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Edited Transcript of UTDI.DE earnings conference call or presentation 15-Aug-19 12:30pm GMT

Half Year 2019 United Internet AG Earnings Call

Montabaur Aug 23, 2019 (Thomson StreetEvents) -- Edited Transcript of United Internet AG earnings conference call or presentation Thursday, August 15, 2019 at 12:30:00pm GMT

TEXT version of Transcript


Corporate Participants


* Frank Krause

United Internet AG - CFO & Member of the Management Board

* Ralph Dommermuth

United Internet AG - Founder, CEO & Member of the Management Board


Conference Call Participants


* 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

* Martin Michael Heinz Hammerschmidt

Jefferies LLC, Research Division - Equity Analyst

* Usman Ghazi

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst




Operator [1]


[Interpreted] Ladies and gentlemen, welcome. It's a pleasure for me to welcome you on behalf of United Internet AG to our analyst conference for the first 6 months. And I would also like to welcome everybody who is listening to the proceedings via the phone.

First of all, Ralph Dommermuth will walk you through the development of the first 6 months, and he will also shine a light on the outlook for the second half of the year. And then Frank Krause will discuss the figures in more detail with you. As usual, after the presentation, you will have the opportunity to ask your questions and we will try and answer them here.

This much about our agenda. Mr. Dommermuth, the floor is yours.


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [2]


[Interpreted] Ladies and gentlemen, I believe most of you have been with us for the previous event, and this is why I will skip the Access topic pretty quickly. Today, I want to shine a light on the corporate development, and I will also discuss the most important things from the first 6 months before Mr. Krause will cover the details.

United Internet, that's the red box in the center. Here, you will find our assets, our team, our sales strength, our operational excellence. We have 61 million accounts in 12 countries right now. We have 10 data centers and we have 90,000 servers in Europe and the U.S. This is our infrastructure for the Access business.

Well, we've got the Access and the Application business for United Internet. And when we break it further down to the consumer business and to the corporate business, these are our brands. And many of you will be familiar with the brands for the Consumer Access business, our main brand is 1&1. And then there are all the brands that we acquired when we acquired Drillisch, the discount brands. And the B2B business is called 1&1 Versatel. In the application business on the consumer side. The main brand is a GMX, WEB. DE and mail.com.

Everything is marketed through United Internet Media. And for our B2B customers, we've got 1&1 IONOS, and we will rebrand the brand step by step. It was called 1&1 Internet. It is now branded 1&1 IONOS, and in the future, it will be only IONOS. And you will also find the many brands that we have acquired over the year in Germany and abroad. We have some partners here listed. We have, in the first box, partners with the investment stake. And then we also have our listed investments on that slide.

I have briefly introduced you to our Consumer Access, the market position in the landline business. Our network quality is good. We have the VDSL/Vectoring through the Versatel network. We had a fiberglass connections via city carriers to the household and then our old "business," ADSL speed up to 16 mbps. And we don't produce these products our own.

The mobile side. We have advanced services that we buy from Vodafone and Telefónica. We've got several brands here as well. 1&1 is our main brand. We have co-brands, GMX and WEB. DE. These are our portal brands. And then we have our discount brands from the Drillisch merger.

Customer Access 380,000 new contracts in the first half of 2019 on the mobile internet side. Broadband connections, no changes here, EUR 4.3 million.

Revenues up 0.4%. The service revenues went up by 3.4%, while the hardware revenues went down by 10.8%. The hardware business is a low-margin business, and this is why we don't have any impact on the EBITDA here. We speak about subsidized handsets here and the money comes back with a period of 24 months due to higher monthly payments.

Now whenever plans expire, our customers opt for 4G plans and the 4G plans cost less. The first 12 months, they are discounted. That leads to lower earnings. Initially, we expected a figure of 1% of the sales growth and now it's 1.3%. Now without that reduction in earnings, if the existing customers remained in the tariff or if they continued the tariffs in a similar basis, then the figure was high. So it's missing turnover, but this is not detrimental to the EBITDA because we had a capacity model with Telefónica for our 4G services. That's less costly than what we have to pay to Vodafone.

