Telefónica(US:TEF)2025-11-04 11:26Financial 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]