United Internet AG (UTDI) Earnings Call Transcript & Summary

Right. Good afternoon, ladies and gentlemen, dear guests, welcome to the analyst and investor conference of United Internet. I'm very happy to be able to welcome you here in person. And I obviously also welcome those guests who are here by webcast. Now let's quickly look at today's agenda. I mean, firstly, Mr. Dommermuth is going to be taking the floor and presenting the company development in 2024 and also take a look at what we're expecting for 2025. And then Carsten Theurer is going to share the financial year 2024 results with you. And then obviously, at the end, there will be ample time for a proper Q&A session. Mr. Dommermuth, the floor is yours.

Good afternoon, ladies and gentlemen. I think many of you have already seen and personally welcomed. Many of you were already in the meeting for 1&1. I hope you won't be bored. I am in charge of Corporate development and will also give you the outlook for 2025. My colleague, Carsten Theurer, is going to go into the nitty-gritty details of the financials in 2024. We're reporting in 4 segments: applications, Internet access for consumers, private consumers and business customers. We have 11,000 employees, and we have a good infrastructure, transportation network, 66,000 kilometers of fiber networks, 5G mobile networks and over 100,000 servers who are running into computing centers in the whole of Europe and the U.S. We are offering our products via different brands and investments predominantly by the brand 1&1, our most important brand. But in addition to that, we have brands such as yourfone or smartmobil or winSIM. In the customer -- business customer business, we have 1&1 Versatel for consumers, GMX, WEB.DE and mail.com and United Internet Media Business customers, we have IONOS predominantly and the subsidiaries where all of -- we also have grown inorganically by buying companies, particularly in Spain, in Britain, Poland and other countries. And then we've got certain minority shareholdings as well. Let us just start with Consumer Access. 3.95 million broadband connections, 12.44 million mobile contracts and the first Open RAN in Europe fully virtualized, and we're doing the migration of existing customers from wholesale contracts. Since January 2024, we are actually moving 50,000 -- migrating 50,000 customers per day and hope to be done with this by the end of the year. We have Internet with 190,000, a very slight decline in the broadband applications. Our sales dropped by 0.8%, but other revenue certainly comes from making smartphones available to our customers. We have had a marked slowdown, minus 10.8% to EUR 761.2 million, but this is a low-margin business and doesn't really affect the result. We have minus 9.6% EBITDA at EUR 590.8 million, including minus EUR 265.3 million cost for the rollout of the 1&1 Mobile Network. Prior year was minus EUR 132.4 million, where we had EUR 133 million -- I mean, I just said, EUR 132.4 million of additional cost. Well, how do I explain this EUR 70 million difference? They come from our operational business, that is the area of access, where we had a plus of 8.9%. EBITDA increased to EUR 856.1 million, an EBITDA margin of 21.1%. That too, I think, very satisfying for a wholesale business because here, we are asset-light basically. In the 1&1 Mobile Network, we're building our own mobile network. And I have told you markedly higher costs for infrastructure here than the year before. Business access, 1&1 Versatel, 66,376 kilometers of fiber optic networks available in over 350 German cities, including the 25 largest ones. And when we say business locations have been linked by plug-and-play solutions for businesses. So this runs via 1&1 and 1&1 Versatel. We are predominantly using 1&1 Versatel for business applications with businesses or any form of public or state authorities. Plus 1.9% revenues, an increase to EUR 574.9 million. This is a bit miserly that plus 1.9% you're going to say, and I also would have hoped for more, but we have to say we do -- we are, in fact, losing sales in the voice area. I mean, in the past, we could basically bill for any moment used, and that is no longer feasible today. All people do want a flat rate for what they do, particularly business customers. So voice usage is actually reduced and reducing. At the same time, monthly subscriptions for the fiber optics links are increasing so that below the line, we can still show a plus of 1.9% of added revenue. The EBITDA has risen by 1.4% to EUR 165.1 million, and thereof there are minus EUR 21.6 million start-up costs for the new business areas, 5G and expansion of the commercial areas. And obviously, this also includes data centers, and we also have start-up costs for business areas where we're basically linking business areas at the same -- at the start, we have 1 or 2 customers and then we have 2 and then we have 10. So this is an ongoing process. Let's talk about applications. Let's start with consumer applications. You possibly know GMX, WEB.DE and mail.com. You know all of those. This is a broad product portfolio for private customers. We have e-mail, we have tasks, appointments, calendar, online office and cloud storage. We