2. ECONOMIC REPORT
2.1 General economic and sector conditions
General economic development
In its latest economic outlook (World Economic Outlook, Update January 2025), the International Monetary Fund (IMF) reported growth of 3.2% for the global economy in 2024, based on preliminary calculations. Growth was thus almost on a par with the prior-year level (3.3%).
In the United Internet Group’s target markets in North America, the IMF anticipates noticeable growth – but at a lower level than in the previous year. The IMF expects growth of 2.8% for the USA (prior year: 2.9%), of 1.3% for Canada (prior year: 1.5%), and of 1.8% for Mexico (prior year: 3.3%).
The situation for United Internet’s most important target markets in Europe is as follows: the IMF anticipates growth of 1.1% for France in 2024 (prior year: 1.1%), of 3.1% for Spain (prior year: 2.7%), and of 2.8% for Poland (prior year: 0.1%). By contrast, slightly weaker growth is forecast for Italy and the UK of 0.6% (prior year: 0.7%) and 0.9% (prior year: 0.3%), respectively.
However, Germany – United Internet’s most important market by far (sales share 2024: around 90%) – was the only one of United Internet’s target markets to once again report a decrease in economic output of -0.2% in 2024 (prior year: -0.3%).
Multi-period overview: GDP trend in United Internet’s key target countries and regions
World | –3.1% | 6.2% | 3.5% | 3.3% | 3.2% | –0.1%-points |
USA | –3.4% | 5.9% | 1.9% | 2.9% | 2.8% | –0.1%-points |
Canada | –5.2% | 5.0% | 3.8% | 1.5% | 1.3% | –0.2%-points |
Mexico | –8.2% | 4.7% | 3.9% | 3.3% | 1.8% | –1.5%-points |
France | –8.0% | 6.8% | 2.5% | 1.1% | 1.1% | +/-0.0%-points |
Spain | –10.8% | 5.5% | 5.8% | 2.7% | 3.1% | +0.4%-points |
Italy | –8.9% | 6.7% | 3.7% | 0.7% | 0.6% | –0.1%-points |
Poland | –2.0% | 6.9% | 5.3% | 0.1% | 2.8% | +2.7%-points |
UK | –9.4% | 7.6% | 4.3% | 0.3% | 0.9% | +0.6%-points |
Germany | –4.6% | 2.6% | 1.8% | –0.3% | –0.2% | +0.1%-points |
2020 | 2021 | 2022 | 2023 | 2024 | YoY change |
Source: International Monetary Fund, World Economic Outlook (Update), January 2025
The IMF’s calculations for Germany are therefore in line with the preliminary figures of the country’s Federal Statistical Office (Destatis), which – at its “GDP 2024” press conference on January 15, 2025 – also announced a decline in (price-adjusted) gross domestic product (GDP) of -0.2% for 2024 (prior year: -0.3%).
According to the Federal Statistical Office, this was due to economic and structural burdens. These include increasing competition for German exports in important markets, high energy costs and persistently high interest rates, coupled with an uncertain economic outlook.
Multi-period overview: development of price-adjusted GDP in Germany
Source: Destatis, January 2025
Development of sector / core markets
By contrast, Germany's digital economy remains buoyant. Despite the current challenging economic environment, the digital sector association Bitkom expects sales in the German market for IT and telecommunications (ICT) to grow by 3.3% (prior year: 2.4%) to € 222.6 billion in 2024.
The increase in the overall ICT market resulted in particular from growth in sales of information technology. According to Bitkom’s 2024 forecast, sales in this largest submarket rose by 4.4 % (prior year: 2.6%) to € 149.7 billion. The various segments of this sub-market made varied progress: software (which also includes AI platforms, collaboration tools and cloud services) grew by 9.5% (prior year: 12.1%) and IT services by 3.8% (prior year: 5.0%). However, IT hardware was up only slightly by 0.7% following a decline of -6.1% in the previous year (compared to the disproportionately high level of investment during the pandemic years).
