Telefonica up on news of government buying stake

MADRID —  Telefonica’s share price soared on Wednesday morning after the Spanish government said it will buy a stake of up to 10% in the company in a counterbalance to a similar acquisition by Saudi Arabia’s STC .

Telefonica was up 5.5% at €3.763 in early trade, on track for its best day since November 22 2021 and being top gainer in the STOXX 600 index.

State holding company SEPI said on Tuesday it will buy the shares in a way that minimises the effect on market price, but it gave no time frame. An informed source said it will buy small numbers of shares over a two-month period.

A 10% stake had a market value of about €2bn on Tuesday night.

The move is a response to the STC announcing it built a 9.9% stake in Telefonica in September.

As Telefonica is considered a defence service provider, the defence ministry has a say in acquisitions and holdings of 5%-10% unless the buyer commits to not requesting a seat on the board.

In October, SEPI said it was considering buying a stake in Telefonica, which was seen as a government attempt to balance the potential STC influence in the company.

Economy minister Nadia Calvino said on Tuesday that SEPI’s presence in Telefonica — it will be its largest shareholder — will “reinforce the company's ownership stability”.

The government said its acquisition in Telefonica will be in line with the stakes that its large neighbours, such as Germany, France and Italy, hold in their large telecom companies.

Reuters