| | | |
| | | |
Leases included in \"Other expenses\"(1) | | | |
| | | |
Taxes other than income tax | | | |
Change in trade provisions | | | |
Losses on disposal of fixed assets and changes in provisions for fixed assets | | | |
Goodwill impairment (Note 7) | | | |
| | | |
| | | |
results and cash flows for the year.
In 2018 Argentina became a hyperinflationary economy. In
order to restate its financial statements, the Company
uses the series of indices defined by resolution JG No.
539/18 issued by the Federaci\u00f3n Argentina de Consejos
Profesionales de Ciencias Econ\u00f3micas (FACPCE), based
on the National Consumer Price Index (IPC) published by
the Instituto Nacional de Estad\u00edstica y Censos (INDEC) of
the Argentine Republic and the Wholesale Internal Price
Index (IPIM) published by FACPCE. The cumulative index
at December 31, 2022, 2021 and 2020 is 1,134.6%, 582.5%
and 385.9%, respectively, while on an annual basis the
index for 2022 is 95% (51% and 36% in 2021 and 2020,
respectively).
The exchange rate used to translate inflation-adjusted
items denominated in Argentine pesos in the 2022
financial statements is the closing exchange rate as of
December 31, 2022 which was 189.08 Argentine pesos
per euro (116.37 and 103.23 Argentine pesos per euro at
December\u00a031, 2021 and 2020, respectively).
The Group includes in a single line item (\"Translation
Differences\") all the equity effects derived from
hyperinflation. This is as follows: (a) the restatement for
inflation of the financial statements of the Group
companies operating in hyperinflationary economies, and
(b) the effects of translating their respective financial
statements into euros using the exchange rate at the end
of the period.
b) Translation methodology
The income statements and statements of cash flows of
the Telef\u00f3nica Group\u2019s foreign subsidiaries (except
Venezuela and Argentina) were translated into euros at
the average exchange rates for the year, as a rate that
approximates the exchange rates at the dates of the
transactions.
c) Goodwill
After initial recognition, goodwill is carried at cost, less any
accumulated impairment losses. Goodwill is recognized
as an asset denominated in the currency of the company
acquired and is tested for impairment annually at the
least, or more frequently, if there are certain events or
changes indicating the possibility that the carrying
amount may not be fully recoverable. The potential
impairment loss is determined by assessing the
recoverable amount of the cash generating unit (or group
of cash generating units) to which the goodwill is
allocated from the acquisition date.
d) Intangible assets
Intangible assets are carried at acquisition or production
cost, less any accumulated amortization or any
accumulated impairment losses.
Intangible assets are amortized on a straight-line basis
according to the following:
\u2022Licenses granted to the Telef\u00f3nica Group by various
public authorities to provide telecommunications
services and the value allocated to licenses held by
certain companies at the time they were included in the
Telef\u00f3nica Group (\u201cService concession arrangements
and licenses\u201d) are amortized on a straight-line basis
over the duration of related licenses from the moment
commercial operation begins.
\u2022The allocation of acquisition costs attributable to
customers acquired in business combinations, as well
as the acquisition value of these types of assets in a
third-party transaction for consideration (Customer
base) are amortized on a straight-line basis over the
estimated period of the customer relationship. The term
length is between 4 and 14 years, based on the
customer segment (residential, business, etc.) and the
business model (prepaid, postpaid, etc.).
\u2022Software is amortized on a straight-line basis over its
useful life, generally estimated to be between two and
five years.
e) Property, plant and equipment
Property, plant and equipment is carried at cost less any
accumulated depreciation and any accumulated
impairment in value.
Cost includes, among others, direct labor used in
installation and the allocable portion of the indirect costs
required for the related asset. The latter two items are
recorded as revenue under the concept Own work
capitalized of the line item Other income.
Interest and other financial expenses incurred and
directly attributable to the acquisition or construction of
qualifying assets are capitalized. Qualifying assets for the
Telef\u00f3nica Group are those assets that require a period of
at least 18 months to bring the assets to the condition
necessary for their intended use or sale.
The Group\u2019s subsidiaries depreciate their property, plant
and equipment, from the time they can be placed in
service, amortizing the cost of the assets, net of their
residual values on a straight-line basis over the assets\u2019
estimated useful lives, which are calculated in
accordance with technical studies that are revised
periodically in light of technological advances and the
rate of dismantling, as follows:
| |
| Years of estimated useful life |
| |
| |
Furniture, tools and other items | |
f) Impairment of non-current assets
Non-current assets, including goodwill, intangible assets
and investments in associates and joint ventures, are
assessed at each reporting date for indicators of
impairment. Whenever such indicators exist, or in the
case of assets which are subject to an annual impairment
test, the recoverable amount is estimated. An asset\u2019s
recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the
estimated future post-tax cash flows deriving from the
use of the asset or its cash generating unit, as applicable,
are discounted to their present value using a post-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the
asset, provided that the result obtained is the same that
would be obtained by discounting pre-tax cash flows at a
pre-tax discount rate.
The Group bases the calculation of impairment on the
approved business plans of the various cash generating
units to which the assets are allocated. The projected
cash flows, based on the approved strategic business
plans, cover a period of five years. Starting with the sixth
year, an expected constant growth rate is applied.
g) Lease agreements
The determination of whether an arrangement is, or
contains a lease is based on the substance of the
agreement and requires an assessment of whether the
fulfillment of the arrangement is dependent on the use of
a specific asset and the agreement conveys a right to the
use of the asset.
At the inception date of the lease (i.e. the date when the
underlying asset is available for use), a lessee recognizes
a right of use asset that represents the right to use the
underlying asset over the term of the lease, and a lease
liability for the present value of the lease payments
payable over the lease term \u2013 discounted using the
incremental borrowing rate at the start date of the lease.
Rights of use assets are measured at cost, less
accumulated depreciation and impairment losses, and are
adjusted for any remeasurement of lease liabilities. The
cost of rights of use assets includes the amount of initial
direct costs incurred and lease payments made before
the commencement date less incentives received. Right-
of-use assets are depreciated on a straight-line basis over
the shorter of the estimated useful life of the underlying
asset and the lease term.
Lease payments include fixed payments (including in-
substance fixed payments) less any lease incentive
receivable, variable lease payments that depend on an
index or rate, and amounts expected to be paid as
residual value guarantees. Similarly, the measurement of
the lease liability includes the exercise price of a purchase
option, if the lessee is reasonably certain to exercise that
option, and payments of penalties for early termination, if
the lease term reflects the lessee exercising such
cancellation option. After the commencement date, the
amount of the lease liabilities is increased to reflect the
accrual of interest and reduced for the payments made. In
addition to this, the carrying amount of the lease liability is
remeasured in certain cases, such as changes in the lease
term, changes in future lease payments resulting from a
change in an index or rate used to determine those
payments. The amount of such remeasurement is
generally recognized against an adjustment to the right-
of-use asset.
The Group uses the \"low value\" asset lease recognition
exemption for office equipment and the short-term lease
recognition exemption for all leases with a term of 12
months or less. Therefore, lease payments in such cases
are recognized as an expense on a straight-line basis over
the lease term.
The Group recognizes non-lease components separately
from lease components for those classes of assets in
which non-lease components are significant with respect
to the total value of the arrangement.
The Group determines the lease term as the non-
cancellable term of the contract, together with any period
covered by an extension (or termination) option whose
exercise is discretionary for the Group, if there is
reasonable certainty that it will be exercised (or it will not
be exercised). In its assessment, the Group considers all
available information by asset class in the industry and
evaluates all relevant factors (technology, regulation,
competition, business model) that create an economic
incentive to exercise or not a renewal/cancellation option.
Notably, the Group takes into consideration the time
horizon of the strategic planning of its operations. After
the commencement date, the Group reassesses the lease
term if there is a significant event or change in
circumstances that is within its control that may affect its
ability to exercise (or not to exercise) an option to extend
or terminate (for example, a change in business strategy).
Where the Group acts as a lessor, leases are classified
between operating and finance leases. Leases in which
the lessor retains a significant portion of the risks and
rewards of ownership of the leased asset are treated as
operating leases. Otherwise, the lease is a finance lease.
h) Investment in associates and joint
arrangements
The Group assesses whether it has significant influence
not only on the basis of its ownership percentage but also
on the existence of qualitative factors such as
representation on the board of directors of the investee,
its participation in decision-making processes,
interchange of managerial personnel and access to
technical information.
The Group assesses rights and obligations agreed to by
the parties to a joint arrangement and, when relevant,
other facts and circumstances in order to determine
whether the joint arrangement in which it is involved is a
joint venture or a joint operation.
Upon the sale or contribution of a controlled business to
an associate or joint venture, the Group measures and
recognizes any retained interest at its fair value. Any
difference between the carrying amount of the business
contributed and the fair value of the retained investment
and the consideration received from disposal is
recognized in full in profit or loss.
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.
Derivative financial instruments and hedge
accounting
The accounting treatment of any gain or loss resulting
from changes in the fair value of a derivative depends on
whether the derivative in question meets all the criteria
for hedge accounting and, if appropriate, on the nature of
the hedge.
Changes in fair value of derivatives that qualify as fair
value hedging instruments are recognized in the income
statement, together with changes in the fair value of the
hedged asset or liability attributable to the risk being
hedged.
Changes in the fair value of derivatives that qualify and
have been designated as cash flow hedges, which are
highly effective, are recognized in equity. The ineffective
portion is recognized immediately in the income
statement. Fair value changes recognized in equity arising
from hedges that relate to firm commitments or forecast
transactions that result in the recognition of non-financial
assets or liabilities are included in the initial carrying
amount of those assets or liabilities. Otherwise, changes
in fair value previously recognized in equity are
recognized in the income statement in the period in which
the hedged transaction affects profit or loss.
An instrument designated to hedge foreign currency
exposure from a net investment in a foreign operation is
accounted for in a similar manner to cash flow hedges.
When the Group chooses not to apply hedge accounting
criteria, gains or losses resulting from changes in the fair
value of derivatives are taken directly to the income
statement. In this respect, transactions used to reduce
the exchange rate risk of income contributed by foreign
subsidiaries are not treated as hedging transactions.
j) Inventories
Materials stored for use in investment projects and
inventories for consumption and replacement are valued
at the lower of weighted average cost and net realizable
value.
Inventories include audio-visual rights which will
generally be consumed in a period of less than twelve
months, and advanced payments to suppliers for future
rights, as well as own content whose production cycle will
in no case exceed thirty-six months.
The cost of film, documentary, short film and series rights
acquired from third parties is charged to the income
statement on a straight-line basis from the time of first
broadcasting or release until the completion of the rights.
Broadcasting rights to football and motor sports events,
including their inherent production costs, are charged to
the income statement on a straight-line basis over twelve
months from the start of the season, while rights to other
premium sports are charged over the period of the
competition. All other sports rights are recognized in the
income statement upon first broadcast.
In-house produced programs and series and program
titles are charged at the time of their broadcast or up to
thirty-six months from the date of release, depending on
their nature and broadcasting strategy. The cost of in-
house productions that the Group expects to recover
through sale to third parties is recognized as an intangible
asset.
