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Debt detail and evolution

Leverage Ratio

The leverage ratio (net debt over OIBDA) for the past 12 months stood at 2.30 times at the end of March 2014, and at 2.27 times if including post-closing transactions (disposal of T. Ireland).

January-March 2014 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

March 2014

- Nota:

- 2014 reported figures include the hyperinflationary adjustments in Venezuela.

(1) Includes "Non current interest-bearing debt" and 1,108 million euros of "Non-current trade and other payables".

(2) Includes "Current interest-bearing debt" and 106 million euros of "Other current payables".

(3) Includes 3,066 million euros of "Current financial assets" and 3,551 million euros of "Non-current financial assets".

(4) Mainly in Spain. This amount is detailed in the captions "Long-term provisions" and "Short-term provisions and other liabilities" of the Statement of Financial Position, and is the result of adding the following items: "Provision for Pre-retirement, Social Security Expenses and Voluntary Severance", "Group Insurance", "Technical Reserves", and "Provisions for Pension Funds of Other Companies".

(5) Amount included in the caption "Non-current financial assets" of the Statement of Financial Position. Mostly related to investments in fixed income securities and long-term deposits that cover the materialization of technical reserves of the Group insurance companies.

(6) Net present value of tax benefits arising from the future payments related to actual workforce reduction commitments.

(7) Calculated based on the last 12 months OIBDA, excluding gains/losses on the sale of companies.

Long-term debt (1) 48,530
Short term debt including current maturities (2) 8,715
Cash and cash equivalents (7,904)
Short and Long-term financial investments (3) (6,617)
(A) Net Financial Debt 42,724
Gross commitments related to workforce reduction (4) 4,227
Value of associated Long-term assets (5) (790)
Taxes receivable (6) (1,352)
(B) Net commitments related to workforce reduction 2,085
(A+B) Total Debt + Commitments 44,808
Net Financial Debt / OIBDA (7) 2.30x

Financing Activity

In the first quarter of 2014, Telefónica's financing activity through bond and loan markets stood at around 5,700 million equivalent euros. This activity was mainly focused on strengthening the liquidity position and smoothing the debt maturity profile of Telefónica S.A. for the following years. Therefore, as of the end of March, the Group maintains a comfortable liquidity position to accommodate next years debt maturities. In Hispanoamérica, Telefónica's subsidiaries tapped financing markets for approximately 124 million equivalent euros in the first quarter of 2014. Also noteworthy is the 500-million-euro bond placement by T. Deutschland in January.

Telefónica S.A. and its holding companies have remained active under the various Commercial Paper Programmes (Domestic and European), with an outstanding balance of approximately 1,632 million euros at the end of March.

Telefónica maintains total undrawn committed credit lines with different credit entities for an approximate amount of 12,560 million euros, with around 11,250 million maturing in more than 12 months.

Financial Debt

Unaudited figures (Euros in millions)

March 2014
Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities 75% 20% 5%

Unaudited figures (Euros in millions)

March 2014
Debt structure by currency 76% 13% 7% 4%

Financial Expenses

Net financial expenses amounted to 801 million euros in the first quarter, of which 146 million euros were due to net negative foreign exchange differences primarily as a result of the implicit devaluation of the Venezuelan bolivar. Excluding this effect, net financial expenses fell 0.2% due to a 14.3% reduction in the average debt. The effective cost of debt over the last twelve months was 5.55%, 21 basis points higher than in December 2013, as most of the average debt reduction has been in euros and Czech crowns (with below average costs) and as currency hedging costs in the Argentinean peso-US dollar increased in the quarter, despite that exchange rate fluctuations more than compensated the cost of currency hedging.

NOTE: For further information, please access the January – March 2014 Results Report

View Quarterly Report PDF document [700 KB]