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Freenet AG: Germany's Asset-Light Telecom Maverick
The Quiet Giant of German Telecommunications
In the glass towers of Düsseldorf and the corner offices of Deutsche Telekom's Bonn headquarters, executives spend billions annually maintaining sprawling network infrastructure—fiber lines snaking beneath German streets, cell towers dotting the Black Forest, and data centers humming in industrial parks from Munich to Hamburg. Yet tucked away in Büdelsdorf, a small town in Schleswig-Holstein that most Germans couldn't locate on a map, sits a company that has spent the better part of three decades proving that owning nothing can be worth billions.
Freenet AG is a leading German telecommunications and digital lifestyle provider, specializing in network-independent mobile communications and TV/media services. Serving approximately 10.4 million subscribers as of September 2025, it has evolved into Germany's largest independent mobile operator.
The paradox sits at the heart of Freenet's story: How did a company with no network infrastructure outperform competitors who spent tens of billions building theirs? With 10.240 million subscribers at the end of Q1 2025, this corresponds to an increase of almost 100 thousand net new subscribers compared to end of 2024. The answer lies in a combination of ruthless efficiency, near-death experience, strategic pivot, and what Warren Buffett might call a moat built not from assets, but from relationships and brands.
The journey to understand Freenet requires traveling back to the go-go days of the late 1990s, when a former ice hockey player convinced himself—and briefly, the market—that building a mobile network from scratch was a perfectly reasonable idea. That decision would lead to one of Germany's most spectacular corporate collapses. What rose from those ashes, however, would become something entirely different: a dividend machine, a TV streaming pioneer, and an object lesson in how asset-light models can thrive in capital-intensive industries.
Part I: The Wild Origins — Gerhard Schmid and the Mobilcom Saga (1991–2002)
From Ice Rinks to Board Rooms
Gerhard Schmid was born on May 22, 1952 in Selb in Upper Franconia, Bavaria. He founded the service provider Mobilcom and the online service freenet.de. After a commercial apprenticeship, the son of a bricklayer and a housewife financed his business studies at the Friedrich-Alexander-University Erlangen-Nuremberg and the University of Regensburg as an ice hockey player in Nuremberg and Straubing.
Picture this: a stocky young man skating across frozen rinks in Bavaria, earning just enough from semi-professional hockey to fund his university education. After his studies, he worked as an ice hockey coach in Selb and Bayreuth. It wasn't an obvious launching pad for building a telecommunications empire, but Gerhard Schmid possessed something more valuable than any MBA credential—an almost pathological intolerance for standing still.
In 1977, Schmid began at Hutschenreuther AG as a management assistant and rose to become Sales Director for the Technical Ceramics division and Controller Director for the entire company. In 1986, Schmid moved as Managing Director to Ostseebad Damp, and in 1989 became Board Member for Marketing and Sales at Sixt AG.
The Sixt years proved formative. From Erich Sixt he learned all the cool slogans and refined marketing tricks that would later become his trademark. Sixt, for example, used pin-up girls on hoods and claimed: "Nothing is lower than the level of this ad except our prices." As one of the first, Schmid recognized the enormous opportunities that arose with the liberalization of the German telephone market.
At 38, Schmid made the decision that would define his life. He left Sixt, gave up his well-paid board position, and in 1991 founded Mobilcom AG with a single employee and a mobile license in Schleswig-Holstein. The audacity was breathtaking—a former ice hockey player with a ceramics background, betting his entire career on a fledgling mobile telecommunications industry.
The Neuer Markt Rocket
Mobilcom was the first company on Germany's Neuer Markt. For Americans seeking comparison, imagine being the first company listed on the NASDAQ during the dotcom boom—except the euphoria in Germany was arguably more intense. The Neuer Markt, Frankfurt's technology-focused exchange segment, became a symbol of Germany's aspirations to compete with Silicon Valley.
His Mobilcom—the first company on the Neuer Markt—challenged industry giant Telekom with aggressive discount pricing. Schmid understood something crucial: the recently liberalized German telecom market was ripe for disruption. Deutsche Telekom, the former state monopoly, had grown complacent. When the Deutsche Telekom monopoly fell in 1998, the "telephone Aldi" from Büdelsdorf in Schleswig-Holstein, with minimal technical equipment, capital, and personnel, became one of the toughest competitors of the former monopolist.
The Mobilcom share became a "money printing machine" according to Julius Bär analyst Joeri Sels. In 1998, Mobilcom's revenue exploded from 323 million to 1.47 billion marks.
