The Council of Ministers has approved that the State Society of Industrial Participations (SEPI), an organization dependent on the Ministry of Finance, proceeds with the purchase of up to 10% of the capital of Telefónica, as reported by the first Spanish teleoperator to the National Market Commission of Securities (CNMV).
The decision comes four months after the Saudi telecommunications company, Saudi Telecom, owned by that country’s sovereign fund, took 4.9% of Telefónica’s capital and purchased another 5% through financial derivatives. An operation that surprised the company itself, according to its directors, and the Spanish Government itself, which did not hide its concern that a shareholder from an Arab country could sit on the board of directors of a strategic company with notable participation in key projects for national security.
Now, the State’s capital returns to the shareholding of the country’s first telecommunications company, for the first time since its privatization ended in 1997.
It does so, according to the statement issued yesterday, “with a vocation for permanence, the participation of 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.”
For this, the state will have to disburse around 2,050 million euros, taking into account that at the close of the Spanish market yesterday, the company reached a capitalization of 20,510 million euros. “An amount that will rise if the operation is not carried out as quickly as possible. As has been seen in the company’s shares listed on the New York Stock Exchange, which rose 4.3% as soon as they were announced,” market sources warn.
The emergence of the Saudi STC with up to 10% of the capital had raised doubts within the Executive, especially among the ranks of Sumar, due to the strategic nature of the company, key in telecommunications and defense management. “Telefónica is a leading company in the field of telecommunications both in Spain and internationally. It develops a set of activities that are of crucial relevance for the economy, the productive fabric, research, security, defense and, in definitively, the well-being of the citizens,” the statement to the CNMV states.
“The presence of a reference public shareholder in the capital of this company will reinforce its shareholder stability,” stated in a press release from the Ministry of Finance, from which SEPI hangs. The company’s shares have had an irregular year and have only appreciated 3.6% since January.
The SEPI will now proceed with “the procedures and actions that allow the purchase process to be launched to “minimize the impact on the price, complete the acquisition of the necessary volume of shares.” That is, it will look for the best strategy to obtain the securities without skyrocketing their price.
The Treasury defends that the entry into the company’s capital is in line with the countries around us, it is argued by the Treasury. As an example, it cites that Germany holds 13.8% of the capital of Deutsche Telekom, that France has 13.4% in Orange or Italy, which adopted an agreement in August 2023 to increase it to 20%. its participation in the company that brings together the fixed telephony assets of Telecom Italia.
