Q1 2024 1&1 Earnings

Investments
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1&1 is reporting its earnings earlier than its competitors this time round, but here is what I was able to find;

  • An internal letter from the Federal Network Agency suggests that an extension is likely.

  • The letter details the rules that will govern the extension and is still referred to as a “consultation draft”.

  • The draft rejects a spectrum swap that was being championed by 1&1.

  • Though the draft is considered preliminary, a change of heart by the authority is seen as unlikely [1].

  • In January, the Federal Network Agency hired EY and WIK-Consult GmbH to carry out a study [2] on competitive conditions in the German mobile market.

  • The study established that there was sufficient competition and entry of a fourth MNO will increase such competition.

  • The Federal Network Agency said it will consider the findings of the study in its decision.

  • Deutsche Telekom Chief Executive Timotheus Höttges praised [3] the findings of the study saying it would have a beneficial impact on BNetzA’s decision.

    “So I think it’s on a good path now. We are very encouraged by the statements, and I expect that there will be an extension of the use,” he said in their February earnings call.

  • During the recent MWC Barcelona 2024, European Commissioner for Internal Market Thierry Breton said they were working on a White Paper that would eliminate costly auctions across the region [3].

The above reports make me more inclined towards the extension. Though 1&1 has tried hard to justify the need for an inclusive plan by sponsoring studies that come to the same conclusion [4, 5], its rivals such as Telefonica are doing the same and arriving at an opposite conclusion [6]. Therefore, I think BNetzA might decide to go with the findings of its own study. The backing from the European Commission may also give them an upper hand against critics of an extension.

The comments on costs relate to the later point. 1&1 said if they don’t get the low-band frequency, they will have to purchase more roaming than they need today which will be more expensive.

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