1&1 Business Model Canvas

1&1's strategic reliance on technology and equipment suppliers is paramount, particularly with its fully virtualized 5G network built on Open RAN. Rakuten Symphony serves as a critical general contractor, supplying active network equipment and ensuring mobile performance, underpinning the network's innovative architecture.

1&1's strategic partnerships are foundational to its 5G network build-out and service delivery. Collaborations with infrastructure providers like Vantage Towers and American Tower are essential for securing antenna sites. Furthermore, its relationship with sister company 1&1 Versatel ensures vital fiber optic connectivity, a critical component for 5G deployment.

The company also relies on partners such as Eubanet and GfTD for site acquisition and construction, facilitating the physical expansion of its network infrastructure. These alliances are key to efficiently establishing the physical backbone of their 5G services.

1&1's network development is further supported by its strategic shift in national roaming agreements. While Telefónica (O2) was a historical partner, 1&1 is actively transitioning its national roaming services to Vodafone Germany as of 2024, aiming to enhance coverage and quality. This migration is expected to be completed by autumn 2025, ensuring continued nationwide connectivity for its customers.

In terms of technology, 1&1's fully virtualized 5G network, built on Open RAN, heavily depends on suppliers like Rakuten Symphony, which acts as a general contractor providing active network equipment. This partnership is crucial for the operational performance and innovative architecture of their 5G infrastructure.

Beyond infrastructure and technology, 1&1 actively partners with content and application providers to enrich its service bundles. These collaborations, though not always detailed publicly, are vital for differentiating its offerings and capturing a broader market share by integrating services like streaming, cloud solutions, and smart home technologies.

Retail partnerships are also a significant channel for 1&1's customer acquisition. In 2024, collaborations with electronics retailers and independent dealers helped extend its market penetration, particularly for mobile services, where in-person engagement remains influential.

1&1 actively develops and innovates its service portfolio, which is a core activity. This includes a wide range of offerings such as high-speed broadband internet, various mobile communication plans for both postpaid and prepaid customers, and a suite of cloud-based applications designed for businesses and individuals.

A significant part of this innovation involves leveraging their Open RAN network infrastructure. This allows 1&1 to pioneer and roll out new 5G services, with Fixed Wireless Access being a prime example, offering a competitive alternative to traditional fixed-line broadband. They are also continuously working to improve and expand their existing services to meet evolving customer demands.

For instance, in 2024, 1&1 continued its network expansion and optimization efforts, aiming to provide enhanced speeds and reliability. Their investment in Open RAN technology is a strategic move to foster greater flexibility and cost-efficiency in their network development, which directly feeds into their product innovation pipeline.

1&1's key activities revolve around building and operating its 5G mobile network using Open RAN technology, aiming for 25% German household coverage by the end of 2025. They also focus on customer acquisition and retention across mobile and broadband services, evidenced by strong growth in mobile internet subscriptions in 2024. Innovation is central, with the development of new 5G services like Fixed Wireless Access, supported by ongoing network optimization.

Skilled employees, especially engineers for network development and IT specialists for virtualized operations, are fundamental to 1&1's Open RAN strategy. Their deep knowledge is essential for constructing and managing this advanced infrastructure.

Customer service personnel are equally critical, ensuring the delivery of high-quality services to end-users. The expertise of these teams directly impacts the reliability and performance of 1&1's network offerings.

In 2024, the demand for specialized telecom talent, particularly in areas like Open RAN and cloud-native network functions, has intensified. Companies like 1&1 are investing heavily in attracting and retaining these professionals to maintain a competitive edge.

1&1's core strength lies in its extensive physical network infrastructure, including antenna sites and data centers, complemented by a robust fiber optic transport network. This is underpinned by crucial spectrum licenses essential for mobile service delivery.

The company leverages a strong brand reputation and a significant customer base of 16.35 million contracts as of Q1 2025, providing a stable revenue foundation.

