Germany’s 1&1 continues to struggle with 5G rollout

1&1 is a long way from where it needs to be on 5G rollout, as evidenced by new forecasts it shared for the coming year.

Germany’s newest mobile operator indicated in its latest full-year results announcement that it expects to have deployed 1,207 5G antenna sites by the end of 2023. Those sites will mainly be delivered in the third and fourth quarters, due to ongoing delays, and commissioning is unlikely to be possible this calendar year, the telco said in its 2022 results presentation.

We already knew that 1&1 was having problems with 5G rollout, largely as a result of its public spat with passive infrastructure partner Vantage Towers. 1&1 had previously said it would be some way off meeting its end-2022 target of 1,000 5G sites deployed. But even against that backdrop, those new forecasts don’t look great.

1&1 actually ended last year with just five operational 5G sites. That is, of course, a blow to its rollout plans, but it also brings a risk of sanction from the regulator. Under the terms of its spectrum licence award in 2019, the telco agreed to roll out those 1,000 sites last year, amongst other targets. Failure to comply could land it in hot water.

That’s a large part of the reason why in February 1&1 filed a complaint with the Federal Cartel Office against Vantage Towers parent Vodafone, whose actions, it claims, are standing in the way of its 5G network rollout.

1&1 first named Vantage Towers as an obstacle to its progress in September after the towers company admitted it would not meet its customer’s year-end target. In late 2021 1&1 contracted Vantage Towers to supply 3,800 sites by the end of 2025, possibly rising to 5,000. It was just the deal Vantage had been looking for as it sought to boost its tenancy ratio in one of Europe’s biggest markets, but it all quickly went sour.

In its complaint to the Federal Cartel Office, 1&1 noted that Vantage had presented a new rollout schedule at the end of 2022, but had since informed the company that there would be more delays and the new targets would not be met. “In particular, the expansion targets planned for the first quarters of 2023 are expected to be missed by a wide margin,” 1&1 said.

By this stage it was calling foul play.

“An end to Vodafone’s preferential treatment of Vantage Towers’ roll-out activities for Vodafone at the expense of 1&1’s network roll-out thus still does not appear to be in sight,” it stated.

The telco noted that while it had just five 5G sites, some of which were supplied by Vantage, Vodafone’s German unit had 1,600 5G antenna sites based on Vantage Towers infrastructure at the end of 2022.

Those are pretty damning figures.

And there could be an impact on 1&1’s wallet. “As a result of the missed expansion target at the end of 2022, the Federal Network Agency is currently considering a corresponding sanction in the form of a fine,” the telco said in its just-published annual report.

It also highlighted some of its longer-term licence conditions, including its requirement to cover 25 percent of households in 2025 and 50 percent in 2030. Failure to meet those targets could result in fines or even in the withdrawal of its spectrum.

But 1&1 is pretty upbeat on that score. “We remain confident that we will achieve coverage of 50 percent of German households before the end of 2030,” it said.

In addition to Vantage Towers, 1&1 is working with American Tower and GfTD, and late last year announced an agreement with consulting company Eubanet through which it will procure up to 7,500 new 5G antenna locations, its goal being to beat that 2030 deadline.

In its results presentation, 1&1 noted that if its 5G ramp-up progresses as expected, it will be able to add around 3,000 antenna sites to its network per year from 2024.

There have been some positive developments for the company in the past year, including the launch of its own Open RAN network and its fixed wireless access (FWA) 1&1 5G at home plan. Its mobile customer base grew to 11.68 million last year, an increase of nearly half a million over 12 months. But to build its mobile business further, the operator needs a network. The next year or so of build-out will be crucial.

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