The cost of broadcasting rights that have expired or
whose recovery value is estimated to be lower than the
acquisition cost is recognized directly as an expense.
k) Pensions and other employee
obligations
Provisions required to cover the accrued liability for
defined benefit pension plans are determined using the
projected unit credit actuarial valuation method. The
calculation is based on demographic and financial
assumptions determined at a country level, and in
consideration of the macroeconomic environment. The
discount rates are determined based on high quality
market yield curves. Plan assets are measured at fair
value.
Provisions for post-employment benefits (e.g. early
retirement or other) are calculated individually based on
the terms agreed with the employees. In some cases,
these may require actuarial valuations based on both
demographic and financial assumptions.
l) Revenues and expenses
The Telef\u00f3nica Group revenues are derived principally
from providing the following telecommunications
services: traffic, connection fees, regular (normally
monthly) network usage fees, interconnection, network
and equipment leasing, handset sales and other digital
services such as Pay TV and value-added services or
maintenance. Products and services may be sold
separately or bundled in promotional packages.
Revenues from calls carried on Telef\u00f3nica\u2019s networks
(traffic) entail an initial call establishment fee plus a
variable call rate, based on call length, distance and type
of service. Both fixed and wireless traffic is recognized as
revenue as service is provided. For prepaid calls, the
amount of unused traffic generates deferred revenues
presented in Contractual liabilities on the statement of
financial position.
Revenues from traffic sales and services at a fixed rate
over a specified period of time (flat rate) are recognized
on a straight-line basis over the term covered by the rate
paid by the customer.
Installation fees are taken to the income statement on a
straight-line basis over the related period. Equipment
leases and other services are taken to the income
statement as they are consumed.
Interconnection revenues from fixed-wireless and
wireless-fixed calls and other customer services are
recognized in the period in which the calls are made.
Revenues from handset and equipment sales are
recognized once the sale is considered complete, i.e.,
generally when delivered to the end customer.
When the Group is in an intermediary position between a
supplier/vendor and an end customer, it must determine if
it is supplying the product or service as the principal in the
transaction or if it is acting as an agent on behalf of the
supplier (manufacturer, wholesaler). The distinction
determines who controls the goods or services being
provided and who has the primary obligation to satisfy the
performance obligation. This assessment affects the
timing and amount of revenue recognized in the financial
statements, either on a gross basis as the principal or on a
net basis as the agent, representing the margin earned by
the Group for arranging the transaction between the
principal and the customer. This is particularly relevant for
the Group in connection with digital services such as
streaming TV content and cloud-based software.
For bundled packages that include multiple elements sold
in the fixed, wireless, Internet and television businesses it
is determined whether it is necessary to identify the
separate performance obligations and apply the
corresponding revenue recognition policy to each one.
Total package revenues are allocated among the
identified performance obligations based on their
respective standalone selling prices.
As connection or initial activation fees, or upfront non-
refundable fees, are not separately identifiable
performance obligations in these types of packages, any
consideration received from the customer for these items
is allocated to the remaining elements.
When the customer has a right of return, the agreed
consideration is considered variable. The Group estimates
the amount of variable consideration to which it is entitled
using the expected value method (probability-weighted
possible amounts), considering all historical, current and
forecast information that is reasonably available, and only
to the extent that it determines that it is highly probable
that a significant reversal in the amount of cumulative
revenue recognized will not occur.
Expenses relating to customer contracts (mainly,
commissions payable to dealers for customer
acquisitions) are recognized as an asset to the extent that
they are incremental and are expected to be recovered.
Subsequently, these costs are amortized over the same
term as the revenues associated with such contract are
recognized, unless the expected amortization period is
one year or less, in which case they are expensed as
incurred.
As part of our strategy, the Group has increased its use of
renewable energy through power purchase agreements
(PPAs) to purchase energy from sustainable sources,
such as wind and solar. These contracts often have a long
term and provide the Group with a mechanism to ensure
the supply of green energy at fixed prices. When these
arrangements involve physical delivery of electricity and
are entered into for the purpose of receiving the energy
for the entity\u2019s expected purchase, sale or usage
requirements (i.e. volume agreed does not exceed actual
and expected power needs), the contract is for \u201cown use\u201d
and is generally accounted for as power purchases or
sales when the underlying transactions take place.
m) Non-current assets held for sale
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at
the lower of their carrying amount and fair value less
costs to sell and are presented separately in the
statement of financial position as \u201cNon-current assets and
disposal groups held for sale\u201d and \u201cLiabilities associated
with non-current assets and disposal groups held for
sale\u201d. Once classified as held for sale property, plant and
equipment and intangible assets (including right-of-use
assets) are no longer depreciated or amortized.
The criteria for held for sale classification is regarded as
met only when the Group determines the sale to be highly
probable: management is committed to a decision to sell
and all actions required to complete the sale indicate that
it is unlikely that significant changes to the sale will be
made or that the decision will be withdrawn. In addition,
the asset or disposal group is available for immediate sale
in its present condition (subject only to terms that are
usual and customary for such transactions) and the sale is
expected to be completed within one year from the date
of the classification.
n) Use of estimates
The key assumptions concerning the future and other
relevant sources of uncertainty in estimates at the
reporting date that could have a significant impact on the
consolidated financial statements within the next financial
year are discussed below.
A significant change in the facts and circumstances on
which these estimates and related judgments are based
could have a material impact on the Group\u2019s results and
financial position. Accordingly, sensitivity analysis are
disclosed for the most relevant situations (see Notes 7
and 24).
Non-current assets and goodwill
The accounting treatment of investments in non-current
assets such as property, plant and equipment, intangible
assets and interests in associates and joint ventures,
entails the use of estimates to determine the useful life for
depreciation and amortization purposes and to assess fair
value at their acquisition dates for assets acquired in
business combinations.
Determining useful life requires making estimates in
connection with future technological developments and
alternative uses for assets. There is a significant element
of judgment involved in making technological
development assumptions, since the timing and scope of
future technological advances are difficult to predict.
Also, upon the sale or contribution of a controlled
business to an associate or joint venture, the Group
measures and recognizes any retained interest at its fair
value. The fair value assigned to the retained investment
is determined on the basis of its business plan, including
significant judgments when considering significant
assumptions such as long-term OIBDA margin, long-term
capital expenditure ratio, discount rate and perpetuity
growth rate which would be significantly affected by the
future trends in the economic, competitive, regulatory
and technological environment.
The decision to recognize an impairment loss involves
developing estimates that include, among others, an
analysis of the causes of the potential impairment, as well
as its timing and expected amount. Furthermore,
additional factors, such as technological obsolescence,
the suspension of certain services and other
circumstantial changes, which highlight the need to
evaluate a possible impairment, are taken into account.
The Telef\u00f3nica Group evaluates its cash-generating units\u2019
performance on a regular basis to identify potential
impairments of goodwill and other non-current assets.
Determining the recoverable amount of the cash-
generating units also entails the use of assumptions and
estimates and requires a significant element of judgment.
Deferred income taxes
The Group assesses the recoverability of deferred tax
assets based on estimates of future earnings, and of all
the options available to achieve an outcome, it considers
the most efficient one in tax terms within the legal
framework the Group is subject to. Such recoverability
ultimately depends on the Group\u2019s ability to generate
taxable earnings over the period for which the deferred
tax assets remain deductible. This analysis is based on the
estimated schedule for reversing deferred tax liabilities, as
well as estimates of taxable earnings, which are sourced
from internal projections that are continuously updated to
reflect the latest trends.
The recognition of tax assets and liabilities depends on a
series of factors, including estimates as to the timing and
realization of deferred tax assets and the projected tax
payment schedule. Actual Group company income tax
receipts and payments could differ from the estimates
made by the Group as a result of changes in tax
legislation, the outcome of underway tax proceedings or
unforeseen future transactions that could affect tax
balances.
Provisions
Provisions are recorded when, at the end of the period,
we have a present obligation as a result of past events,
whose settlement requires an outflow of resources that is
considered probable and can be measured reliably. This
obligation may be legal or constructive, arising from, but
not limited to, regulation, contracts, common practice or
public commitments, which have created a valid
expectation for third parties that we will assume certain
responsibilities.\u00a0 The amount recorded is the best
estimation performed by the management in respect of
the expenditure that will be required to settle the
obligations, considering all the information available at the
closing date, including the advice of external experts,
such as legal advisors or consultants.
Should we be unable to reliably measure the obligation,
no provision would be recorded and information would
then be presented in the notes to the Consolidated
Financial Statements.
Because of the inherent uncertainties in this estimation,
actual expenditures may be different from the originally
estimated amount recognized.
Revenue recognition
Bundled offers
Bundled offers that combine different elements are
assessed to determine whether it is necessary to separate
the different identifiable components and apply the
corresponding revenue recognition policy to each
element. Total package revenues are allocated among
the identified elements based on their respective
standalone selling prices.
Determining standalone selling prices for each identified
element requires estimates that are complex due to the
nature of the business.
A change in estimates of standalone selling prices could
affect the apportionment of revenue among the elements
and, as a result, the timing of recognition of revenues.
Leases
Accounting for rights and obligations as a lessee under a
lease contract requires the use of estimations to
determine the lease term in contracts that include
extension options or early termination options.
Determining the lease term involves making estimates
over the time horizon of the Group's strategic planning
process with respect to relevant factors such as expected
technological progress, possible regulatory
developments, market and competition trends or changes
in the business model. The assumptions regarding these
variables involve a significant degree of judgment to the
extent that the timing and nature of future changes are
difficult to anticipate.
Due to the uncertainties inherent to these estimates,
changes in the assumptions made in respect of uncertain
matters when determining the lease term of a lease
contract may have an impact on the amounts of the right
of use assets and lease liabilities recognized on the basis
of the estimates made by the Group.
o) New IFRS and interpretations of the
International Financial Reporting
Interpretations Committee (IFRIC)
The accounting policies applied in the preparation of the
consolidated financial statements for the year ended
December\u00a031, 2022 are consistent with those used in the
preparation of the Group\u2019s consolidated annual financial
statements for the year ended December\u00a031, 2021, with
the exception of the following new standards and
amendments to existing standards issued by the IASB
and adopted by the European Union for application in
Europe, which are mandatory for annual periods
beginning on or after January\u00a01, 2022.
The application of these amendments for the current
reporting period did not have a significant impact on the
consolidated financial statements of the Group. The
Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting
these amendments.
Amendments to IAS 37: Costs of fulfilling a contract
The amendments to IAS 37 clarify that when assessing
whether a contract is onerous, an entity needs to include
all unavoidable costs that relate directly to a contract,
including both incremental costs and an allocation of
costs directly related to fulfilling contract activities. The
Group applied the amendments to the contracts for
which it had not fulfilled all of its obligations at the
beginning of the reporting period.
