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Edited Transcript of DRI.DE earnings conference call or presentation 15-Aug-19 11:00am GMT

Q2 2019 1&1 Drillisch AG Earnings Call

Frankfurt am Main Aug 26, 2019 (Thomson StreetEvents) -- Edited Transcript of 1&1 Drillisch AG earnings conference call or presentation Thursday, August 15, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* André Driesen

1&1 Drillisch AG - CFO & Member of Management Board

* Markus Huhn

1&1 Drillisch AG - Member of Management Board

* Oliver Keil

1&1 Drillisch AG - Head of IR

* Ralph Dommermuth

1&1 Drillisch AG - CEO & Chairman of Management Board

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Conference Call Participants

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* Andrew J. Lee

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Christian Fangmann

HSBC, Research Division - Analyst of Telecoms

* Fathima-Nizla Naizer

Deutsche Bank AG, Research Division - Research Analyst

* Heike Pauls

Commerzbank AG, Research Division - Equity Analyst

* Martin Jungfleisch

Kepler Cheuvreux, Research Division - Junior Equity Research Analyst

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Presentation

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Oliver Keil, 1&1 Drillisch AG - Head of IR [1]

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[Interpreted] Ladies and gentlemen, I would like to welcome all of you to our analyst and investors conference held by 1&1 Drillisch on the occasion of the report covering the first half of the year. As usual, Mr. Dommermuth, CEO; and Mr. Driesen, our CFO, both members of the board obviously, will walk you through our presentation. And afterwards, we will give you, as usual, the opportunity to ask your questions, and we are already looking forward to an intense exchange of views here.

Now Mr. Dommermuth, the floor is yours.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [2]

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[Interpreted] Mr. Keil, thank you very much. Ladies and gentlemen, welcome to our conference for the first 2 quarters. And before we get started and before myself and Mr. Driesen will walk you through the figures and will give you an outlook, I would like to introduce to Markus Huhn, a colleague of ours. As you will have heard, Mr. Driesen will leave us at the end of the year. And Mr. Huhn will be our -- well, his successor. And could you please introduce yourself here on the stage?

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Markus Huhn, 1&1 Drillisch AG - Member of Management Board [3]

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[Interpreted] Hello, everybody. I'm Markus Huhn. I have been the COO of 1&1 Drillisch since the 1st of July. And as Mr. Dommermuth said, I've been working for 25 years for United Internet. I started my career as a controller, then I was head of commercial affairs covering access business applications until 2007. Since 2008, I have been the CFO. First of all, for 1&1 Internet AG. There, I was in charge of the access business and the communications business. And in 2013, I changed over to 1&1 Telecommunication SA. And since 2013, I've been focusing on the access business. And on top, I am responsible for the central financial department. The said services are provided, therefore the United Internet Group. And together with Mr. Driesen, I have been working together hand in glove for 18 months now. And I believe, over the next few months, we will have a very good handover. I am looking forward to this thrilling job ahead of me, and I'm looking forward to my new role, and I also look forward to cooperating with you. Thank you very much.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [4]

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[Interpreted] Mr. Huhn, thank you very much. Good luck to you for your job. Well, Mr. Driesen will leave us on the 31st of December, and the share price will be as low as never before. And then Mr. Huhn will have the opportunity to speak about rising share prices again next year.

This is my presentation. I will give you some insights into the business development, then Mr. Driesen will turn the light on the result of the first half of the year, and then I will be back on today to speak about the 5G frequency auction and give you some insights into the next step. And I will also give you our outlook for the current year.

You're familiar with our business. We have a DSL brand, a mobile Internet brand. And on the DSL side, we're the leading alternative provider next to telecom. We've got 4.34 million customers. Our services have got a good quality. And usually, we come in first, second or third in the connected tests. Our services were rated very good in the past 5 years. This is our network of 1&1 Versatel. We have also BNGs with Deutsche Telekom, and on the base of Layer 2 and Layer 3, we base on vectoring. And we also have transfer points with 30 carriers to produce fiber to the home.

Next to that, we also offer "ADSL connections". This is our old business, speeds of up to 16 megabit. We don't produce these connections ourselves because we procure them from other network providers as an advanced service.

We also run our mobile brand. Obviously, we are the remedy partner of Telefónica based on the EU merger approval when Telefónica and E-Plus merged back then. We have the opportunity to use up to 30% of the network capacity of Telefonica including all future technologies. And we also get additional procurement of advanced services from Vodafone. We sell our product through our main brand, 1&1. We also have co-brands, 1&1 mail and media with the portals WEB. DE and GMX. And we also sell our services through our discount brands, yourfone, smartmobile and so on and so forth.

Let us take a look at the business development of the first 6 months. We added 380,000 customers to our books, and I believe that makes us the fastest-growing company in Germany. If you take a look around and take a look at the other providers, the wholesale business relations, then you will find out that nobody else made 380 customer contracts in that period. We have a total of 9.58 million contracts. And according to our calculations, we have closed the gap to #3 in the market. They have 1 million more such contracts holding themselves. And that means that we have a realistic chance if everything works out as before. And then within a foreseeable future, we can actually close the gap further to the #3. We've got 4.3 million broadband connections. That's a stable figure. The growth happened rather on the mobile side. Here, you can see the second quarter. The second quarter of 2019 was better than the first quarter, and it was also better than the second quarter 2018. As regards the customer development, this is a good development.

Now the service revenues, up 3.4%, EUR 1.471 million. The revenues, including subsidized hardware such as a smartphone that we hand over for EUR 0, and there are also higher plan prices over 24 months. Together with that, here, we had a decline of 10.4%. That is a bit difficult to calculate for us. Sometimes, the demand for new smartphones is higher. Sometimes, it's lower. It always depends on the devices that can be had, and it also depends on the promotions that we run for individual handsets. However, this is a low-margin business, and it doesn't matter for us whether we generate more or less hardware turnover over 24 months, the money flows in anyway.

We also had old customers using 3G services on the basis of Vodafone's infrastructure, and they are changing to 4G plans more and more often. And here, you can see that our turnover went down because 4G tariffs and plans are discounted for the first 12 months. Initially, this year, we said we expect a growth of 4% plus 1% from the changeovers of existing customers. So we expected minus 1% from customers changing over to other plans paying less. And in fact, we have 4.7% up here on the service revenue side without the effect of increasing LTE demand of existing customers.

