October 25, 2019 / 7:50 AM / 25 days ago

UPDATE 2-Germany's 1&1 Drillisch plunges after pricing review rejected

* Independent expert rejects bid for lower payments

* Shares dive 22%

* Stock set for worst day since 2000

* Separate price reviews under way (Adds detail)

By Tassilo Hummel

BERLIN, Oct 25 (Reuters) - 1&1 Drillisch shares plunged 22% on Friday, a day after the German telecoms operator lowered its outlook citing its rejected request for a retroactive review of a pricing deal with Telefonica Deutschland .

It had sought lowered fees to use Telefonica’s mobile network.

Falling as much as 22% in Frankfurt, 1&1 Drillisch was on track for its biggest one-day loss since 2000.

Shares in parent company United Internet, which was also forced to lower its outlook, fell 19% while Telefonica Deutschland gained 4%.

“Big hit for United Internet and 1&1 Drillisch, crucial stage win for Telefonica Deutschland,” a Frankfurt-based trader said.

An independent expert serving as an arbitrator on Thursday rejected Drillisch’s request to retroactively reduce advance service prices under its deal with Telefonica Deutschland.

In response, Drillisch lowered its 2019 earnings before interest, tax, depreciation and amortisation (EBITDA) forecast to about 690 million euros ($767 million) from about 780 million euros.

United Internet also lowered its outlook.

Telefonica Deutschland signed the deal with 1&1 Drillisch in 2014 following its acquisition of mobile provider E-Plus, selling it access to infrastructure to enable the takeover to go ahead and giving 1&1 Drillisch the right to call for a pricing review.

Separate pricing reviews related to payments since July 2018 are still under way, Telefonica Deutschland said. “The three remaining reviews might still turn out positive (for 1&1 Drillisch) as Telefonica has been especially price aggressive in 2018,” Hauck & Aufhaeuser analyst Simon Bentlage said in a note, reaffirming his buy recommendation on the stock.

$1 = 0.8991 euros Reporting by Tassilo Hummel; additional reporting by Chris Steitz in Frankfurt; editing by David Goodman and Jason Neely

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