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Saudi stc Group acquires 9.9% stake in Telefonica for $2.25 billion

EditorRachael Rajan
Published 2023-09-05, 05:26 p/m
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Saudi Arabia’s stc Group, also known as Saudi Telecom, has agreed to purchase a 9.9 percent stake in Spanish telecom giant Telefonica (NYSE:TEF) for €2.1 billion ($2.25 billion), according to statements released on Tuesday. The acquisition, which will make stc the main shareholder of Telefonica, surpassing BBVA (BME:BBVA), BlackRock (NYSE:BLK) and CaixaBank, each holding 4.8%, is articulated through a direct purchase of 4.9% and the subscription of financial instruments for another 5%.

Telefonica's current market value stands at 21,330 million and the recently acquired stake equates to approximately 2,100 million. The Saudi group emphasized that it has no intention of acquiring control or a majority stake in Telefonica.

Olayan Alwetaid, CEO of stc Group, expressed confidence in Telefonica's leadership and strategy, stating: "Our investment in Telefonica demonstrates our confidence in its leadership, its strategy and its ability to create value." He further added that this significant investment aligns with their growth strategy and allows them to utilize their strong balance sheet while maintaining their dividend policy.

The deal comes as part of stc's global expansion strategy, with the group seeing bullish potential in Telefonica due to its unique portfolio of infrastructure assets and cutting-edge technological platforms. One key factor that attracted the Saudi group to the Spanish company is its significant presence not only in Spain but also in Germany, the United Kingdom and Brazil, making it one of the largest telecommunications companies globally.

Mohammed Al-Faisal, chairperson of stc Group, highlighted the shared vision between the two companies of using technology to connect people and driving growth. He said: "This long-term, significant investment by stc is a continuation of our growth strategy, as we invest in vital technology and digital infrastructure sectors across promising markets, globally."

This latest acquisition follows stc subsidiary Tawal's recent purchase of United Group’s telecommunications-tower assets in Bulgaria, Croatia and Slovenia. As soon as the necessary regulatory permits are obtained for the Telefonica deal, stc intends to exercise political rights equivalent to this 5%.

The Saudi group's investment in Telefonica comes under the anti-opas shield created by the Spanish government during the pandemic and extended until 2024. This policy allows the Council of Ministers to veto non-EU investors from acquiring more than 10% capital in Spanish listed companies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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