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

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