April 1, 2023

DealBook: Telefónica Denies Talk of AT&T Takeover Bid

Telefonica's Vivo brand based in Sao Paulo, Brazil.Sebastião Moreira/European Pressphoto AgencyTelefonica’s Vivo brand based in Sao Paulo, Brazil.

MADRID – Telefónica denied a report on Monday that ATT had made a $93 billion approach for the Spanish telecommunications giant.

The denial came after a report by the Spanish newspaper El Mundo that the American company had been thwarted in a potential bid for Telefónica after the Spanish government told ATT it would oppose such a deal for national strategic reasons.

ATT’s prospective deal would also have included the assumption of Telefónica’s 52 billion euros in debt, according to El Mundo.

In Madrid, shares of Telefónica rose as much as 3.9 percent on Monday before paring back gains. They were up 2.6 percent in late morning trading.

Telefónica has been hurt by an increasingly difficult economic environment and has been looking to unload or spin off assets to reduce its debt levels. The company has been weighed down by a lengthy recession in Spain, which still represents a third of its operating profit but where it lost more than three million customers last year.


Despite Europe’s gloomy outlook, the phone, wireless and cable sector has been one of the few bright spots in the moribund mergers and acquisitions market, as several American players, including John C. Malone’s Liberty Global, continue to hunt for assets.

The Mexican billionaire Carlos Slim Helú has acquired companies like the Dutch cellphone operator KPN and its Austrian counterpart, Telekom Austria. Mr. Malone’s Liberty Global also recently completed its $16 billion takeover of the British cable company Virgin Media.

Rumors also abounded that Verizon was planning a $100 billion approach to buy the 45 percent stake it did not already own in Verizon Wireless from its British partner, Vodafone.

In a brief statement, Telefónica said it had not been approached by ATT.
“In relation to press rumors published today, Telefónica states that it has not received any approach, nor any indication of interest, neither verbal nor in written form, from any party,” the company said.

A representative for ATT declined to comment

The Spanish economy’s problems, coupled with Telefónica’s mountain of debt after a decade of aggressive investments in Latin America and Europe, raised concerns last year over how the company would be able to continue servicing its debt. Recent divestments, though, have helped alleviate such concerns. So did the decision by Telefónica to scrap its dividend payment for 2012. The company is aiming to cut its debt to below 47 billion euros by the end of this year from about 52 billion euros now.

As part of debt-reduction efforts, Telefónica spun off its German subsidiary, Telefónica Deutschland, raising $1.9 billion in Europe’s largest initial public stock offering last year.

The company also sold its $1.4 billion stake in China Unicom back to the Chinese firm, while it continues to consider a potential listing for its Latin American divisions.

More than half of the assets of Telefónica are in Latin America, where its main competitor has been América Móvil, controlled by Mr. Slim.

ATT reduced its stake in América Móvil to 9 percent this month, but remains the second-largest shareholder in the company after Mr. Slim and his family. Any deal with Telefónica would therefore probably raise antitrust issues in Latin American markets.

The Spanish government also denied on Monday that it had vetoed a takeover approach by ATT. José Manuel Soria, the industry minister, told Spanish national television that he held talks with the management of ATT at a conference in Barcelona earlier this year, but that the American executives had not made any mention of Telefónica as a possible target as part of their expansion plans in the European market.

Mark Scott reported from London.

Article source: http://dealbook.nytimes.com/2013/06/17/telefonica-denies-talk-of-a-att-takeover-bid/?partner=rss&emc=rss

DealBook: As Unwanted Suitor Looms, KPN Struggles to Find Buyer for German Unit

KPN’s last-ditch efforts to forestall a hostile bid by América Móvil, Latin America’s largest mobile operator, may have ended after it broke off talks to sell its German business.

KPN, the Dutch telecommunications company, has been trying fend off the unwanted advances of América Móvil for weeks. In May, América Móvil, which is owned by the Mexican billionaire Carlos Slim Helú, offered 8 euros a share to increase its stake in KPN to 28 percent.

After rejecting the offer, KPN moved to block América Móvil by putting its German unit, E-Plus, up for sale. While KPN never disclosed the nature of the discussions, Telefonica was the suitor, according to a person with the knowledge of the matter.

Telefonica, which is América Movil’s rival in Latin America, has reason to hamper América Movil’s move into Europe, where Telefonica is the No. 1 operator in terms of customers but has been struggling amid the economic crisis in Spain. A fusion of E-Plus and O2, Telefonica’s German carrier, would have merged the No. 4 and No. 3 carriers in the country, creating a new market leader by leapfrogging over T-Mobile and Vodafone Germany.

But a potential deal was stifled by the region’s economic woes. In a statement, the Dutch operator called off the discussions, blaming “current adverse conditions in the financial markets.”

