Telefónica shares listed on the Spanish stock market rose up to 6% at the opening of the session this Wednesday. The titles reflect the State’s intention to buy up to 10% of the company’s shares announced this Tuesday and become its main shareholder to counteract the entry of the Saudi STC a few months ago.
At mid-session the rebound stood at 4% and 3.70 euros. The year has been irregular in the park for the company chaired by José María Álvarez-Pallete, with a revaluation of just 3% in the accumulated year before the news of the purchase by the State broke. The company recorded its annual maximum in April, when the shares touched 4.1 euros, a level that it lost in the following months, with 3.5 euros as a floor.
The operation ensures significant demand on the stock market, which increases the value of the shares, and also gives confidence to the company’s plans and shareholder core. “It shows confidence and security in the company and its future strategic plan,” according to Manuel Pinto, XTB analyst. “Together with BBVA and CaixaBank, it strengthens the nationality of the company’s main investors, while at the same time clearing up doubts about the possible purchase of 10% of Saudi Telecom, which would have generated distrust about its independence,” he continues.
To carry out the operation, the Government has used SEPI, its armed wing to defend industrial policy, and thus ensure a significant presence within Telefónica. When announced this Tuesday, it was estimated that the operation would involve an investment of around 2,000 million euros, a figure that has already increased to 2,100 million with today’s revaluation. The Government considers that it is profitable to guarantee a Spanish core within the strategic company, after the entry of Saudi Telecom (STC) which surprised everyone.
The entry of the Government in the long term may raise some more doubts about the value of the shares. “State intervention and changes in the shareholding structure could generate instability in the share price, affecting the profitability of investors due to market volatility. In addition, uncertainty about Telefónica’s strategic direction, influenced by the Government, may sow doubts about the long-term profitability of investments,” explains Franco Macchiavelli, head of analysis at Admirals Spain.
With the operation in Telefónica, Spain joins the general trend in Europe where States participate in the main telecommunications companies. This is the case of Germany, France and Italy within the European Union, and also of Switzerland and Norway outside the community club.
