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Venezuela: Regulators to study CANTV purchase of Digitel Print E-mail
Wednesday, 10 November 2004

According to a Reuters report, Venezuela’s telecommunications regulator Conatel said it was worried that CANTV’s plans to purchase TIM-owned mobile operator Digitel could create unfair competition.

CANTV, whose main shareholder is Verizon Communications, recently announced it had signed a letter of intent to buy Digitel, the Venezuelan unit of TIM for US$ 450 million. Conatel and the anti-monopoly agency ProCompetencia said they would study the proposed deal.

 

"We have to seriously look at the fact that one competitor will be leaving the market, absorbed by another bigger competitor," ProCompetencia superintendent Jorge Szeplaki told Reuters. "As far as the competition situation is concerned, a red alarm light has come on."

 

Alvin Lezama, a director at Conatel, says they are studying the impact of the proposed purchase of Digitel on CANTV's dominant market position and how it might affect existing competition between the two in rural areas.

 

"Our policy has been to promote competition to provide telecommunications services and this proposal seems to be giving the opposite kind of signal," he said.

 

CANTV, privatised in 1991, leads the fixed-line and Internet access market in Venezuela with over 2.9 million lines and 325,000 Internet subscribers. It is also the country's second largest mobile operator through Movilnet, which has over 2.7 million subscribers. Digitel, with 1.2 million subscribers, is the third largest mobile operator and also provides rural phone networks.

 

TIM said it decided to sell Digitel because it only possessed a license to operate regionally in Venezuela instead of a nationwide license.

 

ProCompetencia's Szeplaki said CANTV told him they want to buy Digitel to help deal with tougher competition from Spain's Telefonica, which is entering Venezuela's mobile market.

 

After obtaining approval from Venezuelan regulators last month, Telefonica, through its Telefonica Moviles subsidiary, is proceeding to take over local BellSouth unit Telcel, part of a Latin America-wide deal. Telcel is Venezuela's top mobile operator with about 45% of the market.

 

CANTV was not contemplating a merger of Movilnet, which uses CDMA technology, and Digitel, which uses GSM, the regulators said.

 

Intelecon Research & Consultancy Ltd. 10/11/2004