The news that a foreign group has acquired close to 10% of the shares of Telefónica, a strategic company for Spain, came as a surprise on Tuesday night. STC Group, the main telecommunications group in Saudi Arabia, has acquired 9.9% of Telefónica for 2,100 million euros, which will make the company the largest shareholder of the Spanish operator.
STC Group is the largest telecommunications operator in Saudi Arabia, controlled by the royal family. It has a 75% market share and manages 90% of Saudi Arabia’s internet traffic volume and data. It offers products and services in Saudi Arabia, the Middle East and North Africa. It has a presence in 11 countries and a customer base of 170 million.
It provides “one of the best digital solutions and services in its environment”, according to sources from the Spanish operator, including telecommunications, IoT, 5G, cloud services, Fintech and other advanced digital solutions.
STC Group is listed on the Saudi Arabia Stock Exchange and accumulates a market capitalization of 49.2 billion euros. The Saudi state is the owner of 64% of its capital through its sovereign fund, the Public Investment Fund (PIF), which is a shareholder, among other companies, of Uber, Electronic Arts or Lucid Motors.
The company has recently released some historic results: with 18,179 million Saudi riyals in revenue in the first half of the year and boosting its profit by 2.24%. Its CEO, Olyan Mohammed Alwetaid, explained that a large part of this increase in its result is due to the launch of its Corporate Investment Fund (CIF) which aims to “invest in early-stage emerging companies in various domains, including fintech, cybersecurity , artificial intelligence, Internet of things and other promising areas”.
Before the announcement of the purchase of 9% of the Spanish teleco, both companies signed a strategic collaboration agreement in February “to work together and benefit from their joint scale, the combined experience of both companies and their presence in the market” .
With this alliance, STC Group became a member of Telefónica’s Partners Program, an initiative launched in 2011 and of which other leading telecommunications operators are part and which covers more than 65 markets in Europe, Latin America, the Middle East and Africa.
Telefónica then explained that its ties with STC and its operating companies and subsidiaries in the Middle East would allow it to explore potential joint business opportunities in areas such as B2B.
Until now, BBVA was the largest shareholder in Telefónica, with 4.87%, followed by the American fund BlackRock, with 4.48%, CaixaBank also has a 3.5% stake.
With the entry of STC, the Saudi Arabian telecom company becomes de facto the main shareholder of Telefónica, with 9.9%.
Football fans also know the initials of STC for its sponsorship with Real Madrid signed in 2009. “We have found a strategic partner in Saudi Telecom Company, which shares with us the vocation of leadership and the permanent search for excellence. It is a important alliance for the present and the future”, said Florentino Pérez when renewing his contract in 2013.
