The Spanish group’s new boss Marc Murtra talks up scale and being a European champion as the German group’s leader announces record results and dividends
Telefónica’s annual general shareholders’ meeting formally confirmed the appointment of Marc Murtra (pictured at the meeting) as Executive Chairman and CEO of the group. He was appointed by major shareholders in January, abruptly replacing the group’s long-serving José María Álvarez-Pallete, which took the European industry by surprise.
Murtra informed the meeting’s attendees that a major strategic review was underway and its findings would be made public later in the year. Even before the meeting, he had lost no time in a string of new appointments and taking decisive action in the company’s mostly ailing opcos in Latin America.
The “ambitious” strategic review and its outcome is intended to realise Telefónica’s “enormous potential” as a major player in the European stage.
In perhaps an unconscious echo of Álvarez-Pallete’s five-point strategic plan of 2019, Murtra said the review has five pillars: ringing the changes in Europe; being entirely customer-centric; technological and operational excellence; “disciplined industrial logic”; and creating value for customers, employees and shareholders.
With these five foundational goals in mind, the company is to adhere to three key priorities.
Regional focus
Or as Murtra put it, “Our priority will be Europe, Europe and Europe,” adding, “We will maintain our leadership position in Brazil as a core market and we will focus on what we know how to do as an industrial operator. It seems certain then that Telefonica will continue to extract itself from Latin America apart from Brazil.
This was a key plank in Álvarez-Pallete’s strategy set out six years ago. Clearly, he wasn’t executing fast enough. Murtra has already put matters in train in Argentina, Colombia and Mexico. He referenced regulators’ dislike of reducing the number of operators in a country market due to concerns about prices rising and less choice for consumers due to less competition but stressed the need for consolidation and scale.
Despite showing some signs of thawing and multiple appeals from European operators, the European Commission seems to have gone back to its original principles on this issue.
Financial discipline, simplification
The next priority concerns “sound financial discipline” and simplfication of the company, and the third is technological and operational excellence. Murtra rather lumped them together by stressing “people will be key”.
He said he is committed to the company reaching its full potential for shareholders, employees and “Europe as a whole”. Becoming a European champion is clearly hugely important to Murtra. He reiterated the importance of European legislation enabling the necessary scale to invest in modern infrastructure and employ the best people to gain the technological capacity and capability to “reinforce our strategic autonomy, increase our productivity and improve the lives of our citizens”.
A role model?
As geopolitics become less certain, there will be more and more talk of European autonomy and self-sufficiency. Last week Deutsche Telekom’s CEO Tim Höttges was delivering similar messages at his group’s annual shareholders’ meeting.
After a record year, DT plans to pay out more than ever before to its shareholders: a dividend of 90 eurocents per share. Höttges said the success story of Europe’s leading telecommunications company is set to continue: “We want today’s records to be tomorrow’s standard”.
Indeed, DT could act as an inspiration for Telefónica. It has been hugely successful in a market outside Europe – the US in its case, Brazil in Telefonica’s – was the first European telco to be valued at more than €100 billion.
Höttges insists that was right for Deutsche Telekom is also important for Europe. He added, “We need the will to perform. I believe that we’ve gotten too comfortable. We trusted that our business model would just keep on working. But many things aren’t working anymore. So we have to change it.”
“For the industry of the future, we need data, artificial intelligence, chipsets, data centers, and inexpensive energy. “What’s more, I believe we also need an efficient state. A state that accelerates rather than stalls. A state that advises rather than restricts. Where the citizens are customers rather than applicants. But complaining doesn’t achieve anything. Nor does always pointing fingers at politicians or regulators. Calling for action takes silver. But action itself takes the gold.”
T-Mobile is in the process of taking action to increase its scale in the US through the acquisition of UScellular for $4.4 billon (€3.87 billion), announced last May. T-Mobile will take ownership of UScellular’s networks, operations and more than 4 million customers, plus 30% of its licensed spectrum and about 2,000 additional towers. The deal is expected to complete this summer despite opposition from its rivals.
