Earnings call transcript: Digi Communications sees growth in Q1 2025

Digi Communications NV reported significant revenue growth in Q1 2025, driven by strong performances in key markets like Romania and Spain. The company revealed a €532 million revenue, marking a 20% year-over-year increase. According to InvestingPro data, the company trades at a notably low earnings multiple, suggesting potential undervaluation. The stock saw a modest increase of 0.77%, closing at €67.4, reflecting investor optimism. With 8 consecutive years of dividend payments, Digi has demonstrated consistent shareholder returns.

Key Takeaways

• Digi Communications reported a 20% YoY revenue increase in Q1 2025.
• The company is expanding its 5G and fiber networks across Europe.
• Significant growth was noted in Spain, with a 22% revenue increase.
• The company maintained its full-year CapEx guidance at €750 million.

Company Performance

Digi Communications NV demonstrated robust growth in Q1 2025, with revenues reaching €532 million, a 20% increase from the previous year. This growth was primarily fueled by strong performances in Romania, which saw an 11% increase, and Spain, where revenues surged by 22%. The company is actively expanding its presence in Portugal and Belgium, with new service launches and network expansions.

Financial Highlights

• Revenue: €532 million, up 20% YoY
• EBITDA: €140 million, excluding IFRS 16
• Gross Debt: €1,470 million
• Net Debt: €1,420 million
• Leverage Ratio: 2.5x

Market Reaction

Following the earnings announcement, Digi Communications’ stock experienced a slight uptick of 0.77%, closing at €67.4. This movement reflects positive investor sentiment, likely driven by the company’s strong revenue growth and strategic expansions. InvestingPro data shows an impressive 9900% one-year price return, with the stock generally trading with low price volatility. The stock remains within its 52-week range, with a high of €69.8 and a low of €55.2.

Outlook & Guidance

Digi Communications maintains a positive outlook for 2025, projecting a low double-digit increase in revenues and a low single-digit increase in EBITDA. The company is focused on expanding its network infrastructure and increasing customer acquisition, particularly in new markets like Portugal and Belgium.

Executive Commentary

CEO Sergey Gulgaard highlighted Spain’s critical role in the company’s growth strategy, stating, "Spain accounts for roughly two-three of the goals that we achieve." He also expressed gratitude towards customers and employees: "We are very grateful to our customers. We are grateful to our teams for the great work."

Risks and Challenges

• Market Competition: Intense competition in established markets could pressure margins.
• Economic Conditions: Fluctuating economic conditions in Europe may impact consumer spending.
• Regulatory Changes: Potential regulatory changes in telecommunications could affect operations.
• Infrastructure Investment: High CapEx requirements for network expansion pose financial risks.

Q&A

During the earnings call, analysts inquired about market consolidation, refinancing activities, and margin pressures in Spain. The company also addressed operational updates in Portugal and Belgium, emphasizing its commitment to improving efficiency and expanding market presence.

Full transcript - Digi Communications NV (DIGI) Q1 2025:

Conference Moderator, DG Communications: Good afternoon, ladies and gentlemen, and welcome to the DG Communications and the Investors Q1 twenty twenty five Financial Results Presentation. A copy of the corresponding report is posted in the Investor Relations section of DG’s website at djfncommunications.com. The conference is being recorded today, and a replay will be available shortly after. For today’s call, please submit your questions for the Q and A session at the end of the presentation using the chat box. Before we can start, you are advised that certain statements in this conference call are forward looking and therefore, to material risks and uncertainties.

Actual results could differ materially from those that are implied by such forward looking statements due to the risks and uncertainties associated with DG Communications and V, which include, amongst others, various risks related to our business, risks related to regulatory matters and litigation, risks related to investments in emerging markets risks related to our financial position as well as risks related to the notes and the related guarantee. I would like to introduce the speakers for today’s call, Mr. Sergey Gulgaard, the CEO of DG Communications and B and Mr. Daniel Gupta, the company’s CFO. You may now begin the call.

Sergey Gulgaard, CEO, DG Communications: Good afternoon, ladies and gentlemen. Thank you very much for joining our first quarter results. We are very happy to present you our achievements. Operationally, this was the best, one of the best quarters. We have grown by far and we have we have grown most in absolute terms RGUIs, especially particularly in Spain, but also we were helped by our new markets like Portugal and, of course, not last, Romania.