EBITDA up 0.1%, positive effect from the IFRS 16 accounting. Then we have still minus EUR 2.3 million from the Drillisch integration, EUR 37.1 million preliminary higher costs after the adjustment mechanism expired at the end of 2018. And we are just about to wait for the verdict of an expert, and he will come up with his opinion regarding the prices in 2017. And we believe that the prices should be lower in that advanced service contract. And this is why a price increase will not happen if that adjustment mechanism expires. And even though we have agreed on that scheme to last until 2020.

If you take a look at the like-for-like situation, EBITDA went up by 8.5%. 8.5%, that is a good value for the operating activities, and this is also within the bandwidth that we published in our guidance.

Business Access. 1&1 Versatel, that's the fiber optic network prospect-related business, plug-and-play ready-to-use packages for medium-sized companies. We're represented in 250 cities, 16,315 directly connected locations. We connect companies and authorities straight to the fiberglass network, while private households are not covered by 1&1 Versatel. Revenues in that segment, up 5.4%, EUR 234.3 million in the first half of the year. This is a nice development from the operating business. On the B2B and the wholesale business, well, we are just doing 5.4% better than in the previous year here.

As a consequence, the EBITDA also went up EUR 70.2 million. That is an increase of EUR 44.5 million, a EUR 30.5 million thereof result from the changeover to IFRS 16. That means we have an additional operative result of EUR 40 million which is not 173% at the end of the day, but 54.5%. We will continue to see a nice growth in the future here both on the revenues and earnings side.

The Applications business, our Consumer Applications. We further developed our e-mail services. We make them into central command centers for identity management, offering further services to our customers and solutions. We have a very good market position here in Germany. Germany is our main market. Here we've got 31.4 million account and a market share of more than 50% regarding private e-mails. Just take a look at the various markets in which we operate. We have a leading position for e-mail and private cloud stores. Germany, #3. Content reach, #1. And when it really comes to DE, mail and eIDAS, legal secure communication, we are also the market leader in Germany.

We have 39.21 million accounts on this planet, 40,000 less than at the beginning of the year. This is a seasonal effect which we counter every year. And if you compare the figures with the 30th of June 2018, then you will see that the figure went up by 1.2 million account if you compare the 30th of June with the 30th of June.

Now the 40,000 less in the first half, but we have a growth on the pay account side, 10,000 additional customers while we have lost 50,000 on the free account side.

Now if our customers use GMX or WEB. DE on the road, they shouldn't use the app that comes with the phone, but they rather should use our solutions because here we can show them our advertisements. And 26.3 million do that and 18.7 million people use our cloud storage facilities.

Revenues, EUR 123.8 million minus 11.7%. Two effects here. We have reduced advertising space. Last year in April, we started to reduce the advertising space because we rather want to focus on data-driven business models. In the previous year, that had an effect of minus EUR 4.7 million. And we started last year in April and now we've had it in the entire half of the year. And this is why we have a minus EUR 11.2 million this time round. And we have lost EUR 8.5 million revenues from a lower-margin third-party inventory business.

This is a business that is doing worse than in the previous year. But this is not particularly relevant when it comes to earnings. If you adjust it, we have a decrease of 1% here. Declining revenues are never good. We are in a transformation phase. We are headed toward data-driven business models, and we will sell our first products for advertising companies that allow for better targeting soon at the trade show or [Nesco]. And we will see a comparable growth in revenues for the second half of 2019.

Similar situation for the EBITDA. The increase here due to the reduction of advertising space and we have a slightly positive result that can be attributed to the changeover to IFRS 16.

EBITDA went down minus 7.6%. And in the second half of the year, we'll see another growth because we will pick up some speed now as that transformation goes on, Business Applications from the web hoster to an eBusiness solution provider.

