America Movil has terminated a “relationship agreement” with KPN that will now allow it to increase its stake in the Dutch operator to 30% or more.
The Latin American telecoms giant currently owns just less than 30% of KPN (The Hague, Netherlands) and until now was prohibited from increasing its stake in the operator under the agreement.
According to a clause in that agreement, however, the ownership restriction would cease to apply if KPN or a KPN subsidiary agreed to a takeover offer from another party.
Telefonica’s (Madrid, Spain) recent move for E-Plus, KPN’s German mobile subsidiary, means America Movil (Mexico City, Mexico) is now free to buy up more KPN shares.
“Following the termination of the relationship agreement the standstill has also ended,” said KPN in a statement. “America Movil may now increase its shareholding to 30% or more of the voting rights attached to KPN’s share capital, subject to mandatory offer and other statutory requirements.”
“The two America Movil designees in KPN’s supervisory board will remain in place as long as America Movil holds 20% or more of KPN’s share capital, and at least one designee as long as America Movil holds 10% or more of KPN’s share capital.”
Even so, the very development that allows America Movil to increase its ownership stake could deter the operator – owned by Mexican billionaire Carlos Slim – from doing so.
A presence in Europe’s largest telecoms market is likely to have attracted America Movil to KPN in the first place, and America Movil was reportedly unhappy with KPN’s plans to sell Belgium subsidiary Base – which ultimately came to nothing.
Authorities may also object to a takeover of KPN by a company based outside the EU.
Given the financial pressure it is under, and its steadily weakening position, KPN could well become an acquisition target for a company from the private-equity community, however.
The operator was recently forced to slash dividends after spending far more than planned in a Dutch auction of frequencies for use with 4G services, and it continues to face strong competition in the Netherlands’ broadband market from an array of cable companies and mobile broadband players.