The Digi story is one of stealthy success. Its parent company, the Romanian telecommunications group RCS
After years of slow growth waging battle in the competitive Spanish low-cost mobile telephony sector, its name emerged strongly at the end of 2021, when it became the fifth mobile operator in the country, according to data from the National Commission for Markets and Competition (CNMC). Today it is directed by Marius Varzaru, CEO in the country.
Where is the secret of success?
We have always been very transparent and above all we have listened to our customers. Growth has been advancing according to what they asked of us. First, international calls for the Romanian community. We opened stores to be close to the client and little by little they asked us for calls to other countries, other services. And that’s how we got to where we are. We have the trust of 3.7 million customers, more than 746,000 fiber and more than 249,000 fixed telephony. And something that I am really proud of: we closed 2022 with 6,000 employees.
Digi is the only one of the virtual operators that invests in fiber and deploys it. Why abandon the ‘low cost’?
We continue to offer prepaid cards to a very price sensitive customer. Although I don’t feel comfortable with that low cost description, because it is associated with a low-quality product. That is not our philosophy, but to offer the best product we can at the best price we can. It does not have to be the cheapest, but it does have the best value for money. That is what has made us grow in Spain and in the rest of Europe. Romania as a major operator and Italy. Regarding fiber, like the rest of our services, it is the result of listening to customers. Through them we went from prepaid cards to mobile telephony. In 2018 we detected that they wanted convergent services and we bet on deploying our own fiber.
Is that bet profitable?
In 2022 we allocate 40% of our income. This represents a very high level of investment for a telecommunications operator of our size. We are aware that recovering the investment will not be immediate, it will take time. This year’s accounts will not reflect benefits for the first time since 2009 due to the impact of that investment. The business grows in line with previous years, but we suffer the impact of amortizing all the investment that we are making.
Can you detail those figures more?
We are a company listed on the Bucharest Stock Exchange and I cannot give you any further details until the official presentation of our accounts, which will be on February 28. What I can confirm is that we closed the year with 6,000 employees, compared to the 250 we had when the covid began.
You are distinguished from your competition by your policy of not subcontracting. Are they going to reconsider it now?
Nothing of that. With your own template it is easier to implement and control the business optimization processes that we carry out. In addition, the staff is better paid and more involved with the brand than if they are in an external company. Our trajectory as a group guarantees that it is possible to grow vertically, invest in technology and create stable employment. In any case, I want to clarify that in the last ten years this industry has not destroyed employment, but rather created it. It is one thing for it to have been destroyed in some companies and created in others. By 2023 we are going to continue creating jobs to deploy fiber above all. We hope to create 500 jobs, of which 100 will be in Catalonia, where we already have 500 employees, because Barcelona is next to Madrid where we have our headquarters.
Digi has stood up to the large telecommunications companies in Spain by announcing a price drop while they raise them due to the impact of inflation. Because?
Our company has always had the same philosophy, it is in our DNA. We want to reach the client with the best technology and the most reasonable price possible. Based on that we act, regardless of the competition. Now we have lowered the prices of fiber optics and mobile lines between one and five euros. At the same time, we are the only operator in the Spanish market that offers 10 Gb of fiber. In 2023 we want to continue improving. We are going to launch a product, Fibra Smart, with 500 Mb for 15 euros per month. We can only offer this in areas of Spain where we have our own fiber network. In addition, we are going to improve mobile and fiber services in search of more competitive services.
Have the crisis and rising inflation made Spanish customers more sensitive to price?
We have always noticed that customers are price sensitive. Some, more than others. For example, we have verified that the day our payment cards are recharged the most is the day unemployment benefits are paid. At another level of spending, customers want to pay the right price for services and have the freedom to contract. That is why we do not offer subscriptions to content platforms if they can be contracted directly.
The sector is very aggressive in advertising and marketing. Digi, on the other hand, has not been. What has been your customer acquisition strategy?
We are a small operator and our marketing budget has never been at the level of others in the market. At the beginning we made ourselves known with our own stores throughout Spain where our staff told customers about the attractiveness of our services. Both these employees and our own customers have been the best prescribers of the brand. The triumph of word of mouth has been very important.
But they have already joined the marketing.
In recent years we have invested a little more, not much, in advertising campaigns and especially in sponsorship. We seek to make ourselves known to customers who live in the area where we deploy fiber. That is why we like sponsorship of sports teams a lot. Also, although it is not seen on television, we are very active energizing the spectators at breaks, like the NBA. And although it is not marketing, there is also another of our policies that brings us closer to customers, labor. If we deploy fiber in Barcelona, ??we hire local Barcelona staff and create local employment with long-term jobs. Our employees and their families are also great prescribers.
It is said that Digi will be one of the great beneficiaries of the Orange-MásMóvil merger because they will be able to gain access to the divestments that they are forced to make. Are you preparing for it?
We do not know the decision that the European authorities are going to take and whether or not there will be conditions for the merger. When that information is known, there will be an opportunity to assess it.
Do you consider that this operation is good for the sector? Does Spain need more mergers?
It is difficult for me to give an opinion from a market perspective, because we represent ourselves and our philosophy. We will continue offering products at reasonable prices and good quality and building or deploying our own fiber optic networks or investing in general regardless of the number of operators in the market. More mergers? Competition is the best formula for companies to generate value for customers. In our case, it stimulates us to work to have the best technology at the best price.
