Friday, May 16, 2014

México/Austria: America Movil, Owned by Carlos Slim, Purchases 44.8% Stake in Telekom Austria

According to The Latin American Tribune, Mexican telecommunications giant America Movil, which is owned by Carlos Slim, on Thursday (May 15) presented its offer for the 44.8% stake in Telekom Austria (TA) that it and its partner, Austrian state holding company ÖIAG, do not already own.

In a filing with the Mexican Stock Exchange, America Movil said it has offered 7.15 euros (some $9.80) per share, the same price it announced on April 23 when the shareholder pact was signed with ÖIAG.

The alliance, which requires the two companies to vote in unison on key company issues, created a controlling syndicate with a combined 55.2% stake in TA.

Because their combined stake is higher than 30%, the pact triggered a mandatory takeover offer for the remaining stock held by minority shareholders.

Those shareholders will have between Thursday and July 10, 2014, to tender their stock unless the deadline is extended, America Movil added.

COMMENT: Through ÖIAG, the Austrian government controls 28.4% of Telekom Austria and has veto rights over strategic decisions, while America Movil has a 26.8% interest.
As part of the pact, America Movil and ÖIAG agreed to support a capital increase in TA of 1 billion euros ($1.37 billion).

The Telekom Austria deal was key to Slim’s expansion strategy in Europe after his attempt to take control of Dutch telecoms operator KPN fell through last year.

America Movil is looking to other markets due in part to increased regulatory pressure in Mexico, where it dominates both the fixed-line and wireless sectors.

TA, which has roughly 23 million fixed-line and wireless subscribers in eight countries of central, eastern and southeastern Europe, posted nearly 4.2 billion euros (around $5.8 billion) in revenue in 2013 and had 16,000 employees at the end of last year.

America Movil, the telecommunications services leader in Latin America, had 279 million wireless subscribers and 69 million fixed revenue generating units in the Americas at the close of last year.

As a matter of interest, Mexican billionaire Carlos Slim, who owns America Movil, Slim is poised to double his money after investing $250 million in a 2009 lending agreement with THE NEW YORK TIMES, showing how dearly the newspaper’s owners paid for his help.

Slim, who controls mobile-phone carrier America Movil SAB (AMXL) and is the world’s second-richest person according to data compiled by Bloomberg, already has earned $122 million from his loan to the TIMES, based on an annual interest rate of 14% and a 12% premium charged to the company when its debt to Slim was redeemed in 2011. 

Under the terms of the loan, the Times still owes Slim additional shares worth as much as $141 million based on the Jan. 17 stock price, thanks to options he received to buy shares at what is now a deep discount.

Slim’s loan to the Times gave the publisher time to sell some assets and bolster a digital-subscription strategy to offset slumping ad sales. The agreement with Slim required the parent New York Times Co. to accept terms that effectively reduced a stock market windfall five years later. By selling 15.9 million shares at a fraction of their market value, the company risked giving up more than $100 million it could raise through an offering to the public.