Marius Varzaru: “Digi will have its own mobile network in three years, just like Yoigo”

Digi is the fastest growing telecommunications operator in the Spanish market . Its rise in recent years has been spectacular. Founded 16 years ago as a mere reseller of minutes for international calls specialising in the immigrant user segment, it has become the fourth operator with its own fibre optic network. Its CEO, Marius Varzaru, reveals to us exclusively in this interview the plans for the deployment of its own 5G mobile telephony network that in three years will achieve coverage like that which Yoigo had at its start. In addition, he is categorical about his policy of not raising rates in 2025 and warns, once again, that the Spanish subsidiary of the Romanian group is not for sale, although it could participate in corporate operations if a rival is put up for sale.

Question: Digi will present its annual results on the 28th. What can you tell us in advance?

Answer. 2024 has been the best year in terms of growth in net new subscribers for Digi in Spain. At the beginning of February, we surpassed two million fixed broadband customers and we also surpassed the level of six million mobile lines. We are very grateful to our customers for their trust in our proposal of quality services at stable and competitive prices. We hope to become the third broadband operator in Spain by number of customers in the next 12 months. In addition, in 2024, due to the various agreements we have reached, we have managed to consolidate Digi's long-term strategic model in Spain.

Q. Through portability, you have snatched 900,000 customers from your rivals by 2024. Why are so many users leaving your company to come to Digi?

A. The main reason for our growth in customer numbers is the fibre network deployment we have carried out in Spain over the last six years, starting from scratch. This massive investment in a very modern fibre optic network, which allows speeds of up to 10Gbps and covers more than 12 million customer homes. In addition, it is carried out only with our own employees, and this is the best example of how it is possible to offer quality products at competitive prices and at the same time create employment and value for society.

Q. Digi is the only one of the big four telecom companies that has not announced a rate increase for 2025? Why can it do so?

A. In 2025, we have no intention of raising prices. Our business model allows us to do so and the results already demonstrate this, in the form of revenue growth and operating profit. But, in addition, Digi's model is sustainable based on quality, as we can see in the fibre networks that we have deployed at the beginning of our project, and which already have more than 20% penetration. Hence, more and more customers are contracting our services, which in turn makes the model more sustainable. We have been applying this commercial policy for 16 years and we expect to be able to maintain it in the future.

Q. Your rivals say that Digi's low-cost model with such low prices is unsustainable in the medium and long term. What is the secret to offering such low rates?

A. The low-cost concept comes from airlines that offer a reduced service compared to traditional airlines in exchange for lower prices. But we offer the same service or even better than our competition (as is the case with 10Gbps fiber). That is why we do not define ourselves as low-cost. As I said before, one of Digi's differentiating elements is that we integrate the entire value chain. This means that we take on all the business activities with our own resources, which generates operational efficiency that we then transfer to our clients, and allows us to offer quality products at competitive prices.

Q. A week ago, television was launched across the country. How is it going? Have you considered incorporating football or streaming platforms such as Netflix or Max into your offering?

A. We have just expanded the coverage of our pay-TV service nationwide and we are in the initial phase of its commercialization. It is too early to give details, but our clients demand this product at a competitive price. As for football, our intention is to soon offer the possibility of contracting an additional product that includes the matches of the LaLiga Hypermotion [Second Division]. Regarding the platforms, clients can contract it directly and we do not believe that they need an intermediary.

In benefits

P. Your rivals say that Digi is gaining customers, but not making money. When will Digi be profitable in Spain?

A. Except for two years - 2022 and 2023 - Digi has consistently made a profit in its 16 years of history in Spain. And in those years I mentioned, it is natural not to make a profit, because in those years we have concentrated on the principle of network investment. At the end of 2024, we have again made a net profit and we expect to make a positive net profit in all the following years. In fact, in 2024 we have paid more than 75 million euros in corporate tax alone. And that means that it is a consolidated and sustainable project.

P. These investments have also increased debt.

A. In order to finance this massive investment in a fibre optic network, we have reinvested all the profit generated and have financed it with external debt and group resources. And that is why it is logical that the debt will grow. At the end of 2024, this level of debt is already decreasing, and we are now at levels of 1.4 times EBITDA, less than 215 million euros, the lowest percentage of the three major operators in Spain.

Q. How does Digi view the fibercos creation movement being carried out by Telefónica, MasOrange and Vodafone? Does Digi see itself in any of these fibercos or does it have its own fiber deployment plans?

