Wednesday, 6 September 2023, 18:03
A Saudi Arabian company has become a main shareholder of Spanish telecoms giant Telefónica after purchasing an almost 10% stake in the company. STC Group, Saudi Arabia's main telecommunications operator, announced that on Tuesday 5 September it had acquired 9.9% of the Spanish multinational's shares.
It has raised eyebrows in Spain about what impact it will have on Telefonica, one of the largest telephone operators and mobile network providers in the world. STC Group is indirectly controlled by the Saudi kingdom through different funds and shareholdings, and with this purchase, has acquired exactly 9.9% of Telefónica's capital for 2.1 billion euros. This is the limit that Spanish legislation allows for the involvement of a foreign (non-EU) investor.
Speaking to the media in Brussels, Spain's minister for economic affairs, Nadia Calviño, called for calm and said her team is "analysing all the elements" of the acquisition, and will "take all the necessary steps" to defend Spain's interests. "The acquiring company contacted the government on Tuesday and stressed the friendly nature of the transaction," she added.
The implications of the purchase are also being closely scrutinised by the government in office. The Saudi involvement in a strategic company for Spain, such as Telefónica, means "the details of the operation will be analysed" to see if it requires "some kind of authorisation as it is an investment in a strategic operator", according to government sources. But the STC group has made a fine-tuned purchase by acquiring just 9.9%, the legal maximum allowed in order to avoid having to obtain any additional administrative authorisation.
Spain's deputy prime minister Yolanda Díaz urged to protect Spain's "digital future" and preserve "strategic autonomy". "Spain must ensure decision-making in companies such as Telefónica, guardians of sensitive data," she wrote on social networks.
But STC Group assured it has no intention of acquiring control or a majority stake in Telefónica. "This is a great investment opportunity that allows us to use our strong balance sheet while maintaining our attractive dividend policy," they said in a statement on Tuesday night.
The move was announced with the Ibex-35 closed and shares trading at 3.75 euros. But Wall Street-listed shares did pick up the move, rising 1%. If the Saudi Arabian operator wants to increase its stake to more than 10% in any strategic company for Spain (including Telefónica), it would need to have the backing of the government.
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