1&1 Bundle
What is the Growth Strategy and Future Prospects of 1&1 AG?
1&1 AG is making waves in Germany's telecom sector by building its own 5G network, a bold move launched commercially in December 2023. This strategy aims to boost competition and innovation.
Founded in 1988, the company has grown from an internet service provider to a major player in broadband and mobile communications. Its future success relies heavily on the 5G network rollout and ongoing innovation.
As of the first half of 2025, 1&1 AG boasts 16.33 million customer contracts, with 3.89 million in broadband and 12.44 million in mobile internet. This substantial customer base provides a strong foundation for its ambitious expansion plans. Understanding the external factors influencing this strategy is crucial, as highlighted in the 1&1 PESTEL Analysis.
How Is 1&1 Expanding Its Reach?
1&1 AG is aggressively pursuing a growth strategy centered on the development of its proprietary 5G mobile network, a significant undertaking in the German telecommunications landscape.
5G Network Build-Out Initiative
The company's core expansion initiative involves the extensive construction of its own 5G mobile network using Open RAN technology. This ambitious project aims to achieve significant market penetration within Germany.
Coverage Targets and Progress
The strategic goal is to cover 25% of German households by the end of 2025 and expand this coverage to 50% by the end of 2030. By the close of 2023, 1&1 had established 1,062 antenna sites, with 243 already equipped with base stations, and set a target of 3,000 sites for 2024.
Customer Migration and Network Expansion Pace
As of June 2025, the company reported a significant milestone, surpassing 10 million users on its new Open RAN 5G network. This growth is fueled by a rapid customer migration, with up to 50,000 customers daily switching from rival networks to 1&1's infrastructure, marking one of the fastest mobile network expansions in Europe.
Strategic Partnerships and Roaming Agreements
To facilitate this rapid deployment, 1&1 is collaborating with infrastructure providers like Vantage Towers and American Tower, alongside Eubanet for antenna site acquisition. National roaming agreements are in place to ensure comprehensive coverage during the network build-out phase.
Ensuring Nationwide Coverage and Market Positioning
While initially dependent on Telefónica's network, a crucial long-term roaming deal with Vodafone Germany, effective from summer 2024, grants access to Vodafone's 2G, 4G, and 5G networks. This strategic move gradually reduces reliance on Telefónica, whose roaming agreement is set to conclude in June 2025. These initiatives are fundamental to diversifying revenue streams, attracting new customers, and solidifying 1&1's position as a significant fourth player in the competitive German mobile communications market, reflecting a robust Marketing Strategy of 1&1.
- Accelerated 5G network deployment using Open RAN technology.
- Targeting 25% German household coverage by end of 2025 and 50% by end of 2030.
- Achieved over 10 million users on the new 5G network by June 2025.
- Secured national roaming agreements with Vodafone Germany from summer 2024.
1&1 SWOT Analysis
- Complete SWOT Breakdown
- Fully Customizable
- Editable in Excel & Word
- Professional Formatting
- Investor-Ready Format
How Does 1&1 Invest in Innovation?
The company's innovation and technology strategy is centered on building a next-generation mobile network. This approach is designed to meet evolving customer needs for speed, reliability, and low latency.
Open RAN Leadership
The company operates Europe's first fully virtualized 5G mobile network utilizing Open RAN technology. This strategy aims to drive increased competition and innovation within the German mobile market.
Extensive Partner Ecosystem
Significant R&D investments support collaborations with over 80 technology partners. Key partners include Rakuten Symphony for active network equipment and Mavenir for 5G core functionality.
Decentralized Cloud-Native Architecture
A decentralized, cloud-native Open RAN architecture underpins the network's digital transformation. This foundation is crucial for supporting advanced, real-time applications.
Robust Data Center Infrastructure
As of June 2025, the company has four core data centers and 24 edge data centers operational. Additionally, 279 of the planned 500 local data centers are active, ensuring Germany-wide low-latency coverage.
