Interim Report on the 3rd quarter 2010...Monthly average revenue per user (ARPU) in € Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009 Contract customer (excluding no-frills) 23.8

Interim Report onthe 3rd quarter 2010

freenet AG · Hollerstraße 126 · 24782 Büdelsdorf

3interim report on the 3rd quarter 2010

1. To our shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.1 Key fi nancials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1.2 Letter to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1.3 The freenet share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2. Interim group management report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1 Overview of the business and operating performance in the freenet Group . . . 15

2.2 Risk report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.3 Opportunities and Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.4 Signifi cant events after the reporting date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.5 Transactions with related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

3. Condensed interim consolidated fi nancial statements . . . . . . . . . 23

3.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.2 Consolidated income statement and consolidated statement of comprehensive

income for the period from 1 January to 30 September 2010 . . . . . . . . . . . . . . . . . 26

3.3 Consolidated balance sheet as of 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4 Schedule of changes in equity for the period

from 1 January to 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

3.5 Consolidated statement of cash fl ows from 1 January to 30 September 2010 . . . 31

3.6 Selected explanatory notes in accordance with IAS 34 . . . . . . . . . . . . . . . . . . . . . . . 32

4. Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

4.1 Financial calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

4.2 Imprint, contact, publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

List of contents

From left to right:

Stephan Esch, Chief Technical Offi cer (CTO)

Christoph Vilanek, Chief Executive Offi cer (CEO)

Joachim Preisig, Chief Financial Offi cer (CFO)

1. To our shareholders

1. To our shareholders


1 A retrospective adjustment was made with regard to including the DSL distribution unit in the discontinued operation “DSL Business”.

2 This information relates to the overall Group (including discontinued operations).

3 Starting in Q4/2009, freenet has decided to present the key fi gure “net cash” as the balance of cash and cash equivalents and fi nancial liabilities.

The inclusion of the retirement benefi t obligations, which had a reducing eff ect, is no longer made. The previous year fi gures were adjusted accordingly.

1.1 Key fi nancials

Result in € million Q1—Q3/2010 Q1—Q3/2009adjusted¹

Q3/2010 Q2/2010 Q3/2009adjusted¹

Third-party revenue 2,491.2 2,709.5 846.9 838.2 929.8

Gross profi t 538.5 565.8 177.1 195.5 191.7

EBITDA 244.3 226.6 85.2 88.2 80.8

EBITDA recurring 268.9 272.2 95.7 95.0 98.8

EBIT 101.5 75.3 39.0 39.3 32.3

EBT 68.6 8.1 30.0 28.7 14.5

Group result from continued operations 72.5 4.7 28.6 28.9 –11.3

Group result from discontinued operations 0.4 7.4 0.0 –5.3 13.4

Group result 73.0 12.0 28.6 23.6 2.1

Earnings per share (€) 0.57 0.09 0.22 0.19 0.02

Balance Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Balance sheet total in € million 2,455.8 2,982.1 2,455.8 2,539.6 2,982.1

Shareholders’ equity in € million 1,095.1 802.8 1,095.1 1,092.2 802.8

Equity ratio in % 44.6 26.9 44.6 43.0 26.9

Share Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Closing price XETRA (€) 8.63 9.33 8.63 8.36 9.33

Number of ordinary shares (in thousand) 128,061 128,061 128,061 128,061 128,061

Market capitalisation (in € thousand) 1,105,039 1,194,809 1,105,039 1,070,590 1,194,809

Employees Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Employees at the end of period 4,049 6,311 4,049 4,152 6,311

Finances and investments in € million Q1—Q3/2010 Q1—Q3/2009adjusted¹

Q3/2010 Q2/2010 Q3/2009adjusted¹

Cash fl ow from operating activities² 165.6 257.4 61.5 12.6 92.0

Depreciation and amortisation 142.7 151.3 46.2 48.9 48.5

Investments² 18.6 51.5 5.9 6.8 14.0

Net cash²,³ –677.8 –1,138.4 –677.8 –696.1 –1,138.4

Overview Group

8 interim report on the 3rd quarter 2010

Monthly average revenue per user (ARPU) in € Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Contract customer (excluding no-frills) 23.8 24.3 24.5 24.2 24.8

Prepaid customer 3.1 3.0 3.4 3.1 3.2

No-frills customer¹ 5.1 5.7 5.5 5.1 6.0

1. to our shareholders 2. interim group management report 3. condensed interim consolidated financial statements 4. further information

Overview Mobile Communications segment

Customer development in million Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Mobile Communications customers 15.84 17.62 15.84 16.53 17.62

Thereof contract customers (excluding no-frills customers) 6.37 7.12 6.37 6.60 7.12

Thereof prepaid customers 7.56 9.16 7.56 8.08 9.16

Thereof no-frills customers¹ 1.91 1.34 1.91 1.85 1.34

Gross new customers 2.91 3.00 1.00 0.91 1.09

Net change –1.73 –1.50 –0.69 –0.62 –0.33

Result in € million Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009

Revenue 2,425.9 2,601.6 827.2 815.9 897.3

Gross profi t 497.8 516.7 164.5 182.1 175.8

EBITDA 242.5 224.7 87.0 85.9 87.2

Non recurring items –21.5 –40.0 –8.7 –6.2 –14.0

EBITDA-adjusted/recurring 264.0 264.8 95.8 92.1 101.2

EBIT 109.0 86.2 43.8 40.2 42.9

Non recurring items –21.5 –40.0 –8.7 –6.2 –14.0

EBIT-adjusted/recurring 130.4 126.3 52.5 46.3 56.9

1 Starting in Q1/2010 including no-frills-prepaid.


Dear shareholders, business partners, customers and friends of freenet AG,

The third quarter of 2010 was a successful one for freenet AG in several respects. First, by

focusing on valuable contract customers we were able to stabilise and increase our average

revenue per user (ARPU) and results respectively. This involves declines in our total cus-

tomer numbers, as was announced, but safeguards our company’s long-term profi tability in

the interests of our shareholders. Second, the data revenue share in total revenue continues

to develop positively—proof of the lasting appeal of the mobile internet.

