Saudi Telecom Group (STC) recently informed the U.S. Securities and Exchange Commission (SEC) about its near 10% stake in the Spanish telecom giant, Telefónica. This move has been previously approved by the Spanish government, and it positions STC as Telefónica’s second-largest shareholder.
STC has declared its intention to secure a seat on Telefónica’s board. By doing so, it aims to play a more active role in the company’s decision-making processes. Luxco, the vehicle used by STC for this investment, confirmed plans for board representation discussions. This is the first official submission to a regulatory body regarding its board ambitions.
Though STC has announced it would remain a passive investor, it hasn’t entirely ruled out more active participation. The company mentioned it might engage in strategic discussions and possibly examine business combinations or governance strategies.
The acquisition aims at long-term investment purposes. However, STC retains the flexibility to adjust its investment strategy as it sees fit. This includes continuously monitoring the investment landscape and responding accordingly.
The Spanish Council of Ministers had authorized this stake increase from 4.9% to 9.97%. STC initially held a 4.9% stake and used financial instruments to control an additional 5%. These instruments were converted into shares, facilitating the authorized stake growth.
The Spanish government placed conditions on this approval, focusing on protecting Telefónica’s strategic autonomy and the nation’s critical infrastructure. STC assured that it would not seek overall control over Telefónica.
In comparison, the Spanish government owns a 3% stake in Telefónica through the state entity, SEPI. This move aims to balance STC’s influence and maintain equilibrium within the company.