Saudi Arabia's STC snaps up 9.9% stake in Telefonica

(Sharecast News) - Saudi Arabia's STC Group has acquired a near 10% stake in Spanish telecoms giant Telefonica, it was confirmed on Wednesday.

The communications group, the kingdom's largest, said it would pay €2.1bn to acquire 4.9% of Telefonica's shares along with financial instruments that provided exposure to a further 5%.

Should the deal be approved by Spanish regulators, STC would become Telefonica's biggest shareholder.

STC said the investment was in line with its growth strategy of acquiring stakes in "value-added strategic assets in promising markets, along with benefiting from the return on these investments to support growth, expansion and capital recycling efforts".

Chief executive Olayan Alwetaid added that STC did not intend to acquire "control or a majority stake".

Telefonica, which part owns Virgin Media O2 in the UK and is one of Spain's biggest companies, noted STC's "friendly approach and its support to the management team, Telefonica's strategy and ability to create value".

The acquisition is being financed through STC's own resources and bank debt. STC is 64% owned by Saudi Arabia's Public Investment Fund, which is tasked with shifting the kingdom's economy away from oil.