Shares in Telefonica, the telecommunications company, saw an increase after Spain’s state holding company announced its intention to purchase up to 10% of the company. This news comes three months after Saudi Telecom Co. (STC) took a stake in Telefonica.
At 0834 GMT on Wednesday, Telefonica shares traded 5.5% higher at EUR3.76, resulting in a year-to-date gain of 11%. This rise pushed the stock slightly above the closing level on September 5 when STC declared its plan to acquire a stake.
Based on Telefonica’s closing share price on Tuesday, a 10% stake in the company would be valued at 2.06 billion euros ($2.26 billion).
Spain’s Sociedad Estatal de Participaciones Industriales (SEPI) announced on Tuesday that its decision to purchase the stake followed approval from the Spanish cabinet and aims to provide Telefonica with greater shareholder stability.
In response, Telefonica affirmed its commitment to executing its recently approved strategic plan for the 2023-2026 period in order to generate value for its shareholders.
Analyst Ivan San Felix Carbajo from Renta4 noted that while SEPI’s investment is expected to support Telefonica’s shares in the short term as they buy shares on the market over the next few months, any perception of political interference could negatively impact investor confidence in the long run.
This move by SEPI follows STC’s September announcement of acquiring a 9.9% interest in Telefonica for EUR2.1 billion. STC expressed its support for Telefonica’s leadership, strategy, and value creation capabilities.