Telefónica issues the first green bond of the telco sector, amounting to 1 billion euros

Telefónica issues the first green bond of the telco sector, amounting to 1 billion euros

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Madrid, 28th January 2019.- Telefónica today successfully launched its first green bond issue, amounting to 1 billion euros and a term of five years. The transaction, which is also the first green bond issuance in the telecommunications sector, takes place after the presentation of the company’s sustainable financing framework to the market. It is also the first bond issue of a Spanish company in 2019.

The transaction was very well received by institutional investors, whose demand allowed the coupon to be fixed at 1,069%, up to 25 basis points below the initial price indications. The final paid premium is about 3 basis points, significantly below the average emissions of the year. The final book stood at 5.2 billion, resulting in an oversubscription of more than 5 times. It is worth noting the high involvement of green investors, with a participation close to 50%, which helps diversify the investment base. In total, more than 310 investors have participated, of which more than 80% are international investors.

Telefónica continues to strengthen its financial position with long-term financing at historically low rates while extending the average life of its debt. The settlement and closing date is scheduled for February 5, 2019.

The proceeds obtained will serve to finance projects devoted to increase the company’s energy efficiency thanks to the network transformation from copper to fibre optic in Spain, and could be used, in any case, for existing projects (no older than three years) and future projects.

FTTH (Fibre to the home) is 85% more energy efficient in customer access than the copper network. And it has saved 208 GWh in the last three years, which means avoiding the emission into the atmosphere of 56,500 tons of CO2, equivalent to the carbon captured by more than 900,000 trees. In addition, the deployment of fibre allows the company to close a copper central office daily, recycling all the material as part of its commitment to the circular economy.

The greenest network in the market

The migration to fiber, together with the use of renewable energy and other energy efficiency initiatives, is allowing Telefónica to consolidate its telecommunications network as one of the most sustainable in the market in terms of energy and CO2. And this has been recently recognized by the CDP when it was included in List of the leading companies in climate change management for the fifth consecutive year.

Globally, more than 50% of the electricity used by Telefónica comes from renewable sources. And it has stabilized its energy consumption despite the fact that traffic has grown 107% in the last three years, thus improving its efficiency by more than 50%. All this has been achieved two years in advance of the established in its objectives.

The company is already 100% renewable in Europe and Brazil, thus approaching its goal of being renewable in all countries by 2030. And it has reduced its CO2 emissions by 28% in three years, with the commitment to cut them by 30% to 2020 and 50% by 2030, in line with the Paris Agreement.

Telefónica SDG Framework

In its presentation last December, Telefónica shared with the market its interest in potential financing operations of green and social projects that show a positive environmental, climatic and social benefit, linked to the Sustainable Development Goals of the United Nations. The text is aligned with the Green Bond Principles of the ICMA 2018 (International Association of Capital Markets).

With today’s issuance, Telefónica takes a step further in integrating sustainability into the company’s business strategy, associating part of the business financing also to projects and sustainability objectives. The company has identified five categories of projects: Energy Efficiency of Telefonica Network Infrastructure; Renewable Energy; Digital Solutions for the Environment; Digital Inclusion, Access for all through an Affordable Infrastructure; and Employment Generation and Economic Growth.

All this aligned with the company program that seeks to capture sustainable growth, taking into account the interests of different stakeholders, to make the world more human, connecting the lives of people.

Telefónica also shows its commitment to the investment community and society as a whole, contributing to social welfare while generating value for its shareholders. This issue also represents an interesting opportunity to diversify and extend the company’s investment base.

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