Core Viewpoint - Telefonica (TEF) has experienced a significant downtrend, with a 15.1% decline in stock price over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Analysis - The Relative Strength Index (RSI) is a key technical indicator used to determine if a stock is oversold, with a reading below 30 typically indicating this condition [2]. - TEF's current RSI reading is 18.72, indicating that the heavy selling pressure may be exhausting itself, which could lead to a reversal in the stock's trend [5]. Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts regarding an increase in earnings estimates for TEF, with a 7.6% rise in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [7]. - TEF holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8].

Core Insights - Telefonica, S.A. reported a significant decline in net income for Q3 2025, with a net income of €271 million from continuing operations, down 45.1% year over year, while basic earnings per share (EPS) decreased to €0.09 from €0.12 in the previous year [1][10] - The company's revenues for the third quarter were €8.96 billion ($10.47 billion), reflecting a 0.4% organic growth but a reported decline of 1.6% due to adverse foreign exchange effects, missing the consensus estimate by 0.35% [2][10] - Telefonica continues to execute its portfolio simplification and divestment plan in Latin America, having sold units in Uruguay and Ecuador, with the sale of Telefónica Colombia pending [3] Financial Performance - Revenues in Spain increased by 1.6% year over year to €3.2 billion, driven by service revenue growth and a 15.6% surge in handset sales, with fixed broadband net additions of 2.4% marking the best quarterly performance in nine years [4] - In Germany, revenues decreased by 6.6% to €1.96 billion, impacted by challenges in the partner business transformation, while the adjusted EBITDA margin was 32.1% [5] - In the UK, revenues fell 8% to €2.9 billion, with an adjusted EBITDA margin of 39% [6] - Brazil saw a revenue increase of 6.5% to €2.4 billion, supported by strong contract and FTTH revenue growth, with adjusted EBITDA rising 8.8% to €1.07 billion [7] - The submarine cable unit, Telxius, maintained profitability with an EBITDA margin of 48.8%, despite short-term revenue impacts from contract renewals [8] - Telefonica Tech reported a 21.6% year-over-year revenue increase to €567 million, driven by growth in managed and professional services [9] - Revenues in HispAm fell 3.6% to €1.02 billion, primarily due to weaker B2B performance in Colombia and reduced handset sales in Mexico, although EBITDA showed a year-over-year growth of 1.2% [10][11] Cash Flow and Outlook - For the nine months ended September 30, 2025, Telefonica generated €6.5 billion in net cash from operating activities, down from €7.2 billion in the prior year, with total free cash flow at €312 million [13] - The company reaffirmed its 2025 growth targets, expecting year-on-year organic growth in revenues, EBITDA, and EBITDAaL, while maintaining a €0.30 per share dividend [14]

Core Insights - The event serves as a platform for Telefonica to outline its growth strategy and value creation plans for the upcoming years [2] Group 1: Strategic Overview - Telefonica's management will present a new strategic plan covering the period from 2026 to 2030 [2] - The Chairman and CEO, Marc Murtra, will provide insights into the long-term vision of the company [2] - COO Emilio Gayo will detail the implementation strategies for the new plan [2]

Core Points - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] - It highlights that users with ad-blockers may face restrictions when trying to access content [1] Summary by Categories Technical Requirements - Users are advised to enable Javascript and cookies in their browsers to ensure proper functionality [1] - The presence of ad-blockers can lead to blocked access, necessitating their temporary disablement [1]

