Business 13/06/2021

Operation Save Mobile World Congress

This year's decaffeinated celebration has an undisclosed goal: to avoid the bankruptcy of GSMA, the organising company

4 min
Preparations for the Mobile World Congress 2020, which was finally cancelled.

12 February 2020 was the darkest day in the history of the Mobile World Congress (MWC), the most important trade fair in the mobile technology industry. The coronavirus was still a distant issue for Catalans, and many found hard to understand the cancellation rumours flying around Mobile. When some companies began to announce that they would not be attending, it was even said that it was in response to a supposed boycott by Chinese companies, which dominated the Barcelona event. In the end, the event's organiser, the GSMA, decided to suspend Mobile. The CEO of GSMA, John Hoffman, appeared deeply affected and in some interviews he even cried.

A year later, Hoffman's nerves are much more understandable. It is true that GSMA was hanging on by a thread. The cancellation of the Mobile World Congress endangered the survival of the company and, therefore, also the survival of the show itself, the most important one held in Barcelona. "Last year's suspension did a lot of damage to GSMA financially, but a cancellation this year would be the final blow", explained the sector. MWC accounts for 80% of the income of this association of large telephone operators.

When the cancellation of the congress was announced, GSMA was at pains to insist that the cancellation was due to "force majeure". This insistence on "force majeure" was an attempt to avoid the compensation that could be claimed by all the companies that had already made the necessary investments to attend (from paying the cost of space to paying for tickets or booth rental). But the argument of "force majeure" had weaknesses: the celebration of the event was scheduled for 24 and 27 February, when there were still weeks before the WHO declared that covid was officially a pandemic and for Spain to declare a state of alarm. It is possible that, in the event of going to court, the companies affected would have won the litigation. The bill could be very high: "There are people who spend six, seven or even eight million euros on a stand", those consulted say. On top of that, there are many other expenses in many other areas.

GSMA solution

The solution found by GSMA, according to several sources, was not to refund the companies the money they had paid and, instead, to book them a place for the 2021 edition. With this move it managed to salvage itself a little and, at least, postpone a good part of the problem for a year. It should be remembered that the list of companies that had declined to participate in the fair was long, but the list of companies that were still willing to go was even longer: 2,800 companies had to participate in last year's Mobile and the number of those that said they would not go barely exceeded twenty. However, they were some of the most important companies (such as Ericsson, LG, NTT, Rakuten, Intel and Cisco), without which the show would lose its meaning.

The GSMA's decision had an important consequence: all its eggs were now in one basket, the 2021 show. In other words, the company was staking everything on this year's show. If it could be held, perfect: those who had paid the previous year and had a reserved place could attend. Anyone who paid in 2020 and did not want to attend in 2021 would lose their money and GSMA would not have to pay anything back. With this move, GSMA was able to make the companies bear the losses.

However, if Mobile could not be held this year, the GSMA could be forced to refund the million it had charged in 2020. This explains why Mobile will be held in 2021, regardless of the number of attendees, which is expected to be low. So few that even the organization has made an unprecedented reduction in the price of tickets: the Spanish professionals will be able to go paying only 21 euros, far from the 700 to 4,000 euros that tickets normally cost. "This year it will be done no matter what happens because GSMA is playing for its life", repeat the sources consulted.

John Hoffman, GSMA CEO, the company that organises the Mobile World Congress, in an archive image.

Renegotiation with the administration

GSMA's manoeuvre to avoid bankruptcy could be seen in the renegotiation it made with the State. The Spanish government waived its claim to the money it had already invested in the MWC 2020 in exchange for a reduced rate for 2021. By accepting this, the government also explicitly waived its "claim", as published in the Official State Gazette of 24 June last year. That same month, GSMA had laid off 20% of the thousand workers it had and, according to sources close to the company, the outflow of staff has continued since then.

There was only one way for the MWC not to happen this year: if the Spanish government banned it. "The only way for us not to do it was for the government to order us to stop", explained John Hoffman in an interview on Tv3 in April. The reason: having an express prohibition from the authorities, GSMA could invoke the causes of "force majeure" and, therefore, would have a legal justification for not returning the money owed to the companies. "If not, we will go ahead. We will not postpone it. The date is set in stone", Hoffman insisted.

Along the way, the administrations have maintained their economic commitment to the show: in 2020 Mobile World Capital (financed mainly by the administrations) paid 9.5 million to GSMA. Money that would have had to be returned if the 2021 edition had not been held. In exchange, GSMA also agreed to extend the contract with Barcelona for another year, until 2024, as ARA advanced at the time.

As a result, "this year's Mobile World Congress will be quite sad", according to the sector. Huawei is an example of this. In 2019 it had the largest stand, with 6,292 square meters. This year it will be only a seventh part: 853 square meters. And the entire hall will become two and a half pavilions, instead of the eight it usually occupied. But GSMA will save the show and this means one thing: although this time it will be a sad show, "everyone is already preparing seriously for the 2022 edition".

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