Vodafone prevented from buying Nowo by the Competition Authority | Telecommunications

Vodafone saw the purchase of Nowo blocked by the Competition Authority (AdC), a decision that the telecommunications operator led by Luís Lopes considers prevents “an opportunity to reinforce the level of competitiveness in the market” and “clear benefits for customers and the sector”.

The news that the regulatory entity chaired by Nuno Cunha Rodrigues failed the deal announced in September 2022 was advanced this Monday by Echo and confirmed by PÚBLICO. In a comment sent to PÚBLICO, the AdC explains that it “issued a draft decision opposing the operation” because, although Vodafone “had presented several packages of commitments, it failed to demonstrate that this acquisition would not have a negative impact on competition”.

According to the regulatory entity, “concerns” with the deal “are related to the competitive pressure that Nowo currently exerts in the national telecommunications market and that it would no longer exert if it were acquired by Vodafone”.

The AdC states that the operation “could even lead to price increases in the tariffs charged by operators for mobile and fixed services”, according to the simulation model used in the analysis process. This negative assessment of the operation by the AdC is in line with the problems that had already been raised by Anacom, the regulatory entity for the telecommunications sector, which at the end of 2022 considered that the operation would have “harmful effects”, such as “price increases ”.

The Competition Authority’s decision is understood by Vodafone as a departure, “surprisingly, from the consolidated practice of the European Commission, which just a few weeks ago approved a much larger operation in Spain accepting a substantially lighter package of commitments”, said the company, alluding to the merger between MásMóvil and Orange, which is expected to create the operator with the largest number of customers in the Spanish market.

“Vodafone regrets and disagrees with the draft decision today [segunda-feira] announced by the Competition Authority (AdC) which, if confirmed, will make the acquisition of Nowo unviable”, said the company in a statement sent to PÚBLICO.

When it announced its intention to buy Nowo, Vodafone highlighted that the deal would give it access to more “around 250,000 mobile service subscribers and 140,000 fixed access customers”, that is, broadband Internet and subscription television, with a network that reaches around one million homes.

The operator maintains that “it always clarified all doubts and sought to respond to the concerns raised by the AdC, with the presentation of commitment packages”. These commitments (which Vodafone does not disclose) “would have made it possible to mitigate any possible strengthening of its position in the market, protecting consumers”, maintains the company.

In January, the Business Journal had reported that an imminent negative decision by the regulatory entity was linked “to the fact that in the Portuguese municipalities in which Nowo is present, all operators charge lower prices, which, in the eyes of the AdC, gives Nowo a competitive value higher than that the company can have”.

Vodafone states that it is analyzing the basis of a decision that “makes it impossible to reinforce Vodafone’s investment in the national market and is a wasted opportunity to increase the level of competitiveness and innovation in the market”.

The Competition regulator in Portugal also says that it disagrees with “allegations that, if Vodafone does not acquire Nowo, this eliminates a competitor in the market”. Nowo’s assets, “namely its customer base”, can even “serve to leverage the entry of other operators into the market”, maintains the AdC.