Amendments to IFRS 3: Reference to
Conceptual Framework
Minor amendments were made to update the references
to the Conceptual Framework for Financial Reporting and
to add an exception to the recognition principle in IFRS 3
Business Combinations regarding liabilities and
contingent liabilities within the scope of IAS 37 Provisions,
Contingent Liabilities and Contingent Assets and
Interpretation 21 Levies. The exception requires entities to
apply the criteria in IAS 37 or IFRIC 21, respectively,
instead of the Conceptual Framework, to determine
whether a present obligation exists at the acquisition
date. The amendments to IFRS 3 also clarify that
contingent assets do not qualify for recognition at the
acquisition date.
Amendments to IAS 16: Proceeds Before
Intended Use
The amendment prohibits entities from deducting from
the cost of an item of property, plant and equipment, any
proceeds of the sale of items produced while the entity is
preparing the asset for its intended use (including while
assessing technical and physical performance of the
asset). Instead, an entity recognizes the proceeds from
selling such items, and the costs of producing those
items, in profit or loss.
Annual Improvements to IFRS Standards
2018-2020
As part of the annual improvements finalized in May 2020,
IFRS 9 Financial Instruments was amended to clarify
which fees should an entity include when assessing
whether the terms of a new or modified financial liability
are substantially different from the terms of the original
financial liability. These fees include only those paid or
received between the borrower and the lender, including
fees paid or received by either the borrower or lender on
the other\u2019s behalf.
New standards and amendments to standards
issued but not effective as of December\u00a031,
2022.
At the date of preparation of the consolidated financial
statements, the following IFRS and amendments to
existing standards had been published, but their
application is not mandatory:
| | |
| Mandatory application: annual periods beginning on or after |
IFRS 17 (and subsequent amendments) | | |
| Disclosure of Accounting Policies | |
| Definition of Accounting Estimates | |
| Deferred Tax related to Assets and Liabilities Arising from a Single Transaction | |
| Classification of Liabilities as Current or Non-current | |
| Non-current Liabilities with Covenants | |
| Lease Liability in a Sale and Leaseback | |
Based on the assessment performed to date, the Group
estimates that the adoption of these new
pronouncements will not have a significant impact on the
consolidated financial statements in the initial period of
application. In particular, the Group has made further
progress in its assessment to identify contracts that meet
the definition of insurance contracts and are therefore
within the scope of IFRS 17 Insurance Contracts, but the
Group estimates that the future application of the new
requirements will not have a significant impact on
consolidated equity upon first-time adoption.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxOTY_dbb0993e-8630-47ff-9e32-b257b5127146": {
"value": "
As stated in Note 2, the Group\u2019s consolidated financial
statements have been prepared in accordance with IFRSs
and interpretations issued by the International
Accounting Standards Board (IASB) and the IFRS
Interpretations Committee (IFRIC) as endorsed by the
European Commission for use in the European Union
(IFRSs - EU).
",
"dimensions": {
"concept": "ifrs-full:StatementOfIFRSCompliance",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDkz_42af070b-f979-4948-943a-ed50bb5c397e": {
"value": "
a) Hyperinflationary economies
Venezuela has been considered a hyperinflationary
economy since 2009. In light of the worsening of the
economic and political crisis in Venezuela and in the
absence of official rates that are representative of the
situation in the country, the Group maintains as a policy
for the purposes of the consolidated financial statements
the estimation of an exchange rate, known as synthetic
exchange rate, that matches the progression of inflation
and reflects the economic and financial position of the
Group\u2019s Venezuelan operations in a more accurate way.
The synthetic exchange rate is calculated considering the
inflation rates that are published. On an annual basis,
these rates are 174.3%, 686.4% and 2,959.8% for 2022,
2021 and 2020, respectively.
The exchange rate used to translate inflation-adjusted
bolivar-denominated items in the consolidated financial
statements is the synthetic exchange rate as of the
closing date of each reporting period, amounting to 45.18
digital bolivars per U.S. dollar, 16.47 digital bolivars per U.S.
dollar and 2,094,405 bolivars per U.S. dollar as of
December\u00a031, 2022, 2021 and 2020, respectively. In turn,
the official reference exchange rate at December\u00a031, 2022
was 17.489 VED/USD (4.597 VED/USD and 1,107,199VES/
USD at December 31, 2021 and 2020, respectively).
The use of a synthetic exchange rate versus the official
reference exchange rate does not have a significant
impact given the contribution of Telef\u00f3nica Venezolana to
the consolidated financial position and to the Group's
results and cash flows for the year.
In 2018 Argentina became a hyperinflationary economy. In
order to restate its financial statements, the Company
uses the series of indices defined by resolution JG No.
539/18 issued by the Federaci\u00f3n Argentina de Consejos
Profesionales de Ciencias Econ\u00f3micas (FACPCE), based
on the National Consumer Price Index (IPC) published by
the Instituto Nacional de Estad\u00edstica y Censos (INDEC) of
the Argentine Republic and the Wholesale Internal Price
Index (IPIM) published by FACPCE. The cumulative index
at December 31, 2022, 2021 and 2020 is 1,134.6%, 582.5%
and 385.9%, respectively, while on an annual basis the
index for 2022 is 95% (51% and 36% in 2021 and 2020,
respectively).
The exchange rate used to translate inflation-adjusted
items denominated in Argentine pesos in the 2022
financial statements is the closing exchange rate as of
December 31, 2022 which was 189.08 Argentine pesos
per euro (116.37 and 103.23 Argentine pesos per euro at
December\u00a031, 2021 and 2020, respectively).
The Group includes in a single line item (\"Translation
Differences\") all the equity effects derived from
hyperinflation. This is as follows: (a) the restatement for
inflation of the financial statements of the Group
companies operating in hyperinflationary economies, and
(b) the effects of translating their respective financial
statements into euros using the exchange rate at the end
of the period.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk1_66f81a4f-a819-4c96-aa29-feb1f8f011b6": {
"value": "
b) Translation methodology
The income statements and statements of cash flows of
the Telef\u00f3nica Group\u2019s foreign subsidiaries (except
Venezuela and Argentina) were translated into euros at
the average exchange rates for the year, as a rate that
approximates the exchange rates at the dates of the
transactions.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk1_b05c2a6d-b6d8-4b7c-81af-d6f0876c7818": {
"value": "
b) Translation methodology
The income statements and statements of cash flows of
the Telef\u00f3nica Group\u2019s foreign subsidiaries (except
Venezuela and Argentina) were translated into euros at
the average exchange rates for the year, as a rate that
approximates the exchange rates at the dates of the
transactions.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NTA0_9652e565-65e1-49a9-b750-a7f7bb5b91bc": {
"value": "
c) Goodwill
After initial recognition, goodwill is carried at cost, less any
accumulated impairment losses. Goodwill is recognized
as an asset denominated in the currency of the company
acquired and is tested for impairment annually at the
least, or more frequently, if there are certain events or
changes indicating the possibility that the carrying
amount may not be fully recoverable. The potential
impairment loss is determined by assessing the
recoverable amount of the cash generating unit (or group
of cash generating units) to which the goodwill is
allocated from the acquisition date.
d) Intangible assets
Intangible assets are carried at acquisition or production
cost, less any accumulated amortization or any
accumulated impairment losses.
Intangible assets are amortized on a straight-line basis
according to the following:
\u2022Licenses granted to the Telef\u00f3nica Group by various
public authorities to provide telecommunications
services and the value allocated to licenses held by
certain companies at the time they were included in the
Telef\u00f3nica Group (\u201cService concession arrangements
and licenses\u201d) are amortized on a straight-line basis
over the duration of related licenses from the moment
commercial operation begins.
\u2022The allocation of acquisition costs attributable to
customers acquired in business combinations, as well
as the acquisition value of these types of assets in a
third-party transaction for consideration (Customer
base) are amortized on a straight-line basis over the
estimated period of the customer relationship. The term
length is between 4 and 14 years, based on the
customer segment (residential, business, etc.) and the
business model (prepaid, postpaid, etc.).
\u2022Software is amortized on a straight-line basis over its
useful life, generally estimated to be between two and
five years.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzE_ba93b5dd-b6e7-49f8-bf5f-7ece0de40132": {
"value": "
c) Goodwill
After initial recognition, goodwill is carried at cost, less any
accumulated impairment losses. Goodwill is recognized
as an asset denominated in the currency of the company
acquired and is tested for impairment annually at the
least, or more frequently, if there are certain events or
changes indicating the possibility that the carrying
amount may not be fully recoverable. The potential
impairment loss is determined by assessing the
recoverable amount of the cash generating unit (or group
of cash generating units) to which the goodwill is
allocated from the acquisition date.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzI_63ebe09b-e0a4-4c08-91b2-67606fa9c2d7": {
"value": "
d) Intangible assets
Intangible assets are carried at acquisition or production
cost, less any accumulated amortization or any
accumulated impairment losses.
Intangible assets are amortized on a straight-line basis
according to the following:
\u2022Licenses granted to the Telef\u00f3nica Group by various
public authorities to provide telecommunications
services and the value allocated to licenses held by
certain companies at the time they were included in the
Telef\u00f3nica Group (\u201cService concession arrangements
and licenses\u201d) are amortized on a straight-line basis
over the duration of related licenses from the moment
commercial operation begins.
\u2022The allocation of acquisition costs attributable to
customers acquired in business combinations, as well
as the acquisition value of these types of assets in a
third-party transaction for consideration (Customer
base) are amortized on a straight-line basis over the
estimated period of the customer relationship. The term
length is between 4 and 14 years, based on the
customer segment (residential, business, etc.) and the
business model (prepaid, postpaid, etc.).
\u2022Software is amortized on a straight-line basis over its
useful life, generally estimated to be between two and
five years.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTA_4cc67c11-da73-4c99-844d-ef2048883aef": {
"value": "
Intangible assets are amortized on a straight-line basis
according to the following:
\u2022Licenses granted to the Telef\u00f3nica Group by various
public authorities to provide telecommunications
services and the value allocated to licenses held by
certain companies at the time they were included in the
Telef\u00f3nica Group (\u201cService concession arrangements
and licenses\u201d) are amortized on a straight-line basis
over the duration of related licenses from the moment
commercial operation begins.
\u2022The allocation of acquisition costs attributable to
customers acquired in business combinations, as well
as the acquisition value of these types of assets in a
third-party transaction for consideration (Customer
base) are amortized on a straight-line basis over the
estimated period of the customer relationship. The term
length is between 4 and 14 years, based on the
customer segment (residential, business, etc.) and the
business model (prepaid, postpaid, etc.).
\u2022Software is amortized on a straight-line basis over its
useful life, generally estimated to be between two and
five years. The Group\u2019s subsidiaries depreciate their property, plant
and equipment, from the time they can be placed in
service, amortizing the cost of the assets, net of their
residual values on a straight-line basis over the assets\u2019
estimated useful lives, which are calculated in
accordance with technical studies that are revised
periodically in light of technological advances and the
rate of dismantling, as follows:
| |
| Years of estimated useful life |
| |
| |
Furniture, tools and other items | |
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NTAx_09405950-8af7-4d82-b913-9359843c7c95": {
"value": "
e) Property, plant and equipment
Property, plant and equipment is carried at cost less any
accumulated depreciation and any accumulated
impairment in value.
