1&1 AG
XETRA:1U1
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1&1 AG
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Warm welcome from our side. Good morning, ladies and gentlemen. On behalf of the Executive Board of 1&1 AG, I would like to welcome you to our 9 months conference call. During this conference call, our CFO, Markus Huhn, will present to you the results for the first 9 months of the fiscal year '22, followed by the guidance for the fiscal year '22. Following the presentation, as usual, Markus will be then available to answer your questions.
Thank you very much. And I would now like to hand over to Markus.
Yes. Thank you, Oliver. Good morning. This is Markus Huhn speaking. A warm welcome to our call from my side as well. I would like to give you an overview to the financial results as of end of Q3 this year and on the status of 5G. Yes, please let us step into the presentation with Slide #6 customer base.
We have increased our customer base by 100,000 new contracts in the third quarter, 140,000 mobile contracts and, unfortunately, a decrease of minus 40,000 broadband contracts. In total, we see plus 220,000 net adds as of end of September, thereof 330,000 mobile contracts and minus 110,000 broadband lines. The operational performance, means without the negative impact out of the changes of the telecommunication law, was 450,000 contracts, which is slightly above the performance in 2021. In 2021, we had the 440,000 contracts as of end of September.
As we have already mentioned in the last call, this impact out of the telecommunication law changes is a temporary impact in this year because of the shorter cancellation period of 1 month. In total, the impact is higher than expected, with approximately 250,000 earlier cancellations in 2022. But from quarter-to-quarter, the impact is going to be lower and lower. So in Q1, the impact was minus 90,000 contracts. In the second quarter, it was minus 80,000. And now in the third quarter, it was minus 60,000. And our expectation for the fourth quarter is something between 20,000 to 30,000 negative impact out of this issue.
On the next slide, #7, we are showing the revenue as of end of September with EUR 2.950 billion, a growth of 1.7%. Service revenue rose with plus 2.2% from EUR 2.335 billion in 2021 to EUR 2.386 billion in 2022. The revenue are more or less on the same level as the year before with EUR 563 million.
Let us come to EBITDA by segment on Slide #8. In the Access segment, we have realized EUR 575.8 million as of end of September, which is a solid increase with -- by 7.2% compared with the EUR 537 million in 2021. As you see in the graph, the EUR 537 million doesn't include the EUR 39.4 million non-period income in 2021. The minus EUR 26.8 million negative EBITDA in segment 1&1 mobile network is including our activities for the start of the rollout of the 5G network.
On Slide #10, we are showing the main activities for the mobile network rollout. The main activities in Q4 are starting the operations of the regional edge data centers, the decentralized edge data centers and 2 core data centers. Then our plan is to have our first product ready to start, the fixed wireless access product, at the end of this year. Besides these topics, we've started with the first test of national roaming with Telefónica Deutschland in the fourth quarter. In the next quarters, we have -- in the first quarter next year, the connection to national telecom networks. In the second quarter, the connection to the international telecom networks and the national roaming test phase. And in the third quarter, we plan to start with the operational start of the 4 core data centers. We will have our national roaming ready, and we will be prepared to start with a nationwide marketing launch. And besides that, we have the discontinuation of the MVNO sales. And then in the fourth quarter next year, we will start with the migration of our existing customers.
Yes, now I would like to step into the financials as of end of September with Slide #12, which shows the P&L. So revenue has already been commented. The cost of sales grew up from EUR 1.989 billion in 2021 to EUR 1.997 billion in 2022. Gross profit rose from EUR 912.6 million to EUR 952.9 million. In 2021, we have had the already mentioned positive non-period impact of EUR 39.4 million, which is included in the cost of sales. Without this impact, the operational gross profit in 2021 was EUR 873.2 million, which brings us to an operational increase by 9.1% in the gross profit position.
