Spanish government ousts Pallete at Telefónica and installs Murtra

Spanish government ousts Pallete at Telefónica and installs Murtra

The Spanish government has already decided who will chair Telefónica, and it has made that known. José María Álvarez-Pallete leaves after eight years in the job, and the executive's proposed replacement is Marc Murtra, until now chairman of Indra. It was not presented as a dismissal, but as a communication to the board with the state already installed as top shareholder through SEPI. The announcement came at the weekend and on Monday the market translated it: Telefónica led the declines on the Ibex 35. There are positions being taken to suit all tastes. What is not open to debate is that the company privatised in the 1990s once again has the government sitting at the boardroom table.

Eight years of Pallete and an exit announced with no successor confirmed

The state's entry into the share capital was justified at the time, as recalled in the debate, as buying a seat, not as a change of direction. Eight years later, the executive decides that the man who steered that coexistence should not remain at the helm. The figure that measures the blow is a stock market one: the share peine on Monday with a 3% fall, to 3,851 euros, and moderated the decline to 2,27% minutes later. It is not a catastrophe — a company with operations in Brazil, Germany and Spain does not sink because of a change of chair — but the market made clear what it thinks of the news. The replacement's name circulated before there was official confirmation, and the company itself limited itself to carrying out what its top shareholder demanded.

Who is Marc Murtra, the proposed replacement at Telefónica

Catalan, close to the PSC and with a well-known office in the Criteria and La Caixa universe. Murtra chairs Indra, where he also controls the board of directors, the strategy committee and the executive committee. His profile is sold as a safe bet: someone with whom the bulk of the shareholders could coexist, including the historic partners. The other half of the story is provided by the market. Indra rose 2,8% in the same session in which Telefónica fell, and some read that revaluation as anticipation of rearmament: it is taken for granted that NATO will demand more defence spending — there is even talk of 2,5% of GDP — and any company with military exposure trades higher. Murtra therefore lands at an indebted telecoms operator with the state behind it.

The timing that raises suspicions

This is where it gets uncomfortable. The replacement is communicated in the same period in which a court demands from Telefónica the call records of the State Attorney General, within the investigation into the deletion of messages from his phone. Those who hold the harshest reading say it bluntly: the company was the one that had to hand over those records, and changing the chairman is the quickest way to cool the front. It should be stressed that this is an interpretation, not an established fact. The charitable version is more boring: eight years is a long time and the owner calls the shots.

What Telefónica really controls

It is not just a telecoms operator. It is the network through which calls, data and business traffic flow, and some attribute to it a key role in the distribution of advertising among media outlets. Hence part of the analysis reads the move as a competition problem rather than an ideological one: when the main advertiser and the main shareholder are the same government, the relationship between media and power changes shape. The response from the other side is that the state had been inside for some time and nobody was scandalised then. Both things are true and do not cancel each other out.

The figures behind the replacement: 23 million and a share from 10 to 4

Pallete leaves with a package of 23 million euros, of which roughly half will go to the tax authorities. And he leaves behind a company that, according to the calculation repeated in the debate, he took over trading at around 10 euros and hands over at close to 4. A whole narrative has been built on that gap: it is argued that the company was downgraded enough to make it cheap to buy and that a dismissal like this should not cost shareholders a euro. The segment results — Brazil, Germany, Spain, Telefónica Tech — provide ammunition for those who argue that the breakdown does not square with the group total once write-downs are discounted. The regional detail, read calmly, gives a picture far less brilliant than the headline results.

From Villalonga to Murtra: the chairmanship was never neutral

The sector's memory is long and selective. The privatisation of Telefónica put Juan Villalonga at the helm, a schoolmate of the then prime minister. Before that, as recalled in the debate, there was another chairman from socialist circles with a past at Tabacalera, who would have steered the expansion into Peru and Argentina in the early 1990s. Anyone who reviews the list concludes that La Moncloa has always had something to say about that chair. The novelty is that now no intermediary is needed: the state is the shareholder.

With the state inside and a manager arriving from Indra, the reasonable expectation is more changes at the top and a Telefónica less attentive to the market and more to political instruction. It is also reasonable to be wrong: the history of this company is full of chairmen who seemed definitive and lasted as long as it took for the government to change. If the appointment goes through, the next set of accounts will show whether this was management or control.