January-March 2018 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

  March 2018


(1) Net financial debt includes a positive value of the derivatives portfolio for a net amount of €505m, €3,152m included as financial liabilities and €3,657m included as financial assets.

Non-current financial liabilities 48,850
Current financial liabilities 7,053
Gross Financial Debt 55,903
Cash and cash equivalents (4,822)
Current financial assets (2,941)
Positive mark-to-market value of long-term derivative instruments (2,409)
Other non-current liabilities included in "Trade and other payables" 655
Other current liabilities included in "Trade and other payables" 94
Other assets included in "Non-current financial assets" (1,773)
Other assets included in "Current trade and other payables" (732)
Net Financial Debt (1) 43,975
Gross commitments related to employee benefits 6,362
Value of associated Long-term assets (782)
Tax benefits (1,482)
Net commitments related to employee benefits 4,098
Net financial debt plus commitments 48,073
Net Financial Debt / OIBDA 2.67x




During the first quarter 2018, Telefónica’s financing activity amounted to approximately €10,692m 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 has covered debt maturities for the next two years. The average debt life stood at 9.11 years (vs. 8.08 years in December 2017). The main financing operations of the quarter included:

-> A senior debt issuance of €1,000m was closed in January (maturing in January 2027 and annual coupon of 1.447%).

-> In March, Telefónica Emisiones, S.A.U. closed a USD bond issue in two tranches (750m USD at 20 years and 1,250m USD at 30 years), with coupons of 4.665% and 4.895%, respectively, the latter being the lowest coupon ever paid by Telefónica in an issue in dollars at this term.

-> In March, Telefónica Europe, B.V. launched two transactions simultaneously. Firstly, the issue of deeply subordinated guaranteed fixed rate reset securities guaranteed on a subordinated basis by Telefónica, S.A. for a total amount of €2,250m, divided into two tranches (€1,250m, 5.7 Year Non-Call from the issue date and €1,000m, 8.5 Year Non-Call from the issue date). Secondly, a tender offer for the purchase of existing hybrid bonds in euros and pound sterling, through which a nominal of €1,777m equivalent was purchased, extending the average Non-Call date from 3.2 to 4.7 years, and reducing the average coupon paid by 0.93 basis points, from 5.34% to 4.41%.

-> Also in March, Telefónica, S.A. entered into a syndicated facility agreement for a maximum aggregate amount of €5,500m maturing in 5 years and with two annual extension options, for a maximum maturity of 7 years. This new agreement combines and replaced the following two existing revolving credit facilities: a revolving credit facility for €3,000m maturing in February 2021 and a credit facility for €2,500m maturing in February 2022.

-> Separately, Telefónica Deutschland Holding issued debt instruments in the local market (“Schuldscheindarlehen” and “Namensschuldverschreibung”) maturing up to 15 years and a target volume of €250m, including a tranche via Blockchain technology amounting to €75m with a maturity slightly longer than one year.

Throughout the quarter, Telefónica Group obtained funding by means of extending payment terms with suppliers or with the factoring firm where those had been discounted, for a total of €120m (€367m equivalent in January-March 2017).

Meanwhile, 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 €2,052m at the end of March.

At the end of the quarter, Telefónica maintained undrawn, committed credit lines with different credit institutions for an approximate amount of €12,511m (€11,558m maturing in more than twelve months) which, combined with the cash equivalents position and current financial assets excluding Venezuela, placed liquidity at €20,274m.





Total financial liabilities breakdown

Unaudited figures (Euros in millions)

  March 2018
  Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities (1) 81% 15% 4%
(1) Includes positive value of derivatives and other financial debt.

Net financial debt structure by currency

Unaudited figures (Euros in millions)

  March 2018
Net financial debt structure by currency 82% 12% 6% 0%




Net financial expenses (€381m) decreased 15.0% compared with the first quarter of the previous year, mainly due to the reduction in both debt and cost of debt in European and Latin American currencies.

NOTE: For further information, please access the January – March 2018 Results Report

View Quarterly Report PDF document [1.4 MB]