(Bloomberg) -- The Spanish government is considering buying a stake in Telefonica SA following Saudi Telecom Co.’s plan to become the Spanish telecommunications carrier’s largest shareholder.

SEPI, the government’s corporate holding group, hasn’t yet made a final decision, it said in a regulatory filing on Tuesday. 

Spain has been analyzing Saudi Telecom’s plan to take a nearly 10% stake in Telefonica for about €2.1 billion. The government required the Saudi company, which is controlled by the kingdom’s sovereign wealth fund, PIF, to obtain special approval for such a large holding because Telefonica supplies Spain’s military and defense ministry. 

Read More: Spain Weighs Placing Conditions on Saudi’s Telefonica Stake Bid

In September, Acting Prime Minister Pedro Sanchez had said he would safeguard national defense and security. “We also guarantee that any foreign investment will not exceed the limits that would involve undue influence over strategic companies or access to critical technologies,” he said.

Saudi Telecom has yet to present a formal request for approval from the government. If it’s given the green-light, the stake purchase would turn Saudi Telecom into Telefonica’s largest shareholder, surpassing Banco Bilbao Vizcaya Argentaria SA, Blackrock Inc. and CaixaBank SA, which each own less than 5%.

Other major European nations, such as France and Germany, own stakes in their former phone monopolies but Spain divested its stake in Telefonica years ago. 

Telefonica reports earnings Nov. 8, when it also plans to hold it’s first Capital Markets Day in more than a decade.

On Monday, El Confidencial news website reported that the government was analyzing buying 5% in Telefonica. 



(Updates with shareholders from fifth paragraph)

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