We are an access and applications provider that supplies private customers and organizations with internet-based applications – both as independent products in the Applications Division and in combination with fixed network and mobile access products in the Access Division.
The following figure shows a simplified overview of the United Internet Group’s supply chain and value chain:
United Internet sources network services, domains, licenses, and ICT products such as devices and servers from the upstream value chain(1). In turn, these wholesale services are based in part on a multistage upstream value chain stretching all the way back to raw materials extraction.
(1) The upstream value chain comprises cradle-to-gate goods and services (Greenhouse Gas Protocol, 2011).
The wholesale services provided for the Access Division – and especially network services (mobile and fixed network) – represent a significant component of total wholesale services, with devices and ICT products for customers and services provided by specialized partners and outsourcers coming second by some margin. Taken together, these items make up the bulk of our procurement volumes. All in all, we sourced revenue-related services and goods worth approximately €3.11 billion (2019: €2.78 billion; 2018: €2.77 billion) from our business partners in 2020. Sourcing wholesale services places high demands on the business relationships involved.
United Internet primarily adds value in the areas of product development and enhancement, marketing, sales, and customer care; in addition, the organization has its own logistics capabilities. Our products and services build on our data center and fiber-optic network operations.
The figure breaks down the red “Our value added” link in the value chain above in more detail.
United Internet also uses service providers in some cases for its sales and customer service operations. Downstream(1) activities can be highly relevant, since in many cases the long-term customer relationships resulting from fee-based subscriptions (roughly 25 million) and ad-financed free accounts (roughly 39 million) can facilitate growth. This means that the use phase for our products is a material part of our business – including from a sustainability perspective. Other business partners in the downstream value chain are shipping partners, who are responsible for delivering devices to customers, and partners who ensure that waste devices are recycled/disposed of in an environmentally friendly manner.
(1) Downstream activities cover goods and services following their sale/distribution by the reporting enterprise and transfer of control to another unit or organization.
We primarily source network services and ICT products from the upstream value chain. These must mainly be seen from the perspective of their environmental impact, since network operation involves the consumption of substantial energy and resources. To a lesser extent this also applies to e.g. domains, the provision of which also requires energy and the underlying hardware.
Servers and devices such as smartphones and tablets have environmental impacts that can be relevant, especially with respect to their electronic components up to and including the extraction of the raw materials concerned. A social perspective is becoming important here, since raw materials in particular are frequently mined in countries in which the standards for working conditions and environmental protection are lower than in Germany, for example. In addition, the issue of “conflict minerals” must be addressed. The extraction of minerals such as tin, tantalum, tungsten, and gold – which are used among other things in smartphones as well as for various applications in the automotive sector – sometimes involves forced labor or helps finance armed conflicts. We address this risk in our Code of Conduct for Business Partners.
We add a large proportion of the value we create – from product development down to customer care – in Germany or other EU or OECD countries. Impacts on the environment and society, such as the energy consumed by our data centers or our responsibility as an employer, are examined in detail in the various chapters of this Sustainability Report.
Services that we commission from specialized partners and outsourcers include parts of our customer service and sales operations, and shipping products to customers. Social impacts in the form of data protection, data security, and working conditions must be taken into account here, and we expect our service providers to comply with strict requirements in these areas.
Equally, environmental topics are relevant. Deliveries by our service providers use fuel and emit greenhouse gases. In addition, recycling or disposing of retired devices and IT equipment in an environmentally friendly manner is a relevant environmental factor, which is why we work with specialized partners in this area.