Spanish govt buys 3% stake in Telefonica, eyes 10%


The Spanish government says it will look to increase its stake in the country’s largest mobile operator, seeking to counter the influence of Saudi Arabia’s STC

In September last year, Saudi Arabian telco group STC bought a 9.9% stake in Spain’s Telefonica for $2.25 Billion, a move that made them the company’s largest shareholder.

At the time, STC said the move was simply the latest step in their newly diversified investment strategy, calling Telefonica a “compelling investment opportunity” and emphasising that they had no intention of taking a controlling stake in the business.

Nonetheless, the stake acquisition was controversial, with the Spanish government quickly outlining concerns surrounding loss of control of what they view as critical infrastructure.

Telefonica is not only the country’s largest telecoms operator, but also provides crucial connectivity services to government organisations and, perhaps more importantly, the military.

By December last year, the Spanish government had announced a plan to acquire a 10% stake Telefonica to offset STC’s influence within Telefonica, a move they said was ““in line with other large European countries, such as France and Germany, which have and are increasing their shareholdings in big and strategic telecommunications operators”.

The government’s plan suggested the stake would be built incrementally, with the first 3% acquisition via state holding company SEPI being announced on Monday.

“The entry of the SEPI, a shareholder with a long-term commitment, will provide Telefonica with greater shareholder stability to achieve its objectives, contributing to safeguarding the strategic capabilities of a company that is strategic for (Spain’s) national interests,” said SEPI in a statement.

Now, the government has confirmed its intentions to increase this stake to 10%, saying it will do so gradually through various instruments over the next two months.

“It will be done as quickly as possible, in the shortest possible time, provided that it doesn’t affect (Telefonica’s) share price,” said government spokesperson Pilar Alegria.

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