By Inti Landauro and Andres Gonzalez
MADRID (Reuters) – The board of Spanish telecoms giant Telefonica agreed on Saturday to name defense company Indra chairman Marco Murtra as its new chief executive, replacing chief executive Jose Mario Alvarez-Pallete following a request from sovereign wealth fund SEPI.
Telefonica’s board of directors held an extraordinary meeting on Saturday to decide to terminate Alvarez-Pallete’s contract and offer his job to Murtra, who accepted, the company said in a filing with the stock exchange regulator.
The decision still needs to be ratified by the shareholders, the company announced.
State investment fund SEPI has proposed that Alvarez-Pallete, who has led the firm since 2016, be replaced by Murtra, a person familiar with the matter told Reuters earlier on Saturday.
Alvarez-Palleta’s current term was up for renewal this year at the annual shareholders’ meeting, usually held in April or May.
Under Murtra, Indra, which is 28% owned by the Spanish government, has focused on its defense and aerospace businesses to benefit from increased military budgets by European countries following rising global tensions.
The Spanish government bought a 10% stake worth about 2.3 billion euros ($2.36 billion) in Telefonica through SEPI in May 2024 to counterbalance the acquisition of a similar stake by Saudi Arabia’s STC in late 2023.
The acquisition gave the government a seat on Telefonica’s board of directors.
Given that Telefonica is considered a defense service provider and therefore a strategic company, the government only approved the transaction in November 2024 after securing a stake in the telecom company similar to STC.
Over the past years, Telefonica, like its rivals in Europe, has faced pressure on profitability due to fierce competition and the need to invest heavily in infrastructure for next-generation 5G mobile technology.
It has sold stakes in more mature businesses such as submarine cables or mobile masts and smaller operations in Latin America to fund 5G and fiber.
(1 dollar = 0.9736 euros)
(This story has been edited to update the headline)
(Reporting by Inti Landauro, Andres Gonzalez and Ana Cantero; Editing by David Evans and Tomasz Janowski)
