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Introduction & Market Context
Telefónica SA (BME:TEF) presented its Q1 2025 financial results on May 14, 2025, highlighting resilient performance in core markets despite foreign exchange headwinds affecting reported figures. The Spanish telecommunications giant emphasized its continued strategic execution and progress toward meeting full-year guidance.
The company’s ADR (NYSE:TEF) closed at $4.87 on May 13, 2025, up 0.62% for the day, with the stock trading within its 52-week range of $3.89 to $5.15. The presentation comes as Telefónica continues its transformation strategy, focusing on its core markets while reducing exposure in Latin America.
Executive Summary
Telefónica reported organic revenue growth of 1.3% year-over-year in Q1 2025, while organic EBITDA increased by 0.6%. However, reported figures were negatively impacted by foreign exchange effects, with revenue declining 2.9% and EBITDA falling 4.2% on a reported basis. The company maintained its 2025 guidance and dividend commitment of €0.30 per share.
As shown in the following slide detailing key performance indicators for Q1:
The company highlighted improved performance in Spain, strong momentum in Brazil, and solid EBITDAaL-CapEx in Germany. Meanwhile, Hispam (Hispanic America) operations showed mixed results amid high competition and portfolio changes. Business-to-business (B2B) revenue showed particularly strong organic growth at 5.4%.
Quarterly Performance Highlights
Telefónica’s operational progress was marked by a strong customer base of 354 million accesses, improved product and service portfolio, and historically low churn rates. The company continued expanding its next-generation networks, with fiber premises passed increasing by 1.5 million quarter-over-quarter to 80 million, and 5G coverage reaching 75% in core markets.
The following slide illustrates the company’s operational achievements across customer experience, network development, and efficiency-driven management:
In Spain, Telefónica saw accelerating revenue and EBITDA growth of 1.7% and 1.0% respectively, with positive net adds across all access types for the seventh consecutive quarter. The company maintained best-in-class CapEx/Sales ratio in the market.
The Spanish operation’s performance is detailed in this slide:
Brazil continued to be a standout performer, with EBITDA growing 8.0% and EBITDAaL-CapEx increasing by 14.5%, well above inflation. The operation saw contract growth of 8.7% and FTTH (fiber-to-the-home) growth of 11.1%.
The following slide shows Brazil’s strong performance metrics:
Germany focused on operating leverage, with strong EBITDAaL-CapEx growth of 4.8%. The operation maintained stable churn at 1.1% and saw contract net adds increase by 4.5% year-over-year. The German regulator BNetzA confirmed a five-year spectrum prolongation.
Germany’s performance is illustrated in this slide:
Strategic Initiatives
A key element of Telefónica’s strategy has been the restructuring of its Hispam operations. The company made significant progress in Q1 2025, completing the sale of Telefónica Argentina for €1.2 billion in February and Telefónica Peru in April. Additionally, Telefónica signed a binding agreement for its Colombian operations worth approximately €368 million, with closing subject to regulatory approvals.
The following slide details the progress in Hispam strategic execution:
Telefónica Tech, the company’s digital business unit, continued its growth trajectory with revenue increasing by 6.6% year-over-year on an organic basis. Meanwhile, Telefónica Infra managed 36% of the company’s total FTTH footprint.
The company maintained a solid balance sheet with net debt to EBITDAaL ratio of 2.67x as of March 2025, slightly up from 2.58x previously. Free cash flow showed typical Q1 seasonality at -€205 million for continuing operations.
This slide demonstrates the company’s financial position:
Forward-Looking Statements
Telefónica confirmed it remains on track to meet its 2025 guidance, with Q1 results aligned with internal expectations. The company expects organic revenue growth, EBITDA growth, and EBITDAaL-CapEx growth for the full year, with CapEx/Sales ratio below 12.5%.
The company reiterated its dividend commitment of €0.30 per share, to be paid in two installments: €0.15 in December 2025 and €0.15 in June 2026.
As shown in the following guidance slide:
Looking ahead, Telefónica expects comparisons to ease throughout the year, potentially leading to improved reported results. The company continues to focus on its strategic priorities of growing in core markets, executing its Hispam strategy, and maintaining financial discipline while delivering shareholder returns.
Despite the current challenges reflected in its negative P/E ratio of -24.72 over the last twelve months, analysts predict that Telefónica will return to profitability this year, aligning with management’s positive outlook. The company’s consistent dividend policy, with payments maintained for 22 consecutive years, continues to be a key attraction for investors, offering a yield of approximately 5.1%.
Full presentation:
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