Telefónica’s Álvarez-Pallete takes over as chairman of VM02

The chairman of Telefónica, José María Álvarez-Pallete, has taken over as chairman of the board of directors of the company’s UK joint venture with Liberty Global, Virgin Media O2, replacing Liberty Global CEO Mike Fries.

Left-right: Jose Maria Alvarez-Pallete; Mike Fries

Telefónica said the move is in line with the agreement established in the creation of the joint venture resulting from the merger between cable operator Virgin Media, owned by Liberty Global, and mobile operator O2, owned by Telefónica.

The agreement set out that the chairmanship of the board will rotate every two years between the two companies. Mike Fries will remain a member of the VMO2 board.

While the change in chairman is inscribed in the JV agreement, there is continuing speculation about the future of the jointly owned operating companies in the UK and the Netherlands, where VodafoneZiggo is a JV with Vodafone.

Speaking to analysts on Liberty’s recent Q1 earnings call, CEO Mike Fries indicated that he was open-minded about the future structure of these companies. However, any flotation would requre the agreement of both joint venture partners in both cases.

“You could look at any one of these businesses as a potential candidate for listing,” said Fries. He said Liberty had done a lot of work around this, but noted that Liberty had partners both in the UK and the Netherlands who would have to be consulted. He said Liberty was “always on the lookout for the most impactful way to create value for shareholders”.

By contrast, Liberty is keen to acquire the whole of Telenet, delisting the Belgian telco and taking it private. Fries said that in the Belgian market it was easier to see value creation opportunities as a private company.

Telefónica and Liberty Global announced the integration of their two UK subsidiaries in May 2020 to create a leading operator in the UK market. The deal, the largest in Telefónica’s almost century-long history, closed on 1 June 2021.

This article has been amended to clarify that flotation of Liberty Global’s JVs with Telefónica and Vodafone would require the agreement of both parties in both cases.