Telefonica, S.A. Q2 2026 Earnings Recap

Telefónica’s shares dropped 3.3% following the earnings release, primarily due to signaling a cautious revenue outlook driven by weakness in handset sales, particularly in Germany, which overshadowed margin and cash flow improvements.

Key Takeaways

• Group revenue growth expected at the low end of prior guidance, citing handset weakness mainly in Germany as the key drag.
• Adjusted EBITDA guidance maintained, but expected toward the high end due to solid performance in Spain and Brazil.
• Adjusted operating cash flow after leases guidance upgraded from over 2% to over 3%, supported by improved leverage and cost efficiencies.
• Free cash flow reached EUR 611 million in the quarter, up EUR 278 million sequentially, with acceleration expected in the second half.
• Customer metrics positive in Spain and Brazil, with historical low churn rates and steady B2B revenue growth, but softness in handset sales tempered enthusiasm.