Spain says to remain vigilant over STC-Telefonica tieup

MADRID — Spain said on Wednesday it would keep watch to ensure the "strategic autonomy" of Telefonica after Saudi Telecom (STC) acquired a significant stake in the Spanish telco giant, becoming its largest shareholder. 

In an announcement late Tuesday, STC said it had paid 2.1 billion euros ($2.25 billion) for a 9.9 percent share in Telefonica which has a strong presence in Latin America and the United Kingdom. 

"Telefonica is not just a flagship company but a strategic operator and the government is going to be vigilant to ensure Spain's strategic autonomy," government spokeswoman Isabel Rodriguez said. 

Speaking to reporters in Brussels, Economy Minister Nadia Calvino said the government had in recent years "strengthened" the mechanisms to protect its "strategic sectors" and pledged to apply "all necessary measures" to defend its interests. 

STC said the move would allow it to benefit from the "potential" offered by Telefonica's "unique portfolio of best-in-class infrastructure assets" while insisting it did "not intend to acquire control or a majority stake" in the company. 

Any foreign investor seeking to acquire a stake of 10 per cent or more in a strategic Spanish company must first seek Madrid's approval in a measure approved in 2020 to protect struggling firms during the pandemic. 

"Preserving our strategic autonomy is essential," wrote Labour Minister Yolanda Díaz on X, formerly known as Twitter, calling for "better regulation and protection to avoid" takeovers in companies considered strategically sensitive. 

In a statement, Telefonica characterised as "friendly" the acquisition by STC which is 64 per cent owned by Saudi's PIF sovereign wealth fund and has operations in Kuwait, Bahrain and Malaysia.

Telefonica, which has a strong presence in Brazil, Germany and the UK, posted a net profit of 2 billion euros last year although it has struggled with heavy debt levels.