Spain is investigating a potential takeover of Telefonica’s stake by Saudi Arabia’s STC, Reuters reported.

MADRID (Reuters) – Spain’s Economy Minister Nadia Calpeño said on Wednesday that her country is exploring Saudi Telecom Co’s ( Tadaoul: ) ( STC ) purchase of a 9.9 percent stake in Spanish telecoms giant Telefonica ( BME: ). will not be affected, which represents a possible obstacle to the agreement.

Calpinho said in Brussels that STC contacted the Spanish government on Tuesday to convey the agreement that would make STC the largest shareholder in the Spanish company.

“Telefonica is a strategic company for our country and as a government we will implement all necessary measures to prioritize the defense of our strategic interests,” Galpino told reporters when asked about the company’s move.

STC is the largest Saudi telecommunications operator and is 64 percent owned by the Public Investment Fund, the kingdom’s sovereign wealth fund. The fund is a key driver of Saudi Crown Prince Mohammed bin Salman’s 2030 vision to wean the economy away from oil.

In an attempt to protect companies whose value has fallen after the Covid-19 pandemic, the Spanish government has been empowered to stop buying ten percent or more of shares in companies listed in the EU and outside the European Free Trade Association. Association.

Calpinho said Madrid is examining the request regarding security mechanisms related to the contract, the telecommunications sector, its relationship with Spain’s security, the role of the STC, the exercise of voting rights and participation in the board of directors. Other areas related to decision making in the organization.

He added, “Fortunately, since we came to government, we have strengthened the mechanisms to protect our strategic interests.”

The threshold for government interference in contracts was recently lowered to five percent for defense-related companies.

Telefonica is listed as a defense supplier on government websites, providing “systems and equipment” to the military and providing satellite services to the Defense Ministry’s space division.

(Prepared by Salma Najm for Arabic Bulletin – Editing by Muhammad Muhammad)