United Internet:Quarterly Results/2025 Q2

Q2 2025 United Internet Earnings Call Summary

Q2 2025 United Internet Earnings Call Transcript | Q2 2025 United Internet Webcast Call

Business access (1&1 Versatel)

1&1 Versatel is available in 350 cities in Germany including 25 largest.
Over 28,000 buildings are connected to fiber optic (+287.3%).
Fiber optic spans 67,000 km.
Dommermuth said they are having a decline in voice business where earlier customers paid per minute for voice and they don't accept this anymore. That's why non-recurrent revenue is declining while recurrent revenue is growing.
They will see a decline in non-recurring revenue over a couple of years.
Dommermuth said over the next few years, non-recurring revenue at 1&1 Versatel will start to grow (after hitting the bottom) (Q&A).
Dommermuth said they completely overhauled the 1&1 fiber optic network and now it's better than that of Telefonica and Deutsche Telecom (Q&A).
Dommermuth said overhauling the network costed them a lot of money (Q&A).
Dommermuth said 1&1 Versatel is the only company that is costing them money and that will end over the next couple of years (Q&A). He said next year it will breakeven.

Consumer applications (GMX and WEB.DE)

Dommermuth said the typical ARPU for a free user is €0.25-€0.30 while that of a paid user is around €3.03 (Q&A).

Payment to Deutsche Telecom for the fiber optic at 1&1

Dommermuth said hey paid an upfront cost of EUR 1 billion over four years and they have the benefit that they don't pay it over the next six years (Q&A).

Possibility of selling divisions

Dommermuth said they don't plan to sell any of the business or sell shares of IONOS or 1&1 (Q&A)-min 24:35.
Dommermuth said he thinks they have a good portfolio which compensate each other (Q&A).

Debt

Dommermuth said their indebtedness keeps going down y/y despite the ongoing investments (Q&A).
They have 2.5 leverage now (Q&A) and their threshold is 3.0.

Macro

Dommermuth said their business is more than resilient (Q&A).

AI

Dommermuth said they see AI opportunity at IONOS since they can sell AI agents to businesses (Q&A).
IONOS is participating in building AI Gigafactory in Europe that will cost between EUR 3 billion to EUR 5 billion (Q&A).
EU will cover 35% of the cost of the Gigafactory (Q&A).
Dommermuth said IONOS is capable of taking up credit of EUR 1 billion without any increase in equity (Q&A).

Sovereign cloud

Dommermuth also said IONOS sees big opportunities in independent cloud (Q&A).
Dommermuth said many businesses don't appreciate sovereignty yet and that a lot of businesses are logged into multiyear contracts (spanning up to 5 years) (Q&A).

Current holdings

United Internet holds about 10% of its own shares (around 173M shares outstanding vs. 252M historically) after years of buybacks and cancellations.
Treasury shares are kept as strategic currency for acquisitions or employee compensation, with no voting rights while held.

The Board is authorized to buy back more; there’s no immediate plan to retire or sell current holdings.

Dividend

United Internet’s dividend policy is to pay out 25–40% of net profit.
The recent €0.50 per share payout included a catch-up dividend because past years’ payouts were lower (or zero in one year), bringing the multi-year average to about 35%.
Management is comfortable with the current payout level, which is at the upper end of their target range.

Q2 2025 1&1 Earnings Call Summary

Q2 2025 1&1 Earnings Call Transcript | Q2 2025 1&1 Webcast Call

Customer contracts

Dommermuth said growth in customer contracts is being offset by customer losses due to customer migration from O2 to 1&1 network.
Dommermuth said reasons being given by customers cancelling the contract include Vodafone having a poor connection and not using it anymore.

Outlook

CFO Davies said second half EBITDA in the access segment will be a bit lower than in the second half due to the higher costs with Vodafone due to slower network growth (Q&A)- min 31:00.

Dommermuth said they will return to a little bit of growth in customer contracts in the third and fourth quarter as migration comes to an end (min 4:00).

Q2 results

Davies said the impact of increased costs with Vodafone was felt more in the second quarter than in the first (Q&A).

