With the Telefónica operation, 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.
In the Spanish case, the Government has used the SEPI, its armed wing to defend industrial policy, and thus ensure a significant presence within Telefónica. It will involve an investment of about 2,000 million euros, but the Government considers it profitable to guarantee a Spanish core within the strategic company, after the entry of Saudi Telecom which, remember, caught everyone by surprise.
In this way, the State will become the main shareholder of Telefónica in the coming days, once the Sociedad Industrial de Participaciones Industriales (SEPI) executes the purchase of 10% of the capital stock of the company as approved yesterday by the Council of Ministers.
The decision comes four months after the Saudi Telecom company (STC), owned by the sovereign fund of Saudi Arabia, surprise bought 4.9% of Telefónica’s capital and acquired another 5% in derivative products. The alarms went off in Moncloa where, from the first moment, they warned of the strategic nature of the company and the need to safeguard its Spanish identity.
The decision is far from being an improvisation by the Government of Pedro Sánchez, with it Spain joins European practices. “It is a general trend in the sector that is understood by the arrival of 5G technology and all the implications that its development will have on security,” explain sources in the sector. “In the case of Telefónica it is even better understood as it is a strategic player not only in telecommunications but in defense projects,” they point out.
In the market, the decision is not expected to have an impact on the strategy announced by Telefónica for the next three years. The company itself sent a relevant fact to the CNMV last night in which it corroborates that “it continues to focus on the execution of the 2023-2026 Strategic Plan that it communicated to the market on November 8.”
The rating agency Moody’s considers that this decision does not have a direct impact on Telefónica’s valuation. “When the presence of the State in a company in the sector exceeds 20%, it can influence an increase in the rating of up to one notch, but below that percentage we do not consider that there is implicit support,” says Carlos Winzer, vice president of Moody’s rating agency and telecommunications sector analyst.
There are two large European countries that exceed that percentage. Germany has 30.46% of Deutsche Telecom and France, 23% of Orange. In Telecom Italia, public participation is 9.8%. Outside the European Union, Switzerland and Norway have more than 50% of the shares of the main telecommunications operator in their country, which represents total control of the company.
Now, the capital of the Spanish State returns to the shareholding of the country’s leading telecommunications company, Telecom, for the first time since its privatization ended in 1997. It does so, according to the statement issued, “with a vocation for permanence. The participation of the SEPI will allow Telefónica to provide greater shareholder stability so that the company achieves its objectives and, therefore, will contribute to the safeguarding of its strategic capabilities.”
To do this, the State will have to disburse around 2,000 million euros, taking into account that, at the close of the Spanish market yesterday, the company had a capitalization of 20,510 million euros. “An amount that if the operation is not carried out as quickly as possible will rise, as has been seen in the company’s shares listed on the New York Stock Exchange, which rose 4.3% as soon as it became known,” sources from the market. From the SEPI they speak of “a prompt operation” to minimize the impact on the action.
In this way, SEPI would be the main shareholder ahead of the direct 4.9% owned by STC, 4.9% of Blackrock, 4.8% of BBVA and the same percentage of CaixaBank, according to the information declared. at the CNMV.
Telefónica refrains from commenting, but close sources note their discomfort with the decision for SEPI to join the board of directors, although they do not consider that it will entail any major change. These sources recall that “the company is a regulated company, so the dialogue and public policies already conditioned it sufficiently.” In fact, on the last Investor Day, its president and CEO, José María Álvarez Pallete, publicly requested “total deregulation for the company and that it be freed from the obligations it had when it was a public company.”
