Venezuela Approves Sale Of Cellular Co Digitel

CARACAS -(Dow Jones)- Venezuela approved the US$425 million sale of cellular company Digitel and its merger with two other cellular operators into a company with national reach, government regulators said Thursday.

"We approved the acquisition of Digitel and its merger with other companies," said Alvin Lezama, director of telecom regulator Conatel. Telvenco, owned by local businessman Oswaldo Cisneros, will acquire Digitel from Italy's Telecom Italia and will hold a controlling stake in the new venture.

The Digitel deal also includes a fusion with Digicel and Infonet, two regional carriers, that will compliment Digitel's service. The merged firm will service about 1.9 million subscribers and will also offer fixed-lined services nationwide. Cisneros is expected to hold a 66% stake in the new company, while other groups will hold the rest, regulators said.

Conatel officials said Digitel is expected to offer fixed-line services to the equivalent of 15% of its cellular phone subscribers in a matter of three years. Digitel will serve as the third telecom operator and would compete against telecom company Movistar, a company owned by Spain's Telefonica and Movilnet, the cellular unit of CA Nacional Telefonos de Venezuela, or CANTV, the largest phone operator in the Andean country.

The approval of Digitel's sale comes a year after Venezuela's telecommunications regulator blocked a $450 million bid by CANTV to purchase Digitel. At the time the government argued the fusion would restrict competition. On this occasion regulators claim competition would not be strained by the purchase.

-By Raul Gallegos, Dow Jones Newswires; 58 212 564 1339;raul.gallegos@dowjones.com

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Posted to the site on 18th May 2006