Debt detail and evolution

Leverage ratio

Debt evolution January-March 2022

Net financial debt and commitments

Unaudited figures (Euros in millions)

 December 2021March 2022
Non-current financial liabilities35,29032,942
Current financial liabilities7,0057,521
Gross Financial Debt 42,29540,463
Cash and cash equivalents (8,580)(8,112)
Current financial assets (3,823)(2,210)
Non-current financial assets (4,580)(4,024)
Mark-to-market adjustment by cash flow hedging activities related to debt22
292
Other current assets and liabilities (13)
(19)
Other non-current assets and liabilities 711
1,063
Net Financial Debt 26,03227,453
Lease Liabilities 8,0808,657
Net Financial Debt including Lease liabilities (1)34,11236,110

Notes: Telefónica Group consolidated results deconsolidate Telxius towers division while T. UK is no longer consolidated under the full consolidation method and the new VMO2 joint venture has been accounted for by the equity method since June 1, 2021. In addition, Telefónica Group consolidated results deconsolidate T. Costa Rica while incorporated Cancom UK&I since August 1, 2021, and deconsolidate T. El Salvador since January 1, 2022. As of March 31, 2022 the statement of financial position incorporates Incremental. associated with non-current assets and disposal groups held for sale.

Net financial debt includes a positive value of the derivatives portfolio for a net amount of €615m, €2,097m included as financial liabilities and €2,712m included as financial assets.

(1) As of December 2021, includes assets and liabilities defined as net financial debt including lease liabilities of T. El Salvador, classified as non-current assets and disposal groups held for sale and liabilities associated with non-current assets and disposal groups held for sale.

 December 2021March 2022
Net Financial Debt / OIBDAaL adjusted (1)2.59x2.73x

Notes: (1) OIBDA plus adjustments and after Leases.

Financing activity

Telefónica, has raised long term financing in Q1 22 by €6,099m, of which €5,500m correspond to re-financing of the Group’s debt (excluding commercial paper and short-term bank loans) and €599m equivalent correspond to new financing at Cornerstone. Telefónica’s financing activity has allowed the Group to maintain a solid liquidity position and to further extend debt maturities. As of the end of Mar-22, the Group has covered debt maturities beyond 2024. The average debt life stood at 12.9 years.

Financing activities in Q4 21:

  • In January, Telefónica, S.A. completed the refinancing of its main syndicated facility of €5,500m which is now linked to sustainability objectives related to reduction of direct and indirect greenhouse gas emissions; and a social objective, relating to the increase in the percentage of women in executive positions; and extended its maturity to five years, with two annual extension option, up to a maximum maturity of seven years (Jan-29).

In Apr-22, T. Emisiones completed a €100m reopening of an existing bond with a coupon of 1.864% and maturity in Jul-40. Also in April, T. Brazil signed a BRL 1,000m bilateral loan with maturity in Sep-23.

Telefónica, S.A. and its holding companies continued their issuance activity under the Promissory Notes and Commercial Paper Programmes (Domestic and European), maintaining an outstanding notional balance of €864.6m as of Mar-22.

Undrawn committed credit lines with different credit institutions amounted to €11,980m as of Mar-22 (€11,513m maturing over twelve months), which combined with the cash equivalents position and current financial assets, placed liquidity at €22,302m.

Financial debt

Total Financial Liabilities Breakdown Including Lease Liabilities

Unaudited figures (Euros in millions)

 March 2022
Bonds and commercial paperDebt with financial institutionsOther financial debt (including governments) and net derivatives
Total financial liabilities (1) 88% 7%5%

(1) Includes positive value of derivatives and other financial debt

Net financial debt structure by currency

Unaudited figures (Euros in millions)

 March 2022
EURBRLHISPAMOTHER
Net financial debt structure by currency65% 23% 10%2%

Financial expenses

Interest payments decreased by 3.0% y-o-y in Q1 22, as the reduction of debt in European currencies and seasonality effects were partially offset by the increase in interest rates and debt denominated in Brazilian real. The effective cost of interest payments over the last 12 months stood at 3.89% as of Mar-22 (excluding lease interests: 3.96%).

Note: For further information, please access the January – March 2022 Results Report.