- 1&1 is ahead in network expansion but lagging behind
Germany's fourth mobile network is growing, but it's still tiny compared to its competitors. The CEO of the network operator 1&1, Ralph Dommermuth, announced in Montabaur that more than 400 sites had been integrated into the network by the end of June. This was roughly double the number from three months prior. For comparison, O2 has around 28,000 active mobile sites in Germany, while Vodafone has 26,000.
O2 National Roaming
Where 1&1 doesn't have its own signals, its customers are connected to O2's network through a national roaming agreement. 1&1 pays O2 for the use of its network. However, 1&1 will switch to Vodafone this summer, so customers will be connected to Vodafone's network in the future.
Network Expansion Challenges
1&1 faced significant headwinds in building its network. Initially, it was supposed to have 1,000 sites operational by early 2023, but only five were actually in use. The Federal Network Agency then initiated a fine procedure. 1&1 blamed its expansion partner, Vantage Towers, for not handing over a large number of sites despite a corresponding contract.
The cooperation between the two companies is still not proceeding smoothly, as Dommermuth's statements indicate. "We've just had 250 sites cancelled by Vantage again." The expansion is challenging. "But we're gradually gaining altitude." By the end of 2025, 1&1 must reach a quarter of German households with its antennas, as required by the Federal Network Agency. 1&1 aims to achieve this.
Network Outage Frustrates Customers
In May, 1&1 experienced significant technical issues in its still-small network, leaving many customers unreachable for a long time. Due to this outage, the company estimates it received around 50,000 cancellations. Even Dommermuth was surprised by the outage. "My wife woke me up in the morning because my colleagues couldn't reach me on my phone, because my phone was also down."
Such incidents can happen when building a new network, but it shouldn't have happened. "We also took too long to resolve it." The company has learned from its mistakes and expects this not to happen again.
Dampened Expectations for the Full Year
1&1, a subsidiary of United Internet, had a mixed first half of the year. Revenue increased by 1.1% to €2.02 billion, while operating profit (Ebit) fell by 22.8% to €196.1 million. The costs of network expansion - startup costs - were significantly higher than before. 1&1 recently adjusted its annual forecast for revenue and profitability.
The Commission has expressed concerns about the network expansion delays faced by 1&1. Despite the challenges, 1&1 assures that they are committed to meeting the Federal Network Agency's requirement of reaching a quarter of German households with their antennas by the end of 2025.
