Freenet Buys Debitel

German operator freenet acquires debitel Group

April 28, 2008

3 Min Read

BUDELSDORF, Germany and STUTTGART, Germany -- freenet AG has today signed an agreement for the acquisition of the debitel Group, mainly consisting of debitel AG, TALKLINE GmbH and _dug telecom ag. The seller is debitel (Netherlands) Holding BV, a holding company controlled by Permira funds. The supervisory board of freenet AG has approved the acquisition.

As consideration for the acquisition of the debitel Group, freenet will issue 32 million new freenet shares (approx. 24.99 % after the capital increase, with a current market value of ca. EUR360 million(*)) and a long-term EUR132.5m interest-bearing loan note to the vendor. On a cash-free basis, the debitel Group will be acquired with financial liabilities in the amount of approx. EUR1,135 million. The consideration payable on a debt free, cash free basis (enterprise value) will be ca. EUR1.63 billion..

The transaction marks a major step in the consolidation of the German telecoms market. freenet AG's takeover of the debitel Group creates Germany's leading network-independent telecoms and Internet company: with a #1 position in mobile services provision (ca. 19 million subscribers at year-end 2007) and the #3 position among all mobile providers in Germany, measured by subscribers. With 1.016 Shops (end of 2007) and leading retail partners such as Electronic Partner, Hertie, Kaufhof, Karstadt and the Media-Saturn Holding, the combined group will also have the strongest distribution channel for telecoms and Internet products in Germany. Together, the two companies grossed over 6 million new customers ("gross adds") in 2007.

"This transaction is a defining moment in the long-discussed consolidation of the German telecoms market," commented freenet CEO Eckhard Spoerr. "freenet has advocated consolidation for a long time and actively explored various options. We are now acting decisively in the best interests of our shareholders, customers and employees to be a driver in this movement." Once the transaction is complete, freenet will possess the necessary corporate size and depth to command a leading position in the German telecoms market. Strengthened by its merger with the debitel Group, freenet will develop its business as a major network-independent, distribution-oriented telecoms player, focused on mobile and Internet, offering businesses and consumers a full and attractive suite of telecoms products. The MSP and portal businesses are core components of this strategy. freenet will also proceed with its already announced review of strategic options for its DSL business.

The debitel Group has operations in both Germany (approx. 93 percent of revenue; 13.2 million customers at 31 Dec 2007) and the Netherlands (approx. 7 percent of revenue, 0.85 million customers at 31 Dec 2007). Approx. 5.8 million of the group's German customers are post-paid or customers of other debitel brands such as the no-frills brand "Callmobile, while approx. 7.4 million are pre-paid." The debitel Group had 641 owned shops at the end of 2007. In 2007, debitel took over _dug telecom ag, one of the largest independent retail chains in the German telecommunications sector. That same year, debitel acquired TALKLINE GmbH, the third largest German service provider. In 2007 Debitel reported revenue of EUR3,369 million and EBITDA of EUR255 million (pro forma, including Netherlands (2)).

"The freenet and debitel Group amalgamation unites Germany's two biggest service providers. The company combining freenet and debitel will position itself at the heart of the mobile value chain. As the biggest independent marketer of mobile services, we will continue to grow and create lasting value - not alone, but in continued close cooperation with our partners," said Oliver Steil, CEO of the debitel Group.

Freenet AG

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