DEBT DETAIL AND EVOLUTION

LEVERAGE RATIO

 

January-March 2019 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

  March 2019

Notes:

* Includes assets and liabilities defined as net financial debt plus commitments for Nicaragua, El Salvador, Panama and Costa Rica, that are classified as non-current assets held for sale and liabilities associated with non-current assets held for sale.

Net financial debt includes a positive value of the derivatives portfolio for a net amount of €1,470m, €2,750m included as financial liabilities and €4,220m included as financial assets

(1) Net financial debt calculation has been redefined in the first quarter of 2019 excluding the mark to market adjustment of the unmatured cash flow hedges associated to debt instruments. This change seeks to eliminate the asymmetry generated by the accounting valuation method of both financial instruments; the debt instrument valued at amortized cost and the derivative at market value. The change has been applied to all comparative periods. Also, following the entry into force of IFRS 16 since 1 January 2019, for comparison purposes, the net financial debt figure of December 2018 has been modified to exclude the lease liability of finance leases.

Non-current financial liabilities 46,571
Current financial liabilities 10,655
Gross Financial Debt 57,226
Cash and cash equivalents (8,356)
Other assets included in "Other current financial assets" (2,973)
Cash and other current financial assets included in "Non-current Assets Held for Sale" (23)
Positive mark-to-market value of long-term derivative instruments (3,196)
Other liabilities included in "Payables and other non-current liabilities" 780
Other liabilities included in "Payables and other current liabilities" 101
Other assets included in "Financial assets and other non-current assets" (1,374)
Other assets included in "Receivables and other current assets" (762)
Other assests included in “Tax receivables" (636)
Financial liabilities included in "Liabilities associated with non-current assets held for sale 112
Finance Leases under IAS 17 (1) 0
Mark-to-market adjustment by cash flow hedging activities related to debt (1) (519)
Net Financial Debt (1) 40,381
Lease Liabilities 7,439
Net Financial Debt including Lease liabilities 47,820
Gross commitments related to employee benefits 5,250
Value of associated Long-term assets (127)
Tax benefits (1,361)
Net commitments related to employee benefits 3,762
Net financial debt plus commitments* 44,143
Net Financial Debt / OIBDA 2.61x

 

FINANCING ACTIVITY

In January-March 2019, the financing activity of Telefónica amounted to approximately €4,437m equivalent (without considering the refinancing of commercial paper and short-term bank loans) and focused on maintaining a solid liquidity position and refinancing and extending debt maturities (in an environment of low interest rates). Therefore, as of the end of March, the Group hedged the debt maturity for the next two years. The average debt life stood at 10.2 years (vs. 9.0 years in December 2018).

The main financing operations of the quarter included:

  • In January, Telefónica Emisiones, S.A.U. concluded its first green bond issuance, the first of the global telecommunications sector, obtained an amount of €1,000m maturing in February 2024 and with an annual coupon of 1.069%.
  • In March, Telefónica Emisiones, S.A.U., closed a USD bond issue for 1,250m USD at 30 years with a coupon of 5.520%.
  • In March, Telefónica Europe, B.V. launched two transactions simultaneously. The first, the issue of deeply subordinated fixed rate reset securities guaranteed on a subordinated basis by Telefónica S.A. for a total amount of €1,300m and callable after 6 years from the issue date. The second, a tender offer for the purchase of existing hybrid references in euros, with a repurchase of €935m nominal amount, which, along the liability management exercise of March 2018, has led to extending the average years to call from 3.2 to 4.9, and reducing the average coupon paid by 102 basis points, from 5.16% to 4.14%.
  • In March, Telefónica Emisiones, S.A.U., closed a senior debt issuance of €1,000m (maturing in March 2029 with an annual coupon of 1.788%).

After closing, Telefónica del Perú closed an issuance on the international market for 1,700m Peruvian soles with a maturity in April 2017 and annual coupon of 7.375%.

On the other hand, Telefónica Deutschland Holding issued debt instruments in the local market maturing up to 10 years and a volume of €360m.

Throughout the quarter, Telefónica Group obtained funding by means of extending payment terms with suppliers or the factoring firm where those had been discounted, for a total of €207m equivalent (€120m equivalent in January- March 2018).

Additionally, 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 approximately €1,707m at the end of March.

At the end of March, Telefónica maintained undrawn, committed credit lines with different credit institutions for an approximate amount of €12,651m (€12,193m with maturity at over twelve months) which, combined with the cash equivalents position and current financial assets, placed liquidity at €23,980m.

 

FINANCIAL DEBT

Total financial liabilities breakdown

Unaudited figures (Euros in millions)

  March 2019
  Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities (1) 87% 13% 0%
(1) Includes positive value of derivatives and other financial debt.

 

Net financial debt structure by currency

Unaudited figures (Euros in millions)

  March 2019
  EUR LATAM GBP USD
Net financial debt structure by currency 76% 12% 9% 3%

 

FINANCIAL EXPENSES

Net financial expenses in the quarter (€411m) increased by 7.7% vs. the same period of the previous year, affected by the adoption of IFRS 16 (-6.3% excluding this effect).

NOTE: For further information, please access the January – March 2019 Results Report

View Quarterly Report PDF document [1.3 MB]