Telefónica European head is made COO

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Telefónica has promoted its European head José María Álvarez-Pallete to chief operating officer as part of wider changes at the Spanish telecoms group.

The heavily indebted company said the overhaul would create an organisational structure that would be “stable over time and ready to compete internationally”.

Telefónica faces hard decisions as it seeks to cut debt and improve its operations – including a proposed flotation of about a fifth of its German operations and potentially other sales in its Latin American business.

In July, it was forced to suspend its dividend for a year and cut directors’ pay in the face of a worsening Spanish economy and a net debt pile of €57bn.

Investors are worried about a credit rating just one notch above “junk” status. Mr Álvarez-Pallete – who became chairman and chief executive of Telefónica Europe last September after a similar role in Latin America – will succeed Julio Linares Lopez, who is leaving the role for personal reasons but will remain a board member.

César Alierta, executive chairman, called an extraordinary session of the board to approve the changes.

Eva Castillo, a member of the board and former investment banker, will replace Mr Álvarez-Pallete, seen by analysts as a rising star within Telefónica.

Shares in the group closed slightly lower on Monday at €11.50.

Santiago Fernández Valbuena, chairman and chief executive of Telefónica Latinoamérica, has been co-opted to the board to replace Sir David Arculus, who will step down for personal reasons.

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