ANALYSIS: América Móvil targets Telekom Austria takeover

As América Móvil prepares to make a formal bid to acquire KPN following a failed offer in August, there are suggestions it has already targeted a full takeover of Telekom Austria.

Capacity has learnt that Telekom Austria is next on América Móvil’s checklist, if it finally manages to secure a deal to take over its Dutch partner.

América Móvil – owned by Carlos Slim – already owns approximately 30% of KPN and 23% of Telekom Austria, and has publicly embarked on a bid to take full ownership of the Dutch company.

The touted deal has been met with fierce opposition from KPN’s management over price, with the offer, valued at approximately $11 billion, deemed as too low.

A foundation tasked with protecting the interests of KPN shareholders also moved to block the bid at the end of August.

Since then, América Móvil said it had been in “constructive dialogue” with KPN.

A deal to acquire Telekom Austria is increasingly likely if América Móvil wins over KPN, according to Wally Swain, SVP at Yankee Group’s network research team, because the Mexican powerhouse does not work well with partners.

Unwilling partner
“América Móvil is attracted to a full takeover of KPN and eventually Telekom Austria, because ‘plays well with others’ is not something it gets high marks for on its report card,” said Swain.

Swain said the company has had a “take it or leave it” approach in its pursuit of KPN, because it has the financial clout to make the acquisition and operate in international markets without the help of a local player.

“It views partners as a necessary evil in two circumstances. One needs their money and one needs to fulfil some local political requirement,” Swain said. “They believe partners prevent América Móvil’s management from running the company the way they want to, which puts pressure on the company for dividends.”

The company has pledged to KPN shareholders that it will invest substantially to improve its network infrastructure if it makes the full acquisition.

If Slim gets his way and takes ownership of both KPN and Telekom Austria, Swain predicts he will look to Europe-hungry AT to establish an enterprise partnership.

“After years of trying, América Móvil realises it does not ‘do’ enterprise,” said Swain. “That’s why AT&T is the company’s enterprise partner in LA and will be in Europe. Both companies are trying to enter Europe and some would say they are both arrogant incumbents, used to getting their own way.”

Capacity contacted América Móvil for comment, but it had not responded by the time of going to press.