Germany’s 1&1 Drillisch said Telefonica improved its offer for national roaming. The parties are negotiating a national roaming agreement and prices to support 1&1 Drillisch's roll-out of its own 5G network. The new offer would also give the company a rebate on the existing MBA MVNO contract going back to July 2020. 1&1 Drillisch has until 19 February to accept the offer.
Telefonica tabled a new offer after the European Commission deemed the previous offer submitted last October not fully in line with commitments made by Telefonica when it acquired the mobile operator E-Plus. The operator agreed then to set aside part of its network capacity for virtual operators in order to support competition on the German mobile market. Telefonica said the new offer was deemed "competitive and in good faith" by the Commission.
If 1&1 accepts the offer, the framework conditions and prices offered by Telefonica would become part of the national roaming agreement. Lower annual prices will apply also on MBA MVNO services retroactively. As a result, 1&1 Drillisch expects it would gain EUR 30 million in earnings for the fiscal year 2020. The one-time gain would be booked in the fiscal year 2021.
The national roaming agreement is a prerequisite for 1&1 Drillisch to roll out its own 5G network, providing coverage in areas unserved until its footprint is completed. The company already uses the Telefonica network for its MVNO.
Separately, Telefonica Deutschland announced that an arbitration panel rejected 1&1 Drillisch's attempt to ignore the independent expert opinion received in December 2019 on the terms of their agreement. The company had called for a review of the network agreement and a retroactive price cut.
With the expert opinion upheld in the binging arbitration decision, there will be no retroactive price reduction from September 2017. Telefonica said it also continues to view the other price reviews requested by 1&1 Drillisch, which were not subject to the arbitration proceeding and go back to July 2018, as unjustified.
