Reports this morning are that America Movil has offered €2.6B in cash for a bigger stake in the Netherlands' KPN. The Latin American mobile giant already owns a 4.8% stake, but if this bid is successful that will rise to 28%. That's just under the 30% that in the Netherlands would oblige them to offer to buy all outstanding shares, meaning it's the most they can buy without actually taking over.
If there's anyone in the world that has a full appreciation of the power of telecommunications incumbency, it's Carlos Slim, who has loomed larger than life over the whole sector in Latin America for decades now. It's not his first try to crack the European telco market in a big way, but with the debt crisis still hanging over valuations this may be his best chance to find the bargain he has been seeking. KPN in particular has been publicly suffering as its cash cows lose ground to IP-based alternatives. Last month they announced plans to cut their workforce by some 5,000, and its hard to find anyone optimistic about their short term prospects.
But just what Slim has in mind must be further out, and the 28% of KPN he wants to buy won't be enough to let him take things over. More than anything, however, this move by Carlos Slim ought to bring home just how low valuations are in Europe right now for telecom and infrastructure assets of all types. Consolidation beckons.