1&1 to Acquire Versatel for €1.3 Billion: Strengthening Its Presence in Germany's Fiber Market

1&1's planned acquisition of Versatel for €1.3 billion consolidates its influence over both fixed-line and mobile infrastructure, enhancing its fiber backhaul and business-to-business connectivity services.

Key Takeaways

1&1 is acquiring Versatel for €1.3 billion, enhancing control over the German telecommunications infrastructure.
The acquisition includes all assets and liabilities of Versatel, with a particular focus on its fiber network and mobile backhaul infrastructure.
The deal allows for an adjustment of the purchase price based on Versatel’s performance up until 2029.
Since 2014, Versatel's network has grown significantly, serving over 27,700 sites across 350 cities.
The acquisition will help 1&1 integrate its operations as a key mobile provider in Germany and capitalize on the country's burgeoning fiber market.

1&1 to buy Versatel for €1.3b, tightening grip on German fiber - 1

Details of the Acquisition

German telecom operator 1&1 has announced its decision to acquire Versatel for €1.3 billion, a deal aimed at consolidating its control over both fixed-line and mobile network infrastructure. This acquisition will provide 1&1 ownership of Versatel’s extensive fiber network, mobile backhaul assets, and business-to-business capabilities.

The transaction includes all assets and liabilities of Versatel, which entail a €950 million loan owed to parent company United Internet. While this loan will remain tied to Versatel, it is secured by a guarantee from 1&1, meaning there won’t be any immediate cash payment required for the acquisition. Notably, the agreed purchase price may be adjusted by up to €300 million based on Versatel’s performance metrics between 2027 and 2029, with any required adjustments occurring in 2030.

Versatel's Network Expansion

Since United Internet achieved full ownership of Versatel in 2014, the fiber network has greatly expanded, increasing from 37,000 kilometers spanning 226 cities to 67,000 kilometers now covering 350 cities. This growth enables Versatel to connect more than 27,700 sites and cater to institutional clients as well as other telecom operators.

Strategic Implications for 1&1

The acquisition strategically positions 1&1 to merge its mobile and fixed-line services, establishing itself as Germany’s fourth major provider with its own facilities. Recently, the company successfully migrated its 12 million customers to its Open RAN mobile network, an initiative expected to benefit significantly from alignment with Versatel’s fiber infrastructure.

Market Insights

Industry analysts have emphasized that the merger of fixed and mobile assets enhances 1&1’s competitive edge in Germany's growing fiber market, which is experiencing a surge in deployment speed after years of stagnation compared to other European countries. This move reflects 1&1’s commitment to controlling infrastructure essential for providing quality consumer and enterprise services throughout Germany.

The acquisition is currently pending regulatory approvals and underscores 1&1's strategic goal of bolstering its infrastructure capabilities in the telecommunications market.