The Diplomat
Acting Government Spokeswoman Isabel Rodríguez said yesterday that the Government will ensure that Telefónica’s “strategic autonomy” is preserved, after the Saudi Arabian company Saudi Telecom (STC) bought 9.9% of the Spanish company’s shares for 2.100 million euros.
Speaking to RTVE, Isabel Rodríguez said: “The government has the capacity to assess this type of investment, which does not affect control of the company. There are channels to preserve our strategic autonomy that the government is putting in place, and what I want to stress is that Telefónica is not only an emblematic company in our country, but it is a strategic company, a strategic operator, and that the government is, of course, going to watch over Spain’s strategic autonomy with absolute normality and peace of mind”.
Meanwhile, from Brussels, the first vice-president and acting minister for economic affairs, Nadia Calviño, acknowledged that STC notified the government at the last minute before proceeding with the purchase of the shares and insisted that it was a “friendly” operation that should be interpreted in terms of support for Spain.
With regard to how the Government will guarantee Telefónica’s independence, Calviño said that “the necessary mechanisms” will be applied and that this will be done “always with the defence of Spain’s strategic interests in mind and as a priority”. “We are analysing the elements that determine the application of these mechanisms, Telefónica is a strategic company for our country”, she stressed.
STC’s purchase of this stake in the Spanish group has been carried out through the acquisition of shares representing 4.9% of Telefónica’s share capital and financial instruments conferring economic exposure on a further 5% of Telefónica’s share capital.
In order to convert these financial instruments into voting rights, STC Group must obtain prior authorisation from the government due to the so-called ‘anti-takeover shield’, under which the government has to give permission to non-EU investors seeking to acquire more than 10% of a listed strategic company.
However, this threshold is lowered to 5% in the case of companies with national defence interests, such as Telefónica.
The Saudi STC group itself said yesterday that it considers it premature to apply for a seat on Telefónica’s board, despite becoming the company’s largest shareholder ahead of BBVA (4.87%), BlackRock (4.48%) and CaixaBank (3.5%). “We are still in the early stages of our investment and we trust Telefónica’s current management team, so it is too early to talk about these issues,” sources close to the Saudi operator told Europa Press.
Trip to Saudi Arabia
Telefónica said it “takes note of STC’s friendly approach” to the group and “its support for the management team, Telefónica’s strategy and its ability to create value”.
Hours later it emerged that company chairman José María Álvarez-Pallete and CEO Angel Vilá travelled to Saudi Arabia yesterday to meet with STC Group to discuss the various details involved in the deal. Álavrez-Pallete interrupted his schedule in the United States, where he was participating in a series of conferences for investors on the media and telecommunications sector, to travel to the Arab country.
The aforementioned STC sources insisted that they have no intention of acquiring control or a majority stake in Telefónica. “This is a great investment opportunity that allows us to use our strong balance sheet while maintaining our attractive dividend policy,” they said.
They also stressed that this is “another important milestone” in its expansion and growth strategy, and reflects confidence in Telefónica’s sustainable growth and upside potential.
As part of its growth strategy, STC has made a number of investments in the information, communication and technology sector, both in Saudi Arabia and abroad, the most recent being the acquisition by its subsidiary Tawal of United Group’s telecommunications tower assets in Bulgaria, Croatia and Slovenia.
Telefónica’s shares rose yesterday following the news of the acquisition by STC, a fact about which Isabel Rodríguez pointed out that in the face of economic movements that affect the stock market, the economy of a country and a company, “it is advisable to give messages of calm and not to worry”. She added: “This is what the government is going to do and what the First Vice-President and Minister of Economy is working on at the moment”.
