Spanish government takes 3% stake in Telefónica after Saudi deal concerns

Spanish state-owned holding company SEPI said in a filing with the stock market regulator late on Monday that the move was ‘in line with a cabinet decision in December’ to acquire up to 10% of Telefónica’s share capital. ALSO READ: Spanish state to acquire 10% of Telefónica following Saudi stake.

At the time, the coalition government led by socialist (PSOE) Prime Minister Pedro Sánchez said it was to safeguard the firm’s ‘strategic capacities and essential importance’ to Spain.

It is the first time that the Spanish government has taken a stake in Telefonica since it was fully privatised in 1997. In September, Saudi Telecom (STC) said it had paid €2.1 billion for a 9.9% share in Telefonica, causing concern in Madrid, which only learned of the transaction at the last minute.

Had it been over the 10% threshold, the deal would have required government approval.

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

The Spanish government said the move to acquire a stake in Telefónica was in line with its European neighbours, which also own small minority stakes in their leading telecoms operators.

The return of the state as one of Telefónica’s shareholders comes as the company is in the process of cutting 3,400 jobs by 2026 in Spain, about one fifth of a total workforce of 16,500, 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.