Freenet AG, the German telecommunications company, may not be a household name outside of its home country. Yet, under the radar, they are executing a strategy with the potential to completely reshape the German television landscape. While analysts focus on the near-term impacts of regulatory changes and the competitive landscape, they seem to be missing the larger, longer-term picture – Freenet's methodical, almost boring, approach to building a TV empire.

Freenet's secret weapon is Waipu.tv, its IPTV platform. It's already the fastest-growing linear IPTV platform in Germany, regularly outpacing the growth of Deutsche Telekom's MagentaTV, the market leader. Freenet is playing a clever game, allowing Deutsche Telekom to spend lavishly on marketing and premium content, raising the overall profile of IPTV as a viable alternative to traditional cable. Meanwhile, Freenet steadily expands its user base, focusing on cost-effective customer acquisition and smart partnerships.

This strategy is evident in the latest Q1 2024 earnings transcript. While competitors scramble to respond to the "Nebenkostenprivileg" drop, Freenet observes a steady increase in organic growth, with the first quarter of 2024 set to exceed the record-setting fourth quarter of 2023. Christoph Vilanek, Freenet's CEO, confidently predicts they will reach 1.9 million subscribers by the end of the year, even flirting with the possibility of hitting 2 million.

What's particularly striking is the way Freenet leverages content partnerships to drive growth. They aren't simply relying on internal marketing efforts. Instead, they've struck deals with Sky Germany's WOW and Disney+, offering bundled packages that appeal to a broader range of consumers. They've even started a collaboration with MediaMarktSaturn, allowing them to act as both a sales channel and, potentially, a future service provider. This multi-pronged approach is reminiscent of Freenet's DNA – a company built on acquiring customers and offering them a suite of services.

Freenet's TV strategy isn't about flashy acquisitions or attention-grabbing headlines. It's about slow and steady growth, fueled by strategic investments and a deep understanding of customer behavior. They're not trying to win every battle, but they are meticulously positioning themselves to win the war.

Consider this: Vodafone, the dominant cable provider in Germany, lost a staggering 653,000 TV subscribers in the last quarter. Freenet and Deutsche Telekom combined only gained around 200,000. Where did those remaining 450,000 subscribers go? While Vodafone likely cleaned up their subscriber count, it's reasonable to assume a significant portion simply vanished, disillusioned with cable but not yet choosing an alternative. This is a massive potential customer pool, ripe for the picking.

Freenet's CEO believes around 6 million cable subscribers are vulnerable to churn, and they only need a third of those to reach their 3 million subscriber ambition for 2026. They are already well on their way, and the upcoming regulatory changes in July could further accelerate the trend.

The "Nebenkostenprivileg" drop will allow customers to easily switch providers without incurring double costs. Freenet's targeted advertising campaigns during the European Football Championship, combined with the convenience and affordability of Waipu.tv, are perfectly timed to capture these churned customers.

Hypothetical Growth Scenario

Here's a hypothesis: If we assume that 2 million cable subscribers churn in 2024 and Freenet captures 30% of those, that would equate to 600,000 new subscribers. Add that to their projected organic growth of 1.4 million, and they end 2024 with 2 million subscribers, exceeding their current ambition.

This scenario may seem overly optimistic, but it highlights the sheer scale of the opportunity facing Freenet. While others scramble for short-term gains, Freenet is quietly building a foundation for long-term dominance.

This isn't to say their path is without challenges. Negotiating content costs with ProSiebenSat.1 and RTL remains crucial, as is scaling their platform to handle increasing traffic. Yet, their current success and deliberate approach suggest they are well-equipped to overcome these hurdles.

Remember that Freenet is a company with a strong track record of delivering on its promises. They've consistently exceeded their 2025 EBITDA ambition, and their financial discipline is evident in their healthy balance sheet and commitment to a stable dividend policy.

In a world of hype and grand pronouncements, Freenet's understated approach can be easily overlooked. However, their quiet execution, strategic investments, and focus on customer acquisition have positioned them to become the giant of the German IPTV market. Don't underestimate the quiet giant.

Q1 2024 Earnings Transcript

The following is an excerpt from the freenet AG Q1 2024 Earnings Conference Call on May 16, 2024, featuring CEO Christoph Vilanek and CFO Ingo Arnold:

Christoph Vilanek: Good morning, everybody. Thanks for joining today's update. This morning, I read a comment which said like everything on plan and a bit boring. I think that's true, but I'm happy that it's true. If we look at this first quarter, as expected, we have invested into the growth of waipu.tv and released a new record net add quarter. ... We have told you with the preliminary results early March that we expect the second or another record quarter this quarter. So we have a net add of close to 139,000, which is more than we had in Q4. It compares to plus 83 in Q1 2023. So we've again had a significant growth of almost 60%. ... So once again, we are in the area of a double-digit growth, which is still our ambition. ... So once more, we believe that if this continues, we can reach the line of around 2 million by the end of the year. ...

Key Financial Data

Source: Seeking Alpha

"Fun Fact: Freenet's roots lie in the dial-up internet era. The company was formed in 2005 through the merger of MobilCom and freenet.de, a popular German internet portal."