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Investing.com -- Telefónica (BME:TEF) on Wednesday reported a net income of €427 million from continuing operations in the first quarter of 2025, a 26% decline from the same period last year, as currency depreciation and losses in its Latin American unit weighed on results.
The telecom company also recorded a loss of €1.73 billion from discontinued operations related to the sales of Telefónica Argentina and Telefónica del Perú, bringing total net income to negative €1.3 billion for the quarter.
Revenue totaled €9.22 billion, down 2.9% from a year earlier, but up 1.3% in organic terms, excluding the effects of foreign exchange, perimeter changes and other adjustments.
Service revenue rose 1.5% organically, while handset sales remained flat. Revenue growth was supported by a 6.2% increase in Brazil and a 1.7% gain in Spain, offset by declines of 3.4% in Latin America and 2% in Germany.
The company noted a €388 million negative impact on revenue due to the depreciation of the Brazilian real.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stood at €3.01 billion, down 4.2% on a reported basis but up 0.6% organically. The EBITDA margin for the quarter was 32.7%.
Telefónica España and Telefónica Brasil posted EBITDA growth of 1% and 8% respectively in organic terms, while EBITDA fell 9.8% in Latin America and 2% in Germany.
Capital expenditures dropped 6.7% to €938 million. Excluding spectrum payments, CapEx declined 2.8% organically, bringing the CapEx-to-sales ratio to 10.1%. Telefónica said investments were focused on network modernization, including 5G rollouts and fiber expansion.
Free cash flow from continuing operations was negative €205 million, compared with negative €13 million in the same quarter last year.
The company cited seasonal factors in working capital and higher lease payments as contributing factors. Including discontinued operations, total free cash flow stood at negative €358 million.
Telefónica’s net financial debt was €27.05 billion at the end of March, down €112 million from December.
Lease liabilities totaled €8.01 billion, bringing net financial debt including leases to €35.06 billion. The company said it maintained a strong liquidity position of €20.41 billion, including €10.27 billion in undrawn credit lines.
The company affirmed its full-year 2025 guidance, targeting organic growth in revenue, EBITDA and post-lease operating cash flow.
Shareholder remuneration was also confirmed, with a €0.15 per share dividend set for June 2025 and another €0.15 planned for December.
Telefónica continues to reduce exposure to its Latin American operations. The sale of Telefónica Argentina closed in February, while Telefónica del Perú was sold in April.
A binding agreement to sell its 67.5% stake in Telefónica Colombia was reached in March, pending regulatory approvals.