The numbers were staggering. On paper, Schmid's stake in the company was once worth an astounding seven billion euros. For perspective, that made the son of a Bavarian bricklayer one of Germany's wealthiest individuals—at least on paper.
The UMTS Gamble: When Dreams Become Debts
Then came UMTS.
The year 2000 witnessed what can only be described as collective insanity in European telecommunications. Third-generation mobile licenses—the promise of mobile internet before anyone truly understood what that meant—were auctioned across Europe. In March 2000, France Télécom invested EUR 3.7 billion in a 28.5% shareholding, valuing the operator at 80 times its EBITDA.
A stake in Mobilcom was acquired in difficult circumstances by investing a very large amount of EUR 3.7 billion in a 28.5% shareholding, valuing the operator at 80 times its EBITDA (compared with a stock-exchange valuation before rumours of the deal emerged of the order of 65 times EBITDA).
Eighty times EBITDA. Let that sink in. Even during peak dotcom madness, such valuations were extraordinary. The partnership was supposed to fund Schmid's ultimate dream: transforming Mobilcom from a reseller into a full-fledged network operator.
As regards the development of UMTS, the price of licenses was estimated at EUR 2-3 billion, whereas the British auction sales in March and April 2000 highlighted the ongoing license inflation. In August 2000, the German licenses reached EUR 8.4 billion.
The German UMTS auction became a feeding frenzy. What was expected to cost €2-3 billion per license spiraled to over €8 billion. Mobilcom, backed by France Télécom, won a license—but the victory would prove pyrrhic.
The Spectacular Collapse
Mr. Schmid founded MobilCom in 1991 and in the ensuing decade saw the company's stock value soar to a 2000 high of EUR 140 per share. However, a dispute with former major shareholder France Télécom—in which the French telco threatened to pull the plug on its partner—brought MobilCom close to bankruptcy in 2001, following which Schmid was contentiously ousted from his position as CEO.
The fall was as dramatic as the rise. In early 2002, a dispute arose between Mobilcom major shareholders France Télécom and Schmid over the speed of network expansion and stock options for dealers. In March 2002, Schmid committed to selling his shares to an investor to be provided by France Télécom. With France Télécom's voting rights—Schmid was not entitled to vote in this matter—the general meeting in May 2002 refused to discharge Schmid as board member. In June, France Télécom terminated the cooperation agreement. Schmid was subsequently dismissed as Chairman by the Supervisory Board.
MobilCom founder and Chief Executive Gerhard Schmid said his company was "paralyzed" by the dispute and was losing customers.
The human toll was devastating. In February 2003, he filed for insolvency proceedings to be opened on his assets at the Flensburg District Court. The insolvency proceedings were opened in May 2003.
For many years, he stood as plaintiff and defendant in court with Mobilcom buyers and insolvency administrators; the last proceedings were not concluded until 2015.
When Schmid was asked years later about the decision to bid over €8 billion for a UMTS license, his response reflected the fatalistic acceptance of a gambler who knew the odds but played anyway. "Whoever steps into the boxing ring can get a bloody nose," Schmid said without regret. "You have to accept life as it is. Whoever becomes bitter goes to ruin."
The freenet.de Parallel Track
Even as Mobilcom careened toward disaster, Schmid had planted another seed. At the end of 1998, Mobilcom was the first provider on the German market to attempt to establish a flat-rate narrow-band Internet access for consumers. Following this, Mobilcom launched Internet-by-Call and the Internet portal business under the name Freenet with the dial-up node infrastructure purchased for flat-rate access, which became the nucleus of the spun-off freenet.de at the end of 1999.
A further milestone of the year 1999 was the going public in December of the Internet subsidiary freenet.de on the Neuer Markt in Frankfurt.
This separate entity—freenet.de—would survive its parent's near-death experience and eventually become the foundation for something entirely new.
Part II: The Merger and Transformation (2005–2008)
Rising From the Ashes
By 2003, Mobilcom existed in a fundamentally diminished state. In 2003, the company survived; insolvency could be averted thanks to France Télécom's debt assumption and state financial aid in the form of guarantees for necessary loans. After the former subsidiary freenet.de took over Mobilcom's fixed-line business, the company concentrated on the service provider business—marketing mobile contracts for network operators T-Mobile, Vodafone, E-Plus and O2—and offered products through a franchise-led store chain and distribution partnerships.
The company that emerged was radically different from Schmid's vision. No network infrastructure. No UMTS dreams. Just distribution, customer service, and the hard work of selling someone else's mobile minutes at a markup.
