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Alvarez-Pallete to Replace Alierta at Spanish Giant Telefonica

Telco's new exec chairman to face challenges of digital revolution

MADRID — Cesar Alierta, one of Spain’s most powerful businessmen, will step down as executive chairman of Spanish telco giant Telefonica after almost 16 years at the helm.

He will be replaced by Jose Maria Alvarez-Pallete, currently chief operating officer and Alierta’s right hand man, whose appointment will be confirmed at Telefonica’s next board of directors meeting on April 8.

The succession was proposed by Alierta, 70, “who considers Alvarez-Pallete as the best prepared executive to face the challenges arising from the digital revolution,” the company said Tuesday in a statement.

Alierta will remain as a member of Telefonica’s board of directors, focusing on social projects aiming for progress, such as digital education, and on the executive chairmanship of Fundacion Telefonica, the telco added.

Leading Telefonica since July 2000, after the ousting of former topper Juan Villalonga, Alierta diversified and expanded Telefonica, transforming it from a simple player in the the telco sector in Spanish-speaking countries into becoming a global communications operator that plays a leading role in key territories, especially Germany, Brazil and Spain. Its tentacles also spread over much of Latin America.

Currently, the telco has a presence in more than 20 countries, with some 330 million clients. About 80% of Telefonica’s operating profits comes from the international businesses.

One of the crucial challenges facing Alvarez-Pallete (Madrid, 1963) as new exec chairman will be to monetize at a profit the strong investments in film, TV and digital rights the company is now making as it aims to become one of the four biggest audiovisual content operators worldwide, as Alierta emphasized last year.

In Spain, the telco operates Movistar Plus, country’s big local VOD service with 3.7 million subscribers by year-end 2015, after gaining regulatory clearance for the acquisition of Prisa paybox TV Canal Plus Espana. Telefonica Studios, the telco’s film and TV production arm, has developed an already strong and growing presence in movie production in Spain and Argentina.

In total, Telefonica has 8.3 million pay TV subscribers. Under the Movistar TV brand, the telco competes at pay TV markets in Central America, Colombia, Peru and Chile, while in Brazil it owns paybox Vivo. Telefonica also has a controlling stake in Argentine broadcaster Telefe, a leading and increasingly international player in Latin America’s film and TV production sector.

Further challenges for Alvarez-Pallete include the ever deeper economic and political crisis in Brazil, Telefonica’s second biggest market after Spain, and a positive resolution by European Union’s anti-trust authorities over the sale of British telco O2 to Hong Kong-based Hutchison Whampoa. If that goes through, Telefonica will have the cash, despite a significant debt load, for further expansion.

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