Summary: Telefonica S.A.

The adjusted debt-to-EBITDA ratio climbed above the 3.3x maximum guideline for the ratings in 2018, as the group's EBITDA was held back by heavy content costs, currency translation impacts in Latin America, and restructuring costs. These pressures on reported EBITDA have offset the benefits of a reduction in absolute debt. The slow pace of reduction in underlying leverage makes the group's credit measures susceptible to external factors like currency swings and to operating setbacks or one-off costs such as for spectrum. However, we expect that management's continuous commitment to cutting debt will bear fruit this year. The combination of positive DCF and cash proceeds from recent asset disposals and a one-time tax refund should translate into steadily improving metrics in

...The adjusted debt-to-EBITDA ratio climbed above the 3.3x maximum guideline for the ratings in 2018, as the group's EBITDA was held back by heavy content costs, currency translation impacts in Latin America, and restructuring costs. These pressures on reported EBITDA have offset the benefits of a reduction in absolute debt. The slow pace of reduction in underlying leverage makes the group's credit measures susceptible to external factors like currency swings and to operating setbacks or one-off costs such as for spectrum. However, we expect that management's continuous commitment to cutting debt will bear fruit this year. The combination of positive DCF and cash proceeds from recent asset disposals and a one-time tax refund should translate into steadily improving metrics in 2019, with some further organic deleveraging capability thereafter....

Summary