In 2007, Freenet.de merged with Mobilcom, a deal which took around two years to complete, and the resulting company changed its name to Freenet AG.
The merger was completed on March 2, 2007, with the combined company initially operating under the name telunico holding AG before rebranding to Freenet AG later that month.
The reunification of parent and offspring—Mobilcom and freenet.de—was not without drama. Since then, numerous lawsuits by shareholders of both companies against the merger had been ongoing, so the merger could not be realized until 2007.
The Debitel Acquisition: Creating Scale
If the 2007 merger established Freenet's identity, the 2008 acquisition of Debitel transformed its competitive position.
Arma Partners acted as M&A advisor to freenet AG in freenet's agreement, announced on 27 April 2008, to acquire debitel Group. The aggregate consideration payable was approximately €1.63 billion.
Debitel Group was the largest independent mobile service provider (MSP) in Germany, with over 13 million subscribers. Debitel Group had pro forma 2007 revenues of approximately €3.36 billion and EBITDA of €255 million. The combination of freenet's mobilcom subsidiary, with over 5.5 million subscribers, with debitel would create the #3 overall mobile provider in Germany with 19 million pro forma subscribers.
Debitel AG was one of the largest mobile telephone service providers in Europe. At its peak, the business commanded a 47% market share of the mobile service provider market in Germany with 12.4% of the overall mobile telephone market as of 2004.
The deal's structure reflected careful financial engineering: The total deal value of €1.63 billion comprised the issuance of 32 million new freenet shares to the vendors, the issuance by freenet of a €132.5 million vendor loan note, and the assumption by Freenet of debitel's existing term banking facilities of €1,135 million.
The Asset-Light Pivot: Choosing Not to Build
Post-2007, the company shifted to a network-independent service provider model. This allowed Freenet to focus on customer service and competitive pricing by utilizing existing network infrastructures.
This strategic choice—to permanently abandon any network ownership ambitions—represented a fundamental break from Schmid's original vision. But it also represented something more profound: a recognition that in telecommunications, competitive advantage could come from customer relationships rather than physical assets.
The activities within freenet's value chain that generate value are situated in packaging, multichannel distribution and customer management. In addition to using its own infrastructure in the area of TV and Media, major partners such as network operators, hardware and application manufacturers, energy suppliers and producers of TV and radio programs supply the relevant precursors. Freenet AG generally places great emphasis on forming sustainable long-term partnerships.
The company emerged with a distinctive business model: The freenet Group is a telecommunications provider that offers an extensive portfolio of services on mobile voice and TV markets. In parallel, the company develops innovative digital applications relating to home automation, security, health, data security, and infotainment. The freenet Group operates on Vodafone, TelefĂłnica and Deutsche Telekom's networks through its light MVNOs.
Part III: The Vilanek Era — Stability and Strategic Expansion (2009–2024)
A New Kind of Leadership
In 2009, Freenet found its steady hand. Christoph Vilanek, an Austrian executive with deep telecommunications experience, took the helm as CEO. A long-time telecommunications stalwart, Vilanek joined freenet in 2009 as CEO, having previously been responsible for customer communications, development, customer relationship management at debitel in Stuttgart.
The contrast with Gerhard Schmid could not have been starker. Where Schmid was aggressive, flamboyant, and willing to bet everything on bold gambles, Vilanek was methodical, patient, and focused on incremental value creation. He led the company for 16 years.
Christoph Vilanek has led the company since 2009, transforming it from a pure mobile service provider into a company with two strong pillars: mobile communications and digital lifestyle services as well as TV and media.
Under Vilanek's leadership, the company pursued a series of strategic acquisitions that diversified its revenue base while maintaining capital discipline.
GRAVIS: The Apple Partnership (2012–2024)
In 2012, Freenet acquired GRAVIS, Germany's largest Apple-specialized retailer. Gravis was founded in 1986 by two students at the Technical University of Berlin and quickly developed into one of the leading providers of Apple products in Germany.
Gravis even influenced the design of Apple Stores, of which the iPhone company now operates over 500 worldwide. Before Apple co-founder Steve Jobs and his design chief finalized the look of the first Apple Store in 2000, they were inspired by a Gravis Store in East Westphalia. In Bielefeld, Gravis had opened its "Shop 2.0" with an extraordinary interior design in 1999.
However, the GRAVIS story would end in disappointment. Gravis, Germany's largest Apple-specialized retailer until then, ceased sales in all 37 stores and the online shop on June 15, 2024.
"We have recorded an almost seven-figure negative result every month in 2024," Vilanek revealed in an interview.