The costs for distribution increased from EUR 348.9 million in 2021 to EUR 374.2 million in 2022, which is driven by higher spending in marketing. The administration costs are with EUR 92.1 million, below the year before with EUR 95.5 million. The other operating income increased from EUR 14.6 million to EUR 19 million, which is mostly driven by higher income out of the [ timing ] and collection fee processes. The impairments on receivables and on contract assets grew from EUR 52.4 million to EUR 76.8 million. The background for this increase is that we had a much better payment behavior in our customer base during the coronavirus pandemic. In relation to revenue, the bad debt has been in a range of 2% to 2.1% in 2020 and 2021. In the period before the coronavirus pandemic in 2018 and 2019, the rate was 2.3%. And now in the first 9 months in 2022, we see that the rate is back to the level of 2018 and 2019 with approximately 2.3%.
In addition to this development in this position, we have an additional negative impact of the changes in the telecommunication law because the limit where we can stop our service to the customer in case of no payment, this limit has been increased to EUR 100. Before the changes in the telecommunication law, this limit was EUR 75 -- sorry, EUR 75. And this results in higher debt because of higher outstandings. The impact in the first 9 months out of this issue is approximately EUR 9 million in this position.
And we have the profit from operating activities in 2022 with EUR 428.8 million, which is below the result in 2021 after elimination of the EUR 39.4 million non-period impact, the operational profit increase would be 9.6%. Financial result of minus EUR 4.6 million is including the spendings for the investments in white spots. To remember, in the auction 2019, we have accreted an installment payment over 12 years for the frequencies with the government. And we, on our side, gave the commitment to invest EUR 50 million in white spots. These investments are reflected in the position financial results. Then we come to a profit before taxes of EUR 424.2 million. Tax expense was EUR 127.5 million. Consolidated result of EUR 296.7 million for the 9 months in 2022.
The balance sheet on the next slide. In total, it rose from EUR 7.0637 billion as of end of 2021 to EUR 7.3068 billion as of end of Q3 2022. There are 4 topics that are responsible for the increase of the short-term assets from EUR 1.894 billion to EUR 2.049 billion. The first topic is -- plus of or an increase of EUR 72 million by investment in the free cash flow of United Internet, plus EUR 19 million payments receivable, plus EUR 17 million warehouse stock and plus EUR 29 million because of contingent payment to Deutsche Telekom. The long-term assets increased by EUR 87.1 million from EUR 5.1649 billion to EUR 5.252 billion because of contingent payments to Deutsche Telekom. Short-term liabilities have been reduced from EUR 656 million to EUR 607.5 million, and the long-term liabilities are more or less on the same level as the last year. Equity grew up because of the net income of EUR 296.7 million.
On slide cash flow, you see the net inflow from operating activities with EUR 176.7 million as of end of September 2022, which is lower than in the year before. The main reasons are an increase of contract assets, an increase of receivables and a change in other liabilities and income tax liabilities. The cash flow from investment activities was minus EUR 156.8 million, thereof EUR 83.4 million CapEx and EUR 73 million investment of free cash flow with United Internet. The cash flow from financing activities was EUR 19 million, roughly equal to the EUR 17.8 million in the year before. All these results in a free cash flow as of end of September 2022 of EUR 93.3 million versus EUR 218.8 million in 2021. The drivers for the lower free cash flow are the already mentioned topics, increased contract assets, increased receivables and inventories and a change in income tax liabilities.
On the next slide, Slide #15, we see the bridge from the EBITDA for the first 9 months of EUR 549 million to the free cash flow of EUR 93.3 million. So the main changes are the increase in the receivables and other assets with minus EUR 28.7 million. Then we see an increase in the accrued expenses with EUR 126.9 million. Changes in liabilities and other liabilities with minus EUR 20.8 million. Changes in liabilities related companies of minus EUR 18.1 million. The balance out of the other working capital was minus EUR 34.4 million. We have taxes with minus of EUR 143.4 million, and the already mentioned CapEx position of minus EUR 83.4 million, which leads to the EUR 93.3 million free cash flow.
