Telefónica Could Feel Blow of Alierta Verdict

A Spanish court is expected to deliver its verdict this month in the insider-trading trial of Telefónica Chairman César Alierta — a long-awaited decision that could have profound consequences on Europes biggest telecom firm and Spains close-knit business community.

The charges leveled against Mr. Alierta relate to the late 1990s, when he was running the state-owned tobacco company. Yet analysts say Telefónicas market value is so tied to Mr. Aliertas reputation as a skillful manager that a possible conviction, which could carry a jail term of as many as four and a half years, would badly shake the company and hamper its development.

“It would be totally game-changing for the stock of Telefónica,” says Robin Bienenstock, a London-based telecom analyst at Sanford C. Bernstein. “There is more of a cult of management around this stock than there is around most companies.”

Telefónica declined to comment on how the outcome of the trial might affect the company, saying the mere question violated the presumption of his innocence.

Mr. Alierta, 64 years old, has repeatedly denied any wrongdoing. He is one of Spains most admired and successful executives, having helped transform the former state telecom monopoly into an empire with operations in 25 countries, from Latin America to Europe and China. As chairman with executive responsibilities, he holds a tight grip over management — there is no CEO; and he hasnt groomed a possible successor, analysts and executives say.

“No one here has even considered [Mr. Aliertas] resignation,” said a Telefónica executive familiar with the situation. “Business here has not been remotely affected.”

Mr. Alierta, who declined requests to be interviewed, would likely appeal any conviction, people close to him say.

via Telefónica Could Feel Blow of Alierta Verdict – WSJ.com.