With this stake, STC becomes Telefónica’s second-largest shareholder in terms of voting rights
The Saudi Telecom Group (STC) has informed the U.S. Securities and Exchange Commission (SEC) that it now controls the 9.97% stake in Spanish carrier Telefónica that was previously approved by the Spanish government.
The company also announced its intention to seek representation on Telefónica’s board of directors. With this stake, STC becomes Telefónica’s second-largest shareholder in terms of voting rights, following the state company SEPI.
“Following the acquisition of the ordinary shares pursuant to the contingent share purchase agreement, Luxco [the entity used by STC for the investment in Telefonica] intends to engage in discussions with the issuer [Telefónica] to request a seat on the board of directors,” the filing reads.
According to Spanish press reports, this is the first time STC has formally confirmed to a regulatory body its plan to seek a board seat, although its majority shareholder, the Public Investment Fund (PIF), had previously highlighted in a press release that this level of ownership granted the right to request representation on Telefónica’s board.
While STC initially plans to remain a passive investor, it is leaving the door open to becoming more actively involved in the future.
“Although the reporting persons do not currently intend to do so, they may occasionally engage in discussions with the issuer’s board of directors and/or members of its management team regarding, without limitation, potential business combinations, strategic alternatives, the issuer’s business, operations, capital structure, governance, management, strategy and other matters relating to the issuer,” the company said.
STC further explained that its acquisition of Telefónica shares was made “for investment purposes.” The group emphasized its intent to monitor the investment continually and to evaluate its options
STC has also reserved the right to revise its objectives and take other measures with respect to Telefónica at any time.
In December, the Spanish Council of Ministers conditionally authorized STC to raise its stake in Telefónica from current 4.9% to 9.97%
The decision followed STC’s declaration of intent to expand its investment in Telefónica, which operates in sensitive sectors like national defense and critical infrastructure, necessitating government authorization.
The Saudi telco initially acquired a 4.9% stake in Telefónica over a year ago, along with financial instruments representing an additional 5%. To reach the authorized 9.97% ownership in Telefonica, STC converted these instruments into shares.
The Spanish authorities noted that the approval is contingent upon undisclosed conditions designed to safeguard Telefónica’s strategic autonomy, protect national interests and ensure the security of critical infrastructure.
The Saudi carrier had previously said it does not intend to “acquire control or a majority stake” in Telefónica.
In March, the Spanish government had acquired a 3% stake in Telefonica through SEPI, with the main aim of attempting to balance the influence of Saudi telco stc in the telco.
