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Exclusive: Deezer to begin German expansion using Brazil, France model – CEO

2022 08 05T100950Z 3 LYNXMPEI740GC RTROPTP 4 DEEZER IPO - Global Banking | Finance

By Steven Grattan

SAO PAULO (Reuters) – French music-streaming platform Deezer SA will begin its German operation in the coming weeks as the newly public listed company pushes its market expansion plans with a focus on securing local partnerships, CEO Jeronimo Folgueira told Reuters in an interview on Thursday.

Folgueira, who became CEO a year ago, said the company wants to replicate its Brazil strategy in other countries, but for now it will only focus on a handful. Brazil is Deezer’s No. 2 market.

“I think in Brazil we were able to replicate the model that we successfully done in France, which is we enter the market with big strategic partners – like TIM, Globo and Mercado Libre here – who really help us get scale,” he said.

Germany is the next country on the company’s list, with a local partnership with RTL Group.

“We are launching Deezer inside of the RTL+ app, and that’s happening in the next few weeks. It will give us very strong entry into the German market,” Folgueira said.

“We expect Germany to become the growth driver of the company for the next few years on the back of that. We are looking to replicate that successful French and Brazilian model.”

In July, Deezer – one of France’s first so-called “unicorns” – took the leap on a long-awaited initial public offering (IPO), which analysts saw as a bold move given the current global economic situation.

The company shares fell by as much as 59% in the days following the flotation, before paring some of those losses.

“The fact that we were able to IPO and raise 143 million euros in the current situation … shows the strength of our business and industry,” Folgueira said.

Founded in 2007, just a year after rival Spotify, Deezer had contemplated entering the stock market for years. It postponed previous IPO plans in 2015 due to market conditions.

Folgueira said the IPO was needed to raise capital to execute Deezer’s expansion plans and that the company was stable enough to do so, adding it also wanted to create liquidity for some of its investors and open room for “potential M&A down the road.”

The CEO said they will eventually consider expansion into other markets, like the U.S and U.K., where the company has little presence.

“For us to really grow big we have to find a way of entering and cracking those markets. If we can steal market share and compete with Spotify, Apple, Amazon in France and in Brazil, there’s no reason we cannot do that anywhere else in the world.”

Deezer had 9.6 million subscribers at the end of 2021, still well below Spotify’s 180 million premium subscribers at the time.

(Reporting by Steven Grattan; Additional reporting by Gabriel Araujo; Editing by Christopher Cushing)

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