Mexican telecom giant, America Movil (AMX - Analyst Report) has reportedly terminated deal-terms with Dutch telecommunications company, Koninklijke KPN NV. The deal prohibited America Movil to raise its holding in the company to over 30%. We believe that this ending indicates a possible attempt by America Movil to increase its stake in the Dutch telecom company, ultimately leading to a complete takeover. However, KPN is already exposed to the acquisition bid offer of €1 billion ($10.7 billion) by Telefonica S. A. (TEF - Analyst Report), which can create a hurdle for America Movil in its prospective buyout.
We expect the company to focus on the strategy of acquisition in a highly competitive telecom market in order to tap the opportunities in wireless services and PayTV business. Notably, 2012 was a landmark year for the company with key takeovers like video-on-demand service provider, DLA Inc. (Jan 2012), prepaid mobile network operator, Simple Mobile Inc. (Jun 2012) and PayTV firm Net Servicos (Sep 2012). Further, in Jun 2012, the company increased its minority stake in Koninklijke KPN NV (a Dutch telecom company) to 29.8% from 4.8% and assimilated a 22% stake in Telekom Austria AG, intensifying its foray into the European market.
Moreover, America Movil has also formed profitable liaisons with AT&T Inc. (T - Analyst Report) to drive business expansion. In Nov 2012, both these company entered into a network sharing agreement. This partnership allows America Movil to expand and enhance its networks within Latin America and offshore key markets throughout the world, including growth regions like, Asia and the Middle East. This year, America Movil acquired the media and advertisement unit of Corporacion Interamericana de Entretenimiento SAB de CV known as Corporacion de Medios Integrales SA de CV. The acquisition is expected to be completed by the second half of 2013, subject to pending approvals.
We expect the company to continue focusing on its acquisition strategies in order to stay afloat in a highly competitive telecom market and expand beyond its home ground, Mexico, which is exposed to several regulatory and competitive challenges.
America Movil, which operates with other players like NII Holdings Inc. currently has a Zacks Rank #3 (Hold).