bn Euro; EBITDA: ca. 650m Euro
Maintal, 15 February 2021.
Broadband advance services/ FTTH connections
1&1 Drillisch AG is expanding its fibre optic offering and will in future receive all VDSL and FTTH advance services (fibre to the home - "FTTH") from its affiliate 1&1 Versatel. For this purpose, 1&1 Drillisch has entered into an agreement with 1&1 Versatel on the long-term purchase of FTTH and VDSL complete packages including Voice and IPTV effective from 1 April 2021.
At the same time, 1&1 Versatel has entered into an agreement with Deutsche Telekom on the use of Deutsche Telekom's FTTH / VDSL connections for households. These enable 1&1 Versatel to provide FTTH / VDSL complete packages for 1&1 Drillisch, as 1&1 Versatel's nationwide transport network is largely connected to the local broadband networks of Deutsche Telekom. The FTTH purchase from Deutsche Telekom has a term ten years.
In addition to the existing access to FTTH connections of well-known city carriers, 1&1 Versatel 1&1 Versatel can thus initially offer 1&1 Drillisch around 750,000 additional FTTH connections for marketing. The number of marketable FTTH connections at Deutsche Telekom is expected to increase by an average of 2 million households per year.
FTTH connections for private households enable bandwidths of up to 1Gbit/s. Households not yet equipped with FTTH will be supplied with VDSL connections (up to 250 Mbit/s).
Given the advantages of the new combined VDSL-/FTTH agreement, the existing VDSL only advance service agreement between 1&1 Drillisch and Deutsche Telekom will be terminated before maturity by mutual agreement of the parties. For 1&1 Drillisch this will result in the write-off of accrued assets for VDSL contingents for existing customers still available until 31 March 2024, that must be written off in the amount of ca. 130 million Euro. The one-time write-off has no cash effect and will be clearly topped by the positive effects from the expanded cooperation with 1&1 Versatel and Deutsche Telekom in the long-run.
The new FTTH/VDSL agreement between 1&1 Versatel and Deutsche Telekom is subject to approval by the Federal Network Agency as the competent regulatory authority.
National roaming / Prices for MBA MVNO advance services
Furthermore, 1&1 Drillisch has decided today to accept bindingly Telefónica Deutschland's offer - that was improved following review by the EU Commission - for national roaming and for MBA MVNO advance services. The terms and conditions offered by Telefónica retroactively from July 2020 are based on the pricing mechanisms of the first five years of the MBA MVNO agreement for the future as well. In particular, the offer again includes annually decreasing data prices, which are lower than the fixed prices currently charged by Telefónica.
The conclusion of an agreement, which Telefónica's offer expects until approx. mid of May 2021, would have a positive earnings effect of approx. 34 million Euro for 1&1 Drillisch in the fiscal year 2020, which would be booked as an out-of-period return in the fiscal year 2021. In addition, an agreement on national roaming would constitute an essential prerequisite for 1&1 Drillisch's envisaged rollout of a high-performance 5G network.
Preliminary figures 2020
1&1 Drillisch will account for write-off for non-utilised VDSL contingents as of 31 December 2020. Based on preliminary and unaudited figures, 1&1 Drillisch confirms the 2020 EBITDA forecast - excluding this non-recurring one-off effect - in the amount of ca. 600 million Euro. Taking into account the non-recurring, not cash effective write-off, the EBITDA amounts to ca. 470 million Euro. The EBITDA 2020 includes increased costs for the procurement of mobile advance services due to Telefónica's mid-2020 price increase, regulatory effects, higher initial costs for the 5G network rollout and negative effects from the coronavirus pandemic. Despite negative impacts of the coronavirus pandemic, the other preliminary key figures show a positive development. Thus, the revenues 2020 increased by 3.0% to ca. 3.787 billion Euro and the service revenues by 2.6% to ca. 3.020 billion Euro. Customer contracts improved by 500,000 to 14.83 million.
In the financial year 2021, 1&1 Drillisch expects service revenues to increase to ca. 3.1 billion Euro (2020 preliminary: 3.02 billion Euro). The EBITDA shall increase to ca. 650 million Euro (2020 preliminary: 600 million Euro) (excluding the aforementioned potential out-of-period return of ca. 34 million Euro in connection with the planned conclusion of the national roaming agreement). This forecast includes expected negative effects from the coronavirus pandemic on the revenues and the result in the amount of ca. 25 million Euro (2020 preliminary: 25 million Euro) as well as initial costs for the 5G network rollout of ca. 30 million Euro (220 preliminary:: ca. 14 million Euro).
Maintal, 15 February 2021
1&1 Drillisch Aktiengesellschaft
The Management Board
Financial performance indicators such as EBITDA, EBITDA margin, EBIT, EBIT margin or free cash flow are used in addition to the disclosures required by the International Financial Reporting Standards (IFRS) in the annual and interim financial statements of 1&1 Drillisch AG and in ad hoc reports pursuant to Art. 17 MAR to ensure a clear and transparent presentation of 1&1 Drillisch's business development. Information about the use, definition and calculation of these performance indicators is provided on page 37 of the Annual Report 2019 of 1&1 Drillisch AG.
Disclaimer: This report contains statements regarding the future which are based on the current assumptions and projections of the 1&1 Drillisch AG management. Various risks, uncertainties and other factors, both known and unknown, can cause actual developments, especially in the results, financial position, and the business of our Company, to deviate substantially from the projections about the future as they are shown here. The Company does not undertake any obligation to update such future-oriented statements and to adapt them to future events or developments.
15-Feb-2021 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
1&1 Drillisch Aktiengesellschaft
+49 (0) 6181 - 412 218
+49 (0) 6181 - 412 183
Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange
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