Cost includes, among others, direct labor used in
installation and the allocable portion of the indirect costs
required for the related asset. The latter two items are
recorded as revenue under the concept Own work
capitalized of the line item Other income.
Interest and other financial expenses incurred and
directly attributable to the acquisition or construction of
qualifying assets are capitalized. Qualifying assets for the
Telef\u00f3nica Group are those assets that require a period of
at least 18 months to bring the assets to the condition
necessary for their intended use or sale.
The Group\u2019s subsidiaries depreciate their property, plant
and equipment, from the time they can be placed in
service, amortizing the cost of the assets, net of their
residual values on a straight-line basis over the assets\u2019
estimated useful lives, which are calculated in
accordance with technical studies that are revised
periodically in light of technological advances and the
rate of dismantling, as follows:
| |
| Years of estimated useful life |
| |
| |
Furniture, tools and other items | |
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzM_3c15b5df-835e-4ae5-a3d6-0853e261aade": {
"value": "
e) Property, plant and equipment
Property, plant and equipment is carried at cost less any
accumulated depreciation and any accumulated
impairment in value.
Cost includes, among others, direct labor used in
installation and the allocable portion of the indirect costs
required for the related asset. The latter two items are
recorded as revenue under the concept Own work
capitalized of the line item Other income.
Interest and other financial expenses incurred and
directly attributable to the acquisition or construction of
qualifying assets are capitalized. Qualifying assets for the
Telef\u00f3nica Group are those assets that require a period of
at least 18 months to bring the assets to the condition
necessary for their intended use or sale.
The Group\u2019s subsidiaries depreciate their property, plant
and equipment, from the time they can be placed in
service, amortizing the cost of the assets, net of their
residual values on a straight-line basis over the assets\u2019
estimated useful lives, which are calculated in
accordance with technical studies that are revised
periodically in light of technological advances and the
rate of dismantling, as follows:
| |
| Years of estimated useful life |
| |
| |
Furniture, tools and other items | |
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNDk_847ff290-bf45-40df-8062-da9b53edb5f2": {
"value": "
e) Property, plant and equipment
Property, plant and equipment is carried at cost less any
accumulated depreciation and any accumulated
impairment in value.
Cost includes, among others, direct labor used in
installation and the allocable portion of the indirect costs
required for the related asset. The latter two items are
recorded as revenue under the concept Own work
capitalized of the line item Other income.
Interest and other financial expenses incurred and
directly attributable to the acquisition or construction of
qualifying assets are capitalized. Qualifying assets for the
Telef\u00f3nica Group are those assets that require a period of
at least 18 months to bring the assets to the condition
necessary for their intended use or sale.
The Group\u2019s subsidiaries depreciate their property, plant
and equipment, from the time they can be placed in
service, amortizing the cost of the assets, net of their
residual values on a straight-line basis over the assets\u2019
estimated useful lives, which are calculated in
accordance with technical studies that are revised
periodically in light of technological advances and the
rate of dismantling, as follows:
| |
| Years of estimated useful life |
| |
| |
Furniture, tools and other items | |
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzQ_6f5a128b-4de6-4de1-8dc1-8793dcf09daf": {
"value": "
f) Impairment of non-current assets
Non-current assets, including goodwill, intangible assets
and investments in associates and joint ventures, are
assessed at each reporting date for indicators of
impairment. Whenever such indicators exist, or in the
case of assets which are subject to an annual impairment
test, the recoverable amount is estimated. An asset\u2019s
recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the
estimated future post-tax cash flows deriving from the
use of the asset or its cash generating unit, as applicable,
are discounted to their present value using a post-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the
asset, provided that the result obtained is the same that
would be obtained by discounting pre-tax cash flows at a
pre-tax discount rate.
The Group bases the calculation of impairment on the
approved business plans of the various cash generating
units to which the assets are allocated. The projected
cash flows, based on the approved strategic business
plans, cover a period of five years. Starting with the sixth
year, an expected constant growth rate is applied.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzU_2171f421-d226-49b9-a1a7-4bc111013183": {
"value": "
g) Lease agreements
The determination of whether an arrangement is, or
contains a lease is based on the substance of the
agreement and requires an assessment of whether the
fulfillment of the arrangement is dependent on the use of
a specific asset and the agreement conveys a right to the
use of the asset.
At the inception date of the lease (i.e. the date when the
underlying asset is available for use), a lessee recognizes
a right of use asset that represents the right to use the
underlying asset over the term of the lease, and a lease
liability for the present value of the lease payments
payable over the lease term \u2013 discounted using the
incremental borrowing rate at the start date of the lease.
Rights of use assets are measured at cost, less
accumulated depreciation and impairment losses, and are
adjusted for any remeasurement of lease liabilities. The
cost of rights of use assets includes the amount of initial
direct costs incurred and lease payments made before
the commencement date less incentives received. Right-
of-use assets are depreciated on a straight-line basis over
the shorter of the estimated useful life of the underlying
asset and the lease term.
Lease payments include fixed payments (including in-
substance fixed payments) less any lease incentive
receivable, variable lease payments that depend on an
index or rate, and amounts expected to be paid as
residual value guarantees. Similarly, the measurement of
the lease liability includes the exercise price of a purchase
option, if the lessee is reasonably certain to exercise that
option, and payments of penalties for early termination, if
the lease term reflects the lessee exercising such
cancellation option. After the commencement date, the
amount of the lease liabilities is increased to reflect the
accrual of interest and reduced for the payments made. In
addition to this, the carrying amount of the lease liability is
remeasured in certain cases, such as changes in the lease
term, changes in future lease payments resulting from a
change in an index or rate used to determine those
payments. The amount of such remeasurement is
generally recognized against an adjustment to the right-
of-use asset.
The Group uses the \"low value\" asset lease recognition
exemption for office equipment and the short-term lease
recognition exemption for all leases with a term of 12
months or less. Therefore, lease payments in such cases
are recognized as an expense on a straight-line basis over
the lease term.
The Group recognizes non-lease components separately
from lease components for those classes of assets in
which non-lease components are significant with respect
to the total value of the arrangement.
The Group determines the lease term as the non-
cancellable term of the contract, together with any period
covered by an extension (or termination) option whose
exercise is discretionary for the Group, if there is
reasonable certainty that it will be exercised (or it will not
be exercised). In its assessment, the Group considers all
available information by asset class in the industry and
evaluates all relevant factors (technology, regulation,
competition, business model) that create an economic
incentive to exercise or not a renewal/cancellation option.
Notably, the Group takes into consideration the time
horizon of the strategic planning of its operations. After
the commencement date, the Group reassesses the lease
term if there is a significant event or change in
circumstances that is within its control that may affect its
ability to exercise (or not to exercise) an option to extend
or terminate (for example, a change in business strategy).
Where the Group acts as a lessor, leases are classified
between operating and finance leases. Leases in which
the lessor retains a significant portion of the risks and
rewards of ownership of the leased asset are treated as
operating leases. Otherwise, the lease is a finance lease.
Leases
Accounting for rights and obligations as a lessee under a
lease contract requires the use of estimations to
determine the lease term in contracts that include
extension options or early termination options.
Determining the lease term involves making estimates
over the time horizon of the Group's strategic planning
process with respect to relevant factors such as expected
technological progress, possible regulatory
developments, market and competition trends or changes
in the business model. The assumptions regarding these
variables involve a significant degree of judgment to the
extent that the timing and nature of future changes are
difficult to anticipate.
Due to the uncertainties inherent to these estimates,
changes in the assumptions made in respect of uncertain
matters when determining the lease term of a lease
contract may have an impact on the amounts of the right
of use assets and lease liabilities recognized on the basis
of the estimates made by the Group.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzY_072b978e-dbe4-49e6-9cf9-feae5bc652a5": {
"value": "
h) Investment in associates and joint
arrangements
The Group assesses whether it has significant influence
not only on the basis of its ownership percentage but also
on the existence of qualitative factors such as
representation on the board of directors of the investee,
its participation in decision-making processes,
interchange of managerial personnel and access to
technical information.
The Group assesses rights and obligations agreed to by
the parties to a joint arrangement and, when relevant,
other facts and circumstances in order to determine
whether the joint arrangement in which it is involved is a
joint venture or a joint operation.
Upon the sale or contribution of a controlled business to
an associate or joint venture, the Group measures and
recognizes any retained interest at its fair value. Any
difference between the carrying amount of the business
contributed and the fair value of the retained investment
and the consideration received from disposal is
recognized in full in profit or loss.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzY_204962e4-d05d-451d-add1-4ac4875a308d": {
"value": "
h) Investment in associates and joint
arrangements
The Group assesses whether it has significant influence
not only on the basis of its ownership percentage but also
on the existence of qualitative factors such as
representation on the board of directors of the investee,
its participation in decision-making processes,
interchange of managerial personnel and access to
technical information.
The Group assesses rights and obligations agreed to by
the parties to a joint arrangement and, when relevant,
other facts and circumstances in order to determine
whether the joint arrangement in which it is involved is a
joint venture or a joint operation.
Upon the sale or contribution of a controlled business to
an associate or joint venture, the Group measures and
recognizes any retained interest at its fair value. Any
difference between the carrying amount of the business
contributed and the fair value of the retained investment
and the consideration received from disposal is
recognized in full in profit or loss.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzY_cc7114cb-c188-4d41-998d-4b75057ab89f": {
"value": "
h) Investment in associates and joint
arrangements
The Group assesses whether it has significant influence
not only on the basis of its ownership percentage but also
on the existence of qualitative factors such as
representation on the board of directors of the investee,
its participation in decision-making processes,
interchange of managerial personnel and access to
technical information.
The Group assesses rights and obligations agreed to by
the parties to a joint arrangement and, when relevant,
other facts and circumstances in order to determine
whether the joint arrangement in which it is involved is a
joint venture or a joint operation.
Upon the sale or contribution of a controlled business to
an associate or joint venture, the Group measures and
recognizes any retained interest at its fair value. Any
difference between the carrying amount of the business
contributed and the fair value of the retained investment
and the consideration received from disposal is
recognized in full in profit or loss.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzY_dd348962-1238-4d90-ac20-2650bb3b280e": {
"value": "
h) Investment in associates and joint
arrangements
The Group assesses whether it has significant influence
not only on the basis of its ownership percentage but also
on the existence of qualitative factors such as
representation on the board of directors of the investee,
its participation in decision-making processes,
interchange of managerial personnel and access to
technical information.
The Group assesses rights and obligations agreed to by
the parties to a joint arrangement and, when relevant,
other facts and circumstances in order to determine
whether the joint arrangement in which it is involved is a
joint venture or a joint operation.
Upon the sale or contribution of a controlled business to
an associate or joint venture, the Group measures and
recognizes any retained interest at its fair value. Any
difference between the carrying amount of the business
contributed and the fair value of the retained investment
and the consideration received from disposal is
recognized in full in profit or loss.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk5_039cfb74-043d-4c2d-8c85-e3f1da202723": {
"value": "
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.
