The Diplomat
The Council of Ministers yesterday ordered Sociedad Estatal de Participaciones Industriales (SEPI), a body dependent on the Ministry of Finance, to buy up to 10% of Telefónica’s share capital, according to the Spanish Securities and Exchange Commission (CNMV).
With this move, which could cost around 2 billion euros, the government is trying to act as a counterweight to foreign investors such as the Saudi group STC, linked to the Arab monarchy’s sovereign wealth fund, which acquired 9.9% of the company’s capital in September.
The proposal to the Council of Ministers came from the fourth vice-president and minister of Finance and Public Function, María Jesús Montero, and as explained in the Senate by the first vice-president and minister of Economy, Nadia Calviño, the measure is due to the fact that Telefónica “is, without doubt,” she said, “the most strategic company in our country, not only for its presence in the field of telecommunications infrastructure and in the field of technological innovation, but also for its weight in the field of security and defence”.
María Jesús Montero’s department explained that “Telefónica is one of the country’s main companies, a leader in the telecommunications sector and a key player in other strategic areas. The company is decisive for its industrial capacities and areas of knowledge, as it develops activities that are relevant to the economy and the productive fabric, including those related to security and defence”. She also stressed that it has a wide deployment of telecommunications infrastructure that guarantees connectivity and digital services to Spanish citizens and companies, which is present in all technological areas of the Ministry of Defence.
She also emphasised that it provides the telecommunications services and infrastructures of the integral information infrastructure for defence on national territory and in military operations abroad, and therefore has “a solid position in this sector”. “The presence of a public shareholder in Telefónica will reinforce its shareholding stability and, consequently, preserve its strategic capabilities, which are of essential importance to national interests,” the Treasury said.
When SEPI’s purchase of 10% of Telefónica is completed, the state-owned company will become the operator’s main shareholder, ahead of STC and the stable core of Telefónica’s shareholders, which until now was headed by BlackRock with 4.98%, followed by BBVA (4.84%), and CaixaBank (3.5%).
The Executive emphasises that “the entry into the company’s capital is in line with the countries around us. Germany holds 13.8% of Deutsche Telekom’s capital; France has a 13.4% stake in Orange; and Italy, which in August 2023 adopted an agreement to increase its stake in the company that groups together Telecom Italia’s fixed telephony assets to 20%”.
However, the announcement caused unease among the opposition, and the president of the PP, Alberto Núñez Feijóo, criticised the fact that they had not been consulted and that public money is being used for what they consider interventionist purposes. “It is a government that expels large companies from our country and aspires to control those that remain. It is not a priority to use money from all Spaniards to buy shares in a multinational. And even less so with the rate of indebtedness that our country has,” he said.
This move by the government comes three and a half months after the Saudi ‘teleco’ STC – 64% controlled by the Saudi Arabian government through the sovereign wealth fund PIF (Public Investment Fund) – surprisingly broke into Telefónica’s shareholding with a 9.9% stake in the company’s share capital. This operation, which was orchestrated without Telefónica’s management being aware of it, consisted of the acquisition of 4.9% of shares directly and 5% through financial derivatives.
Current Spanish regulations on foreign investment in strategic listed companies stipulate that the Spanish government must give permission to non-EU investors who intend to acquire more than 10% of a company of this type. However, this threshold is lowered to 5% in the case of companies with national defence interests, such as Telefónica.
