1&1 Boston Consulting Group Matrix

1&1 has been actively deploying Fixed Wireless Access (FWA) via its 5G network since late 2022, targeting areas where fiber optic expansion is slower. This initiative positions FWA as a key growth driver, especially in underserved markets. By leveraging its expanding 5G infrastructure, 1&1 aims to quickly gain traction in the home internet market, offering a competitive alternative to traditional broadband. In 2023, the German broadband market saw continued growth, with FWA emerging as a significant factor, particularly for rural connectivity solutions.

1&1's 5G Open RAN network is a prime example of a Star in the BCG Matrix, exhibiting robust growth and market leadership. The company's strategic push into premium mobile tariffs, leveraging its expanding 5G infrastructure and Vodafone roaming partnership, targets a high-value customer segment. Furthermore, the expansion of Fixed Wireless Access (FWA) via its 5G network since late 2022 addresses areas with slower fiber optic deployment, positioning FWA as a significant growth catalyst.

The company's success is underscored by its ability to attract new customers, evidenced by the acquisition of 190,000 new mobile internet contracts in fiscal year 2024, which directly fuels the expansion of its mobile services portfolio. 1&1's strategy of offering converged mobile and broadband bundles is crucial for enhancing customer loyalty and increasing average revenue per user in a competitive market.

1&1's service revenue, a significant cash cow, demonstrated robust growth in fiscal year 2024. This segment, excluding hardware, is projected to maintain its stability through 2025, underscoring its consistent contribution to the company's profitability.

These high-margin service revenues, primarily from telecommunications, are the engine of 1&1's cash generation. The sustained performance highlights a mature and dependable business area that consistently delivers strong profits.

1&1's mobile postpaid customer base, exceeding 12.44 million mobile internet contracts by H1 2025, represents a significant Cash Cow. This mature segment consistently generates high-margin revenue, underpinning the company's mobile operations.

The company's core DSL Broadband Connections, numbering 3.89 million as of H1 2025, continue to be a stable revenue generator, demonstrating the enduring strength of this segment. These established DSL customers contribute substantially to the Access segment's EBITDA, a testament to their Cash Cow status.

Web hosting and domain services, a key offering under the United Internet Group, also function as Cash Cows. The global web hosting market, valued at approximately $100 billion in 2024, provides a stable, high-margin revenue stream with reduced need for extensive reinvestment.

Outdated prepaid mobile offerings for 1&1 represent its Dogs. These legacy plans, characterized by low average revenue per user (ARPU), struggle to attract new customers in a market favoring flexible, modern tariffs. In 2024, the German prepaid market saw continued pressure on ARPU, with many users migrating to bundled postpaid plans or competitive digital-only offerings, leaving these older plans with minimal profit and declining market share.

1&1's legacy prepaid mobile offerings are firmly in the Dogs quadrant of the BCG Matrix. These older plans, characterized by low average revenue per user (ARPU), are struggling to attract new customers in a market that increasingly favors flexible, modern tariffs. In 2024, the German prepaid market continued to see pressure on ARPU, with many users migrating to bundled postpaid plans or competitive digital-only offerings, leaving these older plans with minimal profit and declining market share.

Traditional fixed-line telephony services, such as POTS and ISDN, are also classified as Dogs. Customer migration towards mobile-only communication and Voice over IP (VoIP) solutions has led to a significant downturn in this segment. For instance, in 2024, the number of traditional landline subscriptions continued its downward trend, with a notable year-on-year decrease observed in major European markets.

Underperforming niche cloud applications within 1&1's portfolio also fall into the Dogs quadrant. Despite the booming overall cloud market, these specialized services have not achieved substantial customer bases or significant revenue generation, consuming valuable R&D and operational capital without commensurate returns.

These "Dog" segments, including legacy prepaid mobile, traditional fixed-line telephony, and niche cloud applications, share characteristics of low market share and limited growth potential. They represent a resource drain without a clear path to future growth, prompting strategic reviews for divestment or passive revenue extraction.

The demand for cloud security services is experiencing robust growth, projected to reach $36.9 billion by 2025, signaling a significant opportunity within the ICT sector. 1&1 could strategically expand its existing cloud application portfolio by integrating more advanced cybersecurity solutions, such as AI-driven threat detection and zero-trust architectures, to capitalize on this trend. While the market is undeniably high-growth, 1&1's current market share in these highly specialized and competitive cybersecurity niches may be nascent, necessitating substantial and focused investment to establish a strong foothold and gain competitive advantage.

Question Marks represent business units or products operating in high-growth markets but with low market share. These ventures require significant investment to increase market share, with the potential to become Stars if successful, or Cash Cows if they stabilize, or Divestments if they fail to gain traction. For 1&1, these are areas where strategic investment is crucial for future growth.

The global market for edge computing, a technology enabling data processing closer to the source, is projected for substantial growth. For instance, the edge computing market was valued at $15.1 billion in 2023 and is expected to reach $60.8 billion by 2030, growing at a CAGR of 21.7%. 1&1's potential entry or expansion into providing edge computing solutions for businesses, particularly in areas like IoT or real-time analytics, would likely be a Question Mark. This is due to the high investment needed for infrastructure and specialized software development, coupled with the challenge of building brand recognition in a rapidly evolving and competitive landscape.