Freenet shares plunged nearly 10% in Germany after UBS downgraded the telecoms company to Sell from Neutral. The broker maintained its price target at €28.50 but warned of an expectations reset amid emerging risks. The steep decline comes after the stock had gained 15% year-to-date before today's pullback, bringing its performance roughly in line with European peers.

UBS analysts led by Polo Tang expressed concerns about stretched valuation, with Freenet trading at the top end of its historical range. The firm anticipates mounting pressure in the core mobile business due to Germany's ongoing price war, which threatens to push average revenue per user lower through 2026. Waipu TV growth has also stalled amid increased competition and reduced marketing spend.

Analysts identified structural challenges in both business segments, expecting Q4 results to reveal that current pressures are not cyclical but rather fundamental to the company's operations. The downgrade also highlights longer-term concerns about AI disruption, as the technology could impact consumer plan selection and mobile network operator strategies for customer retention.

UBS estimates remain 6.5% below consensus for 2028 group EBITDA, with most of the divergence coming from the TV business. The firm's assessment suggests investors should reassess Freenet's valuation given near-term headwinds and emerging technological threats that could reshape the telecoms landscape.