Key Points <\/p>\n
Interested in Telefonica SA? Here are five stocks we like better.<\/a><\/p>\n Telef\u00f3nica delivered a solid Q1 with revenue of EUR 8.1 billion, adjusted EBITDA of EUR 2.8 billion, and free cash flow of EUR 333 million, while reaffirming its full-year guidance and EUR 0.15 per share dividend.<\/p>\n Spain and Brazil were the main growth engines, with Spain posting stronger operating performance and record low churn, while Brazil saw revenue rise 7.4% and added 850,000 contract mobile customers.<\/p>\n Debt continued to fall as the Hispam exit advanced, with net financial debt down to EUR 25.3 billion and leverage improving to 2.72x, keeping the company on track toward its 2.5x target in 2028.<\/p>\n Telefonica (NYSE:TEF) reported a stronger start to 2026, with management pointing to revenue growth, improving operating leverage and debt reduction while reaffirming its full-year targets and dividend plans.<\/p>\n On the company\u2019s January-to-March 2026 earnings call, COO Emilio Gayo said Telef\u00f3nica was \u201cpleased to report a good start to the year,\u201d citing growth in revenue, adjusted EBITDA and adjusted operating cash flow after leases in both constant and current currency terms. He said the company remains confident in its 2026 financial outlook and reiterated its EUR 0.15 dividend per share.<\/p>\n \u2192 Rocket Lab Just Hit a New All-Time High\u2014Time to Buy or Let It Breathe?<\/a><\/p>\n CFO Juan Azcu\u00e9 said first-quarter revenue reached EUR 8.1 billion, up 0.8% year over year in constant currency, supported by a 1% increase in service revenue. Adjusted EBITDA totaled EUR 2.8 billion, up 1.8%, while adjusted operating cash flow after leases was EUR 1.4 billion, up 2.4%. CapEx to sales stood at 10.7%, down 0.2 percentage points from a year earlier.<\/p>\n Free cash flow was EUR 333 million in the quarter, which Azcu\u00e9 said reflected normal first-quarter seasonality tied mainly to working capital. He said the company remains on track for full-year free cash flow guidance of around EUR 3 billion.<\/p>\n Spain and Brazil Drive Momentum <\/p>\n \u2192 MP Materials Is Quietly Building a Rare Earth Powerhouse<\/a><\/p>\n Gayo said Telef\u00f3nica Spain delivered \u201ca strong operating and financial performance\u201d in the quarter, with the unit recording its lowest-ever churn at 0.7% despite a tariff update in mid-January. The company also reached record customer bases in fixed broadband and contract mobile, while B2C converged ARPU remained above EUR 91.<\/p>\n Spain revenue grew 2% year over year, supported by service revenue, while adjusted EBITDA expanded faster than retail revenue and delivered a 56% margin. Gayo attributed the performance to revenue growth and savings from the company\u2019s redundancy program, which more than offset lower wholesale revenue. Adjusted operating cash flow after leases in Spain rose 2.3%.<\/p>\n \u2192 Micron Investors Face a High-Stakes Moment After the Latest Rally<\/a><\/p>\n In response to analyst questions, Gayo said Spain\u2019s first-quarter results were slightly above the company\u2019s expectations and that Telef\u00f3nica expects similar trends in coming quarters, with the second half of the year better than the first half. He said the company does not see a major change in Spain\u2019s competitive environment, describing the high-value market as rational while noting that the low-end segment remains more competitive.<\/p>\n In Brazil, Gayo said Vivo delivered another strong quarter, with revenue up 7.4% year over year and adjusted EBITDA and operating cash flow after leases both up 9%. The company added 850,000 contract mobile customers, its highest figure in five quarters, and reached record mobile ARPU. Fiber connections rose to nearly 8 million.<\/p>\n Gayo said Brazil\u2019s B2C digital businesses continued to grow, with consumer electronics revenue up 56% over the last 12 months, supported by new financing options. In B2B, digital solutions were again the main growth driver, led by cloud and IoT.<\/p>\n Germany Faces 1&1 Impact, U.K. Trends Remain Under Pressure <\/p>\n In Germany, Gayo said the business remained resilient despite the ongoing impact from the 1&1 customer migration, which peaked on a year-over-year basis in the first quarter. He also cited weaker handset demand following a strong fourth quarter last year.