also have a differentiation through data protection and security. So we basically -- the consumer application accounts, we've actually seen a minus of EUR 0.76 million. We have invested quite a lot to ban spam. So the attractiveness of the system has increased. So we haven't lost accounts that were key accounts for us. So 3.04 million pay accounts, that's 240,000 more than the previous year. So we basically have plus 7.7% revenue increase to EUR 298.3 million and plus 6.6% EBITDA to EUR 113.2 million and 37.9% EBITDA margin. Previous year was at 38.3%. And all of this with just very little CapEx because for running the data centers requires a lot less CapEx than building a mobile network. So I think we can say that the EBIT is also at about EUR 100 million. But you've got it in your handout. These are business applications via IONOS as Europe's leading digitization partner for freelancers, small, medium-sized enterprises and reliable cloud enablers active in 15 European countries as well as in the U.S., Canada and Mexico. We basically have plus 220,000 new customers, particularly abroad, plus 4.96 million -- plus 160,000 abroad, 4.96 million and plus 60,000 domestic 4.63 million, plus 9.6% increase in the revenue to EUR 1,560.3 million. Customer growth, and we have moderate revenue growth in the AdTech segment as a result of temporary phasing effects in connection with the new product launch plus 2.4%. The AdTech segment is a small segment. So if we exclude that and hone in on the core segment, then we see a revenue growth of plus 11.6% in the core business, Digital Solutions & Cloud. I think this is quite healthy. EBITDA did even better, plus 15.1% last year to EUR 430.2 million. I'll show you the non-adjusted results because IONOS itself shows adjusted results, and they also do adjust it. So there's a billing carve-out, they used to have a joint system. But after the IPO, they now have their own one, they need to and they have it. And therefore, you can see the numbers without the adjustment, EUR 430.2 million and that is despite the fact that we're in a AdTech segment. The EBITDA side, we did slightly worse. We had minus 16.5% less EBITDA in the AdTech segment. But then in the core business, so if we were to exclude that, we'd have 20% EBITDA growth in our core business. So we've now summed up the numbers, plus 590,000 customer contracts in the group. That's plus 1.9% of revenue. EBIT is in decline, minus 15.3%, EBITDA plus 0.1%. But if you look at the EPS, if you look at the operational EPS, then you basically have to process the EBIT first, which was negative, and that is why the operating EPS was only EUR 0.98, but positive was plus EUR 0.03 as a financial result, minus EUR 0.99 impairment on Kublai and Tele Columbus investment. You know we are in mediation proceedings with them. And that there, I think the last capital increase has strongly diluted that effect. And we have one-off tax effects, we're regrouping that we need to show is minus EUR 0.30. So we show a negative EPS of minus EUR 0.28. The dividend proposal to the AGM 2025, we suggest to pay EUR 0.40 per share, regular dividend plus EUR 1.50 per share one-off catch-up dividend to compensate for the reduced dividend payments for the financial years '18 to '23. You can see the red columns. Those are the dividends we paid in euro cents, 2016, EUR 0.80, '17, EUR 0.85, you see 2018, the legal minimum of EUR 0.05 and then a regular EUR 0.50 for the years '19 to '23. So the National Grid Agency has decided that the auction of new frequencies is going to be postponed by a few years, and that actually makes us confident that 1&1 will be able to do and shoulder the burden of this auctioning process on its own without any external financial assistance. And we've said we'll actually pay an extraordinary dividend of EUR 1.50 to compensate for these weak financial years beforehand. So that will take us to roughly 35% of adjusted consolidated net income after the minority interests. And that is what we want to pay out with this 35%. I think we'd then be happy and healthy. I mean it obviously still needs the consent of the AGM, but I would assume that it will come like that. So in 2025, this new year, we've seen revenues of approximately EUR 6.4 billion. The EBITDA is roughly at EUR 1.35 billion. In '24, it was at EUR 1.295 billion. So it's basically a minus EUR 20 million deductible due to the change of national roaming structures, the provider at 1&1, but no impact on the EBIT. So it costs us EBITDA, but in the EBIT, it stays the same. The cash CapEx is approximately EUR 800 million, and it was EUR 774.6 million in '24. If you add that up, so this EUR 20 million on this EUR 1.35 billion, then we talk about a 6% growth for EBITDA that we are planning to reach this year. Cash CapEx, I already said, EUR 800 million, slightly more than last year, particularly driven by the expansion of the 1&1 Mobile Network and 1&1 Versatel with the fiber optics networks and basically linking up more and more business centers and basically affording to run the base business. So, so much for me, and I turn the floor to my colleague, Carsten Theurer, who is going to go into the nitty-gritty details of the financials with you.

