United Internet and Drillisch shares crashed after Telefónica dispute


The Internet and telecommunications group United Internet and its mobile phone subsidiary 1 & 1 Drillisch each suffered a double-digit percentage drop in their share values ​​on Monday morning. Due to higher price demands for the use of Telefónica Deutschland’s telephone network, United Internet significantly lowered its forecast on Saturday, which caused some shareholders to sell the company’s papers. A recovery of both stocks is currently not in sight. Analysts assume long-term damage.

United Internet announced on Saturday that earnings before interest, taxes, depreciation and amortization (EBIDA) would be significantly narrower than expected. Instead of 1.266 billion euros, a profit at the previous year’s level, the group now only promises a profit of 1.18 billion euros. As the reason for the decline, the MDax listed group named Telefónica Deutschland’s high wholesale demands for mobile communications capacities. According to United Internet, the prices charged by Telefónica for July and August were inappropriately high. “1 & 1 Drillisch considers the wholesale prices required by Telefónica from July 1, 2020 to be not in accordance with the voluntary commitments of Telefónica under the approval decision of the EU Commission to merge with E-Plus”, according to an ad hoc announcement from United Internet .

Telefónica Deutschland and 1 & 1 Drillisch are currently negotiating prices for the provision of mobile communications capacity. Telefónica is obliged to provide these as this was a prerequisite for approving the merger with E-Plus. United Internet announced that “there will be high declines in earnings in the following years”, “should the prices demanded by Telefonica be permanently applicable”.

Analysts assume that the price dispute carries an incalculable risk, which could mean a decline in profits for years. Shareholders of United Internet and the TecDax listed Drillisch reacted immediately. Both papers fell significantly on Monday morning after the stock market opened and initially did not recover. On Monday afternoon, United Internet’s shares fell 26.74 percent to 29.75. The mobile phone subsidiary Drillisch hit it with similar force: The share fell by 27.15 percent to now 17.71 euros.


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