UPDATE: Telefonica Appoints First CEO In 4 Yrs, In Reshuffle
Wednesday December 19th, 2007 / 15h42
(Adds details, analysts' comment.) By Jason Sinclair and David Roman Of DOW JONES NEWSWIRES MADRID -(Dow Jones)- Telefonica SA (TEF) Wednesday appointed Julio Linares as Chief Executive, filling its second most important executive position for the first time since 2003, as part of a wide-ranging management reshuffle. Madrid-based Telefonica, the world's fourth-largest telecommunications company by market value, also said in a press release that Antonio Viana-Baptista, head of the company's key Spanish division and formerly responsible for its mobile operations, will leave the firm. The management shakeup comes as Telefonica faces tougher regulatory scrutiny from the European Union and Spain's once booming economy is starting to show signs of fatigue. In a Spanish-language release, Telefonica defined Linares' job as "consejero delegado," which traditionally translates as CEO. However, the company has described the post as Chief Operating Officer in an English-language release, to distinguish the position from that of Executive Chairman Cesar Alierta. "Things aren't looking as rosy for Telefonica next year, and Chairman Cesar Alierta could use Linares as a barrier in order to protect himself and have someone to share the blame with if the going gets tough next year", a London-based analyst said. The company has released aggressive guidance for the coming years, and a slowdown in the Spanish economy would put in question these upbeat projections, the analyst added. Dresdner Kleinwort analyst Robert Grindle says said the move could also be a good step for corporate governance as it should create a better system of checks and balances. "If Alierta and Linares share some of the power at Telefonica, it could be very positive for the company," Grindle said. Dresdner rates Telefonica at hold with a EUR20 target price. At 1422 GMT, Telefonica shares were down EUR0.08, or 0.4%, at EUR22.22. The stock is up 42% so far this year, and is one of the top performers of Spain's benchmark index IBEX-35, on the back of bullish targets unveiled in October. The company said Viana-Baptista - considered one of its top talents and the architect of much of its expansion in Latin America, particularly in Brazil - is leaving due to personal reasons. He wasn't immediately available for comment. The latest Telefonica CEO was Fernando Abril-Martorell, who resigned in 2003 after a series of conflicts with Alierta. Linares has lately served as general manager for coordination, business development and synergies. Guillermo Ansaldo will head up Telefonica's key Spain division, the company added. Telefonica is the largest telecommunications company in Spain and Latin America by subscriber numbers. Company Web site: http://www.telefonica.com -By Jason Sinclair and David Roman, Dow Jones Newswires, 34 913958125, david.roman@dowjones.com