But without too much hesitation, let’s go into the slides and follow-up with the questions. So first quarter, revenues almost 20% up to €532,000,000 in the quarter. RGU, as I was saying, it was an outstanding performance. We’ve added more than 1,000,000 RGUs in comparison to Q4 last year, million RGUs in comparison to the first quarter of twenty twenty four. EBITDA, 140,000,000, excluding IFRS 16 numbers.

Romania, as I said a bit earlier, grew by 7%. We grew across all our main segments. Mobile, 13% growth to 6,800,000 users. Pay TV, 3% growth, reaching close to 6,000,000 users. And broadband, 5,000,000 users with 7% growth year on year.

Spain, again, a big congratulations, big thumbs up to our colleagues over there. We have surpassed two milestones, 6,000,000 mobile users, in fact, point 2,000,000 mobile users and over 2,000,000, two point one million broadband users, 2539% growth year on year, respectively. These are outstanding numbers. And once again, of our success in this quarter, most of the result is really driven by our Spanish colleagues. So we continue our strategy.

We continue operations with sustained growth across all markets, just like I mentioned a bit before, of course, backed by important significant CapEx aiming to expand the mobile and the fixed network, mobile network in Romania, the fixed network in Spain, and then combined mobile and fixed in Portugal. So these are the main directions of our investment at this moment. And as I said, we are very proud of the payoff. And of course, last but not least on this page, we are very excited with the launches in Portugal and Belgium. Probably, it’s more appropriate to say we are very busy with we continue to be very busy with the launches in Portugal and Belgium.

And as you see, Portugal has surpassed 700,000 RGUs. In Belgium, it’s a it’s a it’s a narrow start. We have over 50,000 mobile users over there. Just very few words on the recent developments. As you see, we were pretty busy on the financing front at the beginning of the year or in the last three months.

So we have signed a couple of export credit facilities. We have financed ourselves in Romania with a new EUR 200,000,000 loan for five years, and we have refinanced the entire portfolio our entire credit portfolio in Spain with a €275,000,000 million facility. Also, just a few days ago oh, sorry, yesterday, we announced signing the €84,000,000 facility to finance the last tranche, the last one third of DG Andalusia development. It’s it’s a facility which is similar to project finance one. It’s very specific to that project.

So so all in all, over €600,000,000 of funds raised. An important part of that was just for refinancing, and some of these funds are available for our further expansion. So €572,000,000 in sales in the first quarter. Romania, ’2 ’90 million, Spain, ’2 ’16 million and Portugal, almost €80,000,000 EBITDA in Romania, One Hundred And Twenty Two Million, excluding IFRS 16 numbers. This is over 40% margin, very healthy.

Spain, a 16% margin. And Portugal, of course, it’s a negative result. We are working hard to make sure that we come into black as quickly as possible. Yeah. So we mentioned RGUs, 29,000,000.

We’ll come back to that as as as we continue the presentation. To to go more deeper into our numbers, So the first quarter EBITDA was 140,000,000, excluding IFRS 16 numbers. With IFRS 16, the number stood at €170,000,000, a 5% growth. Looking at revenues, Romania had an 11% increase. Spain had a 22% increase.

And Italy had sorry, sorry, and overall, the group had 90% increase. Italy was stagnating at EUR 8,000,000 in the quarter, and Portugal generated almost EUR 18,000,000, as we mentioned before, but there’s no comparison as last year, we did not have these operations. You may notice that CapEx amounted to €169,000,000 This is CapEx in our established markets, Romania, Spain, Portugal, and Italy. So this figure excludes Belgium. As we mentioned on our last investor call, we maintained the maintained the guidance of making €750,000,000 in CapEx for the full year.

As always, our growth and our substantial growth is achieved through customer increase across all our markets, and this is, yeah, this is by far the the most important driving factor. So as I said at the beginning of the call, we are very proud of customer evolution. This was by far or this was the best quarter we had on a group level. And this this was also a good quarter in terms of financial performance. Revenue growing very robustly, CapEx being kept under control, 32% of sales, significantly lower than in the previous quarters or years.

And of course, with good margin and EBITDA, excluding IFRS 16, of €140,000,000 So a few words on the RGUs. Romania reached 18,500,000 from 17,200,000 RGUs a year ago, so more than 1,200,000 RGUs growth. Spain added more than 2,000,000 RGUs from 7,000,000 to 9,000,000. Of course, most of them coming from mobile. Portugal stays at 755,000 RGUs.