However, as a telecommunications company we continue to face immense challenges. The

enormous competitive pressure that has characterised our industry for some time now has

intensifi ed again in recent months. On the one hand the largely saturated traditional mobile

communications market is seeing further discount off erings and fl at rates, and on the other

hand the sector of mobile data traffi c/mobile internet is increasingly aff ected as well.

During the quarter under review, competitors like United Internet AG and Drillisch AG pur-

sued an aggressive pricing policy to address the valuable target group of heavy users as

well as the low-range segment of occasional users. As a result, there is still a risk of con-

tinued price erosion and further pressure on ARPU, even in the attractive growth segment

of mobile internet.

We, employees and management of freenet AG, meet the challenges of this competitive

environment by systematically implementing the strategic agenda adopted at the end of

2008. Its key elements include:

■ expanding our range of tariff s and products, especially for mobile internet, but also in

the traditional mobile communications segments

■ focusing on valuable, profi table customer relationships with new and existing cus-

tomers

■ continually improving our internal processes with a view to “operational excellence”,

and not least

■ the fi nal stages of integration of the various acquisitions of recent years within the

Group, with the goal of unifying our two remaining IT landscapes into a single system.

As part of our focus on “operational excellence”, in the third quarter we expanded our

“Retail+” project for the enhancement of the sales performance and the customer service

in our mobilcom-debitel shops to a larger number of shops, as planned. Its key elements are

the increase in customer traffi c, sales and cross-selling, the addition of repair, mobile phone

insurance and used mobile phone buyback services among others, the expansion of the

product range and of collaborations as well as energy marketing.

At the same time, freenet AG further expanded and upgraded its tariff portfolio with new

data and voice fl at rates during the third quarter 2010. At the beginning of the fourth

quarter 2010 the “free” family of rates was launched, off ering customers numerous options

1.2 Letter to shareholders


for compiling a customised mobile rate. We are the only telecommunications company in

Germany to off er a fl exible exchange between the D-network, O₂ and E-Plus under the

mobilcom-debitel brand, thereby fulfi lling a growing basic need of today’s customers. The

launch of our new “free” tariff family is being promoted with a specifi cally developed motto

campaign under the slogan “Deutschland wählt Freiheit” (Germany chooses freedom)

with a massive nationwide advertising exposure. The campaign includes—among others—

a national TV campaign from 1 October 2010, ad bookings in high-circulation print media

such as “BILD” and “Bild am Sonntag”, and a simultaneous national outdoor advertising

campaign for the introduction of the new tariff s.

Moreover, from November 2010 we will market the Apple iPhone in cooperation with the

network operators Vodafone and O₂ in addition to the current cooperation with Deutsche

Telekom.

We will continue to pursue our successful strategy in the months and quarters ahead with

the expertise and commitment that have characterised the development of freenet AG for

many years, and with the experience of a well-rehearsed management team. On 1 October

2010 Joachim Preisig, the former Chief Operations & Integration Offi cer took over the posi-

tion of Chief Financial Offi cer (CFO) from Axel Krieger. Mr Preisig has years of experience

as a managing director at the network operators T-Mobile Germany and O₂, and as CFO at

debitel AG.

We would like to thank Axel Krieger, who has been with us since the start, for his circum-

spect work and commitment. He has contributed to the company’s successful development

over more than 10 years. We wish him all the best in his future endeavours, both personally

and professionally.


Christoph Vilanek Joachim Preisig Stephan Esch

(CEO) (CFO) (CTO)


Performance of the freenet share over the past twelve months

(indexed; 100 = Xetra closing price on 30 September 2009)

German stock market

The German stock market recovered from the price declines of the second quarter and

showed a positive trend again during the third quarter 2010: Germany’s leading index, the

DAX, gained 4.4 percent during the period under review, closing at 6,229 points on 30 Sep-

tember 2010. During the same period, the MDAX gained 9.5 percent. The TecDAX—the

Deutsche Börse (German stock exchange) index for Germany’s 30 major technology stocks,

which includes freenet AG—improved its performance by 6.4 percent during the quarter

under review.

freenet share

Over the course of the third quarter 2010, the freenet share rose from 8.36 euros (30 June

2010) to 8.63 euros (30 September 2010). This brings its third-quarter performance to

5.6 percent, taking into account the dividend of 0.20 euro per share paid out on 7 July 2010.

During the period under review, the freenet share had its lowest closing price on 20 July

2010 at 7.54 euros, and reached its peak of 8.63 euros on 30 September 2010.

In all, 39.7 million freenet shares were traded via the XETRA system during the quarter,

vs. 46.6 million in Q3/2009. Average daily trading volume during the quarter under review

was 602.2 thousand shares, as compared with 921.0 thousand shares in Q2/2010 and

706.7 thousand shares in Q3/2009.

1.3 The freenet share

Oct. 09 Nov. 09 Dec. 09 Jan. 10 Feb. 10 March 10 April 10 May 10 June 10 July 10 Aug. 10 Sept. 10

140

120

100

80

60

40

20

0

freenet AG

TecDAX


Dividend

On 6 July 2010, the freenet AG Annual General Meeting approved the payment of a divi-

dend for the fi nancial year 2009 in the amount of 0.20 euro per share. The dividend was

paid out on 7 July 2010.

Shareholder structure

The share capital of freenet AG consists of 128,061,016 registered no-par shares, each with a

current pro rata share in the registered share capital of 1.00 euro per share.

The shareholder structure has not changed since the beginning of the quarter, and was

as follows on the reporting date (30 September 2010):

Further information on the freenet share is available at:

http://www.freenet.ag/investor/share.html


United Internet AG/

Drillisch AG/

Mr. Ralph

Dommermuth/

MSP Holding GmbH

16.57 %

Free fl oat

75.36 %

DWS Investment GmbH

5.06 %

Classic Fund Management

Aktiengesellschaft

3.01%

Source: freenet AG, 30 September 2010

The headquarters of freenet AG in Büdelsdorf.

