UBS Global Research has revised its recommendation on Germany-based mobile retailer Freenet AG, upgrading the stock to "neutral" from "sell" after shares declined about 29% from their February peak. The research house retained a 12-month price target of €25, while the stock finished trading at €24 on Wednesday.
"With the shares now trading just below our PT of €25 (unchanged), we think the nearterm risk/reward profile is now more balanced," UBS analysts wrote, reflecting the view that the recent decline reshaped the investment case.
UBS noted the stock is down roughly 18% year-to-date, compared with a 17% gain for the broader sector, underscoring the divergence between Freenet and its peers.
To establish downside protection, UBS calculated a floor valuation of €21 per share. That floor was derived by applying a trough multiple of 10 times price-to-earnings to consensus EPS of €2.10.
On the potential upside, UBS highlighted that a successful renegotiation of Freenet’s mobile network operator (MNO) agreement with Telefonica Deutschland could contribute approximately €25 million to EBITDA. UBS equated that uplift to roughly a 7% positive impact on EPS, should such an outcome materialize.
Freenet, which operates roughly 1,000 stores and is described as Germany’s largest independent mobile retailer, has already incurred a €50 million EBITDA shortfall tied to one MNO agreement after volume targets were not met. UBS said it currently assumes that shortfall will not be fully recovered. "A compromise of €25m in return for higher volumes seems more logical," the analysts wrote.
The research note flagged four potential catalysts for the stock, naming the Telefonica Deutschland renegotiation as one of the primary events. That renegotiation is expected in the second half of 2026 and was described as constructive by UBS, although the firm cautioned it is unlikely to fully offset the €50 million shortfall.
UBS also set expectations for near-term operating results. Second-quarter numbers, due on August 12, are projected to show group EBITDA declining about 3.2% to €125 million.
On distribution and product mix, UBS noted that Freenet has started to offer 1&1 plans in its stores, a move the bank labeled as mixed in its implications for the business. The firm also observed that consolidation among German mobile operators could produce pricing benefits but may trigger distribution channel rationalisation, affecting retail footprints and partnerships.
Looking further ahead, UBS forecast group EBITDA of €514 million for 2026, which sits within company guidance of €500 million to €530 million. However, UBS’s 2028 EBITDA projection of €542 million remains well below management’s stated target of more than €620 million.
UBS attributed the gap primarily to the unrecovered MNO shortfall and weaker-than-expected growth in Waipu TV subscribers. The bank projects Waipu TV net additions of roughly 200,000 in 2026, versus management guidance that implies an annual run-rate of 250,000 to 300,000. At the end of 2025, the IPTV unit reported 1.76 million subscribers, a decline of 10% year-on-year.
Context for investors
The UBS repositioning to neutral reflects a recalibrated balance between downside protection—represented by the €21 floor valuation—and conditional upside tied to contract outcomes and subscriber trends. Key near-term items include the Q2 results on August 12 and the Telefonica renegotiation expected in H2 2026.