César Alierta Izuel

Chairman and chief executive officer, Telefónica

Nationality: Spanish.

Born: May 5, 1945, in Zaragoza, Spain.

Education: University of Zaragoza, JD; Columbia University, MBA, 1970.

Family: Married Ana Cristina Placer.

Career: Banco Urquijo, 1970–1985, financial analyst; Beta Capital, 1985–1996, founder and president; Tabacalera, 1996–1999, CEO; Altadis, 1999–2000, co-chairman; Telefónica, 2000–, chairman and CEO.

Awards: Aragonese Person of the Year in the Information Sector, Spanish Association of Telecommunications Engineers, 2002.

Address: Telefónica, Gran Vía 28, 28013 Madrid, Spain; http://www.telefonica.com.

■ César Alierta Izuel served as chief executive officer of two of Spain's largest corporations. In 1996 the Spanish government appointed him as CEO of Tabacalera, the country's main tobacco company; under Alierta's guidance Tabacalera became the world's largest producer and distributor of tobacco, thanks in large part to the merger he engineered with the French tobacco company Seita, which resulted in the creation of Altadis. In 2000 Alierta became the CEO of the Spanish telecommunications company Telefónica, where he guided the company through significant Latin American expansion. Alierta was described as a detail-oriented leader who focused on day-to-day business operations while shying away from the public spotlight. He was said to be an admirer of the renowned billionaire investor Warren Buffet.


Alierta was born and raised in Zaragoza, Spain. After graduating from high school, he considered forging a career as a

César Alierta Izuel. AP/Wide World Photos.
César Alierta Izuel.
AP/Wide World Photos

philosophy professor but instead obtained a law degree from the University of Zaragoza. Having developed an interest in economics, he traveled to the United States to attend Columbia University in New York, graduating with an MBA in 1970. Upon completing his U.S. studies, Alierta returned to Spain to embark on a long and varied career.

Alierta found his first job in 1970 as a financial analyst for Banco Urquijo, where he later began working as the general manager of the capital-markets division. He served in various other capacities for the bank during the next 15 years. In 1985 Alierta left Banco Urquijo in order to start a stock brokerage known as Beta Capital, where he was the largest shareholder and president. He ran Beta Capital until 1996, when he sold out to the Dutch merchant bank Mees Pierson. Alierta served as the president of the Spanish Stock Market Association (AEMV) from 1991 to 1996.


In 1996 the conservative government that had come to power in Spain appointed Alierta as the head of Tabacalera, the state-run Spanish tobacco company. Although Tabacalera had begun trading shares in 1945, no foreign investors had been allowed access to the company until 1987. At the time of Alierta's appointment there was still little foreign investment in the company; Alierta indicated that he wished to keep foreign involvement to a minimum.

Under Alierta's leadership Tabacalera became the world's leading producer and distributor of tobacco, attaining this position through expansion in the United States and Central America, especially in the cigar market. While the company had long dominated the Spanish market, Alierta wanted Tabacalera to become an important multinational corporation. This goal stemmed in part from a desire to raise the company's stock price before the 1998 privatization of the Spanish government's remaining 52 percent of Tabacalera's shares.

Even before Alierta became CEO, Tabacalera had tried to expand into the U.S. market: an attempted 1995 purchase of General Cigar Holdings, one of the largest cigar makers in the United States, had failed to materialize. Indeed, operating in the U.S. market would not be easy for the Spanish tobacco concern. While the Spanish government had essentially controlled the international tobacco trade since the 1600s and Tabacalera enjoyed a near monopoly, the U.S. tobacco market was extremely competitive. After taking over at Tabacalera, Alierta revived the possibility of expansion into the U.S. market, telling the New York Times , "It's impossible to be an important world player without being in the United States" (November 28, 1997).

To this end Alierta engineered the purchases of Max Rohr Importers as well as Havatampa in Tampa, Florida, the second-leading cigar maker in the United States and the owner of strong brand-name products. Alierta also bought two Central American companies that made hand-rolled cigars and would help supply Tabacalera with tobacco leaf. Along with expansion into the U.S. market, Alierta raised tobacco prices in Spain to bring them more in line with the European average; these two steps led to shares in Tabacalera stock doubling in price.

In 1999 Alierta merged Tabacalera with the French tobacco company Seita through a share exchange; the enlarged tobacco group became known as Altadis. The newly created firm benefited from strong positions in both the French and Spnaish markets and possessed an extensive tobacco-product distribution network across Europe and throughout the world. The company operated in 20 countries and employed more than 20,000 workers. Upon the creation of Altadis, Alierta became co-chair of the new company along with the Seita CEO Jean-Dominique Comolli. Comolli oversaw the company's cigarette activity, while Alierta was in charge of cigars and logistics. At the time of the merger Alierta stated, "Two companies with a centennial tradition in tobacco and logistics today face the global market challenge with their integration. Altadis is a key European player in cigarettes and logistics, and the world leader in cigars: our past will be proud of our future" (October 6, 1999, http://www.altadis.com/en/noticias/ennotisueltas/19991006.html).