A. We do not have any such projects. We are happy with the formula we have chosen to sell part of the fibre network to a group of funds to finance new deployments. Despite this sale, Digi remains the only company responsible for long-term maintenance and this ensures that we can offer our service with the same level of quality and at the same competitive prices. In the fibre optic network, our objective is to constantly deploy the network. We are not carrying out a selective deployment, on the contrary, we are actively deploying in 50 provinces in Spain. Right now, the network deployed by Digi covers more than 12 million homes out of a total of 24 nationwide, 3 million of which were deployed in the last year.

5G Network

Q. You mention the fibre network, but Digi made a great effort to remedy the MasOrange merger, with the purchase of spectrum for mobile telephony for 120 million. When will you be a mobile operator with its own network?

A. We have not yet received this spectrum, which is still being used by MasOrange, which is why we have not started broadcasting our signal with this spectrum. We expect MasOrange to deliver it at the end of the second quarter. And from the second half of the year we will activate our first mobile antennas, through which we will begin to offer mobile telephone services through our own network. In this way, we can say that in 2025 Digi will stop being a virtual mobile operator to become a mobile operator with its own network. Where Digi does not have its own coverage, it will continue to offer access to Telefónica's mobile network coverage. Our objective is to deploy a network in the first three years that is just as large as the one Yoigo deployed in its day, with more than 5,000 antennas, but in record time. And then, to continue expanding it with the aim of offering a quality 5G service with wide coverage of the Digi network.

Q. In total, what investments do you have planned for 2025?

A. We are determined to execute the €2 billion seven-year investment plan we announced at the end of 2023, deploying 10Gbps fibre optic networks and a comprehensive mobile telephone network. And in 2025 we will continue along these lines.

Q. What has the renewal of the network agreement with Telefónica for 16 years meant?

A. The reason we chose Telefónica is because it is the operator that is most committed to quality and coverage, and it is the best partner for our long-term project in Spain. The investments we will make in the mobile network are large and need a long time to be profitable, and therefore a period of 16 years seems appropriate to us.

Q. What do you think about the Spanish State becoming the largest shareholder in Telefónica?

A. We are happy with the relationship we have developed with Telefónica, it is strategic, and with our long-term agreement that we believe is very positive for both Digi and Telefónica.

Q. Digi's most visible face is its sports sponsorships. Will you continue to invest in them?

A. We remain very involved in sports sponsorship, both for men's and women's football, and our intention is to continue along the same path and support football clubs in their activities, with active and close contact with fans.

Q. The last year and a half has been tragic for employment in the sector. You are at Telefónica, MasOrange, Vodafone and Avatel. However, Digi continues to create jobs. What is the current workforce?

A. We are ending 2024 with more than 8,750 employees, which represents a growth of 1,250 employees during this year. Digi's project in Spain is long-term and offers its staff the opportunity for professional growth within the company. To give a very specific example, at Digi, the colleagues who deploy the fibre network are then the ones who maintain the network or install internet services at home. All of these activities are intended to be permanent within our organisation since Digi offers a stable job proposal for its employees.

Q. Following the merger of Orange and MásMóvil, there is still talk of consolidation in the sector. It seems that Avatel and Finetwork could be involved in one of these operations. Is Digi a candidate to buy any of these companies?

R. Digi's objective is to continue investing in Spain in the long term, to grow and to remain a relevant player in our market. We will analyse any opportunity that contributes to this objective in due course.

Q. And vice versa. You have always said that Digi Spain is not for sale. But MásMóvil said the same a few years ago when it was the fastest growing company. And it ended up merging with Orange.

R. The Digi Group is very committed to the long-term objectives we have set ourselves and I reaffirm very categorically that Digi is not for sale and, therefore, will continue to be a long-term operator in Spain.

Q. I know this is an annoying question, but I have to ask it. There is talk of the shady finances of Digi's founder and main shareholder, Zoltán Teszári. He never appears publicly and there are doubts about the origin of the funds he used to finance the giant that Digi has become.

A. I appreciate the question. At Digi we are proud of our origins and the way in which we have grown with a business project based on the continuous investment of the profits obtained with the aim of offering quality products at competitive prices. We understand that Zoltan's desire to maintain his personal privacy has been confused with supposed business behaviour. One cannot speak of obscurity when referring to a listed company within the European Union such as DIGI Communications that complies with all the transparency regulations required at European level, as it could not be otherwise, and therefore we consider any assessment to be unfounded.