Telefonica, a global telecommunications leader, has recently unveiled its ambitious Growth, Profitability, and Sustainability (GPS) plan during its Capital Markets Day in Madrid. The strategic plan is designed to position the company as a frontrunner in the digital era and focuses on investment, growth, and sustainable business practices.
Financial Targets for 2023-2026:
The GPS plan outlines key financial targets, including an annual revenue growth of approximately 1 percent, EBITDA growth of 2 percent, operating cash flow growth (EBITDAaL – Capex) of 5 percent, and a Free Cash Flow (FCF) target of over €5,000 million by 2026. Telefonica aims to reduce net financial debt to a debt ratio of 2.2-2.5x/EBITDAaL by 2026.
Dividend Commitment:
Telefonica remains committed to shareholder value, ensuring a minimum dividend of €0.30 per share for the period 2023-2026.
Chairman’s Vision:
Jose Maria Alvarez-Pallete, Chairman of Telefonica, expressed the company’s vision in the context of the digital era, emphasizing the need for deregulation to ensure strategic autonomy. “Our GPS plan is the company’s most valuable tool for growth and stability to successfully face its 100th anniversary and continue providing the best service,” Jose Maria Alvarez-Pallete said.
Five Vectors for Accelerated Growth:
The GPS plan focuses on five vectors: B2C and B2B segment growth, revenue from partner relationships, increased efficiency, and maintaining a differential profile with lower investment.
Financial Performance:
In Q3 2023, Telefonica reported a 9.3 percent increase in net income to €502 million. The company’s financial targets for the current year, revised upwards in July, remain on track.
Immediate Delivery of Targets:
Telefonica anticipates visible progress in achieving its targets by 2024, with FCF expected to grow around 10 percent and Capex (capital expenditure) falling below 14 percent.
Telefonica Tech and Telefonica Infra:
Telefonica Tech’s strategic digital services unit is projected to achieve a CAGR of 18 percent, reaching €3 billion in revenues by 2026. Telefonica Infra, focused on telecoms infrastructure, aims to expand its FTTH footprint to approximately 30 million premises by 2026.
Sustainability as a Pillar:
Sustainability is integral to Telefonica’s strategy, with a commitment to achieving net zero emissions by 2040. The company will intensify collaboration with the telco industry for a fair regulatory environment and strengthen governance, aiming for gender parity in top governing bodies by 2030.
Q3 2023 Results:
Telefonica reported stable Q3 revenues of €10,321 million, with net income growing 9.3 percent to €502 million. Key units, including Telefonica Tech, recorded substantial growth, contributing to the positive financial performance.
Financial Strength:
The company showcased strong financials with OIBDA-Capex increasing by 9.3 percent in Q3, free cash flow reaching €1,130 million, and a decrease of €942 million in net debt to €26,537 million at the end of September.
Leadership in Infrastructure:
Telefonica continues to lead in infrastructure deployment, with a focus on fiber and 5G technology. It maintained global leadership in ultrafast broadband, reaching 171.2 million premises, with 70.3 million on FTTH.
ESG Commitment:
Telefonica is at the forefront of environmental, social, and governance (ESG) issues, advancing sustainable financing with a €750 million green hybrid issued in Q3.
In summary, Telefonica’s GPS plan aims to drive growth, profitability, and sustainability, underlining the company’s commitment to shareholder value, financial strength, and a leading position in the digital era.
