The new chair of Telefónica has vowed to pursue deals across Europe with the aim of making the Spanish telecoms group a counterweight to US dominance of the tech industry.
Marc Murtra, who was parachuted into the struggling business last month, said he wanted to help boost Europe’s “strategic autonomy” by driving telecoms mergers, just as the region seeks to reduce its dependence on Donald Trump’s America.
“We think there’s got to be — and there is going to be — an intra-market consolidation and a European wide consolidation,” he told the Financial Times in his first interview as Telefónica chair and chief executive. “That is what we want to play a leading part in.”
Murtra was drafted in by Telefónica shareholders, led by the Spanish government, to try to revitalise the business. This week he announced his first big decision and a source of funds for an acquisition war chest: the $1.2bn all-cash sale of its Argentina business.
Telefónica is valued today at €24bn, some 55 per cent lower than when Murtra’s predecessor José María Álvarez-Pallete took over nine years ago. It is highly leveraged compared with peers, with nearly €29bn of net debt, which constrains its ability to do deals.
The new chair compared telecoms today with defence four years ago before the Ukraine war, saying it was a sector whose importance was not fully appreciated in Europe. Knowhow needed to be nurtured, he said, adding that “technological decisions and operational decisions should be made within Europe”.
He acknowledged that big tech companies had helped the US to move ahead but said Europe had the skills and economic heft to correct the imbalance. “My view is that while calamities are inevitable, decadence is not.”
The key to achieving leadership was to have bigger companies, he said. “You need large tech companies . . . to accumulate hard-to-get technological and industrial capacity.”
He has launched a strategic review of Telefónica, due to be completed in the second half of this year, but he stressed that he would not try to compete with US tech giants in areas that bore no relation to telecommunications.
“We’re going to focus on what we know how to do better than anybody else,” he said. “Anything we’re going to do . . . is going to have an industrial rationale and we’re going to look at the numbers very carefully.”
Another investor behind Murtra’s appointment was Saudi Arabia’s STC, a telecoms group that owns almost 10 per cent of Telefónica. Murtra, who met STC officials in Riyadh last month, said the Saudi group had shown “huge respect” for the business.
For Telefónica, which is 100 years old and was Spain’s monopoly operator until 1997, the pillars of its business are its home country; Germany; the UK; and Brazil.
It is one of Europe’s biggest telecoms companies, alongside Deutsche Telekom, Orange, Vodafone, BT and Telecom Italia (TIM). Of these, only Deutsche Telekom’s share price has risen over the past five years as the industry has struggled with rising investment costs and falling prices.
Europe stands out for its number of medium-sized operators: there are 41 in total that have more than 500,000 customers, according to trade body Connect Europe. By contrast, the US has only five mobile operators with half a million customers or more, while China and Japan have four each.
Murtra said the European market was inefficient. “It doesn’t allow for economies of scale.” He has taken the job as the European Commission signals it is willing to loosen rules that have limited mergers.
He would not give details of acquisition targets, but said he saw growth opportunities in cyber security given the volume of personal, business and government data sent via Telefónica networks.
The company already has AI partnerships with groups including Microsoft, Meta and Google, but Murtra said it must use the technology to run its networks and organisation more efficiently. “We need to make sure that . . . [we] aren’t left behind.”
He remains committed to a 2019 plan to shrink Telefónica’s operations in Spanish-speaking Latin America. As well as the Argentina sale, Telefónica is waiting for local regulators to rule on a provisional deal struck last year to sell its Colombian business to Millicom.
Additional reporting by Kieran Smith in London