When he was born, nothing indicated that this would be a success story. DigiMobile It entered the Spanish market in 2008, in the midst of the financial crisis, and the only offer was prepaid calling cards. The cards allowed national and international calls because the customers they were calling were immigrants from Romania, the company’s country of origin. At that time the Romanian community in Spain barely exceeded 730,000 people. This was basically their maximum potential audience. And the initial sales force (and for many years) were call centers aimed at the immigrant population, small grocery stores, neighborhood markets and more.
Fifteen years later Digi is a The giant that managed to explode the Spanish market based on telecommunications aggressive prices, simple prices and an increasingly complete range of services – currently including mobile data, fiber and landline – which has long since surpassed the boundaries of the original Romanian origin and conquered the national customer. The operator currently has a portfolio of: Just over 6.1 million customers (almost 4.47 million with mobile lines, 1.24 million with home fiber and internet, more than 400,000 with fixed lines), making Movistar the fifth largest telecommunications company, just after Orange, Vodafone and MásMóvil, and by far the fifth largest in the world. is a telecommunications company. The fastest growing company.
Digi added 1.5 million new customers last year alone (almost 2.8 million in the last two years) and has clearly managed to overtake the legacy group MásMóvil (Yoigo, Pepephone, MásMóvil, Euskaltel, Virgin Telco, Lebara…). challenging This has shaken up the industry as a leader in user acquisition. Much of the company’s growth in recent years has been based on stealing customers from large traditional telecom companies. Romanian company At the top of the list for portability (it changes while the company retains its phone number) and adds the 1.9 million customers it snagged from rivals in the past two years.
The small niche operator and neighborhood call store, which spreads solely by word of mouth as a marketing tool for its limited expat audience, surpassed €500 million in sales for the first time in Spain last year (expected to exceed €680 million this year); It already has its own fiber network reaching more than 6 million homes and has concrete plans to add another 2.5 million homes (although there is speculation it will sell that network for around 1,000 million); initiated a plan to have its own network of stores to sell its products; and judging from this limited rumor, its logo also appeared on the jerseys of Rayo Vallecano, Cádiz or Oviedo (and other teams such as Espanyol, Alavés or Deportivo de La Coruña in past seasons).
Finish the attack
The telecommunications sector in Spain has been fiercely competitive for years; For some companies, this has been too much for many years. Telecom companies live in a near-permanent trade war driven by the continued and growing power of low-cost operators.
Operators estimate that low-cost companies have been able to retain about 60% of all new registrations in the industry for years, both in terms of portability and new numbered lines. Saving on bills is the main reason driving customers to switch companies Telephone and internet services, according to the National Markets and Competition Commission (CNMC) consumer trends survey.
In the large Spanish low-cost market, Digi emerges as the great queen of low cost (Although the company prefers to talk about “fair prices for quality services,” it has no reservations about endorsing that label). And now the operator is about to make a very important change that will allow it to make a giant leap and Complete the assault on the major telecommunications club once and for all Spanish.
Orange and MásMóvil this week signed a deal with Digi to transfer assets and pave the way for them to finally get approval from the European Commission for their merger after two years of preparation. Brussels thinks that the merger of two telecommunications companies, which will create the largest operator in the Spanish market by the number of customers, may negatively affect competition and is preparing to impose conditions (remedies(in economic and social jargon) to approve the merger operation
Digi Spain has signed an agreement with two telecom companies in the process of merging to purchase radio spectrum for 120 million euros to build its own mobile network in the Spanish market. The purchase of the spectrum envisages the transfer of 60 megahertz of different frequencies (including one that will be used for next-generation 5G communications) that have so far fallen into the hands of MásMóvil.
The agreement also envisages the option of a wholesale rental agreement for the use of their mobile network at advantageous prices, which could mean that Digi has the option of activating or not activating it according to its needs and may stop using the network as it has used so far. The Telefónica acquisition consequently dealt a million-dollar blow to the group’s wholesale business.
Digi has already envisaged its intention to launch a 2 billion euro investment plan within seven years if it manages to receive this offer. remedies without merging. Those advocating for Brussels to impose conditions on the operation and turn the excess assets into a growing and already sizeable company like Digi point out that the deal will encourage the Romanian-based company to continue encouraging investment and creating jobs (already a workforce of 7,250 workers (more than double that of two years ago). more) will facilitate its permanence in the Spanish market in the long term and will also Reduce your trading aggressiveness It is forced to undertake investments worth millions of dollars to establish and maintain its own network. But not everyone in the industry is so optimistic.
Fatten another major fourth operator
Orange and MásMóvil, as well as rivals Movistar and Vodafone, argue that the operation should be allowed without any imposition, pending a very long process awaiting the ‘OK’ from the European Commission. remedies difficult Major telecommunications companies have demanded unconditional or near-immediate approval to move forward with the consolidation of a deeply atomized sector like Spain’s.
The largest groups feared that the decision would once again be aimed at encouraging a fourth operator and would not allow progress towards a more rationalization of the stricken telecommunications business in Spain, and that profitability and revenue would fall due to this blow. to extreme competition and the heavy weight of low cost. The European Commission is providing guidance to Orange and MásMóvil on which assets should be transferred and which candidate or candidates would be suitable to acquire them. The big winner is, as all pools state, Digi to be strengthened with wealth surplus from the union of their rivals.
The European Commission has been promoting the liberalization of the telecommunications sector for almost three decades, based on maximizing competition to guarantee affordable prices for citizens and companies. A strategy originally designed to break down old state monopolies, actively seeking to ensure the existence of four reference operators capable of competing in each national market, and complemented by vetoes by Brussels or the imposition of onerous conditions on some operations. Merger between related companies.
“Conditions for the merger of Orange and MásMóvil in Brussels will lead to the worst-case scenario. “Digi will be artificially relegated to the fourth operator when it becomes clear that it does not really need it after being the fastest growing company for years,” criticizes an executive from the national telecommunications industry. Many companies had hoped that the Orange-MásMóvil merger would allow the business to be concentrated around the three major operators, but They are already predicting that the emergence of a fourth strong operator will once again gain momentum and that Digi will replace MásMóvil in this role.