Telefónica, S.A.

Telefónica said Q2 adjusted EBITDA grew 2.7% and adjusted operating cash flow after leases grew 2.9% in constant terms, while service revenue grew 0.9% year over year and service revenue growth in H1 was 1.0%. Free cash flow reached EUR 611 million in Q2 and EUR 944 million in H1, with net financial debt at EUR 25.3 billion and leverage at 2.68x / 2.78x depending on the stated measure and date reference. Spain revenue grew 2.9% and adjusted EBITDA grew 2.3%; Brazil revenue and adjusted EBITDA both grew ahead of inflation, with adjusted EBITDA up 11%; Germany revenue declined over 11% and adjusted EBITDA trend improved to minus 7.2% with margin at 52.7%; VMO2 service revenue declined 3.9% and adjusted EBITDA declined 2.9%. For 2026, Telefónica upgraded adjusted operating cash flow after leases to over 3%, kept adjusted EBITDA guidance unchanged but said it expects the high end of the range, and said it expects to be at the low end of revenue growth due to handset weakness, mainly in Germany. The 2026 dividend of EUR 0.15 was reiterated, payable in June 2027.

Marc Murtra framed the quarter as evidence that the Transform and Grow plan is being executed with discipline, pointing to better adjusted EBITDA, cash flow, and deleveraging. He emphasized network leadership, AI-enabled efficiencies, and stronger commercial traction in Spain and Brazil, while saying Germany remains in strategic transformation and free cash flow should improve in the back half of the year. His tone was confident and strategic, especially on industry consolidation, which he described as supported by a more favorable European Commission stance on M&A.

Juan Azcue focused on the financial bridge: foreign exchange helped Q2, but the underlying business still showed constant-currency progress across key metrics. He highlighted Q2 adjusted EBITDA up 2.7%, adjusted operating cash flow after leases up 2.9%, CapEx/revenue at 11.6%, free cash flow of EUR 611 million in Q2 and EUR 944 million in H1, and net financial debt of EUR 25.3 billion. He also stressed liquidity and financing discipline, noting 5 financing transactions year-to-date, EUR 4.5 billion of long-term financing raised ahead of market volatility, and a lower average interest cost of 2.95% from 3.23% a year earlier.

Analysts pressed on whether Spain’s strong service revenue growth can hold, why EBITDA guidance was not raised despite a strong H1, and how much incremental benefit Spain’s workforce restructuring will contribute. Management said Spain should continue to see the same competitive trends, that H2 should be better than H1, and that the Spanish redundancy program is close to EUR 90 million of savings in H1 and remains on track for EUR 250 million by year-end. Questions also covered U.K. leverage, Germany’s value-versus-volume strategy, FWA, and consolidation; management said VMO2 is strategically important but needs faster deleveraging toward the 4x-5x range, and in Germany said FWA will remain opportunistic and not a major commercial push. On consolidation, Marc said Telefónica is not timing decisions around any specific transaction and any deal would need clear cost and network synergies, the right price, and regulatory accommodation.