The unexpected emergence of Saudi Telecom as the first shareholder of Telefónica is generating growing discomfort in the Podemos part – now integrated into Sumar – of the acting Government. The second vice president and Minister of Labor, Yolanda Díaz, this Friday directly asked the first vice president and Minister of Economic Affairs, Nadia Calviño, to veto the entry of the Saudi public investor into the Spanish company.
“My opinion is that we cannot allow this operation to continue. This is what I have sent to the economic vice president of the acting Government and that is how I am going to defend it,” Díaz said this Friday from Rome. He said that Spain must “think” about its strategic sectors, recalled that “all countries regulate these situations” and promised to “work so that this operation does not occur.”
His statements occurred while the new investor, three days after announcing the purchase of 9.9% of Telefónica for 2,100 million and with an increase through the shares of the Spanish operator, finally registered his position with the CNMV and left in evidence to what extent the Saudi State is the owner of the participation.
The owner of the operation is not Saudi Telecom, but Public Investment Fund (PIF), the State’s sovereign fund, which manages more than 600,000 million euros and which the Saudi crown prince, Mohamed bin Salman, has turned into the spearhead of its Vision 2030 plan. From there, the chain of ownership begins: PIF has 64% of Saudi Telecom, which in turn owns a Luxembourg company called Green Bridge Investment Company SCS, which is the ultimate depositary of the shares. .
Díaz’s statements are much more forceful than those of Calviño on Wednesday, made in Brussels a few hours after, on Tuesday night, Saudi Telecom informed the Government of the operation. The Minister of Economic Affairs reserved a possible legal veto to the purchase of more than 5% of Telefónica and warned that the Government will use “all mechanisms” to protect “strategic sectors and interests.” However, he also recalled that the Executive promotes the “attractiveness of Spain” for foreign investments, “which are absolutely fundamental for economic growth.”
However, there have been more receptive messages from the Government, especially that of the Minister of Social Security, José Luis Escrivá, who highlighted on Thursday the “positive part” of an investment of this type. “It’s good that there are investors as important as sovereign funds in the world,” he said. UGT and CC.OO. They also support the arrival of Saudi Telecom because it will give “body and strength” to Telefónica, they say.
Royal Decree 571/2023 of July of this year is what allows the Government to veto purchases of more than 5% in strategic companies for Defense such as Telefónica. Saudi Telecom can take up to 9.9% and enjoy dividends up to that proportion, but needs permission to exercise political rights. He may also be prevented from joining the board of directors, which the Saudi operator aspires to, despite insisting that “now is not the time” to address this issue.
The acting Defense Minister, Margarita Robles, indicated this Friday in a video conference with several Navy ships that the Government will study “very carefully” the claims of the Saudi State. Relations between Spain and Saudi Arabia in Defense are intense, with a 2,000 million contract with Navantia for the purchase of five corvettes which, as indicated this Friday by the Spanish shipyard, continues to be negotiated without being affected by the investment from Saudi Telecom. The Secretary of State for Commerce estimates that Riyadh has purchased weapons from Spain for more than 450 million in the last three years.
Saudi Arabia declared this Friday the possession of some 570 million Telefónica shares. At market price, they are worth about 100 million more than the amount of the purchase, thanks among other things to the revaluation of these days. 5% of the stake, which is subject to veto by the Government, has been purchased discreetly by Morgan Stanley since February. On Tuesday, these trading acquisitions were packaged into a derivative contract that gives Saudi Arabia the right to receive dividends and has an expiration date of March 2025. Saudi Telecom’s intention is for this participation to become direct as soon as the Government gives permission.
