Technology America Movil says to reduce Telekom Austria stake

America Movil says to reduce Telekom Austria stake

The America Movil logo is seen on the wall of the reception area in the company’s corporate offices in Mexico City .

America Movil said on Thursday it would cut its stake in Telekom Austria by 7.8 percentage points to just over 50 percent as a deadline neared for it to reduce its holding and increase the Austrian firm’s free float.

The announcement came shortly after Citigroup said it was launching a bond of up to 400 million euros ($443.8 million) exchangeable into shares of Telekom Austria, which could be a means to the same end, but America Movil’s brief statement made no reference to that bond.

America Movil became the majority owner of Telekom Austria through a billion-dollar takeover offer in July 2014 that marked Mexican tycoon Carlos Slim’s first successful venture into operating in Europe.

When America Movil took control of Telekom Austria, Slim agreed to increase the free float of the former state monopoly within two years.

Under the agreement, America Movil has to increase Telekom Austria’s free float by the end of the year to 20 percent, from around 12 percent currently.

As a result, America Movil is expected to reduce its 59.7 percent stake in Telekom Austria by September this year to fulfil this agreement with Austria’s state holding company, which owns 28.4 percent of Telekom Austria.

America Movil said in a statement that it had agreed to reduce its Telekom holding to 51.89 from 59.7 percent, but the statement did not say how that would happen.

Shares in the Austrian company are currently below the price of 7.15 euros at which America Movil last acquired a stake in 2014.

Telekom Austria shares were trading at 5.15 euros by 1243 GMT, down 3.1 percent, compared with a 0.7 percent fall in the European telecoms sector.

“The exchange price is expected to be set within a range of 40 percent to 45 percent over the reference share price that will be based on the volume weighted average price of the ordinary shares… between launch and pricing,” Citi said.

Reuters calculations based on the current share price and the mid-point of that range suggest that if all exchange options were exercised 8.25 percent of Telekom’s stock would change hands.

Telekom Austria had no immediate comment and America Movil was not immediately available for comment.

America Movil has said it wants to use Telekom Austria as a base for further expansion into central and eastern Europe, where Telekom Austria already has operations in six countries.

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