One year and almost three months after the announcement of the operation, the Government of Pedro Sánchez has already given its approval for the operator Saudi Telecom Company (STC) to increase its participation in Telefónica to almost 10%, specifically 9.97% of capital. The operation was approved yesterday in the Council of Ministers, as this newspaper reported, although the Executive has imposed a series of conditions, which it has not yet explained, in order to complete its investment, which began in September 2023. At that time, STC , owned by the Public Investment Fund (PIF) – the sovereign fund controlled by the royal family of Saudi Arabia – announced the purchase of 4.9%, without the need for authorization from the Government, although it pointed out that it owned another Additional 5% in financial derivatives, for which it was required, due to the anti-takeover shield that is in force. The operation amounted to around 2.1 billion euros. After obtaining authorization, from now on, the Arab operator will also be able to request a position on the board of directors of the Spanish company. Something that they have not hidden in their statement yesterday, where they state that they acquire “the right to appoint a representative on the council.” And to accommodate them, changes will necessarily have to occur in the body of the company chaired by José María Álvarez-Pallete, although he recently indicated that he did not expect to undertake any revolution in the board. Related News No Criteria raises its percentage in Telefónica to 10% and equals that of the SEPI María Jesús Pérez With this percentage, the investment arm of the ‘la Caixa’ Foundation is close to the percentage that the State has in the telecom through the SEPI of the 10%And these are both in STC and within the Telefónica board, where they remain expectant to receive the formal request to make the decision to include a new member from the Saudi company, either by sacrificing a veteran director , either by expanding the highest governing body of Spain. «This approval represents a significant step forward for STC Group, and reinforces its commitment to investing in high-value assets as part of its strategic growth and expansion plan. With the acquisition of shares in strategic assets, STC Group demonstrates its confidence in Telefónica’s ability to maintain its leadership position in the market, taking advantage of its infrastructure, advanced technological capabilities and extensive presence in Europe and Latin America,” explains STC. For his part, Olayan Al-Wetaid, CEO of STC, commented: “Having obtained the approvals reflects STC’s role as a strategic partner for Telefónica in the long term. As one of the majority shareholders of the company, we maintain confidence in the leadership and strategic vision of Telefónica, with expectations of working together to create value for all shareholders. 9% to almost 10% is carried out under certain conditions imposed by the Government and accepted by the Arabs. The Minister of Economy, Carlos Body, did not reveal in his appearance after the Council of Ministers the exact conditions imposed on STC, although he did point out commitments to guarantee the operations of the Spanish company, the safeguarding of national interests and the protection of critical infrastructures. . Now, sources close to the Executive informed ABC that STC has made a commitment to the Government to keep Telefónica on the stock market, at the same time that they have given them guarantees that in the future, if the option were given to expand their participation again – as they already have in mind, as this newspaper reported –, the company’s headquarters will remain in Spain. Both demands that the Government itself has already imposed in other cases that have raised eyebrows in recent years, as was the case of IFM in Naturgy. With the latter, in fact, the conditions were even greater. “This authorization has been followed by an exhaustive analysis by the Spanish authorities based not only on compliance with our current legislation but also on other considerations such as ensuring the national interest in matters of defense and, of course, that strategic element that has to do with telecommunications infrastructure and the importance of Telefónica in this area,” stressed the Minister of Economy. In any case, the sum of the shares of the State Holding Company Industrials (SEPI, with the 10%), Criteria Caixa (9.9%, with the intention of rising to a maximum of 10.01%) and BBVA (4.83%) guarantee Spanishness with the majority of control of both the board and the shareholders, therefore that, together with the regulatory shield, any hostile operation by a foreign group seems practically impossible. Precisely, asked in A Coruña, where he participated in the CEDE Congress, about the authorization that the Government has given to STC, Álvarez-Pallete pointed out that «We are waiting to know the details of the decision of the Council of Ministers. STC has not told us anything new since last year, when it announced its participation in Telefónica, and therefore I cannot give you more news about its interests. In any case, one of the great strengths that Telefónica has are its shareholders, large and small, who provide stability and support to the operator and reflect the confidence of investors in Telefónica’s strategy. Options for the board The sources consulted point out some options that are already being considered by the Spanish operator to include the Saudis on its board. On the one hand, that Telefónica decides to increase the number of members of the board of directors to 16 from the current 15; on the other hand, that a space is “made open” for them by giving way to a counselor already present. In the telecom company led by Pallete there are two executive directors (the president himself and the CEO), three proprietary directors (representatives of Criteria, SEPI and BBVA), nine independent directors, and another external figure embodied in Javier de Paz, a long-standing director. of the operator close to the PSOE who has been in office for more than seventeen years. In the market, the figure of De Paz stands out precisely, for being the only director with a special qualification, that of ‘other external’, since he is neither proprietary (on behalf of a shareholder), nor independent nor executive. However, given the proportionality relationship, José María Abril, representing BBVA, would not have the right to occupy the seat, since the Basque bank already only has 4.83% of the capital and it is necessary to have at least 6.7%. BBVA sources indicate that nothing has changed in their position and they are comfortable at this moment. However, remember that the operator will want to impose, for reasons of good governance, that STC appoint a woman to comply with the parity law promoted by Sánchez’s own Government, a possibility that is very complicated when taking into account the culture of the Arab country. . The regulations require Ibex companies to have at least 40% female representation in their decision-making body, a percentage that the company does not comply with right now, since it only reaches 33% with 5 women among the members. 15 members.
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