GRAVIS founder Archibald Horlitz, who sold his company to Freenet twelve years earlier, wrote in a LinkedIn blog post that he was "bitterly disappointed by Apple, with which I had been closely connected for more than half a lifetime." His thoughts were with the 600 employees who now lost their jobs. He also pointed to Apple's business policies: for the iPhone 15 launch, only 50 units were delivered to Gravis, while Apple itself and "telcos" received "tens of thousands of units" in the first wave.
The GRAVIS failure offers an instructive lesson about the dangers of depending on a single powerful supplier—even when that supplier is one of the world's most valuable companies.
Media Broadcast and EXARING: The TV Pivot (2015–2016)
The acquisition that would define Freenet's second act came in 2015-2016.
German mobile service provider Freenet made a significant investment in its media delivery capability by acquiring 100% control of digital-terrestrial network operator Media Broadcast and 25% of Munich-based fibre-based media delivery platform Exaring for €295 million. Freenet CEO Christoph Vilanek said the acquisition of Media Broadcast would help position the company for the introduction of subscription-based TV services. Vilanek said that the investment in Exaring would enable the company to deliver advanced entertainment services, including UHD services, over Exaring's fiber network which reaches 23 million German homes.
The experience gained in the Mobile Communications business laid the foundation for the company's entry into the TV and media business. Freenet has been active in this market via its acquisition of the Media Broadcast Group and a majority holding in EXARING AG since 2016 and has gradually expanded this segment into another key revenue pillar. Media Broadcast designs, sets up and operates multimedia broadcast infrastructure for TV and radio based on state-of-the-art digital transmitter technology. Freenet is the sole provider of digital antenna TV (DVB-T2 HD) in the German market.
"The acquisition of a stake in Exaring AG and the associated marketing rights are a quantum leap for us on the way to becoming the leading digital lifestyle provider in Germany," said Vilanek. "The IP platform combines all conventional, new and future television entertainment services on an infrastructure unrivaled in Germany and at unrivaled low prices."
The Ceconomy Investment: A Financial Play
Freenet's investment in Ceconomy AG—parent company of MediaMarkt and Saturn, Germany's leading electronics retailers—represented a different kind of bet: a financial investment rather than an operational one.
In 2025, that investment found its exit. Shareholders Haniel, Beisheim, BC Equities, and Freenet, which together control approximately 27.9% of the shares, intend to sell their shares to JD.com.
The offer provides existing shareholders with near-term liquidity and the opportunity to realize long-term value potential, particularly relevant given anticipated delisting procedures that will reduce share liquidity post-acquisition.
The JD.com deal, valued at €4.60 per share, provided Freenet with a clean exit from what had become a complicated position in a struggling retail sector.
The 2022 Brand Unification
After decades operating under multiple brand identities, Freenet finally consolidated. At the end of February 2022, it was announced that the Mobilcom-Debitel brand would be discontinued in July of the same year in favor of freenet. The changeover took place on July 13 and the company was additionally renamed freenet DLS.
The 2022 rebranding, which unified the mobilcom-debitel brand under the Freenet umbrella, enhanced market presence. This strategic move aimed to create synergies and strengthen brand recognition.
Part IV: waipu.tv — The Growth Engine
The IPTV Bet
Waipu.tv is a subscription-based streaming service launched in Germany in 2016 by Exaring AG and Freenet AG. It offers live streaming without ads, available in European countries including Germany, Switzerland, and the Netherlands.
EXARING AG operates the first fully integrated platform for IP entertainment services in Germany. Its business model is also based on the transmission of TV content from public and private broadcasters.
The waipu.tv service offers more than 300 live TV channels, including over 70 pay-TV channels, alongside cloud-based recording, pause and restart functionality, and a library of 40,000 on-demand titles within its video-on-demand section, the waiputhek.
Growth Trajectory
The launch of waipu.tv marked a significant entry into the TV and media sector. This expansion has driven substantial revenue growth, with 571,000 new subscriptions in 2024.
Freenet AG's robust 2025 performance has been fueled by IPTV and strategic initiatives, with IPTV as the key driver of EBITDA growth.
The company has set ambitious targets: In the IPTV business (waipu.tv), the EBITDA contribution is expected to increase by at least €100 million. Freenet made this assumption by expecting a further increase in IPTV penetration, which should lead to an increase in subscribers to around 3.5 million by the end of 2028.