Derivatives policy
At December\u00a031, 2022, the nominal value of outstanding
derivatives with external counterparties amounted to
83,706 million euros equivalent, a 1% decrease from
December\u00a031, 2021 (84,794 million euros equivalent). This
figure is inflated by the use in some cases of several levels
of derivatives applied to the nominal value of a single
underlying liability. For example, a foreign currency loan
can be hedged into floating rate, and then each interest
rate period can be fixed using a fixed rate hedge, or FRA
(forward rate agreement) The high volume is also due to
the fact that when a derivative transaction is canceled,
the company may either cancel the derivative or take the
opposite position, which cancels out the variability
thereof. The second option is usually chosen in order to
cut costs. Even using such techniques to reduce the
position, it is still necessary to take extreme care in the
use of derivatives to avoid potential problems arising
through error or a failure to understand the real position
and its associated risks.
The main principles in the management of derivatives are
detailed below:
1) Derivatives based on a clearly identified hedged items.
Telef\u00f3nica\u2019s derivatives policy emphasizes the following
points:
\u2022Acceptable underlyings include assets and liabilities,
profits, revenues and cash flows in either a company\u2019s
functional currency or another currency. These flows
can be contractual (debt and interest payments,
settlement of foreign currency payables, etc.),
reasonably certain or foreseeable (PP&E purchases,
future debt issues, commercial paper programs, etc.).
The acceptability of an underlying asset in the above
cases does not depend on whether it complies with
accounting rules requirements for hedge accounting,
as is required in the case of certain intra-group
transactions, for instance. Parent company investments
in subsidiaries with functional currencies other than the
euro also qualify as acceptable underlying assets.
\u2022Economic hedges are hedges that have a designated
underlying asset and that, under certain circumstances,
may offset the changes in the value of the underlying
asset. These economic hedges may not always meet
the requirements to be treated as hedges for
accounting purposes. The decision to arrange these
hedges if they do not meet certain requirements will
depend on the marginal impact on the income
statement and, therefore, on how far this may
compromise the goal of having a stable income
statement. In any case, the changes are recognized in
the income statement.
2) Matching of the hedged item to one side of the
derivative.
This matching basically applies to foreign currency debt
and derivatives hedging foreign currency payments by
Telef\u00f3nica Group subsidiaries. The aim is to eliminate the
risk arising from changes in foreign currency interest
rates. Nonetheless, even when the aim is to achieve
perfect hedging for all cash flows, the lack of liquidity in
certain markets, especially in Latin American currencies,
has meant that historically there have been mismatches
between the terms of the hedges and those of the debts
they are meant to hedge. The Telef\u00f3nica Group intends to
reduce these mismatches, provided that doing so does
not involve disproportionate costs. In this regard, if
adjustment does prove too costly, the financial timing of
the underlying asset in foreign currency will be modified
in order to minimize interest rate risk in foreign currency.
In certain cases, the timing of the underlying as defined
for derivative purposes may not be exactly the same as
the timing of the contractual underlying.
3) Matching the company contracting the derivative and
the company that owns the hedged item.
Generally, the aim is to ensure that the hedging derivative
and the hedged asset or liability belong to the same
company. Sometimes, however, the holding companies
(Telef\u00f3nica, S.A. and Telef\u00f3nica Latinoam\u00e9rica Holding,
S.L.) have arranged hedges on behalf of a subsidiary that
owns the underlying asset. The main reasons for
separating the hedge and the underlying asset were the
chance of differences in the legal validity of local and
international hedges (as a result of unforeseen legal
changes) and the different credit ratings of the
counterparties (of the Telef\u00f3nica Group companies as
well as those of the banks).
4) Ability to measure the derivative\u2019s fair value using the
valuation systems available to the Telef\u00f3nica Group.
Telef\u00f3nica uses several tools to evaluate and manage the
risk involved in derivatives and debt. Among these tools
are the Calypso system, extensively used in various
financial institutions, and the specialized libraries in the
MBRM financial calculation, both of which are
widespread throughout the market and have shown
proven reliability. In order to perform these calculations,
customary market techniques are used when configuring
the calculation methods, and information from money
market curves is used on a daily basis as market inputs
(swaps, depos, FRA, etc.) for interest rates, official fixings
for exchange rates and the interest rates and volatility
matrices for interest and exchange rates that are listed in
the multi-contributor systems, Reuters and Bloomberg.
For those yield curves that are less liquid or whose prices
published in Reuters and Bloomberg are considered not
to adequately reflect the market situation, these curves
will be requested from relevant banks in these markets.
5) Sale of options only when there is an underlying
exposure.
Telef\u00f3nica considers the sale of options when: i) there is
an underlying exposure (on the consolidated statement of
financial position or associated with a highly probable
cash outflow) that would offset the potential loss for the
year if the counterparty exercised the option. This
exposure does not have to be treated as a purchased
option, but rather it can be another type of hedged item
(in these cases, hedge accounting does not apply since
this hedging instrument does not meet the criteria
required by accounting standards to treat the sale of
options as hedging instruments), or ii) the option is part of
a structure in which another derivative offsets any loss.
The sale of options is also permitted in option structures
where, at the moment they are taken out, the net
premium is either positive or zero.
For instance, it would be possible to sell short-term
options on interest rate swaps that entitle the
counterparty to receive a certain fixed interest rate, below
the level prevailing at the time the option was sold. This
would mean that if rates fell and the counterparty
exercised its option, the Group would swap part of its
debt from floating rate to a lower fixed rate, having
received a premium.
6) Hedge accounting.
The main risks that may qualify for hedge accounting are
as follows:
\u2022Variations in market interest rates (either money-market
rates, credit spreads or both) that affect the value of the
underlying asset or the measurement of the cash flows.
\u2022Variations in exchange rates that change the value of
the underlying asset in the company\u2019s functional
currency and affect the measurement of the cash flow
in the functional currency.
\u2022Variations in the valuation of any financial asset,
particularly shares of companies included in the
portfolio of \u201cEquity instruments\u201d.
\u2022Variations in the price of commodities related to
contracts that the Group has with third parties.
Regarding the underlying:
\u2022Hedges can cover all or part of the value of the
underlying.
\u2022The risk to be hedged can be for the whole period of
the transaction or for only part of the period.
\u2022The underlying may be a highly probable future
transaction, or a contractual underlying (loan, foreign
currency payment, investment, financial asset, etc.) or a
combination of both that defines an underlying with a
longer term.
The main coverage instruments used are:
\u2022Forwards / NDF: they are used mainly for exchange rate
hedges related to commercial positions in foreign
currency. They can also be used to hedge financing in
foreign currency and net investment hedge in foreign
currency.
\u2022Exchange Rate Options: in some cases, this type of
instruments can be used linked to future CapEx and
OpEx operations and investments and divestments in
foreign currency.
\u2022Spots: for purchases and sales of currencies that are
made same day value or two days\u2019 value. Generally
used for operational needs or for divestments of
operations in foreign currency.
\u2022Currency swaps: this type of transaction is generally
executed to hedge bonds issuance or loans issued in
foreign currency or net investment hedge.
\u2022Interest Swaps / Interest Rate Options: these
instruments are used to manage the interest rate of the
debt portfolio. Their use of them is ruled by the
Financial Expenses Budget with the objective of its
fulfillment. Both the volume to be contracted and the
maturity of these products are determined by the
underlying assets to be hedged.
It is possible that in several markets the maturity, as
well as the low liquidity, does not allow to contract a
\"perfect\u201d hedge, but this circumstance will have to be
analyzed case by case.
\u2022CDS: in order to manage the counterparty credit risk or
CVA / DVA, CDS operations can be arranged to
mitigate this risk.
\u2022Derivatives of Commodities associated to:
\u25aaPrice risk hedge (mainly Electricity) associated with
the Group's own contracts.
\u25aaSupporting the business lines that may need it and
always hedging the commercial risks of the signed
contracts. They would be settled by differences,
this is, in a non-deliverable format.
\u2022Equity Derivatives: these are derivatives that address
strategic decisions or hedging needs, either to hedge
future investments or hedge existing risks. They protect
Telef\u00f3nica from the potential appreciation or
depreciation in the price of the shares they hold as
underlying.
Between the hedged item and the hedging instrument
there is an economic relationship, this is, in general terms
they move in opposite directions due to the same risk or
risk covered. In other words, there must be an expectation
that the value of the hedging instrument and the value of
the hedged item will change systematically in opposite
directions in response to the movements of one of the
following elements:
\u2022the same underlying item; or
\u2022Underlying items that are economically related in such
sense that they respond similarly to the risk that is being
hedged.
Depending on the complexity of the hedge relationship
and the way in which the hedge has been structured, a
quantitative or qualitative analysis will have to be
performed to demonstrate that there is an economic
relationship between the hedged item and the hedging
instrument.
This may on occasion mean that the hedging instruments
have longer terms than the related contractual
underlying. This happens when the Telef\u00f3nica Group
enters into long-term swaps, caps or collars to protect the
Group against interest rate increases that may raise the
financial expense of its promissory notes, commercial
paper and some floating rate loans which mature earlier
than their hedges. These floating rate financing programs
are highly likely to be renewed and Telef\u00f3nica commits to
this by defining the underlying asset in a more general
way as a floating rate financing program whose term
coincides with the maturity of the hedge. In those cases in
which the underlying assets representing the risk hedged
are canceled or refinanced early, and if there is an open
risk with similar characteristics as the underlying asset
that was canceled or refinanced early, either because
there is new financing or because there is an underlying
asset with similar characteristics and risk profile, the
hedge may remain in force with the derivatives assigned
thereto and the risk will be subject to the hedge arranged
in the aforementioned refinancing. When either of these
situations occurs, the effectiveness of the hedge will be
reviewed taking into account the new situation.
There can be three types of hedges:
\u2022Fair value hedges.
\u2022Cash flow hedges. Such hedges can be set at any value
of the risk to be hedged (interest rates, exchange rates,
etc.) or for a defined range (interest rates between 2%
and 4%, above 4%, etc.). In this last case, the hedging
instrument used is options.
\u2022Hedges of net investment in consolidated foreign
subsidiaries. Generally, such hedges are arranged by
Telef\u00f3nica S.A. and other Telef\u00f3nica holding
companies. Wherever possible, these hedges are
implemented through real debt in foreign currency.
Often, however, this is not always possible as many
Latin American currencies are non-convertible, making
it impossible for non-resident companies to issue local
currency debt. It may also be that, due to the debt
market deepness, the debt in the currency concerned is
not enough to accommodate the required hedge, or
that an acquisition is made in cash with no need for
market financing. In these circumstances derivatives
either forwards or cross-currency swaps are mainly
used to hedge the net investment.
When using options, forwards or cross-currency swaps as
hedging instruments, the exclusion of the time value of
the option, the element at maturity of the forward and the
currency spread of the cross-currency swap of the
hedging relationship are evaluated on a case by case
basis, in order to be treated as hedge costs.
Hedges can comprise a combination of different
derivatives.
