When Cesar Alierta became CEO of Madrid-based Telefonica in 2000, he made Latin American growth a priority. Quickly adding to his company's presence in Argentina, Peru, and Brazil, Alierta started Telefonica operations in Mexico, going head-to-head with the wireless business of Mexican billionaire Carlos Slim's America Movil. The Spanish operator's price-cutting strategy didn't please Slim, the world's richest man, who feared America Movil's margins would be pressured, according to a person with knowledge of the matter. Now Slim is returning the favor by expanding in Europe in a way that could mean headaches for Alierta. America Movil is bidding $3.4 billion for up to 28% of the former Dutch telecom monopoly Royal KPN. If completed, America Movil's alliance with KPN will pave the way for agreements such as roaming, marketing, and joint purchasing, CFO Carlos Garcia-Moreno told analysts. And it could presage more expansion on the Continent.