Wishful Thinking Won't Fix Telefonica’s $57 Billion Problem

Telefonica SA’s share price needs to double to get back to its 2015 value. Chief Executive Officer Jose Maria Alvarez-Pallete launched a new strategy on Wednesday with a long letter full of the latest corporate buzzwords and setting out the need for radical change and bold vision. The five-point plan that came at the end showed that lofty language can’t hide what’s doable in reality.

The Spanish telecoms operator has been a terrible performer in a terribly performing sector. It has too much debt and too little growth. Worse, there’s a mismatch between its largely dollar- and euro-denominated borrowings and revenues from a big business in Latin America. Financial leverage amplifies its woes. What keeps investors hanging on? A chunky dividend and a yield of 6%.