1&1 9-month Earnings, Contracts Down; Confirms FY25 Outlook

Telecommunications provider 1&1 AG (1U1.DE) reported a significant decline in first nine months 2025 earnings, with EPS down 43.2% to €0.63 and EBITDA falling 11.5% to €409.8 million, primarily driven by planned start-up costs for its new mobile network and increased depreciation, despite nearly flat revenues. The company, which also saw a slight dip in customer contracts, reaffirmed its fiscal 2025 forecast, anticipating stable service revenue at €3.303 billion but a full-year EBITDA decline to approximately €545 million as network investments continue.

Analysis

1&1 AG reported a significant decline in its first nine months of 2025 earnings, with EPS falling 43.2% to €0.63 and EBIT dropping 39% to €175.4 million. This was primarily driven by an 11.5% decrease in EBITDA to €409.8 million, despite revenues remaining nearly flat at €3.016 billion and a marginal 0.3% reduction in customer contracts to 16.34 million.

The profitability decline is attributed to higher planned start-up costs for the 1&1 mobile network and increased depreciation and amortization linked to growing antenna sites. The company reaffirmed its fiscal 2025 forecast, expecting stable service revenue at €3.303 billion but projecting a full-year EBITDA decline to approximately €545 million from €590.8 million, reflecting ongoing network investment impacts.

This sustained pressure on profitability, despite revenue stability, underscores the substantial short-term financial burden of the 5G network rollout. The significant 43.2% EPS drop and slight contract base erosion suggest execution risks and potential near-term pressure on shareholder returns.

The market's strongly negative sentiment (-0.75) towards these results indicates investor concern regarding the immediate financial performance and the timeline for investment returns. The confirmed guidance implies that these headwinds are expected to persist through the fiscal year.

Key Decisions for Investors

• Investors should closely monitor the progress and capital expenditure associated with the 5G network rollout, as these are primary drivers of current profitability challenges.
• Evaluate the company's ability to stabilize its customer contract base and effectively monetize network investments into future service revenue growth.
• Consider the reaffirmed fiscal 2025 EBITDA guidance of approximately €545 million as a key indicator for assessing management's execution against its planned investment cycle.