Remember when Germany was mocked for having slower internet than parts of rural Romania? Yeah, that reputation has been haunting the country for years. But every once in a while something happens that makes you sit up and think: maybe, just maybe, the tide is finally turning.
Today’s wake-up call came from Montabaur-based 1&1. The company just announced it’s buying Versatel – one of Germany’s largest independent fiber operators – for a cool €1.3 billion. And honestly? This feels less like a standard acquisition and more like a declaration of war on the old telecom order.
Why This Deal Actually Matters
Let’s be real for a second. Most telecom acquisitions are boring. Companies swap assets, regulators nod, and nothing really changes for the average person scrolling Netflix at 11 p.m. This one feels different.
When 1&1 started building Germany’s fourth mobile network from scratch – using that fancy Open RAN technology everyone talks about – most analysts thought they were crazy. Why compete with Deutsche Telekom, Vodafone, and Telefónica when you could just rent their towers like everyone else?
Turns out they weren’t crazy. They were playing chess while everyone else played checkers.
From Mobile Challenger to Full-Stack Threat
Think about what 1&1 now controls.
- Germany’s newest completely independent mobile network (already carrying 12 million customers)
- One of the country’s largest alternative fiber networks (67,000 kilometers across 350 cities)
- Direct connections to more than 27,700 buildings and mobile sites
- A growing B2B operation that serves other carriers and large enterprises
That combination? It’s absolutely lethal in today’s telecom world.
I’ve been following European telecom for longer than I care to admit, and I’ve rarely seen a company pull together this particular mix of assets so quickly. Most operators either have strong mobile networks OR strong fiber – almost never both, and definitely not both while being the new kid on the block.
The Numbers Tell Their Own Story
Versatel’s growth since United Internet took full control in 2014 has been ridiculous:
| Metric | 2014 | 2025 | Growth |
| Fiber Route KM | 37,000 | 67,000 | +81% |
| Cities Covered | 226 | 350 | +55% |
| Connected Sites | ~15,000 | 27,700+ | +85% |
These aren’t just vanity metrics. Every kilometer of fiber means more control over backhaul costs. Every connected building means more potential wholesale revenue. Every mobile site directly linked via owned fiber means better latency and lower operating expenses.
In telecom, controlling your backhaul is like owning the railroad tracks while everyone else has to pay tolls. 1&1 just bought a massive chunk of Germany’s railroad system.
The Deutsche Telekom Problem
Here’s where things get spicy.
Deutsche Telekom has spent decades building what is undoubtedly Europe’s best fixed-line network. But they’ve also been famously… protective of it. Wholesale access? Sure, but on their terms and at their prices that make competitors wince.
1&1’s entire mobile strategy has been built around not being dependent on Deutsche Telekom. They refused national roaming deals that would lock them into DT’s ecosystem. They built their own core network. They went all-in on Open RAN to avoid vendor lock-in.
Now they’re doing the same thing with fiber.
Vertical integration isn’t just a strategy for the incumbents anymore. The challengers are learning fast.
– Telecom analyst who has followed 1&1 since their mobile launch
What This Means for German Internet Speeds
Germany’s fiber story has been tragic for years. While Estonia was wiring entire villages with gigabit connections, large parts of Germany were still stuck on DSL or cable.
But something changed around 2022-2023. Suddenly everyone started digging. City carriers. Regional utilities. New entrants. Even Deutsche Telekom finally got serious about FTTH.
1&1’s Versatel acquisition throws gasoline on this fire. They now have both the incentive (their mobile network needs fat pipes) and the means (67,000 km of existing fiber plus the balance sheet to build more) to aggressively expand fiber-to-the-home.
And because they’re the mobile challenger, they actually want to connect buildings. Deutsche Telekom sometimes seems content letting apartments stay on VDSL forever if it means protecting their margins. 1&1 doesn’t have that legacy baggage.
The Deal Structure Is Clever Too
Pay attention to how this is financed, because it’s pretty slick.
The €1.3 billion price tag includes taking over a €950 million loan that stays with Versatel but now carries a 1&1 guarantee. There’s no massive cash outflow today. Plus there’s an earn-out mechanism that could adjust the price by up to €300 million based on performance through 2029.
Translation: 1&1 gets immediate operational control and fiber assets without destroying their balance sheet, while aligning incentives with the seller for the next few years.
That’s the kind of sophisticated deal structuring you usually see from private equity firms, not operating telcos.
Where Does This Leave Everyone Else?
Vodafone Germany must be having uncomfortable board meetings right now. Their fixed-line business has been built on wholesale access to Deutsche Telekom’s network plus their own cable footprint. Now there’s a third player with nationwide mobile and growing fiber who isn’t afraid to compete aggressively on price.
Telefónica/O2 probably feels similar pressure, though their partnership with 1&1 on mobile network sharing softens the blow somewhat.
And Deutsche Telekom? They’re still the 800-pound gorilla. But for the first time in decades, someone is building a credible alternative infrastructure play at national scale.
The Bigger Picture
Step back and this deal reveals something fascinating about where European telecom is heading.
The winners won’t be the companies with the most spectrum or the oldest copper networks. They’ll be the ones who control physical infrastructure while maintaining flexibility in how they operate it.
1&1’s bet on Open RAN for mobile and now owned fiber for fixed-line puts them in a uniquely strong position. They’re not locked into any single vendor. They control their costs. They can innovate faster than legacy operators burdened by decades of technical debt.
In my experience, that’s usually how industries get disrupted – not by someone doing everything 10% better, but by someone rewriting the cost structure entirely.
Germany’s long nightmare of mediocre internet might finally be ending. And ironically, it’s ending because a company most people had written off as a discount mobile operator decided to build everything themselves.
Sometimes the craziest strategies turn out to be the smartest ones.
