Germany's 1&1 switches to Vodafone for 5G network deal

Jun 15, 2023

The headquarters of Vodafone Germany are pictured in Duesseldorf September 12, 2013. REUTERS/Ina Fassbender/File Photo

LONDON, Aug 2 (Reuters) - German mobile and broadband provider 1&1 (1U1.DE) said it had agreed a deal for Vodafone (VOD.L) to provide 5G coverage to its customers, ousting current network partner Telefonica Deutschland (O2Dn.DE) by October 2024 at the latest.

1&1, which is majority owned by United Internet AG (UTDI.DE), said Vodafone would provide mobile coverage in areas not covered by its new 1&1 network, including 5G, 2G and 4G, under a deal that would be concluded as soon as possible.

Telefonica Deutschland's shares slumped 16% to a three-year low of 2 euros after the announcement, while parent company Telefonica (TEF.MC) fell more than 7% in Madrid.

Shares in Britain's Vodafone rose 3% and 1&1 (1U1.DE) soared 15%, set for its biggest one-day gain since 2008.

1&1 is building a fourth mobile network in Germany, where it competes with Deutsche Telekom (DTEGn.DE), Vodafone and Telefonica Deutschland.

The new announcement marks a rapprochement between the two companies after 1&1 filed a complaint with Germany's cartel office, blaming its slow progress on rolling out radio masts on Vodafone's Vantage Towers (VTWRn.H) infrastructure business.

Vodafone's new Chief Executive Margherita Della Valle is focusing on improving the company's performance in Germany, its biggest market.

Vodafone said the commercial agreement with 1&1 was for 18 years, and it would start to deliver the 5G coverage to 1&1 customers from the second half of 2024.

It added that wholesale costs would be indexed to Vodafone's mobile network cost to reflect the impact of inflation and technological developments.

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