América Móvil secures 27.7% stake in KPN, plans long-term partnership

KPN shareholders rush to accept América Móvil offer
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América Móvil has vowed to be a long-term partner for KPN after achieving its stated goal of acquiring a 27.7 per cent stake in the Dutch-based operator.

América Móvil said that it would limit its stake to its present holding after being offered nearly 40 per cent of KPN shares by disaffected shareholders when the bidding period closed last Wednesday.

Commenting on the deal, Bernstein Research said that América Móvil's interest in KPN appeared to be for diversification out of Mexico through a cheap distressed asset. However, analysts at the firm added that the professed long term-view indicated a "swingeing" dividend cut given the failure by KPN to sell assets so far and the desire expressed by América Móvil to retain units in Belgium and Germany.

The Dutch government has also indicated its interest in meeting with América Móvil to emphasise the "significance of KPN for the Netherlands," according to the Financial Times. KPN remains legally bound to provide affordable telephone and internet connections to every household in the Netherlands since it is a former state-owned monopoly.

Having seen KPN CEO Eelco Blok fly to Mexico to meet with the company's new largest shareholder, analysts commented that they didn't expect him to exit the telecoms operator given his reputation of knowing every detail of the company.

Jos Versteeg, analyst at Dutch private bank Theodoor Gilissen, told Reuters: "He [Blok] is a bit stubborn, that's the impression he makes. He won't find it in KPN's interest to leave. He'll probably think: 'I'll be the one to help KPN turn around'."

While América Móvil has indicated that it does not plan on making further European investments, Martin Lara, an analyst at the Mexican financial service firm Actinver, told Bloomberg the company would look to consolidate its existing European acquisitions. "They want to learn the market now that they have coverage in various countries through these companies," he said.

This viewpoint was reinforced by Versteeg, who said that  América Móvil owner Carlos Slim wanted to build a big European network. "They've bought a stake in Telekom Austria and they want to expand it gradually," he told Reuters. "They want to do what Vodafone is doing, getting a global network."

For more:
- see this Financial Times article (sub. req.)
- see this Reuters article
- see this Bloomberg article

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