And Italy, Fifteen Percent growth, 500 RGUs in comparison to 475,000 a year ago. All in all, a 17% growth for the group. Mobile services, the biggest segment, amount to almost 14,000,000 RGUs across four territories. Broadband services, point 2,000,000 and pay TV, 6,000,000 RGUs. Of course, so far or previously, we were mostly reporting just one market, Romania.

But since a couple of months, we started Pay TV services also in Spain. And it’s a good start. We’ve achieved 47,000 TV RGUs in Spain by the end of the quarter. Just a couple of words on mobile portability. We continue our selling performance, both in Spain and in Romania.

We spent in Spain with gross profitability at more than 340,000 users during the first quarter. Net profitability, 226,000 users and almost 60,000 gross portability in fixed services and over 53,000 portability net portability in the mobile services. Our gross portability in Romania amounted to 190,000 mobile users in the same period first quarter. So all in all, these are these are very good results for us, but also for the markets that we operate in. Just very few words on the leverage.

As we see, we stabilized ourselves at two and a half times. The refinancing exercises helped us decrease the the repayment the the payment efforts for 02/2025, ’20 ’6, and ’27. So this year, we have a total of €92,000,000 to be paid. In ’twenty six, it will be 177,000,000 And in ’twenty seven, it has relates to €222,000,000 to pay. Of course, as most of you recall, we have refinanced we have repaid the €450,000,000 bond last September, and that helped our maturity profile significantly.

So gross debt, €1,470,000,000. Net debt, €1,420,000,000. And, of course, the remaining €400,000,000 bond tranche remains outstanding for February 2028, and the spread of room and time goes to address this maturity as we go ahead. A couple of words on our focus for 02/2025. In fact, as I mentioned at the beginning of the presentation, not too many changes.

We try to be consistent and to continue our operations. In Romania, we consolidate our technical presence in the mobile segment, improving mobile networks, rolling out five gs services and also connecting new customers. Of course, continues in the fixed segment but with significantly less investments. Spain, again, we continue to roll out the fixed networks. We continue adding customers both for our fixed and mobile services.

And we will focus in the second part of the year on migrating from the MVNO model to an MNO model along receiving the new frequencies from Mass Orange from the from the Mass Orange joint venture. And and in Portugal, we will focus significantly to we will focus we will focus to expand our network coverage, and we’ll focus on getting new customers on board. But, also, we will continue focusing on improving our increasing our revenues and managing our costs to make sure that the red EBITDA becomes black towards the end of the year or beginning of next year. So one or two words on the announcement of the upcoming general meeting of shareholders. The meeting was announced for June 18 to be held in Amsterdam.

We intend to approve the annual report. We intend to continue to extend the mandate of KPMG as the auditor. And of course, we proposed a dividend of share. It’s an increase in comparison to last year. Last year, we paid ZAR1.25 per share.

So we keep our commitment to increase dividends since we listed the company back in 2017. So all in all, I think it’s a very simple agenda, and I hope that most of you or all of you can either attend or express your vote towards this meeting. I believe this is it. This is the presentation, and we will we will we welcome the questions, and I think we’ll start answering the questions in a minute or two. Yeah.

So we have our questions in in the chat box. I will start going through them through them one by one as we as we speak. So a question from Keval Hiroya. The first question. You have shown impressive subscriber growth in Spain, but the EBITDA margin performance has been weaker.

What explains the higher OpEx pressure in Q1? And how do we think about margin growth margins going forward? Yes. Thank you for the question. I think, yes, it’s a good one.

It’s a very good question. In absolute terms, our EBITDA has been pretty stable in Spain. So there’s a marginal decline or almost no decline in Q1 in comparison with Q4. Indeed, in terms of margin, there’s a slight decrease. It is driven by the our changes to our pricing policy, the introduction of new products, the introduction of more affordable products to the customers.

We we expect this to be, how should I say, the bottom of the curve, if I could if I could say so. We we expect a bounce back to the previous levels towards the end of the year. I hope this image is helpful to you. And once again, there’s there’s no other pressure to EBITDA or to our margin apart from our changes to the to our sales policy. And, yeah, once again, they were expected, and I think we are less than as we go.

And second question from Keval. Some of your peers have been vocal on the need for in market consolidation in Europe and in Spain. Do you think that the Spanish market needs consolidation? And does DG have a potential role to play here? Will you consider combining with another large operator in Spain?

I would say we have the owner to operate in pretty competitive markets, the both including Romania, including Italy, including Spain. Having said this, we have a strategy which main strategy is related to organic growth. So we we’re not looking for we’re not aiming to be a consolidator in any of these markets. But if consolidation happens, we’ll certainly take note and to was most likely, we will just continue operations as we go. So once again, I think we see we all see the same, indeed, the rhetoric.