Now we go to the outlook for 2022 on the next slide. We confirm our outlook for 2022 with a Service revenue of approximately EUR 3.2 billion. The year before, EUR 3.1 billion. EBITDA EUR 690 million. In the year before, EUR 672 million. This EBITDA is including EUR 60 million cost for building the mobile network, which was in the year before EUR 38 million. The new contracts will be approximately 350,000 new contracts. The operating subscriber growth will be approximately 600,000 new contracts, which is on the same level as in the year before. Yes, I have already mentioned in the position net adds, we see the negative impact of the 250,000 earlier cancellations because of the changes in the telecommunication law. Our outlook for the cash CapEx is approximately EUR 250 million, and it's mainly driven by the investment in the mobile network for antennas, computers and software.
Many thanks for your attention so far. And now I would like to hand over to the operator and Oliver, and we'll be prepared to answer your questions.
[Operator Instructions] And your first question comes from the line of Yemi Falana from Goldman Sachs.
Thanks for the results today. Clearly, service revenue trends continue to remain robust, but keen to understand what the moving parts are driving a slight weakness from a volume perspective on the fixed line side, particularly given those are higher-ARPU customers. Keen to know where you're losing those customers. Two, what's driver of this increased competition? Is it all around the wholesale pricing or are lower [indiscernible] level fees likely to mean that your fixed line trends improve in the coming quarters?
Yes. To your first question regarding the service revenue, the biggest impact for the weaker growth rate are the additional or the earlier cancellations in the -- due to the telecommunication law changes. That's the main driver. If we would have the -- just the operational increase in our customer base, we would see a stable growth rate in the service revenues.
Regarding the fixed lines, we see also here the bigger part of the loss in the customer base is coming from the earlier cancellations of the telecommunication law, but also our operational performance is a negative improvement. So at the end, in the market today, in our competition landscape, if we have focus still on high values and our customer base, which is still our target, we will see a slightly decrease in our customer base. And it doesn't make sense to be much more aggressive in our prices because we do not see the uplift in our sales figures if we reduce prices or if we are more aggressive in our offer.
Our biggest competitors are the cable offers in our competition landscape with much lower prices. And as we have mentioned in the last calls, we see a new momentum in the market due to the effect that the coverage of fiber will be increased in the next year significant. And we are quite sure due to the effect to have this new momentum in the market, we see definitely a change or a chance in the next years to come back to a situation where we have a stable customer base or a slightly increase in our customer base. But today, as I mentioned earlier, we accept a slightly decrease in our customer base because our focus is on a stable customer value in our customer base.
Your next question comes from the line of from Martin Hammerschmidt, Citi.
I have 3 quick ones, please, and the first one is on EBITDA. In the first 9 months, you generated sort of EUR 550 million, which implies EUR 140 million in the fourth quarter to reach the guidance. So far, I think you generated around EUR 180 million in each quarter. So where does the EUR 40 million drop in the fourth quarter comes from? I mean there's bigger wholesale payments due to phasing and probably more marketing. I just want to understand, is that the whole EUR 40 million? Or is there any other element that contributes to the sort of sharp drop off in the fourth quarter in terms of EBITDA? And then the other 2 is, could you just comment on the news that [ ProSieben ] might be interested in Sky Germany? Just to clarify. And then in term of the [ CMD ], do you have any sort of specific date in mind by now, if it's February or with the full year results?
Yes, to your first question regarding EBITDA, in the fourth quarter, we have higher spendings in marketing and in SARCs because we have some strong campaigns in the fourth quarter, which leads to an increase in this position. That is one big impact with approximately EUR 15 million to EUR 16 million in the fourth quarter. The spendings to wholesale partners are on the same level as in the first quarter where we do not see any changes.
And the second bigger impact are higher spendings for the 5G network. So this is also an amount of approximately EUR 50 million in the fourth quarter. And these positions together brings us to an EBITDA in the fourth quarter of EUR 150 million compared with the EUR 180 million in the third quarter.
Regarding Sky, we do not have any idea where this information comes from. From our side, we can say there are no ideas, no discussions. We don't know what is the driver for this, yes, messages in the market. No idea.