Waipu TV Start: The Mass Market Play
In October 2025, waipu.tv launched its most aggressive product yet. Waipu.tv announced the launch of its latest product, Waipu TV Start, aiming to replace traditional cable and satellite connections with a faster, simpler, and more affordable streaming solution. The newly introduced Waipu TV Start is priced at €4.99 per month, positioning it as the most affordable IPTV entry package on the German market.
According to Markus Härtenstein, Co-CEO of Exaring AG, the goal is clear: "With a price point under five euros, we're targeting millions of households still tied to cable. We want to offer them the simplest and most legal way to enjoy modern television."
The device behind the service has won industry acclaim. Publications like ComputerBild, CHIP, and SATVISION named the Waipu TV Stick a "Testsieger" (test winner). SATVISION awarded the device a record-breaking 96.1%, the highest score ever given to a 4K streaming stick.
Strategic Options and Potential IPO
German telecom group Freenet AG is considering options for its television streaming platform Waipu.TV, which could be valued at as much as €1.5 billion in a deal. The Frankfurt-listed company is looking at whether to approve an initial public offering for Waipu.TV, as the platform's minority shareholders are seeking to exit. Exaring AG, which is majority owned by Freenet and manages Waipu.TV, has been fielding proposals from investment banks about the possible IPO.
A €1.5 billion valuation for waipu.tv would be significant. To put this in context, Freenet's entire market capitalization hovers around €3-4 billion. The implied valuation suggests that waipu.tv alone could represent 35-50% of the company's total value—a remarkable transformation for what began as a mobile reselling business.
Part V: Business Model Deep Dive
The Three Pillars
Freenet operates through three distinct but interconnected segments:
Mobile Communications (Core Business):
The freenet Group is a telecommunications provider offering an extensive portfolio of services on mobile voice and TV markets. The freenet Group operates on Vodafone, TelefĂłnica and Deutsche Telekom's networks.
The genius of Freenet's mobile model lies in its multi-brand, multi-network approach. Mobilcom-Debitel stands out as it is the only MVNO offering 4G services across all three host networks, which makes it possible to directly compare the MVNO experience on each host network.
This network-agnostic positioning provides several advantages: - Customers can be matched to the optimal network for their location - Freenet maintains negotiating leverage with all three MNOs - Service disruptions on one network don't threaten the entire customer base
TV and Media:
Media Broadcast designs, sets up and operates multimedia broadcast infrastructure for TV and radio based on state-of-the-art digital transmitter technology. Freenet is the sole provider of digital antenna TV (DVB-T2 HD) in the German market. The company distributes TV content from public and private broadcasters to private end customers via the freenet TV brand.
Brand Portfolio:
The company operates an extensive stable of brands targeting different market segments: klarmobil.de (budget-conscious), freenetmobile.de (mainstream), freenet FLEX (flexible contracts), waipu.tv (IPTV), freenet TV (terrestrial), and numerous others. This multi-brand strategy allows precise market segmentation without brand cannibalization.
The Distribution Moat
The focus is on direct customer relationships and directly managed sales channels ('captive channels'), which include more than 500 freenet shops as well as numerous additional online marketing platforms. These channels provide freenet with direct customer access with upselling and cross-selling potential and strong customer retention while keeping distribution costs low. Freenet also holds exclusive marketing rights for mobile communication services on the Telekom and Vodafone networks in more than 400 electronics stores operated by Media-Saturn-Deutschland.
The Dividend Machine Model
Freenet plans to realize a payout ratio of 80% of the free cash flow. Compared to other companies listed on the MDAX, freenet AG has an above-average dividend yield and has been able to continuously increase the ordinary dividend per share in recent years.
At the end of the 2028 financial year, the Executive Board expects a free cash flow of at least EUR 330 million. Due to the increasing free cash flow expected and the targeted payout ratio of 80%, the company expects an annually increasing dividend for shareholders until 2029.
The company's Executive Board confirmed the preliminary results for the 2024 financial year, the dividend proposal of EUR 1.97 and the guidance for the 2025 financial year. The Executive Board resolved to launch a share buyback programme with a volume of up to EUR 100 million, to be completed in 2025.
The dividend increased by 11.3% from €1.77 to €1.97 per share for 2024—a meaningful raise that reflects management's confidence in sustainable cash generation.
Part VI: Leadership Transition and Recent Developments (2025)
The Vilanek Departure
After 16 years, the Vilanek era drew to a close. Robin Harries is CEO of freenet AG as of June 1, 2025. The Supervisory Board had resolved his appointment at a meeting on January 29, 2025. Harries succeeds Christoph Vilanek, who led the company since 2009 and decisively shaped it.