Thank you very much. Good afternoon. And I'd like to give you a summary and give you an overview. Let's have a look at the results and the trends. First of all, the customer contracts, you've already seen them with a growth of EUR 0.59 million coming from consumer access, 1&1, 130,000 customers, new customers, consumer application, portal, 3.240 million paying customers on top and business applications, 220,000 plus. So 29.02 million paying contracts. Free accounts ad-financed, a slight decrease and a shift from free to paid accounts due to the security issues with the free accounts. Revenue, 1.9% plus. Here, we can say that for 1&1, EUR 32 million minus in revenue, but in service revenues, a plus of about EUR 60 million and low margin decreasing from EUR 93 million. So from the 1&1 segment, a slight decrease compensated by consumer applications with EUR 20 million in growth and business applications with EUR 136 million in revenue. The EBITDA plus 0.1%, same as the previous year, even though we had higher expenses for the 5G network expansion with EUR 132.9 million in expenses. And we also see the improvement of the Access segment for 1&1, EUR 70 million more in EBITDA, which can somehow compensate for the expansion expenses. And then we have EUR 45 million more in Business Applications EBITDA compared to the previous year. Let's go to the EBIT. Here, you can see our expansion of the network, EUR 117.2 million higher depreciation compared with the previous year, so minus 15.3% EBIT and more assets and the depreciation effects that come with it, so minus EUR 117.2 million. Cash flow. Let's have a look. We can see an increase here despite lower consolidated net income. We can see here the effects of the EUR 117.2 million of depreciation. And we also have the Kublai depreciation of Tele Columbus. And the third factor here is taxes. Versatel was included tax-wise to United Internet to be able to make use of the losses. And so we have a slight tax impact here and had to take latent taxes out of the balance sheet with EUR 80 million of an impact. And then the net cash inflows from operating activities. Here, we can see a slight increase despite the lower consolidated net income. Here, we have the contract assets that have seen a slight decrease with lower hardware sales volume in 2024. Let's go to the cash inflow from investing activities, a slight decrease of CapEx that led to a decrease in investments. The net cash flow from financing activities. Here, we see an increase due to higher interest expenses, about the same as what you can see here. Now here, you can see the cash flow bridge from the EBITDA to free cash flow, EUR 1,294 million of EBITDA 2024, net CapEx in minus EUR 770 million roundabout. And then the contingent payment to Deutsche Telekom over the past 4 years. This is the last year. In 2025, we will not have the same amount. Then taxes, then the change in working capital that leads to the free cash flow of EUR 184.5 million. Deducting leasing, we get to free cash flow after leasing of EUR 47.4 million. Now let's have a look at the balance sheet. Here, you can see the trends that I have already mentioned. We have tangible assets increasing about EUR 600 million due to investments primarily into the 5G network coming from 1&1 and Versatel. The goodwill, mainly unchanged in financial assets, you see a decline in the Kublai share with EUR 170.5 million. Accounts receivable, mainly unchanged. Contract assets, I have already mentioned. Here, you can see the effect of the decline of the volume, the hardware 1&1 volume that has an impact -- a negative impact in the contract assets. Inventories and deferred expenses. Here, we see the leases, rental and pre-service providers, payments, Telekom contingent contract, which leads to this increase in assets. Income tax claims and other assets, cash and cash equivalents. We see a slight increase in the claims due to upfront payments because we included Versatel and now we can make use of the positive effects, and that leads to the increase in the income tax claims, then cash and cash equivalents. At reporting date, a slight increase as well. And as [ Mr. Davies ] said, we are in an investment phase. And so the phasing effects play a role, and this is what you can see here for cash and cash equivalents, this could be optimized. Let's switch to equity. First, the equity ratio, mainly unchanged due to the balance sheet some. So we are talking about 3 percentage points to 46.5%. Liabilities to banks we see an increase here due to the financing over the past few years. And you can see the different factors here, Telekom contingent payment, EUR 262.9 million and CapEx that was linked to that. Trade accounts payable, in business, mainly an increase of about EUR 100 million. For contract liabilities, it's about the same as the previous year and accrued taxes and deferred liabilities, the passive latent taxes that has a slight increase. That is one factor. And then we have the positive effect that the tax we have to pay goes down due to the positive effect mentioned before. Accrued liabilities and other liabilities at reporting date. Now -- and the total here, you can see the effect of the investment phase and the assets, the tangible assets that have gone up. And this is what you can see here in the total. And with that, we end this presentation, and we are happy to hear your questions.

