Mexican Telecom giant
) has raised its capital interest to 7.9% in a Dutch
telecommunications company, Koninklijke KPN NV. Previously, America
Movil owned a 4.8% stake in Koninklijke KPN. The company bought
8,000,000 ordinary shares off exchange and now holds a total of
112,532,225 ordinary shares in Koninklijke KPN.
In May, America Movil offered to increase its minority stake in
Koninklijke KPN NV (a Dutch telecommunications company) to 28% at
€8.0 per share, for an offer totalling €2.64 billion. However,
Koninklijke KPN rejected this, citing the offer as under valued.
Meanwhile, Koninklijke KPN is looking forward to a spin-off of its
German mobile subsidiary E-Plus allowing potential merger prospects
) German subsidiary O2.
According to market reports, the merger of these two German
units will generate €4 billion in annual synergies making it
attractive for investors. Koninklijke KPN considers this
prospective merger as a significant strategy that would divert
shareholders' attention from America Movil's offer.
The company believes that the merger of E Plus and O2 will also
enhance KPN's share value, and make America Movil's offer less
attractive or push the offer price higher. Currently, shareholders
interest in selling stakes to America Movil outside the regular
market trading lies in a significant threat that would shift the
majority of the decision making power at KPN to Movil.
Acquisition plays a key role in driving growth at America Movil.
Last year, the company acquired Pay-TV firm Net Servicos, the
largest multi-service cable company in Latin America. In January,
the company collaborated with Claxson Interactive Group to acquire
DLA Inc. that adds video-on-demand service on cable-TV channels in
America Movil also entered into a partnership with
) in November last year, to expand its reach in emerging markets in
Asia and the Middle East. America Movil will use AT&T's global
network infrastructure to provide Internet services worldwide. In
exchange, the company will offer virtual private network services
to AT&T's multinational clients operating in Latin America.
Going forward, America Movil's Tracfone plans to acquire Simple
Mobile, upon regulatory approval. Recently, America Movil also
acquired a 4.1% stake in Austria's biggest telecom company Telekom
We expect the company to continue focusing on its acquisition
strategies in order to stay afloat in a highly competitive telecom
market and tap the opportunities in wireless services and pay-TV
We currently maintain a long-term Neutral recommendation on
America Movil. For the short term (1-3 months), the stock has a
Zacks #3 Rank (Hold).
AMER MOVIL-ADR (AMX): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis
To read this article on Zacks.com click here.