It was born 15 years ago as a small telecommunications company that wanted to gain a foothold in a then effervescent market after years of domination, if not monopoly, by Telefónica. Today MásMóvil is the fashion operator. And it has gone from being a candidate to being eaten by the big three (Telefónica, Orange and Vodafone) to becoming a predator. At the end of March, the yellow brand surprised the market with the launch of a friendly takeover bid (takeover bid) for 100% of Euskaltel’s shares for an amount close to 2,000 million euros. The surprise was twofold because nobody thought it was going to take over the Basque operator and because for more than a year there had been speculation about the merger with Vodafone.
“I prefer not to comment on rumors and less rumors from the past. The telecom sector in Spain is in a delicate situation, with a 35% reduction in income in 10 years, in employment, and in investment returns. We believe that consolidation in the sector in Spain is necessary. For this reason, we are working on the takeover bid for Euskaltel ”, says the CEO of MásMóvil, Meinrad Spenger, in statements to Negocios.
The sum of MásMóvil and Euskaltel, which already has all the official benefits (Government and Competition), will give rise to a group of 12 million lines, an estimated income of 2,700 million euros, 26 million homes connected with fiber, and more 1,500 employees.
The founder of MásMóvil believes that there are multiple reasons to join Euskaltel at this time. “We are complementary in infrastructure assets and geographically; the synergies with Euskaltel, especially in networks, are very relevant and there is commercial complementarity since while MásMóvil has a very relevant presence in the residential segment, Euskaltel also in the segment of companies and Public Administrations ”.
The regional level also stands out: “Two growing companies come together to guarantee market leadership in the Cantabrian coast, and a solid and investor industrial project is created that will allow accelerating investments in fiber and 5G and prioritizing these deployments in Euskadi , Galicia and Asturias, for the benefit of consumers ”.
When the takeover is completed, MásMóvil will monopolize a dozen commercial brands (Yoigo, PepePhone, Llamaya, Lebara, Lycamobile, Hits Mobile and MásMóvil), and although in principle it will maintain the three regional cable operators (Euskaltel, Telecable and R ), it is not so clear that the Virgin Telco national banner will be maintained. “We can only make a final decision once we have finalized the takeover and we know the exact business data.”
The great unknown of the operation is how MásMóvil will wipe out its high debt, which already had a liability of around 3,000 million euros, to which it will now add the 2,000 million from the takeover of Euskaltel, and the 1,455 million that it owes to turn the Basque operator. “The leverage level of the initial company will be below five times Ebitda post synergies, a reasonable level, especially when we consider that the reduction in leverage will be rapid,” says Spenger.
The other handicap is the technological one. Euskaltel has a cable network that cannot compete with fiber optics, as happened to Ono when it was acquired by Vodafone. “The Euskaltel network is not obsolete – it works very well and the high level of customer satisfaction of Euskaltel, R and Telecable proves it. Furthermore, in the medium term we will have the entire cable network updated to fiber ”, indicates the head of MásMóvil.
Bonus and template adjustment
The unions have criticized the bonus of more than 26 million euros that the management team of Euskaltel is going to take. “The bonus has nothing to do with us: it has already been approved long before our takeover and obviously, we are going to fulfill the signed contracts,” says Spenger.
Regarding possible workforce adjustments, the manager does not get wet (“Our intention is to maintain employment in all territories”). The commitment to the Basque Government, which some unions have even described as supremacist, is to keep the jobs of Euskaltel, but not of the rest of the companies.
Precisely, the nationalist component is another of the obstacles faced by the operation. EH-Bildu and other left-wing groups have demonstrated against the absorption because they understand that a national operator is disappearing. “We do not understand politics nor do we have an opinion on it. It must also be considered that the MásMóvil group is a private company, without public participation. We are simply an operator that tries to offer the best service to Basques, Asturians, Galicians and consumers throughout Spain so that they are the most satisfied customers on the market ”, says the CEO.
The operation comes at a time when the Spanish telecommunications market is increasingly focused on low cost and consumers are looking for fiber and mobile packages at affordable prices. “MásMóvil is not an operator low cost. We are the least promotional operator in Spain because we want customers to not have bad surprises on their bills due to unexpected price increases. We have a specific offer for different types of clients based on a common factor: the quality of the service. We work very hard to improve the experience of our customers: this year we have already come a long way in this direction and reduced the number of customers who do not receive a completely satisfactory service by about 40%, ”says Spenger.
Digi, the great competitor
The manager is less categorical when he is appointed to Digi, the Romanian operator that is breaking all records of customer acquisition and that recalls MásMóvil in its early days. Spenger argues that the quality standards remain the same. “We install fiber in about 50% of the cases on the same day or the day after the contract, which is the fastest rate on the market. In 2020, we have reduced customer complaint calls by more than 35% and by 2021 we have a goal of improving all the most relevant quality indicators by 50% ”, he assures.
And when asked directly if MásMóvil would be willing to face another acquisition, Digi responds: “Right now our only focus is on the Euskaltel operation and we are not contemplating any other acquisition.”
Nor does it consider that the new MásMóvil needs its own television platform like its competitors (Movistar +, Vodafone TV and Orange TV). “We have a clear television strategy that is based on collaboration with external platform experts and the distribution of content from the world’s largest production companies. Thus, our clients have access via Agile TV to Netflix, Amazon Prime, Dazn content and of course also to Spanish televisions. That is the right model. Already more than 200,000 customers enjoy the content offered through our brands Yoigo and MásMóvil ”.