America Movil (AMXL.MX)(AMX.N) said on Wednesday it is unsure if it will sell more shares in Dutch telecoms group KPN, casting doubt over its long-term commitment to a European investment that has led to paper losses and weighed on the Mexican giant's shares.
Latin America's biggest phone company, which is controlled by billionaire businessman Carlos Slim, announced it had trimmed its KPN position to 27.1 percent from 29.8 percent.
"We don't know if we're going to sell more or not, it depends a lot on what's happening on the markets," said Chief Executive Officer Daniel Hajj.
"(At) more than 20 percent, we have exactly the same rights within the company to still develop what we have been doing there," he said on a call with analysts discussing the company's fourth-quarter results.
America Movil sold the shares to improve its financial position but it is "still interested" in maintaining its relationship with KPN, executives said on the call. The Mexico City-based company has two seats on KPN's board.
"I don't think they will completely withdraw their stake in KPN but they could reduce it to the limit ... and use that money for new investments," said analyst Homero Ruiz at Signum Research in Mexico City.
Slim's company started accumulating positions in KPN (KPN.AS) and Telekom Austria (TELA.VI) in 2012, making its first foray outside of Latin America to diversify revenues that are being crimped by tougher regulation and increased competition in its home region. It failed in an attempt to buy KPN last year.
The Mexican company's relationship with KPN, its first European purchase, has not been smooth, and investors have struggled to understand America Movil's interest.
When America Movil made the takeover offer, it said its objective was to acquire a majority stake to "exploit all areas for potential partnerships." The details of the plan and its immediate benefits for America Movil were not made clear.
But when a KPN foundation blocked the deal and the Mexican company withdrew its offer in October, investors were relieved.
Ruiz said America Movil could sell more KPN shares to boost its stake in Telekom Austria or invest in technology companies, which has been a recent area of interest for Slim's flagship company.
In contrast to its strategy with KPN, the Slim family took a stake in Telekom Austria, which was recently consolidated with the America Movil stake.
Hajj said last week that America Movil plans to stay invested in Telekom Austria for the long term.
Austria, which also holds a stake in Telekom Austria, has said it is open to America Movil increasing its position.
If America Movil keeps selling KPN shares, it will lose money, since it paid an average of 3.24 euros a share, according to Bernstein Research analysts.
"Mr Slim should only want to maximise the value of the stake; keeping most of it intact for a later strategic sale or trade," they wrote.
None of the Slim family individually or through their trust hold shares in KPN, but according to a filing in Amsterdam, America Movil Chief Financial Officer Carlos Garcia Moreno in October held 305,400 shares, bought at an average price of 1.69 euros. A spokeswoman did not immediately respond to a question about whether he still holds these shares.
America Movil on Tuesday reported a better-than-expected fourth-quarter profit, helped by a slight pickup in revenue and a lower tax payment.
The executives said separately on the call that the company expects to spend around $9.5 billion to $10 billion on investments this year, in line with its capital spending last year.
America Movil has said that the Mexican government's efforts to increase competition in the country by whittling away the company's 70 percent share of mobile lines and 80 percent share of fixed lines could put off any company plans to increase investment there.
Mexico's government is working out the details of a sweeping telecom reform approved last year.
KPN shares were down 2.29 percent at 2.61 euros, while America Movil shares were down 1.26 percent at 14.14 pesos.
(Reporting by Elinor Comlay and Tomas Sarmiento; Editing by Simon Gardner, Meredith Mazzilli and Amanda Kwan)