- Saudi Telecome Company (STC) has acquired a nearly 10% stake in Spain's Telefonica SA for approximately $2.25 billion. STC purchased approximately 569.3 million shares, utilizing financial instruments to secure a 9.9 percent interest in Telefonica pending regulatory approval. The transaction was financed through a combination of the company's resources and bank debt. Telefonica's American Depositary Receipts experienced a 2.05 percent increase in value in New York on Tuesday.
- Stake acquisitions exceeding 5% may require approval from the country's cabinet. Despite this significant investment, Saudi Telecom has stated it does not intend to gain control or obtain a majority stake in Telefonica but views it as an attractive investment opportunity while maintaining its dividend policy.
Why it matters
This investment reflects Saudi Telecom's effort to diversify its operations and expand its influence and growing role in the telecommunications sector globally. Additionally, it highlights the increasing involvement of Middle Eastern carriers in European telecom companies, underscoring the shifting dynamics in the telecommunications industry. This development could have implications for both companies' future strategies and the telecommunications landscape in Europe.
