The Saudi STC becomes the first shareholder of the Spanish Telefonica

Posted Sep 5, 2023, 10:53 PM

The big maneuvers continue in the world of European telecoms. The Saudi Telecom Company (STC) group announced on Tuesday that it had acquired a 9.9% stake in Telefonica for an amount of 2.1 billion euros.

With this acquisition, STC becomes the leading shareholder of the Spanish group, present in particular in Latin America and the United Kingdom, ahead of the banking group BBVA, which owns 4.87% of its capital, and the American et manager BlackRock, which owns 4.48%.

No takeover

“This acquisition represents a new step in STC’s expansion and growth strategy,” said the Saudi group in a statement, saying it wanted to take advantage of the “potential” offered by the large “portfolio” of infrastructure belonging to the Spanish operator.

“We do not intend to take control or a majority stake” in Telefonica, however, specifies STC, the main telephone operator in Saudi Arabia, with a market capitalization of 49 billion euros.

Under the gaze of Madrid and Brussels

Above 9.9%, foreign investors wishing to acquire the shares of a Spanish company deemed strategic must obtain the green light from the Spanish government, under a measure introduced in 2020 to protect companies weakened by the health crisis. .

Very present in Brazil, Germany and the United Kingdom, Telefonica earned two billion euros in net profit last year, against 8.1 billion in 2021, for 40 billion euros in turnover. The group has nevertheless been confronted for several years with a high debt, which it is struggling to reduce.

At the end of 2022, Telefonica had also had to sell 45% of its Spanish optical fiber subsidiary Bluevia Fibra to Crédit Agricole urances and Vauban Infrastructure Partners, in order to reduce its debt, which peaked at 28.9 billion euros at the end of September.

Consolidation in Spain

The acquisition of 9.9% of its capital by STC comes against a backdrop of increased competition in the Spanish market since Orange and MasMovil announced in the summer of 2022 a merger agreement of their activities in Spain, which could threaten Telefonica.

This merger, which should give rise to the number two telecommunications company in this country, remains subject to the green light from Brussels, which has opened an investigation into this project and warned against a risk of “considerable” effects for competition.

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