Meinrad Spenger is an atypical figure in the telecommunications sector. Coming from a country without major telecoms like Austria, in just over a decade he has gone from being seen as the disruptive troublemaker in the sector with MásMóvil - he hired Belén Esteban as director of public relations - to leading MasOrange, the customer leader in Spain.
Behind him, a trail of acquisitions (Ibercom, Yoigo, Euskaltel) that threaten to pale in comparison to what seems to be the final move: the IPO of the new operator, a step that he acknowledges is attractive to part of the group's management.
What has changed since MásMóvil? In the company culture, he says little. Proof of this is that the first thing you see when entering the group's management area is an "anti-bureaucracy mailbox," a clear statement of intent to continue being agile in a sector that needs to cut its dwindling wave and return to growth through innovation and a more modern regulatory framework.
How do you rate MasOrange's first year?
We have had a spectacular year in many ways. We have grown as a company, as a project in practically all the main indicators: clients, revenue, profitability, and satisfaction. We have also grown especially in the business lines where we have a lot of potential, where we see future growth lines such as the public administration business. We have just won the most relevant contracts from CORA of the General State Administration in fixed and mobile communications, cybersecurity, and data center connectivity. We appear in practically all quality rankings as number one. In terms of network quality, many reports, such as the one from CNMC, highlight us as having the most reliable and fastest networks in Spain.
Have you changed your approach in leading a company twice as large?
We have managed this project from day one as a unique organization, with a unique company culture and a clear vision. We aim to be leaders in customer satisfaction, talent, and positive impact with very clear and defined values: putting the customer first, positive attitude, pragmatism in getting things done, and collaboration. It is quite similar to how we managed the former MásMóvil.
You have been talking a lot about quality and customer experience, but in Spain, price has always weighed more. You have reiterated that you will not descend to 'ultra-low-cost' levels. Has that vision changed or remained?
We have to think about a sector that has growth potential. MasOrange is a growth project; therefore, the sector has to grow. It has not grown during the last decade where more than 30% of revenues have been lost despite the evolution from ADSL to fiber, from 3G to 4G and 5G, and the increase in the number of services. There is now 60% more broadband than ten years ago. Therefore, we need to reflect on what we contribute to Spanish society.
How do you contribute?
Increasing fiber optic penetration by ten points, which is possible because in Spain we are 12 points below the European average, contributes more than 1% to the GDP. Increasing the average browsing speed by five times, as we are doing with 5G and 5.5G or 10 Gbps XGSPON fiber, can also contribute an additional 2% to GDP. What do I mean by this? That this sector is strategic and a facilitator of technological trends that create value such as AI, IoT, and humanoid robots.
How does that fit in a world where fiber is offered for 10 euros per month?
In general terms, what we can be most proud of is that MasOrange has become the relevant operator with the highest growth in Europe, and this is not an easy feat. We know our market with many brands, many low-cost offers, and a lot of competition... To grow, we have to reinvent ourselves, bet on innovation and investment. And that, we are capable of doing because of the size, the team, and the technology we have.
In your multi-brand strategy, there are many low-cost brands. You are betting on adding services like pay TV, but portability balances are negative. How do you correct this to avoid customer churn?
There are different needs, but the main demand from most customers is a quality and comprehensive service. We offer a quality service, in many premium aspects, and that's why we are growing in customers. Portability was more relevant when we only looked at the mobile market. Now we have to address the customer as a whole, the complete packages, and we have more customers than anyone else in Spain. Therefore, if we add additional lines to this customer, it does not reflect in portability. For us, the important thing is to create value, grow in revenue and profitability, or if possible in the number of customers, but we will not do irresponsible things in pricing that could harm our ability to innovate and invest.
MásMóvil was one of the first operators to enter the electricity market and today they continue to bet on it. How is that bet on adjacent services working?
When we talk about innovation, we have to talk more broadly not only about new businesses but also the core business. In the last year, we invested around 1.2 billion and by 2028 it will be approximately 4 billion. We invest in the most advanced networks and what we call the three 'T's: talent, technology, and size. This helps us create truly innovative infrastructures. MasOrange has the most advanced networks in Europe, with the first Open Ran Network and 5.5G.
Additionally, we innovate with services because many times we work with the best partners in the world. For example, in the world of insurance, energy, or alarms, where we are growing significantly. We have almost 900,000 insurance policies, and thanks to this week's agreement with Zurich, we aspire to reach 7.5 million in ten years with a business volume of 1.5 billion. Furthermore, we have more than 350,000 energy customers. And thus, we have the most satisfied customers in Spain. The only thing we have to be careful about is that they are always quality services.
Are you working on new businesses?
There is an exciting topic which is the new businesses that we create internally. We have a quite powerful technological talent around data. Traditionally, operators preferred customers not to use their networks too much to avoid having to invest more. We are the opposite: we want them to use the networks because they are differential experiences and also because they generate very useful data for us, to improve the service and make it more personalized.
Your business is becoming more and more technological.
