Telefonica, the Spanish telecommunications company, has announced its plans for the 2023 to 2026 period, focusing on achieving modest growth in revenue and earnings while also reducing debt and maintaining a stable dividend.
Revenue and Earnings Targets
Telefonica is targeting an annual revenue growth rate of approximately 1% and aims for a 2% increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) over the next four years. This strategy reflects the company’s commitment to sustainable growth while managing its financial obligations effectively.
Debt Reduction Goals
In addition to pursuing growth, Telefonica plans to bring down its net debt-to-EBITDA ratio after leases. The company aims to achieve a ratio between 2.2 and 2.5, compared to the current ratio of 2.62 (as of June 2022). These efforts highlight Telefonica’s dedication to optimizing its financial position and strengthening its financial stability.
Dividend Outlook
Telefonica has also laid out its dividend plans for the 2023-26 period. The company intends to pay dividends of at least €0.30 per share ($0.32), ensuring an attractive return for its shareholders. This commitment emphasizes Telefonica’s focus on delivering value to its investors while pursuing its growth objectives.
Q3 Performance Update
In the third quarter, Telefonica reported a net profit of €502 million, representing a 9.4% increase compared to the same period last year. However, revenue saw a slight decline of 0.2% to reach €10.32 billion. Despite this, operating income before depreciation and amortization (OIBDA) for the quarter increased by 2.5% to €3.33 billion.
Analysts had estimated lower figures for Telefonica’s Q3 performance, expecting a net profit of €335 million, OIBDA of €3.265 billion, and revenue of €10.29 billion, according to consensus estimates provided by the company.
Year-to-Date Results
Telefonica’s results for the first nine months align with its annual targets, which aim for organic growth of approximately 4% in revenue and 3% in OIBDA. On an organic basis, the company achieved a 3.5% increase in revenue and a 2.6% increase in OIBDA for the first nine months. These results demonstrate Telefonica’s ability to execute its strategic plans effectively.