Now we will start our Q&A session. Please wait for the microphone. We'll start with Polo Tang, UBS.

Polo Tang, UBS. I've got 2 questions. The first question is really just about the use of cash because you've announced a EUR 1.50 special dividend. But would you consider special dividends or buybacks in the near to medium term? Can you maybe talk about what your priorities for use of cash are going forward? And then in terms of leverage, you're right about 2x leverage at the moment. But in your view, what is a comfortable leverage range? Is there a floor? Is there a ceiling? Second question is really just about the perimeter or shape of the group, specifically in terms of IONOS, you've previously talked about spinning it off. So what are the latest thoughts on this topic? And are there any tax implications?

Now I first didn't understand what you meant by IONOS split, but it was just explained to me. No, this is not something we have planned. We are happy to have IONOS on board. And as you could just see, we are quite happy with the results. And in regards to cash, now we have this catch-up dividend that we have paid due to the lower dividend over the past few years. And so the National Grid Agency has postponed the auction, and we will have a larger frequency volume. 1&1 will by then have a larger network. And so we suggest to our shareholders that we should now pay the adequate dividend for 2018 to '23 by 35% -- to increase by 35%. We are not planning on changing the overall dividend policy, and there is no reason to do that now that we have that onetime dividend to catch up. And so we don't want to change our overall dividend policy with special dividends or the like. And we don't plan on a buyback either. You never know what's going to happen, of course. So who knows what's coming next and what we will decide then. But for now, this is not something that we are planning to do. You also asked about leverage and our bank net about 2x our EBITDA, and we feel comfortable with that, and we have low financing costs. If you look at our margins, what we pay between [ '08 and '14 ]. For Euribor, I think it's 3.5%. So see, I know what I'm talking about. So 3.5% interest rate. So compared to that, we have a very cost-efficient financing. And especially in this investment phase, interest rates are very important. And so our debt needs to stay in adequate limits.

[Foreign Language]

[Foreign Language]. There is still the obligation of making networks available. And they will be linking them, and that is going to come to an end in the next few years. That is why in this area, it's going to go down. The CapEx is going to go down. On the trading parks, it's possibly going to stay the same or similar, but we are not going to be accelerating this development because we don't just have to build it and put the infrastructure into place, but we also have to market it and sell it so that we always make sure that whatever we build in terms of infrastructure then gets put to use as well and that we're slightly behind our plans rather than running ahead. And that means we're not going to push this building rate into the [indiscernible] level, but to just continue doing what we're doing and then market it well and sell it. [ So when it runs ] -- and the others, we are going to have those structures in future. The base business is going to be slightly declining because we have invested a lot into modernization. And then we basically have a little bit less of that. So possibly, that was my input on Versatel. Then you had asked, are there plans of doing something with our own shares? Well, we're actually using our own shares for staff participation programs, for example, we've got a share program where people can actually settle payments with cash or with shares, but we actually don't need as many of our own shares as we have here. So we're only holding about 10% of our shares ourselves. So I mean, those shareholders don't get a dividend. They don't vote. So they don't damage anybody or disadvantage anybody, but they basically help us that if we wanted to do our own incentive program for our own staff, we didn't have to create those. But we couldn't -- we could take them in. At the top, we had 252 million shares, and now we are at 192 million. And of those EUR 173 million are free floating and the remainder is held by the company. So we've already gone down from 252 million to 173 million and through buying some back. After the IPO, we're at 176 million, but there are no special plans as to what we want to do with these shares we're holding ourselves, possibly a purpose is going to arise, but there is also not a disadvantage for us having them. On the deductible, we have the problem -- or I shouldn't say problem, but that's the situation that many holdings have that you have different business models and the shareholders are actually reacting to that by putting a deductible on that. We basically don't have any plans to reuse that deductible. We could only do that by selling off parts of this, and that is not something we're planning to do. But I also don't feel bad at all because the shareholder actually came in with a deductible at the time. I mean, sometimes it's higher, sometimes it's lower, but that's something decided by the capital markets. But as a general principle, we've always been a holding. So we have never changed our business model. We always had these different concurrent business models, and that is basically the essence of this company.

