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PORTUGAL: An Introduction to TMT

Chambers Practice Area Overview 2019 – TMT 

Introduction 

Portugal enters 2019 with the ambition to continue its pace of growth and economic upturn. After years of a traumatic financial crisis, the Portuguese economy is showing consistent signs of strength that is fuelling confidence among companies and citizens. In 2018, the tourism sector in particular continued to thrive, playing a key role in fostering the growth of other industries, such as construction and services. The minimum wage was recently increased and pension cuts have gradually been rolled back. Not all is good news, however: the Portuguese banking system is still showing signs of fragility, public debt has reached new historical highs, and the pace of growth of the economy is decreasing. It is not clear whether the Portuguese economy will be sufficiently robust and adaptable to face any new international financial crisis.

M&A 

In 2018, although the proposed acquisition of Media Capital did not go forward (largely due to serious concerns raised by the Portuguese Competition Authority), Altice, the multinational telecoms company, remained very active in the Portuguese market. Indeed, in September 2018 Altice announced the closing of the highly-disputed sale of a 75% stake in a newly formed tower company, Towers of Portugal, to a consortium including Morgan Stanley Infrastructure Partners and Horizon Equity Partners. Towers of Portugal comprised nearly 3000 cell sites formerly operated by Altice’s Portuguese subsidiary MEO.

In 2019, Altice may well continue to shake things up in the domestic market, considering the recent announcement of the intention to sell 49.99% of its optical fibre business in Portugal.

Start-ups 

Portugal continues to enjoy the spotlight at the centre of a veritable start-up “gold rush”, which is increasingly vibrant in the tech sector. The number of incubators, accelerators, consultants and freelance contractors continues to increase to cater to the exponential growth in start-up companies based in Portugal. Lisbon is the “capital” of the entrepreneurial ecosystem, although Oporto and Braga are also key driving forces. The Portuguese Government and the Web Summit, one of the world’s largest and most influential tech events, announced a new 10-year deal, which means that the event will remain in Lisbon at least until 2028. The 2018 edition was again a huge success, keeping the excitement that started in 2016 alive and well, and reinforcing Lisbon’s position as one of the most vibrant tech hubs in Europe.

Data Protection 

The main legal topic in the TMT arena, however, continues to be privacy and personal data. As the General Data Protection Regulation (GDPR) has been in force since 25 May 2018, companies and public sector entities invested significant resources in 2018 in order to adapt their businesses and activities to the stringent new legal framework.

Training, gap analysis and general consulting with a view to helping companies prepare for the rules contained in the GDPR took up a large part of TMT lawyers’ time in 2018 and will continue to do so during 2019. The general level of maturity of organisations with regard to privacy continues to be low in Portugal; there remains an enormous amount of work to be done in order to ensure the new rules will be complied with. At the same time, the legislative act which will adapt certain rules of the GDPR to the Portuguese legal system is still to be approved by the Portuguese Parliament. Many public sector organisations are clearly waiting for this act to be published before initiating their projects, which means preparation within the public sector is very late indeed.

2019 may, however, reveal new concerns for companies and public sector organisations, considering the fact that the CNPD (the Portuguese data protection authority) has already started imposing fines for GDPR breaches.

AI 

Artificial intelligence and robotics and the associated legal issues these technologies raise continue to be the subject of heated discussions at conferences and seminars. The number of technology companies announcing the use of AI seems to be growing exponentially. A few law firms are also getting into the game, with projects which deploy artificial intelligence and machine learning enabled technologies for use by the law firm and in the context of the provision of legal services; it will be interesting to see how this trend develops, especially if it leads to fundamental changes in law firms’ business models.

In line with the European approach to AI and robotics, the Portuguese Government has recently announced the creation of a dedicated working group on autonomous vehicles.

Blockchain 

While this technology is leaving its infancy, an increasing number of companies are seeking to understand how their businesses may be impacted by distributed ledger technologies. The so-called “second generation” of blockchain, based on Ethereum and smart contracts, has rapidly shifted attention from cryptocurrencies and ICOs to the underlying technology, unleashing an enormous potential for value creation.

While the legal framework in Portugal is still to be adapted to this new decentralised economy, it is expected that several multi-jurisdictional projects created by companies established in Portugal will be launched in 2019. Without a doubt, this is a great challenge but also a great opportunity for TMT lawyers.

E-health 

The health sector is a particularly burgeoning area for TMT lawyers. With healthcare budgets under enormous pressure and an increasing desire for patients to be more in control of their own treatment, more and more medical treatments are being delivered electronically, with the use of devices and digital platforms. This covers a variety of methods from mobile apps providing direct medical support or connecting to other medical devices, to patient monitoring devices, personal guidance systems, online symptom checkers and medication reminders. The number of software applications which are classified as medical devices is increasing each year. Data protection remains at the top of the list of concerns.

Digital Transformation 

In most companies, the topics relating to digital transformation continue to be on the agenda, with projects of all sorts of sizes in the works and ensuring the IT sector is busy as usual. Projects such as the acquisition of software, process automation, applications, blockchain integration, migrating data and applications to the cloud, and generally altering the way companies do business will continue to occupy TMT lawyers and provide opportunities for growth for law firm practice areas.

By Daniel Reis (partner)