América Móvil's offer for Telekom Austria shares becomes mandatory

The voluntary offer launched by América Móvil in May for shares in Telekom Austria that are not already owned by the Mexican group or its partner, Austrian state holding company ÖIAG, has now become mandatory.

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Hannes Ametsreiter, Telekom Austria CEO

Telekom Austria said on Monday that América Móvil's €7.15 ($9.7) offer per share for the remaining shares was now mandatory after its shareholder agreement with ÖIAG had come into force, giving Carlos Slim's América Móvil control of the company. The mandatory offer expires on July 10 at 17:00 Central European time.

At the time of the voluntary offer in May, América Móvil said it expected the transaction to cost it around €1.4 billion. América Móvil has already spent about $1 billion (€732 million) on building up its stake in Telekom Austria since 2012, Reuters noted previously.

As things stand, América Móvil unit Carso Telecom owns about 25 per cent of Telekom Austria and ÖIAG holds a 28.4 per cent share. América Móvil owns a further 1.79 per cent directly. Around 44.6 per cent is in free float.

In May the Mexican group also said it and ÖIAG have agreed to subscribe to a capital increase of €1 billion that will take place either in the second half of 2014 or the first half of 2015. ÖIAG is to participate in order to maintain at least 25 per cent plus one share in Telekom Austria.

Meanwhile Telekom Austria CEO Hannes Ametsreiter was last week forced to defend his position after the company made a surprise €400 million writedown on its Bulgarian Mobiltel unit. Ametsreiter said he had received no negative comments from shareholder América Móvil that would suggest it was on the verge of abandoning its Austrian investment.

In April América Móvil reached an accord with the Austrian state to increase its control over Telekom Austria and agreed with ÖIAG to pool their respective stakes in the operator under a 10-year agreement. The agreement provides Carso Telecom with the industrial leadership and control of Telekom Austria, while ÖIAG retains certain veto rights as a core shareholder.

While the general reaction at the time was that the Carlos Slim-owned group plans to use the Austrian incumbent as a starting point for his European growth ambitions, there were lingering doubts over the future strategy.

Telekom Austria does have plenty of assets elsewhere, which was part of the attraction for the Mexican group: it owns a mix of fixed and mobile operations in Belarus, Bulgaria, Croatia, Serbia, Macedonia, Liechtenstein and Slovenia. As of December 31, 2013, it had about 2.6 million fixed-line subscribers, 20.1 million wireless subscribers and revenues of €4.1 billion.

Last week the Austrian operator agreed to acquire blizoo, one of Macedonia's largest cable operators, and hailed the move as a new milestone in its convergence strategy.

For more:
- see this Telekom Austria statement

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