(Bloomberg) -- Spain’s government raised its stake in Telefonica SA to 5%, increasing its holding for the second time in three weeks and becoming the national telecommunications company’s largest shareholder — overtaking Saudi Telecom Co.

State investment firm Sepi increased its stake to 5% from 3% on March 25, according to a regulatory filing. The 5% holding is valued at about €1.1 billion ($1.2 billion) as of Monday’s closing price.

Read More: Spain Buys Stake in Telefonica to Counter Saudi Arabia Deal

The government aims to buy as much as 10% of Telefonica’s shares as soon as possible, which would leave it a step ahead of the Saudi state-backed telecom’s plan to take a 9.9% stake. The taxpayer-funded purchase is part of Spain’s plan to keep control over a strategic company whose operations stretch across Europe and throughout Latin America, and also provides services to the military and defense ministry.

STC, which is backed by the kingdom’s Public Investment Fund, surprised the market in September when it made a €2.1 billion investment in the Madrid-based company. STC owns 4.9% of Telefonica’s shares and has financial contracts that give it economic interest over a further 5% of capital.

To convert the 5% into shares, STC will need the Spanish government’s approval. 

The government’s entry in Telefonica marks a shift for Spain, which has historically had a more hands-off approach to markets than its neighbors. Telefonica, a former state-owned monopoly, was privatized in the late 1990s.

Sepi’s position now surpasses that of Telefonica’s historical shareholders Caixabank SA and Banco Bilbao Vizcaya Argentaria SA, as well as BlackRock Inc. 

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