“This means either that KPN and Telefonica couldn’t agree on a price for E-Plus or Telefonica had trouble raising financing for the acquisition,” said Jeffrey Vonk, an analyst at ING Bank in Amsterdam.

Stephen Hufton, a spokesman for KPN, said the Dutch operator was still interested in a sale or other solution for E-Plus as part of its strategy to focus on its home market.

“We believe there is still considerable value to be unlocked in the German market through consolidation but that wasn’t possible given the situation with the financial markets at this time,: Mr. Hufton said. “But that doesn’t exclude it later.’’

Even so, analysts say América Móvil now has the upper hand. Shares of KPN were down by 4 percent on Thursday, to 7.58 euros per share, below América Móvil’s offer.

“I think it is now likely that América Móvil will succeed in its bid for a bigger stake in KPN,’’ Mr. Vonk said.

Since making an offer, América Móvil has been slowly increasing its stake. America Movil said on Wednesday that it had so far acquired 8.7 percent in KPN, up from 4.8 percent when it first approached the company.

Mr. Vonk, the ING analyst, said the decline in KPN’s share price and high trading volume in the stock today in Amsterdam indicated that Mr. Slim may be moving quickly toward his goal.

“I think he is probably taking advantage of the current share price,’’ Mr. Vonk said.

América Movil’s bid for KPN is the company’s second move into Europe. On June 15, America Movil said it had reached an agreement to acquire a 21 percent stake in Telekom Austria, increasing its total stake to 23 percent in that country’s market leader, in a transaction that will conclude by the end of the year.

“I think there is certainly a possibility that América Móvil will become a factor in Europe,’’ said Pete Cunningham, an analyst at Canalys, a research firm, in Reading, England. “If you look at the economic pressures in Europe, operators are in a difficult position. And Latin America is growing faster.’’

Under Dutch law, Mr. Slim’s bid is intended to acquire the most influence at the least cost. By limiting his stake to less than 30 percent, America Movil doesn’t have to extend its offer to all KPN shareholders, as per the rules in the Netherlands.

If Mr. Slim acquires 28 percent in KPN, he could gain effect control or wield outsize influence at KPN shareholder meetings. Typically, only 45 percent of KPN investors vote, according to the operator.

“But if América Móvil does succeed in its bid, and I think it will, then the participation at KPN shareholder meetings may increase, which could dilute his influence,’’ Mr. Vonk said.

Article source: http://dealbook.nytimes.com/2012/06/21/as-unwanted-suitor-looms-kpn-struggles-to-find-buyer-for-german-unit/?partner=rss&emc=rss

AT&T’s Next Move May Be Asset Sell-Off

ATT and T-Mobile’s corporate parent, Deutsche Telekom, acknowledged that the deal was in trouble in a Thanksgiving Day announcement. The companies said they had withdrawn, for now, their application to the Federal Communications Commission to join their cellphone operations. They also said that ATT would take a $4 billion charge against earnings — the amount in breakup fees owed to Deutsche Telekom if the deal is scrapped.

The companies portrayed the withdrawal of the F.C.C. application as a tactical move, after the commission chairman said earlier in the week that he would move to oppose the deal. The Justice Department filed an antitrust suit to block the merger in August.

Focusing on the antitrust trial, scheduled for February, the companies explained, would now be the first step. They vowed to continue to pursue their bold plan to combine the second- and fourth-largest cellphone carriers in the United States.

But the companies’ ambitions must be scaled back if they want any chance at a deal, analysts say. To address the objections of the Justice Department and F.C.C. that a merger would be anticompetitive, ATT could agree to sell off 40 percent or so T-Mobile’s assets to wireless rivals, they say.

The policy goal, analysts say, would be to strengthen wireless competitors beyond the big two, Verizon Wireless and ATT. So sales of mobile spectrum, cell towers and customers could not be made to Verizon, but to others, like Sprint and MetroPCS, the third- and fifth-largest carriers.

Or perhaps assets could be sold to a well-heeled foreign company that, unlike Deutsche Telekom, is increasing its investment in the United States: América Móvil, headed by the Mexican billionaire Carlos Slim Helú. Mr. Slim is a major shareholder in The New York Times Company.

Creative deal-making, analysts note, would be required to forge alliances and supply cash for spinoff purchases. The list of potential participants, they say, includes private equity firms, like SilverLake Partners, and cable companies, like Comcast and Time Warner, which own spectrum and whose Wi-Fi networks can work in tandem with cell networks.

Each of the options would present obstacles. And it is not clear that ATT would be interested in a drastically scaled-down deal. Yet the company has consistently argued that its main motivation for pursuing T-Mobile is to acquire scarce wireless spectrum, so ATT can quickly build out high-speed, next-generation network capacity to improve its service.