Regarding your last question, CMD, we are planning to organize the CMD end of February or in March, together with the communication of our figures for the year 2022. We didn't make a final decision on this, but we are just in discussion whether we will have one meeting or whether we will have two. That's something that we are discussing, but will something be end of February or mid of March.
And your next question comes from the line of Polo Tang, UBS.
I just have a few. First question is, can you comment on what's happening with both your mobile ARPU and your broadband ARPUs? So really just trying to understand really what's happening in a bit more detail in terms of your service revenue trends. So is it really because of just mobile drag? Or is mobile ARPUs being impacted, too?
Second question is really just on your network build-out. So you've previously indicated there would be delays in terms of achieving your first milestone of 1,000 activated cell sites. Can you maybe comment on what caused the delays? And can you give us an indication as to how many cell sites have been built to date? And I think you are aiming to achieve your 50% population coverage target around 2026, 2027. But what are your latest thoughts in terms of the time frame?
And my final question is really just about the transition from the MBA MVNO over to the NRA. So this obviously has to be done in the coming years. But can you maybe talk about how easy or difficult this is in terms of migrating the subscriber base? Does it require a SIM swap? And will the subscribers notice any difference in terms of their service? I think, from memory, the NRA doesn't offer any 5G. So if you could comment, that would be great.
Yes, thanks for your questions. Regarding your first questions to the ARPUs, in each product line, we see a stable ARPU situation. So in the mobile product lines, so in 1&1 segment, we see a slightly increase in our ARPUs. The ARPUs in the discount segment are stable. And the ARPUs in the fixed net lines, they are also increasing. So in total, from ARPU perspective, stable, very stable situation.
The reason for the situation and the service revenues that what I mentioned earlier, one issue is, of course, that we have the earlier cancellations of 250,000 contracts in 2022. And second issue coming from the ARPUs is that, of course, the leavings in the fixed net area with a much higher ARPU compared with, for example, the mobile ARPU is also, of course, a negative impact on the service revenue. But in the product lines, as I mentioned earlier, we have a very stable situation.
Regarding your second question, we have a delay, as we have mentioned in, yes, our news in September. The plan is to have the needed 1,000 antennas mid of next year. The exact time frame is something that what we are discussing with our partners right now to give you exactly the picture about when do we have a certain traffic coverage will be something that we would like to communicate on the CMD next year. And of course, it depends on that what we are negotiating and agreeing with the TowerCo partners at the moment.
Regarding the migration from MBA to national roaming, we think the biggest part of our customers today have already dual SIM, so it means that it is a very easy technical process to move these customers from MBA to national roaming. In the best situation, the customer doesn't feel any changes. Moving customers, for example, from -- which they're today in MVNO contract, for example, with Vodafone, these changes, of course, are a bit more complicated because we have to send a new SIM card to the customer. And the operational workaround such a migration, of course, leads to more effort than to the situation where the customer has a dual SIM. But the expectation is that, at the end after the 2 years' migration, so in the last phase where we have to migrate these customers from an MVNO contract into the national roaming agreement, that will be a very low number of contracts.
So of course, in these areas, we will have some much more operational effort, but the biggest part of our customers or customers in the MBA, MVNO contract where we see a very easy technical way to migrate them.
And your next question comes from the line of Joshua Mills, BNP Paribas.
A couple, please. The first is just coming back to the broadband net adds. So when I look at the [ TKG ] effect, it's moderated this quarter as we also see Deutsche Telekom results today. But your net adds is still running negative 40,000. So it looks like the underlying broadband net add growth for your business is declining and actually getting worse sequentially. I understand that the strategy seems to be to shed some of these customers and wait for the fiber rollout to provide support. But my question is, in the interim, a, do you think about raising prices given some of the news you've seen in Vodafone raising their prices in the last couple of weeks? And then secondly, on this point, what gives you the confidence that fiber is going to help your business given you typically focus on lower-end customers and perhaps less so on the higher-end fiber takers?
