The Spanish government will buy up to 10% stake in Telefonica through the state holding company SEPI. The move will be to get a counterbalance of large equity ownership in the company by STC. “The presence of a key public shareholder will reinforce the company’s ownership stability,” the Budget Ministry said in a statement on Tuesday.
The 10% stake will amount to around $2.20 billion in the current market value. SEPI has said that it the stake takeover won’t impact the share price.
As the news of the government buying the stake broke, Telefonica said that its focus is on executing its strategic plan for the next three years announced on November 08.
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What is Telefonica?
Telefonica is a multi-national telecommunication firm headquartered in Madrid, Spain. It has operations in various countries in Europe and provides telecom, broadband, and TV subscriptions among various other digital services. Spanish government considers it a national asset.
greater shareholding stability
SEPI has said that it’s in for a long commitment in the telecommunication giant. The holding company said that its earnestness will provide Telefonica a “greater shareholding stability for the company to reach its objectives and, therefore, it will contribute to safeguarding its strategic capabilities,” the SEPI said.
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Following the suit
Span’s Finance Minister Nadia Calvino told reporters that the government’s move aligns with the common practice. He pointed out that “other big European countries such as France and Germany that have stakes or are increasing stakes in big strategic firms” are doing the same to achieve better stability in achieving business goals.
STC’s acquisition of a 9.9% stake in Telefonica is worth $2.23 billion. After three months, Spain weighed in to counterbalance the equity ownership. STC’s holding comprises 4.9% in Telefonica while financial instruments avail it of 5% shares for the “economic exposure” to the company.
As of now, STC has not sought authorization from the Spanish government to execute the voting rights related to the financial instruments but maintained that only after receiving the necessary regulatory approvals, will it do so. It has also said that it does not plan for a control or the majority stake in Telefonica.
The Spanish government will have three months to give its verdict after submitting the request.