* America Movil says could start formal talks on pact
* Austrian minister says talks could wrap up within weeks
* Telekom Austria shares up 0.7 pct
(Adds comments from Slim biographer)
By Angelika Gruber and Georgina Prodhan
VIENNA, Feb 25 Carlos Slim's America Movil and
the Austrian government are moving towards a deal to pool their
stakes in Telekom Austria, which would lead to a
takeover offer and mark a further step in the Mexican tycoon's
expansion in Europe.
Austria's economy minister said on Tuesday talks about
creating a shareholder pact, which both parties said had been
informal so far, could wrap up within weeks.
American Movil, which faces increased regulation
and competition in Latin America and is looking to expand into a
recovering European economy, said on Monday it could move to
formal talks with Austria.
An alliance would hold 55 percent of Telekom Austria - 28
percent from state holding company OIAG and 27 percent from
America Movil - obliging it to make a takeover offer under
Telekom Austria shares closed up 1.65 percent, valuing the
whole business at more than 3.1 billion euros ($4.3 billion).
The stock earlier touched 7.31 euros, the highest since July
2012, two months after Slim made his first decisive move on the
company by agreeing to buy 21 percent.
Slim's investments in a mature and highly competitive
European telecoms market have surprised analysts and are
currently loss-making, though some think they could be a canny
bet on growth picking up and regulation easing.
The Mexican bought most of his current stake in Telekom
Austria at 9.50 euros a share.
Analysts expect he will become the largest shareholder
following any takeover offer for Telekom Austria, but he is
eager to secure a friendly deal after his attempt to buy Dutch
telecoms group KPN last year was blocked by a KPN
foundation that viewed his bid as hostile.
Slim's Mexican biographer Jose Martinez told Reuters the
telecoms mogul was pursuing a long-term strategy in Europe and
said America Movil was still keen to take control of KPN.
"He's going to persist, no doubt about it," Martinez said.
"That's his message: he's interested in European markets."
Some analysts believe Slim's medium-term plan is to create a
cross-border operator that could eventually compete with the
likes of Vodafone and Deutsche Telekom in
Europe, and that he may also be eyeing Telecom Italia.
"We view an AMX (America Movil) approach to Telekom Austria
as reinforcing the investment case for Telecom Italia and KPN,"
Bernstein analysts wrote in a note.
"It suggests that AMX is intent on owning a small but
dominant player in Europe to enjoy the future benefits of a
buyout as companies build pan-European footprints."
A PATIENT MAN?
For Austria, a pact would ensure a continued say in
important decisions about Telekom Austria, a former state
monopoly which employs more than 9,000 people in the country,
even if Slim raised his stake to overtake the OIAG's.
Economy Minister Reinhold Mitterlehner, a member of the
conservatives, junior partners in the ruling centrist coalition,
told the Austria Press Agency he welcomed the talks with America
Movil and said a final result was possible "in the next weeks".
Austrian finance minister and conservative party leader
Michael Spindelegger, whose ministry controls the OIAG, said:
"We are open for a close cooperation."
Austria has said it wants to keep a blocking minority of at
least 25 percent plus one share in Telekom Austria in the event
of a widely-expected capital increase by the firm, and would not
try to oppose Slim building his stake.
A spokesman for Telekom Austria said the company could not
comment on shareholder matters.
It is unclear whether Slim would try in the first instance
to bid high enough to take Telekom Austria completely private or
would be content with a majority that would allow him to
consolidate the company's results while leaving some shares to
trade on the stock exchange.
The alliance would have to offer at least the six-month
share price average of 6.09 euros, well below the current price.
"If the mandatory offer is at the average price, he won't
get many shares," said fund manager Guenther Schmitt of
Raiffeisen Capital Management, who has Telekom Austria shares.
"The market is expecting Slim to do something quickly. But
it could easily be that he has more patience than the market."
With an enterprise value (equity plus debt) of 5.5 times
earnings before interest, tax, depreciation and amortisation
(EBITDA), Telekom Austria is expensive compared with a median of
5.2 for its European peers.
It is also almost a third as expensive again as America
Movil at 4.2 times, according to Thomson Reuters data.
Telekom Austria is struggling with fierce competition in its
home market, a country of 8.5 million, where mobile tariffs are
among the lowest in Europe, although they have begun to rise in
the past months following market consolidation last year.
The company is expected to report a 12 percent drop in
fourth-quarter profit on Wednesday.
It is active in seven central and eastern European countries
outside Austria, including Bulgaria, Croatia and Belarus.
($1 = 0.7285 euros)
(Additional reporting by Michael Shields in Vienna and Dave
Graham in Mexico City; Editing by Mark Potter and Meredith