Christoph Vilanek noted: "I am delighted that Robin Harries is taking over responsibility for this great company. Along with this joy, I also feel a little melancholy today."
Christoph Vilanek shaped the company Freenet decisively over the past 16 years. The Austrian focused the mobile business, transformed Freenet into a "Digital Lifestyle Provider." With waipu.tv, he conquered the TV segment and developed an important new revenue source. The freenet shops and online business were integrated and developed into marketing machines. The end of the once-successful Gravis shop chain, which started as an Apple reseller and competed with Apple stores, was perhaps the only blemish in his era. The publicly listed Freenet AG stands comparably well among telecommunications providers like Deutsche Telekom: for the first time, EBITDA exceeded half a billion euros.
Robin Harries: The New Sheriff
Robin Harries (43) was a member of the Management Board of NASDAQ-listed trivago N.V. since April 2024, having already held senior positions at the company from 2012 to 2018. Through his many years of management responsibility as a member of the Executive Board of 1&1 Telecommunication SE and Drillisch Online GmbH from 2018 to 2024, where he was responsible for customer acquisition for all brands and products, Robin Harries has extensive expertise in marketing, sales and digital transformation.
The appointment carries interesting competitive implications. Robin Harries attacks his former employer, 1&1 Drillisch, head-on. Being a former board member there, he should know quite well where the weak points of the fourth network operator lie with its "multi-brand strategy."
The company's earnings have grown sustainably in recent years and management has set a clear ambition for further growth by 2028. The Supervisory Board considers the timing of the handover ideal, as long-term agreements with the three network operators and sustained growth in the IPTV business provide an extremely solid basis for new impetus and business ideas.
The mobilezone Deutschland Acquisition
Harries wasted no time making his mark. Freenet DLS GmbH, a wholly owned subsidiary of freenet AG, signed a purchase agreement on October 8, 2025 for the acquisition of 100% of the shares in mobilezone Deutschland GmbH, Cologne, as well as the operating subsidiaries mobilezone GmbH and mobilezone exchange GmbH.
With over one million contracts concluded annually, around 300 employees and sites in Cologne, Bochum and MĂĽnster, mobilezone Deutschland is one of the leading independent telecommunications providers in Germany. With strong brands such as Sparhandy, Deinhandy, Handystar and HIGH, the company generated revenues of almost EUR 780 million and EBITDA of approximately EUR 30 million in 2024.
Upon completion of the transaction, a purchase price of approximately EUR 230 million will be payable. The transaction is expected to be completed in the fourth quarter of 2025.
Freenet secured German competition approval for its acquisition of Mobilezone from the Federal Cartel Office on November 5, 2025.
The acquisition represents a significant bet on digital distribution. According to a report by WirtschaftsWoche, in the first half of 2025, Mobilezone generated 72% of its revenue in Germany and the German business has been weakening, leading to a profit warning at end of December 2024. While the deal is logical in terms of vertical integration and strengthening retail presence, it carries risks. Mobilezone is a business in need of a turnaround. With an EBITDA margin of around 3-4%, margin expansion will depend on execution and integration.
2025 Financial Performance
Subscriber base increased by almost 100 thousand to 10.240 million (year-end 2024: 10.149 million). Revenues increased moderately by 1.7% to EUR 604.4 million. Adjusted EBITDA of EUR 126.1 million at the prior year's level. Free cash flow increased by 1.7% to EUR 75.8 million.
In 2024, freenet AG's revenue was 2.50 billion, an increase of 3.84% compared to the previous year's 2.41 billion. Earnings were 246.80 million, an increase of 56.60%.
For 2025, management guidance remains constructive: For the current financial year, the Executive Board expects a significant increase in adjusted EBITDA without special effects. The Executive Board expects adjusted EBITDA of EUR 520 to 540 million.
Part VII: Competitive Position and Strategic Analysis
Porter's Five Forces Assessment
1. Threat of New Entrants: LOW-MODERATE
The German mobile market presents peculiar barriers. Network infrastructure requires billions in capital expenditure—but Freenet proves that MVNOs can succeed without it. The real barriers are: - Established relationships with all three network operators - Brand recognition built over decades - Distribution infrastructure (500+ stores, MediaMarkt partnership) - Regulatory complexity in consumer telecommunications
The Germany MVNO market is semi-consolidated: no single virtual operator exceeds a 15% share, yet the top five providers still hold a collective 62%. Brand equity, retail alliances, and integration prowess decide competitive standing more than raw subscriber totals.
