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STC announced the investment on Tuesday after trading closing
STC Group, Saudi Arabia’s largest telecoms operator, has acquired a 9.9% stake in Telefónica worth €2.1 billion, becoming the firm’s largest shareholder.
The deal includes the acquisition of 4.9% of Telefonica’s shares, with the remaining 5% stake derived from various financial instruments. The Saudi firm plans to secure voting rights for the 5% interest held through financial instruments after receiving regulatory approvals, the company said.
STC have confirmed that they do not intend to acquire a majority stake in Telefónica, but rather see the move as a “compelling investment opportunity to use our strong balance sheet whilst maintaining our dividend policy,” according to a statement by STC CEO Olayan Alwetaid in a company press release.
It is no coincidence that STC’s stake stops just shy of reaching 10%, since any foreign investment of 10% or greater in Telefónica would require the approval of the Spanish Council of Ministers. The Spanish government prohibits the foreign acquisition of over 10% in firms active in sectors related to public order, public security, or public health without prior governmental authorisation. It also prohibits acquisitions of less than 10% if this would result in management of the company.
“Telefónica and STC Group share many similarities, with a vision to use technology to connect people and a strategy to drive growth. This long-term, significant investment by STC Group is a continuation of our growth strategy, as we invest in vital technology and digital infrastructure sectors across promising markets globally,” said Mohammed K. A. Al Faisal, chairman of STC Group.
“Our investment in Telefónica demonstrates our confidence in Telefónica’s leadership, its strategy and its ability to create value. As long-term, supportive shareholders, we are committed to strengthening our partnership,” added Alwetaid.
STC have made a number of investments across the tech and telecoms sectors in recent months, both within Saudi Arabia and globally. Most recently, STC completed the acquisition of tower assets from Netherlands-based United Group in a deal worth €1.22 billion.
It is also worth noting that STC is not the only Middle Eastern, state-owned telco investing in major European operators. UAE-based e& has slowly been growing its stake in Vodafone Group since 2022, most recently announcing their intention to increase their equity in business to 20%.
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