United Internet raises sales by 15% and confirms forecast for 2010

Sales up 15.0% in first nine months to € 1.4 billion.

(PresseBox) ( Montabaur, )
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- Forecast for 2010 as a whole confirmed: 15% growth in sales to around € 1.9 billion and EBITDA at record prior-year level of € 356.1 million.

Montabaur, November 10, 2010 - United Internet, Europe's leading internet specialist with brands such as 1&1, GMX and Web.de, is continuing its success story and has confirmed its positive trend after the third quarter. In the first nine months, the company raised sales by 15% to € 1.4 billion (prior year: € 1.22 billion). There was year-on-year growth in customer contracts of 5.4% to 9.54 million. Despite high expenditure of € 58.3 million for quality measures in the DSL business and for the development of new business fields, EBITDA improved by 0.6% to € 270.8 million in the first nine months of 2010 (prior year: € 269.1 million). The development of operative cash flow remained positive with growth of 7.6% to € 208.5 million.

In the third quarter, there was year-on-year growth in sales of 16.9% to € 478.2 million (prior year: € 409.1 million). United Internet made a further strong increase in expenditure for the establishment and development of new business fields during the quarter, especially for the marketing of new Mobile Internet products and its Do-it-Yourself Homepage. With total expenditure of € 39.1 million, the company invested more than twice as much in the development of new business fields as in the first two quarters together. These additional expenses were financed in part by reimbursements of € 19.3 million which United Internet received for pre-service invoices it had queried. As a result, EBITDA fell by just 6.9% to € 88.8 million in the third quarter (prior year: € 95.4 million).

"We once again met our objectives in the third quarter and are well on target in all areas with regard to the year as a whole. The launch of our new Mobile Internet products was very well received. We expect to meet the targets which we set ourselves for 2010," says Ralph Dommermuth, founder and CEO of United Internet.

In the "Access" segment, the investments made in the DSL quality drive were once again reflected in greater customer satisfaction. Growth in sales of the company's important complete DSL packages continued with an increase of 390,000 contracts in the first nine months (of which 200,000 in the third quarter). However, the number of customer relationships for those business models gradually being phased out (narrowband, T-DSL and R-DSL) continued to fall. In this field, a total of 420,000 customer relationships were lost or converted to complete DSL packages in the last nine months (of which 230,000 in the third quarter). Customers reacted very positively to the company's recently launched new Mobile Internet products (MVNO) and concluded 80,000 contracts in the third quarter. As a result, the total number of fee-based Access contracts grew by 50,000 to 3.55 million contracts in the first nine months.

In its "Applications" segment, United Internet also recorded strong growth of 380,000 contracts, of which 180,000 were outside Germany.

In view of the strong progress made so far, the Management Board has confirmed its forecast and expects sales to grow by 15% to around € 1.9 billion for 2010 as a whole and EBITDA to reach 2009's record level of € 356.1 million (without positive special items).

United Internet will continue to pursue its policy of sustainable growth in 2011. In order to utilize its wide range of opportunities, the company will once again invest heavily in new business fields in the coming year. In the "Access" segment, further growth is expected in the number of customer contracts, especially for products enabling mobile internet usage. In the "Applications" segment, the focus in 2011 will be on entering new foreign markets for Business Applications. In the field of Consumer Applications, United Internet will mainly drive the technical integration and subsequent expansion of its newly acquired Mail.com service. As Germany's leading email provider, the company also intends to make a strong entry into the field of legally secure email communication. The respective legislative procedure for the German "De-Mail" system is expected to be completed in the first quarter of 2011. Despite the high costs associated with these projects for sustainable growth in customer subscriptions, initial planning indicates that EBITDA in 2011 will reach a similar level to that of the current year.
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