United Internet – Network construction costs weigh on profit

Internet group United Internet made more money at the start of the year thanks to strong demand for web hosting and cloud products. Total sales for the months of January to March rose by 6.6 percent year-on-year to EUR 1.54 billion, as the mother of the designated new mobile communications provider 1&1 announced in Montabaur on Wednesday. However, earnings before interest, taxes, depreciation and amortization fell by 4.6 percent to EUR 315 million due to start-up costs for the 1&1 network. However, United Internet still made more profit than analysts had expected.

This was mainly due to the business with small and medium-sized companies in the “Business Applications” area, which showed an increased interest in domains, web hosting or cloud storage. In the other three divisions, United Internet recorded declines in operating profits. By far the most important segment, however, remains the sale of fiber optic and DSL connections via the 1&1 brand. This increased its sales by 4.6 percent and thus exceeded the billion mark. Operationally, however, less profit remained.

The subsidiary has so far “almost completely” missed its goal of setting up its own 5G network. According to the latest information, CEO Ralph Dommermuth counts 20 antenna sites – although he should actually have 1,000 by the turn of the year. He blames the construction partner Vantage Towers – the radio tower operator and his mother Vodafone reject the accusation.