Telefonica engages with unions to discuss strategic plans and efficiency measures aimed at strengthening its long-term operations, highlighting a collaborative approach to future organizational changes.

Spanish telecommunications giant Telefonica is taking a proactive and transparent approach to its future business strategy.
The company has invited major unions to hold discussions regarding its upcoming plans, signaling open communication and cooperation.

The meeting, scheduled for November 17, will include key unions such as UGT, CCOO, and Sumados-Fetico, which represent a significant portion of the company’s workforce.

Union representatives confirmed the invitation after Spanish media reports indicated that Telefonica is preparing for an important strategic review.

According to insiders, Telefonica recently sent an internal memo to union representatives explaining that the meeting will focus on details from its recent capital markets presentation.

While the memo did not mention any specific workforce reductions, it emphasized the company’s goal of improving efficiency, competitiveness, and long-term sustainability.

The company aims to align its operations with evolving technological and market demands. Under the leadership of CEO Marc Murtra, Telefonica introduced a five-year strategic plan last week focused on optimizing performance and adapting to the fast-changing telecommunications landscape.

This plan targets approximately 3 billion euros ($3.5 billion) in cost efficiencies by 2030, a move designed to enhance agility and maintain the company’s leading role in Spain and beyond.

Telefonica’s management continues to express confidence that the new roadmap will position the firm for innovation and growth in the digital era.

With around 25,000 employees in Spain, representing nearly a quarter of its global workforce, Telefonica remains one of the country’s most significant employers.

Its strong relationship with unions has historically ensured that any workforce changes are conducted responsibly and respectfully.

While some reports from local newspapers such as CincoDias and Expansion speculated on potential adjustments, company executives reaffirmed that any actions would be taken only after full consultation with labor representatives. This approach reflects Telefonica’s long-standing commitment to transparency and mutual understanding.

During a recent call with analysts, Chief Operating Officer Emilio Gaya highlighted that any restructuring measures, if pursued, would be voluntary and based on agreement with unions. Such collaborative practices align with the company’s values of fairness and respect for employees.

Telefonica’s past experience also demonstrates its responsible management approach. In early 2024, the company successfully completed a voluntary departure program involving 3,420 employees, following a constructive negotiation process with unions.

This initiative was recognized as an example of how large corporations can balance operational needs with social responsibility.
The upcoming dialogue continues that tradition, ensuring that Telefonica’s transformation journey remains guided by mutual respect and shared goals.

The company’s long-term strategy focuses not only on cost optimization but also on technological innovation, digital transformation, and sustainable growth.

Telefonica’s investment in next-generation networks, AI-driven services, and cloud technology is expected to strengthen its market position across Europe and Latin America.

By fostering open discussions and encouraging voluntary participation, Telefonica demonstrates its commitment to maintaining trust and morale within its workforce.

This cooperative attitude reinforces the company’s reputation as a responsible corporate leader in the telecom industry.

As the November 17 meeting approaches, stakeholders expect the discussions to outline practical steps that align with Telefonica’s modernization goals.

The emphasis remains on adaptability, competitiveness, and maintaining a healthy relationship with employees during times of strategic evolution.

Telefonica’s forward-looking approach ensures that change is guided by dialogue and consensus. This balance between innovation and inclusivity continues to define the company’s role as a trusted and progressive telecommunications leader.

STC hopes the ties with Telefonica will help it develop digital cities in Saudi Arabia, importing technological know-how from countries like Spain

Jose Maria Alvarez-Pallete, chairman and chief executive of debt laden Spanish telephone and internet service company Telefonica, got an unexpected call this week when he was in Silicon Valley to meet companies and investors in America’s tech capital.

He learned Saudi Arabia’s largest telecoms operator, STC Group, aimed to be Telefonica’s biggest shareholder, with an interest of 9.9%. Within hours of Tuesday’s call, Alvarez-Pallete was en route to Riyadh, according to people with knowledge of the situation.

STC had spent months building its 2.1 billion-euro ($2.25 billion) stake, said the people, requesting anonymity because of the sensitivity of the matter. The move is a vote of confidence in Telefonica, burdened by billions of dollars in debt while STC gains expertise to modernize Saudi telecoms infrastructure.

But some in Spain worry the deal could give Saudi Arabia too much sway over the country’s telecom and internet infrastructure.

STC is 64% owned by Saudi Arabia’s Public Investment Fund (PIF), the main engine of Crown Prince Mohammed bin Salman’s Vision 2030 effort to build stakes in a variety of global companies and wean the Saudi economy off its dependence on the oil that made it one of the world’s richest nations.

STC hopes the ties with Telefonica will help it develop digital cities in Saudi Arabia, importing technological know-how from countries like Spain, according to a person who had advised the company. For Telefonica, whose market value has sunk to a third of its level eight years ago, the investment offers long-suffering shareholders some respite.

As Telefonica’s rivals slashed prices to attract internet users, the Spanish company also borrowed to invest in new mobile and internet networks. Exacerbating the problems, Telefonica has expanded in Latin America, where flagging local currencies, tighter regulation and competition sapped profit in the last decade.

“This provides a much needed boost for Telefonica given the huge investment to rollout fibre broadband 5G in key core markets,” said an analyst at PP Foresight.