We are the leading supplier in Europe here, operating in 12 countries. In some countries, we're #1, while in others we are #2. Next to Europe, we are also present in Canada, the U.S. and Mexico. Reasonable growth here, 50,000 new customers, 8.11 million customer contract altogether, both at home and abroad. And that also has an effect on the revenues, up 5.7% to EUR 443.3 million. That is due to a customer growth and due to app and cross-selling. We further develop our customers and we sell more and more applications to them that can be used online.

EBITDA, nice development here. At first glance, you see the minus sign, minus 0.4%. Included here are minus the EUR 26.8 million for increased marketing. We used that money for rebranding and for a general increase of the marketing budget. EUR 6.5 million plus can be attributed to IFRS 16. And if you adjust everything, if you say let's assume marketing is the same as last year and we do not consider IFRS 16, then the EBITDA would have grown by 8.7%.

Warburg Pincus is our partner here in this business, and our objective is to list that business independently. We rebrand our efforts here. We generate growth. We want to boost the growth here in order to allow for that IPO.

Now this is an overview of the overall company. 440,000 new contracts in the first half of the year. This is a very good figure and revenues only up 1.1%. I gave you the recent EBITDA, 11.4%. But we have effects from IFRS 16. Otherwise, the result would have been 3.6%; EBIT up 4.5%; and the earnings per share went down by 7.7% and impairments took place for the Tele Columbus investment. And if you subtract that, then the earnings per share went up by 11%. 11% up per share. I think this is a good result.

Now if you take a look at the earnings per share before goodwill depreciation and we also added some companies to our group that we write-off over the years, then the growth is 7.8%.

Now our focal points for the first half of the year. That's a bit boring, actually. We have actually on the agenda exactly what we have announced. Consumer Access, first half of the year. Next to the normal business operation, we have acquired the 5G frequencies. Regarding Business Access, we have continued to expand our fiber optic network. Regarding Consumer Applications, we transform our business to a data-driven business. We continued these efforts. And in September, we will review the results. And on the Business Application side, we rebranded our efforts here as an intermediate step and then there will be a last step coming up. The name will be IONOS, and that company will then have an independent appearance. So it's no longer linked to 1&1. And then the company will act independently, and that will differentiate those 2 companies for the investors. All in all, everything is working out as planned.

Now the outlook. For the overall year, we expect revenue without hardware, up 3% compared to the previous year. Initially, our expectation was 4%, including hardware growth of 2%. You know the reasons for that. 1&1 Drillisch is suffering from poor hardware business, but this has no effect on EBITDA, and we have a higher demand in 4G plans than expected. No effect on the EBITDA, but it has got an effect on revenues. And this is why we have to post a smaller growth figure here.

EBITDA, we stick to what we have said initially, no need for adjustments. Effects from 1&1 Drillisch, EUR 10 million from the TAL charges and EUR 5 million for the realization of the 5G investments, preparation and planning costs incurred here.

Earlier on we've heard a question. Couldn't you foresee that increase in TAL charges? It is actually right. In April, the authorities have published a consultation draft, but the decision took at the end of June. And in between, there was a consultation period with the EU and the market participants. And we did not expect a price increase because the TAL prices were always lowered. And we also fought for lower prices. In April, we didn't expect the price increase to be greenlighted. Now the price hike is 11%, and that cost us EUR 10 million in 6 months. And this is the price hike for an old infrastructure, so to speak.

And this is development we did not foresee. We -- we're not prepared for that. Now if you factor that in, our EBITDA guidance goes down to 7% according to the old accounting approach. According to the new one, also 1% less. We speak about 11% instead of 12%. This is the plan for 2019. This is what we will do in the remaining year.

Now I believe it's time for Mr. Krause to take over and he will shine a light on the details behind the figures. Thank you.


Frank Krause, United Internet AG - CFO & Member of the Management Board [3]


[Interpreted] Thank you very much, Mr. Dommermuth. Welcome on my part as well. I would like to tell you about our well, apart from -- go into detail on the financial key figures, and let's first take a look at our balance sheet and start with the asset side. I would like to focus on the main changes of the past 6 years in 2019, namely as per the 1st of January 2019, when we started on the balance sheet of IFRS 16 which is the middle column.

