2023-09-08 07:27:22
Despite the commotion caused by the landing of Saudi Telecom (STC) in the capital of Telefónica, the reality is that very few consider that the operation entails risks either for the government of the Spanish operator or for some of the businesses. strategies it plays. In fact, there are many analysts who are convinced that it is unrealistic to think that Telefónica could end up controlled by the authorities of Saudi Arabia.
Scope Ratings assures in an analysis of the operation that the promoters of cross-border operations “have found it difficult to convince the European authorities of their good intentions.” The rating agency ensures that “for governments, European national operators continue to be strategic assets over which it can be difficult to accept foreign influence, not to mention control, even when the State is no longer a shareholder, as is the case of Telefónica. Scope adds that “in recent years the importance of ensuring national political control over telecommunications infrastructure has become increasingly relevant, from the spying revelations of NSA whistleblower Edward Snowden to the economic shock of the coronavirus pandemic. Covid virus, which led to the generalization of remote work. For all these reasons, he assures that “it would be unrealistic to think that a European telecommunications operator could end up falling under the control of the Saudi or Emirati governments.”
In the same sense as Scope Ratings, the investment bank Bryan Garnier believes that STC will not go beyond the 9.9% that it has already acquired because it would imply a deeper scrutiny of the operation by the Government. Foreign capital inflows into Spanish companies of weight that exceed 10% must receive the approval of the Executive. In fact, STC is also going to request permission from Defense to buy the 5% that it has acquired through financial instruments, since Telefónica has businesses related to National Defense. In these cases, the threshold for needing authorization is lowered to 5%.
Nor do they see it as feasible for Saudi Arabia to exceed the limit reached by Berenberg analysts, given “the political sensitivities and the status of Telefónica as a strategic asset for Spain.”
Funds available
Due to its economic muscle, STC would have no problem in addressing more capital purchases in the Spanish operator. According to estimates managed by the investment bank Morgan Stanley, at the end of June the Saudi “teleco” had a box of between 7,443 and 9,924 million euros to go shopping. Of that amount, it would have spent the 2,100 million that the Telefónica park has cost and another 1,200 million in another package of towers for United Group.
As Joaquín Robles, from XTB, also explains, the European telecommunications sector is attracting more and more interest in the Persian Gulf. However, he assures that due to the experience demonstrated in many of them, he would not expect significant changes in Telefónica’s management. STC has stated in this regard that it has no intention of participating in the management of Telefónica and has defined this operation as an investment opportunity.
No meetings in sight
For the moment, the movements of the Spanish government have been limited to the declarations that several ministers have made since Wednesday warning that the strategic independence of a company as important as Telefónica will be ensured. There are, for the moment, no official contacts planned either with STC or with the Saudi authorities. The Minister of Foreign Affairs, European Union and Cooperation, José Manuel Albares, assured that the Government does not plan any bilateral meeting with Saudi Arabia to address the matter. Government sources added in this regard that the acting President of the Government, Pedro Sánchez, had not yet planned any meeting with the Saudi Arabian delegation that will attend the G20 summit this weekend in New Delhi to ask for explanations in relation to the operation. Sánchez, finally, will not attend the summit having tested positive for coronavirus.
Regardless of what the Spanish government does, the European Commission recalled that at this time there is a monitoring mechanism for foreign direct investment in force and that the government can go to Brussels to request help in analyzing the Telefónica operation. In any case, from Brussels they recalled that Spain would have the last word on the operation.
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