Telefonica's Troubles

Heavy, heavy over the head of International Telephone & Telegraph Corp. hangs the threat that Spain's Cortes (parliament) will declare the franchise for its big subsidiary. Compania Telefonica Nacional de Espana, null & void. The threat has hung over I. T. & T.'s head for eleven months, and last week Left-wing Deputies in the Cortes were shouting loudly for a vote on the bill, a hefty item in the pre-Revolution program against His Catholic Majesty Alfonso XIII. The shouting Deputies claim the franchise was illegal, that it was obtained only after a thumping bribe was slipped to "a high personage." Telefonica Nacional was given until Dec. 3 to file a formal protest. Granted in the days of Dictator Primo de Rivera, the franchise contract has been recognized by two succeeding governments including the present, which appointed a representative to the board. Premier Azana's supporters are eager for a few succinct answers from

Telefonica Nacional, which will permit them to kill the bill without politically killing themselves. I. T. & T. officials plan to stand squarely on their legal rights, point out that nearly one-third of Telefonica National's stock is held in Spain. (I. T. & T.'s investment in Spanish telephones is about $65,000,000.) Thoughtful Spaniards argue that repudiation of the contract would injure Spanish credit, might cause exclusion of Spanish wines from the hoped-for U. S. market.

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