Boom through home office: tech companies are reaching their limits

Dusseldorf, San Francisco Since Anton Döschl has been working in the technology sector, he has experienced a number of special situations, such as the CeBIT at their weddings or the financial crisis in 2008. The past few weeks have been “probably the most intense” in his career, says the manager. He is responsible for the IT group Cisco Sales and advice on communication and collaboration solutions, including the Webex system. And that is in demand more than ever.

Because public life is severely restricted by the coronavirus epidemic, companies send their employees to their home offices and connect them with video conferences and virtual meetings. Authorities, medical practices and schools are also dealing with the technology. Many of them contact Döschl and his team. “The number of strokes has increased enormously.”

While work is breaking out in large parts of the economy, tech companies such as Cisco, Microsoft, Zoom and Teamviewer, which offer systems for virtual collaboration, are experiencing a special boom. The situation is similar with network operators like that Deutsche Telekom, Vodafone or Telefónica. Worries about a bottleneck or failures make the round.

In a conversation with the Handelsblatt a few days ago, Telekom boss Timotheus Höttges gave the all-clear: “Our network runs completely smoothly without a single major failure.” Telekom had to upgrade in some places and the fixed network in particular was in demand again.

The head of Telekom, on the other hand, saw difficulties elsewhere: “There are some services, such as video conference providers, that are reaching their limits in terms of their capacities. Sometimes it’s the capacity of corporate networks. But it’s not because of the telecommunications networks. “

While the mobile and broadband networks have so far been able to withstand the rush, there are difficulties in their places. Technicians have to upgrade the data centers regularly, the sales representatives handle the mass of inquiries.

Sometimes the systems reach their limits. Even social media like Facebook and Twitter have been in demand for a long time. The corona crisis is a technical test – but when it pays off economically is open.

Video conferencing is becoming the norm

Webex is a platform through which users can chat, hold video conferences and edit documents, much like teams from Microsoft or Zoom from the US company of the same name. Many customers are currently working on the introduction of such solutions. “They are faced with the massive challenge of getting the employees into their home office,” says Döschl, who is currently having all the conversations himself from his home office.

If necessary, video conferences are also used in politics, education and healthcare. Chancellor Angela Merkel last reported from quarantine. A university in Rome switched the lectures to distance learning for 4800 students within 48 hours. Yoga and guitar teachers can also continue teaching. And even doctors and clinics are trying out the technology.

The data traffic is growing enormously. At the De-Cix Internet hub in Frankfurt, the volume increased by ten percent within a week, and the number of video conferences even doubled during this period.

The operating company emphasizes that the core network is designed for this – as soon as a certain threshold is reached, it increases capacity. However, there may be delays for individual users.

The rush is so big that even technology giants like Microsoft or Google Book failures. Of all things, the collaboration and communication service Microsoft Teams had to struggle with greater difficulties on the first day of the numerous school closings in Germany. Other providers of video and telephone conferences have had to admit technical problems time and again.

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United Internet approves new share buyback program

United Internet

The Management Board of United Internet has launched a share buy-back program with the approval of the Supervisory Board.


(Photo: dpa)

Berlin The internet and mobile operator United Internet wants to launch a new share buyback program. As part of this program, up to five million company shares are to be bought back via the stock exchange, the company listed in the MDax announces in a mandatory notice.

The total volume of the share buyback program is up to 150 million euros. The program should start on April 3 and will run until August 31, 2020 at the longest. The company plans to release further details before the share buyback begins.

With the resolution, United Internet “makes use of the authorization granted by the Annual General Meeting on May 18, 2017,” the statement continues. On the basis of this authorization, the company has so far 12,635,523 shares, which according to the information account for 6.51 percent of the share capital. The company currently holds 6,338,513 treasury shares.

United Internet boss Ralph Dommermuth wants with the telecommunications subsidiary 1 & 1 Drillisch Deutsche Telekom, Vodafone and challenge Telefónica and become part of the network operators.

But the project is delayed. The planned schedule could no longer be met, said Dommermuth at the press conference at the end of March. The reason is the outbreak of the coronavirus pandemic, which makes network expansion difficult. Permits are required, which are currently difficult to obtain because many building authorities have closed.

Stagnating business this year

Although the company has seen a sharp increase in telephone calls and data consumption in the fixed network, the company expects business to stagnate overall this year.

However, the impact of the pandemic is just one of several challenges for 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.

More: United Internet is aiming for stable business.

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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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United Internet is aiming for stable business

United Internet

A company sign on a United Internet building on the premises of subsidiary and internet company 1 & 1.


(Photo: dpa)

(Update: Additional company figures added) United Internet is targeting stable business for Montabaur The telecommunications provider United Internet has undertaken a stable business development for the current year and wants to pay a significantly higher dividend again. The distribution for the past year should be 0.50 euros per share, as the MDax group announced on Wednesday in Montabaur. A year earlier, there had only been a dividend of 5 cents because United Internet and its telecommunications subsidiary 1 & 1 Drillisch bought expensive mobile radio frequencies for the new 5G data radio in 2019. CEO Ralph Dommermuth owns around 42.5 percent of United Internet shares.

