Telefónica unveils major restructuring

Telefónica has unveiled a major revamp of its structure and management under which it will fold its traditional business into two major geographical divisions — Europe and Latin America — and also set up a new digital division to compete with internet giants such as Google.

Both the traditional and digital businesses will be supported by a new unit — Global Resources. The company's Spanish unit, which is facing tighter competition and suffering from the weakness of the domestic economy, will be folded into the new European division.

The organizational restructuring will be accompanied by key changes in management under which the only two top executives to remain in their current jobs will be Chief Executive Officer Julio Linares and Chairman César Alierta.

Telefónica said Monday that the current head of the telecom operator's Latin America division, José María Álvarez-Pallete, will lead the new European division, while head of finances, Santiago Fernández Valbuena, will take over the reins in Latin America.

Matthew Key, who is at present responsible for Europe except Spain, will head the new Telefónica Digital unit, while the current head of Telefónica España, Guillermo Ansaldo, will be in charge of the new Global Resources division.

"This is a move from Telefónica to bolster its global brand and digital focus while erasing the negative weight that Spain plays," Bloomberg quoted Francisco Salvador, a strategist at FGA/MG Valores in Madrid, as saying. "Both Valbuena and Pallete continue to be key players within the company as they'll head those areas where the company has its biggest growth."

Latin America accounted for 46 percent of Telefónica's operating revenues and gross operating profit in the first half of this year and is destined shortly to become the Spanish operator's largest market.

Telefónica Digital will be headquartered in London with regional centers in Madrid, São Paulo, Silicon Valley and other strategic areas in Asia. It will compete with all the major internet companies and other service providers such as WhatsApp and Skype that cannibalize traditional telecoms traffic and eat into traditional operators' revenues.