What happened? *In a surprise announcement on Saturday evening, TEF reported Mr Jose Maria Pallete had stepped down as both CEO and Chairman of Telefonica following a request from the BoD, which met earlier in the day *The BoD has appointed Mr. Marc Thomas Murtra Millar as the new CEO and Chairman. Millar is currently President of Indra (defence technology company, EUR 3 bn market cap and 28% owned by the Spanish govt). Mr. Millar has a background in management consulting and investment banking - but no telco experience as far as we are aware. Murtra is also a member of the Board of Trustees for La Caixa (Spanish bank which has a 10% stake in TEF). *The press release notes that it was a unanimous decision from the board ''to agree on the orderly renewal of the Company''s chairmanship, in order to adapt it to its new shareholding structure'' The BoD has also thanks Pallete for his 9 years of service at CEO and 26 years at Telefonica Group. *As a reminder, during 2023/24 SEPI (the investment arm of the Spanish govt) built a 10% stake in Telefonica, as did CriteriaCaixa. Both were intended to be a counterbalance to Saudi Telecom (which owns 5% of TEF outright and another 5% in options) *See here for the PR from Telefonica, here for the FT, and here for the latest El Confidencial article on the news. BNPP Exane View: *This is a major surprise both to us and, press reports would suggest, to Telefonica''s management itself. FT reports suggest that Mr Pallete was only called to the Spanish PM''s office on Saturday afternoon to be informed of the decision. Pallete had met with incoming EC Competition Commissioner Teresa Ribera as recently as last Wednesday, with a LinkedIn post on Friday suggesting he had been meeting with regional teams to discuss the 2025 strategy. *We expect the news to be taken negatively by investors given 1) the uncertainty created around TEF''s strategy under a new CEO, 2) risks to the FY25 mid-term and potentially even dividend...