We see the same intention to consolidate, but this is not necessary this is not something that we think is affecting us, so we think that will affect our operations. Question from Darius. Investment returns. What ROI or payback periods do you expect from investments made in 02/2024, and the ongoing key investments into infrastructure. We I’m not sure we we have that articulate on ROI and other metrics.

But if we speak about payback periods to our efforts, generally speaking, we are long term oriented, and we believe we are also safe from this point of view. So I think our horizon is four, five years and eventually plus. A question from Danish from Barclays. Congratulations on your results. Could you please provide some color on your subscriber trend in Belgium?

Why is the profitability to DG coming down since launch? How is your mobile network development in Belgium progressing? How much population coverage do you target to achieve by 02/2025, ’2 thousand ’20 ’6? Unfortunately, I will be, shall I say, quite poor in information about Belgium on this call just maybe like on the last call as well. Why so?

It is our youngest operation. I think it it deserves more time and more attention to get started. We as I as I mentioned, we have gained 53,000 mobile users by the end of first quarter. We are pretty happy with this number. We certainly see the trend continuing and growing, and we will certainly continue the effort.

But having said this, it is difficult for us to provide you meaningful projections for fixed coverage or mobile coverage or or even comment on the portability. We’re still very young, and I don’t think you could expect a big momentum or big, yeah, big customer growth for in just in the first three or four months of operations. Thank you very much for the question. So question from Nora Nang. Good afternoon.

Thank you for the presentation. I have four questions. Could you please share an update on the acquisition of Telecom Romania Mobile? So thank you, Nora. In fact, it’s an ongoing process as we mentioned also last time on the call.

This week, most yesterday, the competition authority did announce the remedies proposed by the potential well, I’m sorry, but by the buyers, the buyers being us and Vodafone. These remedies are available publicly on on the website of the competition authority. I think there’s a public process to comment on these remedies by June. And I think based on that, the the competition authority will be in the position to make its final decision whether to approve or to approve these changes this transaction or eventually accept or ask some other remedies. So so we sincerely hope that we are in the final stages of the process now.

Second question, could you please provide a breakdown of RGUs in Belgium? Oh, it’s very simple. These these are mobile RGUs. So we have shared with you 53,000 mobile RGUs. Three, is there a one off in income taxes since it’s pretty high this quarter?

No. The income taxes are mostly affected by I I I leave this question to Dan, but I think the income taxes are more affected by deferred tax rather than actual cash tax as we did not notice any significant changes in our current tax. And in addition to that, it’s sale of assets in Spain that drives increase in tax. And when we say sale of assets in Spain, we refer to the Macquarie transaction. And the final question is, do you confirm the CapEx guidance for 2025?

Yes, we do. So as we showed in our four markets in the first quarter, EBIT CapEx was €169,000,000 basically in line with our expectation for €750,000,000 total CapEx. So question from questions from Jurijk Dubon. Could you give more information about the launch of DG in Belgium? Is 53 k users in line with the expectations?

When do you expect to be profitable with the business in Belgium? Have you anything to say about the job cuts that happened this year at DG Belgium? So as I said, there’s not very much to say. We had a launch. It’s a successful technical launch.

We offer commercially the services. We’re very grateful to our first fifty three thousand users, and we certainly hope that more users come to our network. In terms of the last questions on expectation about profitability, very difficult to say, certainly not this year. And, yeah, building an operator from scratch, launching an operator operator from zero is is an expensive business, yeah, which we which we risk to venture into. And for the last part, if I if I have to say anything about the job cuts that happened this year at Digi Belgium, again, nothing in addition to what was discussed also on the previous quarter call, we are early on in our operations.

We are adjusting our needs, our activities, our performance as we speak, as we go. And, yeah, we just realized that the organization was set up maybe for a lot to be a larger one than necessary at this moment, and we try to resize it and to to rescale it. And just as I mentioned it last time, we will do as many cuts or as many changes, personnel strategy management wise as we need to make sure that we have the most effective operations also in Belgium. Ultimately, our goal is to provide good services, affordable services to our users in all our markets, Belgium included, and we’ll do everything we can to achieve that. A question from Boyan Jyrkovic, Spain.

What was in particular attributable to the impressive RGU growth? Well, I stop here. It’s a longer question. Look. There’s a very simple answer to that.

