America Movil is looking to increase the scale of its European operations

Latin-American operator group America Movil has tendered a bid to take its stake in Dutch fixed-line and mobile operator KPN from 4.8 per cent to 28 per cent, as it aims to expand its geographic reach.

The firm, bankrolled by billionaire Carlos Slim, is currently the third largest operator group in the world, in terms of subscriptions, according to Informa’s World Cellular Information Service (WCIS). The firm has over 220 million subscribers in the Americas, with a further 20 million in the US, and the move signals the group’s intentions to increase the scale of its operations in Europe.

According to Dario Talmesio, principal analyst at Informa Telecoms and Media, the move is symptomatic of a difficult landscape facing telcos in Europe.

“It’s quite obvious we are in a very uncertain situation in Europe, in terms of stability and economic prospects in the region,” he said. “In addition, the regulator environment is hostile to European telcos – we have a fragmented and very crowded market place and we do not have an industrial policy that is favouring European companies. This results in the weakening of European telcos at home, which makes them quite an easy acquisition target.”

He added that the research firm is seeing the balance of power shifting away from established European telcos in favour of firms from emerging markets. Vimpelcom, founded in Russia, recently acquired Italian assets, Egypt’s telecoms magnate Naguib Sawiris recently acquired Austrian assets, Hong Kong’s Hutchison Whampoa is bidding for Eircom in Ireland and Orange in Austria, and now America Movil is eyeing a stake in Netherlands, Germany and Belgium by increasing its stake in KPN.

Daniele Tricarico, senior analyst for the LatAm region at Informa, explained that America Movil has typically targeted companies that have been struggling in the region, most notably operator BSE in Brazil from US telco BellSouth, which it used to launch its Claro brand, now the biggest mobile operator brand in the region. He warned that the operator’s expansion often leads to job cuts.

“When America Movil has acquired operations in the past, headcount was one of the things that was affected immediately. America Movil is known in Latin America for being very efficient in terms of headcount, it has quite a small number of people working for it, compared to the likes of Telefonica,” said Tricarico.

He added that although America Movil has been purely a Latin American player until now, with exception of its TracFone MVNO in the US, this move is not entirely a surprise as the operator participated in a tender process for Telecoms Serbia in December last year.

Tricarico also said that increasing the scope of its business in Europe would also improve innovation within the business, and explained that Latin America is a prepaid-dominated market and it could benefit from a moving into Europe would help create more postpaid users.

“America Movil has been struggling to increase the value of its customers and this acquisition is motivated by bringing innovation and knowledge from a European operator such as KPN. It could also improve their financial figures, as EBITDA margins are lower in Latin America due to this focus on prepaid,” said Tricarico.


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