Telefónica (TEF) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered strong free cash flow growth, robust operational and strategic progress, and record-low churn in Spain, with commercial momentum in core markets (Spain, Brazil, Germany) offsetting FX headwinds.

• Free cash flow accelerated by 89.5% year-over-year in Q3 and 27.7% over nine months, surpassing the annual target of 10% growth.

• Network leadership advanced with 5G coverage at 71%–97% and FTTH reaching up to 82 million premises.

• Strategic agreements in Spain (Vodafone Zegona, MasOrange), regulatory progress in Brazil and Germany, and a global API alliance JV with Ericsson were achieved.

• Sustainability leadership continued, with top rankings in reporting, energy, and diversity.

Financial highlights

• Q3 revenue declined 2.9% year-over-year, but underlying growth was positive at +0.3% for the nine months; EBITDA fell 2.5% in Q3 but grew 0.4% for the nine months.

• Free cash flow reached €1,030m in Q3, up 89.5% year-over-year; nine-month FCF up 27.7%.

• CapEx declined 6.3% year-on-year in Q3, with CapEx/Sales at 12% for the nine months.

• Net financial debt at €28.7bn as of September 2024, leverage at 2.76x ND/EBITDAAL.

• Adjusted EPS €0.10 in Q3 (+6.1% y-o-y), €0.30 in 9M (+18.6% y-o-y).

Outlook and guidance

• On track to achieve full-year 2024 targets, with free cash flow and EBITDA minus CapEx trending above guidance.

• 2024 guidance confirmed: revenue and EBITDA growth of 1–2%, EBITDAAL-CapEx up to 13%, and FCF growth above 10%.

• Shareholder remuneration confirmed: €0.30/share dividend for 2024, with payments in Dec 2024 and June 2025.

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