MADRID: The Spanish government will acquire up to 10 percent in Telefonica through the state holding company SEPI in a counterbalance to the acquisition of a large stake in the telecoms giant by Saudi Arabia’s STC, according to Reuters. “The presence of a key public shareholder will reinforce the company’s ownership stability,” the Budget Ministry said in a statement on Tuesday. SEPI said it would complete the acquisition of shares while minimizing the impact on the share price but would not elaborate. It is yet to hire a financial adviser. A 10 percent stake has a current market value of around €2 billion euros ($2.20 billion). A source with knowledge of the matter told Reuters the buying would be piecemeal in small quantities over a period of up to two months and should be financed with public debt issuance. Following the government’s decision, Telefonica said it remains focused on the execution of its approved strategic plan for the coming three years, announced on Nov. 8. With a long-term commitment, SEPI’s participation will provide Telefonica with a “greater shareholding stability for the company to reach its objectives and, therefore, it will contribute to safeguarding its strategic capabilities,” the SEPI said. Economy Minister Nadia Calvino told reporters the move was “in line with other big European countries such as France and Germany that have stakes or are increasing stakes in big strategic firms” to give them more stability in achieving their business goals. STC built a 9.9 percent stake in Telefonica worth €2.1 billion euros in September. In late October, a month after STC’s announcement, SEPI said it was considering whether to buy a stake in Telefonica. STC’s holding consists of 4.9 percent of Telefonica’s shares and financial instruments that give it another 5 percent in so-called economic exposure to the company. As Telefonica is considered a defense service provider, the Defense Ministry has a say in acquisitions and holdings between 5 percent and 10 percent unless the buyer commits not to request a seat on the board. The government has promised to carry out a thorough evaluation before approving STC’s stake. The SEPI announcement came after the market closed in Madrid, with Telefonica shares 0.75 percent off on the day at 3.565 euros. So far this year they have accumulated gains of just over 6 percent. Meanwhile, Telefonica American Depositary Receipts jumped 4 percent higher in New York. STC has still not requested authorization from the Spanish government to exercise the voting rights corresponding to the financial instruments. It has said it would exercise those rights after obtaining the necessary regulatory approvals and that it does not intend to acquire control or a majority stake in Telefonica. The Spanish government has three months to rule on the matter once the request has been submitted.