So this is a positive result because the LTE or 4G tariffs are bought under a capacity framework, and that is less costly for us comparing to serving the customer on the basis of the Vodafone contract. And this is why this is also repercussions on the EBITDA. At first glance, only up 0.1%. That's the bottom line here, but we have also an 18.6% growth in the EBITDA margin. Now, why is 0.1% actually 18.6%? Well, for the very first time, we are using IFRS 16. This has a positive effect, one-off effect, for us in the first half of the year, EUR 2.3 million. We still have expenses for integration projects lower than last year. The integration of 1&1 Drillisch this year, EUR 2.3 million; last year, EUR 7.7 million. So we have a net effect here. And EUR 37.1 million, they are not netted. They have an effect on the overall result but only in a preliminary fashion because we have a -- the loss of a limited price adjustment process. We already discussed that when we presented the 2018 figures. In the first half of the year, that cost us EUR 37.1 million, that price mechanism. And that price mechanism was initially agreed to last until 2020, but then it was reduced in the duration, and it wasn't extended afterwards anymore. And this is a question that we are discussing these days.

All of that is the matter of an arbitration proceeding that will be done by the end of October. The matter is what are the right advanced service prices that we have to pay retrospectively from September 2017, we have a contract with our advanced service provider. And if we can't agree on the right prices, then an expert will make the call. And that arbitration proceeding is underway. It will come to an end until October, and we expect lower prices to be the outcome. And at the end of the day, that adjustment mechanism that is gone will then be reinstituted. Obviously, I can't promise that, that will happen today. But this is just a basis for you so you can compare our operating business. And like-for-like, we have an increased EBITDA of 8.6%. And depending on the expert's opinion, we will actually also generate the 8.6%.

You can see the development of our mobile contracts. On the left side, you can see the number of the contracts and the number of 4G contracts. Within 1 year, the number of 4G contracts went up from 4 million to 6 million. And on the other side, you can see the data usage per contract. The total is up 18.6%. And if you break it down to LTE or 4G contracts, well, these plans are faster. And there, obviously, we have a 24.1% growth year-on-year.

Now in a nutshell here, the essential financial indicators of the first year customer contracts, plus 380,000 in the first half year. And if you compare '18 and '19, it's a plus of 180,000 and 850,000, thereof, mobile, 30,000 in the broadband business. And now turnover went up by 0.4%, service revenues, as I've just said, 3.4%. If you adjust that figure for the changeovers to 4G plans, then 3.4% turn into 7.7%. Now EBITDA, plus 0.1. If you adjust it for the end of the price adjustment process, then it's 8.6%.

Now it's time for me to hand over to Mr. Driesen, and he will walk you through the figures of the first half of the year in detail, and I will later on be back with the 5G information and the outlook.

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André Driesen, 1&1 Drillisch AG - CFO & Member of Management Board [5]

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[Interpreted] All right. I would also like to welcome you colleagues to this session and to look at our results with the figures as we -- as we disclosed when we published them in our report. Mr. Dommermuth has already given some first impressions. Let's look at the detail.

So we've had increase in revenues by 0.4%, while cost of sales has been reduced by 0.7%, but it would have had to be reduced more strongly because we've got some 10% less hardware than the previous year, for some EUR 40 million, say, with a -- in the low margin. So some EUR 40 million less use of material and use of goods, and we do not have the price of the [limitations] of EUR 37 million, which compensates for the reduced price. So we only have a slight reduction of cost of sales by 0.7%. So if we were to look at this like-for-like, we would have to see EUR 37 million, and we'd have to calculate them and adjust for them, and then the gross result would be better.

With distribution costs, we've spent some -- a bit more as compared to the previous year. We are satisfied with the development. We've got some more TV activity with yourfone and repositioned yourfone during 2019. When we -- well, since we're the hardware -- then we called then the hardware specialists and we credit from bundles, and we also did some TV commercials, which is why view distribution costs have increased compared to the last year.

Administration costs increased by 8.9%, which includes consultation costs from the first half of 2019. We had -- we employed consultants for ongoing projects for the price bidding and the 5G competition or auction. We're going definitely to have more costs in this respect in the second half of the year. This has already been included in the EBITDA forecast, as I'm sure you have read. Other operating expense and operating income, while this is not really -- cannot really be forecast, sometimes it's a bit higher, sometimes it's a bit higher. So we've got a reduction, and the impairment losses from receivables and contract assets have been -- have risen due to the increased hardware focus that we've been running for about 1.5 years now. So we -- well, we don't lose clients by the number, but we have -- we do lose customers -- if we lose a customer with a device then we lose more than with a customer that only has a SIM.

With operating activities, we are lagging behind by 0.6%. With the financial results, we've got an increase of -- from EUR 5 million in the first half of 2019 due to the fact that, at the beginning of the year, we communicated that we had a credit line of EUR 2.8 million that we've agreed, with the purpose of the 5G auction, we will not be needing this credit line, but we had to make it available, and we had this agreement. And so this is included in the financial results. And well, firstly, we've paid fewer taxes. We have a taxation ratio from 30%, so the regular number, which brings us roughly to the same place we were last year. However, this has been -- here, we've included the price hike, and so EBITDA is EUR 344.4 million as compared to EUR 340.1 million in the last year is what we're showing.

As -- if we look at the balance sheet, not much has changed as far as clients. The balance sheet total is marginally changed. There are a few changes on the asset side. Equity has increased. And on the other item, with short-term liabilities, we have a reduction.