[ Volker Glaser ], please.

[ Volker Glaser, MPPM ]. In the field of consumer applications, you've increased your EBITDA slightly to EUR 113 million. So what are your further plans there and also your financial expectations also when it comes to the general perspective? Now on the topic of IONOS from investor to investor, you have given an outlook today with an EBITDA of EUR 510 million. That looked quite good indeed. Cloud & Solutions with 8% growth. Is that something that makes you happy? Is that enough? And then last year, in August, you had very clearly said you are not going to sell a single share to IONOS. Are you continuing to say that because the perspectives are what they are with IONOS? I'd like to have your gut feel.

Well, let me start at the end again. There are no plans to sell any IONOS shares. As I said, the company is developing well. It doesn't give us any headaches really. So I think the financing is working well. Financial efforts are financed easily. So EUR 510 million EBITDA after EUR 450 million adjusted is healthy. I think that's a good value. I think it's something we like, obviously. You said 8% growth with digital solutions and cloud. That is more than our competition can say for themselves. But you said from shareholder to shareholder, I could imagine more. I can always imagine more. I would love 10% and 12%, obviously, that goes without saying. But you also have to keep an eye on how much money you want to invest into winning over new companies. And it's difficult to do both things to strongly increase profitability and to outgrow the market, to buy additional market share that normally goes at the expense of your profitability. And at the end of the day, I mean, the management puts together a business plan. And I have to say that their priorities are right. And of course, we could actually show more growth at the detriment of the financial result. But I mean, these are our priorities, and I think they're all right. And I think the other Supervisory Board has agreed with that as well. That's why we adopted this proposal. You then just said the other portal went to 6.6% EBITDA. That's a better result than before. Well, what's the perspective? How do we see this? Yes, we will see more growth in the years to come at this portal. But I don't know whether we are fully capitalizing on all of our potential here, whether we are getting all of our horsepower on the road. I think that is something we would like to see more here. I can certainly say that. But we'll obviously have to see how -- what the next few years will bring. I mean there are some points that speak in favor of room for maneuver in this area, but there are always points that you have to bear in mind, changes within the market or other things that affect you negatively. But as I said, in the next few years, I'm sure we're going to see growth rates, but we're not going to fly to the moon, unfortunately, just to curb excessive expectations. Right. I think certainly in the cloud area, I think there is a lot of potential upside that I can see. There's also certainly data security, mobile telephony security, data security on mobile phones, where we have to say we have a huge potential where lots of customers are not saving their mobile phone data in any cloud so far. And therefore, we see great opportunities in that area. It's not there and using our data pool, obviously, which is also a data treasure, obviously. But there is continued -- there will be growth, but I do not see a skyrocketing of it for the next few years.

Another question, I think, here in the first row.

I'm [ Claus Dotter ]. I'm coming from [ Solventis ]. Let me be a bit of a lag. I mean the dividend you're paying out for these years where you have paying under proportionally badly. You've just explained why you're doing it and how you're doing it is now being paid to the shareholders. And there's obviously one anchor shareholder who gets a lot of the money. But I mean, what are you planning to do with this?

