United Internet ETR: UTDI reported higher first-quarter revenue and earnings for fiscal 2026, with management saying customer growth at IONOS and Mail & Media helped offset stable contract numbers at 1&1 and ongoing cost pressures tied to the mobile network rollout.
Chief Financial Officer Carsten Theurer said the company’s customer contracts increased by 380,000 in the first three months of 2026 to 30.1 million. Group revenue rose 2.5% to more than EUR 1.55 billion, while EBITDA increased 2.4% to EUR 331.9 million. EBIT rose by more than 15%, which Theurer attributed to a significant decrease in purchase price allocation depreciation.
United Internet also reported earnings per share of EUR 0.36, up 44%, supported by improved EBIT and lower taxes. Theurer said amortization of intangible assets and depreciation of property, plant and equipment continued to rise as the company invests in fiber optic infrastructure and the 1&1 mobile network.
New Reporting Structure
Theurer opened the call by outlining a simplified reporting structure that United Internet adopted at the start of fiscal 2026. The company will now report three segments based on its subgroups: 1&1, IONOS and Mail & Media.
He said the change reflects the sale of 1&1 Versatel to 1&1, with the former Consumer Access and Business Access segments now reported on a consolidated basis at 1&1 AG. The former Business Applications and Consumer Applications segments have been renamed IONOS and Mail & Media, respectively.
1&1 Contracts Stable as Wholesale Costs Weigh
At 1&1, customer contracts were stable at 16.32 million in the first quarter. Mobile contracts remained unchanged at 12.48 million, while broadband connections were steady at 3.84 million. Theurer said the broadband performance was positive given declines in recent quarters, adding that a campaign promoting an easier switch to 1&1 had helped stop churn.
1&1 revenue increased 1.1% year over year to about EUR 1.1 billion. Service revenue declined slightly, in line with the company’s business plan, to nearly EUR 900 million, while hardware sales rose almost 11% to EUR 246.3 million.
Segment EBITDA was stable at EUR 192.4 million. Theurer said EBITDA was affected by higher wholesale costs under the national roaming agreement with Vodafone. He said slower-than-planned growth in Vodafone’s own network usage led to higher costs for 1&1 under the capacity-based model.
Theurer also noted that, following the switch in national roaming provider from Telefónica to Vodafone in 2025, costs for certain network components are now recognized directly in EBITDA. Under the prior Telefónica agreement, those costs had been capitalized and depreciated. Savings from producing some wholesale services within 1&1’s own mobile network partly offset the impact, he said.
IONOS and Mail & Media Drive Contract Growth
IONOS increased its contract base by 300,000 to 10.35 million, with Theurer citing customer gains both in Germany and internationally. He said foreign operations performed even more strongly.
IONOS revenue rose 5.7% to almost EUR 350 million, supported by customer growth as well as up-selling and cross-selling. Excluding foreign exchange effects, revenue growth was 7.6%. Despite higher marketing expenses, IONOS EBITDA increased 5.5% to EUR 112.2 million, with an operating EBITDA margin above 32%.
In Mail & Media, the number of pay accounts rose by 80,000 to 3.43 million. Free accounts fell by 220,000, or 0.6%, compared with year-end 2025, which Theurer attributed to seasonal effects and the ongoing conversion to pay accounts.
Mail & Media revenue grew 7.6% to EUR 79.3 million, driven by growth in paid contracts and positive advertising development. Operating EBITDA increased 70.3% to nearly EUR 30 million, while the operating EBITDA margin improved by more than 3 percentage points to 37.6%.
Theurer said the EBITDA increase was helped by the acquisition of server infrastructure used in IONOS Group data centers that had previously been leased from IONOS. Since the acquisition took effect on Jan. 1, 2026, prior lease costs that had been expensed through EBITDA shifted to capital expenditure and scheduled depreciation.
Cash Flow Improves; Guidance Confirmed
United Internet reported a significant year-over-year improvement in free cash flow. Theurer said capital expenditure totaled EUR 115.2 million in the period, reflecting continued investment in fiber optics, mobile networks and data centers. Free cash flow before leasing was EUR 47.5 million, while free cash flow after leasing was EUR 3.7 million.
Net bank liabilities increased 4.3% to around EUR 3.3 billion, which management described as reaching a peak ahead of a planned repayment. The equity ratio rose slightly by 0.4 percentage points to 44%.
Theurer said United Internet remains “right on track” and fully confirmed its guidance for fiscal 2026. He added that capital expenditure is expected to be back-end loaded, similar to the previous year, and said it was too early to further specify the indicated range.
Analysts Focus on Spectrum, IONOS Stake and Leverage
During the question-and-answer session, analysts asked about 1&1’s mobile network buildout and access to low-band spectrum. Theurer said the spectrum discussion remains ongoing and that the company is waiting for a final decision from Germany’s Federal Network Agency, BNetzA.
He said United Internet continues to believe 1&1 should receive access to low-band spectrum as it builds a full mobile network. If access is not granted in the current process, Theurer said the next opportunity would be in 2030, with the Vodafone national roaming agreement serving as a bridge in the meantime.
Asked about network rollout progress, Theurer said the pace remains at about 200 to 300 sites per quarter and that the company is broadly in line with that rate. He indicated 1&1 could end the year with about 3,000 active sites.
On United Internet’s stake in IONOS, Theurer said the company remains satisfied with its investment and continues to see upside from artificial intelligence and digitalization trends. “It is therefore too early to leave the party,” he said, adding that United Internet expects to remain the anchor investor for the time being.
Regarding leverage and capital allocation, Theurer said United Internet still aims to reduce leverage to a target of 2.0 times net debt to EBITDA. He said the company is open to additional share buybacks in the future, as it has done in the past, but that no decision has been made.
About United Internet ETR: UTDI
United Internet AG, through its subsidiaries, operates as an Internet service provider worldwide. The company operates through Consumer Access, Business Access, Consumer Applications, and Business Applications segments. It offers landline-based broadband and mobile internet products, including home networks, online storage, telephony, and IPTV for private users; and telecommunication products ranging from fiber-optic direct connections to tailored ICT solutions, which include voice, data, and network solutions, as well as infrastructure services to national and international carriers and ISPs.
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