A surprise move by a Dutch foundation to block America Movil's 7.2 billion euros ($9.49 billion) offer for the 70 percent of Dutch group KPN it does not own could force Slim to retreat and risk heavy losses if he sells his investment.
In the short term, walking away from KPN might not be unpopular with shareholders who have already lost some faith in an expansion effort that has handed America Movil (>> America Movil SAB de CV) some $2 billion in paper losses related to KPN (>> KPN KON).
America Movil shares climbed more than 1 percent on Friday after a Slim spokesman said the firm had no intention of raising its offer for the Dutch company following pressure from the KPN foundation that the bid be sweetened.
"We are certainly not prepared to negotiate on price, we are also not prepared to negotiate an arrangement where management puts any restrictions on us," Slim's son-in-law and key spokesman Arturo Elias said in an interview with Reuters.
Asked whether the company would retain its almost 30 percent stake if its bid for the rest of KPN fails, Elias said: "That is something we also will have to carefully analyze."
However, if tycoon Slim did abandon his investment in KPN, it would cast doubt over the company's stated strategy of seeking expansion opportunities beyond Latin America, where regulators are increasingly squeezing America Movil's profit.
"It would mean (the) plan to diversify had failed and would be a sign that outside Latin America, Mr. Slim's negotiating skills are less deft," Sanford C Bernstein analyst Robin Bienenstock wrote before America Movil ruled out a higher offer.
America Movil, whose market dominance is presently facing stiff challenges from regulators in Mexico and Colombia, had offered 2.40 euros a share for KPN, which has been trading around 2.30 since the offer and slipped to 2.20 on Friday.
The offer price was about 25 percent below the average price Slim's company paid to acquire a 29.77 percent stake in KPN last year and to add shares in a rights issue earlier this year.
The KPN foundation, which was set up to protect the interests of shareholders, employees, customers, trade unions and "Dutch society more generally," when the former state monopoly was being privatized, is not convinced by Slim's bid.
It argued KPN's interests were at risk because America Movil had not consulted with KPN before making its offer. Slim's spokesman Elias forcefully rejected this and said the Mexican company had been shown a "total lack of respect."
EXPANSION UNDER THREAT
Slim's executives at America Movil have said that the company is investing in the struggling Dutch company and Telekom Austria (>> Telekom Austria AG) for the long term, as part of a wider expansion away from Latin America.
Mexico, which accounts for about one third of America Movil's revenue and almost one half of its core profit, passed a major telecoms reform earlier this year to curb Slim's dominance that could result in the billionaire having to sell assets.
But in contrast with America Movil's expansion throughout 18 countries in Latin America, where Slim has quickly and easily added cheap acquisitions to form the region's biggest phone company, the European effort has been complicated.
Even before the KPN foundation's move, Slim's bid for the Dutch telecom lost him some supporters as investors and analysts noted America Movil would be paying unusually dearly for KPN, which has reported a core profit that is down 12 percent in the first half of this year from the first half of 2012.
"I feel like that money would be much better spent in Latin America," said Andy Castonguay, analyst at Machina Research.
America Movil's earnings before interest, taxes, depreciation and amortization were down 4.5 percent in the first half of this year from the same period in 2012.
Shares in America Movil are also under pressure, down more than 8 percent since it said on August 9 it wanted the rest of KPN. The company's stock is down 13 percent in the year to date.
The KPN offer seems to have compounded existing concerns among some long-time America Movil investors.
Robert Pavlik, chief market strategist at Banyan Partners in New York, said that he has cut his investment in America Movil in the last couple of years because of the estimated reduction in growth rates as well as the sliding stock price.
Rick Hoss, co-portfolio manager of the Latin America Fund at Euro Pacific Asset Management, said the fund sold its America Movil shares earlier this year, as concern deepened that Mexico's telecom reform could further trim the company's profit.
BUYBACK PROGRAM, AUSTRIA
A short-term plus for the shares, if Slim were to abandon his bid for KPN, would be extra money to spend on an aggressive share buyback program. America Movil has been limiting the slide in its stock price by buying back each day this year more than 10 percent of its average daily trading volume.
The firm has spent 55 billion pesos ($4.14 billion) year to date buying back 4.2 million shares or 5 percent of its total outstanding shares, according to Reuters calculations.
It could also free up funds to spend elsewhere - if the KPN situation does not put Slim off of Europe.
"If we do withdraw from (the KPN) bid, we will analyze what possibilities there are, but there's nothing on the cards right now," said Elias. "We always look into every opportunity."
An Austrian newspaper this week reported that Telekom Austria is seeking to raise 500 million euros in capital and it is assured of Slim's participation.
America Movil would have to pay 9.50 euros a share for more of the Austrian firm - the price Slim paid to acquire the stake last year - but only until September 25, when a deadline expires.
Telekom Austria shares closed at 5.48 euros on Thursday.
To be sure, Slim's America Movil still has many fans who are confident in his European strategy.
"This is a little glitch," said Jeff Auxier, chief executive of Auxier Asset Management in Oregon, which holds America Movil shares and debt. "But the bigger picture is that Europe is coming out of a recession and (America Movil) has the expertise and cash to invest heavily in infrastructure and technology."
"I just like (Slim's) track record," he said, adding that with America Movil shares trading lower this year, Auxier said he believes this is a good entry point. "When you are buying America Movil at this price, you have a huge margin of safety."
Still, of 15 analysts covering America Movil's U.S.-listed stock, Thomson Reuters StarMine shows 10 have a 'hold' rating. Only two rate the shares either a 'buy' or a 'strong buy'.
($1 = 13.2885 Mexican pesos) ($1 = 0.7584 euros)
(Writing by Elinor Comlay, additional reporting by Leila Abboud in Paris and Dave Graham in Mexico City; Editing by Phil Berlowitz)
By Elinor Comlay and Tomas Sarmiento