Spain pushes back against stc’s stake in Telefonica
Yolanda Diaz, Spains labour minister and second deputy prime minister has spoken out against the sale of a 9.9% stake in Spanish multi-national operator Telefonica.
Last week, Capacity reported that Saudi Arabian stc Group had agreed to purchase the stake for US$2.25 billion, becoming the largest shareholder in the Telefonica Group.
“We cannot allow the operation to continue. Telefonica manages the most important thing in our lives – data.” Diaz told reporters while travelling in Rome on Saturday.
The deal is still subject to regulatory approval, with economy minister Nadia Calvino stating on Wednesday that Spanish authorities were investigating the purchase.
Calvino said that he would apply all necessary measures to protect Spain’s interests.
The Saudi Arabian company maintained that it “did not intend to acquire control or a majority stake” but rather it saw this as a “compelling investment opportunity.”
But eyebrows will undoubtably be raised by Spanish authorities due to the secretive nature in which stc built its stake and the precise amount that it has bought.
Reuters reported the move caught Jose Maria Alvarez-Pallete off-guard, with Telefonica’s CEO flying to Riyadh from Silicon Valley at short notice after the news broke on Tuesday.
Foreign investment laws in Spain mean that any increase in voting rights above 4.9% triggers a national security review. Exactly 4.9% of stc’s investment is in cash equity, with the other 5% coming in the form of economic instruments that give it exposure to the company. Stc said it will seek to secure voting rights for the 5% pending regulatory approval.
Stc has primarily focused its investments outside of Saudi Arabia on the Gulf region, such as their stakes in Kuwait and Bahrain.
However its towerco subsidiary TAWAL recently closed a deal to acquire United Group’s towers in Bulgaria, Croatia and Slovenia.
Stc’s competitor in the gulf region E& has also made strides to expand into Europe recently, purchasing a controlling stake in PPF Telecom’s operations in Bulgaria, Hungary, Serbia and Slovakia.
E& have also increased their stake in UK’s Vodafone Group this year, and taken an additional board seat.