Spain Minister calls for government to block STC's push for 9.9% Telefonica stake

Spain’s acting Labour Minister, on Friday, called on the government to block the acquisition by Saudi Arabia’s STC Group of a 9.9 per cent stake in Telefonica, for the first time signalling opposition to the deal within the coalition, Reuters reports.

“My opinion is that we cannot allow this operation to continue,” Yolanda Diaz, who belongs to the hard-left junior coalition partner in the Socialist-led caretaker government and is also a deputy Prime Minister, told reporters in Rome.

“I will certainly work to ensure that this operation does not take place,” she said, citing Telefonica’s strategic importance as an operator handling data transmission and adding that she had conveyed her stance to acting Economy Minister, Nadia Calvino, who is also a deputy Premier.

Calvino, whose Ministry has oversight authority over all financial transactions, on Wednesday vowed to protect Spain’s strategic interests, but stressed the need to preserve the country’s ability to attract foreign investment.

She said Madrid was analysing the application of the relevant defence mechanisms, the sector, its relation with Spain’s security and defence of Spain, STC’s shareholding, the exercise of voting rights and the participation on the Board or other decision-making bodies of the company.

Madrid could potentially stymie STC’s stake purchase due to Telefonica providing services to Spain’s Defence industry and the government can intervene in acquisitions of holdings above 5 per cent.

Saudi Arabia’s largest telecoms operator on Tuesday said it had built a stake in Telefonica worth 2.1 billion Euros ($2.25 billion), following the playbook of other Middle Eastern companies in investing in European and Latin American telecom operators.

READ: How the Saudis became a top shareholder in Telefonica, Spain’s telecoms giant