The Saudis partner with a Spanish telecommunications company

Saudi Telecom (STC), the Saudi Arabian telecommunications company, is buying about 10 percent of the Spanish telecommunications company Telefónica for approximately $2.25 billion.

The Saudi company bought around 569.3 million shares of the Spanish company, according to a statement published on Tuesday night.

Sale transactions will be reviewed by the government, as share purchases greater than 5 percent may require approval from the country’s cabinet. The Spanish government considers Telefónica a company of strategic importance since it operates critical infrastructures for the defense and security of the country.

“We see this as an attractive investment opportunity to use our strong balance sheet while maintaining our dividend policy,” Saudi Telecom said in a statement, saying it does not plan to take control or acquire a majority stake in Telefónica.

The Spanish company stated that STC’s approach was friendly and that the management team supported Telefónica’s strategy and value creation capacity.

GROWING IMPACT ON THE MIDDLE EAST IN EUROPE

The acquisition by the Saudi company of the shares of the Spanish telecommunications company highlights the growing influence of Middle Eastern telecommunications companies in Europe.

Saudi Telecom is 64 percent owned by the Saudi Wealth Fund, chaired by Crown Prince Mohammed bin Salman. The largest telecommunications company in the Middle East has been looking to diversify its operations in recent years.

Emirates Telecommunications Group of Abu Dhabi became the largest shareholder of Vodafone Group with the acquisition in 2022. The United Arab Emirates telecommunications company had signed a $4.4 billion deal for 9.8% of the giant’s shares of telecommunications Vodafone, which currently provides services to more than 300 million customers in more than 20 countries.

Emirates Telecommunications Group also announced it will pay 2.15 billion euros ($2.4 billion) for a majority stake in some of PPF Telecom Group’s assets in Eastern Europe.

Earlier this year, the company also announced that it had acquired United Group Towers’ portfolio in Eastern Europe in a deal valued at approximately $1.3 billion, and had invested in towers in Pakistan last year.