The Business Year Special Report
A CORNER rounded
How did the idea of setting up Parlem emerge?
As a Catalan engineer, I was surprised to find out there were no mobile virtual network operators in Catalonia even though there were 40 all over Spain. Catalonia represents 20% of Spain’s GDP, 25% of its exports, and 16% of the total population. There were other successful regional operators; therefore, I decided to create one from scratch. One of our tasks is to unbundle the business telecoms model. Telecoms have large infrastructure and major assets which virtual telecoms use to create products and services. Thus, Parlem created products and services to attract customers while agreeing to use other operators’ infrastructure.
How do you find ADSL or TV partners to commercialize your services?
With mobiles we use the Orange network through MasMovil access, which was a Parlem shareholder from the beginning. MasMovil bought Yoigo, which had its own infrastructure. While we have not moved there yet, we will in the near future. For ADSL, we are in discussions with Jazztel, which was providing this service in 2016. Later, MasMovil bought part of Jazztel as the EU asked Jazztel to sell part of its infrastructure. Through the Jazztel acquisition, MasMovil captured the fiber to home (FTTH) market. Thereafter, the balance of power changed in the market, from one telecom having a monopoly over the infrastructure to all players cooperating together. As for Parlem, we are not deploying any infrastructure for the time being; however, we will in the future in greenfield markets, considering that there are 1,000 villages in Catalonia without access to fiber. We will start this in 2H20.
Can you tell us about your partnership with Agile?
After three months in the market, we realized that people want three or four solutions. That means mobiles, fixed lines, internet access, and TV content. People like to buy bundles, and this is why we added the television service in September 2019. So far, it is running okay, although we do have some restrictions with some specific applications that are not currently available. In 2020, Netflix and HBO will be available. TV accounts for 20% of our sales. For the rest of operations, 50% is mobile and 50% is landlines.
Who are the stakeholders of Parlem, and what have you financed through your recent crowdfunding?
We sort out crowdfunding to convert customers into evangelists. We have a plan to enter the stock market, but we need to have enough people to allow for a free float there. We added 500 customers as shareholders to Parlem through this. We also injected EUR5 million in capital. The idea is to have 750 evangelists-customers as the first shareholders of the company. At present, I am the biggest shareholder, while the second biggest is the family office from Bonpreu, Ona Capital. Once we deploy infrastructure, we will need more capital. This is why we have reinforced our existing shareholder structure.
How does Parlem profile its clients?
We have 87% residential and 13% corporate clients. Since we have plans to increase our corporate hold to 20% over the next three years, we recently acquired Lemon, a company that offers corporate solutions. They have their own IP, customer call center, and access solutions for companies.
Parlem’s revenue has been growing every year. What are your expectations for 2020?
In 2019, the company is set to double its turnover to around EUR10.5 million. We will have a positive EBITDA by EUR200,000, marking our first year of positive EBITDA. We plan to grow our turnover to EUR14 million in 2020. In December 2019 alone, we generated EUR1.3 million in revenue.
What differentiates Parlem from the competition?
There are two main segments in this country, the incumbents that want everything and all services available regardless of their cost, and the low-cost companies. What does not exist is the value-for-money segment. This is where Parlem comes in; we offer TV for EUR6 and give the option to add Netflix, HBO, or sports. Subscriptions can be closed. Everything is available and paid for step by step. Another comparative advantage of ours is our customer service, which constantly gets extremely good feedback.