Freenet FNTN.DE
What does Freenet do?
Freenet is a German telecommunications and media group that acts primarily as an intermediary and distribution partner for mobile services. In the Mobile Communications segment, the company markets voice and data plans from network operators, sells devices such as smartphones and offers complementary services in the Digital Lifestyle area. This also includes network-independent plans, brands for price-conscious customers and an app-based internet brand. A large part of revenue comes from recurring contractual relationships with end customers, in which Freenet participates through commissions or its own tariff models.
In the TV and Media segment, Freenet operates digital television offerings, in particular streaming and antenna television, and generates subscription revenue from them. The business is complemented by further investments and holding activities. In competition, Freenet sits between the large network operators, which are both suppliers and direct-sales competitors, and electronics retailers and online providers. Its strengths lie in a broad distribution network, a large customer base and independence from any single network, while dependence on network operators' wholesale agreements shapes the business model.
Score profile
Rank vs. Telecom Services (17 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Freenet ranks in the middle in the group Telecom Services (4.3/10). On growth, the company ranks in the middle in the group Telecom Services (5.3/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Telecom Services (5.1/10). On financial strength, Freenet ranks above average in the group Telecom Services (6.5/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 9.9x | 8.7x | better than 42 % |
| Trailing P/E | 11.6x | 11.8x | better than 63 % |
| PEG ratio | 0.9x | 1.6x | better than 83 % |
| EV/EBITDA | 8.7x | 7.7x | better than 32 % |
| Price/sales | 1.0x | 1.0x | better than 44 % |
| Price/book | 2.0x | 1.4x | better than 25 % |
| Revenue growth | 23.4% | 3.7% | better than 97 % |
| Earnings growth | -30.4% | 0.0% | better than 9 % |
| Gross margin | 26.9% | 56.9% | better than 3 % |
| Operating margin | 10.3% | 12.9% | better than 38 % |
| Net margin | 8.8% | 8.8% | better than 50 % |
| Return on equity | 17.7% | 11.6% | better than 79 % |
| Debt/equity | 60.7% | 91.3% | better than 68 % |
| Current ratio | 0.8x | 0.9x | better than 38 % |
| Free cash flow yield | 21.5% | 8.3% | better than 90 % |
| Dividend yield | 8.8% | 3.9% | – |
| Payout ratio | 101.5% | 46.2% | – |
| Beta | 0.30 | 0.62 | – |
Valuation: what is Freenet worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Freenet a model range of 20.20 EUR to 20.74 EUR per share.
9 analysts, average rating “Hold”, average price target 26.53 EUR (+12.2%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The number of active contract customers and their length of tenure largely determine recurring revenue in mobile communications.
- The terms of contracts with network operators directly influence margins from commissions and wholesale costs.
- The number of paying subscribers in streaming and antenna television provides predictable revenue in the TV and Media segment.
Risks
- Heavy dependence on a few network operators can weigh on earnings if contract terms change or direct sales expand.
- Intense price competition in the German mobile market limits margins and makes customer retention harder.
- Regulatory changes and technological shifts in TV consumption can put pressure on existing business models.
What to look for with Freenet
Operating cash flow relative to adjusted earnings is revealing, because customer acquisition costs, commissions and the device business can strongly affect earnings quality.