25th July 2024
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Spanish state to acquire 10% of Telefónica following Saudi stake

The Spanish government said on Tuesday that it will acquire 10% of the country’s telecoms giant Telefónica, just months after Saudi Telecom (STC) took a significant stake in the operator. ALSO READ: Spain to ensure ‘strategic autonomy’ of Telefónica after Saudi group takes significant stake.

The government said the acquisition will make it the ‘reference public shareholder’ in Telefónica, and justified the move on the grounds that the company is ‘a leader in the telecommunications sector and of key importance in other strategic areas’.

The government also said that Telefónica’s activities were important for Spain’s national security and defence, including foreign military operations.

The state’s stake in Telefónica ‘will preserve its strategic capacities and its essential importance for national interests’, it added.

The move follows the September announcement by Saudi Telecom (STC) it had paid €2.1 billion for a 9.9% share in Telefónica which has a strong presence in Latin America and the United Kingdom.

STC, which is majority-owned by Saudi’s PIF sovereign wealth, insisted at the time it did ‘not intend to acquire control or a majority stake’ in Telefónica.

But it caused concern in Spain’s government, which only learned of the transaction at the last moment as it was below the 10% threshold where it would have required approval.

The government said at the time it intended to remain vigilant as Telefónica was important in ensuring the country’s strategic autonomy.

The stake will be held by SEPI, the holding company for the state’s investments in firms.

Spain’s coalition government noted that the move was in line with its European neighbours, which also own small minority stakes in their leading telecoms operators.

The return of the Spanish state among Telefónica’s shareholders comes as the company is in the midst of shedding 5,100 posts in the country by 2026, a third of the total, as it tries to boost its profitability.  The company currently has a global workforce of over 100,000 people. ALSO READ: Telefónica to cut 5,100 jobs in Spain by 2026 – approximately 25% of workforce.

Weighed down by a heavy debt load, the sharp jump in interest rates this past year has caused concern about its finances.

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