The Arise of DIGI in the Portuguese Market: Game-Changer or Empty Promise?

In recent days, we have been flooded with news regarding the telecommunications market in Portugal, as our new competitor has arrived and promises to shake up the competition in the market: DIGI. But where does DIGI come from and why has this caused so much debate?

Firstly, DIGI is a telecommunications company with roots in Romania that operates mainly in Europe, offering services at very cheap prices. It arrived on the Portuguese market on November 4th and has already ?promised? to disrupt all the competition, in both prices and conditions offered: extremely low-cost (not even indexed to inflation), “try before you buy” and lack of loyalty launch showcase with low-barrier customer contract commitments. All of this has already resulted in an investment of 400 million euros in our country.

As expected, DIGI’s arrival in Portugal generated very high expectations among consumers. As a result, the main competitors (Nos, Meo and Vodafone) have not had easy days. The CEO of NOS has already given in to pressure and is trying to create fear among national consumers, saying that DIGI will only create a "false illusion of benefit for the consumer”. But this is precisely Digi's strategy: to achieve prices in Portugal that are similar to the markets in Italy, Spain and Romania, where it is already present. For example, DIGI offers 1Gbps fiber with TV and a 50GB mobile line for just €26, while similar bundles from competitors typically start above €60.

In light of this, one of the competitors' strategies has already been to reinforce their "low cost" brands, as Vodafone already put into practice, to guarantee they can survive in the market.

Nevertheless, there is a certain reason on Digi's part when it comes to telecommunications prices in Portugal: according to the study of International Price Comparisons, published by the Finnish company Rewheel, mobile Internet in Portugal is the second highest of the European Union. This raises concerns about why is it that way and how can the scenario turn over. Concerned about price divergences between Portugal and Europe, Jo?o Cadete de Matos, the previous President of National Communications Authority believes this greater competitiveness could lower prices: “I think [2024] will be the last year in which companies, without listening to anything or anyone, without listening to the regulator, without listening to consumers, decide to continue deepening this price divergence”.

Therefore, it is still a big unknown on what impact this company will have on the market, both on the supply and demand sides. The truth, however, is that not everything is a bed of roses and DIGI has suffered strong criticism not only from competitors, but from consumers themselves when it comes to slow internet, installation failures, non-functional mobile cards and non-existent customer support.

To conclude, the “shocking” strategy of this new operator, which does not collude with the current “cartel” that keeps us away from the lower prices practiced in neighboring countries, could bring dark days for Portuguese operators. However, this day had been predicted for a long time, which ends up testing the loyalty that national consumers have towards their telecommunications operators. And, after so many years of being one of the consumers in Europe who pay the most for these services, the Portuguese probably want to show their dissatisfaction. We are simply facing a typical economic dilemma: consumers who want to see their prices fall and producers who want to maximize their profits. Who wins? Only time can answer.