Management of accounting hedges is not static, and the
hedging relationship may change before maturity. The
interruption of the hedge accounting is possible within
the framework of the management of financial risks and
described in the internal document of \u201cfinancial risks
management and hedging strategy under IFRS 9\u201d. To
gauge the efficiency of transactions defined as
accounting hedges, the Group analyzes the extent to
which the changes in the fair value or in the cash flows
attributable to the hedged item would offset the changes
in fair value or cash flows attributable to the hedged risk
using a linear regression model prospectively. To evaluate
the effectiveness of hedges, under IFRS 9, there is no
numerical range under which it is accepted that a hedge
is effective and hence the hedge accounting standards
are applicable. Therefore, Telef\u00f3nica considers that if
there is an economic relationship, not dominated by
changes in credit risk and if the appropriate hedging
rationale has been designated, the requirements for
effectiveness are met. However, at the moment when
ineffectiveness arises, Telef\u00f3nica will evaluate whether
there is still an economic relationship or whether the
designated hedging rationale is appropriate. The possible
sources of ineffectiveness that Telef\u00f3nica can have when
designing a hedging relationship and that will be
considered when establishing the hedging rationale are:
\u2022The hedging instrument and the hedged item have
different maturity dates, initial dates, contract dates,
repricing dates, etc.
\u2022The hedging instrument starts with initial value and a
financing effect is produced.
\u2022When the underlying items have different sensitivity
and are not homogeneous, for example EURIBOR 3M
versus EURIBOR 6M.
The main guiding principles for risk management are laid
down by Telef\u00f3nica\u2019s Finance Department and
implemented by the company financial officers (who are
responsible for balancing the interests of each company
and those of the Telef\u00f3nica Group). The Corporate
Finance Department may allow exceptions to this policy
where these can be justified, normally when the market is
too thin for the volume of transactions required or on
clearly limited and small risks. New companies joining the
Telef\u00f3nica Group as a result of mergers or acquisitions
may also need time to adapt.
7) Cancellation of derivatives.
When a derivative transaction is canceled, the company
may:
\u2022Cancel the derivative and pay its market value.
\u2022Take the opposite position which cancels out the
variability thereof, if cancellation costs are high or if it is
recommended for operating or business reasons.
Breakdown of financial resu",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk5_2cd8448d-ef33-4d1f-80ae-816ed6172f14": {
"value": "
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk5_3065f894-f5ef-4cde-9cea-02df63b82862": {
"value": "
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.
Derivatives policy
At December\u00a031, 2022, the nominal value of outstanding
derivatives with external counterparties amounted to
83,706 million euros equivalent, a 1% decrease from
December\u00a031, 2021 (84,794 million euros equivalent). This
figure is inflated by the use in some cases of several levels
of derivatives applied to the nominal value of a single
underlying liability. For example, a foreign currency loan
can be hedged into floating rate, and then each interest
rate period can be fixed using a fixed rate hedge, or FRA
(forward rate agreement) The high volume is also due to
the fact that when a derivative transaction is canceled,
the company may either cancel the derivative or take the
opposite position, which cancels out the variability
thereof. The second option is usually chosen in order to
cut costs. Even using such techniques to reduce the
position, it is still necessary to take extreme care in the
use of derivatives to avoid potential problems arising
through error or a failure to understand the real position
and its associated risks.
The main principles in the management of derivatives are
detailed below:
1) Derivatives based on a clearly identified hedged items.
Telef\u00f3nica\u2019s derivatives policy emphasizes the following
points:
\u2022Acceptable underlyings include assets and liabilities,
profits, revenues and cash flows in either a company\u2019s
functional currency or another currency. These flows
can be contractual (debt and interest payments,
settlement of foreign currency payables, etc.),
reasonably certain or foreseeable (PP&E purchases,
future debt issues, commercial paper programs, etc.).
The acceptability of an underlying asset in the above
cases does not depend on whether it complies with
accounting rules requirements for hedge accounting,
as is required in the case of certain intra-group
transactions, for instance. Parent company investments
in subsidiaries with functional currencies other than the
euro also qualify as acceptable underlying assets.
\u2022Economic hedges are hedges that have a designated
underlying asset and that, under certain circumstances,
may offset the changes in the value of the underlying
asset. These economic hedges may not always meet
the requirements to be treated as hedges for
accounting purposes. The decision to arrange these
hedges if they do not meet certain requirements will
depend on the marginal impact on the income
statement and, therefore, on how far this may
compromise the goal of having a stable income
statement. In any case, the changes are recognized in
the income statement.
2) Matching of the hedged item to one side of the
derivative.
This matching basically applies to foreign currency debt
and derivatives hedging foreign currency payments by
Telef\u00f3nica Group subsidiaries. The aim is to eliminate the
risk arising from changes in foreign currency interest
rates. Nonetheless, even when the aim is to achieve
perfect hedging for all cash flows, the lack of liquidity in
certain markets, especially in Latin American currencies,
has meant that historically there have been mismatches
between the terms of the hedges and those of the debts
they are meant to hedge. The Telef\u00f3nica Group intends to
reduce these mismatches, provided that doing so does
not involve disproportionate costs. In this regard, if
adjustment does prove too costly, the financial timing of
the underlying asset in foreign currency will be modified
in order to minimize interest rate risk in foreign currency.
In certain cases, the timing of the underlying as defined
for derivative purposes may not be exactly the same as
the timing of the contractual underlying.
3) Matching the company contracting the derivative and
the company that owns the hedged item.
Generally, the aim is to ensure that the hedging derivative
and the hedged asset or liability belong to the same
company. Sometimes, however, the holding companies
(Telef\u00f3nica, S.A. and Telef\u00f3nica Latinoam\u00e9rica Holding,
S.L.) have arranged hedges on behalf of a subsidiary that
owns the underlying asset. The main reasons for
separating the hedge and the underlying asset were the
chance of differences in the legal validity of local and
international hedges (as a result of unforeseen legal
changes) and the different credit ratings of the
counterparties (of the Telef\u00f3nica Group companies as
well as those of the banks).
4) Ability to measure the derivative\u2019s fair value using the
valuation systems available to the Telef\u00f3nica Group.
Telef\u00f3nica uses several tools to evaluate and manage the
risk involved in derivatives and debt. Among these tools
are the Calypso system, extensively used in various
financial institutions, and the specialized libraries in the
MBRM financial calculation, both of which are
widespread throughout the market and have shown
proven reliability. In order to perform these calculations,
customary market techniques are used when configuring
the calculation methods, and information from money
market curves is used on a daily basis as market inputs
(swaps, depos, FRA, etc.) for interest rates, official fixings
for exchange rates and the interest rates and volatility
matrices for interest and exchange rates that are listed in
the multi-contributor systems, Reuters and Bloomberg.
For those yield curves that are less liquid or whose prices
published in Reuters and Bloomberg are considered not
to adequately reflect the market situation, these curves
will be requested from relevant banks in these markets.
5) Sale of options only when there is an underlying
exposure.
Telef\u00f3nica considers the sale of options when: i) there is
an underlying exposure (on the consolidated statement of
financial position or associated with a highly probable
cash outflow) that would offset the potential loss for the
year if the counterparty exercised the option. This
exposure does not have to be treated as a purchased
option, but rather it can be another type of hedged item
(in these cases, hedge accounting does not apply since
this hedging instrument does not meet the criteria
required by accounting standards to treat the sale of
options as hedging instruments), or ii) the option is part of
a structure in which another derivative offsets any loss.
The sale of options is also permitted in option structures
where, at the moment they are taken out, the net
premium is either positive or zero.
For instance, it would be possible to sell short-term
options on interest rate swaps that entitle the
counterparty to receive a certain fixed interest rate, below
the level prevailing at the time the option was sold. This
would mean that if rates fell and the counterparty
exercised its option, the Group would swap part of its
debt from floating rate to a lower fixed rate, having
received a premium.
6) Hedge accounting.
The main risks that may qualify for hedge accounting are
as follows:
\u2022Variations in market interest rates (either money-market
rates, credit spreads or both) that affect the value of the
underlying asset or the measurement of the cash flows.
\u2022Variations in exchange rates that change the value of
the underlying asset in the company\u2019s functional
currency and affect the measurement of the cash flow
in the functional currency.
\u2022Variations in the valuation of any financial asset,
particularly shares of companies included in the
portfolio of \u201cEquity instruments\u201d.
\u2022Variations in the price of commodities related to
contracts that the Group has with third parties.
Regarding the underlying:
\u2022Hedges can cover all or part of the value of the
underlying.
\u2022The risk to be hedged can be for the whole period of
the transaction or for only part of the period.
\u2022The underlying may be a highly probable future
transaction, or a contractual underlying (loan, foreign
currency payment, investment, financial asset, etc.) or a
combination of both that defines an underlying with a
longer term.
The main coverage instruments used are:
\u2022Forwards / NDF: they are used mainly for exchange rate
hedges related to commercial positions in foreign
currency. They can also be used to hedge financing in
foreign currency and net investment hedge in foreign
currency.
\u2022Exchange Rate Options: in some cases, this type of
instruments can be used linked to future CapEx and
OpEx operations and investments and divestments in
foreign currency.
\u2022Spots: for purchases and sales of currencies that are
made same day value or two days\u2019 value. Generally
used for operational needs or for divestments of
operations in foreign currency.
\u2022Currency swaps: this type of transaction is generally
executed to hedge bonds issuance or loans issued in
foreign currency or net investment hedge.
\u2022Interest Swaps / Interest Rate Options: these
instruments are used to manage the interest rate of the
debt portfolio. Their use of them is ruled by the
Financial Expenses Budget with the objective of its
fulfillment. Both the volume to be contracted and the
maturity of these products are determined by the
underlying assets to be hedged.
It is possible that in several markets the maturity, as
well as the low liquidity, does not allow to contract a
\"perfect\u201d hedge, but this circumstance will have to be
analyzed case by case.
\u2022CDS: in order to manage the counterparty credit risk or
CVA / DVA, CDS operations can be arranged to
mitigate this risk.
\u2022Derivatives of Commodities associated to:
\u25aaPrice risk hedge (mainly Electricity) associated with
the Group's own contracts.
\u25aaSupporting the business lines that may need it and
always hedging the commercial risks of the signed
contracts. They would be settled by differences,
this is, in a non-deliverable format.
\u2022Equity Derivatives: these are derivatives that address
strategic decisions or hedging needs, either to hedge
future investments or hedge existing risks. They protect
Telef\u00f3nica from the potential appreciation or
depreciation in the price of the shares they hold as
underlying.
Between the hedged item and the hedging instrument
there is an economic relationship, this is, in general terms
they move in opposite directions due to the same risk or
risk covered. In other words, there must be an expectation
that the value of the hedging instrument and the value of
the hedged item will change systematically in opposite
directions in response to the movements of one of the
following elements:
\u2022the same underlying item; or
\u2022Underlying items that are economically related in such
sense that they respond similarly to the risk that is being
hedged.
Depending on the complexity of the hedge relationship
and the way in which the hedge has been structured, a
quantitative or qualitative analysis will have to be
performed to demonstrate that there is an economic
relationship between the hedged item and the hedging
instrument.