National roaming costs

Dommermuth said if the network grows more slowly than expected, they will have to buy more capacity from Vodafone (min 6.40).

Low-band frequency

Dommermuth said they don't have an offer yet (Q&A) (min 33:00).
Dommermuth said competitors will likely delay the offer as long as they can and their offers will be unacceptable initially (Q&A) (min 33:00).
Dommermuth said how fast they get it depends on how quick BnetzA intervenes (Q&A) (min 33:00).
Dommermuth said BnetzA has introduced reporting procedure that enables them to see the steps being taken in the negotiations (Q&A).
Dommermuth said it's correct that by the end of the year the frequencies have to be given to them (Q&A).

Network buildout

They have 281 far edge data centers and they need 500.
They have 1,200 active antenna sites and more than 4,000 being developed.
They can only have a maximum of 10 kms of fiber optic cable in order to have no latencies.,
Dommermuth said they do assume that by 1st January 2026, they will deliver the 25% coverage (Q&A).
They currently have a total of around 5,800 antenna sites in the pipeline (1,200 active sites, 2,300 built but offline, and 2,300 in progress or contracted)-min 44:00.

Competition

Dommermuth said business continue to be difficult and they don't want to reduce prices to buy back market share.
Dommermuth said Telefonica reduced price a couple of months ago quite strongly and everybody is thinking how to handle that (Q&A)-min 51.18.

Mobile consolidation in Germany

Dommermuth said newspapers indicate the incumbents are pushing for consolidation in Europe i.e reduce the number of operators to three from four (Q&A).
Dommermuth said he doesn't think they are currently capable of participating in any consolidation beyond Germany (Q&A).
Dommermuth said the regulatory environment still favors four operators (Q&A).

Network savings costs

Dommermuth said with the low band frequency, they can get additional gigabytes which are cheaper than the gigabytes they buy via national roaming today (Q&A).
Dommermuth said savings will also depend on the handover direction. Currently, if the customer switch to Vodafone network, they don't move back. However that will change, allowing customers to switch back to 1&1 (Q&A)-min 47:23.
Dommermuth said they are currently building antennas in high and low traffic regions. If they complete antennas in high traffic regions earlier, cost savings will be higher (Q&A).
They see major cost savings next year because migration will be over and will save on international roaming costs (Q&A).
They will save EUR 100 million next year associated with customer migration (Q&A).

Customer migration

Dommermuth said they are still remaining with only 2 million customers to migrate from O2 to own network.
Dommermuth said they will conclude customer migration in the next months.

United Internet acquisition of 1&1 shares

They announce the voluntary public takeover because they were offered several large packages and they saw it as an opportunity to improve 1&1 share (Q&A).
Dommermuth said if they are offered more packages, they will buy them but he won't acquire them via the stock exchange (Q&A)-min 53:01.
Dommermuth said they don't have a target of the shares to acquire i.e. if they wanted to have a squeeze-out they would offer a different offer (Q&A)-min 53:01.
Dommermuth said his comments on the acquisition reflect today's view and that a few years from now, things can be different (Q&A)-min 53:01.

Dispute with Vantage Towers

Dommermuth said they want Vantage Towers to fulfill their obligations and not give them cash (Q&A).
Dommermuth also said they are seeking compensation from Vantage Towers but the first thing is to get the sites as soon as possible (Q&A).

Network quality

Dommermuth said they have excellent network quality, that they once again won mTest competition.

Management guidance and analysts estimates

United Internet management guidance and analysts estimates

United Internet management guidance

Key Items^[1]	2025	Y/Y
Revenue	EUR 6,450 million	1.91%
EBITDA	EUR 1,350 million	4.33%
Cash capex	EUR 800	3.3%

United Internet analysts' estimate

Key Items^[2]	Q2 2025	Y/Y	2025	Y/Y
Revenue	EUR 1,556 million	0.93%	EUR 6,518 million	2.98%
EBITDA	EUR 340 million	5.95%	EUR 1,346 million	4.02%

1&1 management guidance and analysts estimates

1&1 management guidance


Key Items^[3]	2025	Y/Y
Service revenue	EUR 3,303.1 million	0.0%
EBITDA	EUR 545 million	-7.8%
EBITDA 1&1 network	EUR -265 million	0.0%
Cash capex	EUR 450 million	EUR 290.6 million

The management guidance was provided in June 27 2025. In the update, management lowered its 2025 EBITDA guidance to €545 million from €571 million due to higher than planned wholesale national roaming costs with Vodafone.

