Telefonica put the new deal on the table in February after the two had been unable to agree terms, but it's taken some ironing out.
1&1 Drillisch – which formerly changed its name to 1&1 in April – and Telefonica Deutschland (which operates under the O2 brand in Germany) have finally hammered out the details of their roaming agreement.
It seems reports that the two had reached agreement in February was somewhat premature, but the deal is now sealed. The terms of the agreement are largely confidential, but 1&1 will serve its subscribers by roaming on Telefonica’s national infrastructure for five years.
At the end of that five years, there is the option to extend the contract for two more five-year periods, although the second of them will be renegotiated.
1&1 must use the time to build its own network to fulfil the terms of its controversial national 5G licence which it won in 2019.
The German regulator took the 5G spectrum auction as an opportunity to award a licence for a fourth national operator. This decision was challenged in courts and taken to the European Commission by the unhappy incumbents, but prevailed.
A win:win outcome?
In a statement Telefonica said, “As planned, the companies are putting their long-term partnership on a new contractual basis with the signing of this agreement. With the NRA [National Roaming Agreement] Telefónica Deutschland is securing long-term valuable revenue streams”.
Tensions arose between Telefonica Deutschland and 1&1 Drillisch last September after the latter complained about price increases on the host network and argued that Telefonica had broken pricing conditions it agreed to when it acquired E-Plus in 2014.
The owner of 1&1 Drillisch, United Internet, later reported the price increase between July and the end of last year cost it €34.4 million, but said it would offset the loss in the first half of this year.
Telefonica made a new offer in October, but it did not satisfy 1&1 Drillisch which took its woes to the European Commission.
After an investigation, the Commission sided with 1&1 Drillisch and ordered Telefonica to make a better offer, which appears to be acceptable.
Now 1&1 Drillisch can crack on with the small issue of building a new national 5G network.