2. Interim group management report

2. Interim group management report


Business performance in the freenet Group

Despite the planned and therefore expected decline in customer numbers, freenet AG

stabilised its revenue in the third quarter of 2010 at 846.9 million euros, on par with

the previous quarter’s level (838.2 million euros). EBITDA rose year-on-year to 85.2 mil-

lion euros (Q3/2009: 80.8 million euros) and the Group result increased signifi cantly to

28.6 million euros (Q3/2009: 2.1 million euros). The Group’s net debt was reduced by the

end of the third quarter to 677.8 million euros (Q3/2009: 1,138.4 million euros).

In its core business of mobile communications and mobile internet, freenet AG markets

mobile communications services for Germany’s four major network operators under its own

name and for its own account, along with its own products, primarily to private customers

(B2C). In the face of further intensifi ed competition with high dynamics in the price struc-

ture, freenet AG is focusing on valuable contract relationships in its new customer acquisi-

tion and customer management, in order to ensure the Group’s profi tability long-term.

By pursuing this strategy, the company managed to stabilise average monthly reve-

nues per user (ARPU) at 24.5 euros in the contract customer segment and 3.4 euros in the

prepaid segment. In the previous quarter the corresponding values were 24.2 euros and

3.1 euros, and in Q3/2009 they were 24.8 euros and 3.2 euros respectively. In the no-frills

segment (postpaid and prepaid) ARPU was 5.5 euros compared to 5.1 euros in Q2/2010 and

6.0 euros in Q3/2009.

Group revenue also stabilised despite the planned and expected decline in customer

numbers during the quarter under review from 16.5 million to 15.8 million customers at the

end of the third quarter of 2010 due to the implementation of the above-described business

strategy. Group third-party revenue amounted to 846.9 million euros in the third quarter,

after 838.2 million euros in the previous quarter and 929.8 million euros in Q3/2009. The

Mobile Communications segment contributed 827.2 million euros to total segment revenue,

or 97.7 percent. The remaining Other revenue was generated from the Portal, Narrowband

and B2B Services operations. Group third-party revenue for the fi rst nine months of 2010

came to 2.491 billion euros, after 2.710 billion euros in the same period last year.

The Group’s gross profit margin for the third quarter of 2010 was up slightly year-on-

year, from 20.6 percent to 20.9 percent. However, gross profit in the Group fell to 177.1 mil-

lion euros during the quarter under review, down from 191.7 million euros in Q3/2009,

chiefl y as a consequence of the year-on-year decline in revenue.

Nevertheless, the Group’s profitability improved, mainly due to the restructuring meas-

ures implemented in 2009. Group EBITDA increased 5.5 percent year-on-year to 85.2 mil-

lion euros in the third quarter of 2010. EBITDA in the Mobile Communications segment

remained about the same year-on-year at 87,0 million euros (Q3/2009: 87.2 million euros).

In the third quarter of 2010, restructuring-related one-off items in the amount of 10.5 mil-

lion euros for the Group and in the amount of 8.7 million euros for the Mobile Communica-

tions segment were incurred. Recurring Group EBITDA—adjusted for one-off items—rose

during the quarter to 95.7 million euros—a slight improvement over the previous quar-

ter’s 95.0 million euros. Thus, the level of the comparable quarter of the previous year of

2.1 Overview of the business and operating performance in the freenet Group



98.8 million euros was nearly reached. The cumulative recurring Group EBITDA for the fi rst

three quarters of 2010 amounts to 268.9 million euros after 272.2 million euros in the com-

parable period of 2009. The Mobile Communications segment contributed 264.0 million

euros to this, remaining stable compared to the level of the previous year of 264.8 million

euros.

Group EBIT was also increased compared to 2009, rising by 20.7 percent year-on-

year to 39.0 million euros in the third quarter 2010, and by 34.9 percent year-on-year to

101.5 million euros in the fi rst nine months of 2010. freenet again significantly improved its

net interest income to –8.9 million euros for the quarter ended. The further reduction of

debt was decisive for this, as was the expiry of the interest rate swaps as of 31 July 2010.

As a result, Group earnings before taxes (EBT) more than doubled year-on-year in the

third quarter of 2010 to 30.0 million euros (Q3/2009: 14.5 million euros). For the fi rst nine

months of the year EBT increased to 68.6 million euros, up from 8.1 million euros during the

same period in 2009.

The Group result also increased signifi cantly from 2.1 million euros in Q3/2009 to

28.6 million euros in the quarter just ended. For the fi rst three quarters of 2010, the Group

result totalled 73.0 million euros, an increase of 60.9 million euros over the previous year.

Cash fl ow from operating activities amounted to 61.5 million euros in the third quarter

of 2010, and for the fi rst nine months of 2010 totalled 165.6 million euros. Working capital

was reduced during the third quarter of 2010, mainly due to the systematic management

of hardware stocks. Nevertheless, working capital can be built up again in future if, for

example, smartphone sales fi gures continue to be a success. Despite a dividend payout of

25.6 million euros at the beginning of July 2010, the Group was able to further reduce its

net debt during the third quarter of 2010, to 677.8 million euros.

The equity ratio improved from 26.9 percent on 30 September 2009 to 44.6 percent as

of 30 September 2010.

At the same time the number of employees in the Group declined by 103 over the

course of the third quarter of 2010 to 4,049.

Operating performance

The price declines seen in the mobile communications market also in 2009, during the

course of which rates for certain products or product packages had fallen to half their

original price by early this summer in some cases, continued in the third quarter 2010.

This aff ects the traditional mobile communications sector, but also and increasingly the

fast-growing sector of mobile data traffi c and mobile internet.

As part of our focus on valuable, profi table contract relationships, freenet AG once

more shaped the competitive landscape in the third quarter, with service and customer-

oriented products off ered under the mobilcom-debitel brand. In the still fast-growing data

sector, the “Trendch@tter” rate was launched as an exclusive promotional off er in early July:

it off ers unlimited internet access on mobile phones for 9.95 euros per month, and calls to

all German networks for 15 cents per minute—with a mobile phone rental option for 10 or

20 euros a month for users who want a new smartphone.


