STC has purchased a 9.9% interest in Telefónica to further its growth ambitions outside of Saudi Arabia
Saudi Telecom Company (STC) has purchased a 9.9% interest in Telefónica for €2.1 billion ($2.25 billion) to further its growth ambitions outside of Saudi Arabia. The stake, said the company, is comprised of 4.9% of Telefónica’s shares, as well as “financial instruments giving economic exposure to a further 5% of Telefónica’s share capital.”
STC said it plans to convert those instruments into shares but noted that it requires official approval to do so. Government authorization is needed for any foreign investor taking a stake of 5% or more in certain “strategic” defense companies, it explained, adding that Telefónica’s businesses related to national security and cyber defense puts it in that category.
One of Spain’s deputy prime ministers, Nadia Calviño, reiterated this need for government approval, commenting that Spain, while open to foreign investment, is currently analyzing the deal and “apply[ing] all the necessary mechanisms” with Spain’s strategic interests around defense “in mind.”
STC chief executive Olayan Alwetaid said the purchase represents a “compelling investment opportunity” for the company to use its “strong balance sheet whilst maintaining [its] dividend policy,” while STC Chair Mohammed K. A. Al Faisal commented that the “long-term, significant investment… is a continuation of [STC’s] growth strategy, as [it] invest[s] in vital technology and digital infrastructure sectors across promising markets globally.”
This latest move is another example of STC’s growing interest in expanding outside of its home country. Earlier this year, STC’s tower infrastructure unit Tawal acquired €1.2 billion ($1.23 billion) worth of tower assets from United Group’s mobile tower infrastructure unit in Bulgaria, Croatia and Slovenia.
