State-owned SEPI proposed to replace Telefonica’s CEO with Reuters

By Inti Landauro and Andres Gonzalez

MADRID (Reuters) – State investment fund SEPI has proposed replacing Telefónica (NYSE: ) CEO Jose Maria Alvarez-Paltet, who has led the company since 2016, a source familiar with the matter told Reuters on Saturday.

Mark Murtra, the candidate to replace Alvarez-Palt, is currently CEO of defense company Indra, whose largest shareholder is SEPI, the source said.

The change will be decided at an upcoming board meeting, another source familiar with the matter told Reuters. Shareholders must approve any board resolution at a general meeting.

Both sources confirmed an earlier report by news website El Confidential.

Alvarez-Palte’s current term was up for renewal this year at the annual general shareholders’ meeting.

Under Murtra, Indra, which is 28 percent owned by the Spanish government, has focused on defense and aerospace to benefit from European countries’ military budget cuts in the wake of escalating global tensions.

Telefonica declined to comment and no one at Indra was immediately available for comment.

The Spanish government has bought a 10% stake in Telefonica for 2.3 billion euros ($2.36 billion) until May 2024 to balance the same stake in Saudi Arabia’s STC at the end of 2023.

On May 8, after reaching a 7% stake in the company, the government asked for a seat on Telefónica’s board, proposing Carlos Ocana, a former cabinet chief at the Ministry of Industry, to represent the government’s interests.

In recent years, Telefónica, like its European rivals, has struggled with profitability due to fierce competition and the need to invest heavily in next-generation 5G mobile technology.

It has been selling stakes in mature businesses in Latin America, such as submarine cables or mobile masts and smaller operations, to finance 5G and optic fiber.

($1 = 0.9736 EUR)