Key intellectual property includes their Open RAN strategy, advanced IT systems, and specialized software for network virtualization and cloud platform management.

Financial resources are vital, with 1&1 securing funding through internal cash flow, equity, and debt, exemplified by a 2024 development loan from JBIC for network construction.

Beyond just providing internet and mobile services, 1&1 offers a suite of integrated cloud-based applications. These include services like online storage, cloud telephony, and even smart home solutions, adding significant value for their customers.

These additional services are particularly beneficial for small to medium-sized businesses, offering them a convenient, all-in-one digital ecosystem. For instance, their cloud telephony solutions can streamline communication, a critical aspect for many businesses, especially as remote work continues to be prevalent.

In 2024, the demand for integrated cloud solutions continued to grow, with businesses increasingly looking for ways to enhance productivity and collaboration. 1&1's strategy to bundle these applications with their core connectivity offerings positions them to capitalize on this trend, making their internet and mobile packages more attractive and versatile.

1&1 offers robust, high-speed broadband internet powered by an extensive fiber-optic network and strategic collaborations with regional carriers, ensuring reliable connectivity for homes and businesses. The company reported over 4 million broadband connections in 2023, demonstrating strong customer adoption.

1&1 provides a comprehensive mobile service portfolio, including both postpaid and prepaid plans, while actively expanding its 5G network. By the close of 2024, 1&1 aimed to cover a significant percentage of German households with its advanced 5G infrastructure.

The company enhances its offerings with integrated cloud services such as online storage and cloud telephony, creating a valuable all-in-one digital ecosystem, particularly beneficial for small to medium-sized businesses seeking to boost productivity and collaboration.

1&1 employs a competitive pricing strategy, augmented by discount brands, to appeal to a wide range of consumers and capture diverse market segments. This approach ensures they deliver strong value, offering high-quality services at attractive rates.

1&1 is committed to providing dependable connectivity for its business clients through its own mobile network development and national roaming partnerships. The company continued its strategic customer migration to its proprietary network throughout early 2024, aiming for substantial onboarding by year-end.

1&1 likely focuses on building strong customer bonds through tailored offers and rewards. This strategy aims to increase customer lifetime value and minimize the likelihood of customers switching to competitors. For instance, in 2024, telecommunications companies reported that personalized promotions can boost customer retention by up to 15%.

These personalized offers could include exclusive discounts on new services or bundled packages for long-standing clients. Loyalty programs might provide tiered benefits, such as faster customer support or early access to new features, fostering a sense of appreciation and encouraging continued engagement with 1&1's offerings.

1&1 cultivates customer relationships through a blend of digital self-service, direct support, and loyalty initiatives. Their online portals empower customers to manage accounts independently, while phone and chat support address specific needs, especially during crucial service changes. Personalized offers and loyalty programs are key to boosting customer lifetime value and retention, with tailored promotions potentially increasing retention by up to 15% in 2024.

Community building, through forums and social media, further enhances the customer experience by enabling peer-to-peer support and feedback. This engagement can significantly boost customer loyalty and lifetime value, with studies showing a 20-30% increase in lifetime value for companies with strong community engagement.

Contractual relationships, particularly long-term agreements for broadband and mobile services, form the core of 1&1's customer base, ensuring predictable recurring revenue. These contracts are vital for financial planning, allowing for accurate revenue forecasting and investment in infrastructure, as evidenced by a significant portion of 1&1's revenue in 2023 stemming from its existing customer base.

While 1&1 is predominantly an online business, it strategically utilizes a network of physical retail stores. These stores, whether company-owned or operated through partnerships, serve a crucial role in catering to customers who value face-to-face interactions for product exploration and customer service. This hybrid approach expands 1&1's reach beyond digital channels.

1&1's channel strategy is multifaceted, encompassing direct online sales, a dedicated sales force, call centers, and a select network of physical stores. These channels are designed to reach a broad customer base and cater to diverse purchasing preferences.

