Telefónica shareholders overthrow Álvarez-Pallete, appoint new CEO

Marc Murtra (left) has replaced José María Álvarez-Pallete (right) as chairman and CEO of Telefónica.

Marc Murtra (left) has replaced José María Álvarez-Pallete (right) as chairman and CEO of Telefónica.

  • A change in shareholder composition has resulted in a shake-up at Telefónica’s top table
  • Chairman and CEO José María Álvarez-Pallete was forced to resign at a board meeting held over the weekend
  • He has been replaced by Marc Murtra, who was chairman of Spanish defence and tech company Indra
  • The Spanish government appears to be the activist investor behind the change

In a surprise move, Telefónica’s board forced out chairman and CEO José María Álvarez-Pallete during a meeting held on Saturday 18 January and replaced him with Marc Murtra, who had been chairman of Spanish defence and tech firm Indra. Local reports suggest the Spanish government’s investment company, Sociedad Estatal de Participaciones Industriales (SEPI), which became a significant shareholder in Telefónica last year, was behind the sudden move. 

Telefónica played down the dramatic switch, noting in its weekend announcement that the board agreed “on the orderly renewal of the company’s chairmanship, in order to adapt it to its new shareholding structure” and “the termination of the contract signed with Mr. José María Álvarez-Pallete as executive chairman of Telefónica’s board of directors”. 

Álvarez-Pallete, who has been CEO since April 2016, duly fell on his sword and received a glowing tribute from the company that had ousted him. “The board of directors has unanimously expressed its deepest gratitude to Mr. José María Álvarez-Pallete for the years of work and collaboration with the Telefónica Group and, specially, for the many services rendered and for his extraordinary effort, dedication and contribution during his long professional career in the group,” noted Telefónica. 

According to the telco, Murtra has “extensive knowledge of the tech industry” and is a “specialist in digital strategy, digital transformation and public-private partnerships”.  

The sudden change has spooked the Spanish financial market, as Telefónica’s share price sank by 2.85% to €3.86 on the Madrid exchange during Monday trading. 

While Telefónica’s announcement refers only to “some of its relevant shareholders” having requested a “new stage in the executive chairmanship”, rumours emerged early on Saturday in the Spanish press that SEPI, which is the main shareholder in Indra, was seeking to replace Álvarez-Pallete and had the support of other investors.

In a national security-related move, SEPI started to build a stake in Telefónica last year after Saudi telco STC acquired a near 10% stake in the Spanish telco in late 2023. By May, SEPI had invested almost €2.3bn to acquire a 10% stake in Telefónica and had gained a seat on the board. SEPI stated when it reached the 10% threshold that “Telefónica is… decisive due to its industrial capabilities and areas of knowledge, since it develops activities relevant to the economy and the productive fabric, including those related to security and defence. With a vocation for permanence, SEPI’s participation provides greater shareholder stability to the company to achieve its objectives and contributes to the protection of its strategic capabilities.”

That all sounded reassuring, but clearly SEPI has not been happy with the way Telefónica has been progressing. In November 2023, Álvarez-Pallete presented the telco’s Growth, Profitability and Sustainability (GPS) strategy, and noted that Telefónica – one of the world’s largest telcos, with more than 390 million connections across its European and Latin American markets and annual revenues of more than €40bn – is expecting an annual revenue growth rate of about 1% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 2% for the 2023-26 period. 

Will Murtra be able to do any better? We might find out what his plans are on 27 February, when Telefónica reports its 2024 full year financials. 

In the meantime, the change of guard at Telefónica will also cause some upheaval at industry body the GSMA, where Álvarez-Pallete is chair of the board, having been reappointed to that role in October 2024.  

- Ray Le Maistre, Editorial Director, TelecomTV

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