Telefonica chairman Mr Juan Villalonga was yesterday under pressure from the Spanish government and some directors to step down following the boardroom split that thwarted his planned merger with Dutch operator KPN.

Mr Cesar Alierta, chairman of the Spanish-French tobacco group Altadis and a Telefonica board member, was being lined up to succeed Mr Villalonga, according to people close to Spain's dominant telecoms group.

Central to Mr Villalonga's problems was a growing perception that the government which appointed him four years ago when Telefonica was a state-controlled monopoly was orchestrating the campaign for his removal. But Telefonica said Mr Villalonga had no intention of resigning and nobody had asked for his resignation. The embattled chairman kept out of the public eye and was believed to be still in Miami, his main residence.

Mr Francisco Gonzalez, co-president of Banco Bilbao Vizcaya Argentaria (BBVA), Telefonica's biggest single shareholder and ecommerce partner, said the bank's alliance with Telefonica remained but refrained from personally endorsing Mr Villalonga. "Alliances are signed between companies and not between people."

BBVA led the board revolt against the merger with the backing of the other core shareholder, the La Caixa savings bank, and three independent directors considered close to the government, including Mr Alierta. The banks have six members of the board, the management five and nine are independent.

A senior executive of a rival telecoms group said Mr Villalonga's departure was just a matter of time.