The president of Telefónica, José María Álvarez-Pallete, met yesterday in Madrid with the CEO of Saudi Telecom (STC), Olayan Alwetaid, to address aspects related to the recent landing of the Arab operator in the capital of the Spanish company, indicate sources familiar with the meeting. Telefónica sources do not comment on the meeting.
STC has also just announced in its annual report that it expects to obtain “in one year” the “relevant regulatory authorizations” from the Spanish Government to increase its stake in Telefónica from its current 4.9% to 9.9%. In September of last year he already announced that he has parked 5% in derivatives waiting for their execution as soon as he obtained this permit.
The meeting between Pallete and Alwetaid takes place shortly before Telefónica calls its general meeting of shareholders, which is usually held at the end of March or April. STC has already expressed its interest in joining the board of directors, but has also stated that it is in no rush to apply.
For now, STC, whose main shareholder is the Saudi State, has already begun to receive the first dividends from Telefónica in the fourth quarter of 2023, with which it begins to amortize an investment of 2.1 billion euros. The first payment is 173 million Saudi riyals (about 42 million euros).
In its annual report, the Saudi operator also explains that it has signed financial contracts to cover itself in a “one to one” proportion of the risks derived from its investment in the Spanish company.
To increase its shareholding, STC must ask permission from the Government, which in parallel is working on the formation of a front that guarantees the Spanishness of Telefónica. The big move will be the purchase of 10% of the capital by Sepi, which has already received permission from the Council of Ministers to build the stake.
The two managers also meet after having attended the Mobile World Congress (MWC) in Barcelona this week, where the two companies have set up their stands a few meters apart. The two are on the board of the GSMA, the organizer of the conference.
During the MWC, a senior executive at STC, Mohammed bin Rashid Abaalkheil, explained to La Vanguardia that the company did not plan to make any move regarding Telefónica until the position of the Spanish Government was clear.
Sector sources underline the financial attractiveness of STC’s investment in Telefónica. The stock was low and the movements of the sector in Europe have created an appetite to invest in telecommunications, which gave the Spanish company visibility of revaluation.
Telefónica and STC already had a commercial agreement since February of last year. For the Saudi group, the Spanish telecom is a well-known company that can be useful as an entry point into the European merger process.
Brussels’ authorization of the merger between Orange and MásMóvil has opened the door to consolidation movements in Europe. It represents, according to sources, an additional incentive for STC not to rush the three years in which it can exercise its right to take an additional 5% in Telefónica.
The STC stand in Barcelona has occupied a relevant location and there the company representatives offered innovations to passersby such as having biometric face scans.
