América Móvil free to raise stake in KPN

América Móvil terminated its agreement to limit its stake in KPN, opening the door to the possibility that the firm will raise its stake beyond the 28 per cent it currently owns or even bid for the entire company. 

The move puts KPN's plans to sell its German E-Plus mobile business to Telefónica for €8.1 billion ($10.7 billion) in question.  Analysts are speculating that América Móvil may be considering blocking the deal or launching a takeover of KPN.  According to Dutch law, if América Móvil raises its stake in KPN above 30 per cent, the company will have to bid for all of the company.

The Mexican telecom firm, which is controlled by billionaire Carlos Slim, inked a deal with KPN earlier this year in which it invested €4 billion ($5.31 billion) in capital in the Dutch company for a stake of around 28 percent. As part of the agreement, América Móvil could terminate the deal in the event of a takeover offer for KPN or one of its major shareholders.

América Móvil said in a statement that it ended the agreement with KPN but the company hasn't said whether it plans to raise its holding in the Dutch firm. According to Bloomberg, which cited a note from analysts at Sanford C. Bernstein & Co., to buy KPN outright, América Móvil would need to cancel a share buyback and obtain $4 billion (€3 billion) of debt financing. The analysts speculated that América Móvil could partner with AT&T for a bid.

KPN announced last week that it planned to sell E-Plus to Telefónica Deutschland, in a bid to merge the No. 3 and 4 operators in Germany. However, the deal is expected to run into opposition from regulators unless there are concessions on spectrum and making it easier for MVNOs to get access to its network.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article

Related Articles:
Telefónica gets positive signals over E-Plus deal, reports reduced debt
KPN, Telefónica to merge German units in survival plan, but hurdles lie ahead
KPN rejects América Móvil offer as undervalued, hires strategic advisors
Rumour Mill: Is Mexico's Carlos Slim stalking Telekom Austria? 
KPN hits back at América Móvil offer, unveils new strategy 
Rumour Mill: KPN's Belgian arm moves closer to auction, is E-Plus next?

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