Yoigo’s Aggressive Commercial Move Pays Off

Yoigo’s Aggressive Commercial Move Pays Off

Yoigo’s Aggressive Commercial Move Pays Off

Mobile phone operator Yoigo’s aggressive commercial strategy is paying off, if its first half 2015 results are anything to go by!

The Spanish subsidiary of Swedish telecoms giant TeliaSonera saw a sharp rise in profitability in the six months to June, posting an 116 percent year-on-year rise in EBITDA to 27.4 million euros.

While revenues in the first half showed an overall just under 3 percent decline, they rose 5.3 percent to 206 million euros in the second quarter, proof that Yoigo’s decision in March to offer unlimited calls and up to 20 GB of data for 29,9 euros per month was a smart one.

The company has also been focusing on gaining more value added clients. As a result it is the only mobile operator to maintain its average revenue per user (ARPU) in Spain.

But despite its ability to compete in an industry where big players like Telefonica call the shots, where does Yoigo go from here?

 

CASHING IN ON SECTOR CONSOLIDATION

Like many of its European peers, Spain’s telecoms sector is slowly reviving as the economic recovery strengthens and domestic demand picks up.

Yoigo has shown an impressive expansion since it was launched in 2006, but Spain’s smallest mobile player has fallen behind competitors like Telefonica and Vodafone.

Consumers are becoming more demanding and the industry’s focus is shifting towards quad play. This involves providing bundles of phone, broadband, mobile and paid-TV services.

With no fixed-line infrastructure, Yoigo is at a disadvantage, a fact which TeliaSonera realised some time ago and started to look for buyers for its 76 percent-owned subsidiary.

In 2013, however, TeliaSonera rejected offers from both Vodafone and Orange. Yoigo was eventually left out in the cold after the UK-based firm bought cable operator Ono and Orange subsequently snapped up mobile firm Jazztel.

That said, Yoigo is not sitting on the sidelines and plans to cash in on the consolidation process.

Earlier this year, it said it was interested in buying some assets Orange owns in Spain and will be obliged to dispose of to gain European Commission approval for the Jazztel buy.

 

FOCUSING ON NICHE MARKET

Yoigo’s future could continue to be operating in a niche market, competing on the one hand with the big quad players and on the other with the so-called virtual network firms like MasMovil Ibercom.

While still a small fish in a big pond in comparison with the industry giants, MasMovil Ibercom’s plans for further expansion could be a catalyst for more M&A deals.

Whatever happens, it is clear Yoigo remains a valuable potential acquisition target.

In June, Britain’s Virgin Group was reported to be eyeing the budget mobile operator and to have held talks with Yoigo’s owners.

For information on investment in Spain, please contact corporate law firm Argali Abogados.

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