Telecom Italia sells Venezuelan mobile business for USD425 million

20 Jan 2006

Telecom Italia (TI) today announced that it has sold its Venezuelan mobile unit Digitel for USD425 million to Oswaldo Cisneros’ company Telvenco. The Cisneros group is a former shareholder in BellSouth Venezuela (now Movistar, owned by Spain’s Telefónica Móviles). TI said the sale of its wholly owned cellco was part of its strategy of focusing on countries where it has a national licence and where it can exploit the benefits of convergence between fixed line and mobile platforms. It added that the proceeds from the sale would be entirely used to cut debt. Last year, TI sold its mobile business in Peru for EUR407 million.

Digitel launched its GSM network in August 1999 in the central region of Venezuela, before expanding to Caracas in 2001 through the award of infrastructure contracts to Siemens and Nokia. By mid-2005 its network covered the entire central region, including the Distrito Federal, and the states of Miranda, Carabobo, Aragua, Falcón, Yaracuy, Cojedes and Guárico y Vargas – around 15% of the national territory and between 41% and 44% of the population. It had over 1.5 million subscribers at the end of 2005, and earned revenues of some USD347 million for the year.

TI completed the rebranding of Digitel to Digitel TIM in 2004, but soon afterwards rumours emerged that it was in fact looking to exit the market due to the cellco’s lack of a nationwide licence. In November Venezuelan incumbent CANTV signed a letter of intent to acquire Digitel for USD450 million, but the country’s regulator Conatel was worried that the purchase could create unfair competition, and rejected the deal in May 2005.

Venezuela, Digitel, Telecom Italia (TIM)