Telefónica(TEF) - 2024 Q4 - Annual Report

Financial Performance - Consolidated revenues for 2023 reached €40,652 million, a 1.65% increase from €39,993 million in 2022[62] - Operating income for 2023 decreased to €2,593 million, down 36.1% from €4,056 million in 2022[62] - Profit before tax for 2023 was a loss of €1,473 million, compared to a profit of €2,960 million in 2022[62] - The net profit for 2023 was a loss of €574 million, a significant decline from a profit of €2,319 million in 2022[62] - Basic loss per share attributable to equity holders of the parent for 2023 was €(0.20), compared to earnings of €0.31 in 2022[62] Cash Flow and Assets - Cash and cash equivalents as of December 31, 2023, were €7,151 million, a slight decrease from €7,245 million in 2022[62] - Net cash provided by operating activities for 2023 was €11,649 million, down from €11,763 million in 2022[62] - Total assets decreased to €104,324 million in 2023 from €109,642 million in 2022[62] - Equity decreased to €27,096 million in 2023 from €31,708 million in 2022[62] Dividends and Investments - The company plans to maintain dividends per ordinary share at €0.30 for 2023, consistent with 2022[62] - The consolidated investment in spectrum acquisitions and renewals amounted to €157 million in 2024, primarily due to spectrum acquisition in Colombia[102] - The Group's investment in CapEx for 2024 was €5,475 million, slightly down from €5,579 million in 2023[111] Research and Development - Total research and development expenditure in 2024 was €647 million, representing 1.6% of the Group's revenues[111] - Revenues from new digital services, including IoT, cybersecurity, and cloud services, accounted for over 40% of the Company's B2B revenues in 2024, growing by double digits compared to 2023[106] Regulatory and Compliance - The United Kingdom has implemented its own data protection framework post-Brexit, which mirrors the GDPR but with tailored adjustments, increasing compliance risks for Telefónica[119] - The European Commission adopted its adequacy decision for the EU-U.S. Data Privacy Framework on July 10, 2023, allowing for international data transfers to U.S. companies[118] - Telefónica has adopted Binding Corporate Rules (BCRs) approved by the Spanish Data Protection Authority on March 8, 2024, to limit risks from international data transfers[120] - Significant breaches of the GDPR may result in fines of up to 20 million euros or 4% of the company's total annual revenue for the previous financial year[122] Cybersecurity and Risks - The Group has faced various cybersecurity incidents in the past three years, including intrusion attempts and data theft, although none have had material consequences to date[133] - Inflationary pressures have eased in 2024, but high interest rates and geopolitical tensions continue to pose risks to Telefónica's business operations[140] - The Group's operations are exposed to diverse legislation and political environments, which may adversely affect its financial position and cash flows[138] - The Group faces significant economic and political uncertainties in the regions it operates, which may adversely affect its business and financial condition[156] Debt and Financial Management - As of December 31, 2024, the Group's gross financial debt was €38,782 million, an increase from €37,061 million in 2023, while net financial debt was €27,161 million, slightly down from €27,349 million in 2023[161] - The average maturity of the Group's debt as of December 31, 2024, was 11.3 years, compared to 11.6 years in 2023[161] - A 100 basis points increase in interest rates would result in an additional €41 million in financial expenses, while a decrease of the same magnitude would reduce expenses by €41 million[169] - The Group had undrawn committed credit facilities amounting to €11,017 million as of December 31, 2024, with 3.5% of this amount scheduled to expire before December 31, 2025[165] Capital Expenditures and Network Expansion - Capital expenditures in 2024 amounted to 5,475 million euros, a decrease of 1.9% compared to 2023[224] - The company aims for a CapEx-to-revenue ratio below 12% by year-end 2026, with over two-thirds of 2024 CapEx allocated to network expansion and IT system transitions[223] - By the end of 2024, Telefónica Spain's fiber optic network reached 30.8 million homes passed, with 5G coverage at 91% of the population[225] - Telefónica Germany achieved 99% 5G coverage in 2024, with investments of 1,141 million euros focused on expanding 5G and enhancing 4G capacity[225] Corporate Transactions and Shareholder Actions - Telefónica launched a new issuance of notes in an aggregate principal amount of 1,750 million euros, intended for investments in high-speed telecommunications networks and renewable energy[191] - The voluntary public acquisition offer for shares of Telefónica Deutschland was accepted by shareholders holding approximately 7.86% of its share capital for an approximate amount of 549 million euros[193] - Telefónica owned, directly and indirectly, 94.12% of the share capital and voting rights of Telefónica Deutschland as of January 26, 2024[194] - Telefónica reduced its share capital by €80,296,591 through the cancellation of an equal number of treasury shares, resulting in a new share capital of €5,670,161,554[9]