Latin American operator group America Movil has announced its intention to acquire all outstanding shares in European operator group Telekom Austria.

Dawinderpal Sahota

April 24, 2014

3 Min Read
America Movil bids to take control of Telekom Austria
Altice is keeping busy in the M&A space

Latin American operator group America Movil has announced its intention to acquire all outstanding shares in European operator group Telekom Austria.

If its offer is approved, the Mexico-based group has  agreed to vote in favour of a €1bn capital increase in Telekom Austria. And if America Movil’s offer gains regulatory approval, the LatAm group said it will also take on operational responsibilities for Telekom Austria.

In January, America Movil increased its stake in the Austrian telco by 3.14 per cent through its wholly-owned subsidiary Carso Telecom. America Movil already directly held 7.94 million shares in Telekom Austria, and indirectly, through Carso Telecom, it held a further 96.96 million shares, equating to a 21.9 per cent stake in the firm. Currently, America Movil currently holds a 26.81 per cent in the Austrian group.

America Movil has now offered €7.15 per share in Telekom Austria but is only eyeing shares not already held by America Movil, Carso Telecom, Telekom Austria or the Austrian government’s holding company the Österreichische Industrieholding AG (ÖIAG).

Telekom Austria confirmed that the ÖIAG supervisory board has approved and signed a syndicate agreement with Carso Telecom. The agreement guarantees that the ÖIAG will still hold at least a 25 per cent stake in the firm. The operator explained that for a shareholder to reach above the 30 per cent share threshold, Austrian competition law dictates that the shareholder it must make a mandatory offer to acquire the stakes of all other shareholders. The Austrian Takeover Commission must then determine whether the offer is valid and America Movil’s official public offer will be made in the weeks to come.

The syndicate agreement also ensures that Telekom Austria will continue to be headquartered in Vienna and that the firm intends to extend its footprint in Eastern Europe. However, no details have yet been divulged around how the €1bn capital increase will be funded.

“We are very pleased about the clear commitment of both core shareholders to Telekom Austria Group, which they have sealed with today’s agreement,” said Hannes Ametsreiter, CEO Telekom Austria Group.

“First and foremost this means continuity as both shareholders have agreed on a long-term cooperation. At the same time this opens a new chapter in our company’s history, which we will shape together with our shareholders with great enthusiasm.”

Steven Hartley, leader of Ovum’s Industry, Communications & Broadband Practice, believes that America Movil’s expertise will benefit Telekom Austria following the disruption caused by Three’s entry into the market. The challenger operator has a very strong network in Austria and has able to undercut competitors on pricing.

“I think the biggest benefit America Movil can bring to Telekom Austria is the operational outlook,” he said. “It is used to working in markets with lower ARPU. However can it bring in scale benefits around its equipment purchases or creativity around system purchases and outsourcing in an Austrian market that has frankly been hammered for the past few years.”

The Latin American group’s gradual increase in ownership of Telekom Austria led to the European group parting ways with group CFO Hans Tschuden. A source at the operator told that Tschuden’s departure was fuelled by a conflict with the board members representing Telekom Austria’s Works Council and mentioned that a key topic of discontent was America Movil.

Telekom Austria currently operates in Austria, Belarus, Bulgaria, Croatia, Serbia, Macedonia, Liechtenstein and Slovenia. The operator group said it has around 2.6 million fixed line subscribers, 20.1 million wireless subscribers and revenues of €4.18bn, as of December 31st 2013.

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