1&1 analysts' estimates


Key Items^[4]	Q2 2025	Y/Y	2025	Y/Y
Revenue	EUR 989.0 million	-0.2%	EUR 4,058.5 million	-0.14%
Service revenue	EUR 821.0 million	-0.2%	EUR 3,302.5 million	-0.02%
EBITDA	EUR 135.5 million	-6.1%	EUR 552.2 million	-6.53%
EBITDA Access	EUR 201.4 million	-5.4%	EUR 815.5 million	-4.74%
EBITDA 1&1 network	EUR -67.0 million	-39.64%	EUR -264.8 million	-0.19%
EPS	EUR 0.23	-23.3%	EUR 0.95	-20.87%
Access contracts additions	-33,750		-22,500
Mobile contracts additions	43,750		33,750
Broadband contract additions	-77,500		-55,000

Recent pre-earnings analysts' opinions

Buy, €25->€31: Deutsche Bank analyst Nizla Naizer said she has become more bullish on IONOS.
Buy, €22.50->€34.60: Goldman Sachs analyst Andrew Lee see 1&1 and United Internet as the main beneficiaries of industry consolidation in Germany. He said the increased price target reflects better his computation of sum of parts discount. He added that he would welcome a halt to network construction since it would save more than €3 billion.
Buy, €25.80->€28.90: UBS analyst Polo Tang said the majority stake in IONOS covers almost United Internet's entire market value. He expects the announcement of intention to increase stake in 1&1 to 90% to lead to reevaluation, helping both stocks.
Buy, Deutsche Bank analyst Robert Grindle said the lowered EBITDA forecast at 1&1 calls for strategic realignment. He said 1&1 could reduce expenses for external wholesale capacity by expanding its own network.

Competitor expectations and results

Q1 2026 Vodafone results

Operating results

Q1 2026 German service revenue declined 3.2% y/y to €2.69 billion, below 4.6% expected- mainly due to the impact of the TV law change. Excluding, the impact of the TV law change, service revenue could have fell 0.3% y/y. Mobile competitive intensity was offset by Wholesale growth.
Whole sale revenue added 1% to organic service revenue growth. IoT phasing and B2B recovery contributed another 1%.
Mobile service revenue grew by 2.7% in Q1.
Mobile customer contracts declined by 36,000. "Our mobile contract customer base declined by 36,000 (Q4: 12,000) in the quarter, due to the continued reduction of customers through resellers’ channels and low ARPU Business disconnections. The overall competitive intensity in the mobile market impacted the number of new customer additions.," Vodafone said in its press release.
Germany EBITDA fell 8.2% to €291 million.

1&1

Vodafone said 7.7 million 1&1 customers had been migrated at the end of June 2025.

Competition

Vodafone said in the earnings call that competition remains intense.

“The market has remained very competitive in mobile, but we are seeing tangible results from the actions we have taken.”

“No particular changes to the pricing environment since May… so the market remains very competitive.”

Q2 2025 Telefonica results

O2 CEO Markus Haas said they have been able to increase promotions and tariffs by 10% with the launch of unlimited on demand in the last quarter. He said this is a very attractive offer.

References

[1] ttps://www.united-internet.de/en/investor-relations/publications/announcements/announcements-detail/news/united-internet-gets-off-to-a-good-start-in-fiscal-year-2025.html

[2] ttps://www.united-internet.de/en/investor-relations/share/consensus-estimates.html#:~:text=Financial%20analysts%20regularly%20publish%20their,Internet%20as%20a%20company%20consensus.

[3] ttps://forum.investmentwiki.org/t/1-1-news/152/82?u=aron

[4] ttps://imagepool.1und1.ag/v2/download/berichte/2025-08-04-Q2_Consensues_Output-1u1.pdf

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