An emergency meeting of the company’s board elected Catalan businessman Marc Murtra to replace Jose Maria Alvarez-Pallete, it said in a statement.

The company said the decision was taken “in view of Telefonica’s new shareholding structure and that some of its relevant shareholders have expressed the convenience of embarking on a new stage in the executive chairmanship”.

Online newspaper El Confidencial first reported on Alvarez-Pallete’s likely departure on Saturday morning. Sources close to the operation then confirmed it to AFP before the company issued an official statement.

El Pais reported that the SEPI state holding company, which recently took a 10-percent stake in Telefonica, had pushed for Alvarez-Pallete to be replaced by Murtra, currently head of Spanish tech consulting group Indra.

Spanish media reports say Murtra is close to the centre-left government of Prime Minister Pedro Sanchez.

Alvarez-Pallete, who has headed Telefonica since April 2016, will receive a 23-million-euro ($23.7 million) severance package, El Pais said.

Telefonica, which has operations in nine Latin American countries, has been through a turbulent period since Saudi group STC took a 9.9 percent stake in September 2023.

That led the Spanish state to re-enter the group’s capital through SEPI to defend its “strategic” role of providing services to the country’s armed forces.

Spanish banking group La Caixa also raised its stake to 9.9 percent.

Spain’s UGT union, one of the country’s largest, expressed its concerns about the management change. It hoped “that SEPI would clarify the motives and purpose of the changes in the presidency”, it said in a statement.

Telefonica has been facing increased competition in its home market following the recent merger of Orange and MasMovil, and the sale of Vodafone Espana to British investment fund Zegona.

Telefonica last year announced it would be cutting 3,400 of the 16,500 jobs it has in Spain.