The Internet and telecommunications group United Internet has lowered its forecast for operating profit because of the price demands made by its competitor Telefónica Deutschland (O2) for the use of its mobile network. Instead of earnings before interest, taxes, depreciation and amortization (Ebitda) of around 1.266 billion euros and thus at the previous year’s level, a decline to 1.18 billion euros is now expected, as the company listed in the MDax announced on Saturday in Montabaur. “In addition, there will also be significant declines in earnings in the following years if the prices demanded by Telefónica are applicable over the long term.” United Internet does not consider the wholesale prices charged for July and August to be appropriate and intends to take action.
Telefónica Deutschland and the United Internet subsidiary 1 & 1 Drillisch are currently negotiating the prices for the provision of mobile communications capacity. Telefónica Deutschland has to provide this as a condition of the merger with E-Plus. “1 & 1 Drillisch considers the wholesale prices required by Telefónica from July 1, 2020 to be not in accordance with the voluntary commitments of Telefónica under the approval decision of the EU Commission for the merger with E-Plus”, it said. In addition, the prices are not within the scope of the existing contract with Telefónica. The first five-year extension phase has been running since July, even if there has not yet been an agreement on prices.
Effects on 5G network expansion
The outcome of the ongoing negotiations also has an impact on the development of a powerful 5G network planned by 1 & 1 Drillisch, it said. Telekom, Vodafone, Telefónica and 1 & 1 Drillisch have put billions on the table for the corresponding frequencies of the 5G network. Cooperation between competitors is required for expansion, but that was the last issue. In contrast to its competitors, United Internet subsidiary 1 & 1 Drillisch does not yet have its own mobile network. Since some 1 & 1 frequency blocks will only be available in a few years, the company will rent some from Telefónica until then.