4.3 Forecast report
Expectations for the economy
In its global economic outlook published on January 30, 2024, the International Monetary Fund (IMF) updated its forecasts for the development of the global economies in 2024 and 2025. In view of the current fall in inflation and the recent upturn in growth, the IMF raised the forecast for the global economy in its update from 2.9% to 3.1% for 2024 (after 3.1% in 2023). Nevertheless, global economic growth will once again fall well short of the average figure for recent years of 3.8%. For 2025, the IMF forecasts global economic growth of 3.2%.
According to the IMF, there are risks associated with geopolitical tensions, particularly in the Middle East, which have already led to a significant increase in prices for freight shipments between Asia and Europe.
The latest IMF forecasts for United Internet’s target markets in North America (the USA, Canada, and Mexico) are as follows: the US economy is expected to grow by 2.1% in 2024 and 1.7% in 2025 (after 2.5% in 2023); in Canada, economic growth of 1.4% and 2.3% is anticipated for 2024 and 2025, respectively (after 1.1% in 2023); and the Mexican economy is expected to grow by 2.7% in 2024 and 1.5% in 2025 (after 3.4% in 2023).
The IMF anticipates growth of 0.9% and 1.7% in the eurozone for 2024 and 2025, respectively (after 0.5% in 2023).
Likewise, the IMF expects no more than minor economic growth in United Internet’s main EU markets (France, Spain, and Italy): the economists anticipate growth of 1. 0% in 2024 and 1.7% in 2025 for France (after 0.8% in 2023) ; growth in Spain is expected to reach 1.5% and 2.1% in 2024 and 2025 , respectively (after 2.4% in 2023) ; and for Italy, the IMF forecasts growth of 0.7% and 1.1% in 2024 and 2025 , respectively (after 0.6% in 2023).
For the non-EU country the UK, the IMF expects an increase in economic output of 0.6% in 2024 and growth of 1.6% in 2025 (after 0.5% in 2023).
For United Internet’s most important market, Germany, the IMF forecasts economic growth of 0.5% in 2024 and 1.6% in 2025 (after -0.3% in 2023). According to the outlooks, Germany is likely to have the lowest growth of all G7 states again in 2024.
With expected growth of 0.5% in 2024, the IMF is above the forecast of the German government, which, in its 2024 Annual Economic Report on February 21, 2024, forecast growth for price-adjusted gross domestic product of just 0.2% in 2024.
The German government cites the ongoing geopolitical crises, the impact of the energy price crisis, the overall distinct weakness of the global economy and the increasingly noticeable effects of restrictive monetary policy as the reasons for this estimate.
Market forecast: GDP development of most important economies for United Internet
World | 3.2% | 3.1% | 3.1% |
USA | 1.7% | 2.1% | 2.5% |
Canada | 2.3% | 1.4% | 1.1% |
Mexico | 1.5% | 2.7% | 3.4% |
Eurozone | 1.7% | 0.9% | 0.5% |
France | 1.7% | 1.0% | 0.8% |
Spain | 2.1% | 1.5% | 2.4% |
Italy | 1.1% | 0.7% | 0.7% |
Poland | 3.2% | 2.8% | 0.6% |
UK | 1.6% | 0.6% | 0.5% |
Germany | 1.6% | 0.5% | -0.3% |
2025e | 2024e | 2023 |
Source: International Monetary Fund, World Economic Outlook (Update), January 2024
Sector/market expectations
Despite the challenges posed by the adverse macroeconomic conditions, disrupted supply chains, and the shortage of skilled workers, the industry association Bitkom expects the German ICT market as a whole to grow by 4.4% (prior year: 2.0%) to € 224.3 billion in 2024.
According to Bitkom calculations, the IT market is expected to grow again – after a brief dip in growth in 2023 – by 6.1% (prior year: 2.2%) to € 151.5 billion in 2024. Driven in particular by cloud and AI technologies, software is likely to be the fastest-growing segment again with a strong increase of 9.4% (prior year: 9.6%) to € 45.5 billion. Growth of 4.8% (prior year: 5.1%) to € 51.7 billion is expected for the IT services business, which also includes IT consulting. And sales of IT hardware are also set for a return to significant growth with an expected increase of 4.6% (prior year: -5.4%) to € 54.5 billion. The strongest growth driver is still Infrastructure-as-Service, i.e., rented servers, network and storage capacities.
By contrast, the consumer electronics market will remain under pressure. According to a Bitkom forecast, sales are likely to decline again in 2024 by an estimated -3.4% (prior year: -2.1%) to € 7.8 billion.
The most important ICT markets for United Internet’s business model are the German telecommunications market (broadband connections and mobile internet) for its mostly subscription-financed Access division, and the global cloud computing and German online advertising markets for its subscription- and ad-financed Applications division.
