* KPN foundation abstains from vote
* America Movil backs sale, board members not present
* No update on negotiations with America Movil
By Robert-Jan Bartunek and Sara Webb
THE HAGUE, Oct 2 (Reuters) - Shareholders in Dutch telecomsgroup KPN have approved the 8.55 billion euro ($11.6billion) sale of its German unit E-Plus to Spanish rivalTelefonica, paving the way for KPN to step upinvestment and resume dividend payments.
Combining the German units of KPN and Telefonica will createthe country's largest mobile operator by customers, givingTelefonica more clout to compete with Vodafone andT-Mobile.
The deal brings together two long-standing rivals in LatinAmerica. Carlos Slim's America Movil, the biggestshareholder in KPN, approved the transaction once Telefonicasweetened its offer in August, making it virtually certain thatthe sale would be approved.
The Mexican billionaire's group has made a 7.2 billion eurobid for KPN as it looks beyond its South American home base insearch of new opportunities in Europe.
KPN Chief Executive Eelco Blok told reporters he expected tosee more consolidation in the industry in Europe given the needfor funds for spectrum auctions and investment in new high-speeddata networks. He said the E-Plus sale was a "very, veryimportant deal".
The Dutch group will be left with businesses in theNetherlands and Belgium. It said it would use the proceeds ofthe E-Plus sale to invest in its network and resume paying adividend in 2014 after skipping shareholder remuneration in2013.
KPN, which will hold a 20.5 percent stake in the combinationof E-Plus and Telefonica Deutschland, said it expectedregulators to clear the deal by mid-2014.
KPN's shares closed 0.55 percent lower on Wednesday at 2.351euros per share, below the 2.40 that America Movil is biddingfor the group.
The Dutch group has not welcomed America Movil's advances,and an independent foundation tasked with protecting theinterests of investors and other stakeholders has moved to blockthe America Movil bid by acquiring nearly 50 percent of thevoting rights.
Talks between the two parties were hampered by theunexpected departure of KPN's finance chief Eric Hageman, justone year after taking the job.
The foundation said previously that, apart from making surethat the new owners made clear arrangements with employees,America Movil should also make a fair offer for KPN.
Analysts have said that America Movil's offer of 2.40 eurosper share was not very generous, especially as KPN enjoyed a925-million-euro tax break because of the sale, which equates to0.22 euro per share.
Every 0.05 euro increase in the bid price would cost AmericaMovil about 150 million euros more.
The foundation abstained from voting at Wednesday'sextraordinary general meeting to approve the E-Plus deal.
KPN executives, questioned repeatedly during the meetingabout the status of the negotiations with America Movil, refusedto comment.
"We are in talks with America Movil to get to a mergerprotocol and how that will end is unclear," supervisory boardChairman Jos Streppel told shareholders.
"We have fiduciary duties towards our shareholders and otherstakeholders according to Dutch law and hope that we can find abalance to give a positive recommendation."
America Movil owned about 30 percent of the Dutch companybefore the foundation stepped in and has two representatives onKPN's board.
However, neither of America Movil's board members werepresent at the meeting on Wednesday because of a potentialconflict of interest, given that the two companies are still intalks about the Mexican group's bid for KPN, Streppel said.
- Mergers, Acquisitions & Takeovers
- America Movil