The unexpected irruption of Saudi Telecom as Telefónica's first shareholder is causing growing discomfort on the part of Podemos - now integrated into Sumar - of the Spanish Government in office. The second vice-president and Minister of Labor, Yolanda Díaz, yesterday directly asked the first vice-president and Minister of Economic Affairs, Nadia Calviño, to veto the entry of the Saudi public investor into the Spanish company.
"My opinion is that we cannot allow this operation to continue. This is how I have conveyed it to the economic vice-president of the Spanish Government in office and this is how I will defend it", said Díaz yesterday from Rome. He said that Spain must "think" about what its strategic sectors are, he recalled that "all countries regulate these situations" and pledged to "work so that this operation does not take place".
His statements came while the new investor, three days after announcing the purchase of 9.9% of Telefónica for 2.1 billion and with a rise through the shares of the Spanish operator, finally registered the his position at the CNMV and showed to what extent the Saudi State owns the stake.
The owner of the operation is not Saudi Telecom, but the Public Investment Fund (PIF), the sovereign fund of the State that manages more than 600,000 million euros and which the Saudi crown prince, Muhammad bin Salman, has turned into a tip launching its Vision 2030 plan. From there, the chain of ownership begins: PIF owns 64% of Saudi Telecom, which in turn owns a Luxembourg company called Green Bridge Investment Company SCS, which is the depositary last of the actions.
Díaz's statements are much more forceful than those made by Calviño on Wednesday in Brussels a few hours after, on Tuesday night, Saudi Telecom informed the Central Government of the operation. The Minister of Economic Affairs reserved an eventual legal veto on the purchase of more than 5% of Telefónica and warned that the Spanish Government will use "all the mechanisms" to protect "strategic sectors and interests". However, he also recalled that the Executive promotes the "attractiveness of Spain" for foreign investments, "which are absolutely fundamental for economic growth".
There have been more receptive messages from the central government, especially that of the Minister of Social Security, José Luis Escrivá, who highlighted on Thursday the "positive part" of an investment of this kind. "It's good that there are investors as important as sovereign wealth funds in the world," he said. The UGT and CC.OO. they also support the arrival of Saudi Telecom because it will give "body and strength" to Telefónica, they say.
Royal Decree 571/2023 of July this year is what allows the Central Government to veto purchases of more than 5% in strategic companies for Defence, such as Telefónica. Saudi Telecom can take up to 9.9% and have dividends up to that proportion, but it needs permission to exercise political rights. He can also be prevented from entering the board of directors, which the Saudi operator aspires to, although he insists that "it is not the time" to deal with this issue.
The Acting Head of Defense, Margarita Robles, indicated yesterday in a video conference with several ships of the Navy that the Spanish Government will study "with great attention" the claims of the Saudi State. Defense relations between Spain and Saudi Arabia are intense, with a 2,000 million contract with Navantia for the purchase of five corvettes which, as indicated yesterday by the Spanish shipyard, continues to be negotiated without being affected by the Saudi investment Telecom. The Secretary of State for Trade estimates that Riyadh has bought weapons in Spain for more than 450 million in the last three years.
Saudi Arabia declared yesterday the possession of around 570 million Telefónica shares. At market price, they are worth nearly 100 million more than the purchase price, thanks, among other things, to the revaluation these days. A 5% stake, subject to a veto by the Spanish Government, has been bought by Morgan Stanley discreetly since February. On Tuesday these trading acquisitions were packaged into a derivative contract that gives Arabia the right to receive dividends and which has an expiry date of March 2025. Saudi Telecom's intention is that this participation will become direct when the Central Government gives permission.
