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Telefonica SA (NASDAQ:TEF) stock is trading lower after it disclosed that Saudi Telecom Co Group, the leading communications operator in the Kingdom of Saudi Arabia and the Middle East, has acquired a 9.9% stake in Telefónica.
The acquisition of shares representing 4.9% of the share capital of Telefónica and through financial instruments provides an economic exposure over the other 5% of the company's share capital.
The move will likely draw Spanish government scrutiny, which views Telefonica as a company of strategic importance.
Also Read: Vodafone's Spain Unit Worth $4B Attracts Takeover Offers
Saudi Telecom said it does not plan to gain control or take on a majority stake in Telefonica.
Spain can block stake acquisitions beyond 5% for companies considered strategic for national security and defense, as with Telefonica. Another threshold for further government approval is 10%.
The Telefonica deal is the Saudi firm's second foray into Europe in 2023 after the firm agreed to buy a portfolio of tower assets from United Group for $1.3 billion in April.
Price Action: TEF shares are trading lower by 4.19% at $4.01 on the last check Wednesday.
Posted In: TEF
