Saudi Arabia’s STC becomes the largest shareholder of Telefónica after buying 9.9% stake

STC, the kingdom’s largest telecoms operator, unveiled the investment yesterday. The holding consists of 4.9% of Telefonica’s shares and financial instruments that give it another 5% in so-called economic exposure to the company.

“This significant long-term investment by STC Group is a continuation of our growth strategy as we invest in vital technology and digital infrastructure sectors in promising markets globally,” said STC Chairman Mohammed K. A. Al. Faisa.

We are facing a transaction that does not go unnoticed, since STC Group becomes the largest shareholder of Telefónica, surpassing BBVA, BlackRock and CaixaBank. The new shareholders, however, have said that it is not their intention to “acquire control or a majority stake” in the company.

The Saudi participation in Telefónica, which is one of the most important telecommunications companies in Europe, occurs shortly after José María Álvarez-Pallete, the CEO of the firm, announced its new medium-term corporate strategy (2023-2026) focused on growth, profitability and sustainability. 

STC also owns stakes in companies operating in Kuwait and Bahrain. The company is 64% owned by the sovereign wealth fund of Saudi Arabia, the Public Investment Fund (FPI), the main engine of the Crown Prince’s Vision 2030 Mohammed bin Salman to untie the economy from its dependence on oil.

It should be noted that Telefónica and STC Group signed a strategic collaboration agreement at the beginning of the year to benefit from their scale and explore potential joint business opportunities. This collaboration was aimed at a very broad scale of areas related to digital services, innovation and B2B business. In the case of STC Group, the group also had a certain relationship with Spain, as it has sponsored Real Madrid since 2009, and operates several submarine cables with moorings in the country.