So in total, this all compensates and levels off. And I'm going to talk about the short-term liabilities and the short-term assets (inaudible) in the first half of the year, both in Q1 and Q2 found -- had an impact on both quarters. And this brings me to the cash flow, which is better than last year because herein we had EUR 44.6 million positive cash flow in the first 6 months of the year last year, which was increased to -- let me get my glasses just a second. Sorry. Anyway, so 60 -- EUR 86.2 million, so an increase of 92.2%. And in the first, we're not that satisfied with cash flow in the first half of the year. We do expect a clear improvement in the second half of the year, mostly with a change in liabilities from investment activities. Both with the carriers and with the hardware suppliers, we have some high liabilities -- or we had from high liabilities at the end of 2018. And this always depends on the invoicing and the times of maturity and when the invoices fall due. So these are deadline effects which accumulated. So both with carriers and hardware deliverers, we reduced those liabilities. And this is not a one-off effect. But -- well, this came from our operating business, where we've now had a fairly low state at the end of the half year, and everything we had in cash flow in the first half of the year has already been achieved in the second half from the 1st of July until today. So I'm quite confident that we will improve in the [face] another half year, of the second half.

With regard to investment, we've got -- only got EUR 5.3 million from our own CapEx. This is for our own IT infrastructure and financing activities, we've spent considerably less than last year. This is because we only paid out EUR 8.8 million in dividends back in May, and now we've got a stock repurchase and a repayment of loans to United Internet. So we -- if we've got money to spare, we invest it. If we require money, we take on loans [looking actions] if there were favorable conditions. So free cash flow of EUR 81.1 million remains, which is an increase of 102%. And I do assume that we will add to that in the second half of the year.

Now this is the bridge from the EBITDA to the free cash flow. I've spoken about the contract assets, and I've explained -- I used to explain this in 2018, where we had larger effects on this in the second half of the year. We now only have some [EUR 70 million], which are investments -- our own investments in hardware with another supplier and customers with hardware for only EUR 70 million . The biggest effect comes from the other remaining working capital and, in particular, the reduction of liabilities from trade accounts payable. And so we have the CapEx at a low level, which you've already seen over the past few years.

Now let me return the floor to Mr. Dommermuth. But before we do so, Mr. Huhn has already introduced itself. I am happy to pass on my own job to Mr. Huhn, and I am convinced that he's going to be an excellent successor. I would like to thank you for the long years of cooperation and trust that we've had, and discussions and the highly respectful relationship that we've had, the hints and tips and advice that I've been given by you. And there was a lot of fun. I'm sure I'll see some of you. But it might be that this is the last event of this sort for me. So let me thank you cordially, and I would like to say goodbye at this point.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [6]

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[Interpreted] Now on the 5G frequency auctions and the next steps. Let me give you a quick overview. I believe you will say our opinion that 5G will create the foundation for a new mobile ecosystem. More and more devices will be hooked up to the web. And we believe that we need application know-how on top of the Internet know-how. We are well positioned here. 5G will offer higher speeds, up to 10 GB per second. We will have larger capacities. 1 million devices will be connected in 1 square kilometer, and the latency times will be very short, below 1 millisecond is what we expect.

We successfully completed the 5G frequency auction. We acquired 5 blocks in the 3.6 gigahertz range. We parted with EUR 735 million for that, and some are stable until the 12th of September. Then we have acquired 2 blocks in the 2 gigahertz range, and they will be available from 2026. And this is why we only have to pay those 2 blocks in June 2024, and the price tag here will be EUR 335 million. Until 2026, we have the option to lease frequency blocks, 2x10 megahertz in the 2.6 gigahertz range. And that, once again, goes back to the voluntary commitment of Telefonica, which comes along as part of the EU merger release with E-Plus.

Now when we lease the frequency from Telefónica until the 31st of December '25, we can use it, and then we can also work with the frequencies we have bought so far.

Now building up a network requires several individual steps. Here, you can see the progress we have made so far. We have ticked off the first step here. We have acquired the frequencies. And now the second step is due. We have to engage in negotiations about national roaming. You know that this was a part of the auction rules. And if we can't agree on free access, then, the [settle] agency will act as an umpire. We started the negotiations. We are still on square one, basically. I can't tell you today when they will end and what the result of these negotiations will be. And in parallel to that, we also speak about infrastructure sharing, meaning to what degree can we share existing antennas and locations. That makes much more sense for everybody involved compared to building up the same infrastructure 2, 3 or even 4 times. Then, in the next steps, there will be cooperation agreements with technology partners. As soon as we know when we will build what, we need to contact the companies that supply the antennas and the core systems. We have had some initial talks already completed. We have an overview of the performance of the individual suppliers, but we can only take a decision here once we have ticked off the second step. And the fourth step is then the erection of the network that will be based on the fiber optic network of Versatel. And in the fifth step, we will then acquire the frequencies, so that will be available in 2024. They were not to be had this year, and they will be then available at a later time.

The fiber optic network of Versatel is the basis for our 5G network. It will serve as a 5G backhaul. It is available in 250 German cities including 19 of the 25 largest cities. And the overall length is 47,013 kilometers. As you can see, we use this network for landline services, fiber to the building, when we connect companies' or authorities' fiber to the curb, when we cooperate with Deutsche Telecom. Here, we use the last mile of Deutsche Telekom, or we also cooperate with the city carriers such as HanseNet and -- or M-net, NetCologne, for example. Then we also use the Versatel network today to connect mobile base stations of third parties of other network operators, in other words. And in the future, we will connect our own mobile base stations to this network. That's our strategy.

This is an overview of our obligations that came with the set of frequencies we acquired. We have set up -- have to set up 1,000 antennas that are 5G-capable until the end of '22. Until the end of 2025, we have to reach out to 25% of the households in Germany, that corresponds to the 40 biggest cities. There's no need to cover the 40 biggest cities, but this is what we can do. And at the end of 2030, we have to cover 50% of the households. And that corresponds roughly to 390 of the biggest cities in Germany. We believe that we can meet these obligations. Our talks we've held so far make us optimistic. Obviously, construction capacities are scarce these days. However, we have 6 years' time, 11 years' time to comply with these obligations, and we believe that this is very well possible.

