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United Internet sees 5G costs begin to mount despite COVID-19 delay

The parent company of 1&1 Drillisch reports only moderate growth in operating profits, although it hails the first quarter of 2020 as a good start to the year.

Anne Morris

May 13, 2020

2 Min Read
United Internet sees 5G costs begin to mount despite COVID-19 delay

United Internet, the wannabe fourth mobile network operator in Germany under the 1&1 Drillisch brand, indicated that the cost of building its new 5G network further impacted its bottom line in the first quarter of 2020, despite previous reports that the network rollout has been delayed by COVID-19.

The company said initial costs for 5G rose to €2.8 million (US$3 million) in the first three months, up from €1 million ($1.1 million) a year previously. In 2019 as a whole, 5G costs amounted to €5.7 million ($6.2 million).

Overall, United Internet said it got off to a good start in 2020, although a "temporary change in customer behavior" due to the pandemic also burdened earnings by €4.9 million ($5.33 million). As a consequence, EBITDA increased by only 0.4% to €300.8 million ($327 million), although revenue rose by 4.1% to €1.33 billion ($1.44 billion).

CEO Ralph Dommermuth said the company is maintaining its outlook for 2020, with sales and EBITDA expected to be broadly in line with previous the year's figures. However, he noted that the forecast is still subject to uncertainty because of the coronavirus crisis.

"In the coming weeks and months, we will continue to analyze the effects of the crisis on our business development, and plan to update the outlook in our half-yearly report 2020," he said.

United Internet's 1&1 Drillisch acquired 5G-enabling spectrum during Germany's 5G auction in 2019, with all four operators paying a combined €6.5 billion ($7.06 billion) for spectrum rights. Having used Telefónica's network to provide mobile services, 1&1 Drillisch is now building its own mobile network after spending nearly €1.1 billion ($1.19 billion) on spectrum.

The operator acquired two blocks of 10MHz in the 2GHz band and five blocks of 10MHz in the 3.6GHz band. 1&1 Drillisch has also subsequently leased two blocks of 10MHz each in the 2.6GHz band from Telefónica Deutschland to help it fulfill its 5G ambitions.

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— Anne Morris, Contributing Editor, Light Reading

About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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