Telefonica is considering taking over Digi in a euro3.8 billion deal

Telefonica is preparing a major strategic move that could redefine the map of European telecommunications - the acquisition of Digi Communications NV, an operator that has grown spectacularly over the past decade and has become a symbol of fierce competition and innovation in the field of connectivity, according to articles published yesterday in the Spanish press. Journalists from the Iberian Peninsula claim that, if the transaction goes through, the Spanish company would go from its current presence in three major markets - Spain, Germany and the United Kingdom - to a direct footprint in seven European countries, thus doubling its influence on the continent and opening a new stage in its global expansion.

Valued at around euro3.8 billion, the Digi acquisition would bring Telefonica an exceptional strategic asset: a company headquartered in the Netherlands but with a strong operational center in Romania, controlled by businessman Zoltan Teszari. With solid operations in Italy, Portugal and Belgium, Digi has managed to establish itself as a leader in the "value” segment, with over 9.6 million customers and an annual growth of over 23%, transforming itself into a true catalyst for change in the European telecommunications market.

Telefonica's interest does not necessarily mean selling the Romanian company. It also requires that Romanian owner Zoltan Teszari wants to sell the business. Currently, the plans of the Romanian telecommunications group Digi Communications in Spain are to list on the stock exchange. The company has hired Barclays, Santander and UBS as coordinators for the listing of its subsidiary in this country. Even if the acquisition will not take place, this news indicates that Digi has become a strategically interesting company, say Erste Bank analysts.

For Telefonica, the integration of Digi would mean not only consolidating its position in the Spanish market, where Orange and MasMovil recently formed a colossus through a merger, but also eliminating its most aggressive domestic competitor, ensuring complete control over a network that, in many regions, is already leased by Digi. From a strategic perspective, the move would add four key European markets to the Spaniards' portfolio and pave the way for the ambitious goal of becoming a pan-European reference operator, with coverage comparable to that of Deutsche Telekom or Orange.

According to data from the Bucharest Stock Exchange, Digi Communications is valued by investors at 9.43 billion lei, one of the largest shareholders being the Privately Administered Pension Fund NN Pensii, with a 20.65% stake. Digi Communications ended the first half of 2025 with a profit of 10 million euros, down 81% compared to the same period in 2024, while revenues increased by 21% compared to the same period last year, to 1 billion euros. Digi Spain is 100% controlled by Digi Romania, a group that also operates in Italy, Portugal and Belgium. Zoltan Teszari is the majority shareholder of the parent company.

The acquisition that the Spanish journalists are talking about would align perfectly with the new "Transform & Grow" development plan that Telefonica presented yesterday, a growth program that defines the group's direction until 2030. The strategy is based on three essential pillars - structural simplification, financial discipline and European expansion -, complemented by massive investments in emerging technologies such as artificial intelligence, cybersecurity and 5G Stand Alone networks. Under the executive leadership of Marc Murtra, the Spanish company aims to transform its operational DNA and reach a new level of efficiency and profitability, targeting savings of up to 3 billion euros by 2030. According to the development plan published yesterday, Telefonica estimates an average annual growth in revenues of between 2.5% and 3.5% until the end of the decade, while adjusted gross operating profit (Ebitda) should advance between 1.5% and 3.5% per year. The objective is to generate stable and growing free cash flow, reduce debt to around 2.5 times Ebitda by 2028 and reduce investment spending to around 12% of sales by 2030. All this comes together with maintaining the dividend for 2025 at 0.30 euros per share, followed by a gradual adjustment in the following years, in a financial policy oriented towards balance, profitability and investor confidence.

The "Transform & Grow” plan is based on six major directions that will shape the future of the group: improving the customer experience, expanding the B2C offer, accelerating the B2B segment, developing technological skills, simplifying the operating model and training digital talents. Telefonica aims to grant more autonomy to the countries in the network and to focus global functions on strategic areas, thus to create value through efficiency and innovation on a large scale.

However, a possible integration of Digi would not be without challenges. Different competition regulations in each country could complicate the merger process, and harmonizing technical systems and infrastructures would require a carefully planned transition. In addition, preserving the distinct identity of the Digi brand, known for its affordable pricing policy and customer loyalty, would be crucial to maintaining commercial balance. Most likely, Telefonica will keep Digi as an independent brand aimed at the "value" segment, while Movistar and O2 will continue to dominate the premium and mid-range segments.