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Investing.com -- Shares of 1&1 (ETR:1U1) dropped by 3% following the company’s release of its 2025 outlook, which revealed earnings forecasts significantly below market expectations and higher projected cash capital expenditures (capex).
The company’s guidance indicated a stable contract base and service revenue for 2025 at €3.3 billion, falling short of the Bloomberg consensus of €3.36 billion.
The telecommunications firm also expects a decrease in EBITDA of approximately 3.4% YoY to €571 million, a figure notably lower than the consensus estimate of €717 million. The access segment’s EBITDA is projected to decline to €836 million, down from €856.1 million in 2024.
This decline includes a one-time payment of approximately €20 million to Telefonica (NYSE:TEF) due to the expiration of their national roaming agreement, an expense not present in the agreement with Vodafone (NASDAQ:VOD).
Furthermore, 1&1’s network segment EBITDA is anticipated to remain stable at -€265 million, which accounts for around €100 million in expenses related to customer migration and wholesale services. These costs are expected to be eliminated after the completion of the migration of all customers to 1&1’s own network by the end of the year.
Cash capex for 2025 is set to increase to €450 million, compared to €290.6 million in 2024, surpassing both the Bloomberg consensus and Barclays (LON:BARC)’ estimates of €441 million and €360 million, respectively. This increase underscores the company’s investment in migrating customers to its own network.
In an effort to compensate shareholders for reduced dividend payments from 2018 to 2023, United Internet (ETR:UTDI), 1&1’s parent company, proposed a regular dividend of €0.40 per share along with a one-off catch-up dividend of €1.50 per share. This announcement comes as the German regulator extends frequencies, eliminating the need for 1&1 to reserve additional funds for auction participation.
United Internet also provided its own 2025 guidance, with sales and EBITDA projections of €6.4 billion and €1.35 billion, respectively. These figures are below the Bloomberg consensus of €6.6 billion in sales and €1.5 billion in EBITDA. The company’s cash capex guidance for 2025 is €800 million, which is lower than the consensus estimate of €972 million.
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