Telefónica 2025 Capital Markets Day Summary Company Overview - **Company**: Telefónica (NYSE: TEF) - **Event**: 2025 Capital Markets Day - **Date**: November 04, 2025 Key Industry Insights - **Telecom Market Growth**: The European communication market is stagnating with expected annual growth of 1.5%, which is equal to or below inflation [18][19] - **Customer Preferences**: 60% of telco customers prioritize experience over price, necessitating hyper-personalization and digital customer relationships [18] - **Cyber Defense Opportunity**: Estimated opportunity for telcos in cyber defense in Europe is between EUR 10 billion and EUR 22 billion by 2035 [19] - **Investment Needs**: Europe requires over EUR 750 billion in tech investment by 2030 to close the technological gap with the U.S. and China [19] Strategic Plan Overview - **Plan Name**: Transform and Grow Strategic Plan - **Timeframe**: 2026 to 2030 - **Objectives**: - Deliver the best digital experience to customers - Strengthen Telefónica's position in Europe and Brazil - Focus on profitable growth to create shareholder value [5][10][23] Strategic Pillars 1. **Customer Experience**: Improve processes and interactions to enhance customer satisfaction, targeting a net promoter score (NPS) increase of six points by 2028 [25] 2. **B2B Expansion**: Modernize communication services and expand digital offerings, aiming for B2B revenues to constitute 26% of group revenues by 2028 [26] 3. **Technological Capabilities**: Invest EUR 32 billion in network optimization from 2026 to 2028 [26] 4. **Operating Model Simplification**: Reduce operational complexity and improve decision-making speed, targeting a 25% reduction in corporate OPEX by 2027 [27] 5. **Talent Development**: Focus on reskilling and acquiring talent to support strategic initiatives [27] Financial Guidance - **Revenue Growth**: Expected compounded annual growth rate (CAGR) of 1.5%-2.5% from 2025 to 2028, accelerating to 2.5%-3.5% from 2028 to 2030 [48] - **EBITDA Growth**: Similar growth expectations as revenue, with stable margins [48] - **CAPEX**: Decrease from 12.5% of revenue in 2025 to 12% by 2028, further declining to 11% by 2030 [48] - **Free Cash Flow**: Expected growth of 2.5%-3% to 5% from 2025 to 2028, with a commitment to EUR 2.9 billion to EUR 3 billion in 2026 [53] Capital Allocation Strategy - **Dividend Policy**: Proposed dividend of EUR 0.30 per share for 2025, with a payout ratio of 40%-60% of free cash flow in 2027 and 2028 [56] - **Debt Management**: Aim to reduce net debt to EBITDA ratio to 2.5 times by 2028 [54] - **M&A Framework**: Focus on value-accretive transactions in core markets, with a pragmatic approach to portfolio rotation [58] Conclusion - **Vision**: Telefónica aims to become a world-class European telco with profitable scale, focusing on customer experience, technological capabilities, and operational efficiency [21][22] - **Commitment**: The management team is dedicated to executing the Transform and Grow plan, addressing challenges, and seizing opportunities for sustainable growth [60][61]

Financial Performance - Revenue for the first nine months of 2025 reached €26,970 million, reflecting a year-on-year organic growth of 1.1%[16] - EBITDA for the same period was €8,938 million, with a year-on-year organic growth of 0.9%[16] - Free Cash Flow (FCF) from continuing operations was €414 million in 9M 2025, with a forecasted FCF of approximately €1.9 billion for the full year[15] - Revenue decreased by 1.6% year-over-year to €8,958 million in Q3, while organic revenue grew by 0.4% driven by a 0.6% increase in service revenue[29] - EBITDA fell by 1.5% year-over-year to €3,071 million in Q3, but organic EBITDA increased by 1.2%[33] - Free cash flow from continuing operations was €123 million in Q3 25, down from €787 million in Q3 24[45] - Revenue for 9M 25 decreased by 2.8% year-over-year to €26,970 million, while Q3 25 revenue decreased by 1.6% to €8,958 million[110] - EBITDA for 9M 25 was €8,762 million, down 5.5% year-over-year, with Q3 25 EBITDA at €2,867 million, a decrease of 8.0%[110] - Profit for the period from continuing operations fell by 43.4% year-over-year to €960 million, with Q3 25 profit at €333 million, down 40.8%[110] Debt and Cash Flow - Net financial debt stood at €28.2 billion as of September 2025, with a leverage ratio of 2.87x[15] - Net financial debt increased by €624 million in Q3 to €28,233 million, influenced by shareholder remuneration of €294 million[46] - Cash and cash equivalents at the end of the period were €4,392 million, a decrease of 45.5% from €8,062 million at the beginning of the period[115] - Net cash flow provided by operating activities from continuing operations decreased by 8.8% to €6,349 million for 9M 25[115] Operational Highlights - Total accesses amounted to 350.2 million as of September 2025, with FTTH accesses growing by 8.3% year-on-year[17] - In Spain, revenue increased by 1.6% year-on-year, while EBITDA grew by 1.1%[13] - Brazil's revenue grew by 6.5% year-on-year, with EBITDA increasing by 8.8%[13] - Total FTTH (Fibre to the Home) PPs grew by 4.2 million in 9M 25, with 82.6 million FTTH PPs representing a 9% year-over-year increase[24] - B2B revenue increased by 6.5% year-over-year in Q3 to €2,020 million, with IT services showing double-digit growth and accounting for 47% of total B2B revenue[30] - In Brazil, revenue growth in Q3 2025 was 6.5% year-on-year, with mobile business growing by 5.2% and fixed business by 9.6%[68] - In Germany, mobile contract net additions were robust at 157k in Q3 2025, with a low churn rate of 1.1%[73] - Contract accesses in Colombia grew by 45,000 in Q3 25, marking the third consecutive quarter of net adds[102] Capital Expenditures and Investments - The CapEx to Sales ratio was reported at 11.8% for the first nine months of 2025, below the guidance of 12.5%[15] - The company is focused on portfolio transformation in Hispam, with recent sales of operations in Argentina, Peru, Uruguay, and Ecuador[13] - In Brazil, Telefónica Brasil signed an agreement to acquire a 50% stake in FiBrasil for R$850 million, enhancing its market leadership[90] - In Germany, over 1 million households are under construction or have been deployed with fiber, focusing on driving connections post-acquisition of IFG[91] Environmental and Social Responsibility - The company aims to reduce RAN consumption and achieve net zero emissions by 2040 throughout the value chain[26] - The company has committed to the regeneration and conservation of 800 hectares in the Amazon rainforest over the next 30 years through the "Floresta Futuro Vivo" project[67] Strategic Initiatives - The Open Gateway project has reached 291 operators, covering over 80% of global mobile connections, with new API launches in the UK[22] - Telefónica Tech launched new AI services for B2B customers and enhanced its cybersecurity portfolio with new identity-driven solutions[83] Financial Metrics and Adjustments - EBITDA and EBITDAaL are key performance metrics for Telefónica, calculated by excluding depreciation and amortisation from Operating Income, and are widely used in the telecommunications industry[119] - Adjusted EBITDA, Adjusted EBITDAaL, and Adjusted EBITDAaL-CapEx provide insights into the company's performance by removing the effects of restructuring costs and significant capital gains/losses[123] - The leverage ratio is calculated as net financial debt over Adjusted EBITDAaL for the past 12 months, providing a measure of the company's solvency[132] - Free cash flow is derived from net cash flow from operating activities, deducting capital expenditures and dividends, and is crucial for assessing cash available for shareholder remuneration[134] - The EBITDA margin and EBITDAaL-CapEx margin are used to measure operating leverage, calculated by dividing adjusted metrics by revenue[124] - Organic variations are employed to present homogeneous comparisons, allowing for consistent monitoring of business performance[126] - The company emphasizes the importance of capital expenditures excluding spectrum acquisitions for a complete performance measure[121] - Adjusted Net Income and Adjusted EPS are calculated to provide a clearer view of the underlying performance of the company's operations[137] - Forward-looking statements indicate the company's expectations regarding future performance, capital expenditures, and market conditions, subject to risks and uncertainties[141]

