Telefónica Deutschland is looking to strengthen ties with Germany’s fourth mobile operator 1&1.

As reported by German newspaper Handelsblatt this week, Telefónica aims to revive its partnership with United Group-owned 1&1 following the recently announced departure of its Germany CEO, Markus Haas.

Sources told the newspaper that both companies have discussed plans for closer cooperation, as the telcos push to compete with Deutsche Telekom and Vodafone.

A potential takeover of 1&1 by Telefónica could even be on the cards in the future, adds the report.

Handelsblatt notes that 1&1 is struggling to build out its 5G network, which it eventually launched in 2023 following several delays. The carrier won 5G mobile spectrum in 2019 as part of plans to build its own network to become Germany’s fourth mobile operator.

Significantly, 1&1 signed a 5G deal with Vodafone in 2023 at the expense of Telefónica, which had been its initial partner. As part of that deal, Vodafone would provide mobile coverage in areas that were not covered by 1&1’s network, including 2G, 4G, and 5G.

Handelsblatt previously reported that Haas was blamed for the loss of the high-profile 1&1 contract to rivals Vodafone.

This loss for Telefónica is Vodafone’s gain, with around 12 million mobile customers set to switch to Vodafone’s network from 1&1 by the end of this year.

Despite this, Telefónica is reportedly pushing for better relations with 1&1, which has also had its run-ins with Vodafone, notably accusing the telco and its tower company, Vantage Towers, of obstructing 1&1’s 5G mobile rollout in the country.

The two companies agreed in 2021 that the new 1&1 network could share 3,800 existing antenna sites. The agreement included expansion targets, with 1,000 sites due to be live by the end of 2022.

However, the rollout didn’t go as planned. In February 2023, 1&1 complained that it was facing “ongoing obstacles to the rollout of its 5G mobile network resulting from actions by Vodafone.”

This led the Bundeskartellamt to open an investigation into 1&1’s complaints.

While 1&1 is continuing to build out its network in Germany, as of June, the company owns and operates 1,200 antenna sites. As reported by Heise, which cites New Street Research estimates, the carrier will reach 12,500 by 2031, which is well off the 28,000 antenna sites Telefónica currently has.

Neither telco has commented on the reports. If a merger were to materialize in the future, it would see Germany’s market drop from four telcos to three, a trend which has been seen in other markets, notably the US, and more recently in the UK.

There are also strong reports that the same could happen in France, with Patrick Drahi’s Altice poised to split up its operations in the market between Orange, Free, and Bouygues.