Spain’s government acquired a 3 per cent stake in Telefonica through a state holding company, as part of attempts to counterbalance Saudi operator stc’s presence in the company.

State-held company Sociedad Estatal de Participaciones Industriales (SEPI) bought 175 million shares, worth around €698 million, in the first step of a wider government plan to buy a stake of up to 10 per cent in the operator.

Spain’s economic ministry outlined plans in December last year to acquire a stake in Telefonica, a move which will see the nation’s investment fund vie with stc to be the operator’s largest shareholder.

The announcement came three months after stc splashed €2.1 billion on a stake totalling 9.9 per cent.

At the time, Spain said it would look into the potential implications of stc’s buy, with Telefonica considered of strategic importance due to its position in the telecoms sector, and its industrial capabilities in areas including defence and security.

SEPI stated that as a long-term shareholder, it will provide Telefonica with greater stability to achieve its objectives and contribute to safeguarding strategic capabilities”