Enhanced Network Performance
This technological setup enables high-speed downloads and uploads. Performance enhancements have been demonstrated, including upgrades at major sporting venues.
Future-Ready Network Design
By prioritizing open interfaces and cloud-native solutions, the company is building a network optimized for future real-time applications. This positions them as a leader in innovative network deployment.
Strategic Technology Adoption
The company's commitment to adopting cutting-edge technologies like Open RAN and cloud-native solutions is a cornerstone of its 1&1 growth strategy. This focus on innovation is key to its 1&1 future prospects and overall 1&1 company strategy.
- Investment in R&D to drive technological advancements.
- Collaboration with a diverse range of technology partners.
- Building a decentralized and flexible network architecture.
- Ensuring widespread low-latency coverage across Germany.
- Focus on open interfaces for future compatibility and innovation.
- This approach aligns with the broader Mission, Vision & Core Values of 1&1, emphasizing forward-thinking development.
1&1 PESTLE Analysis
- Covers All 6 PESTLE Categories
- No Research Needed – Save Hours of Work
- Built by Experts, Trusted by Consultants
- Instant Download, Ready to Use
- 100% Editable, Fully Customizable
What Is 1&1’s Growth Forecast?
1&1 AG's financial performance in the first half of 2025 shows a slight revenue dip while heavily investing in its 5G network. The company is navigating a period of significant capital expenditure to build out its infrastructure.
H1 2025 Revenue Performance
Total revenue for the first half of 2025 was €2,006.4 million, a marginal decrease from €2,015.9 million in the same period of 2024. Service revenue, however, remained largely stable, reaching €1,646.5 million in H1 2025 compared to €1,644.9 million in H1 2024.
EBITDA and EPS Trends
EBITDA saw a decline of 13.1% to €283.9 million in H1 2025. This was largely due to increased start-up costs for the new mobile network, which amounted to -€130.6 million, up from -€111.0 million in the prior year. Earnings per share (EPS) fell to €0.42 from €0.77 in H1 2024.
Capital Expenditure Surge
Investment volume, measured as cash capex, increased substantially to €118.0 million in H1 2025, a significant rise from €34.0 million in H1 2024. This highlights the company's commitment to its 5G network build-out as a core part of its 1&1 growth strategy.
Full Year 2025 Outlook
For the full year 2025, the company forecasts stable service revenue, projecting it to remain at the 2024 level of €3,303.1 million. EBITDA is expected to decrease by approximately 7.8% to around €545 million, influenced by ongoing network development costs.
The 1&1 company strategy for 2025 includes a significant increase in capital expenditure, with cash capex projected at approximately €450 million, up from €290.6 million in 2024. To finance this ambitious network expansion, a key element of the 1&1 business development, the company has secured a subsidized loan of up to €800 million from the Japan Bank for International Cooperation (JBIC), with the first tranche of €290 million drawn in February 2025. This financial backing is crucial for the 1&1 market expansion and its long term business goals.
Network Investment Impact
The substantial increase in depreciation, driven by the growing number of antenna sites, is a direct consequence of the 1&1 digital strategy analysis and its focus on building a robust network infrastructure.
Financing the Growth
Securing the JBIC loan demonstrates a strategic approach to funding the capital-intensive 5G rollout, ensuring the company has the necessary resources for its 1&1 innovation and development plans.
Revenue Stability
Despite increased costs, the company's ability to maintain stable service revenue indicates resilience in its core business operations and customer base, a positive sign for 1&1 revenue growth strategies.
EBITDA Pressure
The projected decline in EBITDA for 2025 is a direct result of the significant upfront investment in the new mobile network, a common challenge during large-scale infrastructure development, impacting the 1&1 company future outlook.
Customer Base Focus
The expectation of a stable contract base suggests effective 1&1 customer acquisition tactics and strong customer retention, which are vital for long-term growth and market share.
