Phone and Alvarez-Pallete The most important day in recent years awaits them. The company will report results for the first nine months of 2023 this Wednesday and later announce the company’s new strategic plan. The day also coincides with an extremely difficult moment in the telecommunications sector, with the sale of Vodafone’s business in Spain to Zegona and Brussels’ decision to merge Orange and MásMóvil.

Telefonica’s situation, in turn, is also turbulent, since it has two important open fronts. On the one hand, the entry operation by STC, the state-owned operator of Saudi Arabia, in a stake. On the other hand, the company announced a new incentive sick leave plan and is already working with unions on it.

Telefonica’s stock market performance has also not been its best in recent years. A sector constrained by high competition between operators and economic factors such as coronavirus crisis or lack of confidence in stocks as a result of inflation caused the telecommunications company’s securities to decline.

In particular, Telefonica shares have fallen below four euros and at the moment investors seem unsure about entering the telecoms operator. The latest moves within Spain’s main technology company did not help either, and the appearance of STC in the shareholding did not give the desired stability to the company’s securities. Thus, the securities of the listed company Ibex 35 closed the day. closer to 3.5 euros than four euros, as soon as it became known that the company would submit a takeover bid for all shares of Telefónica Germany. The company led by José María Álvarez-Pallete will reach investor day with a market capitalization of approx. 21 billion euros.

STC and SEPI set the agenda

In addition to the Investor Day presentations, the day will be marked by Saudi Arabia’s entry into Telefónica’s share capital. UTK is still waiting for the government’s decision, which must approve or not approve the entire operation. telecommunications company The Asian expects to retain 9.9% of all shares. At the moment he already controls 5% through derivative financial instruments. The regulations set a three-month period for the government to make an announcement. However, the executive branch can extend this period as many times as it wishes.

While the government could veto Saudi Arabia’s entry, all indications are that it will greenlight the operation because it does not want to come into conflict with an economic partner that is making billions of dollars in investments in Spain and the rest of Europe. However, the executive wants to sell STC and plans to act as a shareholder in Telefónica with a 5% stake.

Discharge plan

On the other hand, Telefonica must explain the new sick leave plan it is preparing for 5,000 employees. UGT, the majority union of Telefonica Spain, asked for clarity and said that any possible long-term doubts about the company would be clarified given the presentation of the strategic plan this week.

In its statement, UGT recalls that this Wednesday, as part of Capital Markets Day, the company will present a strategic plan that “will undoubtedly seek to transform our activities to improve our core KPIs and demonstrate the true value of Telefonica.”

The first meetings were planned for these days. However, the company chose to wait until after the investor day to try to reach an agreement with the various unions represented at Telefonica.

Business

Telefonica Investor Day will also serve as an introduction to the main areas of activity for the coming years. In the previous strategic plan Alvarez-Pallete announced a reorganization of markets and focused its efforts on Spain, Germany, the UK and Brazil, in addition to debt reduction.

Both conditions were strictly met, but now the operator’s president must give the market new answers. For example, to dividends. The telecoms company slashed shareholder compensation by half two years ago, and financial sources surveyed indicate the market will be closely watching to see what happens on the matter.

As for the debt, although it has almost halved from the 53.116 million recorded in 2016, it has increased again this year. Thus, at the end of June it stood at 27.5 billion, compared to 26.687 million in 2022. Barclays reiterates that Telefónica’s debt remains high both in absolute terms and relative to the rest of the sector and is a negative factor for the stock price. .

In the retail business, Telefonica should also provide new signals of optimism to the market. Major operators continue to suffer from intense competition to attract users. Low-cost carriers have gained ground over the years, with Movistar losing two million lines over the past decade, according to the National Markets and Competition Commission (CNMC). However, the company continues to lead the customer market.