Shares of 1&1 surged on Wednesday following the announcement of a long-term exclusive wholesale agreement with Vodafone Group in Germany. This news had a negative impact on Telefonica Deutschland, the current partner of 1&1, as its shares sharply declined.
At 1214 GMT, 1&1 shares were trading 11% higher at EUR11.36, while Telefonica Deutschland shares fell 14% to EUR2.09. Majority owner Telefonica also experienced a 6.4% drop to EUR3.58.
1&1 and Vodafone’s German business have entered into a binding preliminary agreement for a roaming partnership, with the final deal expected to be reached as soon as possible. The partnership will span up to 18 years and is set to become effective in the second half of 2024.
Under this agreement, 1&1’s customers will gain access to Vodafone’s roaming services, including its 5G network, in areas that are not currently covered by 1&1’s own network. The pricing for this service will be determined based on the percentage of the Vodafone network used by 1&1’s customers, which will be indexed to Vodafone’s costs.
It is worth noting that, in 2021, 1&1 and Telefonica Deutschland signed a roaming contract with a five-year term, starting retroactively from July 2020. However, analysts at UBS suggested in a recent research note that a new deal between 1&1 and Telefonica Deutschland should not be ruled out.
Before this positive development, 1&1 shares had experienced an 11% decline since the beginning of the year, partly due to concerns regarding the costs associated with building its own network.