Executives from German MVNO 1&1 Drillisch hailed its potential to create a powerful new network as the country’s fourth mobile operator, as it detailed the initial financial cost of its market entry.

In a letter to shareholders, published alongside its H1 results, its executive team said the company was in a “good position to take the next steps” in its development, adding spectrum acquired in Germany’s 5G auction would allow it to create a “powerful mobile services network”.

Of the €1.07 billion the company pledged to pay authorities in the sale, €335 million does not need to be paid until 2024 because some allocations are unavailable until 2026. In addition to the cost of spectrum, it expects initial fees for planning and preparing for 5G to trim €5 million off its pre-tax earnings for 2019.

“In acquiring these frequencies, we have laid the cornerstone for a successful and long-term positioning of 1&1 Drillisch Group as the fourth mobile network operator in Germany,” it added.

Although the auction ended on 12 June, the cost of the spectrum was not taken off the company’s balance sheet for H1 with the only 5G-related charge being a €833,000 cost for fees related to the auction and network preparation.

In addition to its forthcoming launch, the company promoted progress in its existing MVNO business.

During H1, it added 380,000 mobile contract customers, taking its base to 9.58 million by end-June. It also had 4.34 million broadband customers.

Pre-tax profit for the six-month period was €256 million, down 2.5 per cent year-on-year. Revenue increased 0.4 per cent year-on-year to €6.6 million. Net profit figures were unavailable.