The Spanish government has acquired a three percent stake in mobile operator Telefónica.

It was purchased through the state-holding company Sociedad Estatal de Participaciones Industriales (SEPI).

Telefonica is now part-owned by the Spanish government – Getty Images

SEPI bought 175 million shares, worth around €698 million ($757m), with the government targeting an eventual 10 percent stake.

"The entry of the SEPI, a shareholder with a long-term commitment, will provide Telefonica with greater shareholder stability to achieve its objectives, contributing to safeguarding the strategic capabilities of a company that is strategic for (Spain's) national interests," SEPI said in a statement.

The Spanish government said last year it planned to buy in to Telefónica to stave off interest from Saudi Arabian telecoms company STC Group.

STC Group agreed to pay $2.25 billion to take a 9.9 percent stake in Telefónica in September, making it the biggest shareholder in the company at the time. This will now be surpassed by the Spanish government.

The Saudi company has said it does not intend to “acquire control or a majority stake” in the Telefónica.

Shortly after, the Spanish government said it would examine STC's acquisition before giving any approval to the deal.

Because Telefónica is considered a defense service provider, the Defense Ministry gets to weigh in on acquisitions and holdings between 5 and 10 percent before they can be approved.