So property, plant and equipment, there's a reduction here because of deferments and write-offs from the purchase price allocation, PPA, which is above the purchase price, which is shown here. Company [guides] have unchanged and plant and equipment, there is the change in Tele Columbus and Rocket.

The intangible assets, and here, you can see the use of hardware. And then goodwill and -- is also at the level of the end of the year 2018.

Now inventories and income tax assets and liabilities have slightly increased. Now this brings me to the liabilities side where we start with equity. An increase is due to the corporate result and the reevaluation of Rocket as per the 30th of June. Net indebtedness of 13.75 is -- represents leverage of [1.72x] the EBITDA of -- in accordance with IFRS 15, as part of 30th of June which is a nice indebtedness, by the way.

Liabilities due to trade accounts payable declined after business-related increase in the second half of 2018, which CapEx intensity has increased and then it declined. The reduction in accrued taxes and deferred tax liabilities is mostly due to the reduction of deferred taxes in consult and in conjunction with the PPA amortization. And the other accrued liabilities, there are hardly any changes at all.

Let me also show you the core figures for the group. Customer contracts, which incur costs. So you can see the development over the past 12 months. As you can see, we've seen increase of some 1.19 million contracts, which is nice, out of which 250,000 contracts come from the acquisition of the World4You, the former hosting provider in Austria that we acquired in the second half of 2018. So we've got some 940 contracts which stem from organic growth. With regard to advertising-financed free accounts, you see an increase of some 900,000 in the past 12 months. Revenues at corporate group level have increased by 1.1%. Reasons were already explained by Mr. Dommermuth.

Both EBITDA and EPS have increased by some 11%. And if you adjust the EBITDA by the effects from IFRS 16, these are 3.6%, which is roughly the level that we also see with the EBIT. And it might also be interesting to point out the free cash flow which shows a very nice development, namely EUR 190.7 million for the first half of the year. Here, well, you've got some IFRS 15 effects visible here. So if you adjust for those, the -- we end up at EUR 145 million, and compared to the EUR 85 million of last year, means that we are on the right track, and we're absolutely in line with what I said at the beginning of the year, and we are where we want to get at the end. And I'm very satisfied with this. So thank you very much for that.

And now we are very happy to answer any questions you might have.


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [4]


[Interpreted] Right. These were our presentations. Now let's start with the question-and-answer session immediately. (Operator Instructions) Thank you.


Questions and Answers


Martin Michael Heinz Hammerschmidt, Jefferies LLC, Research Division - Equity Analyst [1]


[Interpreted] Martin Hammerschmidt of Jefferies. I've got 2 questions. First of all, you've spoken about progress in the IONOS IPO. Can you give us a timeline? What's missing in order to be able to have the IPO for this business? And secondly, the reduction in dividends has been explained or has been connected to the network expansion. Now you are talking about a share buyback. So put it bluntly do you -- don't you need the money for expanding your network anymore? Or how do you explain this?


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [2]


[Interpreted] Well, as regards the IONOS timeline, I cannot tell you anything concrete yet. We're planning it, but we want to bring the company into such a position that it can be -- that it will be able to prevail on its own. The work is progressing. It will happen, but it won't happen overnight. So we don't have any concrete time yet. Now Warburg Pincus has an investment horizon of some few years. And I think since they've -- I think they joined in 2017, so they've been with us for 2.5 years now. So it won't take forever, but it's not right around the corner.


Frank Krause, United Internet AG - CFO & Member of the Management Board [3]


[Interpreted] Now as regards to network expansion, when we took the dividend or the decision to reduce the dividend, we didn't know how the auction would end. The auction costs only were made available to -- or we were informed of the auction cost afterwards. If we had known that the auction would end at this price, we probably -- or we might perhaps not have reduced the dividend. It was a broad decision that we took, and we wanted to enter the auction with the best possible firepower which is why we cut the dividend. I cannot tell you when the next dividend will be paid and what the dividend will be because in order to do so, we'll have to find out with whom we can cooperate, what we have to do ourselves. We have to develop a timeline. We have to look at the equipment and how we can finance the equipment. And once we found the right equilibrium, then of course, we will be willing to pay dividends once more.

