I=10
United Internet shares shed 7% as AdTech revenue falls 66% y/y and IONOS unexpectedly discontinues it
- United Internet’s Q3 2025 (including discontinued AdTech division) revenue fell 2% y/y to EUR 1,537 million (calculated in Valuation Model)-driven by 66% y/y decline in AdTech revenue to EUR 28 million (IONOS key figures), below analysts estimate of EUR 1,546 million while EBITDA rose 1.6% to EUR 322 million, above analysts estimate of EUR 316 million.
- United Internet said excluding the AdTech business (Sedo), they continue to expect 2025 revenue of EUR 6,050 million and EBITDA of EUR 1,300 million, but lowered 2025 cash capex guidance to EUR 750 million from 800 million due to phasing of some projects to Q1 2026.
- 1&1’s Q3 2025 revenue was up 0.9% y/y to EUR 1,009.8 million, above analysts estimate of EUR 997.8, EBITDA fell 7.7% y/y to EUR 125.9 million (analysts’ estimate: EUR 123.7 million), EBIT decline 37.3% y/y to EUR 57.3 million (analysts’ estimate: EUR 48.8), EPS was EUR 0.21 (analysts’ estimate: EUR 0.18) while access contracts fell 0.1% y/y to 16.34 million (analysts’ estimate: 16.33 million).
- 1&1 reiterated its 2025 guidance which includes service revenue of EUR 3,303.1 million (unchanged from 2024), EBITDA of approximately €545 million (2024: EUR 590.8 million), EBITDA in access segment of around €810 million (2024: €856.1 million), and 1&1 network EBITDA of approximately -€265 million (2024: -€265.3 million). It lowered cash capex to EUR 400 million from EUR 450 million due to phasing of some projects to Q1 2026.
- 1&1 said in the earnings call (Notion Q3 2025 real time earnings call) that it now has 1,500 active antenna sites (at the upper point of our estimate) and 4,500 sites under development (min 4:49).
- United Internet CFO said in the earnings call (Notion Q3 2025 real time earnings call) that they are confident they will achieve 25% coverage at the end of 2025 and that they will need 2,000 active sites to achieve this coverage given their network is high-performance (min 30:16).
- United Internet CFO also said in the earnings call that they are quite suite they will get the low-band spectrum in Q1 or Q2 2026 and not at the end of 2025 since negotiations are still ongoing (min 15:12).
- United Internet CFO also said that no one has showed up (including Telefonica) regarding consolidation of 1&1 and that they are open to have a conversation as always (min 22:52).
- 1&1 CFO said competition remains intense in Germany (min 1:20).
Assessment
United Internet shares were down 7% while IONOS shares were down 10% at one point after the earnings probably due to the skepticism surrounding the collapse in AdTech revenue (-65% y/y) and the decision by IONOS to discontinue it unexpectedly. Management had guided flat revenue growth in the AdTech business in the second half of 2025, after very strong development in first half but is now saying the EUR 400 million guidance for 2025 may not be achieved. There is also uncertainty on whether and when IONOS will find its buy, given Q3 revenue and earnings development in the division. In my opinion (theory), the huge underperformance of the AdTech business may explain why IONOS CFO is leaving.
Overall, excluding the impact from the AdTech business, United internet’s revenue and earnings developed well.
The company’s announcement that it will only need 2,000 active sites to achieve 25% coverage largely diminishes the risk associated with coverage obligations. I think their estimate could be genuine (confidence level: 65%) given that 2025 and 2030 obligations do not specify (see except below) the exact requirements in terms of coverage and quality (Notion- antenna sites obligation). . More research on this area will improve my confidence level.
“It is not appropriate to impose on new entrants a more exacting requirement in terms
of household coverage, quality and transport routes – as was called for in the
responses – because, unlike existing network operators, they do not already have the
necessary infrastructure. In particular, there are at present no frequencies below
1 GHz available to new entrants that would enable them to roll out cost-effective
broadband nationwide,” BNetzA said.
I think the main risk at the moment is the issue of low-band spectrum since a delay in getting it will delay cost savings.
Q3 2025 United Internet Webcast Call
Q3 2025 1&1 Webcast Call