Telefónica demands more for network use

Telefonica

Telefonica Deutschland and the United Internet subsidiary 1 & 1 Drillisch are currently negotiating the prices for the provision of mobile communications capacity.


(Photo: dpa)

Montabaur The internet and telecommunications company United Internet has because of the price demands of the competitor Telefónica Germany for the use of its mobile network, the forecast for operating profit has been lowered.

Instead of earnings before interest, taxes, depreciation and amortization (Ebitda) of around 1.266 billion euros and thus at the previous year’s level, a decline to 1.18 billion euros is now expected, as the company listed in the MDax announced on Saturday in Montabaur.

“In addition, there will also be significant declines in earnings in the following years if the prices required by Telefónica are permanently applicable.” United Internet does not consider the wholesale prices charged for July and August to be appropriate and wants to take action against it.

Telefónica Deutschland (O2) and the United Internet subsidiary 1&1 Drillisch are currently negotiating the prices for the provision of mobile communications capacity. Telefónica Deutschland has to provide this as a condition of the merger with E-Plus.

Impact on 5G network expansion

“1 & 1 Drillisch considers the wholesale prices required by Telefónica from July 1, 2020 to be inconsistent with the voluntary commitments of Telefonica under the approval decision of the EU Commission to merge with E-Plus,” it said.

In addition, the prices are not within the scope of the existing contract with Telefónica. The first five-year extension phase has been running since July, even if there has not yet been an agreement on prices.

The outcome of the ongoing negotiations also has an impact on the development of a powerful 5G network planned by 1 & 1 Drillisch, it said. Telecom, Vodafone, Telefónica and 1 & 1 Drillisch have put billions on the table for corresponding frequencies of the 5G network. Cooperation between competitors is required for expansion, but that was the last issue.

Unlike its competitors, United Internet subsidiary 1 & 1 Drillisch does not yet have its own mobile network. Since some 1 & 1 frequency blocks will only be available in a few years, the company will rent some from Telefónica until then.

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