The most important ICT markets for United Internet’s business model are the German telecommunications market in its mostly subscription-financed Access division, as well as the global cloud computing market, and the German online advertising market for its subscription- and ad-financed Applications division.
Telecommunications market in Germany
For the ICT submarket of telecommunications, the industry association expects an increase of 1.0% (prior year: 2.0%) from € 72.3 billion to € 73.0 billion in 2024. The individual segments of the German telecommunications market are also developing quite differently: for example, telecommunications services grew by 1.8% (prior year: 2.1%) and sales of user devices by 1.6% (prior year: 3.1%), while sales of infrastructure declined by -4.8% (prior year: -0.7%).
Key market figures: telecommunications market in Germany
Source: Bitkom, January 2025
According to the study “German Entertainment and Media Outlook 2024 - 2028” (September 2024), the auditing and consultancy firm PricewaterhouseCoopers (PwC) expects service revenues – of particular importance for United Internet – to increase by 1.3% to € 32.6 billion in 2024. Service revenues in the mobile telecommunications segment are expected to grow by 2.0% to € 18.0 billion and service revenues in the broadband segment by 0.4% to € 14.6 billion.
PwC expects the number of mobile phone contracts to grow by 2.8% to 179.9 million in 2024. This growth results from an increase of 57.5% in 5G contracts to 55.3 million, while contracts for lower data rates declined significantly.
The number of landline broadband connections rose by 0.8% to 38.9 million in 2024, according to PwC. At the same time, there was a decrease in the number of DSL connections (-5.0% to 23.4 million) and the number of cable connections (-1.2% to 8.5 million), while fiber-optic connections increased by 38.0% to 5.8 million.
Global cloud computing market
There was further dynamic growth in the cloud computing market in 2024. In its “Public Cloud Services, Worldwide, 2022-2028, 3Q24 Update” (November 2024), Gartner Inc. forecasts global growth for public cloud services of 19.2%, from USD 499.7 billion to USD 595.7 billion in 2024. The strongest growth is expected in the areas of cloud system infrastructure services (laaS) at 21.3%, cloud application infrastructure services (PaaS) at 19.1%, and cloud application services (SaaS) at 18.1%.
Key market figures: cloud computing worldwide
Global sales of public cloud services | 595.65 | 499.71 | + 19.2% |
thereof Application Infrastructure Services (PaaS) | 171.57 | 144.05 | + 19.1% |
thereof Application Services (SaaS) | 250.80 | 212.37 | + 18.1% |
thereof Desktop as a Service (DaaS) | 3.47 | 3.22 | + 7.7% |
thereof System Infrastructure Services (IaaS) | 169.82 | 140.00 | + 21.3% |
in $ billion | 2024 | 2023 | Change |
Source: Gartner Forecasts, Worldwide Public Cloud End-User Spending, November 2024
German online advertising market
In its study “German Entertainment and Media Outlook 2024 - 2028” (September 2024), the auditing and consultancy company PricewaterhouseCoopers (PwC) forecasts an increase in total revenues (paid search, display, video, affiliate / classifieds) of the German online advertising market (mobile advertising and desktop advertising) of 10.7% from € 17.1 billion to € 18.9 billion for 2024 – following growth of 11.9% in 2023.
Key market figures: total online advertising market in Germany – acc. to PWC
Source: PricewaterhouseCoopers, German Entertainment and Media Outlook 2024 – 2028, September 2024
The Online Marketing Group (OVK) of the German Association for the Digital Economy (BVDW) broadly shares PwC’s assessment of the situation in the German online advertising market. The OVK only takes net revenues into account in its market figures and focuses exclusively on the most important sub-market for United Internet, the display advertising market (mobile and desktop). Based on its updated forecast in September 2024 – as part of its OVK Report 2024/02 – the OVK expects the display advertising market to raise net revenues from € 5.5 billion in the previous year to € 6.2 billion. This represents an increase of 11.7%, following growth of 6.4% in the previous year.