United Internet sales and earnings are expected to be around the 2019 level this year. Since then, the revenue increased by 1.8 percent to 5.2 billion euros. United Internet is currently creating a slow hardware business for smartphones and tablets from its subsidiary 1 & 1 Drillisch, and the company is also reducing online advertising space for private customer offers such as GMX and Web.de.

Earnings before interest, taxes, depreciation and amortization rose 5.4 percent to EUR 1.27 billion. However, this was due to the changed accounting for leases, without which the operating result would have decreased by almost 2 percent.

The bottom line was a profit attributable to shareholders of 396.4 million euros. It rose to 2.13 euros per share after 94 cents a year earlier. Above all the weak share price development in the participation Tele Columbus United Internet had rocketed high impairments in 2018.

Telecommunications subsidiary 1 & 1 Drillisch, with United Internet boss Ralph Dommermuth the established network providers Deutsche Telekom, Vodafone and Telefonica Germany wants to attack, the number of customer contracts increased by 790,000 over the year. At 1 & 1 Drillisch alone, sales rose by 1.1 percent to EUR 3.67 billion, the operating result fell by more than 5 percent to EUR 683.5 million.

More: Home work because of the pandemic: Vendors like Microsoft or Zoom are promoting commercial solutions. There are free and safe alternatives.

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1 & 1 Drillisch pushes cellular plans through new alliance

Head office of 1 & 1 in Montabaur

The expansion of the future 5G mobile communications standard is closely related to the expansion of the fiber optic network in Germany.


(Photo: dpa)

Dusseldorf Last summer there was a fundamental change in the German mobile communications market. Internet entrepreneur Ralph Dommermuth had set himself the goal of establishing the established network operator Deutsche Telekom. Vodafone and challenge Telefónica. To do this, he wanted to set up a fourth network operator.

In the auction of 5G frequencies alone, the United Internet-Subsidiary Drillish Netz AG from around one billion euros. After the auction ended in June, things became quiet about Dommermuth and his ambitious plans.
Until now.

As the Handelsblatt learned, Dommermuth’s group around United Internet was able to agree on a framework agreement after months of negotiations with the Federal Association for Broadband Communication (Breko), in which many city network operators are united. This provides that the approximately 200 Breko companies together with the United Internet subsidiary 1 & 1 Versatel push ahead with fiber optic expansion in Germany and above all want to help open up 5G mobile phone locations.

The step has a signal effect. The expansion of the future 5G mobile communications standard is closely related to the expansion of the fiber optic network in Germany. An antenna can usually only be used reliably for 5G if it has been connected with fiber optics. However, the expansion is expensive and many construction companies are overloaded. It can sometimes take months or years for a construction company to tackle an optical fiber project.

United Internet tries to avoid this bottleneck. Versatel operates an approximately 50,000 km long fiber optic network, is active in 250 German cities, including 19 of the 25 largest cities in Germany. However, this is not enough for the expansion of 5G mobile radio. For comparison: Deutsche Telekom’s fiber optic network spans more than 500,000 kilometers.

5G expansion of 1 & 1 take off

Versatel technical director Claus Beck said: “The cooperation with Breko and its members means that the planning of the 5G mobile network of our sister company 1 & 1 Drillisch continues to gain momentum.” Breko managing director Stephan Albers said the framework agreement enables the networks without long negotiations to provide for mobile phone locations. “Many will participate because it is an attractive business model,” emphasized Albers. Versatel is a member of the Breko.

For United Internet, however, a core problem remains unsolved. It will be many years before the company can offer its own network across Germany. The agreement with Breko can accelerate the expansion in rural areas. But nothing more.

For months now, United Internet has been negotiating with the three major network operators Deutsche Telekom, Vodafone and Telefónica to share their infrastructure. So far, however, according to Handelsblatt information, no agreement has been reached. United Internet was not satisfied with the network operators’ offers. They complain that United Internet wants to buy valuable access to expensive infrastructure for little money.

United Internet originally pushed for legally guaranteed guarantees for the shared use of the other networks, so-called national roaming. The president of the Federal Network Agency, Jochen Homann, had argued: “It is not legally possible to oblige companies to let third parties online and to dictate prices.” However, he had said that all providers were subject to a negotiation requirement and a ban on discrimination.

United Internet insists on these rules. “If no timely solution emerges, the Federal Network Agency will have to exercise its referee role,” said a spokesman. The company had already complained to the advisory board of the Federal Network Agency about the procedure of the network operator. The “mirror” had first reported on the step. A formal complaint to the authority is still pending. However, a review process could take months to years.

More: More and more companies are building on the 5G standard

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