MADRID: Spanish telecoms company Telefonica is to take a stake in indebted media group Prisa, a move that could stop America Movil boss Carlos Slim from tightening his grip on the firm that owns Spain's El Pais newspaper.
Telefonica will acquire 97 million Prisa shares, giving it an 8 percent stake in the media company, although this stake will shrink to 5-6 percent when other shareholders convert a series of warrants.
America Movil's Slim, long-time rival of Telefonica Chief Executive Cesar Alierta, has a 3.23 percent stake in Prisa.
Telefonica may also play a role in scuppering the Mexican company's offer for 28 percent of Dutch telecoms group KPN by merging its business in Germany with KPN's German unit E-Plus.
Telefonica's move will help strengthen its strategic alliance with Prisa in broadcasting and could help Prisa's Digital+ channel recover rights to broadcast lucrative Spanish soccer matches, BPI analysts said in a note to clients.
"(It) could potentially unblock some of the hurdles...Our base scenario regarding Digital+ encompasses that it will be able to broadcast both the Champions League and the Spanish League from next season onwards," BPI said.
Prisa has been suffering from falling advertising revenue in Spain and Portugal and high financing costs and posted an 8 million euro loss in the first quarter.
Prisa's shares were up 12 percent at 0.42 euros.
Under the deal, Telefonica will buy 100 million euros ($126 million) of bonds convertible into Prisa shares.
The convertible bond is part of a recapitalisation announced last week, where Prisa will convert 434 million euros of bonds into shares in two years at 1.03 euros apiece.
Three of Prisa's creditor banks - Banco Santander, Caixabank and HSBC - have taken on 334 million euros of the bonds, thereby reducing Prisa's debt pile, which stood at 3.5 billion euros at the end of 2011.
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