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Telefónica (NYSE:TEF) stock rose on Wednesday after the Spanish government announced plans to acquire a stake which could be worth more than €2B ($2.2B), countering a stake that Saudi Arabia’s built in the telecommunications company, Bloomberg News reported.
The Spainish company’s shares surged about 4.18% to €3.714 on the Madrid Stock Exchange on Wednesday. The stock gained as much as 7.2%, the largest intraday jump since Jan. 2021. However, on the NYSE the stock has dipped about 3% premarket.
Sepi, the Spanish government’s investment arm, will acquire about 10% of Telefonica’s stock to provide “greater shareholder stability” and protect the former telecom monopoly’s “strategic capacities,” the firm said in a regulatory filing on Tuesday, the report added.
Earlier on Tuesday, ministers had signed off on the investment in a cabinet meeting.
In October, it was reported that the Spanish government was thinking of acquiring a stake in Telefonica (TEF) following Saudi Telecom’s plan to become the Spanish telecommunications carrier’s largest shareholder. In September, Saudi Arabia’s STC Group had acquired a 9.9% stake in Telefonica.
Sepi said on Tuesday that Telefonica “carries out a set of activities of crucial relevance for the economy, research, security, defense and the welfare of citizens,” according to the report.
Telefonica noted that it was focused on executing its strategy, the report added.
The Spanish government had sold its last stake in Telefonica over 20 years ago, ending years of public ownership of the company. However, the Saudi investment has spurred the Spanish government to reconsider.
As previously reported, Spain has been analyzing Saudi Telecom’s plan to take a nearly 10% stake in Telefonica for about €2.1B. The Spanish government required the Saudi company, which is under the kingdom’s sovereign wealth fund PIF, to get special approval for such a large holding as Telefonica also supplies Spain’s military and defense ministry.
