80% of the company’s debt is at a fixed rate


Telefónica has managed to avoid the impact of the rise in interest rates in several of its geographies, thanks to the positive impact of a return of 526 million euros in interest before taxes by the Spanish Treasury.

Last year the operator won a long dispute over its 2009 and 2010 corporate taxes for which the Treasury was ordered to return 1,361 million euros to the firm.

In this way, the impact of the interest received by this court ruling has made it possible to reduce its interest payments by 18% in 2022 compared to 2021, up to a total of 1,236 million euros, in full escalation of rates worldwide.

Without this extraordinary income, payments would have increased by 16% year-on-year, mainly due to the increase in debt and interest rates and appreciation of the Brazilian real, partially offset by the reduction in debt in European currencies.

Precisely, the exposure to the Brazilian real caused Telefónica to already register an increase in interest payments in the second quarter, almost two months before the European Central Bank (ECB) raised rates.

The Central Bank of Brazil began to raise rates rapidly in October 2021 and has been holding interest rates of 13.75% since August.

All in all, Telefónica has more than 80% of its debt linked to fixed rates, which shields the company from a more aggressive monetary policy by central banks.

The company has calculated that a rise of 100 basis points means approximately 34 million additional euros in disbursement for the operator, which ended the year with an interest cost of 3.76%.

The company has also reduced its leverage with respect to its adjusted operating result (adjusted Oibda) to the current 2.51 times adjusted Oibda, with a net debt of 26,400 million euros.

The firm has been very active when it comes to managing its liabilities with various repurchases of hybrids to replace them with others with a ‘green’ character. Telefónica already has 17,000 million euros in financing of these characteristics and hopes that it represents 25% of the group’s total.