Saudi Arabia’s Saudi Telecom Company Group (STC) sees its entry into Telefónica with the purchase of a 9.9% stake as a “milestone” in its “ambitious strategy of expansion and sustainable growth”, as well as a sign of confidence in the “upside” potential of the Spanish multinational.
This was stated by the CEO of the Saudi company, Olayan Alwetaid, at the presentation of the company’s third quarter results, which showed “the best revenues in its history” for that period of time.
“Telefónica is one of the world’s largest telecommunications companies with a presence in major markets such as Spain, Germany, the UK and Brazil. This investment seeks to strengthen the cooperation between the two companies so that they can benefit from all the opportunities available in the future,” Alwetaid said in a company statement.
For the company, this “investment” in the Spanish multinational is “aligned with the ambitious strategy of expansion and sustainable growth, which has resulted in numerous investments in the information and communication technologies sector, either locally or internationally”.
“Telefónica benefits from a unique portfolio of best-in-class infrastructure assets and innovative technology platforms, where it is developing cutting-edge capabilities in areas such as cognitive intelligence, computing and the internet of things,” he added.
On business performance, Alwataid said the result is “excellent”, as expected, and STC achieved its “highest revenue” in history for a nine-month period, at 54.61 billion rials, about $15 billion, up 9.10 per cent from the same period last year.
Net profit for the 2023 period reached 11.021 billion rials ($2.937 billion), 17.08% higher than at the end of the third quarter of 2022.
The company said it will distribute 1,993.80 billion rials ($531 million) to its shareholders this quarter.
“STC’s quarterly and nine-month results and performance were excellent and in line with expectations, which were achieved as a result of the group’s commitment to its `Dare 2.0` strategy and its operational and financial plans,” the director said.
STC, Telefónica’s largest shareholder
The purchase of Telefónica shares by STC, which would make the Saudi company its main shareholder, still requires the relevant authorisation from the Spanish Ministry of Defence, as the company has business related to the country’s “critical infrastructure”.
Sources close to Telefónica told EFE in early October that this will be a “long-term” operation and that it is expected to be “complicated”, as STC’s formal application to become a shareholder is not expected before a definitive government is formed in Spain.
STC announced in early September the purchase of 9.9 % of the teleco’s capital for EUR 2.1 billion.
To do so, it acquired 4.9 % of the company in shares and another 5 % through derivatives, which it will execute in order to convert into shares once the relevant authorisations have been obtained.
In recent weeks, the government has argued that it would study the operation meticulously to guarantee national defence and security.