It’s Spain. Spain all along. I mean, Spain accounts for if I’m not wrong yeah. Just one second to have a look. So it is it Spain accounts for roughly twothree of of the goals that we achieve.

This is a very good commercial momentum that we have. We have very good engagement with our customers, and we are extremely happy about that. Would it be fair to assume that at least partially came at the expense of ARPU? I’m not so sure. We I don’t think so.

In fact, we are our we have a slight increase in we have an increase in growth. However, it’s not our first quarter of growth. Certainly, it helps, but I don’t think it’s it’s the main reason. As always, our strategy, our results are based on a number of factors, quality of service, fairness, and the way we interact with our customers, but also price being few of them. Where do you see Spanish ARPU going forward?

Well, we we have changed our offers recently. We have seen existing customers changing packages, opting for more affordable ones. We see new customers coming. We don’t see we don’t think there’ll be significant changes in the ARPUs going forward. But still, I would I would look at this with caution.

This is something that this is something that we’ll have to look for, I think, for the rest of the year. The next question is on general finance interest expense. What was the main reason for such a rise in interest expense interest expense in the first quarter? I think the main reason is the fact that we recycled a very cheap bond by repaying it partially with refinanced funds, partially with own funds. However, we we also borrowed extra funds towards the end of the year, and all new facilities come at least at two, two and a half percent higher cost.

So it’s really and by the way, by saying this, I think we are efficient for operator of our size and operators of our of our standing in terms of interest cost. But on the other hand, it’s just that we were very lucky, and we had a very cheap facility in place originating from pre COVID era. So, yeah, we we pay higher interest, but all in all, there’s nothing wrong with that. I think the general context is that, as you will also appreciate, we all believe that we are in a declining interest market, so we don’t expect this to worsen or to affect us significantly going forward. I hope it’s helpful.

And the third question from Bojan, Belgium. When do you plan to disclose operational KPIs? Does the CapEx envelope of €750,000,000 include Belgium? So Belgium is, at this moment, a joint venture between roughly fifty-fifty joint venture between us and our partner, CityMesh, our Belgian partner. And as long as as long as this is this company remains as a joint venture, we will not consolidate these results, and there will be no more disclosure on the operational KPIs.

If this change if this situation changes, of course, this discussion will also change. And the third question, does the CapEx include of seven fifty include also Belgium? And the simple answer is yes. A follow-up from Nora. How big was the CapEx in Belgium?

Thank you. Well, just as I mentioned, we are not disclosing we are not disclosing the CapEx and the numbers for Belgium. Yeah. Hopefully, we will we’ll speak this sometime later. Question from Vlad Podia.

Hi. Thank you for the presentation. Can you provide more details on what caused the 49% year on year and 2.6x quarter on quarter increase in interest expense, especially considering the overall decline in your report over the past quarters and the fact that most of the debt consists of floating interest loans? So I think we addressed that. We used to have a very cheap bond, which was fixed.

By very cheap, I mean, it was 2.5 percent all in cost. And, yeah, we we we can’t borrow today at those rates anymore. A question from Piotr Rascheborski. What level of CapEx and EBITDA do you expect in 2025? So CapEx, we mentioned, we maintain our guidance of €750,000,000 for EBITDA.

Overall, year on year, we expect a slight increase in the in the low in the low level digits in comparison to 02/2024. When do you expect Portugal to reach breakeven on EBITDA level? Well, it’s it’s too early to assume. We will do our best that this happens quickly or relatively quickly over the next one or two years. A question from Anton.

Can you please comment on your commercial momentum in Portugal? How many of the mobile RGUs ads were on Novo versus the newly launched Digi brand? So I think you have now the q four report and you have also the q one report. You you you already have the dynamic, the commercial dynamic. In particular, during the first quarter, we added 67,000 mobile users.

We’ve added 10,000 fixed broadband users, 4,000 pay TV user 4,000 pay TV users. All these users were added on digital networks and and not on mobile network as we as we are not active on on the commercially on the Novo network. A question from Daniels. How large was maintenance CapEx for in 02/2024, And how much should we expect for 2025? We’re not really splitting our CapEx by growth and maintenance.

I’d expect that our maintenance CapEx is in the area of €150,000,000 How are you feeling about the Belgian launch? Is 53,000 RGUs satisfying start or not? It is very satisfying. And but as I I I just repeat what I said at the very beginning of the call, both Portugal and Belgium take a lot of work from our colleagues in this that that are based in these markets, and we try to support them as much as we can. We keep our fingers crossed.