The new investor “brings confidence and value,” Telefonica’s main trade union UGT conceded on Thursday, but it worried about growing influence of sovereign funds from theocracies.

Telefonica does not view STC as an aggressive investor that will seek management changes, according to a person with knowledge of the management’s thinking.

But the secrecy with which STC (7010.SE) built its stake did catch some observers off guard, the person said.

Speculation about a major new shareholder at Telefonica had been mounting. Last year, Telefonica management twice met with other companies and funds in the Middle East, said the people familiar with the matter.

Telefonica said it was informed Tuesday about STC’S investment, after the companies had become more acquainted in recent months. In February, they sealed a strategic partnership to work in fields such as cybersecurity and the metaverse.

By May, STC had hired advisers, including investment bank Morgan Stanley and law firm Linklaters, and started buying Telefonica shares on the market, said two other sources with knowledge of the move.

When the stake neared 3%, STC paused stock purchases to avoid having to make an official market disclosure, one of the people said. STC sought to keep the stake under wraps until it could buy at least 9.9% of Telefonica, the person said.

On Tuesday, STC hit that target, after acquiring an additional 2% stake from undisclosed investors, one of the people said. The balance, 5%, consists of derivatives arranged by Morgan Stanley, and is pending regulatory approval by the Spanish government, they said.

Central to the deal is STC’s chief investment officer, Motaz Al Angari, formerly a banker at Morgan Stanley, one person with knowledge of the situation said. STC confirmed his involvement. While at the bank, Al Angari advised on giant Saudi Aramco’s record public listing.

Officials for STC declined to comment further. Morgan Stanley and Linklaters declined to comment. Telefonica said: “Our management, strategy and investment teams travel regularly to meet with potential investors, not only in the Middle East, but all over the world.”

In a bid to pare debt, Telefonica has sold swathes of telecoms infrastructure, and is set to present a new strategic plan on Nov. 8 with a focus on growing free cash flow, which its CEO has said could reach 4 billion euros this year.

STC has a cash pile of 22.4 billion riyals ($6 billion) that has been underutilised for many years, equity analysts at EFG Hermes said in a note to clients, so the deal should also be good for the Saudi company. However they warned “unsuccessful deals” by STC in the past may worry some.

Since the news on Tuesday, Telefonica shares gained 2.4% while STC fell 1.1%.

Middle Eastern investors have been taking stakes in Spanish companies for some time. The United Arab Emirates’ Mubadala sovereign wealth fund owns stakes in oil company Cepsa and gas pipeline operator Enagas, while Qatar’s QIA is a shareholder in Iberdrola.

It is a delicate issue in Spain. STC contacted the Spanish government on Tuesday to let them know about the stake and that they did not want to take control, Spain’s acting Economy Minister Nadia Calvino said.

“We will apply all the means at our disposal in the interests of defending our strategic interests,” she told reporters.

The deal comes at an opportune moment for Saudi Arabia, which soon hosts its annual financial conference attended by the world’s top bankers and billionaires, dubbed ‘Davos in the Desert’.

“They want their local champions to become global players,” said a Gulf banker. “With time they will become as important as a Vodafone or Telefonica itself.”

STC had contacted the Spanish government on Tuesday to inform it of the deal, which would make STC the Spanish telecom’s largest shareholder, Calvino said in Brussels.

“Telefonica is a strategic company for our country and as government we will apply all the mechanisms that are necessary to prioritise the defence of our strategic interests,” Calvino told reporters when asked about STC’s move.

STC (7010.SE) is Saudi Arabia’s largest telecoms operator and is 64% owned by Saudi Arabia’s Public Investment Fund (PIF), the main engine of Crown Prince Mohammed bin Salman’s Vision 2030 to wean the economy off its dependence on oil.

In a bid to protect companies whose value had plummeted since the COVID-19 pandemic from hostile takeovers, the Spanish government has had the power to block acquisitions of stakes of 10% or larger in listed companies by entities from outside the European Union and European Free Trade Association.

Calvino said Madrid was analysing the application of the relevant defence mechanisms, the sector, its relation with Spain’s security and defence of Spain, STC’s shareholding, the exercise of voting rights and the participation in the board or other decision-making bodies of the company.

“Fortunately, since we arrived in government we have reinforced the mechanisms for protecting our strategic interests,” Calvino added.

The threshold at which the government can intervene was recently lowered to 5% for companies related to defence.

Telefonica is listed as a defence provider on government websites, supplying “systems and equipment” to the army and satellite services to the defence ministry’s aerospace arm.

The government must ensure the decision-making of a company that handles sensitive data remains in Spain, acting Labour Minister Yolanda Diaz said on social media platform X, formerly known as Twitter.

STC said on Tuesday evening it had built up a 9.9% stake in Telefonica worth 2.1 billion euros ($2.25 billion).

Telefonica, whose shares were 2% up on Wednesday on the Madrid stock exchange while the blue-chip index Ibex-35 (.IBEX) was down 0.4%, said it was informed of STC’s investment on Tuesday, describing it as “friendly”.

STC’s holding consists of 4.9% of Telefonica’s shares and financial instruments that give it another 5% in so-called economic exposure to the company.

STC said it plans to secure voting rights for that 5% interest held through financial instruments after receiving regulatory approvals.