1. Group and Company Profile

1.1 Business model

Group structure

Founded in 1998 and based in Montabaur, Germany, United Internet AG is the parent company (hereinafter also referred to as “the Company”) of the United Internet Group.

Together with its service company United Internet Corporate Services GmbH, United Internet AG focuses mainly on centralized functions such as Finance, Corporate Controlling & Accounting, Tax, Investment Management, Press Relations, Investor Relations, Legal, Corporate Governance, Compliance & Sustainability, Risk Management, Corporate Audit, HR Management, Facility Management, Procurement, and Corporate IT.

Compared to the previous year, there were only minor changes in the Group structure as of December 31, 2019.

Operating activities in the Consumer Access segment are mainly managed by the companies Drillisch Online GmbH and 1&1 Telecom GmbH – under the umbrella of 1&1 Drillisch AG.

In its Business Access segment, United Internet mainly operates via 1&1 Versatel GmbH – held by United Internet Service Holding GmbH.

Operating activities in the Consumer Applications segment are primarily managed via the companies 1&1 De-Mail GmbH, 1&1 Mail & Media GmbH and United Internet Media GmbH – pooled together under 1&1 Mail & Media Applications SE.

In its Business Applications segment, United Internet is primarily active via STRATO AG and its subsidiary Cronon GmbH (formerly: Cronon AG) – held by the holding companies 1&1 IONOS TopCo SE (formerly: 1&1 Internet TopCo SE) and 1&1 IONOS Holding SE (formerly: 1&1 Internet Holding SE) – as well as via 1&1 IONOS SE and its main domestic and foreign subsidiaries. These include – in addition to the foreign subsidiaries 1&1 IONOS Inc. (USA), 1&1 IONOS Ltd. (formerly: 1&1 Internet Ltd., UK), 1&1 IONOS S.A.R.L. (formerly: 1&1 Internet S.A.R.L., France), and 1&1 IONOS España S.L.U. (formerly: 1&1 Internet España S.L.U., Spain) – in particular Arsys Internet S.L.U. (Spain), Fasthosts Internet Ltd. (UK), home.pl S.A. (Poland), InterNetX GmbH, Sedo GmbH, united-domains AG, and World4You Internet Services GmbH (Austria).

In addition to these operative and fully consolidated subsidiaries, United Internet held a number of other investments as of December 31, 2019.

These mainly consist of equity interests – held by United Internet Investments Holding AG & Co. KG – in the listed company Tele Columbus AG, Berlin (29.90%), as well as investments in the strategic partners ePages GmbH, Hamburg (25.01%), Open-Xchange AG, Cologne (25.39%), rankingCoach International GmbH, Cologne (30.70%), and uberall GmbH, Berlin (27.42%). In addition, United Internet holds shares in AWIN AG, Berlin (20.00%), via 1&1 Mail & Media Applications SE – following the contribution of affilinet to AWIN in 2017.

Further details on these investments and changes in investments are provided in section 2.2 “Business development” under “Group investments”.

A simplified illustration of the Group structure of United Internet with its significant operating subsidiaries and investments – as of December 31, 2019 – is shown in the following chart.

Business operations

With 24.74 million fee-based customer contracts (prior year: 23.85 million) and 37.59 million ad-financed free accounts (prior year: 37.00 million), United Internet is a leading European internet specialist.

The Group’s operating business is divided into the two business divisions “Access” and “Applications”, which in turn are divided into the reporting segments “Consumer Access” and “Business Access”, as well as “Consumer Applications” and “Business Applications”.

Access division

The Access division, with its two segments Consumer Access and Business Access, comprises United Internet’s fee-based access products for its consumer and business customers. In its consumer business, these include broadband and mobile access products with the respective applications (such as home networks, online storage, telephony, video-on-demand, or IPTV), while the business segment offers data and network solutions for small and medium-sized enterprises (SMEs), as well as infrastructure services for large corporations.

With a current length of around 48,500 km, United Internet operates one of Germany’s largest fiber-optic networks. Moreover, the Company – indirectly via 1&1 Drillisch AG, acquired in 2017 – is the only MBA MVNO in Germany with long-term rights to a share of up to 30% of the used network capacity of Telefónica Germany and thus extensive access to one of Germany’s largest mobile networks. In the fiscal year 2019, United Internet also successfully participated in the 5G spectrum auction and purchased two frequency blocks of 2 x 5 MHz in the 2 GHz band and five frequency blocks of 10 MHz in the 3.6 GHz band. By acquiring these frequencies, the foundation was laid for the development of the Company’s own powerful mobile communications network. In addition to its own landline network and privileged access to the Telefónica network, the Company also purchases standardized network services from various pre-service providers. These wholesale services are enhanced with end-user devices, self-developed applications and services from the Company’s own “Internet Factory” in order to differentiate them from the competition.

