Telefonica nears deal for KPN as sweetens offer

TELEFONICA has raised its bid for KPN’s German arm by six per cent to €8.55bn (£7.32bn), winning over top KPN investor America Movil and setting the stage for consolidation in Europe’s largest mobile market.

The Spanish telecoms group’s original deal to buy KPN’s E-Plus unit was thrown into doubt earlier this month when Mexican billionaire Carlos Slim’s America Movil said it would launch a bid for the shares in KPN it does not already own.

America Movil, which owns almost 30 per cent of KPN, said yesterday it backed Telefonica’s new offer for E-Plus and would press ahead with its plan to buy the rest of the Dutch firm.

The agreement moves Telefonica closer to its goal of stepping up its challenge in Germany to market leaders Deutsche Telekom and Vodafone.

It also offers a better deal for America Movil, Telefonica’s arch-rival in Latin America, which on paper has racked up huge losses on its European investments since buying minority stakes in KPN and Telekom Austria.

KPN will receive €5bn in cash for E-Plus and get a bigger stake in Telefonica’s German business of 20.5 per cent, compared with the 17.6 per cent previously offered.

BPI analyst Pedro Oliveira said the deal showed Carlos Slim and Telefonica boss Cesar Alierta could overcome their differences. “Their business sense is becoming stronger than the rivalry between Telefonica and America Movil,” he said.

Telefonica still needs to win support from antitrust regulators for a deal that will reduce the number of players from four to three in a market with 112m subscribers.