4.3 Forecast report

Expectations for the economy

In its global economic outlook published on January 17, 2025, the International Monetary Fund (IMF) updated its forecasts for the development of the global economies in 2025 and 2026.

With regard to the global economy as a whole, the IMF has upgraded its forecast. It now expects global economic growth of 3.3% in 2025, which is 0.1 percentage point higher than in its fall outlook. It also expects 3.3% for 2026.

According to the IMF, the risks that could affect this outlook include geopolitical conflicts such as those in Ukraine and the Middle East, as well as the political uncertainty resulting from Donald Trump's return to the US presidency. The IMF has not yet incorporated Trump's policy proposals into its forecasts.

In particular, the outlook for the USA improved significantly by 0.5 percentage points to 2.7% for 2025. By contrast, the IMF’s experts paint a very different picture for Germany, United Internet’s most important target market. After two years of recession in 2023 and 2024, the German economy is expected to grow by only 0.3% in 2025. The previous IMF estimate (fall outlook) was thus downgraded by 0.5 percentage points. According to the IMF, Germany will once again record the weakest growth of the leading western G7 industrialized nations in the current year. The reasons cited are weak industrial output and high energy prices, which are hampering the country’s economic recovery.

Germany will therefore continue to lag behind its European neighbors in 2025. Growth will be significantly stronger in Spain (2.3%), but the UK (1.6%), France (0.8%) and Italy (0.7%) are also set to outpace Germany.

Market forecast: GDP development of most important economies for United Internet

Source: International Monetary Fund, World Economic Outlook (Update), January 2025

The IMF’s growth forecast for Germany in 2025 is in line with the German government’s own projection. On publication of its Annual Economic Report 2025 on January 29, 2025, the government also forecast price-adjusted GDP growth of just 0.3%. In the fall of 2024, the government was still expecting GDP to grow by 1.1%.

Germany’s Minister for Economic Affairs, Robert Habeck, cited the “high level of uncertainty” caused by US economic and trade policy under Donald Trump and the political situation in Germany as the main reasons for the downgraded outlook. He also pointed to measures in the growth initiative of the coalition government, which will now largely remain unimplemented due to the collapse of the coalition.

Habeck identified the lack of both unskilled and skilled labor, excessive bureaucracy and sluggish investment as the most pressing issues.

Sector/market expectations

Despite the challenges posed by these adverse economic conditions, further growth is still expected for Germany’s digital economy. The digital association Bitkom, for example, expects the German IT and telecommunications (ICT) market to grow by 4.6% to € 232.8 billion in 2025. ICT sales in the previous year rose by 3.3% to € 222.6 billion.

Information technology continues to be the main growth driver. According to the latest Bitkom forecast, this market is set to grow by 5.9% (prior year: 4.4%) to € 158.5 billion in 2025.

Within this segment, software sales in particular are expected to grow strongly again, by 9.8% to € 51.1 billion. The ongoing boom in artificial intelligence (AI) is particularly evident here: sales of AI platforms – on which AI applications can be developed, trained, and operated – are expected to grow rapidly by 43% to € 2.3 billion. Collaboration tools for teamwork and remote working environments are also expected to grow strongly by 12% to € 1.4 billion. Moreover, security software is likely to grow by 11% to € 5.1 billion and double-digit growth is forecast for cloud services, which are expected to grow by 17% to € 20.0 billion.

Growth is also expected across almost all segments of the IT hardware market. According to projections, the hardware market as a whole is expected to grow by 3.3% to € 53.7 billion by 2025. The main growth driver is once again expected to be the Infrastructure-as-a-Service segment, i.e. rented servers, network and storage capacities, which is expected to grow by 24.4% to € 6.2 billion.

Bitkom forecasts that revenues from IT services as a whole will increase by 5.0% to € 53.8 billion in 2025.

The most important ICT markets for United Internet’s business model are the German telecommunications market 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 1.8% (prior year: 1.0%) to € 74.3 billion in 2025. The strongest growth in this segment is expected to come from business with telecommunications infrastructure, which is expected to grow by 3.5% (prior year: -4.8%) to € 8.0 billion. Sales of end-user devices are likely to increase by 2.7% (prior year: 1.6%) to € 12.8 billion. And business with telecommunications services is also expected to grow by 1.4% (prior year: 1.8%) to € 53.5 billion.

Market forecast: telecommunications market in Germany

Source: Bitkom, January 2025

Global cloud computing market

According to Gartner’s calculations, the global public cloud services market is expected to grow by 21.5% (prior year: 19.2%) to USD 723.4 billion in 2025. The strongest growth is expected in the areas of cloud system infrastructure services (laaS) at 24.8%, cloud application infrastructure services (PaaS) at 21.6%, and cloud application services (SaaS) at 19.2%.

Market forecast: global cloud computing

Source: Gartner Forecasts, Worldwide Public Cloud End-User Spending, November 2024

Online advertising market in Germany

After a 10.7% increase in online advertising in 2024, PricewaterhouseCoopers expects further growth in 2025 with an increase in total market volume (mobile advertising and desktop advertising) of 9.6% to € 20.7 billion.

Market forecast: total online advertising market in Germany (mobile advertising & desktop advertising) – acc. to PwC

Source: PricewaterhouseCoopers, German Entertainment and Media Outlook 2024 – 2028, September 2024

Expectations for the Company in 2025

Forecast for the fiscal year 2025

Adjusted for the “Energy” business field, United Internet expects the following development of sales and earnings for the Group in the fiscal year 2025:

• Sales 2025 (acc. to IFRS) are expected to rise to approx. €6.4 billion (2024: € 6.303 billion without “Energy” and “De-Mail”) .
• Operating EBITDA 2025 (acc. to IFRS) is expected to grow to approx. € 1.35 billion (2024: € 1.295 billion without “Energy” and “De-Mail”), including approx. € -20 million due to 1&1 changing its national roaming service provider. In the commercially equivalent national roaming agreement with Vodafone, the capacities used by 1&1 are fully recognized in EBITDA, whereas under the national roaming agreement with Telefónica they were previously capitalized in part and depreciated in scheduled amounts.

The Company will continue to invest heavily in 2025, especially in the expansion of its fiber-optic network and mobile communications network. Cash capex is expected to be approx. € 800 million (2024: € 774.6 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 2025 ( 2024: € -365.3 million including non-scheduled special items).

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. In the fiscal year 2025, 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 Business Access segment, the fiber-optic network is to be expanded further with the connection of new locations. In addition, the corporate customer business will continue to be developed.
• 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 addition, the segment will expand its cloud business in particular.

At the time of preparing this Management Report, the Company’s Management Board believes that the Company is on track to reach the forecast presented above in the section “Forecast for the fiscal year 2025”.

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.