UPDATE 1-Austria-Slim talks on Telekom Austria hit rough patch-paper

Thu Mar 20, 2014 4:39am EDT

(Adds OIAG comment, share price)

VIENNA, March 20 (Reuters) - Talks between Austria and Carlos Slim's America Movil on pooling their stakes in Telekom Austria have hit snags over Austrian insistence on maintaining broad veto rights over some decisions, Kurier newspaper reported on Thursday.

Creating such a syndicate would mean Slim and Austria would have to vote in unison on major issues, protecting Austria's influence even with a smaller stake, while allowing Slim to gain control without risking political hostility.

State holding company OIAG - the biggest shareholder with 28 percent versus nearly 27 percent for Slim - said last week talks had not yet reached the stage of formal negotiations.

Kurier said the talks had turned tougher.

"The situation has escalated dramatically. The syndicate accord is on knife's edge," it quoted unnamed observers as saying.

It said OIAG was insisting on broad veto rights similar to what the state got two decades ago when it entered a similar deal with Abu Dhabi fund IPIC to control energy group OMV . It said the Mexicans had rejected a draft on this.

An OIAG spokesman declined comment other than to say preliminary talks were underway.

Telekom Austria shares eased 0.1 percent to 6.912 euros by 0835 GMT, while the STOXX Europe 600 European telecoms index slipped 0.3 percent. (Reporting by Michael Shields; Editing by David Holmes)

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