Debt detail and evolution

Leverage ratio

Net financial debt and commitments

Unaudited figures (Euros in millions)

 December 2020September 2021
Non-current financial liabilities42,297 36,189
Current financial liabilities8,123 4,703
Gross Financial Debt 50,420 40,891
Cash and cash equivalents (5,604) (9,791)
Current financial assets (2,489) (3,454)
Non-current financial assets (5,137) (5,216)
Mark-to-market adjustment by cash flow hedging activities related to debt(1,048)(275)
Other current assets and liabilities (260) (317)
Other non-current assets and liabilities (654) 127
Net Financial Debt 35,228 21,965
Lease Liabilities 6,469 7,941
Net Financial Debt including Lease liabilities (1)41,697 29,906

Notes: (1) As of September 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. As of December 2020, includes assets and liabilities defined as net financial debt including lease liabilities of T. UK, T. Costa Rica and those subject to the agreement of Telxius Telecom with American Tower Corporation, classified as non-current assets and disposal groups held for sale and liabilities associated with non-current assets and disposal groups held for sale.

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 Cancom UK&I has been incorporated since August 1, 2021.

Net financial debt includes a positive value of the derivatives portfolio for a net amount of €1,297m, €2,541m included as financial liabilities and €3,838m included as financial assets.

Net financial debt stood at €25.0bn as of September 2021 post estimated distribution of proceeds to Telxius minorities.

 December 2020September 2021
Net Financial Debt / OIBDAaL adjusted (1)2.79x2.18x

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

NFD/OIBDAaL adj. ratio stood at 2.49x as of September 2021 post estimated distribution of proceeds to Telxius minorities.

Financing activity

Telefónica, in the current low-interest rate environment, re-financed €5,407m (€1,694m at the Group, €1,650m at the JV with Allianz, €1,976m at VMED O2 UK JV and €87m equivalent at FiBrasil) of its debt in the first nine months of the year (excluding commercial paper and short-term bank loans), which allowed the Group to maintain a solid liquidity position and to further extend debt maturities. As of the end of September 2021, the Group has covered debt maturities beyond 2024. The average debt life stood at 13.85 years (post estimated distribution of proceeds to Telxius minorities), vs. 10.79 years in December 2020.

Financing activities in Q3 21:

  • In July, T. Emisiones purchased €838.6m of existing senior bonds in euros and T. Europe, B.V. purchased €114.9m of the existing hybrid bond with first reset date in Mar-22 following the tender offer launched in June.
  • In addition, T. Colombia signed a sustainability linked bilateral loan of COP 500,000m maturing in Mar-25.
  • Also in July, T. Emisiones, S.A.U., issued a notice of redemption with respect to its $750m 4.570% senior notes due 2023 that was redeemed in full on August 2, 2021.
  • In September, T. Europe, B.V redeemed the €127.5m outstanding of the existing hybrid bond with first reset date in Mar-22.

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 €1,021m as of Sep-21.

Undrawn committed credit lines with different credit institutions amounted to €12,427m as of September 2021 (€11,654m maturing over twelve months), which combined with the cash equivalents position and current financial assets, placed liquidity at €22,606m (post estimated distribution of proceeds to Telxius minorities).

Financial debt

Total Financial Liabilities Breakdown Including Lease Liabilities

Unaudited figures (Euros in millions)

 September 2021
Bonds and commercial paperDebt with financial institutionsOther financial debt (including governments) and net derivatives
Total financial liabilities including Lease liabilities (1)93% 8%-1%

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

Net financial debt structure by currency

Unaudited figures (Euros in millions)

 September 2021
EURLATAMGBPUSD
Net financial debt structure by currency57% 29% 13%1%

Net Financial Debt plus leases in Latam currencies over total stood at 26% as of September 2021 post estimated distribution of proceeds to Telxius minorities.

Financial expenses

Interest payments slightly increased by 0.9% y-o-y in 9M 21. The effective cost of interest payments over the last 12 months stood at 3.29% as of Sep-21 (excluding lease interests: 3.27%).

Note: For further information, please access the January – September 2021 Results Report.