Freelance Spain
Spaniards for the 21st century

Juan Villalonga
Ex- Manager of Telefonica

Juan Villalonga Navarro (born April 8, 1953) was appointed chairman of Telefónica, Spain's major telecom operator, in spring 1996. The post is one of the most influential in Spain. He was forced to resign in July 2000, following allegations of insider trading - but by then, he had increased the value of the company five-fold, and he left with a $25 m golden handshake. After staying in the background for seven months, his appointment to the board of directors of Univision, the US Spanish-language television network, was announced in February 2001.

Villalonga graduated in Law and Economics at the prestigious Deusto University in the Basque Country and holds a Master's in Business Administration from the Institute of Advanced Economic Studies in Barcelona. He was a partner at McKinsey & Co., based in the U.S., Portugal, Italy and Spain during his nine-year association with the consulting firm. Later he worked as a chief executive for the CS First Boston business bank's Spanish branch, and next for Bankers Trust, which sought to benefit from his excellent contacts in Madrid's political and business circles.

Villalonga was a childhood friend of Spanish premier José María Aznar, who picked Villalonga for the post of Telefónica supremo. Observers felt his appointment owed to the Spanish government's desire to have someone sympathetic, amenable and docile in the top seat at Telefónica, but Villalonga soon proved he had his own ideas on how the company should be run, and his tenure was characterized by a series of daring moves.

He consolidated the company's already strong position in Latin America, where Telefónica controls much of the telecom industry. He also concentrated on securing Telefónica's leading position in Spain in the face of new competition once the company lost the monopoly position it enjoyed until European Union regulations enforced a liberalization of the Spanish telecom market. In 1995, the first private cellular phone company (Airtel) was started. More cell phone operators and, later, land-line phone companies followed. In a final step, at the end of 2000, Telefónica was due to lose its monopoly over local telephone calls. Villalonga's strategy was to reduce the company's dependence on the Spanish market by spreading to Latin America and Europe, and by diversifying into other sectors such as television.

At the end of 1998 Villalonga launched Telefónica Interactiva, which the following year would become Terra, Telefónica's Internet portal, with the purchase and incorporation into the portal of Olé, one of the first of Spain's search engines. By September 1999 Terra had invested some $600 million buying up portal companies in Argentina, Brazil, Mexico, Chile, Peru and other Latin American countries. In November 1999 Terra went public and its shares rose spectacularly, amid controversy over stock options held by Telefónica executives.

In May 2000, in its most spectacular move, Telefónica announced the purchase of America's Lycos for $12.5 billion in stock, opening the US market of 30 million Spanish speakers to their portal Terra, and giving it access to parts of the world where Terra did not have a foothold, such as Asia.

But Villalonga's relationship with the government started to become strained in 1999, when Villalonga left his wife Concha Tallada, a close friend of Aznar's wife Ana Botella, for the vivacious Adriana Abascal, 18 years his junior and widow of Mexican TV magnate Emilio Azcárraga. Aznar, facing an upcoming general election, was also worried about controversy over the Terra stock option plan benefiting top Telefónica executives. In mid-June 2000 Villalonga came under attack by the Madrid daily El Mundo, edited by Pedro J Ramirez, which reported that he'd been involved in insider trading. Villalonga came under investigation by Spain's securities watchdog committee, the CNMV, amid rumours that he would be forced to step down as Telefonica chairman. He finally handed in his resignation in July 2000.

The day after leaving Telefónica, Villalonga attended his mother's funeral in Madrid. That was to be his last public appearance in 2000, and he spent most of the year in the US, while everyone wondered what project Villalonga would turn his talents to next. A position at Cisco Systems was initially mooted. In the end, though, Villalonga joined the American Spanish-language Univision network as a board member in February 2001. Meanwhile Bob Davis, founder of Lycos with whom Villalonga had hatched the Terra-Lycos match, resigned as CE of the resulting company at the beginning of February. He had gotten along famously with Villalonga, but never managed to establish a good working relationship with the new Terra Lycos president, Joaquim Agut, appointed after Villalonga's departure.


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