PARTNER FEATURE: Spain-based MVNO Simyo, once a struggling player in a saturated market, made the transition to becoming a serious contender by shifting to the mass market with competitive converged mobile and fibre broadband bundles and a multi-channel approach – while upgrading both its branding and product portfolio.

The Orange-owned operator, founded in 2008, experienced high churn as new operators entered the market and cut prices. While Spain has four major telecoms players, more than 100 different brands operate across the industry. “You can imagine how fierce the competition is in this country,” said Simyo CEO Enrique de Porres during a session at MWC Barcelona 2022. To quickly drive growth, “we needed to accelerate the competitiveness of our portfolio.”

Over the last two years, the acquisition value in convergent offers has decreased by €10. “This is a huge deterioration of revenue and ARPU,” reflected de Porres.

Looking at the long-term impact of hyper competition, between 2008 and 2020, overall revenue of the top four main operators – Movistar, Orange, Vodafone and Masmovil – dropped nearly 34 per cent. This decline has also sharply cut margins.

The prolonged Covid-19 (coronavirus) pandemic, which slowed GDP growth over the past two years, added to the pressure caused by aggressive pricing for converged mobile and broadband offers.

De Porres explained that two-thirds of new customer acquisitions last year opted for midrange and low-cost bundles. However, he pointed out that the premium segment still accounts for more than half of the total revenue generated.

Consolidation

In November 2020, Orange moved to simplify its portfolio from three MVNO brands – Simyo, Amena and Republica Movil – down to one. Orange opted to shut down Amena and Republica Movil and concentrate on Simyo, which had the largest subscriber base of the three and also an NPS of about 70 per cent, the highest in the market, de Porres revealed.

In addition, Simyo had a more flexible IT platform, which would be needed to support the move from being a niche brand to one focused on the low-cost mass market. It also decided to move from a mobile to a converged focus, adding fibre broadband. Further complicating the consolidation was the decision to target households, not individuals, with a multi-channel approach, rather than a pure digital effort.

The first challenge was to integrate Republica Movil’s customer base of 300,000 into the new brand’s system. To support a quick migration, while maintaining engagement with its existing base, it created a one-to-one tariff exchange which meant more than half of Republica Movil’s customers moved to better packages. With a campaign running over the summer months, which were believed to be the most popular time to make the switch, customers who migrated enjoyed 30GB added to their plans for free.

A real success story

With support from Huawei, Simyo completed what de Porres called a one-shot migration, which he admitted “was a bit risky. We were crossing our fingers.” He believed it was much better to do it this way to avoid a months-long transition between brands. “It’s a real success story inside Orange Group.”

To boost engagement with existing customers and maintain its NPS level, it launched tailored websites for each customer, explaining how the migration would impact tariffs and the benefits offered.

Next, it repositioned Simyo to attract the mass market. This was no small feat, as Simyo was not a well-known brand in the market, with its awareness level at roughly 20 per cent of the population.

New branding

In response, it switched agencies and changed its creative line, focused on families and how technology can help people in real life.

De Porres said it also invested more in advertising, “increasing our voice not only on TV but on digital platforms to try to improve our awareness level”, which was very low at the beginning, especially for convergent services. It also ran roadshows with main distributors around the country to promote the new Simyo proposal.

To drive quick commercial growth, the operator introduced a much more competitive portfolio. “When you are in the low-cost segment, and you want to grow, the balance between features and pricing is key. Without that you cannot compete.”

In addition, it expanded its retail network. A fully digital approach was proving not effective enough to reach the volume expected, so Simyo invested in physical retail shops to complement its current digital approach, making Simyo a brand closer to customers on the streets.

A year after implementing the changes, sales almost doubled and its retail network grew five times by the end of September 2021. Simyo successfully moved from ranking number seven in the Spanish market among MVNOs to number three.

“We hit our objectives, although we still have great challenges ahead,” he acknowledged.