Digitel Plans US$80mn Expansion Projects

Monday, February 21, 2000

enezuelan mobile and rural telephony operator Digitel Venezuela plans to invest up to US$80mn this year as part of its US$610mn investment plan through 2008, Digitel president Olli Rissanen told BNamericas.com.

Digitel will spend US$40mn to expand current services in its rural concession area and Caracas, and another US$40mn to expand its network to fellow central region cities Maracay and Valencia.

Finland's Nokia (NYSE: NOK) will provide the technology for the Caracas expansion, adding to last year's US$220mn vendor financing agreement for initial buildout, while Germany's Siemens will provide hardware for Maracay and Valencia.

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Since starting commercial rural operations in August 1999 and commercial mobile operations in October 1999, Digitel has amassed 20,000 clients and expects to attain 150,000 by year-end.

Rissanen dismissed international press reports that Spanish integrated telecom company Airtel plans to acquire a stake in Digitel, adding that several telecom companies had approached his company with similar proposals.

To finance its 10-year investment plan, Digitel will depend mainly on its current shareholders and further vendor financing deals, rather than actively seek a new partner, he said.

Rissanen was pleased by the recent pricing agreement between Venezuela's telecom regulator Conatel and incumbent operator Cantv (NYSE: VNT), saying that it was "concrete, detailed and fair for both parties."

He was unable to specify how Digitel would react to deregulation of the industry when Cantv's monopoly ends in November, because President Hugo Chavez has yet to approve a bill that would determine any operator's right to exploit different sectors. However, he did say that Digitel is well placed to take advantage of its existing infrastructure and there are various sectors that might interest the company.