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The Spanish government, through state holding company SEPI, will acquire up to 10% of Telefonica, following STC’s €2.1 billion grab for a 9.9% stake in the operator.
December 20, 2023
The Council of Ministers in Spain agreed to purchase shares up to 10% via State Society of Industrial Participations (SEPI), who said the move will reinforce shareholder stability and preserve strategic capabilities ‘of essential importance for national interests’.
The announcement pointed out Telefónica is one of the main companies in the country, and is involved in all sorts of areas of the economy including those related to security and defence.
It read: “Telefónica has a wide deployment of telecommunications infrastructure that guarantees connectivity and digital services to Spanish citizens and companies. It is also present in all the technological areas of the Ministry of Defense and provides the telecommunications services and infrastructure of the Comprehensive Information Infrastructure for Defense in national territory and in military operations abroad, therefore, having a solid position in this sector.”
Seemingly by way of further justification, the announcement goes on to cite other presidents of state investment into major European telcos, saying Germany holds 13.8% of Deutsche Telekom, France holds 13.39% Orange, and Italy holds 20% of Telecom Italia.
The announcement doesn’t mention it specifically, but the move is probably not unrelated to the fact that three months ago Saudi Telecom Company dropped €2.1 billion on Telefonica to snap up a 9.9% stake, which at the time gave it more than twice the voting rights of the next biggest shareholder.
There was some vocal opposition to the deal in September, which has to be approved by the government. “Spain is a serious country and since we came to power we have reinforced all the mechanisms to defend the interests of our country,” El Mundo – and various other Spanish news outlets – quoted Nadia Calviño, Spain’s first vice president and economy minister at the time. “That is what we are going to do: analyse the transaction with the utmost rigour and activate the appropriate mechanisms to protect our general and strategic interests, given that Telefónica is a strategic company.”
Of this latest investment move by SEPI, Reuters quotes Calviño as saying it is “in line with other big European countries such as France and Germany that have stakes or are increasing stakes in big strategic firms.”
Aside from that, SEPI's added its presence as a major investor will help company achieve its grand objectives. In November Telefonica unveiled its new strategic plan dubbed GPS (Growth, Profitability and Sustainability – what’s not to like there?) which targeted €5 billion in annual free cash flow generation in 2026, up from around €4 billion this year.
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