The Saudi Telecom (STC) telephone operatorthe main one in Saudi Arabia, has confirmed the purchase of 9.9% of Telefónica shares. In the operation, which was carried out by surprise, STC has invested 2,100 million euros. The operator, which is controlled by the Arab state, has taken advantage in its purchase of the decline in the price of the Spanish company, which in recent years has lost almost half of its price.
With 9.9% of its titles in its possession, STC becomes the main shareholder of Telefónica, since it has more than double the titles held by what from now on will be its second largest shareholder: BBVA , which has 4.87% of its titles. Despite this, sources from the operator have stated that the company has no intention of obtaining a majority stake in the group. They also do not want to take control of it, since they see this step as an investment opportunity.
The operation is part of STC’s expansion and growth strategy, which involves making various investments in the information, communications and technology sectors, both in Saudi Arabia and in other countries. It is not the only acquisition they have made in the telecommunications operator sector either. In fact, its most recent operation is directly related to them: the purchase of the assets related to the United Group’s telecommunications towers in Bulgaria, Croatia and Slovenia. The operation was carried out by one of STC’s subsidiaries, Tawal.
According to Olayan Alwetalid, CEO of STC Grouphis investment in Telefónica shows «confidence in Telefónica’s leadership, its strategy and its ability to create value. As long-term supporting shareholders, we are committed to strengthening our partnership«.
However, for the operation to be fully authorized, it is necessary for the government to expressly authorize it. This is due to the fact that the investment has been made in a company considered strategic for the country, due to its activities in the Defense sector as one of the army’s communications providers. As a consequence, any entity that wants to acquire more than 5% of its shares has to receive authorization from the Ministry of Defense in order to do so.
Telefónica has already notified the CNMV of the operation, stating that it has been carried out through “the acquisition of shares representing 4.9% of Telefónica’s share capital and financial instruments that confer economic exposure to another 5% of the company’s share capital«. In addition, Telefónica has taken note of STC’s approach, which it considers friendly, and has given its support to its board of directors, to its strategy “and its ability to create value«. The operator faces in a few weeks the presentation of its strategic plan for the coming years (until 2026), as well as investor day, which will be on November 8.
It remains to be seen what will happen with the government’s authorization for the operation, in addition to the position that STC will occupy on its board of directors. Other of the group’s shareholders have a representative in it with less than half of the titles that the Saudi operator can finally get if the Ministry of Defense authorizes the operation. Therefore, it could even have two representatives. We will have to wait a few weeks until all the fringes of an operation that has taken the telecommunications sector in Spain by surprise are closed.