Telefonica ups German bid as Slim gets onside

Telefonica, the Spanish mobile giant that owns O2, yesterday raised its bid for Germany’s E-Plus and won the backing of Mexican billionaire Carlos Slim, who could have blocked the deal.

Telefonica offered to pay Holland’s KPN telecoms group €8.55bn (£7.34bn) for E-Plus an increase on the €8.1bn it had offered in July.

Mr Slim’s America Movil, which is the largest single shareholder in KPN with a 30 per cent stake, said it would vote in favour of the new deal.

That paves the way for Mr Slim, who Forbes magazine ranks as the world’s richest man with an estimated fortune of $73bn (£47bn), to go ahead with his bid to take over the rest of KPN. For Telefonica, the successful takeover of E-Plus will catapult it to number one mobile operator in Germany with about 43m subscribers. That leapfrogs T-Mobile’s 38m and Vodafone’s 3m. Measured by revenues, the combined E-Plus and Telefonica is not so dominant.

The deal is also seen by many industry experts as the start of a major new consolidation in the European mobile phone market, which has too many smaller operators chasing increasingly mature markets. It still needs to be cleared by European regulators.

In the UK, T-Mobile and France’s Orange have merged their operations to form EverythingEverywhere, which plans to list on the London stock market some time next year.

America Movil said it was still committed to buying KPN, and added that it wants to strengthen the Dutch company with superior technology, better procurement and more investment.

“America Movil intends to respect the identity of KPN,” a statement said. It promised to keep the KPN brand and the company’s headquarters in The Hague, Netherlands.

Mr Slim has built a stake of just under 30 per cent of KPN via America Movil over the past two years.

Following KPN’s initial plan to sell E-Plus, he launched a bid to acquire the 70 per cent of KPN he doesn’t already own for €2.40 per share, or €7.2bn. Neither of KPN’s boards nor its charitable foundation have yet expressed an opinion on Mr Slim’s bid.