América Móvil increases presence in Europe with Telekom Austria purchase

Latin American operator group América Móvil is increasing its presence in Europe by acquiring a 21 per cent stake in Telekom Austria. The purchase comes in the same week that the operator increased its stake in Dutch operator KPN.

América Móvil already held a 1.7 per cent stake in the Austrian firm. It has now acquired an additional five per cent direct and entered into an agreement with Marathon Zwei Beteiligungs, a subsidiary private trust set up by investor Ronny Pecik for another 16 per cent. This takes the company’s stake in Telekom Austria to approximately 23 per cent in total.

“This acquisition positions América Móvil as a long-term strategic partner of Telekom Austria. It is part of América Móvil geographic diversification strategy and provides an attractive presence in Central and Eastern Europe,” the company said in a statement.

Pecik is expected to continue to serve as vice-chairman of the supervisory board and to support the future development of Telekom Austria.

This week, América Móvil also took its stake in Dutch operator group KPN from 4.8 per cent to 7.3 per cent, after purchasing six million ordinary shares in the company. It had announced its intention to take its stake up to 28 per cent in May, but KPN told its shareholders not to accept the unsolicited $3.25bn bid for shares, which valued each share at €8, claiming that the offer was too low. The deal announced on Monday valued shares at €7.80, however.

This is not the first attempt by an emerging market telco to expand into a mature market; Tata Communications bought Teleglobe and tried but failed to buy Cable & Wireless UK, said Angel Dobardziev, practice leader for emerging markets at Ovum.

“What is interesting about the America Movil move is that it indicates the rising ambition of emerging market telecoms power players to break new ground and use their vast and growing financial firepower to attempt deals that would have been unthinkable just a few years ago,” he said.

He added that he has heard similar ambitious talk from a number of other emerging market telcos, which view the current economic uncertainty in Europe as a great opportunity to buy flagship assets at bargain prices.

“And yes, with growth rates double or treble that of mature markets, and in some cases their appreciating currencies, emerging players’ firepower is only going to get stronger. Hence, we expect this to be just the initial trickle of a growing number of deals where other leading European telcos become the target of emerging market buyers.”