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General

United Internet lowers FY outlook as mobile promotions, lower handset sales slow growth

Thursday 15 August 2019 | 09:32 CET | News

German operator United Internet reported a drop in first-half earnings, to EUR 0.84 per share from EUR 0.91 a year earlier, hurt by a writedown of EUR 34 million on its stake in cable operator Tele Columbus. Revenues and EBITDA were slightly higher, as customer growth offset increased promotions in the mobile market, but the company lowered its full-year growth outlook, due to weaker hardware sales and costs for rolling out its mobile network and price cuts. United Internet said it's also preparing an IPO for its hosting business Ionos and negotiating a new wholesale deal for its telecom business. 

Excluding the impairment charge, earnings rose 11 percent to EUR 1.01. EBITDA increased 11 percent to EUR 565.5 million, helped by the switch to IFRS 16 accounting. The latter offset increased wholesale costs after the expiry of the operator's previous agreement at the end of 2018. United Internet said it's gone to arbitration over the new wholesale conditions and expects a decision in October, which should result in lower prices on a retroactive basis. 

Revenues for the six months rose 1.1 percent to EUR 2.55 billion. Growth was held back by a fall in hardware sales and reduced prices offered in the first year of two-year LTE mobile contracts. This was offset by customer growth. In total, the company added 440,000 paying customers in the period to reach a total of 24.29 million at the end of June. This included 280,000 contracts added in the consumer access business, 10,000 in consumer applications and 50,000 in business applications. 

United Internet confirmed it's planning an IPO for the business applications business. The hosting operation was recently rebranded as 1&1 Ionos and will list on the stock market as Ionos following a transition phase, the company said. 

The weak hardware sales and mobile promotions led to a reduction in the company's forecast for the full year to 2 percent sales growth rather than the initial 4 percent forecast. Excluding hardware, annual sales are expected to grow 3 percent. While this will have little impact on EBITDA, the company does see higher costs for preparing its 5G mobile network (EUR 5 million) and changes in subscriber line charges (EUR 10 million), leading to a cut in the annual EBITDA growth outlook to 11 percent from 12 percent. 

United Internet also announced plans to start a share buyback programme. It plans to repurchase up to 6 million shares, of 2.93 percent of the total outstanding, for a total price of EUR 192 million. The buyback will start on 16 August. 



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Categories: General
Companies: Tele Columbus / United Internet
Countries: Germany
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