Portugal's mobile telecoms market has long been dominated by three so-called "quad-play" service providers, namely Altice-owned MEO, NOS and Vodafone Portugal.

Indeed, Portuguese operators were among the first in Europe to provide packages that bundled smartphone and mobile broadband plans with TV and fiber-to-the-home offerings. At times, the operators have even labeled themselves quintuple players through the crafty separation of smartphone mobile data services from mobile broadband services.

Vodafone Portugal is now attempting to boost its position through the acquisition of Nowo from MásMóvil. Ranked as the fourth convergent player in the market, Nowo nevertheless lags some way behind its three bigger rivals.

According to the 2021 market report from regulator Anacom, Nowo accounted for 3.2% of TV and fixed internet subscriptions, 2.4% of fixed voice, and 1.9% of mobile services. That compares to market leader MEO's 40.7% share of the fixed market and 40.3% of mobile subscribers.

Figure 1: Vodafone's planned acquisition of Nowo will not dramatically change its market position initially, but questions over 5G licenses and new market entrants remain.
(Source: l_martinez/Alamy Stock Photo)

Previously called Cabovisã, the former cable operator rebranded as Nowo in 2016.

It set out its aim to "break the status quo" in a "saturated" market dominated by packages in which "nobody can choose what they want and where all pay for unwanted services," Advanced Television reported the company saying at the time. Nowo also launched a mobile virtual network operator (MVNO) service using the MEO network.

Then in 2019, Nowo was snapped up by a consortium of MásMóvil Ibercom SA and Gaea Inversion Scr SA. The consortium acquired holding company Cabonitel, which controls Nowo and ONITELECOM – Infocomunicações SA (ONI).

Although Nowo hasn't perhaps quite reached the goals it aspired to in 2016, it has been steadily building up a market presence.

It even took part in Portugal's tortuous, 200-day long auction of 5G-enabling spectrum in October 2021, investing almost €70.22 million (US$69.2 million) and gaining two of the three 1800MHz lots sold in an exclusive phase for new entrants as well as 2.1GHz and 3.6GHz frequencies.

Mobile market gains

A new chapter could be about to start for both Nowo and Vodafone Portugal, which has struggled to compete with its rivals in the areas of TV, fixed telephony and broadband.

Vodafone has just entered into an agreement with MásMóvil shareholder Llorca JVCO to acquire Nowo's holding company Cabonitel. Financial details have not been disclosed, although Spanish newspaper Expansion reported that the transaction is worth about €150 million.

The deal, which is expected to close in the first half of 2023, aligns with Vodafone Group CEO Nick Read's plan to bolster the group's presence in Italy, Portugal, Spain, and the UK.

Indeed, Vodafone has also just confirmed it is in discussions with CK Hutchison on a possible combination of Vodafone UK and Three UK.

According to Vodafone, Nowo currently has around 250,000 mobile subscriptions and 140,000 fixed access (pay-TV and fixed broadband) accounts.

Its broadband network also covers about one million homes. Mário Vaz, CEO of Vodafone Portugal, commented that the acquisition of Nowo "will allow Vodafone to increase its customer base, as well as its fixed network coverage."

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The sale will also see MásMóvil, Vodafone's nemesis in Spain, exit the Portuguese market.

Indeed, it had already been reported in May that the Spanish group was reconsidering plans to launch a 5G network in Portugal because of unexpected competition from fellow newcomer Dixarobil Telecom, which is owned by Romania's Digi Communications.

The big question for Vodafone is whether or not its planned Nowo transaction will achieve regulatory approval. To be sure, there are a number of issues to be ironed out. For instance, both operators have licenses to operate 5G networks in Portugal, and it's not clear how Anacom would handle that.

Furthermore, the spectrum auction, although an organizational disaster in many ways, did manage to usher in Nowo and Dixarobil as new entrants. Vodafone, one of the three incumbents, is now planning to remove one of the newcomers from the running.

As things stand, and based on Anacom figures for the first half of 2022, it looks like the combined entity would overtake second-placed NOS in the mobile broadband segment, while Vodafone would also reinforce its second-placed ranking in terms of mobile accesses. However, MEO and NOS would continue to dominate the fixed telephony and fixed broadband markets.

Given Nowo's relatively small market shares, it's possible that regulators will be less concerned about a merger with Vodafone. However, the proposed transaction certainly poses some regulatory conundrums that will need to be resolved. More will no doubt be revealed in the months ahead.

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— Anne Morris, contributing editor, special to Light Reading