2.1 overview of the business and operating performance in the freenet group

Also at the beginning of July, the fi rst daily fl at rate for the internet access on mobile

phones was introduced for new mobilcom-debitel customers: The “Internet Starter” delivers

full cost certainty with no minimum term or monthly subscription fee at a fi xed daily usage

price of 1.99 euros—as a pre-installed option for all voice rates and all four German mobile

networks. Customers are only charged if they actually use the mobile internet on a given

calendar day.

In mobile communications, freenet AG established a new tariff concept in early

October 2010: its new “free” rate, which allows customers to compile a customised mobile

rate from a variety of modules. It has no minimum charge and can be terminated at a

month’s notice. Anyone who also needs a modern smartphone pays an optional 10 or

20 euros a month and must sign a 24-month contract. Each month customers can choose

between the D-network, O₂ and E-Plus and adjust their rates to their actual calling pat-

terns. Calls to all German networks cost 19 cents/minute, a basic price that also applies to

text messages. Frequent users of calls and text messages can also select various voice fl at

rates and the “100 SMS Allnet” option, which can reduce their bill to as little as 9.95 euros

per month depending on the network selected. Mobile surfers can also choose from the

“Internet Starter” option at a fi xed daily usage price of 1.99 euros—as described above—or

the “T@ke-away Flat” rate for 9.95 euros per month.

As part of its enhanced customer focus, freenet AG had already marketed other mobile

phone fl at rates, incentives and concessions: for example, at the end of July 2010 the O₂ o

promotional rate with a cost cap of 40 euros per month for unlimited calls and text mes-

sages, with no monthly subscription fee, minimum contract period or minimum charge; or

in early August, a 75-euro “switching bonus” plus 25 euros as reimbursement for the cost of

number portability for all new mobilcom-debitel customers who opted for one of the adver-

tised tariff /handset combinations with a 24-month contract period; and fi nally, the free ver-

sion of “Mein Base” with a free ten-euro fl at rate option for a month if customers simulta-

neously signed up for a further ten-euro fl at rate option.

In the no-frills sector, callmobile GmbH & Co. KG signed a cooperation agreement with

Vodafone. Given the attractive terms with a per-minute rate of 9 cents including 10 free

minutes per month to any network, the “callmobile” brand soared to #1 in the “Stiftung

Warentest” ranking of 28 September 2010 right after its launch. According to calculations

by teltarif.de in August 2010, freenet AG’s discount sector regularly occupies top positions

with its freenet mobile, klarmobil and callmobile brands in the respective categories of

infrequent, normal and frequent callers.

Mobile portal activities, which are included in freenet AG’s strategic core business

in addition to mobile communications, were further expanded in the third quarter of the

current year, as the company aims to gain the best possible competitive position in the

growing market for mobile internet use.

After freenet AG’s great success with the free football app “Pocket WM 2010” in the

run-up to the World Cup, the freenet.de “Pocket Liga” was launched at the start of the

German football season in August. This new app for the iPhone, iPad and Android is also

free and includes a live ticker, a comprehensive overview of all the games, news, scorers

and league tables of the fi rst and second national league as well as the matches of the

German Football Association (DFB) Cup. At the same time also a new national league fore-



casting game started on freenet.de with numerous social network features, including a

direct link to Facebook for the fi rst time.

freeXmedia, the online marketer of the freenet Group, further helped to increase the

appeal of freenet’s mobile and stationary portals during the third quarter of 2010, too. With

“radsport-aktiv.de” and “radsport-news.com” the company also won two leading cycling

sites in Germany, as well as Motor Presse Stuttgart’s touring portal for outdoor enthusiasts,

“tourwerk.com”. With the “UrbanBIKING.de” and “AnglerNetz.de” portals, freeXmedia now

markets all of Motor Presse Stuttgart’s sites for fans of the outdoors, and thus off ers adver-

tisers market-leading reach in the ever-growing target group of outdoor enthusiasts.

Including the new cooperations, freeXmedia’s total reach is currently at more than

15.8 million unique users, or more than 31 percent.


2.2 Risk report

During the third quarter of 2010, there were no major changes to the risks described in

detail in the “Risk report” of the Annual Report 2009 and the half year report 2010.

The Annual Report 2009 and the half year report 2010 are available on the internet at

http://www.freenet.ag/investor/publications.html.

2.3 Opportunities and Forecast

2.4 Signifi cant events after the reporting date

Please refer to the Group management report 2009 published in mid-March 2010 for

details on the opportunities and forecast of the current fi nancial year. No appreciable

changes emerged during the fi rst nine months of 2010.

Therefore, the company confi rms the summary statement issued in the Group manage-

ment report 2009 regarding the business performance of the Group, and will continue its

strategy of focusing on the core business of mobile communications/mobile internet with

the Portal business, with the aim of securing and enhancing its long-term profi tability and

strong cash fl ow and continue paying down its debt.

Janus Capital Management LLC announced in October that its voting share in freenet AG

had exceeded the 3-percent-threshold and at that time was 3.09 percent.



2.5 Transactions with related parties

The following major transactions have taken place between the Group and related parties:

€’000s 9 months 2010

9 months 2009

Revenue attributable to services

Associated companies

KielNET GmbH Gesellschaft für Kommunikation, Kiel 1,119 1,246

Joint ventures

FunDorado GmbH, Hamburg 178 140

Companies with a major infl uence on freenet AG

1&1 Internet AG, Montabaur 7,465 468

8,762 1,854

Costs of purchased services


KielNET GmbH Gesellschaft für Kommunikation, Kiel 37 359

Joint ventures

NetCon Media s. r. o., Hlucin, Czech Republic 3 54


siXXup new Media GmbH, Pulheim 55 0

107 422

Interest expenses from vendor loan


Telco (Netherlands) Holding B. V., Hoofddorp, the Netherlands 181 5,627


As at 30 September 2010 the following major receivables due from and liabilities due to related

parties existed:

Additionally, the sale of freenet Breitband GmbH to 1&1 Internet AG constitutes the sale of

a fully consolidated company to an associated company. In the fi rst nine months of 2010,

this sale resulted in a profi t of 4,513 thousand euros.

All transaction prices were negotiated under commercial terms.