I mean you said you were going to be a little nerve wrecking and well, I could say that is none of your business, it's mine, but let me possibly begin at the start. You correctly said I'm a major shareholder of United Internet, and therefore, it is true if you say that I dominate the AGM. But if you look at how I've looked at the proposals of the shareholders and also of the Supervisory Board and the shareholders' representatives, I could have voted for other things, but I haven't done that. And I've basically forced the other shareholders to accept that lower dividend because I wanted to be prudent. And we could possibly say that prudence is no longer required. And that is why I think it goes without saying to say, okay, this is now safe and we can now pay out the money. I mean that was a demand we heard from the small-scale investors every year because why do you keep that dividend? Why are you not paying? And therefore, I think this is appropriate and right to now compensate for it and pay. And you want to know what I do with my dividend. Well, I'm not going on holiday with it. You will not believe that I have enough cash. I could actually go on holiday for the rest of my life. So I don't think I'll take it and go on holiday. No, certainly not.

We have somebody in the second row, Siyi, again.

Siyi, again, from Citigroup. I have 2 questions, please. And the first one is really the market consolidation has been a key topic, especially with the change of the [ EC ]. Maybe a broader question is that how you think about the market consolidation and specifically for United Internet, do you see there could be a scope for you to have a further strategic cooperations with your competitors either through consolidation or through network JV? That's my first question. And the second question is more about numbers. I was wondering you can help us to understand the moving parts of your free cash flow for 2025. Maybe also give an indication about how should we think about free cash flow profile for the years to come.

Right. On market consolidation, I don't think I have any thoughts. I mean I have to be a bit crude here. I can't tell you anything else on market consolidation. It's not something we talk about. And regarding the free cash flow 2025, we are going to be moving to a very similar level as in 2024. And the subsequent years, we will hopefully generate a bit more cash flow. I see a positive trend. When we will see an increase, I cannot tell you because we have our investments coming, and we don't know when and what they are, but the trend is definitely going to be a positive one.

The gentleman from HSBC, please.

I've got 3 questions, please. The first one, in your presentation, I think you made some comments about IONOS carving out some systems from within -- from United Internet to be a bit more independent. I was wondering, is that process -- if I've understood that correctly, is that process fully finished now? Or is there still more they could do? Or maybe there are advantages you want to talk about for them having still some links to the group? The second question builds on a couple of others on capital allocation. And I suppose the old chestnut of the value that you see in the 1&1's listing. I appreciate the comments that you've made around the dividend and/or the special dividend. Did you consider any alternatives such as the 1&1's minorities? Is that just a separate conversation from your perspective there, have your thoughts at all changed there? And then a question for Mr. Theurer. Could you talk a little bit about your plans and focus for the next 12 months? Have you -- I wondered if you wanted to comment on anything you've seen initially in your new role or anything that you want to work on in particular?

I'll start with the one, 1&1's minorities. In the past few years, we have actually bought the odd share package for 1&1 when they were offered to us when the price is good or was good in the past when we felt that the price is appropriate, we'd also buy packages. But there is not so much free float in 1&1. I mean that there are not that many shareholders who hold major packages. But if there were to be one who wanted to talk to me and say, I want to sell, then I'd always listen and be generally interested just like I've always done it in the past few years as well. Now on the independence of IONOS, IONOS, they used to use commercial systems of the corporation. They continue to do that with SAP applications, et cetera, et cetera. It does make sense to administer that from one spot. But there are systems where they have special needs, and that was, for example, in the field of billing. And that is why IONOS decided to acquire a new billing system, and it's actually undergoing a test phase in Spain as the first market for rollout. And we will basically after a test phase, if it goes well, we'll roll it out for the remainder of Spain. And then subsequently, there's also going to be a rollout for other nations to follow. I think in 2 years' time, that should be completed. And well, without actually saying things that the management haven't officially said yet, but that is a major part also of the adjustment of the EBITDA within IONOS because this is basically a legacy burden that they're still dragging along with themselves and that they really like to shed ASAP.

Well, regarding my plan, there are parts that I can choose freely, parts that I've just taken over. So an S/4 SAP migration where the project is just starting, I think that is something that is going to keep me pleasantly occupied for the next 2 years to come. Now on the one hand, we obviously have a high-level view there. So we're talking about synergetic effects across the group and also intra-group cooperation. And there is the topic of independence on the one hand and optimized cost structures on the other. And those, I think, are going to be the main topics that are going to be my focus for the year to come.

