Sepi increased its stake in Telefonica, a former state-run monopoly that was privatised in the late 1990s, to 3% in March. The 5% holding is valued at about €1.1 billion.

Its increase to 5% means it overtakes stc’s 4.9% shareholding.

Stc quietly became the largest shareholder in Telefonica in September 2023, with ownership of financial instruments that it give it an additional 5% economic interest on top of its 4.9% cut of the shares.

The Spanish government must approve the conversion of that 5% into shares, as Telefonica is deemed a company of national importance.

The aim of the Spanish stake is to give Telefónica “shareholding stability”, according to a filing made by Sepi in December.

Capacity first reported that the state owned investment company was aiming to achieve a 10% stake in Telefonica in November.

Stc has maintained throughout that it does not intend to acquire control or a majority stake in Telefonica, but rather sees it as a “compelling investment opportunity.”