VIENNA Austrian state holding company OIAG's board authorized management to negotiate a deal to pool the state's Telekom Austria (TELA.VI) stake with that of Carlos Slim's America Movil (AMXL.MX), effectively handing Slim control of the group.
An accord would mean the partners would have to vote in unison on major issues and would protect Austria's influence even with a smaller stake, while allowing Slim to raise his nearly 27 percent stake above the OIAG's 28 percent.
It would also trigger a mandatory offer for Telekom Austria shares by putting the partners' combined stake above the 30 percent threshold.
"The supervisory board granted management a negotiating mandate for final negotiations of a syndicate contract," OIAG said in a statement on Friday after a meeting in which the board was briefed on the status of talks.
It said its main concerns included keeping Telekom Austria's headquarters in Austria and ensuring the state keeps a blocking minority of at least 25 percent plus one share.
It said it would inform the public of the outcome after talks that would take place in the weeks ahead.
Telekom Austria shares closed down 0.7 percent at 7.186 euros while the Stoxx telecom sector index .SXKP was up 0.9 percent.
The stock had rallied after OIAG head and Telekom Austria Chairman Rudolf Kemler said on Wednesday Austria was close to a roughly 10-year deal to pool its Telekom Austria stake with Slim.
America Movil's goal is to boost its stake to above 30 percent so that it can consolidate the group, Kemler said.
He said the Austrian government was committed to keeping a blocking minority stake should it come to a capital increase, which he said Telekom Austria needed to finance growth in existing eastern Europe markets.
Kemler said no details of any capital increase had been discussed with America Movil, nor had the partners decided how to handle the mandatory offer a syndicate deal would trigger.
America Movil, which also owns a stake in Dutch group KPN (KPN.AS), has been seeking to invest outside Latin America, where regulation and competition have been squeezing sales.
(Reporting by Michael Shields; Editing by Mark Potter and Pravin Char)