1&1 Drillisch AG Company Profile and Outlook
1&1 Drillisch AG is a listed stock corporation and one of the large network-independent telecommunications providers in Germany. The Company provides its customers with a comprehensive portfolio of services and products from the fields of DSL, mobile voice and data services. The core business of 1&1 Drillisch Group is telecommunications and is essentially conducted by the wholly-owned subsidiaries Drillisch Online GmbH ("Drillisch Online"), Maintal, and 1&1 Telecommunication SE ("1&1"), Montabaur. Drillisch's primary activity is the marketing of postpaid and prepaid products in the networks of Telefónica and Vodafone as well as landline and DSL products, including the related applications (such as home networking, online storage, telephony, video on demand or IPTV).
During HY1 2018, 1&1 Drillisch continued to invest strongly in new customer contracts as well as in retention and increased value of current customer relationships to secure sustained growth in profits. The number of customer contracts in the current product lines rose by 470,000 to 13.11 million contracts (31/12/2017: 12.64 million) during the first six months. In the mobile internet sector, there was a gain of 430,000 customer contracts, raising the number of contracts to 8.73 million (31/12/2017: 8.30 million). DSL lines increased by 40,000 to 4.38 million (31/12/2017: 4.34 million). In comparison with the closing date of the previous year, the number of customer contracts - including the Drillisch customers per 30/06/2017 - rose by 990,000 (8.2%).
Specifically, reported revenue in HY1 2018 rose in comparison with HY1 2017 by 42.5% from EUR1.276 billion (previous accounting in accordance with IAS 18) to EUR1.819 billion (accounting in accordance with IFRS 15). From the pro forma perspective (with the inclusion of Drillisch in the previous year), revenue rose by 14.5% from EUR1.588 billion (previous accounting in accordance with IAS 18) to EUR1.819 billion (accounting in accordance with IFRS 15).
Disclosed earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 61.9% from EUR210.1 million (previous accounting in accordance with IAS 18) to EUR340.1 million (accounting in accordance with IFRS 15). From the pro forma perspective (with the inclusion of Drillisch in the previous year), the EBITDA rose by 20.4% from EUR282.4 million (previous accounting in accordance with IAS 18) to EUR340.1 million (accounting in accordance with IFRS 15). The initially positive effects from the changeover to IFRS 15 contained in this figure totalling EUR158.3 million are offset by additional investments (above all, from the increased use of smartphones) in the same amount so that the two items balance each other out in the bottom line, and to this extent the figures are comparable with those of the previous year. Moreover, the EBITDA of HY1 2018 contains realised synergies in the amount of about EUR15.6 million and one-off expenditures from ongoing integration projects in the amount of EUR7.7 million.
Our revenue and profit figures developed well during HY1 2018. We can confirm our financial forecasts for the year 2018 as a whole and still expect revenues of about EUR3.7 billion and an EBITDA of about EUR750 million. Regarding the customer contracts we assume that the achieved growth of approximately 500 thousand contracts per half year following the business combination of 1&1 and Drillisch will continue. Therefore we expect an overall growth of approximately one million contracts to approximately 13.63 million contracts in 2018. We have decided not to participate in the fiercer price competition in the mobile discount segment since May 2018 and consequently not to further increase the sales performance this year.