Key market figures: display advertising market in Germany – acc. to OVK
Source: Online-Vermarkterkreis (OVK), OVK-Report 2024/02, September 2024
Legal conditions / significant events
Legal conditions
The legal parameters for United Internet’s business activities remained largely unchanged from the previous year in 2024 and had no significant influence on the development of the United Internet Group.
Significant events
1&1 starts migration of existing customers 1&1 mobile network
Following the launch of mobile services in the 1&1 mobile network in late 2023, 1&1 also began to migrate over 12 million existing customer contracts from third-party networks to the 1&1 mobile network in January 2024.
By gradually migrating existing customers to its own network, 1&1 can increasingly replace the purchase of advance services from third parties (on wholesale basis) and instead use internally produced advance services, thus achieving ever greater savings in the procurement of advance services.
IONOS builds cloud solution for German federal administration
In April 2024, the German Federal Information Technology Center (ITZBund) commissioned IONOS to set up a private enterprise cloud for the ITZBund data centers. ITZBund is the IT service provider for 200 federal administrative authorities and is tasked with providing them with modern IT support and leading them into the digital future.
The framework agreement has a term of five years. As is common in the cloud sector, the variable order is invoiced on a pay-per-use basis.
Availability of 1&1 mobile network temporarily restricted
Sales and earnings were unexpectedly burdened by the effects of a temporary outage of the new 1&1 mobile network in May 2024 and the associated increase in customer churn. Moreover, the planned migration of existing customers to the 1&1 mobile network was temporarily severely restricted due to the unforeseen undersizing of individual network components and could only be resumed extensively in the fourth quarter of 2024.
As a result, the savings expected in fiscal year 2024 from the migration of existing customer contracts (on a wholesale basis) to the 1&1 mobile network were only achieved to a small extent. In addition, there were temporarily higher expenses for the elimination of capacity bottlenecks identified as a result of the network outage.
Conclusion of main contract for national roaming partnership between 1&1 and Vodafone
In August 2024, Vodafone and 1&1 launched their national roaming partnership for mobile communications. After already signing a binding preliminary agreement in the previous year to cooperate from the summer of this year, the two companies signed the detailed main contract on August 23, 2024.
Since August 29, 2024, new 1&1 customers have been using the Vodafone mobile network with their smartphones. The migration of existing customers has since also been undertaken using Vodafone as the national roaming partner. National roaming via Vodafone is to be made available to all 1&1 mobile customers by the end of 2025. At the same time, the national roaming advance services previously obtained from Telefónica are being completely phased out. National roaming is a standard procedure used in the rollout of new mobile networks that enables customers to surf and make calls without interruption in areas not yet covered. This is achieved by automatically using the roaming partner’s antennas in these areas.
The cooperation between Vodafone and 1&1 is set up for the long term and includes mechanisms that protect both companies economically in the event of rising costs and data volumes.
Financing measures
In December 2024, United Internet successfully refinanced its existing syndicated loan facility with its core banks. A term until December 2029 was agreed for the new syndicated loan facility of € 950 million, which includes contractually agreed extension options.
At the same time, the Group took out a syndicated loan of € 550 million in December 2024, which will fall due in December 2027. United Internet AG incorporated part of its existing bilateral credit lines with core banks into the syndicated loan, enabling it to successfully refinance them in the long term.
In addition, United Internet and Japan Bank for International Cooperation (JBIC) signed a loan agreement for up to € 800 million, also in December 2024. The funds will be provided by one tranche directly from JBIC, which is wholly owned by the Japanese government, and one tranche from a consortium of European and Japanese commercial banks guaranteed by JBIC.
For further information, see chapter 2.2 “Business development”, “Liquidity and finance”.
There were no other significant events in fiscal 2024 which had a material effect on the development of business.