Digi supercharges Portugal push with €150 million Nowo buy

The Romanian telecoms group is essentially looking to capitalise on Vodafone's recent failure to get its bid for Nowo over the line, Portuguese regulators having formally blocked that deal just last month. Vodafone never disclosed the value of its failed Nowo purchase, incidentally.

Vodafone had offered to sell spectrum to Digi in order to smooth the regulatory path, but the suggestion was not enough to satisfy competition watchdog the Autoridade da Concorrencia (AdC) that there would not be an adverse impact on the market. There should be fewer regulatory hurdles for Digi though.

It already has a presence in Portugal in that it acquired spectrum there a few years ago and has been working on the full launch of services. But it does not register at present from a competition perspective. In fact, the regulator may well look favourably on its purchase of Nowo, since it will arguably strengthen the closest thing the country has to any real competition to the big three.

Meo, Nos and Vodafone together served 96% of Portugal's mobile customers as of the first quarter of this year, according to data from telecoms regulator Anacom. MVNO Lycamobile and Nowo each claim 2% of the market, the former being slightly bigger in terms of mobile phone customers.

Nowo also holds spectrum in Portugal, like Digi having secured frequencies reserved for new entrants in late 2021, but to date still relies heavily on an MVNO offer.

As Digi revealed in a perfunctory statement to the Bucharest Stock Exchange – in which it also shared the value of the deal with Nowo parent MasMovil and the fact that it still requires competition clearance – Nowo has around 270,000 mobile customers and 130,000 fixed accesses in Portugal, as well as frequencies in the 1800 MHz, 2.6 GHz and 3.6 GHz bands.

The authorities will doubtless look at those spectrum allocations, but ultimately, a tie-up between the two newcomers would create a stronger fourth player that the AdC clearly looking for and as such, the deal will probably get the green light.

Digi has been talking up its upcoming Portugal launch for the past couple of years and the acquisition of an existing player could help speed up the process.

In June, Sandra Maximiano, Anacom head, told a Portuguese parliamentary committee that she expected Digi to launch in November or at the latest before the end of the year, according to a Reuters report She noted that Digi has been building out 5G mobile and fibre infrastructure of its own, but still needed to broker deals on interconnections and content with the existing players, the implication being that this part of the process has not been easy.

Indeed, she warned the big three not to seek to obstruct Digi's market entry, and played down concerns that Meo, Nos and Vodafone have expressed about there being insufficient space in the market for a fourth player.

It's starting to look like the market leaders will soon face new competition, whether they like it or not, and it's not too much of a stretch to suggest we will be hearing complaints about pricing pressures in the not-too-distant future.