AMSTERDAM/BRUSSELS (Reuters) - Dutch telecom group KPN's (KPN.AS) biggest shareholder, America Movil (AMX.N), has ended an agreement to keep its holding below 30 percent, a sign it may bid for the whole company.
Mexican billionaire Carlos Slim's company, which owns 29.8 percent of KPN, was entitled to end the agreement after Spain's Telefonica (TEF.MC) bid 8.1 billion euros ($10.7 billion) for E-Plus, KPN's German mobile arm, KPN said on Monday.
The end of the deal means America Movil is free to increase its shareholding to the level that would trigger an offer for the whole of KPN, the Netherlands' biggest telecoms operator by sales.
America Movil shares (AMXL.MX) fell 1.6 percent to 13.57 pesos in morning trading in Mexico.
KPN shares were up 5.9 percent to 2.00 euros in Amsterdam.
"We believe that the termination of the relationship agreement, in combination with widely reported rumors that AMX (America Movil) finds the sale price of E-Plus too low, could increase the likelihood of AMX preparing a bid for KPN," ING analyst Emmanuel Carlier said in a note to clients.
Some analysts said that a full takeover would be a stretch for America Movil, with its net debt to expected 2013 core profit (EBITDA) of around 1.6 times at the end of June and a share buyback plan in progress.
The initial investment in KPN "was predicated on the basis that we would not risk the credit ratings that we had from the rating agencies, and that obviously has not changed," America Movil Chief Financial Officer Carlos Garcia Moreno said on a conference call on Friday discussing second-quarter results.
Still, Slim's flagship could alternatively sell its KPN stake, but only after E-Plus was sold, boosting KPN's share price. America Movil paid an average price of 3.24 euros per share to build its KPN stake, according to Sanford Bernstein analysts.
"They can now increase their stake but I don't see it happening in the short term. I think they'll wait and see how it ends with E-Plus. It's possible that they are interested in the Dutch operations of KPN, and that they want to take it over in the medium term," said Christopher Ho, analyst at AFS Brokers.
Ho said he did not rule out America Movil selling its stake in KPN, but he did not expect that to happen soon.
Bernstein analysts last week suggested that America Movil might also consider a joint bid for KPN's E-Plus
America Movil, whose own shares are down 22.7 percent over the past 12 months in spite of an aggressive buyback program, said on Friday it was still deciding whether to back KPN's proposed sale of E-Plus, regarded as its crown jewel. Germany is Europe's biggest mobile market, and Telefonica is a big Latin American rival of America Movil.
The Mexican company, which has lost about 2 billion euros on its KPN investment since last year, around half of its total investment, declined to comment on Monday, except to say that it would keep its two seats on KPN's board.
America Movil, which also has 24 percent of Telekom Austria (TELA.VI), has said it views its holdings as long-term investments and is not concerned by the share price losses.
A KPN spokesman said America Movil had not communicated its intentions.
The two companies agreed their cooperation deal in February, at the time of KPN's 4 billion euro capital increase, including a rights issue to which America Movil subscribed.
In theory, this agreement was indefinite, with a two-month notice period. KPN said on Monday that America Movil was entitled to break the deal without notice after the E-Plus offer.
($1 = 0.7539 euros)
Reporting by Gilbert Kreijger, Philip Blenkinsop and Elinor Comlay; Editing by Louise Ireland, Erica Billingham and John Wallace