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Telefonica (TEF)
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Telefonica (TEF) AI Stock Analysis

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TEF

Telefonica

(NYSE:TEF)

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Neutral 52 (OpenAI - 4o)
Rating:52Neutral
Price Target:
$5.00
▼(-0.60% Downside)
Telefonica's overall stock score reflects significant profitability challenges despite stable cash flows and reasonable leverage. The technical analysis indicates bearish momentum, and the valuation is mixed with a high dividend yield but negative P/E ratio. These factors combined result in a moderate score, highlighting the need for caution.

Telefonica (TEF) vs. SPDR S&P 500 ETF (SPY)

Telefonica Business Overview & Revenue Model

Company DescriptionTelefónica, S.A., together with its subsidiaries, provides telecommunications services in Europe and Latin America. The company's mobile and related services and products comprise mobile voice, value added, mobile data and Internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services. Its fixed telecommunication services include PSTN lines; ISDN accesses; public telephone services; local, domestic, and international long-distance and fixed-to-mobile communications; corporate communications; supplementary value-added services; video telephony; intelligent network; and telephony information services, as well as leases and sells handset equipment. The company also provides Internet and broadband multimedia services comprising Internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access, high-speed Internet through fibre to the home, and voice over Internet protocol services. In addition, it offers leased line, virtual private network, fibre optics, web hosting and application, outsourcing and consultancy, desktop, and system integration and professional services. Further, the company offers wholesale services for telecommunication operators, including domestic interconnection and international wholesale services; leased lines for other operators; and local loop leasing services, as well as bit stream services, wholesale line rental accesses, and leased ducts for other operators' fiber deployment. Additionally, it provides video/TV services; smart connectivity and services, and consumer IoT products; financial and other payment, security, cloud computing, advertising, big data, and digital telco experience services; virtual assistants; digital home platforms; and Movistar Home devices. It also offers online telemedicine, home insurance, music streaming, and consumer loan services. The company was incorporated in 1924 and is headquartered in Madrid, Spain.
How the Company Makes MoneyTelefonica primarily generates revenue through its telecommunications services, which include mobile and fixed-line voice services, broadband internet access, and television services. The company has a diverse revenue model, with key revenue streams coming from mobile services, including voice and data plans, as well as fixed broadband subscriptions. Additionally, Telefonica earns from value-added services such as cloud solutions, cybersecurity, and Internet of Things (IoT) offerings. Significant partnerships with technology providers and content creators further enhance its service portfolio and drive revenue growth. The company's strategic focus on digital services and customer retention initiatives, along with cost optimization strategies, also contribute positively to its overall earnings.

Telefonica Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q1-2025)
|
% Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
Telefonica's earnings call for the first quarter of 2025 highlighted strong operational performance in its core markets such as Spain and Brazil, as well as progress in strategic simplification in Hispam. However, challenges remain with forex impacts on financial metrics and operational difficulties in the Hispam region. While there are clear positive trends in customer engagement and network expansion, the financial performance is somewhat dampened by external factors like forex and seasonality in cash flow.
Q1-2025 Updates
Positive Updates
Strong Customer Engagement and Network Expansion
NPS scores reached new highs, with Spain leading the market. Fiber was rolled out to over 1.5 million premises, and 5G coverage reached 75% in core markets.
Commercial and Financial Strength in Spain
Telefonica Spain showed strong commercial momentum with customer growth in all accesses for the seventh consecutive quarter. Domestic revenue grew by 1.7% year-on-year.
Resilient Performance in Brazil
Vivo reached its largest customer base with revenue rising 6%, above inflation, driven by higher ARPU and growth in mobile contracts and fiber accesses.
Operational Efficiency in Germany
Telefonica Deutschland maintained robust commercial momentum with a stable EBITDA margin year-on-year and a 4.8% growth in EBITDA minus CapEx.
Strategic Simplification in Hispam
Completed the sale of Telefonica Argentina for €1.2 billion, and signed a binding agreement to sell Telefonica Colombia.
Positive Trends in Telefonica Tech
Telefonica Tech increased revenue by 6.6% year-on-year, with commercial activity growing and bookings up by 7%.
Negative Updates
Impact of Forex on Financial Metrics
Reported results were negatively affected by forex, impacting the financial metrics despite organic growth in main metrics.
Challenges in Hispam Region
EBITDA minus CapEx fell by 31% due to lower EBITDA and higher lease costs, primarily in Colombia.
Seasonality Affecting Free Cash Flow
Free cash flow from continuing operations totaled minus €205 million, affected by seasonality in working capital, leases, and financial payments.
Company Guidance
In the recent Telefonica results conference call for the first fiscal period of 2025, significant metrics and strategic guidance were shared. The company highlighted robust operational performance across its core markets of Spain, Brazil, and Germany, with an emphasis on customer engagement, network transformation, and efficiency. Telefonica achieved notable milestones, including a record high Net Promoter Score (NPS) and expanded fiber and 5G coverage, reaching 75% in core markets. The company also made significant strides in network virtualization and legacy service shutdowns, optimizing operations by completing the copper switch-off in Spain and shutting down 3G in Germany and 2G in Uruguay. Financially, Telefonica reiterated its 2025 guidance, expecting revenue, EBITDA, and EBITDA minus CapEx to grow organically, with a stable free cash flow similar to 2024 figures, despite forex challenges. The company reduced net debt and maintained a solid liquidity position, with its net debt to EBITDA ratio at 2.67 times. Additionally, strategic moves included the sale of operations in Argentina and Peru and a pending agreement in Colombia, highlighting the company's focus on financial flexibility and simplification. The strategic review, expected to conclude in the second half of the year, will further refine the company’s operational focus and financial strategy.

