Corona virus delays the establishment of the 5G network

United Internet boss Ralph Dommermuth

The entrepreneur’s network plans are delayed.

(Photo: Thies Rätzke for Handesblatt)

Dusseldorf Internet entrepreneur Ralph Dommermuth wanted to rise to the circle of network operators in Germany. He wanted Deutsche Telekom, Vodafone and challenge Telefónica. The construction of the new infrastructure should actually start now. But the project is delayed. The planned schedule could no longer be met, said Dommermuth on Thursday at his company’s balance sheet press conference United Internet.

The outbreak of the corona pandemic complicates network expansion. Permits are needed for the laying of new fiber optic lines. But these are currently difficult to get. “Many building authorities have closed,” said Dommermuth. Dommermuth is also cautious when it comes to business development.

Although his company saw a sharp increase in telephone calls and data consumption in the fixed network, the company expects business to stagnate overall this year. The company behind brands such as GMX and Web.de had increased its sales by 1.8 percent to around 5.2 billion euros in the past financial year.

Adjusted earnings (Ebitda) rose 5.4 percent to just under EUR 1.27 billion. The MDax group plans to raise its dividend from five cents in the previous year to 50 cents. At the subsidiary 1 & 1 Drillisch, who is primarily responsible for the network expansion, announced Dommermuth, however, to keep the dividend at the prescribed minimum of five cents. “We want to keep our powder dry,” said Dommermuth.

However, the impact of the corona pandemic is just one of several challenges facing the company. United Internet wants to be able to use the existing networks in Germany at least in the meantime to set up its own infrastructure. His company had been talking to Telekom, Vodafone and Telefónica for months. But no agreement had yet been reached. “The three potential negotiating partners are in no particular hurry,” said Dommermuth.

Federal Network Agency could intervene

The conflict between the newcomer and the established providers was already emerging. The heads of Telekom, Vodafone and Telefónica had spoken out against building a new competitor right from the start. However, all four companies took part in the auction of the frequencies for the upcoming 5G mobile communications standard last year. United Internet alone had paid more than one billion euros for the use of the frequencies.

The Handelsblatt learned from corporate circles that the network operators Vodafone and Telefónica had already submitted contracts for the shared use of their infrastructure. However, the network operators could not agree on the financial details with United Internet or 1 & 1 Drillisch.

If the companies do not come together, the case could end up with the Federal Network Agency. The authority sets the framework for the telecommunications industry in Germany. It had decided against an obligation to share the infrastructure required by United Internet. Authorities president Jochen Homann had argued, however, that there was a “negotiation requirement” and a “prohibition of discrimination”.

If negotiations between the companies fail, the authority could check whether government intervention is necessary. However, it is unclear how long such a check would take.

More: The corona pandemic is a stress test for the data networks.

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