Competition stops Vodafone’s purchase of Nowo as it considers it would increase fixed and mobile prices

The Competition Authority (AdC) confirmed to the Express which issued a draft decision opposing the purchase of Nowo by Vodafone Portugal, an operation notified almost a year and a half ago, communicated to those targeted last Friday.

“The acquirer, although it presented several packages of commitments, failed to demonstrate that this acquisition would not have a negative impact on competition”, says an official Competition source to the Express. Despite having presented some packages of remedies to mitigate the competition problems that arose with this acquisition, Vodafone was unable to convince Nuno Cunha Rodrigues’ team that the market would become more competitive.

“The AdC’s concerns with the operation are related to the competitive pressure that Nowo currently exerts in the national telecommunications market and which it would no longer exert if it were acquired by Vodafone”, he explains. Nowo has a presence in some regions of the country and in these it has been shown that prices are lower, and the AdC is convinced that the disappearance of this operator in some regions would reduce competitive pressure.

“AdC’s simulation model for this acquisition demonstrates that the operation could even lead to price increases in the tariffs charged by operators for mobile and fixed services”, assures Competition. Nowo, whose share is between 2.5% and 3%, has a fixed, but also mobile network that extends throughout the country.

Nowo assets could serve new competitors

The AdC de-dramatizes the threat of Nowo’s exit from the Portuguese market, made by its president to Eco, who claimed that he would do so if the purchase was unsuccessful. “Regarding the allegations that if Vodafone does not acquire Nowo, this eliminates a competitor in the market, the AdC disagrees because Nowo’s assets, namely its customer base, can serve to leverage the entry of other operators into the market”, highlights. Competition does not say so but one of the operators it refers to is Digi.

On February 27, Concorrência had already told Eco that there was no “imminent bankruptcy” under “any of the conditions” and that it even saw “alternative scenarios” to a sale to Vodafone.

In Portugal, the purchase of Nowo by Vodafone would create an operator with a market share of around 25%. Nowo, an operator owned by Spain’s MásMóvil, has a market share of between 2.5% and 3%, with 275 thousand customers in the mobile business and 132 thousand in the fixed line, and operates mainly in rural markets and cities smaller ones, such as Setúbal, Caldas da Rainha or Coimbra. Vodafone is the third operator on the market.