And then the second question, if I can, is just on the network plans and rollout. So we heard from Telefónica Deutschland around the price cap and what the German government is proposing a 70% of the energy could be protected in terms of price. I believe that's only though related to energy that was previously being used. And given you're going to be securing brand-new energy contracts to build this network, are you expecting any of the energy you use for the network could be capped with price? Or is it all going to be uncapped and tend to be bought in the market spot rates?
Yes. Regarding your first question to the broadband lines, as I mentioned earlier, we see besides the negative impact of the telecommunication load that our operational development still decreasing in the customer lines. And today, with the Deutsche Telekom as a strong competitor, I would say Deutsche Telekom is still the winner in the market. And besides that, the cable offers from Vodafone. So it's our view on the competition landscape is the second big competitor in the market.
Regarding your second question, we believe that fiber will bring a new momentum in the market. We've seen it in each technology change in the last year. So when the market moved from ADSL to VDSL, there is a demand in the market for new technology. So it's also a demand in the market for fiber. And therefore, we believe that this new momentum, this new demand in the market and the increase in coverage in the next years will lead us with our offers, that are too competitive, will lead to a situation where we believe in a stable customer base in the broadband lines.
Regarding the third question, the third question to the energy costs and the network, we, at the moment, with the contracts that we have and with the demand for energy in the first years, we are quite close to our assumptions that we made in our first business case. There are, yes, several ways to take care that the energy costs will -- yes, will not bring us in the situation where we have a massive increase in our costs. That's something that can -- we also make transparent on the Capital Markets Day. But today, we feel comfortable with the contracts that we have that we will be in a situation to keep the costs for energy in that range that we have calculated in our business case.
Okay. And maybe just one quick follow-up on the fiber points. Is it possible to see whether you're seeing better net add trends in areas where fiber has been rolled out already? And going forward, would you look to do partnerships with alternative fiber providers as well as Deutsche Telekom?
Of course, it's still on our strategy. Today, we have a certain number of alternative partners in the fiber landscape. And we are also in discussion with further partners, and there is a high interest in the market to cooperate with us. That's also something in our strategy that we are driving or running now.
[Operator Instructions] Your next question comes from the line of James Ratzer from New Street Research.
Two -- or a question really around the fixed wireless access launch that you are planning for this quarter. I was wondering if we could explore that in a little bit more detail. So firstly, how many sites are you actually going to be launching this service from, please? Could you let us know how many homes that would cover? And can you let us know then what speeds this will be advertised at? And any thoughts on how you're going to price it as well? That would be great.
Yes. At the beginning of next year, we will not have a big campaign on this product because of the delay that we have with the antennas. Our planning so far was that, when we have the 1,000 antennas at the end of this year, we would be able to start with the campaign. So our -- the situation so far is that we see approximately 120 to 150 antennas at the end of this year that are available or sites that are available, means with advertising and sales approach we will start later, not in January. We can do it January in certain areas where we have an antenna, but it will be more, let's say, a test phase, then start with the sales, start with sales and advertising will be mid of next year when we have the first 1,000 antennas.
That's clear. Do you have any indication then on when you have 1,000 antennas up and running how many homes would that cover? And what kind of speeds would you be able to advertise with the product?
Unfortunately, I do not have this information available, but that will also be something that we can communicate on the CMD.
And your next question comes from the line of Usman Ghazi from Berenberg.
I have got a few questions, please. The first one was just a follow-up. Did you say that you expect to have 100, 200 antennas for fixed wireless access operational by the end of this year? But presumably, the total number of antennas that we'll have operational, are they much higher than this, which obviously which you're building out for mobile coverage as well as fixed wireless access? So -- or is it that 100 to 200 that you expect to be at the end of the year, in total?
The second question was just trying to understand the CapEx guidance that -- from September. So the CapEx guidance was reduced from EUR 300 million to EUR 400 million to EUR 250 million. Obviously, if I just do the math around, let's say, EUR 50,000 cost per antenna times, however, many hundred antennas that you might have fallen short off, you don't get to such a big reduction in the CapEx guidance. So can you indicate what else has moved in terms of either deployment or payment on the infrastructure between 2022 and 2023, in addition to just the payment for the active equipment?
