Spanish Government Seeks to Replace Telefonica Chairman Pallete
Spain’s government is seeking to replace Telefonica SA Chief Executive Officer and Chairman Jose Maria Alvarez Pallete, according to people with knowledge of the matter.
(Bloomberg) -- Spain’s government is seeking to replace Telefonica SA Chief Executive Officer and Chairman Jose Maria Alvarez Pallete, according to people with knowledge of the matter.
Telefonica’s top shareholders — Spanish state holding company Sepi and Criteria Caixa SA — have kicked off the process. The carrier is set to hold an urgent extraordinary board meeting as soon as Saturday to approve the change, the people said asking not to be identified discussing private negotiations.
The news was reported earlier by website El Confidencial.
Sepi will propose Marc Murtra, chairman of Indra Sistemas SA, to succeed Pallete at the board meeting, according to other people familiar with the matter. Murtra joined Indra in 2021 after his appointment was proposed by the Spanish government, who owns 28% of the defense and IT firm through Sepi.
Spokespeople for Telefonica, Criteria, STC and the Spanish government declined to comment. Calls and messages to Murtra weren’t answered. Pallete’s role is up for renewal at the next shareholders meeting later this year.
Telefonica’s shareholder structure has undergone a complete revamp since late 2023, when Saudi Telecom Co. announced plans to acquire a €2.1 billion ($2.2 billion) stake in the company. In response, Spain’s government, which once owned the firm, bought a 10% stake, becoming the telecom operator’s largest shareholder. Criteria Caixa, Spain’s biggest financial holding company, increased its stake to 9.99% in June.
STC, which is controlled by Saudi Arabia’s Public Investment Fund, owns 4.9% of Telefonica’s shares and holds a further 5% through derivatives. The Spanish government in November granted permission for STC to increase its stake and convert the financial derivatives it holds into stock.
Pallete, who became chairman and CEO in 2016, has overseen substantial transformations at the carrier, including cutting debt by nearly half, reorganizing core markets and launching new tech and infrastructure divisions. More recently, the firm has pledged to grow its operating free cash flow by 5% annually and maintain its dividends.
Still, the stock has lost more than half of its value since Pallete took the helm, and the shares have been on a downward trajectory in recent months, after a year of aggressive stake building by Sepi and Criteria.
(Updates with details from the fourth paragraph.)
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First Published:18 Jan 2025, 09:47 PM IST
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