There’s just plant lots and and plenty of work. So so if you ask us, we feel very good about this number. It’s a good start, and we are looking forward for, of course, much better results in the future. So another question from Darius. What is your revenue EBITDA outlook for 02/2025, and what is your longer term growth outlook?

It’s difficult for me to to really speak about long term growth outlook, especially with two new markets being in incipient stages. I refer here to Portugal and Belgium. But speaking of 02/2025, I’ve already mentioned earlier, a low level a a a low figure increase sorry. Low single digit level increase in terms of EBITDA and a low double digit increase in terms of revenues. That’s our expectation for 02/2025.

So a question from Giovanni Reichenbach. Can you please provide an update on your liquidity profile on raw and all other available undrawn committed facilities? Giovanni, we’re not sure. I sorry. I I don’t have these numbers handy.

But at this moment, especially due to lots of refinancings that we did in the last three months, as I already mentioned, I’d say we have between two hundred and two fifty million undrawn facilities as we speak. So which which I hope is helpful to anyone looking to anyone looking. A question from Simon. Please, can you confirm the current size of your proprietary fixed network in Belgium and the current state of negotiations for fixed wholesale access from other parties? What is your plan b if you cannot agree access terms with the other operators?

So starting from the end, the plan b is to build. The plan b is actually plan a, which is always to build. So this is our main plan, and this is something we will we are doing at this moment. We will continue doing. In terms of announcing the size of the network, I think we are pretty much at the beginning, and there’s very little to say about.

So question from BS. Have there been some media reports on unpaid supplies in Belgium after the year results? You said there were no liquidity issues, but the stories persist. Any update on that front? Well, I just referred to the question Giovanni asked a bit earlier With over €200,000,000 of undrawn facilities, certainly, there are no liquidity issues.

But having said this, I don’t think this discussion should go into an operational update on Belgium. I think we we we we mentioned this also last time, and we repeat this time. So I I hope it’s I hope it’s okay for you and for the rest of the audience. A question from Joe House. Can you share your views on how interest in both Portugal and Belgium has been received by customers?

Are you gaining customers in line with expectations? Well, I think the best result is really shown through the numbers and reaching between eighty and ninety thousand RGUs in the first quarter in Portugal is certainly both helpful and satisfying. Again, we are grateful to our customers. We are grateful to our teams for the great work, and we’ll just continue working and building and developing the network. I’d say it’s same it’s more or less same about Belgium with the command that we realize that Belgium will move slower in comparison to Portugal or Spain or Romania.

Question from Flavio Nunes. Can you provide more clarity on the current level of coverage that you offer in Portugal, both in mobile and fixed networks? There have been complaints about faulty customer support in Portugal, what they are doing to address those issues. So, Flavio, I think the question is repeating itself a bit from from the previous conversation. Our mobile coverage is exceeding 98% of the population.

We we we kindly ask you to have patience as we just build this network very recently. We are continuously improving, updating, upgrading it. So coverage is changing and, again, improving as we speak and in days and in months. And this is a continuous effort on our side, but also it’s a continuous effort with our partners, Cellnex and Vantage, to make sure that we provide the best coverage we can to our customers. In terms of faulty customer support, we are we are aware of the needs to work and also to improve our call center and our support.

We are working on that, and, yeah, we are trying to provide as good experience to our customers as possible. And the third question, would you consider the launch of Digi Portugal a success? Is it meeting your expectations? Look. It’s it’s it’s a it’s a difficult question, and I think on a personal note.

So to say that it’s not successful is wrong because we operate. We have customers on the network. The customers are using the service, and we work hard on a daily basis to provide the service. To say that it is very successful is difficult. Again, it’s very subjective.

I think time will show how successful we are. And once again, we we are certainly committed to the markets, to the customers on a very long term basis, and our interest is to continue to evolve our coverage, the quality of our services, the number of users, and we’ll do our best to do so. Another question from Goya. Romania. Are you happy with the proposed remedies from the regulator with regards to Telecom Romania?

Yes. The remedies the remedies were proposed by us to be very exact from the procedural point of view. They were reviewed by the regulator, and they are now subject to market test and market comments from the market participants. So since, basically, they were proposed by us, they were offered by our by by us, These we certainly agree with the remedies. Okay.

A question from Russell Waller. Hi. Can you give us an update on the fiber rollout in Portugal, please? Is the goal still for 50% coverage by the end of the year? Does the 50% target include any wholesale deals?

