--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.
Write to Anthony Harrup at anthony.harrup@dowjones.com