Last updated: May 8, 2012 7:33 pm

América Móvil seeks to raise KPN stake

Carlos Slim, the Mexican telecoms billionaire has signalled his intention to expand into Europe with a €3.2bn offer for a stake in KPN, the struggling Dutch telecoms operator.

América Móvil, the company controlled by Mr Slim, has offered €8 a share to increase its stake in KPN from 4.8 per cent to 28 per cent. The offer represents a premium of more than 23 per cent to KPN’s previous closing price.

América Móvil said it would seek to use KPN as a base for expansion in the European mobile market.

“We think it gives us a good vantage point to look at this market in Europe,” said Carlos Garcia Moreno, chief financial officer, adding that the company had run out of room to expand in Latin America.

Mr Garcia Moreno cited “cultural affinities” as a reason to choose Europe rather than Asia, and said KPN’s position in the Netherlands, Germany and Belgium made it a safer bet than companies in peripheral European countries.

Frederic van Daele, an analyst at Kempen & Co, said: “It looks to me like they are trying to buy themselves into relatively good European market positions with decent cash flows at a low price.”

“I think there is something to the idea that they would like to have a minority stake, look over the shoulders of KPN management as to how the market works, learn something from that and maybe later see what they’re going to do.”

Shares in KPN closed up 17 per cent at €7.58. However they have fallen in recent months – a year ago they were trading at over €10 – as the company has faced a series of setbacks.

In December, Dutch competition authorities raided its headquarters in an inquiry into charges of price-fixing with two other mobile carriers, Vodafone and T-Mobile. In February, 2m customers lost email access for days due to a hacking incident. And in April, Eelco Blok, KPN’s chief executive, had to apologise to members of the European Parliament over a discount pricing plan that had been made available only to holders of Dutch passports, which the company ascribed to a programming error.

KPN also faces heavy pressure on earnings due to tough competition, heavy investments in its fibre-optic network and the transition of smartphone users from voice to lower-price data applications.

KPN on Tuesday said that América Móvil’s offer was too low. “KPN is of the opinion that €8 per ordinary KPN share substantially undervalues the company,” it said in a statement. “KPN will seek further clarification as to América Móvil’s intentions.

The América Móvil offer takes effect in June pending approval by the Netherlands’ financial market authority.

América Móvil shares were down 7.8 per cent at 17.2 pesos in early afternoon trading in Mexico, although analysts said that was partly due to profit-taking after a strong run.

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