Telefonica Chief's Departure Seems Imminent
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[Madrid, SPAIN] An ongoing investigation into alleged insider trading by Juan Villalonga, president of Telefonica, may lead to his replacement within a week, say several Spanish sources.
Last month, Spain's securities and exchange commission, the Comision Nacional de Mercado de Valores (CNMV), reopened an investigation into Villalonga's alleged use of privileged information to buy Telefonica stock options in 1998. Ever since then, talk of his immediate replacement has been mounting.
Telefonica stock plummeted in the third week of June, but regained force once Villalonga appeared to be holding on to his post for the time being. Spain's business dailies Cinco Dias and Expansion have both cited sources within the company saying Villalonga's departure is imminent, and may occur before the next board meeting on July 26. Telefsnica has not confirmed this.
According to EL PAIS, Spain's leading daily, Villalonga and his top associates have reportedly been meeting in Los Angeles this week to discuss, among other things, his possible departure. According to the rival daily ABC, Telefonica's president may have agreed upon a four billion peseta ($22 million) settlement to terminate his contract.
"On the other hand, if a leader is making it so the company has to stall on agreements, business decisions, strategies and the like, then there's not much good in keeping him in this position."
Telefonica is in the midst of several deals worldwide, including bids for UMTS mobile phone licenses across Europe, the purchase of Dutch production company Endemol, and the buyout of several Latin American telephone operators. Telefonica affiliate Terra Networks is in the midst or a merger to form Terra-Lycos.
Villalonga was appointed head of Spain's former telephone monopoly by Spanish president Jose Maria Aznar as part of a liberalization of the telecommunications sector. In less than two years, Telefonica's CEO has taken a once small company to international prominence and given it a market capitalization greater than that of rival European players like British Telecom and Telecom Italia.