Source: AFP
Spain announced on Tuesday that it will acquire 10% of local telecoms giant Telefonica, just months after Saudi Telecom took a major stake in the operator.
The Spanish government said the takeover would make it the “reference public shareholder” of Telefonica, and justified the move on the grounds that the company is a “leader in the telecommunications sector and is of key importance in other strategic areas”.
The government also said Telefonica’s activities were important to Spain’s national security and defense, including foreign military operations.
The state’s stake in Telefonica “will preserve its strategic capabilities and essential importance for national interests,” he added.
The move follows Saudi Telecom’s (STC) announcement in September that it had paid 2.1 billion euros ($2.3 billion) for a 9.9 percent stake in Telefonica, which has a strong presence in Latin America and the United Kingdom .
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STC, which is majority-owned by Saudi Arabia’s state-owned PIF, insisted at the time that it had “no intention of acquiring control or a majority stake” in Telefonica.
But it caused concern for the Spanish government, which only found out about the transaction at the last minute, as it was below the 10 percent threshold where approval would be needed.
The government said at the time that it intended to remain vigilant as Telefonica was important to ensuring the country’s strategic autonomy.
The stake will be held by SEPI, the holding company for the state’s investments in businesses.
Spain’s coalition government noted the move was in line with its European neighbors, who also hold small minority stakes in their top telecoms operators.
The return of the Spanish state to Telefonica shareholders comes as the company is in the midst of shedding 5,100 jobs in the country by 2026, a third of its total, as it tries to boost profitability.
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The company currently has a global workforce of over 100,000 people.
Burdened by a heavy debt load, the sharp rise in interest rates over the past year has raised concerns about its finances.
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Source: AFP