Plan to halve dividends in 2026, to save €3bn by 2030 to invest in modernisation, converged nets, expanding its B2B base, simplifying operations and better CX
Telefónica presented its five-year strategic plan, Transform & Grow, at the operator’s Capital Markets Day, as promised by Marc Murtra (pictured), Telefónica Group’s CEO and chair. The company said its plan would position “Telefónica as a world-class European telco with profitable scale”. Shares fell almost 11% on the news.
The approach might not be popular in the short term, but it is grasping the nettle. As T7 Trading noted, “Telefonica’s leverage problem looms large. Despite cutting its debt nearly in half over the past ten years [as of 30 September, the group’s net debt was €28.2 billion]. it remains one of Europe’s most indebted carriers, sitting at the lowest investment-grade rating from major credit agencies.”
The strategy will run from 2026 to 2030. Murtra was appointed abruptly in January by the board, led by the Spanish government which has a 10% stake in the group.
Murtra’s emphasis is on investment in core technology and to save €2.3 billion in 2028 and €3 billion by 2030. This will be funded in part by halving dividends in 2026. Telefonica confirmed its 2025 dividend is €0.30 per share, which will be cut to €0.15 next year, paid in June 2027.
Savings are to be invested in upgrading equipment, converged networks combining mobile and broadband, and expanding its B2B and public sector business and portfolio.
All about scale
The strategy’s other key goals are laudable but hardly revolutionary: better customer experience, to simplify its operating model and develop talent. The plan also commits to Europe’s strategic autonomy, taking the opportunity to point out how a lack of consolidation – prevented by wrong-headed regulation is the sub-text – had led to “inefficient investment compared with the United States and China”.
Murta also said he is keen to grow by acquisition, but did not announce any prospective deals or targets.
He is continuing with elements of the strategy laid out by his predecessor, José María Álvarez-Pallete López, in November 2019 of doubling down on the group’s four core markets; Germany, Spain, the UK and Brazil, and exiting other Latin American markets. Murta has executed the latter at speed.
Earnings call
Telefonica’s revenue between January and September fell 2.8%, due to unfavourable currency fluctuations, to €26.97 billion. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) dropped to €8.938 billion, a 3.6% fall compared to the first nine months of 2024. The sales of subsidiaries in Argentina, Peru, Ecuador and Uruguay also racked up losses. Without losses from these transaction in LatAm, Telefónica would have posted a net profit of €828 million in the first nine months of the year – 45.9% less than in the same period last year.
COO Emilio Gayo said fibre and 5G customer additions were big positives and that “operational momentum” meant it would meet its full year guidance.
