June 28, 2012 / 2:17 PM / 8 years ago

UPDATE 1-KPN chief to meet new Mexican shareholder

(Adds KPN, analyst comment)

AMSTERDAM, June 28 (Reuters) - Eelco Blok, the head of KPN who failed to prevent an effective takeover by America Movil, was in Mexico on Thursday for talks with the Dutch telecom’s new largest shareholder on the company’s, and possibly his own, future.

Mexican billionaire Carlos Slim, who controls America Movil, outflanked KPN’s management to win nearly a quarter of KPN, as he takes advantage of beaten-down valuations to add European companies to his mobile phone empire.

Two weeks ago America Movil boosted its stake in Telekom Austria to 23 percent.

Blok, who took the top job at KPN last year, repeatedly recommended KPN shareholders reject Slim’s 8 euros ($10) per share offer, saying it was too low. But 40 percent of investors wanted to sell their shares - much more than Slim needed to reach his goal of owning 27.7 percent of the company - raising questions over Blok’s future.

“I think there is a lot of doubt on Blok and whether he will make it. But I wonder whether it is right to blame Blok,” said Jos Versteeg, analyst at Dutch private bank Theodoor Gilissen.

Attempts to fend off Slim’s approach by selling KPN’s valuable German business E-Plus and Belgian unit BASE proved fruitless. By Wednesday, America Movil said it had already scooped up nearly a quarter of outstanding shares and would now buy the remaining 2.82 percent.

This will give Slim effective control because no more than half of KPN’s shareholders usually ever appear at company meetings.

America Movil has said it supported KPN’s strategy and management and analysts do not expect Blok, a skilled sailer with a reputation of knowing every detail of the company, to leave.

“He is a bit stubborn. That’s the impression he makes. He won’t find it in KPN’s interest to leave. He’ll probably think: ‘I’ll be the one to help KPN turn around’,” said Versteeg.

KPN shares have fallen to a seven-year low of 6.35 euros since Blok’s appointment. They were trading above that at 7.32 on Thursday.

Blok was to meet America Movil in Mexico city, a spokesman for the Dutch company said on Thursday, declining to provide details.


America Movil wants to get a foothold in Europe by buying assets cheaply as stock markets have suffered from the euro zone’s debt crisis.

“It wants a big European network. They’ve bought a stake in Telekom Austria and they want to expand it gradually. They want to do what Vodafone is doing, getting a global network,” Versteeg said.

America Movil’s chief financial officer, Carlos Garcia Moreno, reiterated last week that the group was seeking a long-term strategic partnership with KPN and Telekom Austria.

“We are a strong partner financially and we are going to be there for the long-term ... We come with an open hand and we want to work shoulder-to-shoulder with the management,” he said.

Moreno said scale was an important factor and something America Movil could offer to KPN and Telekom Austria, at a time when telecom operators are rolling out next-generation 4G networks.

However, Versteeg said KPN may still try to sell its Belgian unit BASE to release cash for investments, and find a partner for E-Plus, the jewel in KPN’s crown that accounts for most of KPN’s customers, and has the highest core profit margin in the group, at 42 percent.

KPN itself failed last week to combine the business with Telefonica’s German operations O2 in a bid to create more value for shareholders and fend off Slim’s bid.

Combining the two German operators could unlock cost savings of up to 4 billion euros, analysts have said.

America Movil was not in takeover talks elsewhere in Europe, the company said last week. ($1 = 0.8028 euros) (Reporting by Gilbert Kreijger, Editing by Anthony Deutsch and Erica Billingham)

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