DEBT DETAIL AND EVOLUTION

LEVERAGE RATIO

 

January-June 2019 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

  June 2019

Notes:

* Includes assets and liabilities defined as net financial debt plus commitments for 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 €1,663m, €3,249m included as financial liabilities and €4,912m included as financial assets.

Non-current financial liabilities 46,508
Current financial liabilities 10,077
Gross Financial Debt 56,585
Cash and cash equivalents (7,588)
Other assets included in "Other current financial assets" (3,183)
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 (3,479)
Other liabilities included in "Payables and other non-current liabilities" 795
Other liabilities included in "Payables and other current liabilities" 100
Other assets included in "Financial assets and other non-current assets" (922)
Other assets included in "Receivables and other current assets" (751)
Other assests included in “Tax receivables" (687)
Financial liabilities included in "Liabilities associated with non-current assets held for sale 107
Finance Leases under IAS 17 (1) n.a
Mark-to-market adjustment by cash flow hedging activities related to debt (1) (724)
Net Financial Debt * 40,230
Lease Liabilities 7,542
Net Financial Debt including Lease liabilities 47,772
Gross commitments related to employee benefits 5,152
Value of associated Long-term assets (125)
Tax benefits (1,339)
Net commitments related to employee benefits 3,688
Net financial debt plus commitments* 43,918
Net Financial Debt / OIBDA 2.62x

 

FINANCING ACTIVITY

In January-June 2019, the financing activity of Telefónica amounted to approximately €5,699m 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 June, the Group has covered debt maturities for the next two years. The average debt life stood at 10.3 years (vs. 9.0 years in December 2018).

The main financing operations of the quarter included:

  • In April, Telefónica del Perú closed an issuance on the international market for 1,700m Peruvian soles, maturing in April 2017 and annual coupon of 7.375%.
  • In April, Telefónica Deutschland Holding issued debt instruments in the local market, maturing up to 10 years and a volume of €360m.
  • In May, Colombia Telecomunicaciones S.A. E.S.P. made its first long-term issue on the local market for COP500,000m divided into two tranches; 1) COP 347,590m (5 years; coupon of 6.65%) and 2) COP 152,410m (10 years; variable CPI rate +3.39%).

After the closing of the quarter, Telefónica Emisiones, S.A.U. completed a €500m, 20-year senior debt issue with an annual coupon of 1.957%. These tenors are usually very difficult to access, as they are carried out under very positive market conditions, and are often restricted to companies with high credit ratings.

Throughout the first half, 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 €251m equivalent (€44m equivalent in April-June 2019).

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 €1,372m at the end of June.

At the end of June, Telefónica maintained undrawn, committed credit lines with different credit institutions for an approximate amount of €13,144m (€12,818m maturing in over twelve months) which, combined with the cash equivalents position and current financial assets, placed liquidity at €23,915m.

 

FINANCIAL DEBT

Total financial liabilities breakdown

Unaudited figures (Euros in millions)

  June 2019
  Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities (1) 89% 11% 0%
(1) Includes positive value of derivatives and other financial debt.

 

Net financial debt structure by currency

Unaudited figures (Euros in millions)

  June 2019
  EUR LATAM GBP USD
Net financial debt structure by currency 77% 11% 9% 3%

 

FINANCIAL EXPENSES

Net financial expenses in April-June totalled €240m (€1m in April-June 2018) and their y-o-y performance was mainly affected by the impact of the favourable court ruling in Brazil in April-June 2018 (€444m) and the adoption of IFRS 16 (€48m), which more than offset the income recognition this quarter of interests associated to the extraordinary tax refund in Spain (€201m). In January-June 2019, these expenses (€651m) increased 70.0% y-o-y, affected by the factors described above.

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

View Quarterly Report PDF document [5.5 MB]