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The prices of the new operator DIGI seem totally crazy: they are more than 50% cheaper than the competition. The major players in the Belgian market had better watch out. This obviously raises the question of the origin of the prices that we all know, and which increase over the years. How does the company of Romanian origin manage to offer discounted prices in an area that has seemed frozen for years?
Small comparison
First, let's take a concrete look at the differences between subscriptions. For the moment DIGI offers only one mobile subscription: unlimited calls & texts, as well as 15 GB. At Voo, you can find a similar subscription, with these same characteristics, but it costs €18 per month. Orange has two ranges, one with 8GB, and the other 50GB, so it is the first which seems closest to that of DIGI, although with less data. It costs 14€ per month. And finally, Proximus presents a subscription at €19.99 per month, but which does not have 15GB, but rather 10GB. DIGI's offer therefore seems the most interesting on the market, for the moment.
Les prix Voo, Proximus, Orange and Digi.
As for fiber, it is offered at €10-20 per month, but it is not yet available everywhere (we did the test with an address in Liège, but it is not accessible). Three offers are available. For our comparison, we will take DIGI Fiber Essentials, the cheapest: up to 500 Mbps, unlimited surfing. In this category, there is a big difference in price. Proximus offers an offer of €62.99, Orange €55 per month, and finally Voo, but with a different formula, offers 200 Mbps at €40 per month.
Obviously, all these prices must be compared with the famous “packs” offered by the operators. It is more interesting to take several services grouped together, the separate price is always more expensive. But at first glance, DIGI seems much cheaper…
How can they offer such prices?
So why such a glaring price difference between the operators we know and the new brand? Their organization would have a lot to do with it, as explained by Antoine Destrument, telecoms specialist at Selectra who gives his advice on the CallMePower.be platform. “What they say is that they have everything in-house, i.e. call center, etc. They try to internalize everything, at least that's what they do in other countries. Afterwards, I think it's a fairly aggressive marketing strategy, just to be popular directly, to exist directly on the market. And then, perhaps gradually increase prices, or, in any case, adapt a little more to the market. I think they are aiming for quantity, and then making economies of scale thanks to the fact that they will rely solely on their own infrastructure and workforce.“.
No choice….
To establish themselves in a country, this marketing strategy can sometimes prove necessary for brands. “Ultimately, it's a bit like the only way to find a place in a market where finding consumers is finding customers with other operators, because it's a saturated market.. I think they are aware of it, it is not growing with a whole section of consumers potentially looking for. Wanting to find market share necessarily means taking it from others“, analyzes Nicolas Neysen, professor of digital strategy at HEC Liège. Surprisingly (or not), the company has contracts with Proximus, in order to be able to benefit from a mobile network quickly. This obviously falls into a category of costs in less (building the network, etc.) for the company.
But the price offer still remains astonishing, when we know that the operator has not necessarily cut back more than the others on its services to customers, this is perhaps what will be its strength. “We could say: ok, it's a bit like Ryanair. Except that the product is quite qualitative. At least that's the case with what they do in other countries. Even at the call center level, many other companies no longer even display a telephone number, and use online chat, but this is not their case. They don't seem to be discounting things.“, notes Antoine Destrument. Moreover, these prices even surprise some professionals. “I admit that I was quite surprised at the prices, I didn't think they could keep such a promise. In any case, they will be talked about and I think that was their main interest.”
A risky bet?
DIGI will do everything to grab as many customers as possible. “It's a risky bet because it seems to me that the margins will be relatively limited with such prices and that the only possibility to ultimately be profitable is to have volume.. When you want to be aggressive in terms of costs and therefore play the low cost card, you have to have a lot of customers“, concludes Nicolas Neysen.
One thing is certain, DIGI has been able to get people talking about it, and break the prices of the current market in Belgium in the field of telecom operators. It remains to be seen whether the company will manage to maintain the pace, and please enough customers…
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