Now what do we plan to do later this year? Of course, we want to increase our revenue further, service revenue. The plan is up 3%. I have presented 3.4% for the first 2 quarters, and we believe the trend towards changing to 4G plans will continue. And the visible growth will be, as a result, around 3%, but that does not have an effect on the overall result because the LTE traffic is produced at lower cost. EBITDA, 2 effects that couldn't be foreseen when we put together our business plan. The TAL charges will increase for the first time instead of being lowered. And that happened in the second quarter because of a decision by the regulator. There was an increase of 11%, we didn't foresee it in our business plan. And that price hike will cost us roughly EUR 10 million in the second half of the year. And because of the successful acquisition of the 5G frequencies, we have startup costs to cover in order to launch everything, and we have earmarked roughly EUR 5 million for that. If you deduct these EUR 15 million, then our EBITDA will decrease correspondingly. And the increase will be 8% instead of the forecast 10%. If the arbitration process ends as we hope, then that will be the figures that will materialize, and further information on that will be available only at the end of the year.

Thank you very much for your attention, and now the ball is in your court. We are looking forward to your questions now.

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Questions and Answers

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Oliver Keil, 1&1 Drillisch AG - Head of IR [1]

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[Interpreted] Okay. Up front in the first row, Martin Jungfleisch of Kepler. Your first question, please?

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Martin Jungfleisch, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [2]

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[Interpreted] Martin Jungfleisch of Kepler Cheuvreux. So the first obvious question, transparency on the planned 5G expansion. I know you cannot say a lot because not everything has been decided. But if you were able to say a bit more regarding CapEx, capital investments, you said something like EUR 200 million, whether this is still on track or dividends in 2021, '22, that would be helpful.

The second question I've got is with regard to fixed line. You said that this was fairly low, fairly weak in the second quarter. Do you know why this was? Whether this had to do -- or whether it's going to continue because this is just the markets, the way that the market is at the moment or whether this is due to increased competitive pressure also with regard -- from the cable providers? Can you say anything on that?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [3]

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[Interpreted] Now I have to, well, start wobbling about a bit. And we will fake -- we don't know yet from what point -- from when we're going to have a roaming agreement, what the conditions and the terms are going to be. What of the existing infrastructure we can use, whether we can use antennas that others have built? This is the business model of DFMG or Vodafone, for instance, that they want to put their antennas into any subsidiary, the other providers who offer antenna locations. All these negotiations are ongoing, and I cannot tell you today what exactly we're going to build ourselves.

And, of course, we've created a business plan. When we drew up the business plan, we assumed that we'd have to build every single antenna ourselves. That is our calculation, the basis for our calculation, but this is not going to be the most efficient way to do things. So please, bear with us. Give us some time because the tracks that we lay now will be lying there for a number of years. So we now have to decide what is the best possible model, where and what we will build ourselves, what are the right partners, what can we use, which partners do we use, there are many different variables, many different parameters, different partners, companies contracting saying we can do this or that service, we'd be interested in building locations for you and sites for you. And we have to evaluate all these things, and we're at the very beginning.

Then you also mentioned the CapEx of EUR 200 million. That would be great if it were EUR 200 million, but I don't know the figure. We cannot build a network for EUR 200 million per year. Okay. I cannot confirm this figure. This always will have to -- or this will depend on how many antennas we're going to build. An antenna has a certain price, an average price. And then the question is how many of those do you erect. And I cannot tell you what the CapEx is going to be, whether it's going to be EUR 200 million or EUR 400 million or EUR 150 million and how it's going to be distributed over the years. This is going to depend on what we're going to build, how much of it we're going to have to build ourselves and what existing locations or sites we can use.

You asked about the dividend, and I have to be just as vague as with the other question. We have major investments ahead of ourselves -- ahead of us, but we don't know what the investments are going to be, whether we're going to buy, whether we're going to engage in leasing contracts, how we're going to -- whether we're going to have to pay the frequencies in one go or in a lump sum or whether as a deferred payment. So I cannot tell you.

With regard on -- to fixed line we can define focus points and focuses. And so we can decide where we're going to focus on mobile and where we're going to focus on landlines. And we usually focus on one topic only. And so in the first half of the year, we focused on mobile alone. As regards to landline, we -- or fixed lines, we increased our prices. We hiked our prices in the first half of the year. And price increases don't always generate -- or don't necessarily generate more turnover. You have to look at the relation between prices and revenues and then in turnover. How much more do I generate and what impact does this have on my client's health? Will I lose clients? Or what -- how does this change in comparison -- if I compare the situation where I don't change my prices to a situation where I increase my prices. What features do I offer at which price? And we spend a lot of time thinking about exactly these things.

And at this point in time, if we look at telecom infrastructure, this is going to be a more difficult business in the next few years. I think that Vodafone, with, I don't know, every mayor and parliament -- I mean, member of parliament and member of municipalities, they will take pictures, and they will have photo ops. And say, yes, great, because without them -- they will act like, without them, the expansion of the network wouldn't have worked. And Vodafone is going to milk it for what it's worth that they were the ones to expand the network. And I think that Vodafone is going to generate an advantage -- a competitive advantage compared to telecom. And they didn't pass it on to Telefonica. If you read the press releases and the cooperation between Telefónica and Vodafone with regard to landlines, they agreed on lower speeds, VDSL speeds roughly. The high speeds were reserved -- or are reserved -- remain reserved to Vodafone. I don't know why they did this, why Telefonica agreed to this. But hey, Telefónica has to know why they did this. And I think that, in the next few years, Vodafone is going to emerge the winner in landlines, definitely or quite clearly. And we will run a defensive strategy, a margin and profit retaining strategy rather than a brute force strategy, where we use technology that is not up to what Vodafone can offer and try to be aggressive with this subjective to the technology.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [4]

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[Interpreted] Second question, Heike Pauls of Commerzbank, and then we'll move to the left-hand side and to the back.

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Heike Pauls, Commerzbank AG, Research Division - Equity Analyst [5]

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[Interpreted] Yes, I have a question on -- a follow-up question on what was just said. You seem to see a cooperative disadvantage from the -- this Vodafone situation that you just described. Are you planning to make a move in cable after this exclusive deal between Vodafone and Telefonica? And my second question, you sound fairly confident with regard to the price deal and the deal of Telefonica. Can you explain where this confidence comes from?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [6]

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[Interpreted] Let's start with the competitive disadvantage of the cooperation between Telefónica and Vodafone. I don't see a big competitive disadvantage. I do see a competitive disadvantage by the fact that Vodafone can offer gigabit speeds, and they've got a strong marketing argument, which Telefónica doesn't have. If I read the publications right, I don't know their contract. But if I read the publication, like, they don't have this argument. So I don't think that Telefónica is going to be too strong a competitor.

