Telefónica(US:TEF) ZACKS·2025-08-01 15:41Core Insights - Telefonica, S.A. reported a significant decline in net income for Q2 2025, with a net income of €155 million, down 67% year-over-year, and basic earnings per share (EPS) of €0.02, matching the consensus estimate [1][11] - Quarterly revenues decreased by 3.7% year-over-year to €8.95 billion ($10.2 billion), falling short of consensus estimates by 8.83%, but showing an organic growth of 1.5% in core markets [2][11] - The company is strategically reducing its exposure to lower-margin Latin American operations, having completed divestitures in Argentina and Peru, and is progressing with deals in Uruguay, Ecuador, and Colombia [3] Financial Performance - Adjusted EBITDA for the quarter was €2.9 billion, reflecting a year-over-year increase of 1.2%, while operating income decreased by 6.7% to €1.03 billion [12] - Cash flow from operating activities for the first half of the year was €4.5 billion, slightly down from €4.6 billion in the previous year, with free cash flow of €505 million for the quarter [13] Business Unit Performance - Telefonica Espana saw a revenue increase of 1.9% year-over-year to €3.2 billion, supported by strong customer additions and price increases [4] - Telefonica Deutschland's revenue decreased by 2.4% to €2 billion, with a quarterly adjusted EBITDA margin of 31.3% [5] - VirginMedia-O2 U.K. reported a revenue decline of 5.5% to €3 billion, with an adjusted EBITDA margin of 38.2% [6] - Telefonica Brasil's revenues increased by 7.1% to €2.3 billion, driven by strong contract and FTTH revenue growth [7] - Telefonica Hispam's revenues fell by 2.9% to €1.04 billion, primarily due to weaker results in Colombia [10] Strategic Outlook - For 2025, Telefonica expects year-on-year organic growth in revenues, EBITDA, and EBITDAaL - CapEx, aiming to keep CapEx below 12.5% of sales and maintain free cash flow at 2024 levels [14] - The company reaffirmed its commitment to shareholder returns with a confirmed dividend of €0.30 per share for 2025 [14]