Battle of the Latin Telecom Tycoons

When César Alierta became chief executive officer of Madrid-based Telefónica in 2000, he made Latin American growth a priority. Quickly adding to his company’s presence in Argentina, Peru, and Brazil, Alierta started Telefónica operations in Mexico, going head-to-head with the wireless business of Mexican billionaire Carlos Slim’s América Móvil. The Spanish operator’s price-cutting strategy didn’t please Slim, the world’s richest man, who feared América Móvil’s margins would be pressured, according to a person with knowledge of the matter. Now Slim is returning the favor by expanding in Europe in a way that could mean headaches for Alierta.

América Móvil is bidding $3.4 billion for up to 28 percent of the former Dutch telecom monopoly Royal KPN. Among KPN’s assets are German mobile-phone carrier E-Plus, which vies for the country’s No. 3 spot with Telefónica’s O2, and the Simyo wireless brand, which competes with Telefónica in Madrid.