(new: Interview with Ralph Dommermuth)
MONTABAUR (dpa-AFX) - Germany's soon-to-be fourth mobile operator 1&1 believes it is on track to implement government expansion requirements despite problems with the rollout of its 5G mobile network. "If our strategy works out, we will be back on track," 1&1 CEO Ralph Dommermuth said Thursday in an interview with financial news agency dpa-AFX. At the same time, the manager wants to have it examined to what extent he can pass on additional costs resulting from the delays to contractual partners.
On the stock exchange, however, the results of the previous evening initially caused long faces. The papers of the parent company United Internet and 1&1 were still in the red in afternoon trading. The bills of the web hosting subsidiary Ionos, on the other hand, increased by 3.8 percent. "I can understand that our investors remain skeptical for the time being after the delivery delays last year. At the moment, I can't refute that," Dommermuth said.
Company documents show that 1&1 aims to have a good 1,200 5G sites in its portfolio by the end of the year. Currently, there are 94 sites, 14 of which have already gone live. Dommermuth expressed optimism that the new ramp-up will be successful: "We assume that the binding commitments made by our suppliers will now be fulfilled." For one thing, he hopes that with the new Vantage owners, including KKR, an ofrish Windo will move in. "For another, we've been presented with new forecasts with exact milestones that we're comfortable with," the executive said. 1&1 plans to market its first smartphone tariffs in the third quarter.
Dommermuth had in the past accused his contractual partner Vantage Towers and its parent Vodafone of delaying the contractually agreed expansion of antenna sites. Vantage Towers works for 1&1 and thus for a direct Vodafone competitor. According to 1&1, the accusation is currently being investigated by the German Federal Cartel Office. Vodafone had already rejected the accusations in February, stating that it had "taken note of 1&1's accusations with astonishment.
And even now, the dust doesn't seem to have completely settled. Dommermuth, who is also head of the parent company United Internet, wants to check whether additional costs resulting from the delays can be passed on to contractual partners. 1&1, in turn, faces possible fines from the German Federal Network Agency as a result of the failure to meet 2022 targets - the new mobile provider could also pass these on. When asked, a spokeswoman for Vantage Towers declined to comment on the details of the contract. However, Dommermuth made it clear that an end to the business relationship was not being discussed: "As of today, we do not want to terminate the cooperation with Vantage Towers. If delivered, we will stay with it."
1&1 must reach at least 25 percent of German households with its mobile network by the end of 2025 and 50 percent by the end of 2030, according to requirements imposed by the German Federal Network Agency from the 2019 auction. According to company documents, 1&1 expects to obtain 3,000 new sites per year from 2024. In this context, scaling effects should have a positive impact, Dommermuth said.
Previously, it was envisaged that Vantage Towers would shoulder the bulk of the planned sites. The smaller remainder was distributed among the other build-up partners. Theoretically, 1&1 could also cooperate with Deutsche Telekom subsidiary Deutsche Funkturm (DFMG) as a further partner - but there is no official information on this. The latest word from industry circles was that DFMG and 1&1 had not reached a common denominator due to differing views on price clauses.
Meanwhile, 1&1 expects start-up costs for the 5G network to be twice as high in the current year than in 2022. In an initial reaction, Goldman Sachs analyst Yemi Falana viewed this as a negative surprise.
In 2023, United Internet aims to increase sales to EUR 6.2 billion, which would correspond to an increase of around 4.8 percent compared to the 2022 figure. In the past year, the Group achieved an equally strong increase to around EUR 5.9 billion. However, operating earnings before interest, taxes, depreciation and amortization are expected to remain at the previous year's level of around 1.27 billion euros as a result of increased investments, the company announced on Wednesday evening.
Two-thirds of revenue was generated by the mobile communications subsidiary 1&1, which grew by 1.4 percent to almost EUR 4 billion. Operating profit adjusted for special effects climbed 3.2 percent to 693.3 million euros. In 2023, revenue is expected to increase by around two percent, while day-to-day operations are likely to generate less profit.
Meanwhile, web hosting subsidiary Ionos has mixed feelings about the current year. Although revenue should increase by around a tenth and adjusted operating earnings (Ebitda) by at least ten percent. In 2022, however, the stock market newcomer still increased its sales by 17.2 percent to almost 1.3 billion euros. However, less of this was left over in operational terms: due to greater marketing expenditure to increase brand awareness and higher energy costs, adjusted operating profit (Ebitda) fell slightly to 345.6 million euros./ngu/jkt/he