€’000s 30. 9. 2010 30. 9. 2009

Receivables from regular transactions



Joint ventures



1&1 Internet AG, Montabaur 234 436

394 610

Liabilities from regular transactions



Joint ventures


6 56

Debt from vendor loan


Telco (Netherlands) Holding B. V., Hoofddorp, the Netherlands 0 143,825



The headquarters of freenet AG in Büdelsdorf (interior view).

3. Condensed interim consolidated fi nancial statements

3. Condensed interim consolidated fi nancial statements

interim report on the 3rd quarter 2010 25

3.1 Overview

3.2 Consolidated income statement and consolidated statement of comprehensive

income for the period from 1 January to 30 September 2010 . . . . . . . . . . . . . . . . . . . . . 26

3.3 Consolidated balance sheet as of 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4 Schedule of changes in equity for the period

from 1 January to 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

3.5 Consolidated statement of cash fl ows from 1 January to 30 September 2010 . . . . . . 31

3.6 Selected explanatory notes in accordance with IAS 34 . . . . . . . . . . . . . . . . . . . . . . . . . . 32



3.2 Consolidated income statement and consolidatedstatement of comprehensive income for the period from 1 January to 30 September 2010

In €’000s Q1—Q3/2010

1. 1. 2010

—30. 9. 2010

Q1—Q3/2009

1. 1. 2009

—30. 9. 2009

adjusted

Q3/2010

1. 7. 2010

—30. 9. 2010

Q3/2009

1. 7. 2009

—30. 9. 2009

adjusted

Revenue 2,491,170 2,709,539 846,904 929,781

Other operating income 64,201 102,065 19,857 31,618

Other own work capitalised 7,361 7,195 2,653 2,458

Cost of materials –1,952,660 –2,143,785 –669,808 –738,058

Personnel expenses –121,573 –161,681 –40,563 –54,252

Depreciation and impairment write-downs on property, plant and equipment and intangible assets –142,739 –151,275 –46,241 –48,479

Other operating expenses –245,331 –287,824 –74,210 –91,227

Operating result 100,429 74,234 38,592 31,841

Share of results of associates 1,121 1,045 372 439

Interest receivable and similar income 16,562 6,708 2,764 3,826

Interest payable and similar expenses –49,462 –73,923 –11,700 –21,568

Result before taxes on income 68,650 8,064 30,028 14,538

Taxes on income 3,898 –3,394 –1,453 –25,821

Group result from continued operations 72,548 4,670 28,575 –11,283

Group result from discontinued operations 416 7,369 0 13,353

Group result 72,964 12,039 28,575 2,070

Group result attributable to shareholders of freenet AG 73,002 12,055 28,607 2,252

Group result attributable to minority interest –38 –16 –32 –182

Earnings per share (undiluted) in € 0.57 0.09 0.22 0.01

Earnings per share (diluted) in € 0.57 0.09 0.22 0.01

Earnings per share from continued operations (undiluted) in € 0.57 0.04 0.22 –0.08

Earnings per share from continued operations (diluted) in € 0.57 0.04 0.22 –0.08

Earnings per share from discontinued operations (undiluted) in € 0.00 0.05 0.00 0.09

Earnings per share from discontinued operations (diluted) in € 0.00 0.05 0.00 0.09

Weighted average of shares outstanding in thousand (undiluted) 128,061 128,061 128,061 128,061

Weighted average of shares outstanding in thousand (diluted) 128,061 128,061 128,061 128,061


In €’000s Q1—Q3/2010

1. 1. 2010

—30. 9. 2010

Q1—Q3/2009

1. 1. 2009

—30. 9. 2009

adjusted

Q3/2010

1. 7. 2010

—30. 9. 2010

Q3/2009

1. 7. 2009

—30. 9. 2009

adjusted

Group result 72,964 12,039 28,575 2,070

Change in fair value of held-for-sale fi nancial instruments 28 29 15 7

Taxes on income recognised directly in equity –8 –9 –4 –2

Change in value recognised directly in equity 20 20 11 5

Consolidated comprehensive income 72,984 12,059 28,586 2,075

Consolidated comprehensive income attributable to shareholders of freenet AG 73,022 12,075 28,618 2,257

Consolidated comprehensive income attributable to minority interest –38 –16 –32 –182


3.3 Consolidated balance sheet as of 30 September 2010


Assets in €’000s 30. 9. 2010 31. 12. 2009 30. 9. 2009

Non-current assets

Intangible assets 616,587 735,082 775,227

Goodwill 1,116,504 1,116,505 1,120,222

Property, plant and equipment 42,010 52,103 71,831

Investments in associates 3,193 3,645 3,005

Other investments 2,267 2,190 7,381

Deferred income tax claims 58,177 27,090 41,809

Trade accounts receivable 2,967 3,755 4,154

Other receivables and other assets 17,587 17,817 16,521

1,859,292 1,958,187 2,040,150

Current assets

Inventories 48,200 52,057 63,689

Current income tax claims 7,653 10,005 5,185

Trade accounts receivable 381,450 487,296 396,150

Other receivables and other assets 37,507 45,689 39,859

Cash and cash equivalents 121,662 480,291 179,552

Assets of disposal group classifi ed as held-for-sale 0 0 257,520

596,472 1,075,338 941,955

2,455,764 3,033,525 2,982,105


Shareholders’ equity and liabilities in €’000s 30. 9. 2010 31. 12. 2009 30. 9. 2009adjusted

Shareholders’ equity

Share capital 128,061 128,061 128,061

Capital reserves 737,536 737,536 737,031

Revaluation reserve 61 41 53

Retained earnings 229,380 181,980 –62,450

Capital and reserves attributable to shareholders of freenet AG 1,095,038 1,047,618 802,695

