A head-turning partnership in the German mobile market–Vodafone and 1&1 want to end their rivalry and get together. What does their new cooperation entail? Could this closing of ranks between two old rivals pave the way for a new era in the mobile industry?

Vodafone and 1&1 made a surprise announcement Wednesday of a national roaming partnership in Germany that will see both companies share networks. Mobile carrier Vodafone is looking to increase its revenue through this cooperation, while 1&1 hopes to save on legal fees related to the network expansion dispute. Under the new agreement, 1&1’s nearly twelve million mobile customers will switch from the O2 to the Vodafone network in October 2024, giving them access to fast 5G services.

This is why the alliance was necessary

1&1 founder Ralph Dommermuth emphasized the new deal’s non-discriminatory nature and highlighted the company’s savings by eliminating legal fees. Previously, 1&1 was in an ongoing dispute with Telefónica over network construction. In the last six months, 1&1 posted a profit of around 254 million euros, with the cost of the 5G network rollout explaining the nearly 12 percent drop.

The new roaming contract enables 1&1 customers to access the company’s network in areas without Vodafone’s own masts. The previous roaming agreement with Telefónica Deutschland (O2) only covered 4G, while the new partnership also includes access to Vodafone’s 5G network.

What does the future look like?

Why this about-face? “The deal with Vodafone wasn’t about us buying cheaper than Telefónica,” Ralph Dommermuth, CEO of 1&1 told FAZ. He says that “the prices are more or less the same. It is much more important that the contract contains a clear basis for calculation and no hidden costs”.

He adds that the cooperation represents a long-term solution for both companies, with Vodafone having the opportunity to utilize its networks better and further improve them for customers. At the same time, 1&1 will gain access to 5G services, which could strengthen its competitive position. However, it remains to be seen how the partnership will develop in a rapidly changing mobile market.