Telecom Italia Mobile (TIM) sold its Venezuelan branch for US$ 425 million (€ 325 million). Just as it was advanced by  Convergencialatina, a group of Televenco`s stock holders , property of the Venezuelan executive,  Oswaldo Cisneros, purchased 100% of Digitel TIM, the third largest mobile telephone operator in the country.  The amount of the transaction was of US$ 25 million less than the offer presented by Cantv in May 2005. However, Oswaldo Cisneros` holding will also cover Digitel TIM`s debts, estimated in US$ 130 million, taking the transaction up to US$ 555 million. According to what TIM announced, selling its Venezuelan branch will allow it to reduce its financial debt. The only thing missing would be the approval from the Comisión Nacional de Telecomunicaciones (Conatel), the regulating body, with the opinion from the Promoción y Protección del Consumidor (Procompetencia).

Oswaldo Cisneros had 22% of Telcel until Telefónica Móviles (TEM) purchased Bellsouth’s branch. Now, the executive will try to consolidate the three GSM networks in the country and focus on the lower-income population. The strategy is different from Movistar (TEM) that leads the market with 46.2% participation and Movilnet (Cantv) that has 36.4%. Both companies operate CDMA in a market with the highest ARPU throughout Latin America – estimated in US$ 20- in spite of its low rates in products, which makes us suppose very high-traffic levels, reason why both companies chose CDMA to administrate it.

The mobile telephony expansion surpassed the industry’s expectations. Last September it reached 10.4 million lines, with a penetration of 39.1%.

Digitel TIM is the third largest Venezuelan operator, with 1.7 million clients and € 287 million registered at the end of 2005. The company operates the country’s central region, representing 44% of the urban population. As part of its strategy to consolidate the GSM operations in the country, Cisneros may well advance on Digicel and Inonet that have a 2% market participation in the south and eastern part of the country.

Digicel`s purchase on behalf of Cisneros has closed one of the eventual paths for Slim to disembark in Venezuela. América Móvil and Telmex want to gain presence within the Andean region, where the best scenario for mobile telephony appears, with optimistic growth indexes. Digitel, which was on sale since 2004, represented an opportunity for Slim, which now will have to keep on looking for strategies and businesses to enter the Andean region, and in that way, the incumbent Cantv (28% Verizon), which recently announced its hope to associate with the state Colombia Telecom, would become more attractive.