Capital and reserves attributable to minority interest 103 141 120

1,095,141 1,047,759 802,815

Non-current liabilities

Trade accounts payable 533 3 66

Other payables 47,657 54,138 59,447

Borrowings 586,131 718,207 1,171,268

Retirement benefi t obligations 24,756 24,194 23,656

Provisions for other liabilities and charges 18,739 12,792 42,838

677,816 809,334 1,297,275

Current liabilities

Trade accounts payable 294,740 390,289 379,631

Other payables 126,471 177,927 222,419

Current income tax liabilities 23,044 7,337 4,771

Borrowings 213,343 551,874 149,701

Provisions for other liabilities and charges 25,209 32,469 58,207

Liabilities of disposal group classifi ed as held-for-sale 0 16,536 67,286

682,807 1,176,432 882,015

2,455,764 3,033,525 2,982,105



3.4 Schedule of changes in equity for the period from 1 January to 30 September 2010

In €’000s Sharecapital

Capital reserves

Reva-luation reserve

Retainedearnings

Capital and reserves attri-

butable to shareholders

of freenet AG

Capital and reserves

attributable to minority

interest

Share-holders’

equity

As of 1. 1. 2009 128,061 737,536 33 –74,505 791,125 136 791,261

Stock-based compensation 0 –505 0 0 –505 0 –505

Consolidated comprehensive income 0 0 20 12,055 12,075 –16 12,059

As of 30. 9. 2009 128,061 737,031 53 –62,450 802,695 120 802,815

As of 1. 1. 2010 128,061 737,536 41 181,980 1,047,618 141 1,047,759

Dividend payment 0 0 0 –25,602 –25,602 0 –25,602

Consolidated comprehensive income 0 0 20 73,002 73,022 –38 72,984

As of 30. 9. 2010 128,061 737,536 61 229,380 1,095,038 103 1,095,141


3.5 Consolidated statement of cash fl owsfrom 1 January to 30 September 2010

In €’000s 1. 1. 2010 —30. 9. 2010

1. 1. 2009 —30. 9. 2009

Result from continued and discontinued operations before tax 69,151 16,949

Adjustments:

Depreciation and impairment write-downs on items of fi xed assets 142,739 156,885

Decrease in provisions –17,819 –37,354

Interest receivable and similar income –16,562 –6,820

Interest payable and similar expenses 49,462 74,002

Share of results of associates –1,121 –1,045

Other non-payment components –66 –485

Loss on disposals of fi xed assets 2,958 2,047

Decrease of inventories, trade receivables and other assetsnot attributed to investing or fi nancing activities 102,854 98,553

Decrease of trade payables and other liabilities not attributed to investing or fi nancing activities –152,424 –31,061

Proceeds of the sale of subsidiaries –4,398 0

Income taxes paid –9,219 –14,252

Cashfl ow from operating activities 165,555 257,419

Purchase of property, plant and equipment –8,214 –15,681

Purchase of intangible assets –10,337 –35,868

Cash-proceeds from disposals of intangible and tangible fi xed assets 1,443 2,712

Cash infl ow from the sale of subsidiaries 17,028 20,000

Return of capital from associates 1,573 1,503

Interest received 3,279 3,556

Cashfl ow from investing activities 4,772 –23,778

Payments to company owners and minority shareholders –25,602 0

Cash repayments of bonds and borrowings –454,047 –110,437

Interest paid –47,111 –69,887

Cashfl ow from fi nancing activities –526,760 –180,324

Cash-eff ective change in cash and cash equivalents –356,433 53,317

Cash and cash equivalents at 1. 1. 331,418 –19,950

Cash and cash equivalents at 30. 9. –25,015 33,367

Derivation of cash and cash equivalents 30. 9. 2010 30. 9. 2009

Cash and cash equivalents of continued operations 121,662 183,068

Cash and cash equivalents of discontinued operations 0 0

Liabilities as part of current fi nance scheduling due to banks –146,677 –149,701

–25,015 33,367



3.6 Selected explanatory notes in accordance with IAS 34

1. In accordance with Regulation 1606/2002 of the European Parliament and Council,

based on the International Financial Reporting Standards (IFRS) as adopted by the

European Union, the present condensed interim consolidated fi nancial statements were

prepared in accordance with IAS 34. The Group took into account all IFRS adopted and

mandated by the EU. The present condensed interim consolidated fi nancial statements

were not subjected to review by an auditor.

The Group has applied all accounting standards that are mandatory as of the fi nancial

year 2010. The accounting standards to be applied for the fi rst time have, however,

no signifi cant eff ect on the presentation of the Group’s assets, fi nancial position and

results.

In preparing the interim report as of 30 September 2010 and determining the compa-

rable fi gures for the previous year, the same accounting and valuation methods as in

the consolidated fi nancial statements 2009 were used in principle—taking the circum-

stances outlined below into account. A detailed description of these methods may be

found in the notes to the consolidated fi nancial statements 2009 of freenet AG.

2. As described in detail in the consolidated fi nancial statements 2009, the operations

“DSL business” (deconsolidation on 30 November 2009) and “STRATO Group” (decon-

solidation on 31 December 2009) were sold in the fi nancial year 2009. In the previous

year comparable fi gures these operations are presented as discontinued operations

in accordance with IFRS 5. The result from discontinued operations for the fi rst nine

months of 2010 contains adjustments for both the DSL business and STRATO Group in

relation to the purchase price as well as to subsequent expenses and income attribut-

able to these discontinued operations.

The operations DSL business and STRATO Group were already presented as discontin-

ued operations in the published condensed interim consolidated fi nancial statements

as of 30 September 2009. However, the present report contains a retrospective adjust-

ment to the previous year comparison fi gures with regard to the result from discontin-

ued operations, in that the DSL distribution unit was now additionally included in the

“DSL business” operation as compared to the published condensed interim consoli-

dated fi nancial statements as of 30 September 2009. This adjustment leads to a lower

result from the discontinued operation DSL business in the amount of 5,680 thousand

euros for the fi rst nine months of 2009, and a corresponding higher result from contin-

ued operations.

Because the processes of selling the operations STRATO Group and DSL business have

since been completed, the comparability between the period under review and the fi rst

nine months of 2009 is limited regarding the result from discontinued operations and

the assets and liabilities associated with the discontinued operations.


3. The period result of discontinued operations is broken down as follows:

The sale of freenet Breitband GmbH to 1&1 Internet AG in 2009 constituted the sale of

a fully consolidated company to an associated company. Due to purchase price adjust-

ments this sale resulted in a profi t of 4,513 thousand euros in the fi rst nine months of

2010.

