Telefonica, America Movil Both Covet the German Market: Both Will Get Stakes

Telefonica is trying to acquire Royal KPN NV ’s German mobile business, and of course requires KPN's approval. But that also means Telefonica has to win the backing of KPN's biggest investor, America Movil, which owns 29 percent of KPN. 

The potential complication has been that most observers believe America Movil wants a position in the German market. So an exit, by way of sale of the KPN E-Plus business, would be a set back.

But a new deal proposed by Telefonica apparently now has been accepted by America Movil and KPN.

Telefonica has agreed to give KPN a bigger stake in the combined operations of E-Plus and Telefonica Deutschland. Under the modified deal, KPN have 20.5 percent ownership of the new company, up from the 17.6 percent originally proposed stake.

As always, regulatory approvals are needed, so the deal could still change, or fall apart. If the deal is approved, though, Telefonica, KPN and America Movil would continue to have an equity stake in the German mobile market. 

Among the noteworthy implications is the face that arch rivals Telefonica and America Movil will cooperate in the German market, though competing fiercely in Latin America.