In its Access division, United Internet operates exclusively in Germany, where it is one of the leading providers – based on customer contracts and sales revenues.

Access products are marketed via well-known brands, such as 1&1, or discount brands, such as yourfone and smartmobile.de, which enable the Company to offer a comprehensive range of products while also targeting specific customer groups.

Applications division

The Applications division, with its two segments Consumer Applications and Business Applications, comprises ad-financed and fee-based application products for consumer and business customers. These applications include domains, home pages, web hosting, servers and e-shops, Personal Information Management applications (e-mail, to-do lists, appointments, addresses), group work, online storage, and office software.

The applications are developed at the Company’s own “Internet Factory”, or in cooperation with partner firms, and operated on around 90,000 servers at the Company’s 10 data centers.

In its Applications division, United Internet is also a leading global player – based on domains, customer contracts, and sales revenues– with activities in Europe (Germany, France, the UK, Italy, the Netherlands, Austria, Poland, Switzerland, and Spain) and North America (Canada, Mexico, and the USA).

Applications are marketed to specific home-user and business-user target groups via the differently positioned brands GMX, mail.com, WEB.DE, IONOS, Arsys, Fasthosts, home.pl, InterNetX, STRATO, united-domains, and World4You. Via the Sedo brand, United Internet also offers customers professional services in the field of active domain management. Free apps are monetized via advertising run by United Internet Media.

Divisions, segments and brands (as of: December 31, 2019)

Management

The Management Board of United Internet AG comprised the following 2 members in fiscal year 2019:

• Ralph Dommermuth, founder and Chief Executive Officer (with the Company since 1988)
• Frank Krause, Chief Financial Officer (with the Company since 2015)

As in the previous year, the Supervisory Board of United Internet AG elected by the Annual Shareholders' Meeting 2015 comprised the following three members in fiscal year 2019:

• Kurt Dobitsch, chair
• Michael Scheeren, deputy chair
• Kai-Uwe Ricke

Main markets and competition

Germany is the most important sales market of the United Internet Group by far and accounted for almost 92% of total global sales in the fiscal year 2019.

Besides Germany, the Group’s most important sales markets are

• the UK,
• the USA,
• Spain,
• France,
• Poland and
• Austria.

Competitive standing in the Consumer Access segment

Following the merger with Drillisch (now 1&1 Drillisch) in 2017, United Internet is the fourth force in Germany’s telecommunications market with landline and mobile products in its purely domestic Consumer Access segment – based on customer contracts, sales revenues and profitability – after Deutsche Telekom, Vodafone and Telefónica Germany.

Competitive standing in the Business Access segment

United Internet is also a leading company its Business Access segment, whose operations are also limited to Germany. With the fiber-optic network of 1&1 Versatel spanning approximately 48,500 km, United Internet operates one of Germany’s largest fiber-optic networks.

Competitive standing in the Consumer Applications segment

In its Consumer Applications segment, United Internet operates in Germany, Switzerland, and Austria via the GMX and WEB.DE brands, as well as in countries such as the USA, UK, France, and Spain via the international brand mail.com. United Internet is the leading provider of e-mail services and one of the leaders in cloud services in its domestic German market – based on the number of users.

Competitive standing in the Business Applications segment

In the globally aligned Business Applications segment, United Internet is active in a total of 12 countries with its hosting and cloud applications. The Company has long been the market leader in Germany – based on the number of managed country domains – and strengthened its position in 2017 with the takeover of its competitor STRATO. In other European countries, United Internet’s hosting and cloud applications are now available in all major markets – either locally or from Germany. In addition to the domestic German market, these mainly include the major European economies of France, the UK, Italy, Poland, and Spain. With the exception of Italy, the Company is among the market leaders in the aforementioned countries. All in all, therefore, United Internet is also one of the leading European suppliers of hosting and cloud applications – based on the number of managed country domains. Further target markets outside Europe are the North American countries Canada, USA, and Mexico. In the most important of these markets, the USA, United Internet is also one of the leading players in this segment – based on the number of managed country domains. From a global perspective, United Internet is thus one of the leading companies for hosting and cloud applications.

Main locations

As of December 31, 2019, the United Internet Group employed a total of 9,374 people at over 30 domestic and foreign facilities.

Main locations (by headcount; > 50 employees)