“If that is its goal, then ATT has to explore ways to salvage as much spectrum out of the deal as it can,” said Kevin Werbach, an associate professor at the Wharton School of the University of Pennsylvania and a former technology policy official at the F.C.C.

To sell off 40 percent of T-Mobile’s assets, ATT would most likely have to make peace with rivals who have opposed the merger, like Sprint and MetroPCS, and offer these carriers favorable terms, said Kevin Smithen, an analyst at Macquarie Securities.

“The issue for ATT is whether gaining some market share and spectrum is worth handing over some of T-Mobile’s assets to the struggling third and fifth carriers,” Mr. Smithen said.

Private equity firms, analysts say, would mainly be interested in providing financing for others to buy spectrum assets, or in buying some assets and then reselling them. Such investment funds, they add, are not in the business of running companies.

América Móvil in Mexico is a candidate to buy T-Mobile assets, according to Berge Ayvazian, a telecommunications consultant. The company’s TracFone unit, which sells a flat-rate, prepaid service called Straight Talk, has been rapidly adding subscribers in the United States.

“The result,” Mr. Ayvazian said, “would be a healthy company that is growing around the world and in the United States, becoming the No. 4 competitor in this market.”

But other analysts noted that América Móvil, with its prepaid service, is a very different business than the traditional model of signing up subscribers on two-year contracts.

Article source: http://feeds.nytimes.com/click.phdo?i=5803c03b74b84fe4881711532f193b94

Optimism for Digital Plan, But Times Co. Posts Loss

The New York Times Company reported on Thursday that nearly a quarter of a million people had purchased subscriptions to The Times website, a sign that its digital strategy was paying off so far.

Since March, when The Times introduced its model to charge online readers, The Times has signed up 224,000 paying subscribers to NYTimes.com, in addition to 57,000 others who pay to receive The Times on e-readers like the Barnes Noble Nook and Amazon Kindle.

As the introductory rate expires and more customers begin paying the full price, which starts at $15 every four weeks, The Times expects to see more of a benefit to its bottom line.

“The digital subscription model is a long-term effort, and its full impact on revenues will be more evident over the course of the year as we progress past the early stages of the plan,” said Janet L. Robinson, the chief executive.

Ms. Robinson added that the digital subscriptions would provide the company “with a significant new revenue stream in the second half of this year.”

The announcement came on the same day as the company’s quarterly earnings report. The company said it had a net loss of $119.7 million in the second quarter, in part because of a noncash write-down of $161.3 million to reflect the declining value of its regional newspapers.

Earlier this month the company sold more than half of its minority ownership in the Boston Red Sox and several other sports properties, raising $117 million before taxes. And last week it announced plans to pay back a $250 million loan from Carlos Slim Helú, a Mexican telecommunications billionaire, on Aug. 15, three and a half years ahead of schedule.

Over all, Wall Street analysts and investors reacted with optimism, pushing the company’s stock price up nearly 2 percent in trading on the New York Stock Exchange. Shares closed at $9.14.

But the second quarter also showed how challenged the print advertising market remained. Revenue declined 2.2 percent, to $576.7 million from $589.6 million, in large part because of a 4 percent decrease in advertising. The company said a 2.6 percent increase in online advertising revenue partly offset a 6.4 percent decline in print advertising. At the News Media Group, digital advertising rose 15.5 percent, a sign that charging readers for access to NYTimes.com was not discouraging advertisers.

Operating costs declined by nearly 1 percent, to $525.2 million in the quarter, the company said.

Home delivery orders also ticked up, helping to slow the rate of decline in print circulation revenue. Over all, the company’s circulation revenue for the quarter was flat at $234.9 million, reflecting the print declines and the introductory 99-cent rate for the first month of digital subscriptions. Circulation revenue was up 1.6 percent at The New York Times Media Group, but down 5.4 percent at the New England Media Group, which includes The Boston Globe, and down 1.7 percent at the regional papers.

Excluding one-time items like the write-down and severance costs, the company’s operating profit in the quarter was $82.9 million, compared with $92.6 million in the period a year earlier. On a per-share basis, the net loss translated into 81 cents, in contrast to a profit of 21 cents a share, or $32 million, in the period a year earlier.

The company cautioned that advertising would remain soft in the third quarter, but said it expected moderate increases in circulation revenue and declining operating costs.

Alexia S. Quadrani, a stock analyst with J. P. Morgan, called the second quarter results “good” and said that despite the declining print ad market, there were reasons for optimism in the third quarter.

“Any adjustments to print advertising will likely be offset by better circulation trends from the digital initiatives and improved profitability, which when combined with lower interest expense from the prepayment of the Carlos Slim notes, should have a positive impact,” she said in a note to investors.

Article source: http://feeds.nytimes.com/click.phdo?i=106af09d3addc7d7f0a2192526bdbfa1