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América Móvil targets 23% of Telekom Austria

by Andrew Bulkeley | Published June 15, 2012 at 12:00 PM

Amid efforts to build a significant stake in Dutch Royal KPN NV, Mexican phone company América Móvil SAB de CV late Thursday, June 14, said it had agreements in place to increase its small holding in Vienna's Telekom Austria AG to nearly 23%.

Mexico City-based América Móvil SAB, which is owned by billionaire Carlos Slim, said it would first buy a 5% stake from Austrian financer Ronny Pecik and Egyptian telecom investor Naguib Sawiris and then pick their remaining 16% stake following approval by Austrian authorities.

It gave no price but at the current market valuation but a 21% stake is worth about €756 million ($952.6 million).

"América Móvil expects to develop a constructive relationship with Telekom Austria's stakeholders and is confident about the company's overall potential for development," the company said.

The Mexican company dialed up its first investment in Telekom Austria early this month over the market after launching an unsolicited bid for just under 28% in Dutch Royal KPN NV. América Móvil has already acquired 8% of KPN over the market in keeping with Slim's traditional strategy of exploiting weak economic conditions to buy undervalued companies.

Buying into Europe will also allow him to offset the effects of competition at home, where Spain's Telefónica SA this week teamed up with Grupo Iusacel SA de CV to share network equipment and expansion costs in Mexico. The duo are the second and third Mexican cellular services providers, respectively.

Slim's swift European expansion has added momentum to a consolidation of European providers - and brought him up against at least one familiar rival.

América Móvil's KPN approach has forced the Dutch company to retain Goldman, Sachs & Co. and J.P. Morgan Chase & Co. to consider alternatives. Most expect KPN to announce some sort of deal involving its German E-Plus operation and the German O2 business of Telefónica, which has also announced an initial public offer of its German activities to pay down debt.

But Slim's investment strategy also has him busy in his traditional Latin American markets. Slim, the richest man in the world, this week also gained an 8.4% stake in Argentinian oil company YPF SA, according to an SEC filing. YPF was partially nationalized in April after Argentina decided its former majority owner, Repsol SA, of Spain, wasn't investing adequately in its unit. The YPF stake, which was acquired by investment vehicle Grupo Financiero Inbursa SAB de CV, was reportedly part of a settlement for a default on a syndicated loan.

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