The third question was just on the spectrum. So I just want to get your views on the proposal by BNetzA to swap the 900 -- swap the 800 megahertz spectrum with the 900 and to have that auctioned next year? Do you see this as a reasonable compromise? Or would say that this offer needs to be improved?
Thanks for your questions. Regarding your first question, the mentioned number of antennas are sites that are available and not on each site the antenna will be installed. And therefore, these antennas will not be available for fixed wireless access product at the beginning of next year.
Regarding the CapEx, the biggest part of the CapEx are CapEx positions from Rakuten for data centers, for equipment of data centers. So it's just a smaller part for active equipment, I mean, antennas. In that area, we have postponed in next year. But in next year, we see, of course, an increase in our CapEx. It will be in the range that we have communicated in the past already. So in 2022, the biggest part of the CapEx is coming from the parts from Rakuten for data center, for software and not from the active equipment.
Regarding the spectrum situation, I would like to hand over to Oliver to -- he can give you an overview about the situation.
Usman, Oliver here. The spectrum is, as we have discussed already in the H1 call, we all, Telekom, Vodafone, Telefónica and 1&1, we all have time until the 21st of November to sign our opinions, our thoughts, our ideas to the Bundesnetzagentur contrarian to some other parts in the market. We do not want to discuss a likelihood about prolongation or an auction. It is very clear that we must have access and that we get access to the low band. But the way how the Bundesnetzagentur decides upon the final framework, I think if they have on the 21st of November the draft and they discuss it internally, and it takes them at least a couple of weeks or months to come up with a decision to the market. But we are very confident that there will be a solution which respects the access we need as the new #4 in the market.
Can I just have a clarification? Just -- I'm still not clear on the message on the number of sites. So perhaps if you -- could you indicate how many sites will have been built out by the end of this year for the mobile network plus fixed wireless access, may be that will just clear up the messaging.
Internally, of course, Usman, we have a very good view about it. But with the delay of one of our most important or the important partners is also clear that, that is a comparable ramp-up situation. We do not want to discuss right now whether it is X or Y number of sites. We are growing that into. And as Markus has concerned in presentation, the time line and the status, we are very optimistic and pretty much on the way to exercise on that. External influences, one cannot rule them out, but we are in a very good way and deliver that what we have indicated in the presentation slide.
Sorry. From that comment that you made, it seems that whatever operational issues were there between you and the tower company that is underperforming, that those have been solved? Or are they still under investigation? Or could you just give an indication on that?
Operational issues solved, sorry, remind me what...
As the power company was -- has always been below the target on delivery side. There must have been some reasons for that. Have those reasons been resolved? Or are they still being investigated?
The situation with the TowerCo, we do not name the TowerCo. The situation with the TowerCo is good discussion and well progressing. So even if they should not be solved finally today, they will be solved. Otherwise, we would not be able to communicate that we expect the 1,000 sites mid next year. More details, we do not intend to share, excuse me.
[Operator Instructions] And the question comes from Joshua Mills from BNP Paribas.
So maybe to ask related to the Usman's question, but rather than asking how many sites you have built or how active, can you just remind us what the regulator was looking for when they asked for 1,000 sites by the end of 2022? Is that sites built? Or was it having those sites turned on and actively delivering a signal?
And then related to this as well, can you just explain to us whether there is any downside risk that you get fined or any other repercussions for not meeting those targets? Which it doesn't sound like you will do, even if it's just on a site build basis. And how we should think about that risk or discussions with the regulator?
Yes. Regarding your first question, as I mentioned earlier, we have the sites available that I have mentioned earlier. The idea is to how many are active or not, that will be also something that we would like to communicate on the Capital Markets Day. As we mentioned earlier, our plan is to have the 1,000 sites as active sites at the mid of next year. And we are in a very close discussion with the regulator regarding the situation, regarding our forecast. So we have a high transparency to the German regulator, but we can't make all these information public.
