Telefonica slightly lifts 2026 core profit, cash flow targets

Telefonica Raises 2026 Profit, Cash Flow Targets as Q3 Growth Accelerates

Telefonica's Upgraded Financial Outlook and Q3 Performance

Upgraded Profit and Cash Flow Targets

MADRID, Nov 12 (Reuters) - Spain's Telefonica on Thursday upgraded its 2026 core profit and free cash flow targets after posting faster growth and reducing leverage in the third quarter, although it also lowered its revenue-growth forecast for the year.

• The telecoms group said earnings before interest, tax, depreciation and amortisation (EBITDA) should increase by slightly more than 2.5% this year, compared with its prior 1.5%-2.5% range
• Telefonica also expects free cash flow of €3.1 billion ($3.4 billion) instead of the previous €3 billion
• It sees adjusted operating cash flow after leases growing more than 3.5% by year-end from more than 3% previously

Revenue Growth Forecast Adjustment

• However, Telefonica now expects revenue to rise 1%-1.5% this year at constant exchange rates, compared with a previous outlook of 1.5%-2.5% growth

Strategic Initiatives and Market Performance

Operational Model and Cost Efficiencies

• The revised targets come as Telefonica aims to translate a simplified operating model and cost efficiencies into cash generation and lower debt, while navigating subdued growth across its core markets of Spain, Britain, Brazil and Germany
• The company had already raised its OpCFaL target in July, citing stronger operating momentum in Spain and Brazil

Third-Quarter Financial Results

• Third-quarter revenue rose 2.2% on a constant-currency basis to €8.43 billion, accelerating from the pace posted earlier in the year and supported by 1.8% growth in service revenue
• Between July and September, adjusted EBITDA increased 2.8% at constant exchange rates to €3.08 billion, while adjusted OpCFaL rose 7.2% year-on-year

Leverage Ratio and Dividend Confirmation

• Telefonica's leverage ratio fell by 0.05 times from June to 2.63 times in September, as it works towards a target of around 2.5 times by 2028
• The company confirmed a cash dividend of €0.15 per share, payable in June 2027($1 = 0.9018 euros)

Reporting Credits

(Reporting by David Latona; Editing by Christopher Cushing and Mrigank Dhaniwala)