Sanchez charge against the Administration trump for his dependence on the Magnificent Seven, the big American technology companies, which he blames for manipulating the opinions of Americans and calls them the technocaste. But then the same geostrategic policy applies. In the name of security, it intervenes in communications or vetoes the purchase of companies. A few months ago, it prevented the acquisition of Talgo by the Hungarian Magyar Wagon due to its alleged links with Vladimir Putinrelying on a secret report from the CNI.
The takeover of Telefónica ended on Saturday. It is not the first time that a Government takes a turn in the telecom sector. The Executive of Aznar named Juan Villalongaan investment banker, and later replaced him with Cesar Aliertaalso linked to the financial world, who had just presided over Tabacalera. The so-called “crony capitalism” ended with José María Álvarez-Palletethe only former president who spent his entire career in the company. “Once a phone, always a phone,” he said in a farewell tweet.
Pallete’s career had been affected since the entry of the Saudi STC into Telefónica’s shareholding, in September 2023, a few months after the re-election of Pedro Sánchez. Pallete had met the CEO of the Saudi teleco, Olayan Alwetaidin the global employers’ association GSMA, which includes more than 1,100 operators in the sector under his presidency since 2022. On several occasions he had canvassed him to enter the capital without success, according to close sources, who assure that when the Saudis announced that they had a 10% package, half in derivatives, the president of Telefónica was the first surprised.
The entry of STC angered the Government, which interpreted it as a defensive maneuver by Pallete
The news also left the members of the Spanish Government speechless and sowed distrust towards him. In Moncloa it was interpreted as the result of a maneuver initiated before the elections to protect his presidency, for fear that Alberto Núñez Feijóo won the elections, as all the polls predicted.
The Galician was in favor of removing Pallete. In Madrid, the content of a private lunch with the president of Fundación La Caixa spread by word of mouth, Isidro Faineowner of another 10% of the teleco, in which Feijóo asked him to replace him and he did not resist. This explains why the CEO of Criteria Caixa, the holding company industrial of the Caixa Foundation, Angel Simonwas present at the farewell ceremony of the president of Telefónica. The relationship had long since cooled.
The chief executive of Telefónica found himself in no man’s land. Feijóo accused him of favoring the socialists with the signing of former ministers such as Trinidad Jimenez or the maintenance of the veteran counselor Javier de Pazboth very close to the former president Shoemakerwhile there was no room for those related to the PP. Although curiously the position of the popular ones changed after his dismissal. His general secretary, Cuca Gamarraaccused the Government of “colonizing the Ibex companies” and Feijóo unsuccessfully telephoned Fainé personally so that he would not consent. Paradoxes of life!
In the Government, the distrust was led by none other than its first vice president, Nadia Calvinoauthor of the idea that the State would take 10% of Telefónica in order to “provide stability so that the company can achieve its strategic objectives.”
The possibility of his replacement had been on the table for a long time, but Pallete continued to cling to his experience and know-how to believe that he could remain in office, since he was surrounded by those loyal to the Executive. In May 2024, the entry of Carlos Ocañaas an advisor on the part of the Sepi, also close to Zapatero, was interpreted as a sign of relief. Ocaña, director of Real Madrid and a man very close to Sánchez, but without a technological profile, did not have enough resume to succeed him.
During the previous months there had been speculation about the arrival of some heavyweight to the administrative body, such as the former minister Miguel SebastianIndra’s advisor and pro Zapatista, as a future successor. Álvarez-Pallete’s entourage was even considering the possibility of granting another position on the council to someone close to the Government, such as the former Secretary of State for Digitalization, Carmen Artigas.
When he was summoned at mid-afternoon at the Moncloa Palace on Friday, January 17, Pallete got the surprise of his life. At that time he had a meeting to study the progress of the company and he called it off without giving it any importance. The Secretary of State for the Economy of Moncloa, Manuel de la Rochaaccompanied by Simón, the president of Sepi, Belen Gualdaand from a representative of STC, he told him that they had nothing against him, thanked him for his management and proposed an orderly exit. Between the four of them they hold almost a third of the capital.
The presence of the Saudis, who have gone from being suspected of being able to destabilize the administration, to faithful allies of the Executive, was surprising. Now it is seen that they are the scapegoat. From the first day they offered to collaborate with the Government.
“I’m leaving, but right now. Tomorrow I resign and on Monday there will be a new president,” Pallete reacted.
Pallete accepted the decision without blinking. “If you want to kick me out, kick me out, but right now, I don’t want to wait, tomorrow I will present my resignation to the council so that on Monday there will be another president,” he said without resisting and turned around and walked out the door. He was visibly angry. Although other sources suggest that he did it to avoid harmful uncertainty for the company.
His management was correct. In recent months the business was even picking up in Spain. They had broken their chest in Europe to change the regulation in order to favor mergers and reduce the number of operators. The price had fallen almost 60% since it arrived (it went from 9.5 to 3.87 euros), in line with the rest of the sector. On the other hand, it had managed to consolidate the balance sheet, cutting debt almost in half (from 50,000 to 29,000 million) and offering a stable dividend of more than 7% annually, thanks to solid results.
The dark spot is in Peru. The Andean market has already sunk its accounts for the third quarter, having to provision 314 million. The business in Latin America, excluding Brazil, will weigh on the annual results, which will be known at the end of February.
Pallete did not understand what he had done wrong that led to his dismissal. Actually, no one knows. The worst thing is that the forms were not taken care of. It was unnecessary to fire him in Moncloa by one of Sánchez’s most trusted people, to highlight the political nature of the decision.
Above all, when the successor, the former president of Indra, Marc Murtrabrings together a priori the qualities required to address the challenge of transforming and expanding the company, as he stated after reaching out to employees in his letter. Murtra, an engineer born in the United Kingdom, but trained in Catalonia, at the head of Indra has more than doubled the price.
The new president of Telefónica is the right man for the creation of a national telecommunications and defense giant through the merger with Indra because he has the support of both the Government and the La Caixa Foundation, where he has been a trustee since 2021. La Sepi is the controlling shareholder in both companies.
The problem that Indra has is that it is too small to compete internationally in the defense sector. Its turnover reaches less than half of its European peers, such as the French Dassault or the British Rolls Royce. Its only way to grow is with the sale of the jewel in the crown, the technological subsidiary Minsait. But its acquisition by Telefónica, as the market speculates, would be a mistake, because it would increase its large debt and add 45,000 employees, half of the telecom’s current workforce. The true creation of value would be in the merger with Indra and that would truly justify the replacement.
P.S..- Politics was also key in Sabadell’s return to Catalonia. After the agreement between the president of Sabadell, Josep Oliuwith that of the Generalitat, Salvador Illafor the bank’s headquarters to return to Sabadell, the BBVA takeover bid is affected, because the Government or the CNMC will put all kinds of conditions on it. Sánchez himself spoke of territorial and social cohesion as elements to take into account. Oliu has also closed the door to accepting a friendly monetary improvement in the offer, making the merger impossible. The remaining option would be to take a stake as a separate brand. But this does not create the expected synergies and, furthermore, it is very expensive for BBVA. Bad business for Carlos Torres!
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