€’000s 9 months 2010 9 months 2009 (adjusted)

DSLbusiness

STRATO Total DSLbusiness

STRATO Total

Revenue 2,383 0 2,383 189,891 65,705 255,596

Other operating income 144 45 189 2,743 1,581 4,324

Profi t from the disposal of discontinued operations 4,513 –115 4,398 0 0 0

Cost of materials 513 0 513 –134,363 –10,153 –144,516

Personnel expenses –2,962 0 –2,962 –16,814 –14,974 –31,788

Depreciation 0 0 0 0 –5,610 –5,610

Other operating expenses –4,020 0 –4,020 –50,898 –18,256 –69,154

Interest receivable and similar income 0 0 0 29 83 112

Interest payable and similar expenses 0 0 0 0 –79 –79

Taxes on income 0 0 0 0 –1,516 –1,516

Taxes on the profi t from the disposal of discontinued operations –85 0 –85 0 0 0

Result from discontinued operations 486 –70 416 –9,412 16,781 7,369



The balance sheet items of the discontinued operations DSL business and STRATO

Group were as follows in the condensed interim consolidated fi nancial statements as of

30 September 2009:

Assets and liabilities of the discontinued operation DSL business as of

30 September 2009

Assets and liabilities of the discontinued operation STRATO Group as of

30 September 2009

Assets in €’000s 30. 9. 2009

Non-current assets

Intangible assets 9,624

Goodwill 88,025

Property, plant and equipment 1

97,650

Current assets

Inventories 842

Current tax claims 0

Receivables, other assets and advanced payments 45,125

Cash and cash equivalents 1,698

47,665

145,315

Liabilities in €’000s 30. 9. 2009

Current liabilities

Trade accounts payable, other liabilities and deferrals 18,232

Borrowings 0

Other provisions 351

18,583

18,583

Assets in €’000s 30. 9. 2009

Non-current assets

Intangible assets 54,158

Property, plant and equipment 13,466


71,312

Current assets

Inventories 213


Cash and cash equivalents 1,818

40,893

112,205

Liabilities in €’000s 30. 9. 2009

Non-current liabilities

Trade accounts payable, other liabilities and deferrals 356

Borrowings 419

Other provisions 660

1,435

Current liabilities

Trade accounts payable, other liabilities and deferrals 30,279

Borrowings 114

Deferred income tax liabilities 16,875

47,268

48,703


3.6 selected explanatory notes in accordance with ias 34

Intangible assets and property, plant and equipment attributable to the DSL business

which were not sold in the course of the sale of freenet Breitband GmbH and freenet

Customer Care GmbH in 2009 were shown as held-for-sale through 30 June 2010. For

pending services in relation to these intangible assets and property, plant and equip-

ment, a provision of 15,401 thousand euros had been created in the balance sheet as of

30 June 2010, shown under the position “liabilities of disposal group classifi ed as held-

for-sale”. These assets have not yet been sold, nor are they likely to be sold in the near

future any more. Accordingly, the above-described provision for pending services has

been reallocated to the Group’s continued operations and is shown under “provisions

for other liabilities and charges” in the balance sheet as of 30 September 2010, in the

amount of 13,098 thousand euros.

4. The fi gures in the cash fl ow statement were given for the overall Group (continued and

discontinued operations) in each case.

Of the reported cash fl ow from operating activities, the discontinued operation DSL

business accounted for a cash outfl ow of 3.6 million euros in the fi rst nine months of

2010 (previous year: cash outfl ow of 5.1 million euros). There was no cash fl ow from

investing and fi nancing activities for the DSL business during the period under review.

In the previous year comparison period, cash outfl ow from investing and fi nancing

activities attributable to the DSL business was negligible.

There was no cash fl ow related to the sold STRATO Group in the period under review.

In the fi rst nine months of the previous year 2009, the discontinued operation STRATO

Group generated cash infl ow of 27.1 million euros from operating activities as well as

cash outfl ow of 3.4 million euros from investing activities. Cash fl ow from fi nancing

activities was of negligible magnitude.

5. Of the 17,028 thousand euros shown as proceeds from the sale of subsidiaries in the

consolidated cash fl ow statement of the fi rst nine months of 2010, 16,409 thousand

euros came from further purchase price payments for the sale of freenet Breitband

GmbH, and 619 thousand euros from further purchase price payments associated with

the sale of the STRATO Group.

This fi nalises the purchase prices for the sales of freenet Breitband GmbH and the

STRATO Group.

Of the payments of 454,047 thousand euros for the servicing of debt in the fi rst nine

months of 2010, 145,321 thousand euros are accounted for by the vendor loan taken out

on the occasion of the debitel acquisition, and 308,726 thousand euros are accounted

for by the two long-term bank loans existing in connection with the debitel acquisi-

tion. Of the servicing of the long-term bank loans, 66,666 thousand euros were sched-

uled and 242,060 thousand euros were unscheduled, mainly paid from the sales of the

operations DSL business and STRATO Group.



6. Beginning with the fi rst quarter of 2010, the segment report of the freenet AG Group

is no longer made up of six segments, but only of the two segments “Mobile Communi-

cations” and “Other”.

After the sale of the STRATO Group and the DSL business last year, the segments

“Broadband” and “Hosting” include only residual activities of negligible signifi cance.

After thorough examination, these segments as well as the other previous segments

“Portal”, “B2B” and “Narrowband” no longer achieve the quantitative thresholds of

IFRS 8.13 for segments requiring disclosure and are therefore no longer listed as seg-

ments in the present condensed interim consolidated fi nancial statements.

7. The year-on-year improvement in net interest income (balance of interest receivable

and similar income and of interest payable and similar expenses) by 34.3 million euros

is mainly due to the servicing of debt in the last 12 months, and to the fact that the

valuation of the swaps resulted in interest income of 13.5 million euros in the fi rst nine

months of 2010 (previous year: interest income of 2.1 million euros).

