UBS has moved Freenet to a Sell rating from Neutral while maintaining a price target of €28.50, saying the telecoms group faces a combination of near-term operational pressures and potential longer-term disruption. The reaction in the market was swift, with Freenet shares sliding almost 10% on German trading.
The downgrade follows a period of strong share performance for the company. Before the latest pullback, Freenet’s stock had risen about 15% year to date, roughly matching the gains seen across European peers. UBS’s analysts, led by Polo Tang, said they are concerned that recent improvements in the share price have left the valuation at the high end of its historical range and that earnings expectations may be due for a reset.
UBS pointed specifically to weakening momentum in two business areas. In the mobile business, the broker expects mounting pressure driven by an ongoing German price war that is likely to push average revenue per user - ARPU - lower into 2026. Separately, the TV division is showing signs of slowing growth: UBS noted that the Waipu TV "growth engine has stalled amid increased competition" and that reduced marketing spend - as management focuses on profitability - has further dampened the segment’s trajectory.
Analysts at UBS warned that these pressures could become clearer in the company’s upcoming results. They suggested Q4 may reveal that the challenges are structural rather than merely cyclical. One specific point raised was an anticipated subscriber clean-up, with non-paying TV customers being removed from the base - an action UBS says is not yet reflected in consensus forecasts.
Beyond immediate operational concerns, UBS also flagged a longer-term risk tied to artificial intelligence. While the broker acknowledged that Freenet’s reseller model appears resilient at present, it highlighted two potential AI-driven threats: consumers could increasingly rely on agentic AI to select new plans, and mobile network operators - MNOs - could deploy AI more effectively for customer retention and acquisition via digital channels. Either development, UBS warned, could erode the advantage of Freenet’s current model over time.
On the numbers, UBS said it had not changed its estimates in this round of analysis but that its forecast for 2028 group EBITDA sits 6.5% below consensus once adjustments for the MobileZone acquisition are included. UBS attributed most of this shortfall to weaknesses in the TV business.
The combination of a stretched valuation, softer trends in both Mobile and Waipu TV, and the potential for AI-driven disruption underpinned UBS’s decision to lower its recommendation to Sell. Market participants will be watching forthcoming quarterly figures closely for signs that the pressures cited by UBS are indeed structural and whether management’s profitability focus will offset subscriber and ARPU headwinds.