Interview with Ralph Dommermuth

Mr. Dommermuth, how would you judge the past fiscal year 2024?

It was a successful year on the whole, but not without its challenges. We continued to lead the way with innovative products and invested in new customer relationships. The United Internet Group maintained its sustainable growth trajectory with further increases in sales and customer contracts. However, our operating result fell short of expectations. This was mainly due to higher than expected start-up costs for the 1&1 mobile network.

It has been over a quarter of a century since a new mobile communications infrastructure was established in Germany. In December 2023, the mobile services of the 1&1 O-RAN were launched. What is your verdict after the first year?

Our teams have delivered an outstanding technological performance. While our competitors are only now talking about the benefits of pioneering OpenRAN technology and conducting initial trials, 1&1 successfully demonstrated its market readiness last year. The 1&1 network is the first fully virtualized Open RAN in Europe – cloud-native, independent of dominant network equipment suppliers and ready for real-time applications. All network functions are controlled by software in our private cloud and we already have over 200 decentralized and regional edge data centers in operation. Gigabit antennas are used at all antenna locations and connected to the respective data centers via fiber-optic lines. We are therefore creating a highly future-proof network that is changing the mobile communications landscape. And this is precisely what we set out to do as the fourth network operator – create more vibrant competition with innovations that benefit consumers.

However, there are always going to be setbacks with an infrastructure project of this magnitude – especially one with such a pioneering new technology. In late May 2024, for example, there was a widespread network disruption that cost us a great deal of time and effort to rectify. And during troubleshooting, it became clear that central components of the core network were not sufficiently dimensioned. We took immediate action and had the missing components for future growth retrofitted at our first two core data centers in the summer of 2024. The other two core data centers, three and four, went live with a certain delay in early November 2024. These four core data centers now ensure reliable stability. In short, we may not have chosen the easy way, but it is the right one.

Around 12 million customers are gradually being transferred from the Telefónica network to the 1&1 O-RAN. This is the largest migration in German mobile communications history and a highly complex task. How is it going? How can we best visualize the process?

We are making good progress with the migration. Six million customers are already surfing and making calls using the 1&1 mobile network. Every working day, we migrate up to 50,000 additional customer contracts to our network. We will complete the migration of our existing customers on schedule by the end of the year.

For our customers, the move to the 1&1 O-RAN is generally an over-the-air update installed automatically overnight without them having to do anything. They only need to swap their SIM cards in rare cases.

In mobile communications, HUAWEI’s dominant role in 5G networks is a cause for concern. And in cloud services, there is the dominance of Amazon, Google, and Microsoft. Now more than ever, Europe needs its own solutions to ensure its digital independence. What role can IONOS play?

Europe, and especially Germany, cannot afford to give up control of its digital infrastructures and high-quality data. Digital infrastructures must be sovereign. This is not merely an option, but a basic requirement for maintaining our leading position as a business location. United Internet’s business models support this target of a digitally independent Europe – from e-mails, websites, and cloud infrastructure to modern fiber-optic and mobile networks.

The demand for sovereign solutions is growing. For example, IONOS is playing an increasingly central role for German public-sector companies with a crucial need for secure and independent cloud services. As a counterweight to US hyperscalers such as Google or Amazon, IONOS offers its customers 100% data protection-compliant storage and archiving of their data in accordance with German data protection laws and stored exclusively at European data centers. This focus on the security and technical performance of German-engineered cloud services is proving highly compelling. ITZBund, for example, the IT service provider for 200 administrative authorities in Germany, has commissioned IONOS to build a private enterprise cloud. IONOS is also an independent cloud partner for major public-sector agencies and institutions in Germany, such as the Federal Employment Agency, the German Pension Insurance, and the German Social Accident Insurance – thus helping to strengthen the secure digitalization of Germany’s administration system.

“United Internet’s business models support the target of a digitally independent Europe – from e-mails, websites, and cloud infrastructure to modern fiber-optic and mobile networks.”

RALPH DOMMERMUTH

What are your expectations for the fiscal year 2025?

United Internet expects sales to increase to around € 6.4 billion in the fiscal year 2025. Despite high costs for the development of future topics, EBITDA is likely to grow to around € 1.35 billion. We will continue to make strong investments, especially in the expansion of our fiber-optic and mobile communications networks. Cash capex is therefore expected to be around € 800 million.

Every month, services provided by United Internet are used around 50 million times in Germany – and around 70 million times worldwide. We look forward to leading the way with innovations once more in the coming year and continuing to shape our digital world with confidence.