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 AG ("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).
The Group has a total workforce of about 2.860 associates. In FY 2017, we realised revenues of €2,812.3 million (2016: €2,430.1 million).
Despite the investments in customer growth, the adjusted consolidated EBITDA from the continued operation (earnings from the continued operation before interest, taxes, depreciation and amortisation) increased by €144.3 million (37.2%) to €532.2 million in fiscal year 2017 (2016: €387.9 million). The adjusted EBITDA margin from the continued operation rose to 18.9% (2016: 16.0%).
1&1 Drillisch in an excellent position to take the next steps in the Company’s development and is looking ahead to the future with confidence. 1&1 Drillisch is planning an increase of about 1.2 million in the number of customer contracts subject to charge. Growth drivers are coordinated brand management, higher marketing budgets and the significantly increased offering of subsidised smartphones (mostly without initial additional payment) in sales via GMX and WEB.DE as well as for the 1&1 Drillisch discount brands (smartmobil.de, yourfone, winSIM and others). These measures will affect both new and current customers.
In May 2014, the International Accounting Standards Board (IASB) promulgated the standard IFRS 15 “Revenue from Contracts with Customers”. Application is mandatory for reporting periods beginning on 1 January 2018 and later.
Based on IFRS 15, 1&1 Drillisch projects a rise in revenue to about €3.7 billion (2017: €2.8 billion) in fiscal year 2018. This will result from the planned organic growth, the consolidation of Drillisch for the entire year and the increased offering of subsidised smartphones in conjunction with the earlier realisation of hardware sales in accordance with IFRS 15 (revenue effect: approximately €200 million).
The EBITDA in the Group is expected to reach approximately €3.7 billion (2017: €2.8 billion). This includes about €300 million in diminished earnings from the additional subsidies for smartphones (recovered via higher rate prices) and the contrary positive effect of about €300 million from balance sheet disclosures pursuant to IFRS 15. Synergies of about €50 million from the merger of 1&1 and Drillisch, related especially to savings during the procurement of network advance services and smartphones, are also included in the planned EBITDA. These cost savings are contrasted by about €30 million in diminished earnings from an increased marketing budget and about €20 million in one-off expenditures for integration projects.