Digi Communications will spend €300 million on the rollout of fibre infrastructure in southern Spain and has secured an investment partner to share the financial burden.

The telco group said that its Digi Spain unit has brokered a deal with UK investment group Abrdn that will see the pair share the cost of a sizeable fibre-to-the-home (FTTH) project in Andalusia, covering the provinces of Almeria, Cadiz, Cordoba, Granada, Huelva, Malaga and Sevilla.

Digi has already begun deploying FTTH as part of what is starting to look like a fairly aggressive expansion strategy in Spain. It has almost completed rollout to 1 million homes, it said, but with the Abrdn deal can push on to reach 2.5 million. It puts the total cost of the project at €300 million, which will be shared equally between itself and Abrdn, although there remains the possibility of bank financing too.

Aside from being a sign that the investment climate for fibre in Spain remains favourable, the deal is also indicative of a change in the competitive landscape in the country. That change has already begun, with Digi having built up a solid customer base across fixed and mobile in the past year or so, but is set to shift gears in the near future, if the proposed merger of MasMovil and Orange Spain is allowed to go ahead.

In a nutshell, Digi is already Spain’s fifth fixed and mobile player, and it is growing at pace. But it is also likely to be the main beneficiary of any competition remedies imposed on Orange/MasMovil, which could well make it an even stronger number four.

Orange and MasMovil announced their plan to create a 50:50 JV in Spain last summer, but the European Commission is still examining the deal from a competition perspective. According to Reuters, Brussels is set to open an in-depth investigation next month and its sources claim MasMovil will have to offer certain remedies to get the deal over the line.

We’re used to seeing companies hive off spectrum assets or sub-brands, or offer network access, for example, to persuade regulators back their plans. And it appears Digi would be a willing participant in any such situation. Spain’s Expansion recently reported that Orange and MasMovil have been in contact with Digi and others about possible remedies, while ION Analytics’ sources say Digi has been vocal about its intentions to take up any such offer.

We still don’t know if any remedy situation will actually present itself; the industry is watching with interest to see which way the Commission will jump on this one. Either way, though, Digi is turning itself into a force to be reckoned with in Spain.

It had 3.8 million mobile customers in Spain at the end of 2022, an increase of 28% year-on-year, while its fixed-line revenue-generating units rose by 74% over the year to 1.1 million. It remains primarily a virtual player, but does hold some mobile spectrum and, as per this latest FTTH announcement, is growing its fibre footprint.

To put Digi’s customer numbers in context, Spain’s MVNOs together had a share of just over 7% of the mobile market as of January, according to CNMC data, while MasMovil, the smallest of the big four, claimed 20.8% and Telefonica’s Movistar, the biggest, had 27.7%. And the fixed broadband market looked similar.

Digi might well be some way behind the big four, but one way or another looks set to narrow the gap in the coming months and years.

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