Düsseldorf Ralph Dommermuth is known in the telecommunications industry as a clever negotiator. On Wednesday, he once again made it clear why: according to an ad hoc announcement, his company 1&1 has concluded an “exclusive” contract with its competitor Vodafone. The content is a “National Roaming Partnership” for up to 18 years.
As a result, the companies are working closely together: Dommermuth’s almost twelve million customers will be allowed to use the entire Vodafone mobile network – i.e. 2G, 4G (LTE) and the currently fastest 5G connections – in addition to the 1 &1 infrastructure from October 1 next year at the latest. These are becoming increasingly important for customers who are interested in a mobile phone contract. The providers can therefore charge higher prices for 5G accesses.
1&1 Vodafone pays a fixed price for access per percentage point of the network power it has used. These prices are set anew every year. So far, 1&1, which itself only has a very thin mobile phone network, has opted for a roaming agreement with Telefónica Deutschland (O2). It was created in the course of coercive measures by the EU Commission and was negotiated accordingly doggedly.
Ralph Dommermuth frees 1&1 from the 5G trap with the contract
Dommermuth had already complained in an interview with the Handelsblatt in May that the conditions were no longer up-to-date. While 1 &1 is setting up its own 5G network, it is absolutely dependent on roaming so that its own customers can surf and make calls even in regions that are not yet served.
Since this still applies to almost the entire country, the contract with Vodafone is important for Dommermuth. Because modern 5G connections were explicitly excluded in his previous agreement with Telefónica.
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The construction of its own 5G network at 1&1 is still stalling. The company currently only has around 40 activated 5G locations. However, it should have been 1000 by the end of 2022 in order to meet the expansion requirements of the Federal Network Agency on time.
has enabled 1&1 so far. Actually, by the end of 2022 it should have already been 1000.
It is at least questionable whether the provider will create the 1,200 locations announced in the spring by the end of 2023. Dommermuth told Handelsblatt in the spring that the ramp–up would only really pick up speed in the second half of the year – that is, now. This is sometimes doubted in the industry.
The radio tower dispute between Vodafone and 1&1 remains
Thanks to the Vodafone contract, at least the business expansion pressure is now falling. 1&1 no longer has to fear that customers will be looking for real 5G from the competition in the future. However, the expansion requirements of the Federal Network Agency, which has already initiated a fine procedure against 1 &1, remain in place.
>> Also read: Opening of 5G networks could push down prices in the mobile network
In addition to 1&1, Vodafone is also emerging as the winner from the deal. The Group is in bad shape, losing customers and executives. The new boss Margherita della Valle is trying to turn the trend around. Dommermuth’s customers are likely to gain momentum in Germany – Vodafone’s most important market – thanks to additional sales.
Della Valles Germany Governor Philippe Rogge was already looking forward to being able to “make even better use of his networks” and to “continue to improve them for our customers”. However, first of all, he needs to increase the network capacity. Therefore, additional profits are not expected at the Düsseldorf headquarters until 2026.
The harmony between the management floors in Düsseldorf and Montabaur also remains limited: the simmering conflict between 1&1 on the one hand and Vodafone with its radio tower subsidiary Vantage Towers on the other remains unaffected by the roaming agreement, it was said. Dommermuth accuses them of being largely responsible for the expansion backlog of its 5G network. 1 &1 even filed a complaint with the Federal Cartel Office.
For Telefónica Deutschland, where a kind of love-hate relationship is maintained with partner Dommermuth, the new contract is bad news. The stock temporarily lost more than 17 percent on Wednesday. The group, which is separately listed on the stock exchange in Germany in addition to the Spanish parent company, is also said to have negotiated 5G roaming with 1 &1.
From autumn next year, CEO Markus Haas will now lose tens of thousands of customers month after month, which 1&1 will transfer to Vodafone in several stages. The move will be completed by the end of 2025 at the latest. Telefónica does not publicly quantify the percentage of revenue generated by 1&1 roaming.
In the past, analysts expected an effect of at least EUR 600 million. Telefónica announced on Wednesday afternoon that it would stick to forecasts such as minimum dividend for the current financial year.
1&1 announced on Thursday morning that it had earned around 254 million euros (EBIT) in the last six months. The company explained the decline of almost twelve percent with the costs for the 5G network setup.
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First publication: 02.08.2023, 17:18.