Telecommunications market in Germany
The industry association Bitkom expects the German telecommunications market to grow in total by 1.0% (prior year: 1.7%) to € 72.8 billion. The strongest growth in this segment is expected to come from business with telecommunications services, which is set to grow by 1.6% (prior year: 1.9%) to € 52.6 billion. Total spending on telecommunications infrastructure is expected to decrease slightly by -1.0% (prior year: 4.4%) to € 8.4 billion. Sales of end-user devices are likely to be on a par with the previous year with a slight decline of -0.2% (prior year: -0.7%) to € 11.8 billion.
Market forecast: telecommunications market in Germany
Sales | 72.8 | 72.1 | + 1.0% |
in € billion | 2024e | 2023 | Change |
Source: Bitkom, January 2024
Global cloud computing market
Following the very strong growth of 2023 (17.8%), Gartner forecasts global growth for public cloud services of 20.4% to USD 678.79 billion in 2024.
Market forecast: global cloud computing
Global sales of public cloud services | 678.79 | 563.59 | + 20.4% |
thereof Application Infrastructure Services (PaaS) | 176.49 | 145.32 | + 21.5% |
thereof Application Services (SaaS) | 243.99 | 205.22 | + 18.9% |
thereof Business Process Services (BPaaS) | 72.92 | 66.34 | + 9.9% |
thereof Desktop as a Service (DaaS) | 3.16 | 2.78 | + 13.5% |
thereof System Infrastructure Services (IaaS) | 182.22 | 143.93 | + 26.6% |
in $ billion | 2024e | 2023 | Change |
Source: Gartner, Public Cloud Services, Worldwide, 2021-2027, 3Q23 Update, November 2023
Online advertising market in Germany
After a 7.0% increase in online advertising in 2023, PricewaterhouseCoopers expects further growth in 2024 with an increase in total market volume (mobile advertising and desktop advertising) of 5.3% to € 14.18 billion.
Market forecast: total online advertising market in Germany (mobile advertising & desktop advertising) – acc. to PwC
Online advertising revenues | 14.18 | 13.47 | + 5.3% |
in € billion | 2024e | 2023 | Change |
Source: PricewaterhouseCoopers, German Entertainment and Media Outlook 2023 – 2027, September 2023
Expectations for the Company in 2024
Forecast for the fiscal year 2024
- United Internet AG expects an increase in consolidated sales (acc. to IFRS) to approx. € 6.5 billion for its fiscal year 2024 (2023: € 6.213 billion).
- Operating EBITDA (acc. to IFRS) is expected to grow to € 1.42 billion in 2024 (2023: € 1.300 billion).
The Company will continue to invest heavily in 2024, especially in the expansion of its fiber-optic network and mobile communications network. Cash capital expenditures are likely to be 10 - 20% above the prior-year figure (2023: € 756 million).
Due to its role as a holding company, the earnings of United Internet AG at parent company level are mainly influenced by its investment result (profit transfers and dividends) and the interest result. From the current perspective (subject to possible special items), the Management Board expects a balanced net income for the fiscal year 2024 (2023: € 274.0 million including special items of € 219.1 million from the IONOS IPO).
United Internet AG intends to maintain its shareholder-friendly dividend policy based on continuity in the coming years. Dividend payouts will continue to represent approx. 20 - 40% of adjusted net income from continued operations after minority interests (adjusted net income attributable to “shareholders of United Internet AG” – according to the consolidated statement of comprehensive income) in the future. The prerequisite is that funds are not required for further Company development.
Management Board’s overall statement on the anticipated development
The Management Board of United Internet AG is upbeat about its prospects for the future. Thanks to a business model based predominantly on electronic subscriptions, United Internet believes it is largely stable enough to withstand cyclical influences. And with the investments made over the past few years in customer relationships, new business fields and further internationalization, as well as via acquisitions and investments, the Company has broadened the foundations for further growth.
United Internet will continue to pursue this sustainable business policy in the coming years. The segments will focus on the following topics:
- In addition to the rollout of the 1&1 mobile network, the Consumer Access segment will focus in particular on marketing mobile internet products and winning high-quality customer relationships in the fiscal year 2024.
- In the Business Access segment, the fiber-optic network is to be expanded further in 2024 with the connection of new locations. In addition, the business customer and wholesale business will continue to be developed.
- In fiscal year 2024, the key topics in the Consumer Applications segment will again be the further expansion of data-driven business models and a focus on fee-based premium products.
- The Business Applications segment will continue to focus on expanding business with existing customers and gaining new high-quality customer relationships in 2023. In addition, the segment will expand its cloud business in particular.
Following a successful start to the year, the Company’s Management Board believes that (at the time of preparing this Management Report) the Company is on track to reach the forecast presented above in the section “Forecast for the fiscal year 2024”.
Forward-looking statements
This Management Report contains forward-looking statements based on current expectations, assumptions, and projections of the Management Board of United Internet AG and currently available information. These forward-looking statements are subject to various risks and uncertainties and are based upon expectations, assumptions, and projections that may not prove to be accurate. United Internet AG does not guarantee that these forward-looking statements will prove to be accurate and does not accept any obligation, nor have the intention, to adjust or update the forward-looking statements contained in this report.