Barclays has moved German mobile carrier 1&1 and its listed parent United Internet to an "overweight" recommendation from "equal weight," and raised price targets for both stocks, citing improving fundamentals at the operator and potential value that has not been reflected in current share prices.
Price targets and upside scenarios
The broker increased its price target for 1&1 to 24 from 20.50 per share. Barclays also outlined an upside case tied to potential merger-and-acquisition activity that would value 1&1 at 37 per share. For United Internet, the price target was nudged to 28 from 27, while an M&A-linked upside scenario points to 40 per share. Barclays maintained a "neutral" view on the wider European telecom services sector.
Operational stabilisation at 1&1
According to Barclays, 1&1's operating results were affected in 2024-25 by the migration to its own network and by switching its roaming partner from Telef4nica to Vodafone. With that migration now complete, the broker reports that operational performance is stabilising. After negative net additions in 2025, Barclays says it is "beginning to see signs of stabilisation," and that this, combined with selective price increases, should support a recovery in service revenue growth in the coming quarters. The broker projects a 1% compound annual growth rate in service revenue over 2025-28.
Guidance and near-term metrics
Barclays notes company guidance for approximately 80 million of EBITDA in the near term, with around 100 million of incremental annual EBITDA growth into 2027-28. Reported EBITDA for 1&1 was 689 million in 2025 including Versatel. Capex in 2025 was 652 million and is expected to decline to a range of 500 million-550 million, remaining broadly stable through 2027-28.
Spectrum assumptions and valuation impact
The broker reduced its assumption for 2030 spectrum spend to 00 million from 1.20 billion, which lowers the total spectrum liabilities net present value in its discounted cash flow model from 1.30 billion to 1.0 billion. On headline numbers, Barclays observed that 1&1 trades at roughly 12x FY26 EV/EBITDA, but after adjusting for future spectrum and lease obligations the implied underlying multiple falls to about 7x - a discount versus European peers at 7.7x.
Consolidation and strategic options
Barclays flagged in-market consolidation in Germany as a material upside that does not appear priced into either stock. As an illustrative exercise, the broker modelled a hypothetical merger between 1&1 and Telef4nica Deutschland and estimated potential net opex and capex synergy net present value of 5.09 billion to 8.02 billion.
Media reports had suggested discussions between the two companies. At the fourth-quarter 2025 results conference in March 2026, United Internet and 1&1 Chief Executive Ralf Dommermuth said he "was not in any dialogue with Telef4nica" and had "no intention of selling the company right now."
Barclays also identified a Radio Access Network company structure - a RanCo - as an additional strategic option. With 1&1 spending about 400 million-500 million per year on its 5G network build, Barclays said a RanCo deal with an existing operator would remove near-term capex and opex requirements and avoid future 2030 spectrum obligations, noting that 1&1 does not have access to low-band spectrum until 2030.
Implications for United Internet
Within United Internet, Barclays estimates that 1&1 represents roughly 65% of the group's enterprise value. The broker further noted that the holding-company discount versus listed assets has widened materially year-to-date.
This repositioning by Barclays calculates a path where stabilising operational metrics, selective price actions and reduced assumed future spectrum liabilities improve the risk-reward for 1&1 and United Internet, while identifying consolidation scenarios and RanCo structures as potential sources of incremental value that the market may not have fully priced.