Saudi group STC buys 9.9% of Telefónica to be its first shareholder

Saudi telecommunications company STC Group has bought a 9.9% stake in telephone for 2,100 million euros (about US$ 2,250 million), with which it becomes the first shareholder of the Spanish operator, as reported by the Arab company in a statement today.

Telefónica has also informed the National Securities Market Commission (CNMV) of the operation, which will be carried out through the acquisition by Saudi Telecom of shares representing 4.9% of Telefónica’s capital stock and financial instruments of another 5%.

The Saudi company clarifies that it has no intention of acquiring control or a majority stake in Telefónica, according to its CEO, Olayan Alwetaidwho has highlighted that “This is a great investment opportunity that allows us to use our strong balance sheet while maintaining our attractive dividend policy”.

STC It is the largest Saudi telecommunications operator and also owns stakes in companies operating in Kuwait and Bahrain. The company is 64% owned by the sovereign wealth fund of Saudi Arabia, the Public Investment Fund (FPI), the main engine of the Crown Prince’s Vision 2030 Mohammed bin Salman to untie the economy from its dependence on oil.

So far the Spanish bank BBVA was the first shareholder of telephonewith 4.87%, followed by the US fund BlackRock, with 4.48%, according to operator sources. Another Spanish bank, caixabankalso has a 3.5% stake in the telephone multinational.

STC will obtain the voting rights corresponding to that 5% through the physical liquidation of the financial instruments after obtaining the necessary regulatory authorizations.

investment, notes STCreflects his confidence in the Telefónica management team, its strategy and the ability to create value.

Saudi Telecom is the digital leader in the Middle East and offers innovative products and services in Saudi Arabia, the Middle East and North Africa, according to information provided by the company, which is listed on the Saudi Arabia Stock Exchange with a market capitalization of 49.2 billion euros.

The Saudi group has made investments in the information, communication and technology sector, both in Saudi Arabia and abroad. The most recent is the acquisition by one of its subsidiaries, Tawal, of United Group’s telecommunications tower assets in Bulgaria, Croatia and Slovenia.

The president of STC, Mohammed KA Al Faisalhas indicated in the statement that telephone and the group that leadsshare many similarities, have the same vision of using technology to connect people and developing a strategy to drive growth”.

“This important long-term investment is aligned with our growth strategy, according to which we invest in sectors such as technology and digital infrastructure in markets that we consider promising around the world.“, Add.

Strategic plan

Telefónica is scheduled to present a new strategic plan on November 8, focused on increasing the company’s free cash flow, which its CEO says could reach 4 billion euros ($4.3 billion) this year.

Telefónica, like its rivals in Europe, has faced declining profitability due to competition and the need for heavy investment in infrastructure for 5G mobile technology.

The company has been selling stakes in more mature businesses, such as undersea cables and cell towers, to finance 5G and fiber optics.

With information from EFE and Reuters