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1&1 grabs German 5G deal with Vantage Towers – Total Telecom

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Back in 2019, Germany held its first 5G spectrum auction, an event noted for its high prices and,  more importantly, the potential entrance of a fourth national mobile operator in the form of data centre specialist 1&1 Drillisch. 
1&1, which has operated as a mobile virtual network operator for numerous years via a deal with Telefonica, spent €1.1 billion on spectrum at the auction, acquiring a 5MHz block in the 2GHz spectrum band and five blocks of 10MHz in the 3.6GHz band.
 
Since then, 1&1 has signed numerous deals to help lay the groundwork for the launch of its own open RAN…

Back in 2019, Germany held its first 5G spectrum auction, an event noted for its high prices and,  more importantly, the potential entrance of a fourth national mobile operator in the form of data centre specialist 1&1 Drillisch. 

1&1, which has operated as a mobile virtual network operator for numerous years via a deal with Telefonica, spent €1.1 billion on spectrum at the auction, acquiring a 5MHz block in the 2GHz spectrum band and five blocks of 10MHz in the 3.6GHz band.

Since then, 1&1 has signed numerous deals to help lay the groundwork for the launch of its own open RAN-based 5G network, most notably with Rakuten, a company that has built out its own open RAN network in Japan in recent years. 1&1 also expanded their relationship with Telefonica Deutschland via a mandated national roaming agreement. 

Now, the 1&1’s burgeoning mobile subsidiary, 1&1 Mobilfunk, has signed a major passive infrastructure deal with Vantage Towers, giving them access to at least 3,800 mobile sites by the end of 2025.

The first of these sites, which include both rooftop towers and ground-based infrastructure, will be made available next year. 

The terms of the lease will see it last until 2040, with 1&1 having the option to extend the partnership to 2060 if desired. 1&1 will also have the option to increase the number of German sites included in the deal to up to 5,000.

“With Vantage Towers, we have gained a strong partner for the passive infrastructure of our 5G mobile network. By cooperating with established tower companies, we want to primarily use existing antenna sites. This is environmentally friendly, conserves resources and at the same time accelerates our rollout,” explained Ralph Dommermuth, CEO of 1&1 AG. 

Vantage Towers itself was created in 2019 by combining all of Vodafone Group’s European mobile infrastructure, amounting to around 82,000 mobile sites, 19,000 of which are in Germany. Since then, the company launched an IPO in March 2021, which sold around 19% of the unit and raised around €2.3 billion.

For Vantage, the deal with 1&1 seems a natural progression of their overall European strategy, but it is not without controversy.  

According to sources, Peter Zehetner, Vantage Towers’ Managing Director for Germany, is set to leave the company following disputes with CEO Vivek Badrinath regarding how to handle this potential partnership with 1&1.

The source of the clash is clear enough. On the one hand, Vantage needs more partners in Germany, where Vodafone is currently the only tenant for the majority of the company’s sites. In Germany, Vantage’s infrastructure serves an average of just 1.2 providers per location, far fewer than neighbouring markets like the UK, where each site is used by around two providers on average. 

This has led Badrinath to press forward with a 1&1 deal, which he recently described as being “extremely important to us”.

On the other hand, 1&1 are a direct competitor for Vodafone and the deal with Vantage will only serve to increase the pressure on the operator, which is increasingly struggling to keep up with Deutsche Telekom and Telefonica in Germany in recent years. In the companies’ most recent results, Telefonica’s mobile service revenues grew by 4.4% and Telekom’s grew by 2%, leaving Vodafone lagging behind at just 0.8%. 

It appears that Zehetner fears the deal with 1&1, helping them launch yet another mobile competitor to Vodafone in the German market, that played a large part in his decision to leave the company.

In related news, 1&1 Mobilfunk has also signed an inter-company deal with 1&1 Versatel Deutschland for use of their fibre and data centre infrastructure, with initial terms for the deal set to end in 2050. In total, Mobilfunk plans to use four central data centres for the core network, with the network supported by a further 500 decentralised data centres.

How will 1&1’s 5G network change the dynamics of the German telecoms market? Find out from the experts live and in person at our upcoming Connected Germany event

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