15th July 2024
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Spain to ensure ‘strategic autonomy’ of Telefónica after Saudi group takes significant stake

Spain said on Wednesday that it would keep watch to ensure the ‘strategic autonomy’ of Telefónica after Saudi Telecom (STC) acquired a significant stake in the Spanish telco giant, becoming its largest shareholder.

In an announcement late on Tuesday, STC said it had paid €2.1 billion for a 9.9% share in Telefónica, which has a strong presence in Latin America and the UK.

‘Telefónica is not just a flagship company but a strategic operator and the government is going to be vigilant to ensure Spain’s strategic autonomy,’ government spokeswoman Isabel Rodríguez said.

Speaking to reporters in Brussels, Economy Minister Nadia Calviño said the government had in recent years ‘strengthened’ the mechanisms to protect its ‘strategic sectors’ and pledged to apply ‘all necessary measures’ to defend its interests.

STC said the move would allow it to benefit from the ‘potential’ offered by Telefónica’s ‘unique portfolio of best-in-class infrastructure assets’, while insisting it did ‘not intend to acquire control or a majority stake’ in the company.

Any foreign investor seeking to acquire a stake of 10% or more in a strategic Spanish company must first seek Madrid’s approval in a measure approved in 2020 to protect struggling firms during the pandemic.

‘Preserving our strategic autonomy is essential,’ wrote Labour Minister Yolanda Díaz on X (formerly Twitter), calling for ‘better regulation and protection to avoid’ takeovers in companies considered strategically sensitive.

In a statement, Telefónica characterised as ‘friendly’ the acquisition by STC which is 64% owned by Saudi’s PIF sovereign wealth fund and has operations in Kuwait, Bahrain and Malaysia.

Telefónica, which has a strong presence in Brazil, Germany and the UK, posted a net profit of 2.0 billion euros last year, although it has struggled with heavy debt levels.

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