This may on occasion mean that the hedging instruments
have longer terms than the related contractual
underlying. This happens when the Telef\u00f3nica Group
enters into long-term swaps, caps or collars to protect the
Group against interest rate increases that may raise the
financial expense of its promissory notes, commercial
paper and some floating rate loans which mature earlier
than their hedges. These floating rate financing programs
are highly likely to be renewed and Telef\u00f3nica commits to
this by defining the underlying asset in a more general
way as a floating rate financing program whose term
coincides with the maturity of the hedge. In those cases in
which the underlying assets representing the risk hedged
are canceled or refinanced early, and if there is an open
risk with similar characteristics as the underlying asset
that was canceled or refinanced early, either because
there is new financing or because there is an underlying
asset with similar characteristics and risk profile, the
hedge may remain in force with the derivatives assigned
thereto and the risk will be subject to the hedge arranged
in the aforementioned refinancing. When either of these
situations occurs, the effectiveness of the hedge will be
reviewed taking into account the new situation.
There can be three types of hedges:
\u2022Fair value hedges.
\u2022Cash flow hedges. Such hedges can be set at any value
of the risk to be hedged (interest rates, exchange rates,
etc.) or for a defined range (interest rates between 2%
and 4%, above 4%, etc.). In this last case, the hedging
instrument used is options.
\u2022Hedges of net investment in consolidated foreign
subsidiaries. Generally, such hedges are arranged by
Telef\u00f3nica S.A. and other Telef\u00f3nica holding
companies. Wherever possible, these hedges are
implemented through real debt in foreign currency.
Often, however, this is not always possible as many
Latin American currencies are non-convertible, making
it impossible for non-resident companies to issue local
currency debt. It may also be that, due to the debt
market deepness, the debt in the currency concerned is
not enough to accommodate the required hedge, or
that an acquisition is made in cash with no need for
market financing. In these circumstances derivatives
either forwards or cross-currency swaps are mainly
used to hedge the net investment.
When using options, forwards or cross-currency swaps as
hedging instruments, the exclusion of the time value of
the option, the element at maturity of the forward and the
currency spread of the cross-currency swap of the
hedging relationship are evaluated on a case by case
basis, in order to be treated as hedge costs.
Hedges can comprise a combination of different
derivatives.
Management of accounting hedges is not static, and the
hedging relationship may change before maturity. The
interruption of the hedge accounting is possible within
the framework of the management of financial risks and
described in the internal document of \u201cfinancial risks
management and hedging strategy under IFRS 9\u201d. To
gauge the efficiency of transactions defined as
accounting hedges, the Group analyzes the extent to
which the changes in the fair value or in the cash flows
attributable to the hedged item would offset the changes
in fair value or cash flows attributable to the hedged risk
using a linear regression model prospectively. To evaluate
the effectiveness of hedges, under IFRS 9, there is no
numerical range under which it is accepted that a hedge
is effective and hence the hedge accounting standards
are applicable. Therefore, Telef\u00f3nica considers that if
there is an economic relationship, not dominated by
changes in credit risk and if the appropriate hedging
rationale has been designated, the requirements for
effectiveness are met. However, at the moment when
ineffectiveness arises, Telef\u00f3nica will evaluate whether
there is still an economic relationship or whether the
designated hedging rationale is appropriate. The possible
sources of ineffectiveness that Telef\u00f3nica can have when
designing a hedging relationship and that will be
considered when establishing the hedging rationale are:
\u2022The hedging instrument and the hedged item have
different maturity dates, initial dates, contract dates,
repricing dates, etc.
\u2022The hedging instrument starts with initial value and a
financing effect is produced.
\u2022When the underlying items have different sensitivity
and are not homogeneous, for example EURIBOR 3M
versus EURIBOR 6M.
The main guiding principles for risk management are laid
down by Telef\u00f3nica\u2019s Finance Department and
implemented by the company financial officers (who are
responsible for balancing the interests of each company
and those of the Telef\u00f3nica Group). The Corporate
Finance Department may allow exceptions to this policy
where these can be justified, normally when the market is
too thin for the volume of transactions required or on
clearly limited and small risks. New companies joining the
Telef\u00f3nica Group as a result of mergers or acquisitions
may also need time to adapt.
7) Cancellation of derivatives.
When a derivative transaction is canceled, the company
may:
\u2022Cancel the derivative and pay its market value.
\u2022Take the opposite position which cancels out the
variability thereof, if cancellation costs are high or if it is
recommended for operating or business reasons.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk5_9b2fd877-579c-4a77-b63f-a4ce4a8d3d5e": {
"value": "
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTQxODM2OTk5OTg0NDk5_bb393d17-5541-4e17-a281-5c268c469b5c": {
"value": "
i) Financial assets and liabilities
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzg_e943a7fd-1ab5-46a5-a005-8686964a50db": {
"value": "
Financial Assets
All regular way purchases and sales of financial assets are
recognized in the statement of financial position on the
trade date, i.e. the date that the Company commits to
purchase or sell the asset.
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTM_ce984902-216e-4ac4-91c3-a1d90fdba9f1": {
"value": "
The Group applies an impairment model for financial
assets based on expected credit losses, using a simplified
method for certain short- and long-term assets
(commercial receivables, lease receivables and
contractual assets).
Under this simplified approach, credit impairment is
recognized by reference to expected credit losses over
the life of the asset. For this purpose the Group uses
matrices based on historical bad debt experience by
geographical area on a portfolio segmented by customer
category according to credit pattern. The matrix for each
category has a defined time horizon divided into intervals
in accordance with the collection management policy and
is fed with historical data that covers at least 24 collection
cycles. This data is updated on a regular basis. Based on
the information observable at each close, the Group
assesses the need to adjust the rates resulting from these
matrices, considering current conditions and future
economic forecasts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxNzk_8ad6596a-ad6e-4f29-9bcf-891a342668cd": {
"value": "
Derivative financial instruments and hedge
accounting
The accounting treatment of any gain or loss resulting
from changes in the fair value of a derivative depends on
whether the derivative in question meets all the criteria
for hedge accounting and, if appropriate, on the nature of
the hedge.
Changes in fair value of derivatives that qualify as fair
value hedging instruments are recognized in the income
statement, together with changes in the fair value of the
hedged asset or liability attributable to the risk being
hedged.
Changes in the fair value of derivatives that qualify and
have been designated as cash flow hedges, which are
highly effective, are recognized in equity. The ineffective
portion is recognized immediately in the income
statement. Fair value changes recognized in equity arising
from hedges that relate to firm commitments or forecast
transactions that result in the recognition of non-financial
assets or liabilities are included in the initial carrying
amount of those assets or liabilities. Otherwise, changes
in fair value previously recognized in equity are
recognized in the income statement in the period in which
the hedged transaction affects profit or loss.
An instrument designated to hedge foreign currency
exposure from a net investment in a foreign operation is
accounted for in a similar manner to cash flow hedges.
When the Group chooses not to apply hedge accounting
criteria, gains or losses resulting from changes in the fair
value of derivatives are taken directly to the income
statement. In this respect, transactions used to reduce
the exchange rate risk of income contributed by foreign
subsidiaries are not treated as hedging transactions.
Derivatives policy
At December\u00a031, 2022, the nominal value of outstanding
derivatives with external counterparties amounted to
83,706 million euros equivalent, a 1% decrease from
December\u00a031, 2021 (84,794 million euros equivalent). This
figure is inflated by the use in some cases of several levels
of derivatives applied to the nominal value of a single
underlying liability. For example, a foreign currency loan
can be hedged into floating rate, and then each interest
rate period can be fixed using a fixed rate hedge, or FRA
(forward rate agreement) The high volume is also due to
the fact that when a derivative transaction is canceled,
the company may either cancel the derivative or take the
opposite position, which cancels out the variability
thereof. The second option is usually chosen in order to
cut costs. Even using such techniques to reduce the
position, it is still necessary to take extreme care in the
use of derivatives to avoid potential problems arising
through error or a failure to understand the real position
and its associated risks.
The main principles in the management of derivatives are
detailed below:
1) Derivatives based on a clearly identified hedged items.
Telef\u00f3nica\u2019s derivatives policy emphasizes the following
points:
\u2022Acceptable underlyings include assets and liabilities,
profits, revenues and cash flows in either a company\u2019s
functional currency or another currency. These flows
can be contractual (debt and interest payments,
settlement of foreign currency payables, etc.),
reasonably certain or foreseeable (PP&E purchases,
future debt issues, commercial paper programs, etc.).
The acceptability of an underlying asset in the above
cases does not depend on whether it complies with
accounting rules requirements for hedge accounting,
as is required in the case of certain intra-group
transactions, for instance. Parent company investments
in subsidiaries with functional currencies other than the
euro also qualify as acceptable underlying assets.
\u2022Economic hedges are hedges that have a designated
underlying asset and that, under certain circumstances,
may offset the changes in the value of the underlying
asset. These economic hedges may not always meet
the requirements to be treated as hedges for
accounting purposes. The decision to arrange these
hedges if they do not meet certain requirements will
depend on the marginal impact on the income
statement and, therefore, on how far this may
compromise the goal of having a stable income
statement. In any case, the changes are recognized in
the income statement.
2) Matching of the hedged item to one side of the
derivative.
This matching basically applies to foreign currency debt
and derivatives hedging foreign currency payments by
Telef\u00f3nica Group subsidiaries. The aim is to eliminate the
risk arising from changes in foreign currency interest
rates. Nonetheless, even when the aim is to achieve
perfect hedging for all cash flows, the lack of liquidity in
certain markets, especially in Latin American currencies,
has meant that historically there have been mismatches
between the terms of the hedges and those of the debts
they are meant to hedge. The Telef\u00f3nica Group intends to
reduce these mismatches, provided that doing so does
not involve disproportionate costs. In this regard, if
adjustment does prove too costly, the financial timing of
the underlying asset in foreign currency will be modified
in order to minimize interest rate risk in foreign currency.
In certain cases, the timing of the underlying as defined
for derivative purposes may not be exactly the same as
the timing of the contractual underlying.
3) Matching the company contracting the derivative and
the company that owns the hedged item.
Generally, the aim is to ensure that the hedging derivative
and the hedged asset or liability belong to the same
company. Sometimes, however, the holding companies
(Telef\u00f3nica, S.A. and Telef\u00f3nica Latinoam\u00e9rica Holding,
S.L.) have arranged hedges on behalf of a subsidiary that
owns the underlying asset. The main reasons for
separating the hedge and the underlying asset were the
chance of differences in the legal validity of local and
international hedges (as a result of unforeseen legal
changes) and the different credit ratings of the
counterparties (of the Telef\u00f3nica Group companies as
well as those of the banks).
4) Ability to measure the derivative\u2019s fair value using the
valuation systems available to the Telef\u00f3nica Group.
