Saudi Telecom becomes Telefónica’s largest shareholder after buying 9.9% stake for €2.1 billion

TelefónicaJosé María Álvarez-Pallete, Executive Chairman of Telefónica

STC Group, the leading Saudi Arabian investor, has acquired a 9.9% stake in Telefónica for a total of 2.1 billion euros, it said in a statement on Tuesday. The first telecommunications company in Saudi Arabia has stated that it has no intention of “taking control” of the company headed by José María Álvarez-Pallete, among other reasons because it requires the cooperation of the Spanish government to do so. The dividend paid by Telefónica is “its main attraction”, he added.

The investment has been made through the acquisition of shares representing 4.9% of Telefónica’s share capital and financial instruments that give economic exposure to another 5% of Telefónica’s share capital.

STC Group Chairman Mohammed K.A. Al Faisal commented that his company shares many similarities with Telefónica. “This significant long-term investment by STC Group is aligned with our growth strategy, whereby we invest in sectors such as technology and digital infrastructure in markets we see as promising around the world,” he said.

The purchase of 9.9% of a company considered strategic and protected by a special Spanish government regulation is the limit that any foreign investor can buy, as to take a larger stake would require the authorisation of the Spanish government.

The Saudi operator becomes the largest shareholder in the company chaired by José María Álvarez-Pallete, ahead of BBVA, which has 4.87% of the economic rights, the US fund manager Blackrock, which holds 4.48%, and CaixaBank, which has 3.5%.

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