VIENNA (Reuters) - America Movil will cut its stake in Telekom Austria by 7.8 percentage points to just over 50 percent, it said on Thursday, ahead of an end of year deadline to reduce its holding and increase the Austrian firm's free float.

The announcement came the same day that Citigroup said it was launching an issue of bonds exchangeable into 7.8 percent of Telekom Austria's shares, but America Movil's brief statement made no link to that issue.

America Movil became the majority owner of Telekom Austria through a billion-dollar takeover offer in July 2014 that marked Mexican tycoon Carlos Slim's first successful venture into Europe.

When America Movil took control of Telekom Austria, Slim agreed to increase the free float of the former state monopoly within two years.

Under the agreement, America Movil has to increase Telekom Austria's free float by the end of the year to 20 percent, from around 12 percent currently.

As a result, America Movil is expected to reduce its 59.7 percent stake in Telekom Austria by September this year to fulfil its agreement with Austria's state holding company, which owns 28.4 percent of Telekom Austria.

America Movil said in a statement that it had agreed to reduce its Telekom holding to 51.89 from 59.7 percent, but the statement did not say how that would happen.

Shares in the Austrian company are currently below the price of 7.15 euros at which America Movil last acquired a stake in 2014.

Telekom Austria shares closed at 5.11 euros on Thursday, down 3.8 percent, compared with a 1.1 percent fall in the European telecoms sector.

Citigroup's 374.2 million euro ($415 million) bond issue has an exchange price of 7.213 euros per share, it said.

The initial exchange price represents a 40 percent premium over the volume weighted average price of the ordinary shares of the company between launch and pricing, Citigroup said.

That premium is at the lower end of a range of 40-45 percent announced earlier on Thursday.

Telekom Austria had no immediate comment and America Movil was not immediately available for comment.

America Movil has said it wants to use Telekom Austria as a base for further expansion into central and eastern Europe, where Telekom Austria already has operations in six countries. It has since supported a 1 billion euro capital increase.

(Reporting By Shadia Nasralla and Francois Murphy in Vienna and Mexico City newsroom; editing by Adrian Croft and Elaine Hardcastle)