Written by Inti Landoro and Andres Gonzalez
MADRID (Reuters) – State-owned investment fund SEPI has proposed replacing Telefonica (NYSE:) CEO José María Alvarez Ballete, who has been leading the company since 2016, a source familiar with the matter told Reuters on Saturday.
The candidate to replace Alvarez-Balletti is Marc Murtra, the current CEO of defense company Indra, of which SEPI is the largest shareholder, the source said.
Another source familiar with the matter told Reuters that the change would be decided at a board meeting to be held sooner rather than later. Shareholders will have to ratify any Board of Directors decision at the General Assembly.
The two sources confirmed a previous report published by the El Confidencial news website.
Alvarez-Pallete's current term was due to be renewed this year at the annual general meeting of shareholders.
Under Murtra, Indra, which is 28% owned by the Spanish government, has focused on its defense and aerospace business to take advantage of the growing military budgets of European countries in the wake of rising global tensions.
Telefonica declined to comment and no one at Indra was immediately available for comment.
The Spanish government bought a 10% stake worth about 2.3 billion euros ($2.36 billion) in Telefonica through SEPI in May 2024 to offset STC Saudi Arabia's acquisition of a similar stake in late 2023.
On May 8, after the government had reached a 7% stake in the company, it requested a seat on the board of directors of Telefonica and proposed Carlos Ocaña, former cabinet chief of the Ministry of Industry, to represent the government's interests.
Over the past years, Telefonica, like its competitors in Europe, has faced pressure on profitability due to fierce competition and the need for huge investments in fifth-generation (5G) mobile technology infrastructure.
It has sold stakes in more mature companies such as submarine cables or mobile towers and smaller operations in Latin America to finance 5G and fiber optic networks.
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