In July 2000 Alierta became the CEO of the Spanish telephone company Telefónica, having served as a member of the company's board of directors since 1997. Telefóncia's board met on July 26, 2000, in order to identify a suitable replacement for the CEO Juan Villalonga, who was being investigated for controversial stock-options contracts. The meeting lasted less than an hour; Alierta was chosen. After Alierta's appointment Telefónica shares immediately increased in value.

The board believed Alierta would be able to balance the interests of the company's core shareholders with those of international investors. Upon taking over, Alierta expressed confidence in existing management and indicated that he had no plans to institute major changes. He emphasized that he wished to pay close attention to the company's day-to-day management, something his predecessor had not done. Furthermore, the new CEO favored a "back-to-basics" approach that would focus on Telefónica's mobile and fixed-line phone operations while de-emphasizing other media such as satellite television.

In being chosen as Telefónica's new CEO, Alierta was seen as somewhat of a compromise and had both supporters and detractors. In the Financial Times his supporters pointed to the fact that he possessed important qualities that Villalonga had lacked. One Madrid investment banker said, "He believes in teamwork and he knows how to delegate" (July 27, 2000). Others also felt that he would know how to increase the value of the company's stock. One of his supporters remarked, "There is very little about creating shareholder value that César doesn't know about" (July 27, 2000). On the other hand, Alierta's detractors felt that he lacked the ability to spot opportunities and make quick decisions, for which Villalonga had been reputed. Alierta was known to painstakingly pore over details before making decisions.


Alierta faced a series of problems after taking over at Telefónica, most notably charges of insider trading at Tabacalera, which he categorically denied. In 2002 a nine-month investigation, which also focused on Alierta's wife and nephew, indeed found evidence of such trading while Alierta had been leading Tabacalera. The charges were especially important because no senior executive in Spain had ever been put on trial. In addition to the official government investigation a Spanish consumer group representing 15,000 bank customers and stock-market investors filed a lawsuit against Alierta.

The charges stemmed from 1997, when Alierta and his wife had formed an investment company that they later sold to their nephew. The investment company purchased a large number of Tabacalera shares immediately preceding the purchase of Havatampa and the subsequent rise in tobacco prices, both of which led to an increase in the value of Tabacalera shares. In early 1998 the investment company sold these shares at a great profit.

Along with the CEOs of most large Spanish companies that invested abroad, Alierta also had to cope with the negative effects of economic problems in Latin America. At times as much as 50 percent of Telefónica's revenue came from Latin America; ties to the region led to a decline in the value of the company's shares in 2001, especially as a result of Argentina's financial crisis. A 2001 scandal in the Argentine government led to protests against president Fernando de la Rua, who soon resigned; the political crisis developed into a severe economic one in 2002. The Argentine government devalued the peso and defaulted on foreign debt, and the country suffered through record unemployment and poverty.

Despite its instability, Latin America continued to offer growth potential for Telefónica. Alierta was quick to point out that while the problems in Argentina were severe, his company had also invested in less troubled markets such as that of Brazil. He told the Financial Times , "The crisis in Argentina is not a Latin American crisis. We are confident that Brazil has decoupled from Argentina's problems" (December 19, 2001).

Alierta also hedged against the Argentine problems by investing heavily in Mexico. In 2000 he negotiated an all-stock transaction worth $2.6 billion to buy Motorola's operations in Mexico and other Latin American countries. In 2002 Alierta paid nearly $6 billion in cash and assumed debt for Bell South's Latin American operations. In spite of the sporadic economic issues and the concerns of some investors, Alierta would not shy away from the Latin American market.

Another problem that grabbed headlines during Alierta's term at Telefónica was a reported falling out in 2003 with Fernando Abril-Martorell, the company's chief operating officer. Abril-Martorell had resigned his position in 2000 as a result of a dispute with the former CEO Juan Villalonga; when Alierta took over at Telefónica, he asked Abril-Martorell to return to the company due to his reputation as an excellent manager and his respected position among investors. However, Alierta and Abril-Martorell apparently had their own differences with respect to corporate strategy; the latter eventually resigned. This episode left some investors worried, and Telefónica shares fell noticeably in value after news of the resignation was announced. Abril-Martorell's departure, however, gave Alierta even more power to run Telefónica in what he believed to be the most suitable manner.

See also entry on Telefónica S.A. in International Directory of Company Histories .

sources for further information

Burns, Tom, "New Face with an Eye for Detail," Financial Times , July 27, 2000.

Crawford, Leslie, "Telefónica Hedges against Spread of Argentine Crisis," Financial Times , December 19, 2001.

Goodman, Al, "Spanish Cigar Company Makes Inroads into U.S.," New York Times , November 28, 1997.

"Seita and Tabacalera Merge, Creating Altadis, a Leader in the European Tobacco Industry," October 6, 1999, http://www.altadis.com/en/noticias/en-notisueltas/19991006.html .

—Ronald Young

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