Feature Article

July 29, 2013

More Change for America Movil, KPN in Europe?

The chess pieces are starting to move in the European mobile market, in the wake of Telefonica’s move to buy E-Plus and vault itself up into the top ranks of the German mobile market.

America Movil sees Telefonica as a primary competitor in American Movil’s core Latin American markets, and America Movil also has an investment of 29.8 percent in KPN, which owns E-Plus and wants to sell that asset to Telefonica.

Up to this point, America Movil has had an agreement limiting its stake in KPN to 30 percent. In the wake of the Telefonica move, America Movil says it is not going to abide by that agreement in the future.

That means America Movil is free to acquire a bigger stake in KPN, both for the larger reason of pursuing a bigger stake as a way of diversifying outside Latin America, and for the tactical reason of trying to break up the Telefonica move by reversing the decision to sell the E-Plus stake.

But America Movil also could sell its minority stake, once the E-Plus deal is consummated, others might argue. The thinking there is that the cost of acquiring all of KPN would be too costly, and also that E-Plus originally was envisioned as a key attraction of the KPN investment in the first place, as a way of gaining entry into the German market.

In that sense, what America Movil wanted in the first place was entry into the German market, not the Netherlands as such. If E-Plus is sold, America Movil will have to rethink its ability to enter the German market, and possibly its investment in KPN as well.

It is not at all clear the two America Movil members of KPN will vote to support the E-Plus sale, either. "We will evaluate the terms and conditions of the transaction," Daniel Hajj told analysts in a conference call to discuss America Movil's second-quarter results.

Should América Móvil want to block the sale of E-Plus in Germany to Telefónica, acquiring a majority in KPN may be its only option, though.

Edited by Rich Steeves

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