Competitive Positioning
Understanding the Competitors Landscape of 1&1 is crucial when evaluating these financial projections, as market dynamics influence revenue and investment capacity.
1&1 Business Model Canvas
- Complete 9-Block Business Model Canvas
- Effortlessly Communicate Your Business Strategy
- Investor-Ready BMC Format
- 100% Editable and Customizable
- Clear and Structured Layout
What Risks Could Slow 1&1’s Growth?
1&1 AG's growth strategy faces significant hurdles, including initial delays in its 5G network deployment. The company missed a key regulatory deadline to have 1,000 antenna sites operational by the end of 2022, with only five active at that time. This led to a proceeding by the German Federal Network Agency, carrying potential fines of up to €50 million.
5G Rollout Delays
Initial setbacks in deploying 5G antenna sites have created regulatory challenges. The company cited partner issues and site acquisition difficulties as primary reasons for these delays.
Network Outages and Churn
A temporary outage of its new mobile network in May 2024 impacted customer retention. This event led to an unexpected rise in customer churn and hindered the planned migration of existing users.
Intense Market Competition
The company operates in a highly competitive telecommunications market. Established players like Deutsche Telekom, Vodafone, and Telefónica Deutschland present a continuous challenge for customer acquisition and retention.
Fiber Network Bottlenecks
Connecting its mobile masts to the fiber network remains a critical operational bottleneck. This infrastructure challenge directly affects the efficiency and expansion of its services.
Regulatory Uncertainties
Future operations could be influenced by regulatory uncertainties. Questions surrounding the legitimacy of a 2019 frequency auction and expiring frequency rights add layers of complexity.
Addressing Operational Issues
Management is actively working to resolve these issues. Efforts are underway to overcome antenna bottlenecks and secure compensation for damages from network outages.
The company's ability to navigate these challenges will be crucial for its future prospects. Understanding the Revenue Streams & Business Model of 1&1 provides context for how these risks might impact its overall financial performance and growth trajectory.
Regulatory Scrutiny
The German Federal Network Agency initiated proceedings due to missed 5G deployment targets. Potential fines of up to €50 million highlight the severity of these regulatory challenges.
Customer Retention Impact
A temporary network outage in May 2024 led to increased customer churn. This event temporarily halted the planned migration of existing customers to the company's own network.
Infrastructure Dependencies
The company faces significant challenges in connecting its mobile masts to the fiber network. This remains a key bottleneck for its operational efficiency and expansion plans.
Market Saturation
The telecommunications market is highly saturated, with strong competition from established providers. This environment makes customer acquisition and retention a continuous challenge for the company's 1&1 growth strategy.
1&1 Porter's Five Forces Analysis
- Covers All 5 Competitive Forces in Detail
- Structured for Consultants, Students, and Founders
- 100% Editable in Microsoft Word & Excel
- Instant Digital Download – Use Immediately
- Compatible with Mac & PC – Fully Unlocked
Disclaimer
All information, articles, and product details provided on this website are for general informational and educational purposes only. We do not claim any ownership over, nor do we intend to infringe upon, any trademarks, copyrights, logos, brand names, or other intellectual property mentioned or depicted on this site. Such intellectual property remains the property of its respective owners, and any references here are made solely for identification or informational purposes, without implying any affiliation, endorsement, or partnership.
We make no representations or warranties, express or implied, regarding the accuracy, completeness, or suitability of any content or products presented. Nothing on this website should be construed as legal, tax, investment, financial, medical, or other professional advice. In addition, no part of this site—including articles or product references—constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any securities, franchises, or other financial instruments, particularly in jurisdictions where such activity would be unlawful.
All content is of a general nature and may not address the specific circumstances of any individual or entity. It is not a substitute for professional advice or services. Any actions you take based on the information provided here are strictly at your own risk. You accept full responsibility for any decisions or outcomes arising from your use of this website and agree to release us from any liability in connection with your use of, or reliance upon, the content or products found herein.