Overview

• The Handelsblatt-sourced report says Telefónica is exploring options ranging from closer cooperation to acquiring 1&1, with failure still possible.
• Operational pressures underpin the talks as 1&1 struggles to scale its 5G network and Telefónica faces low O2 network utilization and muted growth prospects.
• 1&1 ended its long partnership with Telefónica in 2023 and struck a 2024 deal with Vodafone that will move about 12 million customers onto Vodafone’s network by year-end.
• Analysts are divided, with some seeing strategic merit and others warning that 1&1’s high market valuation and Telefónica’s debt load could make a purchase value-destructive.
• Any takeover would likely face stringent German antitrust scrutiny because it would reduce the number of nationwide network operators to three.