Government aims to quickly reach 10% stake in Telefónica, causing stock to surge to May highs

Unexpected Rise in Telefónica Shares Following Government Announcement: What It Means for Telefónica, Sepi, and the Government

On Tuesday, at a press conference, Pilar Alegra, the Government spokesperson, announced that the Executive expects the State Society of Industrial Participations (Sepi) to acquire 10% of Telefónica in a short period. This statement came after Sepi declared that it currently holds 3% of the telecommunications operator’s shares.

However, Alegra’s statement had the opposite effect, causing Telefónica’s shares to rise for the first time since May 2023. By 4:30 p.m., the shares had reached 4.08 euros, representing a 2.26% increase. The rush to complete the operation could potentially increase the final cost by tens of millions of euros, as Sepi will need to disburse an additional 1,600 million euros to reach the 10% ownership stake.

The current market value of Sepi’s 3% ownership stake is over 700 million euros. To reach the desired ownership stake, an additional investment of 1,600 million euros will be necessary. However, according to government estimates, this additional investment will significantly increase the overall cost beyond the initial estimate of approximately €2 billion.

The sudden development has significant financial implications for both Telefónica and the government compared to initially estimated costs. It is crucial for all stakeholders to closely monitor this situation and its potential impact on both industries and government budgets.

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