• Digi Communications is becoming a multi-market service provider of note in Europe
• Its home market is Romania but it’s now an increasingly important player in Spain
• It is preparing to launch services in Belgium and Portugal as its approaches an annual revenue run rate of €2bn

Digi Communications might not yet be a household name across Europe, or even a widely recognised name in the telecom sector, but the ambitious service provider has been playing an important role in the reshaping of the Spanish telecom sector in the past year or so and is set to become a more influential regional operator as it launches services in additional markets and gains greater financial and customer base scale.

And while it’s not a major service provider yet, it’s well on the way to generating annual revenues of €2bn and it is profitable at an operating and net income level.

The company, which currently generates most of its revenues from its home market of Romania and Spain, has just reported its first-quarter results. Total group revenues were up by 12.8% year on year to €445.3m, of which €260.7m was generated in Romania, €177.5m in Spain and €7.6m in other markets (mainly Italy, where it is a mobile virtual network operator offering cut-priced services to 435,000 customers over Vodafone’s network).

Group operating profit for the first quarter stood at €49.7m, up by almost 52% year on year, while net profit was €25.6m, more than double the total from a year earlier. 

In Romania, Digi has 6 million mobile users, 4.6 million fixed broadband customers, 5.7 million pay-TV customers and 880,000 fixed line telephony users. Its customer numbers are growing modestly, except for the fixed line voice where, in line with other service providers in most markets, user numbers are falling. 

In Spain, it has 5 million mobile customers, just over 1.5 million for its fixed broadband service and 496,000 fixed line voice customers. Those numbers are growing at a very rapid pace, even for fixed line voice, with year on year customer base growth rates of 24% for mobile, 57% for fixed broadband and (incredibly) 55% for fixed voice, “mainly driven by our attractive offerings,” the company noted in its first-quarter report. 

And it seems likely that Digi will continue to grow quickly in Spain, where it has benefitted from the recent M&A moves of other operators: For example, it picked up spectrum licences from MásMóvil for €120m and arranged a mobile roaming deal with Orange Spain as a result of the regulatory conditions applied to the recent merger of Orange Spain and MásMóvil to form MásOrange. It has also recently struck a mobile roaming deal with national operator Telefónica and, in a move that shored up its finances and expanded its broadband reach, it sold its fibre-to-the-home (FTTH) broadband network assets for €750m to a consortium of investors that are developing a large wholesale broadband operator called Onivia. Digi Spain will use the Onivia FTTH network to offer retail fibre broadband services to a broader potential user base than it could have reached on its own – see Digi Spain sells its FTTH network for €750m.

In the company’s first-quarter press release, Digi Communications’ CEO, Serghei Bulgac, stated: “Following a year of remarkable expansion in 2023, we are thrilled to report a robust first quarter of 2024. Our key markets, Romania and Spain, have maintained strong performance and allowed us to reach a historical milestone of 25 million clients served, across all three markets of activity… We are committed to continuing to deliver superior quality at affordable prices across vibrant European markets, including established regions and new markets in Belgium and Portugal, where we are gearing up for the service launch.” 

And those launches are imminent, as the company noted that commercial services will be launched in 2024. 

In Portugal, Digi has been investing in its own fibre broadband access network infrastructure: It recently agreed usage rights for mobile spectrum currently licensed by Vodafone Portugal and wholesale access to Vodafone fibre access network if the Portuguese competition authorities approve the planned takeover of cable operator Nowo Communications by Vodafone Portugal (though Vodafone appears to be struggling to get that deal agreed with the authorities). 

Further north, Digi is looking to get its brand into the market through wholesale agreements while it builds out its own network. In August 2023, Digi Belgium (previously known as Citymesh Mobile), the Belgian 5G newcomer that is 51% owned by Citymesh (part of IT services group Cegeka) and 49% by Digi unit RCS & RDS, secured a national roaming agreement with Proximus, Belgium’s national operator. The agreement guarantees a five-year access right to Proximus’ national mobile network. 

At the time, Ward Van Ooteghem, chief strategy officer at Citymesh Group, noted in this announcement: “In 2022, together with RCS & RDS, we acquired the package for the new Belgian telecom player. Creating a complete nationwide Digi network will take a few years, but thanks to this agreement, we can combine the strong Proximus coverage with the rollout of our own Digi network. This way, we can enter the market in 2024 with a comprehensive mobile offering for both consumers and business clients.” 

To help with its expansion, Digi has struck two export credit facility agreements worth €117m to help fund network developments in Romania and Portugal. It has also brokered a €50m credit facility with Banco Santander to help with its capital needs in Spain.  

- Ray Le Maistre, Editorial Director, TelecomTV