European Telecom Services: Inflection ahead with additional M&A optionality, upgrade 1&1/UI to OW

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European Telecom Services: Inflection ahead with additional M&A optionality, upgrade 1&1/UI to OW

Equity Research

24 June 2026

European Telecom Services

Inflection ahead with additional

M&A optionality, upgrade 1&1/UI

European Telecom Servicesto OW

NEUTRAL

We upgrade 1&1 to OW on gradually improving fundamentals, Unchanged

with top line stabilisation and lower migration driving OpFCF European Telecom Services Ganesha Nagesha

growth. Meanwhile in-market consolidation remains a +91 (0)22 6175 1712

potential upside that is not priced in. We also upgrade UI to ganesha.nagesha@barclays.comBarclays, UK

OW. Mathieu Robilliard

+44 (0)20 3134 3288

We upgrade 1&1 and United Internet to Overweight. At 1&1, stabilising KPIs and a more mathieu.robilliard@barclays.com

BBI, Parisrational promotional environment should support a gradual service revenue inflection

(+1% CAGR2025–28E). With network migration costs starting to fall in 2026 and capex Maurice Patrick

peaking in 2026, we see strong OpFCF growth ahead. In addition we see optionalities to +44 (0)20 3134 3622

create further value that is not priced in: 1/A potential RanCo structure, which would maurice.patrick@barclays.com

Barclays, UKimprove network economic for 1&1, particularly given limited access to low-band

spectrum; 2/1&1 seems well placed should there be any M&A in Germany that could create Maxime Delaugerre

significant potential synergies. We increase our PT from €20.5 p/s to €24. Our upside case +44 (0)20 3555 5672

that includes potential M&A points to €37 p/s. At United Internet, improving trends at 1&1 maxime.delaugerre@barclays.com

Barclays, UK(c. 65% of its EV)should drive an acceleration of OpFCF growth in the coming years. At

IONOS, 1Q results were re-assuring with some green shoots of AI monetization, and we