Telefonica Affirmed At 'BBB-/A-3' On New Financial Policy And Sound Credit Metrics; Outlook Stable

We consider Telefonica's financial policy and capital allocation framework, unveiled in late 2023, offer considerably higher visibility to the group's credit metrics and confirm its commitment to reducing leverage over the next three years. We now anticipate the group will post consistent top-line and EBITDA growth and maintain S&P Global Ratings-adjusted leverage (excluding the U.K.) well below our 4x downside trigger over the same period, and we also anticipate solid free operating cash flow (FOCF) generation with FOCF to debt growing toward 13% by 2026. We therefore affirmed our 'BBB-' long-term and 'A-3' short-term issuer credit ratings on Telefonica S.A. The stable outlook on the long-term rating reflects our expectation that Telefonica will continue to prioritize a moderate reduction in

...May 28, 2024 - We consider Telefonica's financial policy and capital allocation framework, unveiled in late 2023, offer considerably higher visibility to the group's credit metrics and confirm its commitment to reducing leverage over the next three years. - We now anticipate the group will post consistent top-line and EBITDA growth and maintain S&P Global Ratings-adjusted leverage (excluding the U.K.) well below our 4x downside trigger over the same period, and we also anticipate solid free operating cash flow (FOCF) generation with FOCF to debt growing toward 13% by 2026. - We therefore affirmed our '###-' long-term and 'A-3' short-term issuer credit ratings on Telefonica S.A. - The stable outlook on the long-term rating reflects our expectation that Telefonica will continue to prioritize a moderate reduction in leverage through earnings and FOCF growth, such that it will show debt to EBITDA comfortably below 4x and maintain FOCF to debt of well above 8%. MADRID (S&P Global Ratings) May...

Ratings Action