But we have to put this on a broad basis, because our indebtedness cannot increase too much, and we cannot come into a situation where we don't have any money with. I think right now, our indebtedness is quite good. And this is important to us. We want to keep indebtedness at a scale which is -- which makes sense and which we can live with if interest rates don't start with a 0 anymore. So we will learn more about this in the next few months and then we should know more. And we should -- we will be able to communicate more.

Any other questions?


Martin Jungfleisch, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [4]


[Interpreted] Martin Jungfleisch of Kepler Cheuvreux. A few weeks ago, you purchased some additional shares of 1&1 Drillisch. Can you explain the reason for this? And can you perhaps also say why or whether further share purchases, company share purchases are planned?


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [5]


[Interpreted] Well, with Drillisch, we increased our stake to some -- a bit more than 75%. We wanted that. We've been wanting to do that for a while. When we did the merger with Drillisch, we assumed that there would be a number of shares to be -- which have been returned from free shareholders. But that didn't really happen a lot. And we said, at some point, we're going to fill it up to 75% and the Drillisch share currently is fairly low. And so we saw an opportunity to touch the larger -- the fairly large package of shares. And thus, we now have come to 75.1% or something. So that was the reason. We've always wanted to have a 75% stake.

And as to your question as do you plan other purchases, after today, I need to say, no, we're not planning any. But I would never say never. So we want to a certain free float for Drillisch as well. But you have to look at what -- how to share -- what the development of the share is going to look like. And if you had a reevaluation tomorrow, then things might change. But today, we don't have any concrete plans of purchasing any other further shares of 1&1 Drillisch.


Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [6]


[Interpreted] Christian Fangmann, HSBC. I've got a few questions on application business. GoDaddy has taken off its net guidance, net ad guidance. Do you think that this is because the market is growing less rapidly or is this a true opportunity for you to move in? So is this a consequence of your success, because your results are slightly better? Is this only in Germany with regard to growth or do you also see this in Germany -- outside of Germany as well where GoDaddy is one of the main competitors and -- but you might be more successful than you used to be?

And a question for Krause as the CFO with regard to the IFRS 16 effects. On paper, the B2B EBITDA was a miss, but this is due to the fact that in QA, there only was EUR 1 million of IFRS 16 positive effect. And while in Q2 it was EUR 7 million. In other words, if you'd had the same result in Q2 than in QA, then you'd have a positive result. So what can we expect for the second half? Because a delta of EUR 4 million, EUR 5 million is not irrelevant. So a little guidance on this effect, the IFRS 16 effect, would be very much appreciated.


Frank Krause, United Internet AG - CFO & Member of the Management Board [7]


[Interpreted] Okay. So your question -- first question was the GoDaddy net ad guidance. I cannot tell you anything about this. Honestly, I can't. I really -- might be -- might sound a little silly, but I really -- I had other things to occupy myself with. I haven't followed. Our business is continuing as it should, as we planned, so I don't see any peaks, any changes where we say, okay, oh, things are suddenly going better or worse. Everything in this business is going on as planned. I cannot give you any comment on this. Honestly, not. And IFRS 16, well, we're talking about business applications. So there were one-off effects. And if you look at the first half of the year, and this is a number that you can use for your calculations.


Fathima-Nizla Naizer, Deutsche Bank AG, Research Division - Research Analyst [8]


Nizla from Deutsche Bank. My first question is on Business Applications. You've done several quarters of rebranding, are you happy with the progress the business is making? And when you look at second half, how much more do you have to do in terms of rebranding? And what sort of growth do you expect going into the year? That would be great. The second question is on the Q2 reported EBITDA. Could you just remind us if there are any positive one-offs in that -- the Q2 reported number of EUR 330 million on top of the negatives that you very clearly explained? That would be great.


