The German Operators spent an impressive €6.5 billion to access the 5G frequencies.
They now face questions and scepticism regarding the profitability of such an investment.
This article introduces how they intend to do it.
Deutsche Telekom : The 5G shall help to consolidate European Leadership
Deutsche Telekom AG is the co-leader of the German telecommunications market with 46 million subscribers (Q3 2018). Headquartered in Bonn, it is the largest telecommunications provider in Europe by revenue with a turnover exceeding €75 billion in 2018.
Deutsche Telekom was formed in 1996 when the former state-owned monopoly Deutsche Bundepost was privatized. Today, the company with 178 million mobile customers, operates several subsidiaries worldwide, including the mobile communications brand T-Mobile. The German arm of the company is called Telekom.
With a clear aim to remain a telecommunication leader, the company is looking at developing both consumer and enterprise businesses in Europe by heavily investing in 5G.
During the 5G auction in Germany, Telekom bought frequencies worth €2.17 billion and announced its ambitious plan of connecting six main German cities — Berlin, Bonn, Darmstadt, Hamburg, Leipzig, and Munich — with 300 5G antennas by the end of 2019.
“Our goal now is to get 5G to the streets, to our customers, as quickly as possible,” Deutsche Telekom’s Germany head, Dirk Woessner, told a glitzy presentation in Berlin on July 3.
The roll out of the 5G network will continue with the connection of 20 largest cities in the coming 18 months and by the end of 2020, Telkom aims to cover 99% of the German population with 50Mbit/s 5G network largely through its already-in-place fiber-optic network.
The company has a clear B2B strategy by seeking to develop strategic partnership with German industries and building a 5G ecosystem. It is also following an open “roaming” strategy and is ready to share its infrastructure with other network operators.
Deutsche Telekom is ready for a commercial rollout of 5G for its consumers and is among the first companies to offer 5G ready smartphones at their stores. Other attractive packages include a new 5G Unlimited rate plan that offers unlimited surfing for €84.95 per month and guarantees an automatic switch to the 5G network when available.
Vodafone wants to democratise 5G
Vodafone GmbH is a German subsidiary of UK based company Vodafone Group Plc. Headquartered in Dusseldorf, it is the second largest provider of mobile phone services in Germany with close to 30 million mobile customers (Q3 2018).
Vodafone is following a European “tower” acquisition strategy and is set to create a new company TowerCo, to manage its portfolio of 61,700 telecoms towers, which will be operational by May 2020.
It aims to create Europe’s largest towers portfolio in 10 markets with a potential EBITDA of around €900 million, including 19,300 towers in Germany.
5G is one of the key pillars of Vodafone’s development and the company is using its 5G launch experience in the UK to speed up its development in Germany.
In early 2018 Vodafone Germany announced that Deutsche Bahn and automobile firms e.GO, Audi and Continental had become its first 5G partners.
Last month, Vodafone counter-attacked Deutsche Telekom by announcing it will shortly launch 5G services in Germany by switching on 5G antennae in 20 German towns and cities — a figure that Deutsche Telekom only expects to reach next year.
Vodafone also announced cheaper 5G deals for smartphone than its competitors, starting at €14.99 per month for the first year. Its unlimited 5G data plan costs €80, which is a few euros lesser than the €85 deal by Deutsche Telekom.
“We are democratising 5G. With us, 5G isn’t just a technology only for high earners,” Vodafone’s Germany chief Hannes Ametsreiter said in a statement.
Vodafone, like other German network operators, continues to rely on network gear from Huawei, the Chinese technology giant that has been sanctioned by the United States because of perceived security risks.
Telefónica Germany hasn’t revealed her plan yet
Previously branded Viag Interkom before becoming O2 Germany, the company launched services in 1995 as a joint venture between British Telecom and the industrial group Viag, which later became E.ON when it merged with Veba.
In 2001 Viag Interkom came under the umbrella of BT’s mobile arm O2 but after Spain’s Telefónica bought O2 in 2006, the company was rebranded as Telefónica Germany in 2011.
In 2014 Telefónica Germany acquired E-Plus from KPN for €5 billion. The deal effectively created a market in which all three MNOs have a similar share in terms of subscribers.
As part of the deal Telefónica Germany was required to provide up to 30% of network capacity to MVNOs, sacrifice some spectrum and offer wholesale LTE services to other operators.
In October 2018 Deutsche Telekom signed a deal to connect some 5,000 of Telefónica Deutschland’s mobile base stations to its fibre backhaul network. The move is part of a wider effort to upgrade existing 3G and 4G base stations to 5G.
Telefónica Germany in 2018 also teamed up with NGN Fiber Network to connect more than 1,500 base stations to fibre. NGN Fiber Network manages a nationwide fibre network running to about 15,000km.
As with other telecommunication giants in the country, Telefonica Germany is also ambitious and want to become a “Mobile Customer and Digital Champion” and 5G is, as for the other main operators, the key for this strategy.
However, despite a massive investment of €1.425 billion to acquire 5G frequencies during the last auction, O2 did not announce a detailed 5G rollout plan for the coming years.
Telefonica is believed to be willing to build its development through partnership with enterprise businesses. It already has extensive expertise in the construction and operation of private networks and 5G access and core solutions. It is therefore, an important partner for business customers and the German industry in addition to its private customer business.
Drillisch : the ambitious challenger
Drillisch secured 30% of Telefónica Germany’s network capacity in 2014 following the latter’s merger with E-Plus.
In 2015 the company acquired yourphone and Phone House from Telefonica. In September 2017 the company completed its acquisition of 1&1 Telecommunications, enabling it to become a full-service provider using the latter’s DSL network in Germany.
In October 2018, 1&1 Drillisch closed down four mobile sub-brands (helloMobil, Phonex, McSIM and discoPLUS), and are expected to close down another two (BigSIM and discoSURF) by the end of the year.
It will have ten remaining brands (including winSIM, PremiumSIM, DeutschlandSIM, sim.de, discoTEL and simply).
With more than nine million customers (Q3 2018), Drillisch is the latest entrant in the 5G market in the country. With more than one billion euros spent in the spectrum allocation, Drillisch is the fourth big player among 5G network operators in Germany.
The company has not revealed its strategy but has expressed its intention to play among the leading telecommunication service providers in Germany.