--America Movil taking minority stakes in two European phone companies
--Lack of mergers-and-acquisitions options in Latin America prompts move into Europe
--America Movil goes carefully as it gets to know new markets
By Anthony Harrup
MEXICO CITY--Mexican telecommunications company America Movil SAB (AMX, AMX.MX) is treading lightly as it pursues geographic diversification in unfamiliar European markets after exhausting options for acquisitions in Latin America, the company's chief financial officer said Friday.
America Movil, controlled by billionaire Carlos Slim, said Friday it has agreed to buy 21% of Telekom Austria AG (TKA.VI) from investor Ronny Pecik, to raise its stake to about 23%. The agreement follows an offer last month to buy up to 28% of Dutch phone company Royal KPN NV (KPN.AE), of which America Movil has so far accumulated 8%.
America Movil Chief Financial Officer Carlos Garcia Moreno said in a telephone interview that the rationale for entering Europe was to continue with geographic diversification, which has given America Movil scale and solid cash-flow generation, even in times of economic turmoil.
The company continues to invest and expand organically in Latin America, but "if we look at mergers and acquisitions in the region, there isn't much more to do, there isn't much more to buy," Mr. Garcia Moreno said. "If we want to continue with M&A, it will have to be elsewhere."
Mr. Garcia Moreno said America Movil felt comfortable taking majority and outright stakes as it expanded in Latin America, but is less familiar with the competitive dynamics and customer preferences in Europe, which is why it's doing it through minority stakes.
While KPN management has opposed America Movil's $3.28 billion offer, saying it undervalues the shares, Telekom Austria's Chief Executive Hannes Ametsreiter welcomed the Mexican carrier as "a strategic and long-term investor," bringing know-how and knowledge of the industry to the European concern.
America Movil is Latin America's largest wireless service provider with 246 million mobile subscribers in 18 countries.
The two offers are similar in that they bring America Movil's size and experience in creating value to their smaller European counterparts, Mr. Garcia Moreno said. "This is what we're bringing to the table."
The company is also determined to maintain its conservative debt ratios to preserve its credit ratings, which are among the highest in the world for the telecommunications sector, and at present isn't looking to enter other regions, the official added.
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