Yes. We maintain the we maintained the intention announced also during our last call for 50% country coverage by the end of the year, so no changes there. And simply, no. This figure does not include any wholesale deal. So it’s all our network.

Another question from Danish. How many homes passed do you have now in Spain, and when do you plan to sell next tranche to Macquarie? We have built ourselves more than 12,500,000 homes in Spain to date. We deliver homes to Macquarie continuously as we speak. So this is the process which will continue for the next one year and a or so.

And so this is something that is ongoing. And when we say that it’s a continuous process, it’s a continuous process from the deal that we signed last year involving 6,000,000 homes out of twelve twelve and a half that we built in total by now. A question from Russell Waller. Is the intention still to get to 100% fiber coverage? And over what time scale, what percent of that will be wholesale do you think, please?

I believe the question refers to Portugal. I think long term, the answer is yes. We still intend to cover meaningfully more or less the entire country. I refer to Portugal. It’s however, it’s very difficult for me to say now how soon or how quick we’ll do it.

So I’d rather defer this question to some later time. Question from Ganesh. How many homes for us do you expect to build in Spain this year? I think I think the speed of rolling out the networks is more or less constant for us, and it’s it’s it’s centered around 2,000,000, two million plus homes passed as we speak. So so so this is the number.

I hope it’s helpful. Andrew Webb, how did your q one Portuguese results compare to your expectations? Yeah. Once again, it’s they’re they’re I don’t know. It’s it’s it’s a it’s a complicated answer.

We are stressed ourselves by the negative EBITDA that we generate in these operations to be very sincere and very open. And we will focus, and we will do everything we can to reduce this gap between revenues and costs as much as we can and as quickly as we can. Having said this, there are lots of things to do also in terms of customer experience. But on the other hand, we have users. We have happy users that are relying on our service.

And I think the service delivers what we promised, good quality service at affordable price. So from this point of view, I think it was a good launch. How is the repricing of the Novo customer base going? Well, we are migrating the Novo customers to DG network. Along with this, there is also repricing.

So it’s it’s it’s it’s it’s it’s an ongoing process, and it it goes well. I will not tell you numbers. We will rather tell you when the process is finished. But I think it’s going it’s going pretty well, pretty good, and we have no surprises there. Are you on track with Portuguese FTTH rollout plan to cover 50% of premises by the year end?

The answer is yes. Are you still considering wholesale agreements for Portuguese fixed line access in Portugal. We we always consider wholesale agreements in all markets where we operate. So we are very much open to such opportunities. But so far, there were no possibility to access our competitors’ network on affordable prices.

I am still exploring national roaming agreements with existing operators in Portugal. Also, this may be of interest to improve eventually access coverage of our network in certain areas. However, as we launched our services at at the end of last year, as we build most of our network with more than 98% coverage, I think the pressure and the need for such service is is decreasing. A question from Russell Waller. Just to sorry.

Just to clarify, you said Belgium is not consolidated, but the 750,000,000 of CapEx guidance includes Belgium. How do I reconcile those two statements? Thank you. Also, does the €750,000,000 include the Romania or Portugal m and a cost? So starting with the end.

Yes, 750,000,000 includes the m and a that we expect in Romania. We don’t expect any m and a in Portugal for this year. And, yes, indeed, I what what you mentioned is correct. I did say that Belgium is not consolidated, but I also did say that €750,000,000 of CapEx is inclusive of is inclusive of Belgium. If you looked at our numbers a bit earlier, we have spent CapEx of €170,000,000 in all markets, excluding Belgium in the first quarter.

Just doing a simple arithmetic and annualization that gives you the €680,000,000 total CapEx for the year. Again, I’m not saying this is the number and it’s just four times, but there’s plenty of room for us also to support the Belgian operations in this number. And I hope this is helpful. But but your your your observations were correct, and thank you for the question. A question from Christian Caricas.

How do you see the ARPU in Portugal by the end of the year and going forward? You mentioned in the last call that you expect it will decrease as Novo migration continues. Thank you. So, yes, the the overall dynamic, the overall strategy is the same. There are no changes.

So from this point of view, there’ll be a decline in ARPU, which we know that we expect or we intend to compensate with the increase in RGUs. However, it’s difficult for me to comment on the on on the exact levels as we we have not decided the full calendar and how and the speed of the of the of the conversion. The question from. Hello. Thank you for the presentation.

I have a few questions on the Portuguese presence. What are your takes on the first full trimester of the patients in Portugal? And second, what was the impact of the blackout on April 28? Yeah. Well, thank you.