But Vodafone, I mean, they did invest a lot. You have to be fair in regarding them. The sums they paid, they have to make a gain from it. So they did invest a lot in order to expand into improving their network. And this has to end in improvement and revenue because otherwise, it wouldn't have been worth it. And I'm sure that everybody is going to notice it. If I invest into a -- and if I look at a cable graph fiber infrastructure and a cable infrastructure, and that can be compared. But VDSL and the 250 Mbit, you have to draw a distinction between the actual customer demand. And the customer demand is not in this area. Customer demand, the rate that's sold most often is 50 megabits. So not 150, not 200, it's 50 megabits. But with -- from a marketing standpoint, it is going to be an advantage which Vodafone is going to be milked for all that it's worth. They won't get all the customers, but they will increase their market share to the detriment at the extent of everybody else that uses the telecom infrastructure.

Your second question was with regard to why -- where does the confidence come from with regards to the price. Now I cannot tell you with whom we're doing the price review because that is, of course, confidential. But I can tell you that our provider has been fighting against doing this price review and that we needed a mediator and a conciliatory action, and so we have managed to overcome a number of obstacles and with -- after all the questions of whether the mediator was necessary or was relevant. And then they didn't pay -- the other side actually didn't pay the arbitration court. And well, if they drag their feet so much, and if they don't want this arbitration court and if they don't pay them, and if we have to pay them everything, then I think we're on the right way. We're on the right track. I cannot prove it, of course, but this is just my gut feeling. And we'll know more in a few months.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [7]

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[Interpreted] On the left-hand side, in the second row from the left, there was a question.

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Andrew J. Lee, Goldman Sachs Group Inc., Research Division - Equity Analyst [8]

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English, I'm afraid. It's Andrew Lee from Goldman Sachs, trying to speak slowly. So the first question is a bit of a long one, so just if you can bear with me. Your shares are down meaningfully because of an increase in uncertainty and fear of a dilutive-returns investment process in the near term, even if that might be accretive to returns in the long term.

What we're seeing in the investment markets at the moment is a divergence of the investment time horizons, where private investors in infrastructure have extended their time horizons and are looking at multi-decade investment time horizons. Whereas, the public equity markets are continuing to shrink their time horizon and hence why the market is not prepared to look through your investment cycle. So the question is, if you do go ahead with the investment, how do you think about financing that? Do you think about taking your company private? Do you think about partnering with a private infrastructure investing partner? Or would you just keep things as they are? That, believe it or not, is question 1. And then just a very quick second question, which is, just do you believe that the risks of conversion competition -- convergence competition of fixed and mobile have gone up in the market now that Vodafone has completed its deal?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [9]

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[Interpreted] Let me answer in German because we've got interpreters in the booth, and that's easier for me. So we're not planning to take the company off the stock exchange. We're not planning to go private, we are not planning to cooperate with private infrastructure partners. We don't know yet what investment volume is lying ahead of us, but we do have a lot of financing options and possibilities. On the one hand, our company is not indebted. We do have the possibility of using supplier's loans, network products for instance, well, you do get the equipment or you do get the network finance. And the question I just mentioned in passing, whether we actually have to pay for the frequencies or whether these can be deferred, all of this is -- remains open, which is why we cannot say what our capital requirements will be and how we can cover it. As everybody -- as would everybody else -- do -- as everybody else would do in the situation, we're trying to be clever, as clever as we can, but we don't -- cannot make -- and we cannot make any statements on this. We don't have any concrete plans as of today.

Your other question was about fixed mobile convergence competition. Well, this is a trend which can be seen in other countries and which has passed or has gone further in other countries than in Germany. But we do notice this in Germany as well, we notice this in own clients at all where we've got fixed mobile convergence products which we offer to our clients in order to safeguard customers and for customer loyalty. And I think this will be an increasing trend. And somebody who has a superior fixed line offer like Vodafone, for instance, they have better arguments than somebody working with a telecom basis and using a telecom basis. You have to be very clear about this. How much better this is going to be and how much gain they will take from this advantage, I cannot tell you today because I don't know what the offers will be and how aggressive everybody will be because you've got a customer base, a client base that you've purchased or that you've acquired at a price and you don't want to lose those. And you don't want to slash your client base in half. I don't know Vodafone's strategy, of course. But as I said, it's not going to -- the landline business is not going to be easier for the other competitors due to this combination of this agreement between Vodafone and Telefonica.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [10]

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[Interpreted] Now let's go to the second right row from the back. Yes, [Timo Mueller]?

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Unidentified Analyst, [11]

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[Interpreted] Mr. Dommermuth, you've said you have to be vague, you said it yourself. But fortunately, there are some things that I've heard and [shown], namely that you have to build those 1,000 tenants by the year 2020 or '22, and the radial mass has to be built. And then the frequencies that you bought, the EUR 733 million has to be paid at some point. When will it be paid? You said, well, it might be deferred. This is the first I'm hearing that such things can be deferred and payments can be deferred. But if I'm at an auction and I want to be successful in an auction, then I have to be aware of the fact that I might have to pay whatever I buy at the auction. So what about these millions and these [EUR 735 million], how would -- what will they look like in the balance sheet? How will they be written off? How -- when will they be sent? And since I'm a friend of easy calculation and simple calculation, if you look at the 1,000 radio mass that has to be built by 2022, I would like you to tell us about -- well, what such a radio mass costs assuming that you do have to build it for yourself?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [12]