2. Bargaining Power of Suppliers: MODERATE-HIGH
This represents Freenet's most significant structural vulnerability. Three host networks control nearly all radio access, giving Deutsche Telekom, Vodafone, and TelefĂłnica leverage to raise wholesale rates or limit 5G features.
However, Freenet has mitigated this risk through long-term contracts. Long-term agreements with the three network operators provide an extremely solid basis.
3. Bargaining Power of Buyers: MODERATE
German consumers are price-sensitive but also value service quality. Freenet's multi-brand strategy allows it to compete across price tiers, from budget-conscious klarmobil customers to premium freenet subscribers.
4. Threat of Substitutes: MODERATE
Over-the-top messaging services (WhatsApp, Telegram) have reduced voice and SMS revenue industry-wide. However, data consumption continues growing, supporting ARPU in the mobile segment. The waipu.tv expansion into IPTV represents a strategic response to cord-cutting trends affecting traditional TV distribution.
5. Competitive Rivalry: HIGH
Germany's MVNO market share is 18%, with Freenet and 1&1 securing significant shares.
The German telecom market features intense competition from: - Deutsche Telekom (dominant network operator) - Vodafone Germany - TelefĂłnica Deutschland - 1&1 Drillisch (MVNO competitor now building own network) - Numerous discount MVNOs (Lidl, Aldi, Tchibo)
Hamilton Helmer's 7 Powers Analysis
Counter-Positioning: Freenet's asset-light model represents counter-positioning against network operators. Deutsche Telekom cannot easily abandon its network investments to match Freenet's cost structure.
Scale Economies: Limited traditional scale economies given the MVNO model, but scale advantages exist in marketing efficiency and customer acquisition costs.
Switching Costs: Moderate. German regulations mandate number portability, but Freenet's comprehensive service portfolio (mobile + TV + internet) creates bundling benefits.
Network Effects: Minimal direct network effects.
Process Power: Customer service expertise developed over 25+ years represents meaningful process advantages. Freenet's "Assisted Personalized Shopping" concept leverages this accumulated know-how.
Branding: Multiple strong brands covering different market segments. The freenet brand itself carries significant awareness in Germany.
Cornered Resource: The exclusive MediaMarkt/Saturn distribution relationship, freenet remains the exclusive partner for distribution in all MediaMarkt and Saturn stores in Germany and their online channels, represents a partially cornered distribution resource.
Part VIII: Bull and Bear Cases
The Bull Case
waipu.tv Creates Substantial Optionality
If waipu.tv achieves its 3.5 million subscriber target by 2028 and the €1.5 billion valuation materializes, Freenet shareholders could see significant value crystallization. An IPO or strategic sale of the IPTV business would: - Unlock hidden value in Freenet's conglomerate structure - Provide capital for further growth investments or special dividends - Validate the "digital lifestyle" transformation thesis
Dividend Growth Sustainability
At the end of the 2028 financial year, the Executive Board expects a free cash flow of at least EUR 330 million. Due to the increasing free cash flow expected and the targeted payout ratio of 80%, the company expects an annually increasing dividend for shareholders until 2029.
At current prices, a 7%+ dividend yield with visible growth trajectory is compelling for income-oriented investors.
German IPTV Market Expansion
The German TV market remains ripe for disruption. Traditional cable and satellite providers face structural decline as consumers shift to internet-delivered content. Waipu.tv aims to replace traditional cable and satellite connections with a faster, simpler, and more affordable streaming solution.
mobilezone Integration Upside
If Freenet successfully integrates mobilezone Deutschland and achieves cost synergies, the €230 million acquisition could prove highly accretive.
The Bear Case
Network Operator Dependency
Freenet's fundamental business model depends on purchasing wholesale capacity from three network operators—Deutsche Telekom, Vodafone, and Telefónica—who are also indirect competitors. Any deterioration in these relationships, or aggressive pricing by MNOs in the discount segment, could squeeze Freenet's margins.
5G Transition Risk
Three host networks control nearly all radio access, giving Deutsche Telekom, Vodafone, and TelefĂłnica leverage to raise wholesale rates or limit 5G features.
MVNOs have historically received degraded access to new technologies. If network operators restrict 5G access or charge premium rates, Freenet's competitive position could weaken.
waipu.tv Valuation Skepticism
The €1.5 billion valuation implies significant premium to peers. This valuation reflects the service's strong performance and growing user base in the competitive streaming market. However, European streaming valuations have compressed, and execution risk remains substantial.
German Market Saturation
The German mobile market approaches saturation. Growth increasingly depends on taking share from competitors rather than expanding the overall pie. Lidl Connect's unlimited on-demand offer and Tchibo Mobil's 35 GB promotional tier reinforce a value-play cycle that compresses average revenue per user. Freenet's 2025 report shows a 3% ARPU decline, highlighting profitability pressures.
