BRUSSELS (Reuters) - Dutch telecoms group KPN (KPN.AS) said its largest shareholder, America Movil AMXI.MX, had backed its plan to raise 4 billion euros (3.4 billion pounds) and the two would seek to develop joint cost-cutting initiatives.
KPN said on Wednesday its equity capital increase would consist of a 3-billion-euro rights issue as well as hybrid capital instruments, which were expected to be partly recognised as equity.
America Movil, controlled by Mexican billionaire Carlos Slim, would subscribe for newly issued shares in proportion with its current shareholding in KPN of nearly 28 percent.
KPN said the proceeds would be used to reduce its net debt level and to continue to invest in its operations.
The Dutch company has, along with other telecoms groups, seen earnings dwindle in competitive markets and had to pay more than expected for a fourth generation mobile licence.
KPN said America Movil would designate two people to take places in its 8-person supervisory board at KPN’s annual shareholder meeting on April 10.
KPN said the two would look to develop their relationship further through the formation of joint working groups to advise KPN’s board on operational and financial matters.
The two could cooperate in areas such as joint procurement, international mobile roaming and international transit with the aim of achieving cost savings, KPN said.
Reporting by Philip Blenkinsop; Editing by Mark Potter