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[Interpreted] Well, the frequencies have to be paid on the 12th of December, EUR 735 million on the 12th of December. And that, of course, will deplete our coffers, and we will have to take up a loan of some EUR 700 million -- oh, less, excuse me, rather less. And yes, well, so we have to either repay that loan with cash or we'll have to be refinanced. At the moment, we're paying somewhere between 0.5% and 0.75%, so it will not have a huge impact on our profit and loss statement. But it will have an impact on our balance sheet because you will see this on the balance sheet. As regards to the write-offs, we're going to write-off the frequencies over that huge -- the time from 2021 on for 20 years. But we're going to begin the write-off from the moment that we're beginning the network operation. Or do we start earlier? Well, we're playing -- planning use -- to use it from 2021 onwards. So this will be the same, but yes. So usually, you'd start the write-off from the moment the network goes active and you start using the frequencies, so this is 2021. Then the EUR 735 million, if you divide them by 20, there will be some EUR 37 million per year. And then you asked about the 1,000 broadcasting towers that we need to be. Well such a -- or such a mass costs about EUR 150,000, a bit more or bit less. Depending on the foundation and it has to be connected to the glass fiber network. And well, we want to rent the glass fiber from 1&1 Versatel. Well, as a general provider, we might combine networks of city networks or from telecom and get them wherever we can. If you purchase fiberglass cable, and the fiberglass usually is not done with outside networks. If you have a provider with 100 branches and you won't have your own glass -- fiberglass network in those 100 locations, which is why the fiberglass connections will not mean a CapEx challenge for 1&1 Drillisch.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [13]

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[Interpreted] The next question. Second row on the right? Christian Fangmann, HSBC.

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [14]

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[Interpreted] Yes. Christian Fangmann. I have a few questions. On the wholesale price review. The first question was, you said you're confident that you will gain something from it. It's mostly about 2017, I think. So do you think that this outcome will have a direct influence on the prices that you're paying in 2019? That is, the discount that ended 2018, can that be (inaudible) -- can the new prices be used? Or do you think that there are going to be different price rounds, which will -- which are under review, so do we have to wait for those reviews as well? And the second question on service revenue guidance reduction. In Q1, it was quite obvious that there was a lot of migration from the Vodafone network to the O2 network. So what has changed for you to cause you to reduce your guidance? Is there -- are there more migrations that originally -- than originally planned? Are there -- is there an increased number of promotions than originally planned? Is there an increase in demand from the clients? Or their clients demand more LTE products? Some information on this would be nice. And I've got a follow-up question afterwards.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [15]

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[Interpreted] Okay. So let's start at the ending. Start at the end and look at the migration. Yes, we do have migration of customers who used to use the Vodafone network. But we don't run any specific promotions. Customers who want to move from Vodafone to LTE and LTE contract will get the same conditions as does a new client who enters into an LTE contract with us. So there's an increased demand because clients see LTE as the better technology. And Telefónica, today, has a better network quality. I see this, if I look at the new business, we've got 100% of new clients who decide to go -- to use the Telefónica network. So a low number of clients prefer the Vodafone 3G network. Well, it's 3G and it costs EUR 10 more over the year. And this was in the past, but the share was different. But increasingly, this is switching and changing and clients don't request the Vodafone products anymore because they're older and they increasingly buy the Telefónica products because they're more modern and Telefónica has an excellent network quality in the big cities, at least. And they've improved their network quality considerably. We see this with the number of customer complaints and calls to the hotline that we see progress with Telefónica as regards their network quality, which of course, is good for us and good for the client.

On the wholesale price review, you're right, the price review is for September 2017. And the question is, were the prices that we had to pay back then adequate or should they -- would they have had to have been lower. We caused -- or we instigated this price review because we felt that they would have had to be lower. Once -- if the arbitrator -- the arbitration and the examiners decide that the prices would have had to be lower in '17, then any price increases after 2019 would be excluded. If the -- let's say the price was EUR 100, and if the results of the expertise is that it would have had to be at EUR 95, and you cannot take EUR 110 for 2019 because the expert says that the price is adequate from -- for the future. And the price that is beside of that is in fourth, until the next agreement, so we can have a bilateral agreement or we can call in another expert. And we've got 4 different arbitration and expert review proceedings. So after the first one would be completed, there will be 3 others. And we are talking about considerable funds and considerable sums of money here. So -- but let's be cautious about this because we don't know yet what the result of the expertise will be. Everybody has their own opinion. And the other side has an entirely different opinion. So we said, well, if the expert reduces the price a little bit then the price hike will definitely be stricken, which is why we put this into our results [stuff]. If the expert says, no, the price was great, we'll have to wait for the result. But we do have some more price reviews in store until the 1st of January 2019. So between the September 2017 and the 1st of Jan 2019, we've got a few points in time where there are proceedings going on when expert needs to decide whether the price was adequate or not. And if the expert says -- or if the expert for all these proceedings say the price -- all these prices were fine, then we can -- we'd have to tolerate the price increase. And then we'd have to ask a question again at the next deadline. It's a simple mechanism. If you cannot agree, then you call in an expert, and you can call in an expert twice a year. And if we cannot agree at all, ever, then we always have to go and call in an expert. But the last review process in order to look at this escalation, and it's okay, 1.5 years. The other 3 were quick because the first procedure was lost by our competitor resoundingly. And so the second, third and fourth one haven't -- we don't have an arbitration procedure anymore, we immediately called in an expert. But just to the auction, during the frequency auction, our partner said, well, the expert cannot take a decision while the auction is ongoing because this could be collusion. And unfortunately, the Federal Network Agency agreed, so we had to wait until the auction was over. And only now can we bring in the expert for the fast proceedings. At the same time, the second side of the fourth will also immediately and -- be started. And we agree with our, well, contract partner that we don't need an arbitration corridor or an arbitration trial anymore, but bring in next for the [middle in]. They have 3 months. Yes, it's going to take a few months, but we won't take 2 years now. It took more than 2 years for the first set of proceedings because we had -- we were embroiled in legal discussions. And now it should be -- probably should be done within 3 months after calling in an expert. Because I mean, you have to bring in an expert together because this is a --inside, there's a hornets nest all by itself. But now that we've agreed, I think the rest should be quite quick, I guess. And well, we've never had such proceedings with a supplier, and it would be so much easier if we didn't have this. And well, the last contract had 498 pages and you have to process all this. You have to really understand all this, and you have to be very clear. I'm optimistic, yes, that we will prevail at the end of the day because, from our point of view, the rules are clear, the framework is clear, but the other side sees it differently, entirely differently. And it's up to the expert on how the expert will decide because they keep their cards close to their chest. But if you look at the market development, you will -- can see that data volumes are increasing dramatically. And if you want to have prices which are in line with the market, you have to have price reductions in line with the data -- the development of data volumes, and this is where our client comes from that we are saying, yes, in order to have prices which are in line with the market, the prices have to fall to the same extent as they're falling in the market. And I think this should go without saying, but we now have to really go through this entire process until decisions taken both from (inaudible).