In 2024, the digital landscape continues to emphasize seamless online experiences, making 1&1's e-commerce platform a critical revenue driver. This focus is supported by the ongoing growth in global online retail, projected to exceed trillions of dollars, underscoring the importance of efficient digital sales funnels.

The company also relies on strategic partnerships and affiliate marketing to expand its reach. These collaborations allow 1&1 to tap into new customer segments by leveraging the established audiences of partners, a strategy that proved effective in 2023 with affiliate marketing contributing significantly to customer acquisition for many digital service providers.

1&1's advertising efforts across various media are crucial for brand building and driving traffic to its sales channels. In 2023, the company's marketing and sales expenses reflected a considerable investment in customer acquisition within the competitive digital services market.

Mobile internet users represent a substantial segment for 1&1, encompassing both postpaid and prepaid subscribers. The demand in this area is heavily influenced by competitive pricing on data allowances, the perceived quality and reach of network coverage, and attractive smartphone bundling deals. In 2024, the German mobile market saw continued growth, with a significant portion of the population relying on mobile data for daily communication and access to online services.

1&1 serves a diverse customer base, primarily focusing on private households and small to medium-sized businesses (SMBs). For households, the emphasis is on reliable, high-speed internet, including fiber optic connections, and mobile plans with ample data. SMBs seek dependable digital infrastructure, scalable solutions, and accessible support to facilitate their operations and digital transformation efforts.

The company also targets mobile internet users, offering both postpaid and prepaid options, with competitive pricing and strong network coverage being key attractors. Broadband internet users, a foundational segment, require consistent performance for both personal and professional use, with many upgrading to faster fiber connections.

1&1 employs a dual-brand strategy to cater to different market needs. Discount brands appeal to cost-conscious consumers, while the main 1&1 brand targets those seeking enhanced features and premium support, maximizing market penetration and revenue.

Marketing and sales expenses are crucial for customer acquisition and building brand awareness. In 2024, companies are allocating significant portions of their budgets to digital advertising, content marketing, and sales team commissions to reach target audiences effectively.

These costs directly impact the overall cost of distribution, as they cover the efforts to get the product or service in front of potential buyers. For instance, many SaaS companies in 2024 are seeing customer acquisition costs (CAC) rise, with some reporting CAC exceeding $1,000 for certain market segments, underscoring the heavy investment required.

Key cost drivers for 1&1 include significant capital expenditure on building its 5G network, estimated in the hundreds of millions of euros for 2024, alongside substantial operational expenses for national roaming and wholesale network access. Marketing and sales efforts to acquire customers also represent a considerable outlay, with customer acquisition costs in the tech sector often exceeding €1,000 per customer in 2024.

Personnel costs, including competitive salaries for specialized roles like network engineers (averaging around €65,000 annually in Germany in 2024), are a major operational expense. Furthermore, substantial investments in IT infrastructure, software licenses, data center operations, and ongoing research and development are critical for maintaining their virtualized, Open RAN-based network and cloud services.

1&1 generates revenue through hardware sales, offering devices like smartphones and routers. These sales are often tied to their mobile or broadband service contracts, providing a bundled value proposition for customers.

While these hardware sales contribute to overall revenue, they are generally considered low-margin streams for the company. For instance, in 2023, 1&1 reported a significant portion of its revenue from services, with hardware sales playing a supplementary role in customer acquisition and retention.

Beyond core subscriptions, 1&1 diversifies revenue through hardware sales, primarily smartphones and routers, often bundled with service plans. While these sales are crucial for customer acquisition and retention, they typically represent lower-margin contributions compared to service-based income.

1&1 also taps into value-added services and cloud solutions, including online storage, IP telephony, and smart home integrations. These offerings are sold as standalone products or bundled with existing packages, aiming to increase average revenue per user (ARPU).

The company also earns revenue through interconnection fees, charging other carriers for network usage, and anticipates future income from wholesale network access as its infrastructure develops.