Creditreform Rating has confirmed the unsolicited corporate issuer rating of Telefónica S.A. (Telefónica) at BBB- and changed the outlook from stable to negative. This change is based on a substantial decline in the Company´s 2019 results and, in H1 2020, in revenues as well as in results, predominantly due to negative currency effects in Latin America, non-recurring effects, and in H1 2020 as a result of social and macroeconomic distortion due to the COVID-19 pandemic, adversely affecting the rating relevant key figures. In addition, the further economic consequences are still characterized by uncertainty, which could dampen the business climate, especially in Latin America, causing further devaluation of domestic currencies against the euro. Based on the Company´s strong market and leading position, especially in Europe, its scalable and sustainable business model, characterized by growth options especially in digitalization, and fiberglass, good access to capital markets combined with solid liquidity, we confirm the rating of Telefónica at BBB-.
Creditreform Rating has carried out an unsolicited corporate issuer rating of Telefónica, S.A. The rating has been set to BBB- with stable outlook. The current rating of BBB- attests a highly satisfactory level of creditworthiness to Telefónica, S.A., which represents a low to medium default risk. The rating result of Telefónica, S.A. is based on its high degree of diversification, and its solid and leading position in many of its key markets. Despite unfavorable market conditions, adversely affecting revenues and EBITDA in 2018, the Company has improved its net profit, and has continued to reduce debt as planned, which is noticeable in the relevant key figures. The investments of Telefónica in the past years and its focus on digitalization has brought about diversification and lead to more efficiency, increasing its competitiveness and achieving organic growth. In the first nine month of this year, the Company recorded for the first time an increase in revenues since a long period, despite disinvestments in Central America and impairing depreciation of the Brazilian real and the Argentine peso against the EURO. At the end of November, the Company has presented a new strategic plan. With strategic measures the Company in particular has planned to generate more than EUR 2 billion of additional revenues and an increase of 2 percentage points in operating cashflow margin by 2022. Nevertheless, It remains to be observed if the Company will be able to continue its deleveraging path in the short and medium term due to the high investment requirements which we expect for example in line with 5G investments.
Creditreform Rating has carried out an unsolicited rating of Telefónica S.A. The rating has been set to BBB- with stable outlook.