In the earnings call;
- 1&1 mentioned a leaked BnetzA internal letter in the yellow press, which mirrors their worst-case scenario (Context: A low-band frequency prolongation without an obligation to provide access for 1&1). They said they are waiting for an official statement.
- They pointed out that if they miss the low-band spectrum, they will make use of national roaming to provide a good indoor coverage which will imply that they will have low traffic (Context: they still guide for close to 50% nationwide coverage by 2030 without the low-band frequency and 60% if they get possession of it) and that impacts their financial performance (due to higher cost of national roaming).
- 1&1 said they experienced a significant migration at the end of March, that their current migration level is 20-40k per day (Context: they approaching optimum level of 50k per day) and that they had migrated around 1 million customers at the end of April.
- They noted that the customer additions during the quarter was impacted by discounts offered by competitors and the migration though the latter’s impact couldn’t have been high due to the low number of migrated customers.
- They said they had 530 base stations (Guided: 600) and 227 active antenna sites (Guided: 200) at the end of March and that they still want to have 3,000 antenna sites at the end of 2024.
- They are guiding for 80-100k net customer additions in Q2 2024 (aided by the tariff changes they made last quarter), which would be above their guided 75k upper point average for each quarter this year (they said in Q4 2023 that they expect to add 200-300k customers in 2024).
Assessment of the earnings
1&1’s operating performance during the quarter was stable though the net customer additions was impacted by the migration. Also, their 2024 outlook and progress on the network buildout and customer migration to own network is positive. The missing piece is the decision of BnetzA on whether to extend the network or not and if to provide obligation for sharing of the low frequencies. The fact that the call focused on the worst case scenario implies that 1&1 may get disadvantaged by the decision.