8. The interest swaps used in the past expired on 31 July 2010. The resultant risk of an

increase in short-term interest (=EURIBOR) was hedged by applying an interest cap.

9. As in the consolidated fi nancial statements 2009, current and deferred income tax was

calculated based on an average tax rate of 30.2 percent.

10. In accordance with the resolution passed by the ordinary Annual General Meeting of

freenet AG on 6 July 2010, dividends totalling 25.6 million euros were paid out to the

shareholders on 7 July 2010.



Segment report 1. 1. 2010—30. 9. 2010€’000s

Mobile Communi-

cations

Other¹ Elimination of inter-segment revenue

and costs

Eff ects regarding

IFRS 5

Total

Third-party revenue 2,422,438 71,115 0 –2,383 2,491,170

Intersegment revenue 3,423 4,775 –8,198 0 0

Revenue, total 2,425,861 75,890 –8,198 –2,383 2,491,170

Cost of materials, third parties –1,926,251 –25,896 0 –513 –1,952,660

Intersegment cost of materials –1,787 –4,673 6,460 0 0

Cost of materials, total –1,928,038 –30,569 6,460 –513 –1,952,660

Segment gross profi t 497,823 45,321 –1,738 –2,896 538,510

Other operating income 61,055 10,605 –2,757 –4,702 64,201

Other own work capitalised 6,831 530 0 0 7,361

Personnel expenses –96,122 –28,413 0 2,962 –121,573

Other operating expenses –227,048 –26,913 4,495 4,135 –245,331

Share of results of associates 0 1,121 0 0 1,121

Segment EBITDA 242,539 2,251 0 –501 244,289

Depreciation and impairment write-downs –133,561 –9,178 0 0 –142,739

Segment EBIT 108,978 –6,927 0 –501 101,550

Group fi nancial result –32,900

Taxes on income 3,898

Group result from continued operations 72,548

Group result from discontinued operations 416

Group result 72,964

Group result attributable to shareholders of freenet AG 73,002

Group result attributable to minority interest –38

Investments in continued operations 14,557 3,994 18,551

1 The “Other” segment consists of the Portal, B2B and Narrowband businesses as well as Holding activities.

11. Segment report from 1 January to 30 September 2010 and

1 January to 30 September 2009



Segment report 1. 1. 2009—30. 9. 2009€’000s

MobileCommunications

Broadband Portal

Third-party revenue 2,595,275 190,243 28,130

Intersegment revenue 6,308 0 2,422

Revenue, total 2,601,583 190,243 30,552

Cost of materials, third parties –2,083,338 –131,595 –9,560

Intersegment cost of materials –1,577 –6,490 –1,923

Cost of materials, total –2,084,915 –138,085 –11,483

Segment gross profi t 516,668 52,158 19,069

Other operating income

Other own work capitalised

Personnel expenses

Depreciation and impairment write-downs

Other operating expenses

Share of results of associates

Group result before fi nancial result and taxes on income

Group fi nancial result

Taxes on income

Group result from continued operations

Group result from discontinued operations

Group result

Group result attributable to shareholders of freenet AG

Group result attributable to minority interest

Of the fi gure of 75,279 thousand euros shown for EBIT in continued operations, 86,231 thousand euros are attributable to the Mobile

Communications segment, 2,455 thousand euros are attributable to the Portal segment and –13,407 thousand euros are attributable to

the Fixed Network segment (consisting of the sum of the B2B and Narrowband segments as well as Holding activities).

Of the fi gure of 226,554 thousand euros shown for EBITDA in continued operations, 224,728 thousand euros are attributable to the

Mobile Communications segment, 2,879 thousand euros are attributable to the Portal segment and –1,053 thousand euros are attribut-

able to the Fixed Network segment.

Of the fi gure of 48.1 million euros shown for investments in continued operations (excluding the payments for the acquisition of sub-

sidiaries and equity participations), 42.4 million euros are attributable to the Mobile Communications segment and 5.7 million euros are

attributable to the Fixed Network segment.



Hosting B2B Narrowband Elimination of intersegment

revenue and costs

Eff ects regardingIFRS 5

(adjusted)

Total(adjusted)

65,944 52,566 32,977 0 –255,596 2,709,539

1,979 1,377 42 –12,128 0 0

67,923 53,943 33,019 –12,128 –255,596 2,709,539

–12,121 –40,331 –11,356 0 144,516 –2,143,785

–579 –1,448 0 12,017 0 0

–12,700 –41,779 –11,356 12,017 144,516 –2,143,785

55,223 12,164 21,663 –111 –111,080 565,754

102,065

7,195

–161,681

–151,275

–287,824

1,045

75,279

–67,215

–3,394

4,670

7,369

12,039

12,055

–16



The Hamburg site of freenet AG.

4. Further information

4. Further information


4.1 Financial calendar

10 November 2010

Publication of interim report III/2010

25 March 2011¹

Publication of Consolidated Financial Statements/Annual Report 2010

11 May 2011¹

Publication of interim report I/2011

30 June 2011¹

Annual General Meeting

10 August 2011¹

Publication of interim report II/2011

10 November 2011¹

Publication of interim report III/2011

1 Probable dates.



4.2 Imprint, contact, publications

freenet AG

Hollerstraße 126

24782 Büdelsdorf

Phone: +49 (0) 43 31/69–10 00

Internet: www.freenet.ag

freenet AG

Investor Relations

Deelbögenkamp 4c

22297 Hamburg

Phone: +49 (0) 40/5 13 06–7 78

Fax: +49 (0) 40/5 13 06–9 70

E-mail: [email protected]

The Annual Report and our interim reports are also available at

http://www.freenet.ag/investor/publications.html.

The English version of the interim report is a translation of the German

version of the interim report. The German version of this interim report

is legally binding.

Current information concerning freenet AG and the freenet share

is available on our website at www.freenet.ag.

freenet AG · Hollerstraße 126 · 24782 Büdelsdorf

Documents

Interim Report on the 3rd quarter 2010...Monthly average revenue per user (ARPU) in € Q1—Q3/2010 Q1—Q3/2009 Q3/2010 Q2/2010 Q3/2009 Contract customer (excluding no-frills) 23.8