America Movil wants to own up to 28 per cent of KPN and sees it as a long-term investment that would give it a presence in Europe at a time when the Mexican group has run out of opportunities to expand at home.

The deal, which could give America Movil seats on KPN's supervisory board, would also give it a presence in Germany, where KPN has been trying unsuccessfully for years to merge its E-Plus unit with Telefonica-owned O2 Germany.

KPN shares surged more than 20 per cent to their highest since early April, bouncing from a seven-year low set earlier this month. The Dutch company said the offer was “moderately positive” and showed the undervaluation of its shares.

Yet for KPN, the entry of Mr. Slim as a major investor will not solve the structural problems it has been grappling with, including tough competition in its home market and a lack of critical scale in the foreign markets where it remains.

America Movil, which has already built up a 4.8-per-cent stake in KPN by buying shares in the open market, is the biggest mobile operator in Latin America and a major cash cow for Slim.

The Mexican tycoon, ranked by Forbes magazine as the world's richest man, has built his empire by purchasing troubled companies and turning them around.

“America Movil is a long-term investor, we think if the company (KPN) executes (its strategy) well, it will perform well,” Carlos Garcia Moreno, America Movil CFO, told reporters on Tuesday, adding there was scope to co-operate in areas like roaming, content, marketing and procurement.

Eoin Treacy's view Investor sentiment towards Europe has been deteriorating, especially with the inconclusive result of the Greek election and Francois Hollande's promise to renegotiate the Eurozone's fiscal treaty on behalf of France. However, despite a sense of despondency, the European economy still represents one of the world's largest and the recent sell-off in the telecom's sector has created opportunities. (Also see my comments on KPN last Thursday).

KPN had become deeply oversold by late last week and today's upward dynamic will have at least pressured shorts. While it remains to be seen at what level prices stabilise, today's action suggests a low of at least medium-term significance has been reached.