America Movil Extends European Push
06/15/2012| 08:16am US/Eastern
Mexican billionaire Carlos Slim on Friday bought a 21% stake in Telekom Austria AG, hard on the heels of his 2.6 billion euro ($3.28 billion) bid for a 27.7% stake in Dutch phone company Royal KPN NV, showing his push into Europe isn't confined to one region.
Mr. Slim's America Movil SAB, Latin America's largest wireless service provider, already holds a 1.7% piece in Telekom Austria and made a deal with investor Ronny Pecik to buy his 21% stake. The deal makes American Movil the second-largest shareholder after Austrian state holding company Osterreichische IndustrieHolding AG, which holds 28.42%.
America Movil has 246 million mobile subscribers in 18 countries. Its expansion within the Americas has given it stable profits and cash flow and it is looking to widen its footprint further, including into Europe where telecommunication assets have fallen in value.
The company last month officially launched its EUR8 a share cash offer for KPN, which the Dutch company has rejected as too low. As part of its defense against the offer, KPN has said it will review its strategic options for E-Plus, Germany third largest mobile operator, which analysts reckon could be worth up to EUR10 billion.
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The offer for KPN would give America Movil a significant stake in a company with a "relevant position in European markets," the company has said, giving Mr. Slim a valuable insight into the regional market as a whole.
Austria Telekom is Austria's largest telecommunications company and for Mr. Slim opens the door to Eastern Europe, where it has operations in Belarus, Croatia, Slovenia and Serbia.
"It is part of [our] geographic diversification strategy and provides an attractive presence in Central and Eastern Europe," America Movil said.
Financial details of the latest transaction weren't given, but at Thursday's closing price of EUR8.03 a share, a 21% stake would be worth about EUR747 million.
America Movil said it wants to be a long-term strategic partner of Telekom Austria, and Telekom Austria's Chief Executive Hannes Ametsreiter said America Movil's substantial holding is a positive step for the company.
"As a strategic and long-term investor, the company with its know-how and knowledge of the industry will contribute to our company's economic success," he said.
The 21% stake acquisition by America Movil will give Telekom Austria a more solid financial position as Mr. Pecik's stake in the company is largely debt-funded, wrote JPMorgan analysts in a note, adding that America Movil also brings technical know-how. The deal also supports the view that Mr. Slim aims to expand his presence in Europe.
America Movil will buy a 5% stake immediately, with the remaining 16% subject to regulatory approval.
At 1425 GMT, Telekom Austria's shares were up 1.7% at EUR8.17.
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