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [9]


[Interpreted] Okay. So let's start with your second question, namely, there are some instances, okay, in the second half and the second -- first half and the second quarter, you might have read the text that we sold our shares of Deutsche mines. We had hinted at this or this already started last year, there was an option which we could take in 2019. We evaluated this option in the 2018 statement. And so this was a deal. Axel Springer was also involved of when the right time happens. So in the second quarter of the first half, we decided to divest our shares. And we were very transparent about this. This is not in any segment. This is contained in corporate. And this is a subject that was well-known last year so it was part of the guidance. And if you look at the consensus, and, I think, well, the consensus for the first half was EUR 611 million, and we came out with EUR 630 (sic) [EUR 630 million.] And the delta is exactly the sale, the divestment of Deutsche mines. So yes, so with -- if we adjust for this one-off sale, then we are on the consensus level.

And your second question was on the rebranding? Well, we've -- 1&1 Internet was rebranded into 1&1 IONOS. And then the next step is going to remove the 1&1 and only call it IONOS. And that is going to happen in the next few months. And then this will be done and that's our plan. And so we're making -- we're taking steps. We're making progress. It doesn't happen overnight. With all those projects where we have integration on the one hand and where we've purchased companies on the one hand and where we've -- we're doing the rebranding on the other hand and we still are -- also have to look at that we want to increase our growth and speed up our growth. So it's not taking -- it's not happening overnight. But on the whole, we're quite satisfied with the progress.


Heike Pauls, Commerzbank AG, Research Division - Equity Analyst [10]


[Interpreted] Heike Pauls, Commerzbank. Two questions. Mr. Dommermuth, you've mentioned earlier that you think that landlines or the fixed line business, which is based on Deutsche Telekom's infrastructure, will become more difficult. Does that have any impact on Versatel's fiber to the home or fixed line strategy? And secondly, your stake in Tele Columbus is currently evaluating a divestment of the network. What is your stance on this at the moment?


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [11]


[Interpreted] Well, Ms. Pauls, thank you very much for the questions. I spoke about Telekom's infrastructure where -- in comparison with Vodafone's fixed line cable structure which is expanded to gigabit infrastructure, and gigabit and cable is not a gigabit in fiberglass. And it doesn't guarantee the speed because it's not synchronous. But it doesn't have any impact on our investment strategies at 1&1 Versatel because there, we only hook up companies and municipalities are all -- well, city authorities and whether it's 400 mbit or 1 gigabit, if -- at a pincher. And as a peak, if nobody else uses it in that street, doesn't make any difference for a company. Either they are fine with a lower bandwidth or they require more bandwidth and need to buy more bandwidth and then fiberglass is the option and is the go-to solution, not a slightly more tuned cable solution.

And since we're more involved in B2B and because cable hookups don't happen in the industrial zones, but they usually have those in the residential areas, so there you have -- well, you don't have a -- you don't have 100% of coverage and competition between cabling, fiberglass. Your other question was about Tele Columbus and the strategy in the selling. Mr. Krause, perhaps you want to say something.


Frank Krause, United Internet AG - CFO & Member of the Management Board [12]


[Interpreted] Yes. Let me just go into a bit more detail with Tele Columbus. There are a number of puzzle blocks, pieces that came together. It all started with the rebranding, when they called it PŸUR. It wasn't much of a rebranding. It was a renaming that they did. And if you -- well, if you look at their -- something that they should have discussed at the AGM and with their clients. And then we saw a bad performance in the first quarter -- that was underscored in the first quarter. If you look at this, the leverage increased from 6.0 to 6.24x. And at the end of the day, there was an after leakage, there was an ad hoc warning that the company was dealing with dividing the companies [with staff crew and the net crew] when there is having discussions with infrastructure funds.

