Jose Maria Alvarez-Pallete, chairman and chief executive of debt laden Spanish telephone and internet service company Telefonica, got an unexpected call this week when he was in Silicon Valley to meet companies and investors in America's tech capital.
He learned Saudi Arabia's largest telecoms operator, STC Group, aimed to be Telefonica's biggest shareholder, with an interest of 9.9%. Within hours of Tuesday's call, Alvarez-Pallete was en route to Riyadh, according to people with knowledge of the situation.
STC had spent months building its 2.1 billion-euro ($2.25 billion) stake, said the people, requesting anonymity because of the sensitivity of the matter. The move is a vote of confidence in Telefonica, burdened by billions of dollars in debt while STC gains expertise to modernize Saudi telecoms infrastructure.
But some in Spain worry the deal could give Saudi Arabia too much sway over the country's telecom and internet infrastructure.
STC is 64% owned by Saudi Arabia's Public Investment Fund (PIF), the main engine of Crown Prince Mohammed bin Salman's Vision 2030 effort to build stakes in a variety of global companies and wean the Saudi economy off its dependence on the oil that made it one of the world's richest nations.
STC hopes the ties with Telefonica will help it develop digital cities in Saudi Arabia, importing technological know-how from countries like Spain, according to a person who had advised the company. For Telefonica, whose market value has sunk to a third of its level eight years ago, the investment offers long-suffering shareholders some respite.
No comments:
Post a Comment