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Venezuela Digitel Buyer Plans Fusion With Cell Cos

CARACAS -(Dow Jones)- A Venezuelan firm that has offered to purchase cellular company Digitel also plans a merger with two cellular operators to create a company with national reach.

Telvenco, owned by local businessman Oswaldo Cisneros, has reached an agreement to purchase Digitel from Italy's Telecom Italia for $425 million.

The deal also includes a fusion with Digicel and Infonet, two regional carriers that would complement Digitel's service, Telvenco said in a statement Friday.

The merger would create a company with approximately 1.8 million subscribers, the only carrier to offer GSM technology nationwide.

"The deal still needs approval from the authorities and Cisneros will lead it," said Victor Hill, the top shareholder for Digicel. He declined to give details of the merger or if the regional carriers would invest additional capital.

Cisneros has kept regulators informed about the process for six months, said a person who works closely with the business leader.

The source said Cisneros would hold a stake larger than 80% in the new consolidated company.

Digitel would serve as the third wireless network operator competing against Movistar, a company owned by Spain's Telefonica, and Movilnet, the cellular unit of CANTV, the largest phone operator in the Andean country.

New York-based Athelera advised Telvenco on the acquisition, and J.P. Morgan provided financing for the transaction, according to the release.

Digitel's planned sale comes almost a year after Venezuela's telecommunications regulator Conatel blocked a similar $450 million bid by CANTV to purchase Digitel.

At the time, the government argued that the fusion would essentially create a duopoly, with two large companies dominating the sector.


(END) Dow Jones Newswires