The Spanish government signaled its intention to take a share of up to 10% in Telefónica Group in order to balance Saudi interests in the operator.
The move comes after Saudi Arabia’s stc Group somewhat controversially acquired a minority stake in the former Spanish incumbent in September. The Saudi operator currently owns a 4.9% stake, and is set to increase this to 9.9% should it receive regulatory approval. It already has voting rights through financial instruments for a further 5% share.
Olayan Alwetaid, CEO of stc Group, has previously emphasized that stc does not intend to acquire control or a majority stake in Telefónica, but rather sees it as a “compelling investment opportunity to use our strong balance sheet whilst maintaining our dividend policy.”
However, Spain believes measures are required to “reinforce” shareholder stability at Telefónica and “preserve strategic capabilities of essential importance for national interests.” It referenced the operator’s strategic position in Spain in multiple areas, especially in the fields of telecommunications, security and defense.
The government has therefore instructed state holding company Sociedad Estatal de Participaciones Industriales (SEPI) to purchase Telefónica shares. If SEPI acquires the full 10%, it would become Telefónica’s largest shareholder after stc. Other major shareholders are Caixabank with 4.88%, Banco Bilbao Vizcaya with 4.84%, and Blackrock with 4.8%.
Spain further justified its position by noting that governments in neighboring European countries also hold stakes in former incumbent operators, pointing to Germany’s 13.8% stake in Deutsche Telekom, France’s 13.39% shareholding in Orange, and plans by Italy to increase its stake in Telecom Italia’s fixed network grid to 20%.
Growth strategies
As for stc, it is generally pursuing a strategy to expand its international presence. For example, in August 2023 it acquired United Group’s tower assets in Bulgaria, Croatia, and Slovenia and has now brought them under wireless infrastructure subsidiary TAWAL.
The Saudi operator is also said to be interested in buying Altice Portugal, which is controlled by billionaire entrepreneur Patrick Drahi. Furthermore, U.K. newspaper the Times suggested that stc may be preparing to approach Drahi over a stake in U.K. incumbent BT. Drahi currently owns almost 25% of BT via Altice UK.
Meanwhile stc’s regional peer e& (formerly Etisalat) acquired a stake in Vodafone in May 2022, gradually raising it to 14.6% over subsequent months. The UAE-based operator also recently acquired just over 50% of PPF Telecom, the telco arm of the Czech PPF Group, and has expressed interest in Ethiopia’s mobile incumbent operator Ethio Telecom.