Another question, [indiscernible] fourth row.

Yes. In regards to 1&1, you have already said something. Now can you add anything on Tele Columbus and the procedure? What's the current state?

Well, as far as I know, the mediation procedure is undergoing. And I think they have now found mediators, the arbitration procedure and it's [ DES ]. Well, the [ DES ] procedure is undergoing. The arbitrators have been appointed and they are in the beginning of the procedure, and it will take some time.

Another question in the second row.

Hans Dieter Klein from Alpha. A long-term question. In the next 2 years, you will then have built up your network, licenses, frequencies, you said maybe 2028. And then you have concluded your investments. Could you then think of a new dividend policy afterwards? So you're still growing. You have state-of-the-art technology. You have high free cash flows. Would you then consider changing your dividend policy and going over to a much higher dividend?

Well, yes, that would be fantastic. That's our goal. I mean, we will not conclude the network expansion within 2 years. This is going to take some more years and still cost money. But it's correct after the next frequency auction. And if that doesn't cost us too much cash and if we don't have to pay too much for financing, if we can continue to have low-cost financing and fewer expenses and of course, other disclaimers what could happen, then yes, it would be appropriate to pay out a higher dividend. And we've seen that in other companies that don't have strong growth because in total, we don't have a strong growth. And we can then, of course, pay an adequate appropriate in telecommunications as 1&1, why shouldn't they pay a higher dividend and United as well linked to that? Yes, that would be the perspective. That's the desire here.

Another question, [ Volker Glaser ].

[ Volker Glaser ], Mr. Dommermuth, I would also like to ask this. With the federal government planning on more digitalization, IT and so on, do you see any opportunities there? Any possibilities for IONOS, for example, how IONOS could benefit from this federal program. IONOS is also building a cloud for the federal administration. What's the status quo? And what's your outlook?

Yes, I could see that. And that's a topic we are looking into for IONOS. As far as we know, the topic of cloud, digital sphere, that plays a role in the coalition agreement. We will have to see what the outcome will be. But I think that here in Germany, we are at a top location to do more in this area. And if we get support for better growth or even better public orders as it has been the case in other countries as well, that would be great, and that could also lead to growth impulses or should actually lead to growth impulses. And so for IONOS, yes, it should be a very positive development to see that politicians are now seeing that we need to catch up in this field. And so if there are opportunities, I will make sure together with the management to seize those opportunities.

And the status quo of the project for the federal administration.

As far as I know, we are going approximately according to plan. That's what I've heard. There are different projects. It's the National Grid Agency. It's the job agency. It's 200 administrations that we are modernizing.

And my last question, Pincus has already sold a large part of the shares. So I think you have a colleague in the Supervisory Committee.

Well, I've always -- I'm always telling them to get it done to sell the remaining 3% or what to then have more free flow that would be good for the share. And then we don't have questions like that referring to the overhang. So -- but my colleague isn't telling me anything about it, which is, of course, the right thing to do. I don't know if he can make that decision or if that decision is being made in New York or wherever. But yes, I would love to see that as well to see this getting to an end, and we would like to see a 36.2% free flow that would be quite comfortable. I don't know what that would be in euros, maybe EUR 1 billion so that we could get in and out. So I mean, there is a certain free flow today as well. But yes, it would be better to have more.

Another question on the left, [ Carsten Doringer ].

Yes. In regards to your corporate structure, you said that you're not planning on introducing any changes. And I was a bit surprised to hear that because 2.5 years ago, I don't know if that was just an idea of the capital market, but there were rumors that the telco business would be merged and IONOS would be paid out. And now it doesn't sound like that anymore. What can you tell us about that?

Well, no we had not thought about that. And paying out IONOS, we would have to do that before the IPO. Together with -- before the IPO, we could have saved taxes then. But if now we have 63.8% of shares of IONOS and then we would have to pay the taxes accordingly, and that would be on top. So if we wanted to do that, we should have done that before the IPO, but it was never our goal to do it and neither is it our goal today. Now of course, you never know what the future will bring. But for the moment, there are no such plans of a split or selling it or anything like that.

Now I'm asking you because the deductible over the past 2, 3 years was not like that before. And so before the share price was evaluated very differently.