Integration Risk
The mobilezone acquisition adds complexity at a moment of leadership transition. Mobilezone is a business in need of a turnaround. It will take time to integrate, rationalize brands, reduce duplicative costs and align sales channels.
Part IX: Key Metrics for Ongoing Monitoring
For investors tracking Freenet's performance, three KPIs merit particular attention:
1. waipu.tv Net Subscriber Additions
The company's growth engine lives or dies by IPTV subscriber momentum. The 571,000 net additions in 2024 and trajectory toward 3.5 million by 2028 provide clear benchmarks. Any sustained deceleration would signal competitive or market penetration challenges.
2. Mobile Postpaid Net Adds
Postpaid growth nearly tripled in Q1 2025 with 53,000 new units. Postpaid customers generate higher ARPU and lower churn than prepaid. This metric reveals Freenet's ability to compete for more valuable customer segments.
3. Free Cash Flow Conversion
Cash conversion remained high at around 60% of EBITDA. Given Freenet's explicit 80% FCF payout policy, free cash flow generation directly determines dividend sustainability. Any deterioration in conversion rates would immediately impact shareholder returns.
Part X: Conclusion — The Maverick's Lesson
Three decades ago, Gerhard Schmid bet everything on building a mobile network. He lost. From the wreckage of that audacious gamble emerged something unexpected: a company that proved you don't need to own the infrastructure to profit from it.
Today's Freenet bears little resemblance to Schmid's original vision. No network towers. No UMTS dreams. Just millions of customers, strong cash generation, and a methodical expansion into digital entertainment. The asset-light model that emerged from near-bankruptcy has proven remarkably durable—even as competitors spend billions on 5G infrastructure.
Robin Harries inherits a company at an inflection point. The mobile core business provides stability but limited growth. waipu.tv represents the most exciting growth opportunity but faces execution challenges. The mobilezone acquisition adds scale but also integration risk.
For long-term investors, Freenet presents an unusual proposition: a high-yield dividend stock with genuine growth optionality through its IPTV business. The risks are real—supplier dependency, competitive intensity, technology transitions—but so are the potential rewards from a successful waipu.tv expansion.
Perhaps the most instructive aspect of Freenet's story is what it reveals about competitive advantage in capital-intensive industries. Deutsche Telekom, Vodafone, and TelefĂłnica collectively invested hundreds of billions building German mobile infrastructure. Yet Freenet, owning none of it, captures meaningful value by excelling at what those giants sometimes neglect: customer relationships, brand management, and distribution efficiency.
Gerhard Schmid's UMTS dream became a cautionary tale about overreach. Freenet's subsequent evolution offers a different lesson: sometimes the smartest move isn't building the railroad—it's running the best trains on tracks someone else already laid.
Myth vs. Reality Box
| Consensus Narrative | Reality Check |
|---|---|
| "Freenet is just a mobile reseller with no competitive moat" | Multi-network access, exclusive MediaMarkt distribution, and 25+ years of customer service expertise create meaningful barriers |
| "waipu.tv can be valued at €1.5 billion" | Ambitious—represents 10x+ the segment's current EBITDA contribution; depends heavily on subscriber growth execution |
| "The dividend is secure" | 80% payout ratio leaves limited margin for error; depends on sustained FCF generation |
| "The GRAVIS failure shows management can't operate retail" | More accurately reflects Apple's channel strategy than Freenet's operational capabilities |
| "Freenet can't compete as 5G rolls out" | Long-term MNO contracts provide medium-term protection; full 5G access remains negotiation priority |
Material Risks and Regulatory Considerations
Regulatory Overhang: German telecommunications remains subject to Bundesnetzagentur oversight. Any regulatory changes affecting MVNO wholesale access terms could materially impact Freenet's cost structure.
Tax Treatment Changes: Around 60% of the 2025 dividend is paid without capital gains tax deduction. From 2026, the dividend will be paid with full capital gains tax and solidarity surcharge deduction. This changing tax treatment may affect total shareholder returns for domestic German investors.
Accounting Considerations: Freenet's revenue recognition for long-term mobile contracts and treatment of subscriber acquisition costs merit investor attention. The company's use of adjusted EBITDA excludes one-time items that may recur more frequently than "one-time" suggests.
Pending Litigation: No material litigation disclosed in recent filings, though telecom companies generally face ongoing consumer protection and competition law exposure.
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