The Comisión Nacional de Telecomunicaciones (Conatel) has not approved the sale of Digitel yet, Telecom. Italia Mobile (TIM)’s subsidiary, to the Venezuelan businessman Oswaldo Csineros for US$ 425 million. However, the regulating entity would soon grant a favorable resolution  for the  transaction, that made TIM’s withdrawal from the local market official.

Digitel will be controlled by Oswaldo Cisneros, Gustavo Cisneros’ cousin, owner of the holding of the media Grupo Cisneros, through the firm Telvenco. As partners he will have Rajendra Singh, president of Telcom Ventures and majority shareholder of Infonet, and Victor Gill, Digicel’s president. Cisneros’ next step will be to incorporate the operators of Infonet and Digicel to the new Digitel, in exchange of shareholding.

The mobile market –10.4 million lines and a penetration of 39.1% in September 2005- is headed by Movistar (Telefónica Móviles) followed by Movilnet (Cantv), both CDMA operators. They are followed by Digitel (central region), Infonet (western region) and Digitel (southern region), the three GSM operators.

As it was advanced by Cisneros in a press release, Infonet and Digicel’s take over will consolidate Digitel as the third operator of the country, with a base of 1.8 million of GSM customers. The businessman added that “with the acquisition (of Digitel and Infonet) we will strengthen the telecommunications industry in our country, combining the GSM cellular technology quality with an important investment in infrastructure and with a detailed knowledge of the Venezuelan market, we will create an excellent cellular system for our customers throughout the country”.

Oswaldo Cisneros stated that Digitel’s success will be supported in “that the cellular industry is still less penetrated, reason why it offers a growth potential”. On the other hand, Rajendra Singh stated that during the following two years Digitel will invest “important amounts in infrastructure” to integrate and to expand the existing network and to provide coverage in the entire country. According to the executive, the new network will allow the customers to keep a “perfect GSM coverage when they travel around the country and it will assure the Venezuelan traveling abroad the international roaming access”. Digitel’s executives assure that the consumers will acknowledge its service quality and commitment with the country “since it is a company operated and controlled only by Venezuelan”.

It is expected that, during the following hours, Conatel will declare itself in favor of Digitel’s purchase. However, in the case of a merger among the GSM operators, the opinion of the Superintendencia para la Promoción y Protección de la Competencia (Procompetencia) is a requirement in the process, as it happened in May when Cantv wanted to keep Digitel. Sources from the competition defense body assured to Convergecnialatina that Oswaldo Cisneros has not formalized his intention of taking over the other two operators. However, the body would grant its approval because the consolidation of a third player, that will compete at the same level as Movistar and Movilnet, will be positive.

On the other hand, as in Venezuela there is no more spectrum for sale, the situation makes that the possibility that Cisneros’ movements, former shareholder of BellSouth and founder of Telcel-BellSouth in Venezuela lead to a new offer of the GSM pack to the Mexican businessman Carlos Slim, who is also interested in entering the Venezuelan market is not ruled out.