Financial Data and Key Metrics Changes - The company reported sustained organic growth in revenues and EBITDA, with EBITDA minus CapEx returning to growth in the quarter [8][29] - Free cash flow expectations for the year were updated to around EUR 1,900 million, reflecting various impacts including tax refunds and litigation payments [20][21] - Net financial debt decreased year on year to EUR 28.2 billion, and after accounting for recent divestitures, it further reduced to EUR 26.5 billion [25][26] Business Line Data and Key Metrics Changes - In Spain, Q3 revenue increased year on year, driven by service revenue growth, with retail revenue up about 2% and EBITDA growth accelerating to nearly 4% [10][11] - Telefonica Brasil maintained robust growth, with revenue growing over 6% year on year, supported by a 17% increase in new fiber connections and low churn rates around 1% [12][13] - Telefonica Deutschland faced challenges with a revenue decline of over 6% year on year and EBITDA dropping 9.5%, primarily due to ongoing migration issues [15][16] Market Data and Key Metrics Changes - The total customer base reached 350 million, with significant growth in fiber and mobile contract accesses across core markets [7] - In Germany, the company reported strong mobile contract net adds despite the negative impact of the one-on-one migration [14] - Virgin Media O2 improved its commercial results, focusing on customer loyalty and expanding its convergent offerings [16] Company Strategy and Development Direction - The company is focused on accelerating portfolio transformation and increasing efficiency across the group, with a declining CapEx to sales ratio [6][8] - The strategy includes exiting five out of eight Hispam countries to streamline operations and concentrate on core markets [22][30] - The company aims to maintain strong performance in retail and B2B segments, despite increasing competition [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining operational performance in core markets, with strong growth in Brazil and Spain [29][30] - The outlook for Germany remains challenging, but underlying performance is expected to improve as migration issues are resolved [24][62] - The company reiterated its commitment to the dividend for 2025 and confirmed guidance for revenue and EBITDA growth [20][30] Other Important Information - The company signed long-term Power Purchase Agreements (PPAs) in the UK and Germany, enhancing its ESG approach [27] - A write-down of approximately EUR 250 million was recorded for Telefonica Tech due to lower sector expectations and asset performance [76][78] Q&A Session Summary Question: Clarification on free cash flow impacts for 2025 - Management confirmed that the EUR 400 million tax refund is expected in 2026, and the Millicom litigation payments will be distributed from 2025 to 2027 [32][33] Question: Germany's EBITDA stabilization target - Management acknowledged the challenging market conditions but emphasized ongoing efficiency measures that are expected to yield results in the coming quarters [35][37] Question: Free cash flow difficulties in Germany - Management indicated that the free cash flow drag is a combination of various factors, including B2P impacts and restructuring efforts [46][50] Question: Dynamics in the Spanish wholesale market - Management noted that the decline in wholesale revenue was anticipated and attributed to contracts signed in previous years, with expectations for improvement in the future [64][66] Question: Working capital expectations - Management clarified that working capital contributions are expected to be lower than initially anticipated due to reduced management capacity in Hispam [70][73]