I think the first question was addressed. I’m not sure I should come back, but I would say everything we have in Portugal is a work in progress. And once again, we are extremely grateful to our customers for joining our network. We’re extremely we’re we’re very grateful for being first users and, yeah, trusting us and also using our services. For the second question, yes, it was an unfortunate event which affected both us and most of our competitors either fully or partially.

Particularly in our case, we we were hit also by the blackout. And while for a few hours, our operations were available throughout an important part, half or more than half of the network. In the second part of the blackout and for a good number of hours after, our network was down as we were busy bringing it back. But finally, the network is back, and we have seen all our customers also coming back. And once again, it’s another big thank you for the patience and for trusting our services.

But, yes, it was a one off experience, I think both for us but also for our competitors. And we sincerely hope the energy sector will be more resilient than it doesn’t happen again. Question from Jeremy Ben Natham. Are you still committed to 50% fixed coverage in Portugal by the February and rolling out 200 to 100 in the future? I think that we did mention this couple of times already, and the answer is yes and yes.

A comeback from InesH. I didn’t understand your early answer. The RGU of the first quarter only have DG. It doesn’t have the Novo clients included. Now you should read the answer differently.

The RGU numbers include both Novo and DG customers because they are DG group customers overall. What I wanted to say, and I’m just clarifying, is that the increase or the additions in the first quarter come from DG network because DG network is commercially active and Novo is not. A question from Rohan Sankla. Do you plan to build 100% of Spain in FTTH homes passed? If not, how do you decide on which locations, what percent of total Spain to build?

Yeah. It’s a it’s a it’s a it’s a tough one. I’m not sure we intend to build 100% of Spain. So so Spain has a vast and complex geography. It’s a big country.

We we are very happy with the build out that we achieved so far, the 12,500,000 homes. We’re certainly not stopping here, but we will consider this as we go forward in the next two or three years, eventually, how big the network is and what the network coverage should be. We try when we when we build the network, we try also to assess the number of converged users that we have on our combined fixed and mobile network. And I think this is this is by far the most important criteria for us to expand the networks. A question from Dan Sika.

Do you have any target for expansion of five g coverage in Romania. Not really. We cover more than half of Romania with five g services. We will continue increasing this coverage goes this year and next year, but we are not committed to a number. Eventually, we’ll announce when we build.

Marius Quiche. How many users do you need for a breakeven in Portugal? Well, I think so so well, I’m not sure we think now in users, but well, I think sorry. Sorry. Sorry.

Apology. We probably need to double our fixed customer base and to double our mobile customer base from where we are today to come close to to come close to a black position. This is just a rough estimation as we speak. What do you mean Novo is not commercially active? I understood that you decreased prices at Novo to align them with DG, suggesting you are still actively managing the brand.

Is the long term plan to rebrand Novo into DG? There was a question from Anton. It was a it was a comeback to a previous question. No. What I mean?

I mean the following. DG and Novo continue to operate as two stand alone brands, and we are in an exercise to migrate Novo’s customers to DG network. And as soon as they migrate, they they come through DG packet. They they they start using DG services, and they benefit from DG’s prices. That’s what I meant to say.

And when I say that Novo is not commercially active, we are not focusing on doing sales under the Novo brand. We are focusing to do sales under the Digi brand. So question follow-up question from. How many homes do you want to cover with fiber long term in Spain? I think I mentioned this earlier.

There is no target. We’ll certainly continue building networks in the next two or three years. We’ll have to assess this as we go forward. Once again, an important element to that is or can be our ability to sign wholesale deals. It’s not that we’re not interested to go to 100% of Spain.

It’s a question of how do we do that. So we’ll have to we’ll have to think and we’ll to address that. And the second question, you mentioned Spanish margins will improve towards the end of the year. What will drive this? Well, I think two things are driving our Spanish margins.

On one hand, it’s the growth in customers, which is always helpful. And the second, we as we we are discussing on our previous calls, we are migrating from an MVNO to MNO type of relationship with Telefonica, and it has slightly different economics also, which also helps our margin to a certain extent. Yeah. So so so far so good. I think we had the full hour with the presentation and questions, and the questions stopped.

We we will wait on the line for a minute or two. And if there’ll be no questions, no further questions, we’ll we’ll close the line. Yeah. So then I think, once again, a big thank you for all of you. Thank you for joining.

Thank you for listening and participating. And we’ll meet again mid August discussing the second quarter results. Thank you very much, and see you soon.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.