Telefónica Reports 1.2% Year-Over-Year Revenue Increase

Telefónica Reports Strong Q2 2024 Performance

Telefónica has showcased robust financial results for the second quarter of 2024, demonstrating a year-over-year revenue increase of 1.2% and an 11.5% growth in EBITDAL minus CapEx. The company has made notable progress in operational efficiency, network transformation, and customer-centric strategies. Telefónica remains optimistic about achieving its financial objectives for the full year 2024, fueled by positive commercial momentum in its primary markets and strategic agreements aimed at enhancing its network and services.

Key Highlights:

• Telefónica’s revenue rose by 1.2% YoY, with EBITDAL minus CapEx increasing by 11.5% YoY.
• The company signed nonbinding memorandums of understanding (MOUs) with potential partners for future transactions in Colombia and Spain.
• Telefónica is well-positioned to meet its full-year guidance and long-term targets, emphasizing reduced leverage and disciplined capital allocation.
• Further improvements in EBITDA and EBITDAL are anticipated in the upcoming quarters.
• The debt-related interest cost has decreased to 3.58%, with two expected deleveraging events in the latter half of 2024.

Company Outlook:
Telefónica is confident in its financial trajectory and ability to generate free cash flow for the remainder of 2024. The company targets a capital intensity of less than 12% by focusing on business evolution, network optimization, and strategic investments. It is also identifying wholesale and consolidation opportunities to help meet its long-term strategic goals.

Challenges and Opportunities:

• While lease costs in Spain are rising, they remain manageable.
• A one-off payment in Peru is forthcoming but has been factored into guidance and will not disrupt growth projections.
• In Brazil, Vivo continues to lead in mobile and fiber-to-the-home sectors, and the UK joint venture, VMO2, is experiencing steady revenue with accelerated fiber deployment.
• Growth in wholesale agreements has not been detailed regarding pricing and traffic.

Q&A Highlights:
During a recent conference call, executives emphasized that although the Vodafone MOU remains in early stages, the company is outpacing its EBITDAL minus CapEx guidance through lease management strategies. Telefónica is actively working to mitigate foreign exchange risks through hedging. The company expressed confidence in achieving a 10% free cash flow growth for the year.

Conclusion:
Telefónica’s strong Q2 performance reflects its commitment to robust operational and financial strategies, focusing on expanding networks and enhancing service quality through strategic partnerships. The company is on track to meet its financial targets, demonstrating a positive outlook for growth and value creation for stakeholders in 2024.