Strategic Goals - Telefónica aims to become a "best-in-class European Telco" with profitable scale through its Strategic Plan '26-'30[68, 75, 98] - The company's mission is to deliver the best digital experience to its customers[60] - The company's vision is to become a world-class European Telco with profitable scale[64] Strategic Pillars & Targets - The plan focuses on six strategic pillars: Expand B2C offering, Scale B2B, Evolve Technological Capabilities, Simplify Telefónica's Operating Model, and Develop Talent[81, 85, 91] - The company aims for a 1.5-2.5% CAGR in revenues and adjusted EBITDA between 2025 and 2028, and 2.5-3.5% CAGR between 2028 and 2030[245, 247] - Telefónica targets a reduction in CapEx/Revenues down to approximately 12% between 2026 and 2028, and further down to approximately 11% in 2030[245, 247] - The company is targeting a 3-5% CAGR in Free Cash Flow (FCF) between 2025 and 2028[268, 301] Key Initiatives - Telefónica plans to grow its B2B share of total group revenue to approximately 26% by 2028 and approximately 27% by 2030[320, 321] - The company intends to improve the average NPS (Net Promoter Score) in ES, BR & DE by +10 points by 2028 and +6 points by 2030[319] - Telefónica is targeting a 10.2% Digital Services revenue CAGR between 2025 and 2028[320] Efficiency & Financial Strategy - The company plans a 25% reduction in OpEx related to the operating model in Corporate Centre and Global Business Units[215, 327] - Telefónica is committed to maintaining an investment-grade credit rating and targets a leverage ratio (Net debt / EBITDAaL) of approximately 25x in 2028[275, 294] - The company's dividend policy targets a payout of 40-60% of FCF base for dividend, with a DPS (Dividend Per Share) of €015 in 2026[286, 301]

Core Viewpoint - The telecom company plans to achieve steady revenue and earnings growth in the coming years by expanding its digital services and entering defense markets [1] Summary by Relevant Categories Revenue and Earnings Growth - The company aims for consistent revenue and earnings growth in the future [1] Digital Services Expansion - The focus will be on expanding digital services as a key growth strategy [1] Defense Market Exposure - The company intends to gain exposure to defense markets, which may provide additional revenue streams [1]

Q3 25 Performance Highlights - Telefónica reported sustained organic growth in key financial metrics, including a 1.1% year-over-year increase in revenue for 9M 25 and 0.4% for Q3 25[14] - The company's focus on Next Generation Networks resulted in Fibre reaching 82.6 million, with a quarter-over-quarter increase of 1.3 million premises passed[12] - Telefónica achieved industry-leading CapEx to Sales ratio, driven by efficiency-driven management and accelerating portfolio transformation with Uruguay and Ecuador sales closed in October[12] Financial Results - For 9M 25, Telefónica's B2B revenue increased by 5.6% organically, while B2C revenue decreased by 1.9% organically[14] - The company's CapEx/Sales organic ratio decreased by 0.5 percentage points for 9M 25 and 0.7 percentage points for Q3 25[14] - Free Cash Flow (FCF) from continuing operations was €414 million for 9M 25 and €123 million for Q3 25[14] Regional Performance - In Spain, Telefónica experienced growth acceleration in all main accesses, with best-in-class CapEx/Sales of 11.3% for 9M 25[27] - Brazil saw EBITDA growth strengthened by high-value accesses and efficiencies, with FTTH accesses increasing by 12.7% year-over-year[30] - Germany's financials were impacted by partner business, with revenue declining by 6.6% year-over-year in Q3 25[45] Guidance and Outlook - Telefónica's 2025 guidance includes organic growth in revenue and EBITDA, with CapEx/Sales below 12.5% and FCF of approximately €1.9 billion[67] - Lower FCF is expected for 2025 due to different timing in cash inflow from tax cases and litigations won, as well as impacts from transitioning Hispam perimeter changes[68] ESG Initiatives - Telefónica has invested €77 billion in SDG-aligned investments since 2015 and continues to lead the sector in ESG ratings, ranking in the top 3% in Sustainalytics[76, 77]