Telefonica Germany boss criticizes four network operators in Germany and plans to use AI and cut jobs

Telekom, Vodafone, 1&1 and Telefonica operate their own mobile networks in Germany. The new Telefonica Germany boss considers this to be “anti-innovation and anti-investment” and points to other European countries where there are fewer network operators.

The new Germany boss of the Spanish telecommunications group Telefonica is critical of the structure of the German mobile communications market. In no other large country are there four network operators, said Santiago Argelich Hesse. The model of service providers who sell mobile phone tariffs without operating their own network has only survived in Germany. “It would be a solution to the problem if the market consolidated on three providers,” said German-Spanier. There is no need for four mobile networks. The current structure desired by politicians leads to low prices for consumers, but is hostile to innovation and investment. “We have to see how we limit all these rules and costs.”

The manager did not want to comment on the recurring rumors that Telefonica Deutschland could merge with its O2 brand and the network operator 1&1. The 1&1 parent company United Internet had repeatedly rejected such speculation.

Telefonica has been suffering for years from the fact that 1&1 - until then a partner of the telecommunications group - made a name for itself as the fourth network operator in Germany and otherwise shared the network of its competitor Vodafone. For places where 1&1's own network is not yet ready, 1&1 no longer uses Telefonica's network, but Vodafone's. Telefonica Deutschland's sales have continued to decline since then, admitted its Germany boss, who is aiming for "a turnaround" in the coming year.

More use of AI - fewer staff

Argelich Hesse, who has succeeded Markus Haas as head of Telefonica in Germany since the beginning of the year, wants to combat the loss of importance with a package of measures: "The future must be linked to growth - which is not easy because the market is not growing," he said. "It won't be a sprint, but a marathon. We won't be the biggest." Telefonica has undergone a deep transformation and the job cuts have now been completed on a voluntary basis. Telefonica had announced that it would cut 1,100 jobs by the end of 2026, but there are media reports of a second round of cuts. The increased use of artificial intelligence (AI) will also have an impact on staff, admitted Argelich Hesse.

He sees growth opportunities in the business customer market dominated by Telekom, in which Telefonica is expected to grow double-digit in the next few years - from a low base. Telefonica has a small single-digit market share in Germany - but it is the leader in Spain and Brazil. The business with partners such as Alditalk, which brings Telefonica almost ten million customers, is to be expanded. Telefonica is working on new partnership models. “We have to develop this further, away from pure prepaid at the checkout,” said Argelich Hesse. Customers should be offered more digital products.

“Customers see us too much as a mobile-only provider,” said Argelich Hesse. O2 should be positioned as a premium provider, the discount brand Blau will rely heavily on AI. Argelich Hesse wants to use the year 2027 to renegotiate the partnerships - both in sales and with the cell phone tower operators. “2028 will be the year in which the new strategy materializes,” he said.