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [16]

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[Interpreted] Well, I've got 2 follow-up questions. One question regarding customer quality. Can you give us some insights into the cross ads on the mobile phone side? Is the situation similar as before ARPU? Or is the margin a bit better or bit worse? And then possibly a comment on the existing customers. I have seen that the expenses for impairment went up 20% year-on-year. Is that, first and foremost, a hardware-related issue? Do you write off old stocks? Or are there other reasons? And then my third question regarding acquisition, are you absolutely busy with the [M&O] case? Or do you also plan further acquisitions?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [17]

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[Interpreted] Well, let me answer the first 2 questions, the customer quality, in general, or the earning strength of new customers. Well, obviously, we are a competitor in the market, and using the Drillisch brand, we want to be the price leaders. However, we haven't significantly reduced the price points. You add a bit of more performance, obviously, but sales and raw earnings are on a similar level at 1&1, and we try to keep up prices as far as possible. However, we are part of the competitive environment. We compete against the original brands. At 1&1, we almost have the same prices Telefónica is asking for its O2 brand. This is not aggressive. However, we benefit from the fact that 1&1 is a very good brand and we make a difference regarding our services and the brand portfolio. This is what differentiates us against the competition, and we no longer need the price gap to the competition that we used to have in the age of the discount companies.

Now the next question, well, that doesn't relate to hardware issues, and well, that's the sum total of a small end consumer claim. And I have already mentioned that we have an increasing amount of customers who have a handset in their current contract, that was a strategic decision to add more hardware to our products. That was a marketing decision. And we have a slightly higher amount of money whenever a customer fails here to consider. This is an overall development that can be traced back to that decision or strategy. However, we do not have one-off cases coming up, surprisingly, but we have an increasing revenue with higher hardware share.

And then your next question was about acquisitions, I believe. We are busy with building out the network. And this is why no further acquisitions are planned this time. But you should never say never, but this is our plan A.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [18]

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Well, the next question, please?

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Unidentified Analyst, [19]

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I've got 2 questions, please. There have been some news reports about some fiber assets that are available or might be available for sale from private equity. Given your comments about Versatel having a network that's already present in around 250 cities. I mean, would buying additional fiber assets be helpful for the mobile network build? Or do you not need to go down that route? That was the first question. The second question was, again, on Versatel. I think in the last conference call, you had mentioned that you could explore options to combine Versatel with Drillisch if it facilitated the mobile network build. And I was just wondering if you had any updated thoughts on that and how that might be achieved if Versatel continued to be sitting in the United Internet Group.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [20]

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[Interpreted] Now with all due reservations, I don't know what fiber assets are in the market and what you were referring to. We are not looking here for any fiber assets that can be found in small villages, let's say. We, first and foremost, operate a national network, our transport network, as we call it, and we are represented in the large cities. And we have a closely knit network there and there assets would be a welcome boost. But we do not plan to buy a network that only reaches out to individual households in smaller communities. This is not what we refer to as our core business today.

And the next question was should we combine Versatel and Drillisch. I can't give you an answer on that today. Versatel used to be a subsidiary of 1&1 Telecommunication, Then Versatel, before the merger with Drillisch, we have taken it out and moved it over to United Internet. That was a request by the selling side, Drillisch. They said it's an infrastructure asset, and they said, we're a service provider. And this is why they didn't see it in the combined company. Whether it will remain like that forever or whether we will turn back the wheel, we don't know that today, time will show. But today, there are no concrete considerations about that.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [21]

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Okay. Then we've got the third row, right side. Jefferies.

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Unidentified Analyst, [22]

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[Interpreted] Let me come back to the guidance regarding the service revenues and the Vodafone-O2 migration. There is a burden on the revenue, 1.3 percentage points in the first half of the year. When you presented the initial guidance in the fourth quarter of last year, as you expected, 1 percentage point. Now that seems to work out in the first half of the year. And then you reduced the service revenues for the second half of the year. Do you expect more pressure in the second half of the year? Or are there any other effects that may have an effect on the service revenues? And then a question on the TAL charges. The price hike was announced in April and Drillisch confirmed the outlook in May. Back then, the increase in TAL charges was already known. Now you reduced the figure, referring to the TAL charges. How do you explain that? Are there any other major effects on the EBITDA apart from that sum that you have quoted?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [23]

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[Interpreted] Let me get started with the regulatory process regarding the TAL charges. We have taken a close look at that. And I learned about that increase at the end of May. And as far as I know, that was the moment in time when the final decision was made. Whether there were some early indicators of that decision, I don't know that. But the end of May is the moment in time when we learned about it and could process that information.

Regarding the service revenues. Now it's 3.4% in the first half of the year. And the trend of existing customers changing over to 4G plans will continue. And this is why we can't stick to the 4%. We have to be realistic here on the service revenue site-wise, so the result will start with a 3, 3 point something. Now the customer growth in the second half of the year will be good. But we have to be very clear about it, our market is subject to changes. And if you take a look at the overall market and at how it developed in the first 2 quarters, then you will find out that the growth is moderate, if you consider all market participants. At the end of the quarter, we have seen quite a lot of discount campaigns, a lot of activities going on currently, and we also have to factor that in. And then, at the end of the day, you get prices for plans that are not really interesting depending on how many concessions you have to make. Now, if you take that as a basis and if you assume that the market will rather get tougher and that the migration of the customers will continue, then 3 point something is more realistic than 4 point something.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [24]

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[Interpreted] Okay. The next question from Deutsche Bank from Nizla Naizer.

