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Saudi Arabia’s STC Group has emerged as the leading shareholder of Spanish telecom giant Telefonica, holding a 9.9% stake. This investment worth 2.1B euros ($2.25B), is part of STC’s strategy for expansion and was announced on Tuesday.

  • STC’s holding includes a 4.9% share in Telefonica’s stocks and financial tools providing an additional 5% economic exposure.
  • The company plans to gain voting rights for the 5% interest held via financial instruments upon regulatory clearance.
  • This investment aligns with STC’s strategy to utilize its strong balance sheet while maintaining its dividend policy, as confirmed by STC CEO Olayan Alwetaid.
  • Alwetaid asserted that STC does not have plans for acquiring control or a majority stake in Telefonica.
  • U.S. investment bank Morgan Stanley assisted STC with this strategic move, with Linklaters and Allen & Overy acting as legal advisors.
  • STC is 64% owned by Saudi Arabia’s Public Investment Fund (PIF), which is a crucial part of Crown Prince Mohammed bin Salman’s Vision 2030 to diversify the economy from oil.
  • This investment in Telefonica marks the second venture of STC in Europe’s telecom market after its recent purchase of tower infrastructure from United Group.

Telefonica is expected to reveal a new strategic plan on November 8 to enhance the company’s free cash flow. Amidst the intense competition and the need for significant investment in the 5G infrastructure, Telefonica has been off-loading stakes in mature businesses to fund 5G and optic fibre.

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