Telefónica (TEF) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 1.2% year-over-year, with robust B2B and B2C growth and strong commercial momentum in Spain, Germany, and Brazil.

• EBITDA minus CapEx (EBITDAAL - CapEx) increased 11.5% year-over-year, supported by operational efficiency, personnel savings, and legacy shutdowns.

• Free cash flow improved over 20% year-over-year in Q2, excluding extraordinary tax payments in Peru, keeping the company on track for full-year targets.

• Strategic initiatives advanced, including MOUs with Millicom (Colombia) and Vodafone (Spain FiberCo), and long-term network agreements in Spain and the UK.

• 2024 guidance and all key financial targets reaffirmed, with strong progress in sustainability and recognition among the world's most sustainable companies.

Financial highlights

• Q2 2024 revenue: €10,255m (+1.2% y-o-y); H1 2024: €20,395m (+1.1% y-o-y); service revenue up 2.2%.

• Q2 2024 EBITDA: €3,219m (+1.8% y-o-y); H1 2024: €6,424m (+1.9% y-o-y); EBITDA minus CapEx up 11.5% y-o-y.

• CapEx/Sales at 12.1% in Q2 and 11.3% in H1, below the up to 13% full-year guidance.

• Net financial debt at €29.2bn as of June 2024, with net debt/EBITDAAL at 2.78x and average debt maturity of 11 years.

• Free cash flow in Q2 was €205m (+>20% y-o-y excl. Peru tax); H1 FCF €163m.

Outlook and guidance

• 2024 guidance confirmed: revenue growth ~1%, EBITDA and EBITDAAL - CapEx growth 1–2%, and free cash flow growth >10%.

• CapEx intensity expected to remain below 13% for 2024, trending toward less than 12% by 2026.

• Dividend of €0.30/share for 2024, paid in two tranches (Dec 2024, June 2025), covered by FCF.

• Leverage reduction targeted to 2.2x–2.5x by 2026.

• Free cash flow generation expected to accelerate in H2 2024, supporting deleveraging and dividend sustainability.