But just to give you this background regarding any penalties to the regulator, we are also in discussion. We believe that we will have to pay something, but we do not see the situation. That's our impression out of the discussions that we have that we do not see the situation that it will be amount which will have a big negative impact on our EBITDA.
Great. And just going back then, at the time when the regulator asked for 1,000 sites, can you just confirm whether that was sites built or sites active?
My opinion, it's available sites which has to be ready to start to operate.
And your next question comes from the line of Adam Fox-Rumley from HSBC.
I just had one question, which was really a follow-up on the implications just for Q4 in the short term. So I think, if I'm right, you've done about EUR 26 million of the EUR 60 million guided costs for the network deployment so far this year. And your free cash flow bridge shows EUR 83 million of the EUR 250 million of CapEx that you're guiding for. My suspicion is that as you've already kind of answered a lot of the spend comes in data centers in the Q4, but can you really spend that much additional money in line with the guidance that you've set out within the one quarter?
On the OpEx side, we have 1 big project, which will be finalized in the fourth quarter. So some of the effort is already spent. And for example, we have to pay licenses, which will be reflected in OpEx. And that will be the biggest driver on the OpEx side in Q4.
Regarding the CapEx side, we have some projects where Rakuten is currently working on, and the plan is that they will finalize these projects in the fourth quarter. And after that, when the projects and the certain domains for [indiscernible] that would recreated with them in the contract, when these domains are finalized, then we have to pay for them. And therefore, when Rakuten will stay in their time line, and at the moment, we do not see that they will any postpone. Then we have to pay these amounts, which leads to the approximately EUR 250 million cash CapEx for the total year.
Okay. So it's a question of phasing of projects and how they hedge. Understood.
And your next question comes from the line of Usman Ghazi from Berenberg.
It's a question on the SAC and SRC spend and the markets you highlighted. In Q3, I think you said around EUR 15 million was spent. Can I just confirm that -- I mean, was this spend concentrated towards the end of the quarter so we haven't seen the commercial benefits of this come in as yet?
Excuse me, Oliver here. The line was very bad whilst your last question. Can you summarize, please?
Yes, my question was the distribution spend in the quarter, the EUR 15 million that was mentioned, was it done towards the end of the quarter? So the reason for asking it is I'm trying to understand if we have seen the benefits on subscriber additions from this spend already in Q3 or the benefits will come in, in Q4.
So in the fourth quarter, we have the EUR 15 million higher spending. So approximately EUR 10 million in higher marketing. It will come in October and November in the Cyber Weeks. And the higher marketing spending leads to higher net adds, which leads to the higher SARCs. So it will be something which will come over the fourth quarter. The biggest impact we believe will be in October and November due to the fact that we then -- for example, in September, we have the Cyber Week and -- sorry, in November, we have the Cyber Week. And then also in November, we will start with our, yes, Christmas offer, where we also expect a much higher number of net adds than in the last months.
Yes, I understood your question regarding the benefits. The benefits will start, yes, let's say, mid of November. Because in October, most of the customers or the biggest impact out of the campaigns will be in November. So when all these customers are connected and getting services, it will be something end of November, beginning of December. So the benefit will be more end of the year in December.
Okay. That's fine. And just to clarify what you just said. So the spend has been done in Q3 of EUR 15 million, I think you indicated. I mean, is there more spend to come in Q4? Or is the Q3 was the peak in the spend and then you see the benefits coming?
The spending in Q4 are higher than the spending in Q3.
There are currently no further questions. I will now hand the call back to Oliver Keil for closing remarks.
Thank you, Sharon, and thank you to everybody on the call and the webcast for your attention. As usual, we will be available for further discussions and questions in the afternoon. I may now return to the operator, Sharon. And after a short break, wish you all an interesting meeting in the call with our parent company, United Internet. Wish you all the best. Stay healthy and see you soon, perhaps in person again. Thanks. Goodbye.