Telefónica (TEF) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw strong free cash flow growth, with FCF up 89.5% year-over-year in Q3 and 27.7% for the nine months, exceeding the annual target and supporting confidence in 2024 guidance despite FX headwinds.

• Commercial momentum accelerated, with best net adds in Spain in six years, churn at historic lows (0.8%), and total accesses rising to 393 million.

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

• Network leadership continued with 5G coverage at 71% in core markets and FTTH reaching 82 million premises, surpassing 2026 targets.

• Sustainability leadership recognized through awards in reporting, transparency, and diversity, with 33.6% women in executive roles.

Financial highlights

• Q3 revenue declined 2.9% year-over-year to €10,023m, but underlying growth was positive at +0.3% for the nine months; EBITDA for nine months was €9,684m, up 0.4% year-over-year.

• CapEx intensity at 12% of revenue for the nine months, with CapEx down 6.3% year-over-year in Q3.

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

• Net financial debt at €28.7bn as of Sep 2024, ND/EBITDAAL at 2.76x, with average debt life ~11 years and 75% at fixed rates.

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

Outlook and guidance

• 2024 guidance reiterated: revenue growth around 1%, EBITDA and EBITDAAL - CapEx growth between 1% and 2%, CapEx/Revenue up to 13%, and FCF growth above 10%.

• Dividend for 2024 confirmed at €0.30 per share, payable in two tranches in December 2024 and June 2025.

• Leverage reduction targeted to 2.2–2.5x by 2026, with strategic execution and hedging reinforcing confidence in multi-year targets.