Debt detail and evolution

Leverage ratio

Net financial debt and commitments

Unaudited figures (Euros in millions)

December 2021December 2020
Non-current financial liabilities35,29042,297
Current financial liabilities7,0058,123
Gross Financial Debt 42,29550,420
Cash and cash equivalents (8,580)(5,604)
Current financial assets (3,823)(2,489)
Non-current financial assets (4,580)(5,137)
Mark-to-market adjustment by cash flow hedging activities related to debt22
Other current assets and liabilities (13)
Other non-current assets and liabilities 711
Net Financial Debt 26,03235,228
Lease Liabilities 8,0806,469
Net Financial Debt including Lease liabilities (1)34,11241,697

Notes: (1) Includes assets and liabilities defined as net financial debt including lease liabilities of T. El Salvador, classified as non-current assets and disposal groups held for sale and liabilities associated with non-current assets and disposal groups held for sale.

Telefónica Group consolidated results deconsolidate Telxius towers division while T. UK is no longer consolidated under the full consolidation method and the new VMO2 joint venture has been accounted for by the equity method since June 1, 2021. In addition, Telefónica Group consolidated results deconsolidate T. Costa Rica while Cancom UK&I has been incorporated since August 1, 2021.

Net financial debt includes a positive value of the derivatives portfolio for a net amount of €1,573m, €2,194m included as financial liabilities and €3,767m included as financial assets.

December 2021December 2020
Net Financial Debt / OIBDAaL adjusted (1)2.59x2.79x

Notes: (1) OIBDA plus adjustments and after Leases.

Financing activity

Telefónica, in the current low-interest rate environment, re-financed €6,667m (€2,954m at the Group, €1,650m at the JV with Allianz, €1,976m equivalent at VMO2 JV and €87m equivalent at FiBrasil) of its debt in FY 21 (excluding commercial paper and short-term bank loans), which allowed the Group to maintain a solid liquidity position and to further extend debt maturities. As of the end of Dec-21, the Group has covered debt maturities beyond 2024. The average debt life stood at 13.63 years, vs. 10.79 years in Dec-20.

Financing activities in Q4 21:

  • In November, T. Europe, B.V launched a sustainability issuance of Undated 6.5 year non call Deeply Subordinated Guaranteed Fixed Rate Reset Securities (hybrid bond), with the subordinated guarantee of Telefónica, S.A., (€750m, 6.5 years reset date) and a tender offer for the purchase of existing hybrid bonds with first reset date in 2023 and 2024. Telefónica Europe, B.V. accepted the purchase in an aggregate principal amount of €750m. After this last transaction, the average years to call was extended, from 3.75 as of Dec-20, to 4.16, and the average coupon paid was reduced from 3.74% to 3.56%, respectively.
  • Also, in November, T. Chile launched a USD 500m bond with maturity in Nov-31.

In Jan-22, Telefónica, S.A. completed the refinancing of its main syndicated facility of €5,500m which is now linked to sustainability objectives related to reduction of direct and indirect greenhouse gas emissions; and a social objective, relating to the increase in the percentage of women in executive positions; and extended its maturity to five years, with two annual extension option, up to a maximum maturity of seven years (Jan-29).

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 €1,029m as of Dec-21.

Undrawn committed credit lines with different credit institutions amounted to €12,182m as of Dec-21 (€11,791m maturing over twelve months), which combined with the cash equivalents position and current financial assets, placed liquidity at €24,586m.

Financial debt

Total Financial Liabilities Breakdown Including Lease Liabilities

Unaudited figures (Euros in millions)

December 2021
Bonds and commercial paperDebt with financial institutionsOther financial debt (including governments) and net derivatives
Total financial liabilities including Lease liabilities (1)89% 10%1%

(1) Includes positive value of derivatives and other financial debt.

Net financial debt structure by currency

Unaudited figures (Euros in millions)

December 2021
Net financial debt structure by currency70% 28% 1%0%

Financial expenses

Interest payments increased 27.3% y-o-y in FY 21, despite the reduction of debt in European currencies, due to extraordinary collections in 2020, the increase in interest rates in Brazil and a higher level of debt denominated in Brazilian reals. The effective cost of interest payments over the last 12 months stood at 3.77% as of Dec-21 (excluding lease interests: 3.86%).

Note: For further information, please access the January – December 2021 Results Report.