He Government has authorized the operator Saudi Telecom Company (STC) the acquisition of the extra share package with which almost 10% of Telefónica. The Council of Ministers gives the green light one year and two months later that the entry operation into the telecom company chaired by José María Álvarez-Pallete was formalized. The door to the board of directors also opens to apply for a positionwhich will force a significant restructuring to preserve the distribution of forces with Sepi and Criteria.
As confirmed by government sources, the Council of Ministers has raised the so-called ‘anti-takeover shield’ after the last step of authorization by the Ministry of Defense was completed. It must be remembered that this operation, which implied exceeding 5% of the shares, was included in the assumptions of this protectionist measure due to the strategic nature and the relationship with National Security of contracts managed by Telefónica itself.
In this way, STC has free rein to convert 5% of financial derivatives into securities that they had initially contracted with the investment bank Morgan Stanley (the other 4.9% of the securities were acquired directly from the beginning and allowed them to receive their corresponding dividends). That 5%, for which STC paid almost 55 million eurosmakes it the third relevant shareholder after the State Society of Industrial Participations (Sepi) and Criteria, which have 10% each.
It remains to be seen the ‘small print’ of the agreement and if it includes any veto measure in decisions related to National Security. That was one of the big concerns that the Government of Spain had, which at the time studied formulas to veto the access of the company directed by Olayan M. Alwetaid in this critical business. The possibility of being able to inhibit STC from any matter that is dealt with in the council or through other administrative bodies and that is linked to national security was analyzed.
With this measure, The door to the Telefónica board of directors opens so that the Saudi operator can request its representative. This will force the operator to carry out a restructuring to maintain the balance of forces and the positions of the independent directors who represent the minority shareholders. Among the latter, two representatives close to the company were appointed almost a year ago. There are those who see Javier de Paz as a candidate to leave, who after surpassing the threshold of 12 years as an independent today occupies a position as ‘Other External’.
The Saudi company had been given one year at the beginning of 2024 to obtain authorization from the Executive. Just in November 2023, two months after the commotion generated by his emergence into the shareholding, he called for “cooperation.” “This investment aims to strengthen the cooperation between the two companies to benefit from all the opportunities available in the future,” said the group’s CEO, Olayan M. Alwetaid.