UPDATE 2-KPN may launch rights issue after Q1 results

Wed Apr 10, 2013 1:13pm EDT

By Sara Webb

THE HAGUE, April 10 (Reuters) - Dutch telecoms operator KPN , in which Mexican billionaire Carlos Slim's America Movil took nearly 28 percent last year, could launch its 3 billion-euro ($3.9 billion) rights issue soon after publishing quarterly results on April 23, its CEO said on Wednesday.

Eelco Blok said KPN needed to see the market's reaction to its first-quarter results first but might then publish its prospectus for the rights issue.

"It is possible," Blok told Reuters. "But of course we need to see the reaction of the share price to the Q1 results. We have the possibility. You never know what can happen."

Analysts expect the company to report earnings before interest, tax, depreciation and amortisation for the first quarter of 971 million euros, according to Thomson Reuters StarMine SmartEstimates, down from 1.1 billion euros in the same period a year ago.

As expected, shareholders approved KPN's planned capital hike at its annual meeting on Wednesday, giving it until June 30 to launch the rights issue, which is intended to reduce debt.

KPN has already raised 2 billion euros from the sale of hybrid bonds.

Shareholders on Wednesday also voted in favour of the appointment to KPN's supervisory board of two executives from America Movil - Chief Financial Officer Carlos Garcia Moreno and Chief Operating Officer Oscar von Hauske.

But KPN's management came in for sharp criticism from shareholders, both retail and institutional, over the firm's poor performance and the handling of the Mexican giant's tender offer last year.

Moreno told Reuters the Mexican firm and KPN have already discussed ways to work together in areas such as procurement because they share several vendors, and reiterated that America Movil's interest in KPN was strategic.

"We have very long-term objectives," he said: "Europe is going to recover."

America Movil is sitting on a substantial paper loss on its investment in KPN as the shares which it bought in its tender offer at 8 euros hit a low of 2.5 euros on March 1. On Wednesday the share price closed up 5.25 percent at 2.8 euros.

America Movil's share price has also been hard hit, and Garcia Moreno told Reuters the company had a policy of buying back shares in response to declines in the price.

But asked whether the group would consider selling assets in response to new telecoms rules in Mexico, he said it was "too early" to comment.

Mexico's President Enrique Pena Nieto, who took office in December, has said he wants to increase competition in the telecoms market and has presented a plan for sweeping reforms which has been backed by Mexico's lower house and is now before the Senate.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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