Spain is carefully evaluating Saudi Telecom Co.’s proposal to become the largest shareholder in Telefonica SA, according to Prime Minister Pedro Sanchez. The government has legal instruments in place to protect the country’s strategic interests and ensure national defense and security. Sanchez emphasized that foreign investments should not have undue influence over strategic companies or access to critical technologies.
Sanchez did not mention the specific names of the companies involved but referred to foreign investors acquiring a stake in a Spanish telecommunications company of significance. He also stated that interest from large international investors in Spanish companies is considered positive news.
Saudi Telecom intends to acquire a nearly 10% stake in Telefonica for approximately $2.25 billion. If approved, this transaction would make Saudi Telecom the largest shareholder, surpassing Banco Bilbao Vizcaya Argentaria SA, Blackrock Inc., and CaixaBank SA. Previously, Spain implemented restrictions on foreign investments during the COVID-19 pandemic to protect declining company valuations. The government recently amended the rules, requiring authorization for ownership exceeding 5% in defense-related companies.
Sanchez emphasized that the Spanish government possesses the necessary instruments to protect national sovereignty and strategic interests, particularly in terms of critical technologies and defense. Telefonica is known for providing systems and equipment to Spain’s military and defense ministry.
Saudi Telecom is the largest telecommunications company in Saudi Arabia and is predominantly owned by a sovereign fund seeking to diversify the economy away from oil dependence.
Telefonica described Saudi Telecom’s proposed holding as friendly and expressed support for their management team, strategy, and ability to create value.
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