<\/p>\n Telef\u00f3nica Deutschland\u2019s fixed revenue rose 4% year over year, while adjusted EBITDA was affected by the 1&1 impact. Gayo said that excluding the 1&1 effect, underlying adjusted EBITDA grew at a high-single-digit rate year over year. He said the company continues to work toward returning to growth in 2027.<\/p>\n Management also discussed Germany\u2019s pricing and ARPU trends during the Q&A. Santiago Argelich Hesse, CEO of Telef\u00f3nica Germany, said ARPU was affected by the success of family plans and second and third SIM cards, which dilute per-SIM ARPU but support household-level growth. He said household ARPU was growing year over year.<\/p>\n In the U.K., Virgin Media O2 launched O2 Satellite, which management described as the first direct-to-device satellite connectivity service switched on by a U.K. mobile network. The company also said O2 now has the largest 5G standalone footprint in the U.K., reaching 86% of the population.<\/p>\n Financially, Virgin Media O2 service revenue decreased, mainly due to consumer revenue pressure from prior-year customer losses and lower fixed ARPU. Adjusted EBITDA also declined, reflecting the service revenue trend. Gayo said progress on the Netomnia acquisition was continuing as expected.<\/p>\n Debt Falls as Hispam Exit Continues <\/p>\n Azcu\u00e9 said Telef\u00f3nica\u2019s net financial debt decreased to EUR 25.3 billion, down EUR 1.5 billion in the first three months of the year, primarily due to proceeds from Colombia and Chile. The company\u2019s net debt-to-EBITDA ratio improved to 2.72 times from 2.78 times in December, and management said deleveraging remains on track toward a 2.5 times target in 2028.<\/p>\n Telef\u00f3nica has sold six Hispam assets over the past 12 months, with Azcu\u00e9 putting the total firm value at above EUR 4 billion. Following the sale of Chile in February 2026 and the agreement to sell Mexico in April 2026, both companies were classified as discontinued operations in the first quarter.<\/p>\n The company also raised EUR 3 billion in long-term financing at the group level during the year. Azcu\u00e9 said Telef\u00f3nica\u2019s average cost of debt declined to 2.81% in March 2026 from 3.30% in March 2025.<\/p>\n Management Reaffirms Strategy and Guidance <\/p>\n Gayo said Telef\u00f3nica is executing against its \u201cTransform and Growth Plan,\u201d with priorities including customer experience, B2C convergence, B2B digital growth, network expansion, simplification and the Hispam exit.<\/p>\n During the Q&A, management said the business plan is based on organic growth in markets such as Germany and Spain, while potential transactions would be evaluated against criteria including core markets, core business, clear and measurable synergies, and appropriate terms.<\/p>\n Asked about Telef\u00f3nica\u2019s participation in a possible European AI gigafactory project, Borja Ochoa, CEO of Telef\u00f3nica Spain, said the company is leading the Spanish consortium and preparing an offer expected between June and July, with an outcome expected by year-end. Azcu\u00e9 said Telef\u00f3nica\u2019s investment would be a minority stake, around 10% to 15%, and that the equity contribution would be well below several hundred million euros because the project would be largely debt financed.<\/p>\n Gayo closed the call by saying Telef\u00f3nica is \u201cmore focused, more efficient, and more profitable,\u201d and reiterated that first-quarter performance leaves the company on track to meet its 2026 guidance across key metrics, including free cash flow.<\/p>\n About Telefonica (NYSE:TEF) <\/p>\n Telef\u00f3nica, SA is a Spanish multinational telecommunications company headquartered in Madrid. Founded in 1924 as Compa\u00f1\u00eda Telef\u00f3nica Nacional de Espa\u00f1a, it has grown into one of the world’s largest telecommunications groups. Telef\u00f3nica provides a broad range of communications services to residential and business customers, including mobile and fixed-line telephony, broadband internet, and pay-TV. The company also develops and sells network infrastructure and related services to support connectivity at scale.<\/p>\n Beyond traditional voice and data services, Telef\u00f3nica has expanded into digital and IT services aimed at enterprise customers and public-sector clients.<\/p>\n This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.<\/p>\n The article “Telefonica Q1 Earnings Call Highlights<\/a>” was originally published by MarketBeat.<\/p>\n