On May 7, Slim’s America Movil SAB said it would increase its stake in Royal KPN NV to 28 percent, a 2.66 billion-euro ($3.5 billion) commitment. Since then, shares of the former Dutch phone monopoly have slumped 39 percent, making it the worst performer in the 23-member Bloomberg Europe Telecommunication Services Index for the period.

Telekom Austria AG, the Mexican billionaire’s other big European bet, was second-worst. Slim’s company on June 15 agreed to acquire a 21 percent interest in Austria’s former state-owned carrier, eventually paying 883 million euros. Since then the shares have dropped by a third.

“Slim took on a really tough job with his investments in European telecoms this year,” said Boris Boehm, who helps manage about 1.3 billion euros, including shares of KPN and Telekom Austria, at Aramea Asset Management in Hamburg. “He may have to wait at least two years before he sees significant returns.”

Telecommunications carriers across Europe have had a difficult year, with their shares faring worse than any other industry in the region as companies and consumers alike trimmed spending on wireless and fixed-line services. Slim may be underestimating the problems he’ll face because of the companies’ high debt loads, Boehm said.

Cold Response

Investors in America Movil responded coldly to the offer for KPN. The Mexican company’s shares dropped 8.2 percent in the day after the deal was announced, slashing Slim’s fortune by $4.4 billion. Since May 7, America Movil has fallen 19 percent as investors have also expressed concern about slowing growth in the company’s core Latin American markets.

Representatives of America Movil declined to comment for this story, though Slim has said he views the KPN and Telekom Austria stakes as long- term investments.

Despite the losses in Europe, Slim’s wealth has grown by $13.8 billion this year as his investment company, Grupo Carso SAB, has gained 75 percent, and financial services company Grupo Financiero Inbursa SAB, which he controls, has added about 55 percent. Slim’s gain is bigger than that of any of the 100 people tracked on the Bloomberg Billionaires Index except Amancio Ortega, the founder of Spain’s Inditex SA.

Dividend Cuts

In Europe, the business situation at his target companies turned considerably gloomier soon after Slim announced his investments. KPN in June ended talks to merge its German E-Plus unit with the local business of Spain’s Telefonica SA, which would have created the country’s biggest operator by customers.

E-Plus lost ground in the third quarter after the introduction of Yourfone, a new low-cost brand, failed to boost market share. In August, KPN scuttled a sale of its Belgian mobile-phone unit, Base, after deeming bids unsatisfactory.

KPN, based in The Hague, dropped the most in 11 years yesterday after cutting its dividend for the second time since Slim increased his stake. Tuesday, the stock rose 1.2 percent to 3.99 euros as of 9:14 a.m. in Amsterdam. Its shares have lost 57 percent this year, the worst performance of any company in the 77-stock Bloomberg World Telecommunications Index.

Telekom Austria, where revenue has slid for 15 consecutive quarters, in September slashed its planned dividend by 87 percent. The Austrian company has said it will probably miss its forecasts for next year as sales per user come “under pressure.” The stock today rose 0.9 percent to 5.55 euros as of 9:14 a.m. in Vienna.

Telefonica Turnaround

By contrast, Telefonica, which competes with America Movil in Brazil, Mexico and more than a half-dozen other countries, stabilized its share performance in the second half after losing 23 percent from January through June. Chief Executive Officer Cesar Alierta scrapped this year’s dividend and cut the Madrid- based company’s debt by selling its Atento call-center division and spinning off its German unit.

In the Latin American markets that form the basis of his empire, Slim is facing politicians seeking to curtail his dominance and tougher regulation that has hurt profits.

The darkening clouds at home mean Slim probably won’t be selling his European assets anytime soon, said Alberto Espelosin, who helps manage about 1 billion euros at Abante Asesores in Madrid.

“Slim knows that the telecoms industry in Europe needs to consolidate in the mid-to-long term, so he’s betting the current problems affecting the industry will be solved,” Espelosin said. “You can’t blame him for his investments in KPN and Telekom Austria so far, as those are good companies, which are faced with the same problems as other European telecoms, but that at least are doing something to solve them.”