Digi stays on track for launches in Belgium, Portugal in 2024

It's been a long time coming, but Romania-based Digi Communications continues to insist that it will be able to launch fixed and mobile services in Belgium and Portugal before the year is out.

During the recent earnings call for the first half of 2024 (H1 FY24), Serghei Bulgac, CEO of Digi, said services should soon be up and running in both markets.

In Belgium, Digi has signed a mobile virtual network operator (MVNO) and a national roaming agreement with former incumbent Proximus to underpin the launch of its own services. "We are in the process of implementing this agreement," Bulgac said. "We will launch mobile services … in the following months, but I cannot be more specific than that," he said.

He added: "We are developing at this moment a fiber network with our own resources in Belgium, and when we launch our mobile services we will also launch the fixed services in the areas where our network is complete."

Expansion in Portugal through Nowo acquisition

In Portugal, the aim is to launch mobile and fixed services in the second half of 2024, which is somewhat later than was originally planned.

In order to bolster its activities here, Digi recently agreed to buy Nowo Communications after Vodafone failed to gain regulatory approval to acquire the market's fourth-largest player. In August, Digi Portugal entered into a share purchase agreement with Lorca JVCO for the acquisition of 100% of Nowo's parent company Cabonitel for €150 million (U$167 million). The transaction is also still awaiting regulatory approval.

During the earnings call, Bulgac rejected an assertion that Digi is paying rather a high price for Nowo.

"The Nowo transaction is important strategically to us. We wanted very much to consolidate the mobile frequency, the spectrum that Nowo acquired in 2021. Secondly, we are also integrating an existing broadband and cable operation, which is very much aligned with what we intend to do," he said.

He noted that Nowo operates a hybrid fiber-coaxial (HFC) network, "which will have to be replaced by our fiber optic network, but we believe this all is a very synergistic operation and it is helpful for our strategy going forward. So I would disagree that the price is rather high to what we are used to," he said.

Digi has still been unable to form a national roaming agreement in Portugal, however, remarking that the offers it received from the incumbent operators were not satisfactory. While insisting that Digi is still keen to agree on a roaming deal, Bulgac said he believes the operator's own network "covers the entire population of Portugal well enough, and we are very busy in the last stages to launch the services later this year," with or without roaming.

Bulgac added that Digi will spend "in the magnitude of €500 million ($556 million)" in Portugal over the next five years, noting that current capex in the market is in the order of €120 million ($134 million) to €150 million ($167 million).

Building a Spanish presence

Digi is also active in Italy, Romania and Spain. Digi Spain is in the process of transforming itself from an MVNO, hosted by Telefónica, to a full-fledged mobile network operator (MNO). Here, capex is around €300 million ($334 million), Bulgac said.

The merger remedies that allowed Orange Spain and Másmóvil to form MasOrange included an agreement by Digi to buy Másmóvil's spectrum for €120 million ($134 million). This includes two slightly lower range frequency bands (1800MHz and 2100MHz), as well as the 3.5GHz midband.

In addition, Digi has established a new mobile network agreement with existing wholesale partner Telefónica covering both national roaming and RAN sharing options for a period of 16 years, effective from January 1, 2025. The agreements replace an existing MVNO deal between Digi and Telefónica and will also see them share spectrum in the 3.5GHz band.

And then there were five…

If all goes to plan, Digi could well be up and running in what would then be five markets by the end of 2024. In the meantime, it has continued to report ongoing growth. In H1 FY24, Digi Communications reported a 30% increase in revenue to €918 million ($1 billion). Adjusted EBITDA rose almost 20% to €285 million ($317 million).

The group also reached 25.5 million revenue generating units (RGU) as of June 2024, the bulk of which are in Romania.

Italy is still a relatively small market for the operator, with around 450,000 mobile RGUs by the end of June. Here, Digi is currently experimenting with fixed-line services with a pilot in Turin, although Bulgac noted that it has not generated significant results so far.