Telefonica Financial Statement Overview

Summary
Telefonica's financial statements show stable cash flows and reasonable leverage, but there are significant profitability issues. The income statement reports negative net income despite stable gross margins, while the balance sheet indicates negative equity returns despite balanced leverage. Cash flow performance is strong, signaling effective cash management, yet profitability remains a critical concern.
Income Statement
55
Neutral
Telefonica's TTM revenue has declined compared to the previous year, exhibiting negative growth. The gross profit margin remains intact at 100% due to matching revenue and cost structures, but the net profit margin is negative, indicating profitability challenges. EBIT and EBITDA margins show stability, although they are moderate. Overall, the income statement reflects mixed results, with a strong gross margin but concerning net losses.
Balance Sheet
60
Neutral
Telefonica's debt-to-equity ratio is moderate, reflecting a balanced leverage structure. However, the company's return on equity is negative due to net losses, posing profitability concerns. The equity ratio indicates a substantial proportion of assets financed by equity, suggesting some stability. Overall, the balance sheet shows stability in leverage but highlights profitability issues.
Cash Flow
70
Positive
The company's free cash flow has shown positive growth, reflecting efficient capital management. The operating cash flow to net income ratio is strong, indicating robust cash generation relative to net income. However, the free cash flow to net income ratio is less favorable due to negative net income. Overall, cash flow metrics demonstrate strong cash generation but are impacted by profitability challenges.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue38.93B41.31B40.65B39.99B39.28B43.08B
Gross Profit38.93B28.76B20.23B27.05B27.02B30.06B
EBITDA12.60B12.35B10.34B13.54B22.53B13.82B
Net Income-2.38B-49.00M-892.00M2.01B8.14B1.58B
Balance Sheet
Total Assets94.37B100.50B104.32B109.64B109.21B105.05B
Cash, Cash Equivalents and Short-Term Investments8.19B9.26B7.67B9.69B12.41B8.10B
Total Debt7.55B45.02B44.12B8.68B8.07B5.29B
Total Liabilities73.39B77.75B77.23B77.93B80.53B86.79B
Stockholders Equity17.28B19.35B21.85B25.09B22.21B11.23B
Cash Flow
Free Cash Flow5.35B5.20B5.49B5.30B4.10B6.18B
Operating Cash Flow10.84B10.99B11.65B10.81B10.27B13.20B
Investing Cash Flow-4.83B-5.22B-4.29B-5.33B5.90B-7.79B
Financing Cash Flow-4.49B-4.67B-7.19B-7.92B-12.99B-5.44B

Telefonica Technical Analysis

Technical Analysis Sentiment
Negative
Last Price5.03
Price Trends
50DMA
5.34
Negative
100DMA
5.22
Negative
200DMA
4.76
Positive
Market Momentum
MACD
-0.08
Positive
RSI
30.38
Neutral
STOCH
10.53
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TEF, the sentiment is Negative. The current price of 5.03 is below the 20-day moving average (MA) of 5.27, below the 50-day MA of 5.34, and above the 200-day MA of 4.76, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 30.38 is Neutral, neither overbought nor oversold. The STOCH value of 10.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TEF.