And since the -- an entire range of infrastructure fund was involved, we heard about it, there were rumors in the market. And then people started saying, well, we can't shake the feeling that at the end of the day, they’re having discussions -- or will be agreed on with United Internet, the biggest shareholder, there will be hosting agreement, which makes sense from a point of view of the infrastructure funds. Because if you do this, you have to make use of your network. So the intentions might be -- the idea might be correct. But nobody talked to us about it.

And so after some other shareholders talked to us and say, okay, we have to be more active in this and we believe that -- well, if you -- the Supervisory Board needs to be -- is facing reelections and in new elections. And so we need to -- we have to help the management due to the -- or by means of the Supervisory Board makeup. So we made our own suggestion, gave our own suggestion of 6 people for the Supervisory Board who have the right qualifications and were able to cover all the pain points of the last 18, 20, 22 months and were able to address these points. So whether it's consolidation of cable networks, customer satisfaction, NPS, governance, financial reporting, sales and marketing.

So as you might have seen, Tele Columbus then decided to -- well, they had planned the AGM at -- on the 26th -- 21st of June. And they postponed it to the 29th of August. And so we discussed this with their CEO, André Krause to talk about the situation, look at the situation. And we had a very highly constructive discussion where we were able to agree on some points. And so we utterly agree on the subject of reducing the Supervisory Board from 8 people to 6 people, having the Supervisory Board Chairman -- give that Chairman 2 votes instead of just 1.

But we weren't able to agree on whether we've already seen a turnaround at the company, whether the company is moving in the right direction now. And after that talk, after that discussion, we had a press conference and we suggested or we proposed having -- publishing the Q2 figures before the 29th of August so that the shareholders could have -- get an impression of the company before the AGM. Because we found it would be wrong to only publish the figures on the 29th of August when the AGM was to be held. So this happened too late because it happened after the point whether you'd have a separate list and then different suggestions. So the initial situation hasn't changed, which is why the AGM invitation has 2 suggestions. And we -- well, we've -- we were discussing this with lots of partners and stakeholders from the telecommunications industry and people tend to agree with us.


Usman Ghazi, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [13]


Usman Ghazi from Berenberg. Please, first question was on the question -- on the original question on the increase in stake in Drillisch by United Internet. And you mentioned that you always wanted to increase the stake to 75%. I'm just wondering what does the 75% allow you to do that the 73% did not. As in, why were you so keen on increasing the stake to 75%? And then the second question I had was just on the IONOS IPO. Just directionally, it seems from your comments that 2020 is too early to be thinking about any kind of IPO transaction to be happening. Is that a correct interpretation of your comments?


Ralph Dommermuth, United Internet AG - Founder, CEO & Member of the Management Board [14]


[Interpreted] Well, yes, I do believe that 2020 is too early. Let me repeat it because it's -- I do believe that 2020 is too early indeed, yes. But I cannot promise this. I cannot guarantee it. But from what I see now, I would say that, yes, 2020 is a little too early. And as regards the 75%, why were you so keen? Well, we weren't so keen. It took 2 years from the summer of 2017 to 2019. And it just turned out that the opportunity came. The shares were available, we were offered the package and we said, well, we wanted to get the 75% at some point and then, well, we -- during the merger, we ended up at 73%. And we thought that more private shareholders would hand in their shares, and we didn't get over those 75% or up to those -- and said, okay, so let's do it that way.

We originally said we wanted it, so now we have the opportunity. So why not do it? Let's do it. And well, you know the advantages. We -- if we wanted to, which we're not planning at the moment, we could have a domination agreement. And if we wanted, which we don't at the moment, we could purchase other shares without having to disclose this, to make it public is the next threshold of 100%. But that was not our main motivation. But well, we weren't so keen, as you suggested. But if the share price hadn't come down this way and if we hadn't been offered the package, then we wouldn't have done it. So we didn't go out there, actively go out there and urgently and keen -- were keen to buy this package to get over the 75%. That was definitely not the case.

Any other questions? I see you kind of -- sorry, I don't see any other questions.

So if this is the case, then thank you very much for your interest. I would like to close the conference, and I'll be happy to have you down in the hall, out in the hall, for coffee and some informal talks. Thank you.

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