A Pivotal Year on the Horizon for Germany’s Newest Operator
As 2026 dawns, Germany’s telecommunications landscape stands at a critical juncture, with no player facing a more consequential year than 1&1. After a tumultuous journey to establish itself as the nation’s fourth mobile network operator, the company has finally gained operational momentum. Yet, this hard-won progress is now overshadowed by profound market-wide uncertainty. This article will explore the pivotal forces shaping 1&1’s immediate future, dissecting its recent achievements against a backdrop of looming regulatory upheaval and intense speculation about strategic M&A. The year ahead will test 1&1’s resilience, as its fate hangs in the balance between competitive independence and potential consolidation.
The Rocky Road to Becoming Germany’s Fourth Operator
To understand the significance of 2026 for 1&1, one must first appreciate its challenging history. Since acquiring 5G spectrum in the 2019 auction, the company’s path has been fraught with obstacles. As incumbents Deutsche Telekom, Vodafone, and Telefónica (O2) aggressively expanded their 5G standalone networks to cover the vast majority of the country, 1&1 grappled with significant delays in infrastructure delivery, operational scaling issues, profit warnings, and a damaging network outage in May 2024. These foundational struggles painted the picture of a challenger struggling to gain a foothold, making its recent successes all the more remarkable and its current predicament all the more precarious.
Navigating a Landscape of Opportunity and Uncertainty
From Setbacks to Milestones: 1&1’s Hard-Won Momentum
Despite its difficult start, 1&1, owned by United Internet, ended 2025 on a high note, achieving two monumental goals that signal its arrival as a viable operator. The company successfully completed the migration of all 12.48 million mobile customers onto its own proprietary network, a crucial step it describes as achieving “competitive independence.” Furthermore, in December 2025, it met a key regulatory obligation from the 2019 auction by extending its innovative open RAN network to cover 25% of German households. To fuel its next phase of growth, 1&1 strategically acquired its sister company, fiber specialist 1&1 Versatel, for €1.3 billion, securing vital infrastructure for its future network build-out.
The Sword of Damocles: A Looming Spectrum Auction Redo
A significant cloud of uncertainty hangs not just over 1&1, but the entire German mobile market. In a stunning development, an August 2024 court ruling declared the rules of the original 2019 5G spectrum auction unlawful, throwing the legal basis for all operators’ 5G licenses into question. Germany’s federal networks agency, Bundesnetzagentur (BNetzA), is now forced to “relaunch 5G spectrum award proceedings,” creating two potential outcomes: a complete and chaotic rerun of the auction or a retroactive adjustment of the license conditions. While regulators have assured operators that it is “business as usual” for now, this unresolved issue undermines the financial and strategic foundations of their multi-billion euro investments, with clarity only expected after a consultation period ending in January 2026.
Shifting Alliances: The Specter of a Telefónica-1&1 Reunion
Adding another layer of complexity is the potential for a dramatic strategic realignment. 1&1 currently relies on a national roaming agreement with Vodafone, having ended a long-standing partnership with Telefónica—a move that dealt a significant financial blow to the Spanish-owned operator. However, an October 2025 report in a prominent German newspaper suggests Telefónica is actively working to win back 1&1’s business. This effort is reportedly spearheaded by new Telefónica Germany CEO Santiago Argelich Hesse, who is believed to have a better chance of mending relations with 1&1’s chief, Ralph Dommermuth. Speculation goes beyond a simple roaming deal, with sources suggesting a potential takeover of 1&1 by Telefónica is on the table, a move that would consolidate the market back to three players.
The Triad of Forces Shaping Germany’s 5G Future
The outlook for 2026 is defined by a convergence of technological progress, regulatory jeopardy, and strategic maneuvering. While 1&1 has proven its technical and operational capabilities, its future will likely be determined by forces beyond its direct control. The key question is how the spectrum auction dilemma will be resolved; a disruptive outcome could reset market dynamics entirely. Concurrently, the strategic dance between 1&1 and Telefónica could either forge a powerful new alliance or erase the country’s fourth operator from the map. These parallel developments ensure that 2026 will be less about network rollouts and more about high-stakes corporate and legal chess.
Key Takeaways and Strategic Considerations
The analysis revealed a clear narrative: 1&1 has overcome immense internal challenges to become a functional network operator, only to face two existential external threats. The primary takeaway was that its future hinged on the outcomes of the BNetzA spectrum proceedings and the M&A speculation involving Telefónica. For industry observers and investors, the crucial next steps were to monitor BNetzA’s announcements following the January 12 consultation deadline and scrutinize any official communications from 1&1 or Telefónica regarding their partnership. For the operators themselves, the situation demanded extreme strategic flexibility, as they had to prepare for scenarios ranging from a stable four-player market to a sudden, judicially-forced spectrum re-auction or a major industry consolidation.
A Year of Reckoning for 1&1
In summary, 2026 is poised to be a year of reckoning for 1&1. The company has successfully navigated the treacherous path from a virtual operator to a full-fledged network owner, achieving critical milestones in customer migration and network coverage. However, its long-term destiny is now entangled in a regulatory crisis and the tantalizing possibility of a market-altering merger. The resolution of these issues will not only decide 1&1’s fate but will also set the competitive tone for Germany’s telecommunications sector for the next decade. Ultimately, 2026 will answer the crucial question: will Germany’s bold experiment with a fourth national mobile network succeed, or will the market revert to its familiar trio?
