The Autoridade da Concorrência (AdC) has blocked Vodafone's proposed deal to acquire Cabonitel, owner of mobile and fixed operator Nowo.

Following an in-depth investigation, Portuguese regulator AdC said that a deal would hurt competition and harm consumers.

"AdC decided not to authorize the transaction as it considered that the concentration operation is likely to create significant barriers to effective competition in the identified relevant markets, harming consumers," said the AdC in a statement.

Vodafone Group, estimated to have around five million mobile customers in Portugal, agreed on a deal to acquire Spanish operator MasMovil's Portuguese unit Nowo in October 2022.

At the time, the telco said it expected the deal to be completed in the first half of 2023.

Nowo is Portugal's fourth biggest operator and has 250,000 mobile phone customers plus 140,000 fixed telecom services clients,

AdC said that its investigation determined that a merger would remove the availability of a challenger telco, Nowo in this case, which offers lower prices than its competition.

"In terms of coordinated effects, it was concluded that the merger transaction would be likely to result in an increase in the likelihood, sustainability, and degree of coordination of behavior on the part of the three main market operators – MEO, NOS, and Vodafone," said the regulator. 

"This conclusion was reached, on the one hand, by the similarity of the offers of the three main market operators and, on the other hand, by the fact that the merger would result in the elimination of the only operator – Nowo – which offers differentiated and at lower prices than the others."

It argued that a decision to approve the merger would make it difficult for future entrants into the country's mobile market.