KPN and America Movil, which holds 29.8 percent stake in the Dutch operator, have announced a partnership agreement for and indefinite period. The agreement contains several important elements:
- America Movil has agreed to subscribe to its pro rata share of KPN's planned capital increase, which shareholders will vote on 10 April. KPN plans to issue EUR 3 billion in new shares to existing shareholders as will as raise EUR 1 billion in an issue of hybrid securities, such as convertible bonds.
- America Movil will receive two seats on KPN's supervisory board.
- The two companies will set up working groups to advise on operational and financial issues.The partners will target cost savings through joint procurement and agreements on international traffic, both in mobile roaming and fixed transit.
KPN's deteriorating profitability of course also plays a role. KPN is showing some early signs of recovery on the Dutch broadband market, but this is far from a confirmed trend. Furthermore, the last quarterly results showed that not only is the Dutch mobile market difficult, Germany is also becoming problematic.
In the end the questions remains what are America Movil/Carlos Slim's exact plans for KPN and Telekom Austria (in which it also has a significant stake). KPN recently chose a long-term strategy requiring significant investments in networks (FTTH, LTE, WiFi), but what does Slim think of this? How much power will he have in practice under the new agreement? And what does he plan for Germany? While KPN is making its decisions, the uncertainty for investors is increasing as it is still unclear what America Movil's intentions are.