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Fathima-Nizla Naizer, Deutsche Bank AG, Research Division - Research Analyst [25]

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I just have a couple. First is on your relationship with Telefónica Deutschland. If you do want to lease out spectrum from them, by when do you have to come to that agreement? I think they mentioned it should be by the end of the year. Some color from your end would be great. And linked to that, if you do go down that path of renting spectrum from them, what happens to the existing MBA MVNO contract? And how does that sort of progress in line with the renting of the spectrum? The second question is linked to the mobile net add run rate that -- you did 200,000 in Q2. You mentioned that the market is getting a bit more challenging. How do you expect that number to be in the next 2 quarters? Do you have an idea how you'll end the year in terms of mobile net adds? That would be great.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [26]

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[Interpreted] Let me get started with your last question, net adds customer growth. I believe the second half of the year will turn out as the first half of the year, so the figures will be comparable regarding the net growth. Then, you asked about that frequency contract. When do we have to sign it? Well, that's sort of secret. It's part of the Telefónica commitment. We have a time window of 9 months during which the [M&O] auction negotiations can take place, and that refers to national roaming and leasing frequencies. Leasing of frequencies is an obligatory part of the contract. You have to lease their frequencies. It's a must. It's obligatory. And national roaming is not obligatory. You can do it, but you don't have to. These are the contract stipulations. We've got a time window of 9 months. And the faster we complete the negotiations, the better because we need the frequencies in any case. Whether we do roaming with Telefónica or another network provider, that remains to be seen. But the obligatory frequencies, well, we want them. And it's not a lot to negotiate about because the commitments quote a price and a duration. And it says that we have to be in the same situation as if we were the owner of the frequencies, and this is exactly what we want to happen. And I believe we should complete that process rather sooner than later, but I can't promise anything today. Now what is the effect on the MBA contract? Well, I need to differentiate between the commitments and the contracts. I can't quote from our contracts, but I can quote from the commitments. In the commitments, you will find information that, if we get little roaming from Telefónica, then the MBA agreement will be continued as a little roaming agreement, then the MBA contract will change over to a national roaming contract. And if we don't need any roaming, then we don't need an MBA contract because then we don't procure any services. If we continue to get services, then the MBA contract needs to be continued as a national roaming contract. This is what Article 59 of the commitments says.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [27]

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[Interpreted] Well, there is another question here. Second row front, right side?

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [28]

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[Interpreted] Christian Fangmann again. A sort of follow-up question regarding the MBA contract. Is it correct, if you extend the MBA contract or if you convert it into a roaming contract will there still be the one-off payment to Telefónica Germany?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [29]

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[Interpreted] Can you repeat that? What do you mean one-off payment?

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [30]

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[Interpreted] Well, in 2015, there was a one-off payment of EUR 170 million at the beginning of the MBA contract. And I assume, whenever that contract will be extended, there will be another one-off payment.

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [31]

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[Interpreted] Well, there are several components to this contract. And there is one component that relates to an investment contribution, and that component or sum has to be paid every 5 years no matter whether it's the MBA contract or it's about roaming. This is a payment for the expansion of the network and the new technologies, and that has to be paid in regular intervals. And it is also part and parcel of our calculation, by the way.

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [32]

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[Interpreted] One more question regarding the price review. Can you explain what Telefónica says about that? You have mentioned that the data volume is growing, and the costs are growing, but the data volume is also growing at Telefónica. Is that a counterargument? And then the second question, you have mentioned several reviews are -- or will follow-up the first review. Now let's come back to the data usage argument. Will that increase the likeliness for 2018, '19, that the reviews will end positively for you because the data volumes also grew significantly in that period of time?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [33]

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[Interpreted] No, I have to be really careful in choosing my words. First of all, I can't confirm whether we speak about Telefónica or not. And of course, I also know the argument of the other side. I read all the briefs, even though they may be almost 500 pages long. But I don't want to reveal what they say today. You need to ask the other side. I don't try to give you the line of reasoning here. I don't want to even try it, so we'll have a call and everything will written -- be written down. And if I reveal any information I should not have revealed, then lawyers will be at my doorstep tomorrow. This is why I have to be very careful.

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Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [34]

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[Interpreted] Well, you said more reviews, more opportunities?

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Ralph Dommermuth, 1&1 Drillisch AG - CEO & Chairman of Management Board [35]

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[Interpreted] Yes, that's true. Well, the price review is something we can trigger twice a year. If we want, we can ask for a price review. First of all, there are proceedings. And if these arbitration proceedings are not completed within 1 month, then an expert will be called in. This is what the contract says. And obviously, each and every new price review gives us the opportunity to have the prices reviewed no matter what the result is. Now what is that all about? We are competitive in the long term. This is a long-term contract. And initially, you don't know how data volumes will increase and how prices will develop. You need to have a mechanism in such a situation that allows for adaptations. And this is the mechanism that we have chosen, negotiations every six months. And if you can't agree, the expert has the final say. And the objective is to be able to have offers for the customers in line with the market. And this is also the foundation of the work of the expert. Well, you can't have a long-term agreement, if you have the prices cast in stone the very first day, the volumes cast in stone, that would be very problematic. That's a mechanism that is in place. Well the question is, can it be accepted by the other side? Well, first of all, we want to be able to offer a good plan. And then the other question is, is it acceptable for the other side to offer that price? Or would they make losses then? Well, you can't obviously expect that your partner makes losses. And we want to have packages that are in line with the market situation, and it must be acceptable to the other side. And this is the bandwidth within which the expert will take his or her decision. I can't tell you how everything will turn out at the end of the day. We believe it's time for a price decrease, and if there is a price decrease, then another price hike will be excluded automatically. This is our point of view. Our figures reflect the canceling of the price increase. We haven't factored in a price reduction. Now if the price goes down by EUR 0.01, then the price increase has to be skipped. If the result is the adequate price is EUR 0.01 below the previous price, then there will not be a price increase, and this is why our guidance only includes the price increase cancellation. We haven't factored in the decreasing price. Well, this is our opinion, and the expert has the final say. And as usual, in life, there are other expert opinions, other general opinions, and this is why the appointed expert needs to come up with this decision.

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Oliver Keil, 1&1 Drillisch AG - Head of IR [36]

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[Interpreted] I think this should now take us to the last question, if we have any more questions. If you don't have any more questions, then Investor Relations and the CFO will be available at your disposal. And we'll meet again at the conferences at the roadshows or unless we have a question or 2, which is fine. Otherwise, I'd like to end the event so that our colleagues from United Internet can begin their own conference at 2:30. Okay. So in that case then, thank you very much for your interest and all the best. And talk to you soon.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]