Telefonica Risk Analysis

Telefonica disclosed 16 risk factors in its most recent earnings report. Telefonica reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Telefonica Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$18.49B13.1517.30%6.82%-5.13%-5.90%
72
Outperform
$19.82B19.607.96%4.66%-6.51%-0.21%
68
Neutral
$63.85B22.0811.57%2.50%-0.64%56.92%
68
Neutral
$42.09B7.5132.48%1.03%17.05%
60
Neutral
$27.64B-6.40-7.90%4.33%0.89%-494.16%
52
Neutral
$28.89B-3.55%7.09%-4.73%-251.31%
60
Neutral
$48.67B4.58-11.27%4.14%2.83%-41.78%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TEF
Telefonica
5.03
0.41
8.87%
AMX
America Movil
20.93
5.06
31.88%
CHTR
Charter Communications
276.12
-47.96
-14.80%
TLK
PT Telekomunikasi Indonesia Tbk
18.88
0.20
1.07%
VIV
Telefonica Brasil
12.56
2.82
28.95%
VOD
Vodafone
11.49
1.94
20.31%

Telefonica Corporate Events

Telefónica Reports Strategic Milestones and Operational Advancements in Q2 2025
Jul 30, 2025

In its recent quarterly results presentation for January to June 2025, Telefónica announced key strategic milestones, including a reduction in capital expenditures and the completion of the copper switch-off in Spain. The company is focusing on technology and operational excellence, with advancements in network architecture and process automation. Telefónica has also accelerated its disposals in the Hispam region, with recent agreements in Uruguay, Ecuador, Argentina, Peru, and Colombia. The company emphasizes customer focus, reporting an increase in customer lifetime value and a strong net promoter score, reflecting its commitment to value creation for stakeholders.

Telefonica Releases Half-Year Financial Report for 2025
Jul 30, 2025

Telefonica has released its half-year financial report for January to June 2025, highlighting the company’s financial position and performance. The report indicates a decrease in non-current assets from 78,133 million euros at the end of 2024 to 73,108 million euros by June 2025, reflecting changes in property, plant, and equipment, as well as other financial metrics. This financial update provides stakeholders with insights into Telefonica’s operational adjustments and strategic focus for the remainder of the year.

Telefónica Reports Strong H1 2025 Results, Advances Strategic Divestments
Jul 30, 2025

On July 30, 2025, Telefónica announced its financial results for the first half of 2025, highlighting solid progress in strategy execution and resilience despite economic uncertainties. The company reported growth in revenue and EBITDA, with significant improvements in free cash flow and a reduction in net debt. Telefónica is actively reducing its exposure in the Hispam region, having entered binding agreements to sell its operations in Uruguay and Ecuador. The company remains committed to its 2025 guidance and shareholder remuneration, with a focus on maintaining momentum in Europe and Brazil.

Telefónica Announces Board Restructuring on July 29, 2025
Jul 29, 2025

On July 29, 2025, Telefónica announced changes in its Board of Directors and Committees, following a meeting in Madrid. The company accepted the resignations of Ms. Verónica Pascual Boé and Ms. María Rotondo Urcola as Independent Directors, who will continue to serve in advisory roles within the company. To fill these vacancies, Ms. Anna Martínez Balañá and Ms. Mónica Rey Amado were appointed as Independent Directors. Additionally, Ms. Mónica Rey Amado and Ms. Ana María Sala Andrés were appointed to the Sustainability and Regulation Committee and the Nominating, Compensation and Corporate Governance Committee, respectively. These changes are part of an orderly renewal process aimed at strengthening Telefónica’s governance structure.

Telefónica to Release H1 2025 Financial Results on July 30
Jun 30, 2025

Telefónica, S.A. has announced that it will release its financial results for the first half of 2025 on July 30, 2025. The announcement includes details about an earnings release and a conference call scheduled for the same day, which will be webcasted online. This event is significant for stakeholders as it provides insights into the company’s financial performance and strategic direction for the year.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 24, 2025