June 8, 2020 / 4:12 PM / a month ago

Strong start for Virgin brand keeps Spain's Euskaltel upbeat despite virus

June 8 (Reuters) - Spanish telecommunications firm Euskaltel is confident of hitting its goal to almost double revenue in the next five years with a push outside its regional market, despite the economic blow of the coronavirus outbreak, its CEO told Reuters.

Based in Spain’s northern industrial heartland around the Basque region known as Euskadi in the local language, Euskaltel started offering broadband, mobile and TV services under British billionaire Richard Branson’s Virgin brand nationwide in May.

“The launch has started well,” Jose Miguel Garcia said in an interview on Monday.

Alongside savings made through online sales and services, he said the launch gave him confidence to stand by financial guidance for 1.3 billion euros ($1.5 billion) in revenue by 2025 and a 6% annual rise in core earnings each year until then.

“We hope COVID becomes an anecdote that affects a couple of quarters, and that we can quickly return to our road map,” Garcia said.

Euskaltel hopes to lure customers in a market already crowded with Telefonica Orange, Vodafone and smaller operator MasMovil by filling what it sees as a gap between low-cost offerings and high-cost packages that bundle lots of services in long-term deals.

MasMovil has agreed for three U.S. buyout funds to take it private. That would leave Euskaltel as the only alternative listed company to former monopoly Telefonica, which Garcia said should benefit his company.

Asked about any potential mergers or acquisitions of its own, Garcia said Euskaltel was focusing on its five-year plan.

“It takes up 100%, I’d say 200% of my time. We don’t have anything else,” he said.

The company has added more clients since the beginning of April, despite a lockdown to stem an outbreak of the virus that has now been blamed for more than 27,000 deaths in Spain and sent the euro zone’s fourth-largest economy hurtling towards recession.

Some of the small firms that make up 50% of Euskaltel’s business suspended their contracts during the pandemic, but around 38% of them re-connected in May and more are returning in June, Garcia said.

$1 = 0.8852 euros Reporting by Isla Binnie; Editing by Mark Potter

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