INTERVIEW wITh RALPH DOMMERMUTH
Mr. Dommermuth, how would you judge the past fiscal year 2021?
Very positively. We continued to drive growth across the United Internet Group in 2021 and once again achieved year-on-year improvements in the most important metrics – customer contracts, sales, and operating result.
In the Access division, the main focus was on preparations for the rollout of our 5G mobile network. After concluding the national roaming agreement with Telefónica in May 2021, we succeeded in establishing a strong partner network in the past year – in particular our extensive technology partnership with the global OpenRAN experts Rakuten. In addition, we forged a partnership with the established radio tower company Vantage Towers and signed an intercompany agreement with 1&1 Versatel, who will be responsible for connecting the antenna masts to fiber-optic lines and providing the 1&1 data centers.
There was also progress in the Applications division. As we continued to expand our portal brands GMX, WEB.DE, and mail.com into comprehensive communication and information platforms – also through the increased use of artificial intelligence – IONOS passed the one billion euro revenue threshold for the first time last year on the back of a product and sales drive.
As a new market player and the fourth German network operator, you have set out to build Europe’s most advanced mobile network. What specific advantages does the so-called OpenRAN approach offer over traditional network architectures?
Our network architecture is known as virtualized OpenRAN and stands for an open mobile communications network based on standardized technical interfaces. Unlike traditional network architectures, this innovative approach makes a strict separation between software and hardware. As a result, network intelligence is shifted away from the antenna masts and into a private cloud. Our antennas don’t need technology cabinets at the base of the mast and are easily replaceable. What’s more, we only use commercially available cloud servers in our data centers. This gives us the flexibility to combine different software and antenna suppliers. As a consequence, we’re not dependent on a single equipment supplier such as Huawei, which provides a self-contained, proprietary system that cannot be altered.
In addition, all 1&1 antennas are connected to fiber optic lines, which in turn are connected to 500-plus local data centers across Germany. The cloud applications that run here benefit from extremely short transmission paths, which are essential for real-time applications. As a result, our OpenRAN is able to fully exploit the potential of 5G.
The efforts of the established network operators to convert parts of their existing infrastructure to this completely new, cloud-native network architecture also confirms our conviction that the future of mobile communications is virtual.
In August, you announced your partnership with the Japanese tech group Rakuten. Why did you choose Rakuten and what services does the company provide for the 1&1 mobile network?
After several years of preparation and development work, Rakuten successfully launched the world’s first commercial OpenRAN mobile virtual network as a new market player in Japan in April 2020. Today, this network is already competing with those of the established network operators. By partnering with this proven OpenRAN expert, we are benefiting from its extensive learning curve as well as from a great deal of valuable experience that ideally complements our expertise in telecommunications networks, cloud applications, and data centers.
Specifically, Rakuten will be responsible for the installation of our active network equipment and also for the overall performance of the 1&1 mobile network. In this connection, Rakuten will provide access to its specially developed orchestration software that enables OpenRAN to be operated with a high degree of automation.
For the rollout of 1&1’s mobile network, you’ve also forged partnerships with established radio tower operators to ensure fast and eco-friendly implementation. How will that work exactly and what are the rollout plans?
As part of our successful participation in the 5G spectrum auction, we accepted binding rollout requirements from Germany’s Federal Network Agency. These include putting 1,000 base stations into operation by the end of 2022, achieving 25% coverage of German households by the end of 2025, and 50% coverage by the end of 2030.
„Our aim is not only to build Europe’s most advanced mobile network, but also to reach our rollout targets earlier“
In order to make the rollout as efficient as possible, we signed an agreement with the radio tower company Vantage Towers – one of the largest owners of radio masts in Germany – in December 2021. This gives us access to several thousand existing radio masts on which to mount our 1&1 high-performance antennas. This not only saves valuable time for complex site acquisitions, but also helps protect the environment and conserve resources.
Our clear objective is to achieve 50% household coverage even earlier than the rollout requirements stipulate.
You already mentioned that the cloud provider IONOS generated sales of over one billion euros for the first time in fiscal 2021. How did it achieve this growth and what plans do you have for this company?
In the past year, we drove forward a sales and product campaign, entered new markets, and enhanced the IONOS brand profile. These efforts paid off. We are also investing in additional marketing measures this year in order to raise brand awareness further in our most important European markets.
At the same time, we are involved in preparations with IONOS for an IPO, which we are planning to hold in 2022 or 2023. We have already completed much of the preparatory work and will be able to move swiftly when the capital market is suitably receptive. As IONOS is growing and highly profitable, we can wait for the right moment.
What are your expectations for the fiscal year 2022?
For the fiscal year 2022, we expect an increase in sales to approx. € 5.85 billion. Despite additional investments, EBITDA is likely to be on a par with 2021. This forecast includes increased initial costs for 1&1’s 5G network rollout of approx. € 70 million (prior year: € 38 million), as well as approx. € 30 million for additional marketing activities of IONOS.
It is the triad of fast mobile communications, fiber-optic connections, and cloud applications which holds the key to our digital future. United Internet AG is very well positioned in this respect and will continue to invest heavily in these business fields in the coming years.