Well, we didn't have the 100% of the sum of the parts before. And so of course, the deductible was different. And -- but we are not in charge of the share price.

Now then I don't understand why you're not doing a share buyback program now.

Well, as I said, there is a certain debt, but it's at low cost. And so with the higher dividend, EUR 190 per the number of shares, it's a total of EUR 240 million. So that basically would be the implication of the buyback. And who knows, maybe there will be a buyback program at some point once we have more clarity and stable financing and so on. We have done that in the past. So we could do it again in the future. But for now, we said we will catch up on the dividend. And then we can check that point. And maybe there will then be a good moment for a buyback program. And so we want to make sure that the shareholders that are staying can then benefit from that.

All right. Another question from [indiscernible], I think.

I've got one more question regarding the free cash flow. Mr. Theurer, you just said it's going to be at the level of 2024. When I look at that, then I see those EUR 260 million that you've paid to Deutsche Telekom and EUR 25 million more CapEx. So EBITDA was supposed to be growing slightly. So [indiscernible] is the rest of that, I would like to know because I think that would be quite interesting to hear. And then one question to Mr. Dommermuth. In which of the 3 shares would you invest if you had to make the choice?

Well, that's a good question. I think United Internet is low and [indiscernible] is low and IONOS as well, I find them all underrated and undervalued. But I remember in 2021, we actually split the share 40x. And I think in 2000, we actually had split it 10x or something, and the share was at, I don't know, possibly EUR 50 or something, I can't remember. And it then went down to EUR 20, and then we said to our Supervisory Board and they said, it's way too cheap. We technically wanted to do a capital increase and it's completely undervalued. And then after the Internet bubble burst, the share was at EUR 0.40 or something. I mean, I do believe it's underrated, undervalued. I think it affects all 3, but I obviously can't forecast as to whether it is going to be even more underrated tomorrow or whether it will go up. So it's difficult to tell. But I would prefer the one or not the other. I do think in 1&1, we have a lot of leeway to make up. And if it works, then we will see a strongly increased profitability that speaks in favor of an investment in 1&1. On the other hand, we have to say that there is a lot of pressure from the market. The price pressure is huge. Telefonica hyper aggressively pushes prices across the whole of the market. I mean you need to look at with IONOS, I'd have to say they still have a strong business model, smaller and medium-sized companies have to invest more and more. They just have to be present on the web. And with the cloud computing, we are getting more and more traction in this business. I mean, even the government has now said more has to happen in that field. I mean those are growth opportunities directly benefiting IONOS. But I mean, you could also talk it down and do it the other way around and say, oh, possibly small companies will no longer need a web presence because there won't be websites because people will just use artificial intelligence and to get their information. I'll just talk into my mobile phone and give me the 7 best offers or the 3 best so and so because I want to buy X, Y, Z. I mean, and people no longer need all these websites. I mean there are always scenarios how you could inflate or deflate it. And the same holds true for United Internet. We have a deductible for being a conglomerate, but is that going to increase or decrease? Only the Lord knows. I think I'd invest in all 3. I mean, I am very strongly invested in all 3. I always say to my people, let's walk our talk. But I mean, I have been walking and talking for a long time. Right, on that cash flow question, you're absolutely right. The contingency payment goes down, but we have this EUR 240 million that also will find its reflection in the books so that they mutually compensate for one another.

Right. I don't see any raised hands right now. Yes. There is one in the first row.

Maybe a question for the new CFO, Carsten. So Mr. Dommermuth laid out a few options that you have, potentially more share buyback if you cancel shares, potentially acquiring more of the minorities in 1&1. What is the financial leverage flexibility that you deem to have as a CFO in the company while keeping the cost of debt attractive? Is 2.5 to 3x net debt to EBITDA a fair range for you?

[Foreign Language] From my point of view, up to 2.5% (sic) [ 2.5 ], I'd be comfortable. I think up to 3, no problem. Yes, maybe we shouldn't go above that. I mean if you ask for a ceiling level, then I'd say 3.

Right. Anybody else requesting the floor before we come to the end? Well, I don't see any more hands, and I'll use the opportunity of thanking you for your attendance and attention. And may I invite you to have a coffee with us at the end, and I look forward to seeing you next time around. Thanks indeed. Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]