We are not really a typical telco. In fact, we believe we are a technology company with a telco origin. And on what do I base this? I base it on the fact that we are attractive to technological talent. In addition to having the latest technological stack, a unique data lake, and the most relevant databases in the market because AI without data is not very intelligent. It's much A and little I. We attract and are able to retain talent because we offer an environment with top people and very attractive projects. It's no longer just about salaries, but about wanting to have an attractive evolution in an environment that changes very rapidly. We want engineers to return not only to Spain but to our sector. We are already growing in IT and AI areas.
It must be difficult to find workers to do AI.
There are few gurus, but there are many interested and curious people with very strong training in universities.
What projects are you driving?
First, we try to provide internal and external training. Second, we are organizing our data and that of our customers to help them not have mediocre results with AI. And then implement use cases. We have already automated over 1,000 processes and have implemented 150 cases in fields such as customer service operations or networks. There we analyze if an antenna provides regular service with customer satisfaction. We see a correlation between inadequate service and a poor experience and even higher cancellation rates.
Beyond internal use, in the process of growing in companies and the Public Administration. How are you innovating in this segment?
We are no longer a gigabyte factory. We are a solutions company with a differential offer for companies that may have to do with connectivity or not. In that field, for example, we are leaders in creating private networks for companies and public administrations. Private networks are dedicated networks that offer better performance, better quality assurance, and better security levels, which are very important. We implement them in clients such as the Port of Barcelona or with the firefighters of Madrid, who have the first 5G emergency network. 5G can replace some Wifi solutions in a short time. Why? Because they are more reliable, have higher availability, higher security levels, and longer lifespans. We also work on cybersecurity for large and small businesses, which have not had access to advanced cybersecurity solutions until now. We can democratize cybersecurity services.
Is 5G an opportunity?
There has been much talk about 5G and little action in Europe. Not so much in other continents and territories. In Spain, we have an opportunity to be pioneers in creating an ecosystem around 5G. And it is not only obvious for us, it is a necessity. We want to contribute something useful to society. What do we do? We are leaders in the so-called standalone 5G, which allows materializing many of the advantages of 5G around latency, network layers, slicing calls, creating private networks, and offering guaranteed quality services in companies. We are the first in 5.5G, which is an intermediate step between 5G and 6G that has new functionalities. Many of them are very interesting, such as sensing, which can detect movements, temperature changes, and improve location accuracy with an error of ten centimeters. It sets a new IoT standard to increase its applications.
The IoT is another focus for telcos
We are talking about pure M2M connectivity, but also about services on top: personalized patient monitoring, having Smart City services. For example, we also work on measuring real traffic emissions, where 1% of vehicles can contribute 40% of emissions. If we detect these, we can notify the owner to repair or focus on a renewal plan for those vehicles to improve air quality in our cities. We have established ourselves as a reliable partner with very strong technological talent. Another field is cloud services. We already know that it is important to have control of our data and sovereign clouds, which do not leave either the company or the State to securely preserve sensitive data. They will be key. We also play there and play very well because we have data centers basically in all territories. Initially to maintain computing capacity for our networks, but also for clients who want their data center near their headquarters.
They are in the project presented by the Government for the AI gigafactory.
Yes, it is a future project with which we are going to fight to attract one of these projects to Spain, as four or five will be done in Europe. We are delighted to participate and contribute our experience in data centers, cybersecurity, data center connectivity, and offering services to clients who want to use computing capacity in Spain.
On the corporate side, what is the status of 'fibreco' with Vodafone? You have incurred a large debt for the project and the entry of a partner is being finalized.
We have been very successful with this project to obtain financing and now we have several options on the table to choose an equity investor who will have a minority stake in the company. We have prepared several options and the board will have to decide which offer is finally chosen. I think we are going to sign an agreement this quarter. The industrial logic of the project is that Vodafone and we are going to have a network to maintain, operate, and update jointly. If it were only one, it would have less investment capacity. We are already testing the 50 XGPON, which is 100 times faster than today's average connection.
And in terms of shareholders. There is a lot of talk about going public when reducing debt, is there a timeline?
We have to make sure that the company is doing well and is ready for a potential IPO. It is an option that is also attractive to many people who have already managed a company in the stock market. Remember that the former MásMóvil was in the Ibex 35 until the end of 2020. Our obligation is to manage and prepare the company for this event. Then shareholders can agree on something else, sell to other investors, or a consolidation by Orange. What will happen? We do not know and we are not worried now. We have to focus on being the best techco with telco origin in all of Europe.
Talking about consolidation, how do you see the messages coming from Europe? They seem more receptive to what the major telcos are claiming, but I don't know if it has changed in practice.
We support consolidation in general in this sector and we are very fortunate that our transaction is done and it took us two years to do it. And now the market and our customers perceive the advantages that they believe we have in terms of innovation and investment capacity.
Does the national regulatory framework help these objectives? It has been very critical in the fiscal aspect...
The tax pressure on the telecommunications sector in Spain, compared to other countries, is high, especially in spectrum fees. Because there are countries where you pay, buy the spectrum, and then it is yours and you use it. In Spain, the model is hybrid: you have to pay, and pay quite a lot, for the purchase and then pay annual fees. The logic of calculating these fees has not changed in 20 years, but back then mobile phone revenues were about double what they are now. Maintaining the same fee calculation logic when you are already billing only half, does not make much sense. It would be important to adjust the fees to current revenues.