2023-12-19 21:35:15
The Government has given the green light for the State Society of Industrial Participations (SEPI) to buy 10% of Telefónica after the Saudi company STC Group has announced its intention to take over 9.9% of the Spanish technology company. This was confirmed today after the Council of Ministers in a relevant fact sent to the National Securities Market Commission (CNMV).
The 10% stake in the Spanish telecommunications company would be equivalent to 2.5 billion euros, given that its capitalization currently amounts to 20.5 billion; and would make SEPI the largest shareholder of Telefónica, ahead of STC and the stable core of Telefónica shareholders, which until now was led by BlackRock with 4.98%, followed by BBVA (4.84%), and CaixaBank ( 3.5%).
Counterweight
The possible entry of SEPI into Telefónica’s shareholding was revealed in October, after the Saudi telecommunications group STC announced in early September its intention to acquire 9.9% of Telefónica for 2.1 billion euros. It has already acquired 4.9% directly on the market, while to acquire the other 5%, linked to derivative financial products that it aspires to convert into shares, STC must request authorization from the Government as Telefónica is a strategic company not only due to the area in which it operates but also due to the contracts it maintains with the Ministry of Defense, although it is still unknown if it has done so.
In this regard, immediately after STC announced the operation by surprise, the Government warned that it was going to carefully study the purchase to safeguard the interests of a company that it considers strategic for Spain. STC is controlled by the Saudi sovereign fund PIF, the vehicle chosen by Crown Prince Mohammed bin Salman, the kingdom’s de facto ruler, to promote an economic agenda aimed at reducing the country’s dependence on oil and which Saudi Arabia has called Vision 2030. The entry of the SEPI would act, in this regard, as a counterweight to the fund.
Precisely, the Treasury has highlighted today in a statement that Telefónica “is one of the main companies in the country, a leader in the telecommunications sector and key in other strategic areas. The company is decisive due to its industrial capabilities and areas of knowledge, since that develops activities relevant to the economy and the productive fabric, including those related to security and defense”.
SEPI has highlighted that its entry into Telefónica has a “vocation for permanence”
“With a vocation for permanence, SEPI’s participation will provide Telefónica with greater shareholder stability so that the company achieves its objectives and, therefore, will contribute to the safeguarding of its strategic capabilities. SEPI will proceed to carry out the procedures and actions that allow the process to be launched to, minimizing the impact on the price, complete the acquisition of the necessary volume of shares,” the company dependent on the Ministry of Finance explained in its statement.
The first vice president and minister of Economy, Commerce and Business, Nadia Calviño, has also defended an agreement that, as she said, is “in line” with other large European countries, such as France or Germany, which have and are even increasing their participation public in the large strategic telecommunications operators.
Despite the powerful artillery that STC has at its disposal thanks to the support of PIF, from the first moment the Saudi company has assured that its investment in Telefónica has a purely industrial nature. The investment in the Spanish company, according to STC Group, reflects its “confidence in Telefónica’s management team, its strategy and ability to create value.” The analysts themselves consider it unlikely that the Government of Riyadh intends to put Telefónica under its direct control.
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