The president of Telefónica, José María Álvarez-Pallete, and the company’s CEO, Ángel Vilá, have traveled to Saudi Arabia to meet with the top executives of the Saudi Telecom Corporation (STC), after the Arab group announced the purchase of 9.9% of the Spanish group, indicate sources familiar with the transfer.
Álvarez-Pallete, whose presence was scheduled in California, maintains good relations with the top executives of the Saudi group. She sits next to the CEO of Saudi Telecom, Olayan Mohammed Alwetaid, on the board of directors of the GSMA telecommunications association, the organizer among other things of the Mobile World Congress in Barcelona.
Telefónica has not commented for the moment on the movement of the Saudi group, whose stock market value of close to 50,000 million euros, more than doubles that of the Spanish group. Yesterday he limited himself to saying, after the announcement of the purchase, that he “takes note” of it.
Relations between the two companies are not new and include an international alliance. At the beginning of this year, Telefónica and Saudi Telecom signed a strategic collaboration agreement to work together on different initiatives. The Saudi group became one of the partners with which Telefónica covers more than 65 markets in Europe, Latin America, the Middle East and Africa.
Even more striking is that among the fifteen members of the Saudi Telecom management committee there is an executive who is not Arab, the Spaniard José del Valle, whose previous responsibility had been that of CEO of Telefónica Media Networks.
Telefónica sources refused to comment on the trip of its directors, while Saudi Telecom indicates that for the moment there are no aspirations to join the board of directors of the Spanish company. “We are still in the early stages of our investment and we trust the current Telefónica management team, so it is too early to talk about these matters,” they say from the company.
The purchase of 9.9% of Telefónica for 2,100 million, which will make it the largest shareholder ahead of CaixaBank, BBVA and BlackRock, is the first acquisition of Saudi Telecom in Spain. It has a presence in Kuwait, Bahrain, Malaysia and, recently, in Bulgaria, Croatia and Slovenia thanks to the purchase of telecommunications towers by its subsidiary Tawal.
The company’s main shareholder is the Saudi sovereign wealth fund PIF, with more than 60% of the capital. It has taken less than 10% of the capital from which the anti-opas shield approved by the Government during the pandemic and extended until 2024 allows an operation to be vetoed. However, Telefónica’s contracts with the Ministry of Defense allow the Council of Ministers to rule on the transaction.
The Saudi company reported the operation to the Government yesterday, which today announced, through the Vice President and Minister of Economic Affairs, Nadia Calviño, that it will use “all mechanisms” to protect Telefónica’s interests.
Saudi Telecom has informed the Saudi market that the purchase of a direct 5% and an additional 4.9% through derivatives of Telefónica has been financed through a mixture of own resources and bank debt.
The investor says he does not want to take control of Telefónica and has expressed confidence in the management team of the Spanish company. Álvarez-Pallete is in the process of drawing up the strategic plan until 2026, which he will present in November, at the group’s first capital market day in a decade.
Since taking office in 2016, the president of Telefónica has been committed to reducing debt and seeking value for the company, which has included intense contacts with potential investors. The company’s shares rose nearly 2% this morning, but later moderated their growth to 0.7%. Its market value is 21.7 billion.