Telef\u00f3nica uses several tools to evaluate and manage the
risk involved in derivatives and debt. Among these tools
are the Calypso system, extensively used in various
financial institutions, and the specialized libraries in the
MBRM financial calculation, both of which are
widespread throughout the market and have shown
proven reliability. In order to perform these calculations,
customary market techniques are used when configuring
the calculation methods, and information from money
market curves is used on a daily basis as market inputs
(swaps, depos, FRA, etc.) for interest rates, official fixings
for exchange rates and the interest rates and volatility
matrices for interest and exchange rates that are listed in
the multi-contributor systems, Reuters and Bloomberg.
For those yield curves that are less liquid or whose prices
published in Reuters and Bloomberg are considered not
to adequately reflect the market situation, these curves
will be requested from relevant banks in these markets.
5) Sale of options only when there is an underlying
exposure.
Telef\u00f3nica considers the sale of options when: i) there is
an underlying exposure (on the consolidated statement of
financial position or associated with a highly probable
cash outflow) that would offset the potential loss for the
year if the counterparty exercised the option. This
exposure does not have to be treated as a purchased
option, but rather it can be another type of hedged item
(in these cases, hedge accounting does not apply since
this hedging instrument does not meet the criteria
required by accounting standards to treat the sale of
options as hedging instruments), or ii) the option is part of
a structure in which another derivative offsets any loss.
The sale of options is also permitted in option structures
where, at the moment they are taken out, the net
premium is either positive or zero.
For instance, it would be possible to sell short-term
options on interest rate swaps that entitle the
counterparty to receive a certain fixed interest rate, below
the level prevailing at the time the option was sold. This
would mean that if rates fell and the counterparty
exercised its option, the Group would swap part of its
debt from floating rate to a lower fixed rate, having
received a premium.
6) Hedge accounting.
The main risks that may qualify for hedge accounting are
as follows:
\u2022Variations in market interest rates (either money-market
rates, credit spreads or both) that affect the value of the
underlying asset or the measurement of the cash flows.
\u2022Variations in exchange rates that change the value of
the underlying asset in the company\u2019s functional
currency and affect the measurement of the cash flow
in the functional currency.
\u2022Variations in the valuation of any financial asset,
particularly shares of companies included in the
portfolio of \u201cEquity instruments\u201d.
\u2022Variations in the price of commodities related to
contracts that the Group has with third parties.
Regarding the underlying:
\u2022Hedges can cover all or part of the value of the
underlying.
\u2022The risk to be hedged can be for the whole period of
the transaction or for only part of the period.
\u2022The underlying may be a highly probable future
transaction, or a contractual underlying (loan, foreign
currency payment, investment, financial asset, etc.) or a
combination of both that defines an underlying with a
longer term.
The main coverage instruments used are:
\u2022Forwards / NDF: they are used mainly for exchange rate
hedges related to commercial positions in foreign
currency. They can also be used to hedge financing in
foreign currency and net investment hedge in foreign
currency.
\u2022Exchange Rate Options: in some cases, this type of
instruments can be used linked to future CapEx and
OpEx operations and investments and divestments in
foreign currency.
\u2022Spots: for purchases and sales of currencies that are
made same day value or two days\u2019 value. Generally
used for operational needs or for divestments of
operations in foreign currency.
\u2022Currency swaps: this type of transaction is generally
executed to hedge bonds issuance or loans issued in
foreign currency or net investment hedge.
\u2022Interest Swaps / Interest Rate Options: these
instruments are used to manage the interest rate of the
debt portfolio. Their use of them is ruled by the
Financial Expenses Budget with the objective of its
fulfillment. Both the volume to be contracted and the
maturity of these products are determined by the
underlying assets to be hedged.
It is possible that in several markets the maturity, as
well as the low liquidity, does not allow to contract a
\"perfect\u201d hedge, but this circumstance will have to be
analyzed case by case.
\u2022CDS: in order to manage the counterparty credit risk or
CVA / DVA, CDS operations can be arranged to
mitigate this risk.
\u2022Derivatives of Commodities associated to:
\u25aaPrice risk hedge (mainly Electricity) associated with
the Group's own contracts.
\u25aaSupporting the business lines that may need it and
always hedging the commercial risks of the signed
contracts. They would be settled by differences,
this is, in a non-deliverable format.
\u2022Equity Derivatives: these are derivatives that address
strategic decisions or hedging needs, either to hedge
future investments or hedge existing risks. They protect
Telef\u00f3nica from the potential appreciation or
depreciation in the price of the shares they hold as
underlying.
Between the hedged item and the hedging instrument
there is an economic relationship, this is, in general terms
they move in opposite directions due to the same risk or
risk covered. In other words, there must be an expectation
that the value of the hedging instrument and the value of
the hedged item will change systematically in opposite
directions in response to the movements of one of the
following elements:
\u2022the same underlying item; or
\u2022Underlying items that are economically related in such
sense that they respond similarly to the risk that is being
hedged.
Depending on the complexity of the hedge relationship
and the way in which the hedge has been structured, a
quantitative or qualitative analysis will have to be
performed to demonstrate that there is an economic
relationship between the hedged item and the hedging
instrument.
This may on occasion mean that the hedging instruments
have longer terms than the related contractual
underlying. This happens when the Telef\u00f3nica Group
enters into long-term swaps, caps or collars to protect the
Group against interest rate increases that may raise the
financial expense of its promissory notes, commercial
paper and some floating rate loans which mature earlier
than their hedges. These floating rate financing programs
are highly likely to be renewed and Telef\u00f3nica commits to
this by defining the underlying asset in a more general
way as a floating rate financing program whose term
coincides with the maturity of the hedge. In those cases in
which the underlying assets representing the risk hedged
are canceled or refinanced early, and if there is an open
risk with similar characteristics as the underlying asset
that was canceled or refinanced early, either because
there is new financing or because there is an underlying
asset with similar characteristics and risk profile, the
hedge may remain in force with the derivatives assigned
thereto and the risk will be subject to the hedge arranged
in the aforementioned refinancing. When either of these
situations occurs, the effectiveness of the hedge will be
reviewed taking into account the new situation.
There can be three types of hedges:
\u2022Fair value hedges.
\u2022Cash flow hedges. Such hedges can be set at any value
of the risk to be hedged (interest rates, exchange rates,
etc.) or for a defined range (interest rates between 2%
and 4%, above 4%, etc.). In this last case, the hedging
instrument used is options.
\u2022Hedges of net investment in consolidated foreign
subsidiaries. Generally, such hedges are arranged by
Telef\u00f3nica S.A. and other Telef\u00f3nica holding
companies. Wherever possible, these hedges are
implemented through real debt in foreign currency.
Often, however, this is not always possible as many
Latin American currencies are non-convertible, making
it impossible for non-resident companies to issue local
currency debt. It may also be that, due to the debt
market deepness, the debt in the currency concerned is
not enough to accommodate the required hedge, or
that an acquisition is made in cash with no need for
market financing. In these circumstances derivatives
either forwards or cross-currency swaps are mainly
used to hedge the net investment.
When using options, forwards or cross-currency swaps as
hedging instruments, the exclusion of the time value of
the option, the element at maturity of the forward and the
currency spread of the cross-currency swap of the
hedging relationship are evaluated on a case by case
basis, in order to be treated as hedge costs.
Hedges can comprise a combination of different
derivatives.
Management of accounting hedges is not static, and the
hedging relationship may change before maturity. The
interruption of the hedge accounting is possible within
the framework of the management of financial risks and
described in the internal document of \u201cfinancial risks
management and hedging strategy under IFRS 9\u201d. To
gauge the efficiency of transactions defined as
accounting hedges, the Group analyzes the extent to
which the changes in the fair value or in the cash flows
attributable to the hedged item would offset the changes
in fair value or cash flows attributable to the hedged risk
using a linear regression model prospectively. To evaluate
the effectiveness of hedges, under IFRS 9, there is no
numerical range under which it is accepted that a hedge
is effective and hence the hedge accounting standards
are applicable. Therefore, Telef\u00f3nica considers that if
there is an economic relationship, not dominated by
changes in credit risk and if the appropriate hedging
rationale has been designated, the requirements for
effectiveness are met. However, at the moment when
ineffectiveness arises, Telef\u00f3nica will evaluate whether
there is still an economic relationship or whether the
designated hedging rationale is appropriate. The possible
sources of ineffectiveness that Telef\u00f3nica can have when
designing a hedging relationship and that will be
considered when establishing the hedging rationale are:
\u2022The hedging instrument and the hedged item have
different maturity dates, initial dates, contract dates,
repricing dates, etc.
\u2022The hedging instrument starts with initial value and a
financing effect is produced.
\u2022When the underlying items have different sensitivity
and are not homogeneous, for example EURIBOR 3M
versus EURIBOR 6M.
The main guiding principles for risk management are laid
down by Telef\u00f3nica\u2019s Finance Department and
implemented by the company financial officers (who are
responsible for balancing the interests of each company
and those of the Telef\u00f3nica Group). The Corporate
Finance Department may allow exceptions to this policy
where these can be justified, normally when the market is
too thin for the volume of transactions required or on
clearly limited and small risks. New companies joining the
Telef\u00f3nica Group as a result of mergers or acquisitions
may also need time to adapt.
7) Cancellation of derivatives.
When a derivative transaction is canceled, the company
may:
\u2022Cancel the derivative and pay its market value.
\u2022Take the opposite position which cancels out the
variability thereof, if cancellation costs are high or if it is
recommended for operating or business reasons.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODA_f95d2cbf-e9d6-46b9-8f69-295e9a3627eb": {
"value": "
j) Inventories
Materials stored for use in investment projects and
inventories for consumption and replacement are valued
at the lower of weighted average cost and net realizable
value.
Inventories include audio-visual rights which will
generally be consumed in a period of less than twelve
months, and advanced payments to suppliers for future
rights, as well as own content whose production cycle will
in no case exceed thirty-six months.
The cost of film, documentary, short film and series rights
acquired from third parties is charged to the income
statement on a straight-line basis from the time of first
broadcasting or release until the completion of the rights.
Broadcasting rights to football and motor sports events,
including their inherent production costs, are charged to
the income statement on a straight-line basis over twelve
months from the start of the season, while rights to other
premium sports are charged over the period of the
competition. All other sports rights are recognized in the
income statement upon first broadcast.
In-house produced programs and series and program
titles are charged at the time of their broadcast or up to
thirty-six months from the date of release, depending on
their nature and broadcasting strategy. The cost of in-
house productions that the Group expects to recover
through sale to third parties is recognized as an intangible
asset.
The cost of broadcasting rights that have expired or
whose recovery value is estimated to be lower than the
acquisition cost is recognized directly as an expense.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODE_efe41e40-d6f4-4c04-8122-d7cb2992d359": {
"value": "
k) Pensions and other employee
obligations
Provisions required to cover the accrued liability for
defined benefit pension plans are determined using the
projected unit credit actuarial valuation method. The
calculation is based on demographic and financial
assumptions determined at a country level, and in
consideration of the macroeconomic environment. The
discount rates are determined based on high quality
market yield curves. Plan assets are measured at fair
value.
Provisions for post-employment benefits (e.g. early
retirement or other) are calculated individually based on
the terms agreed with the employees. In some cases,
these may require actuarial valuations based on both
demographic and financial assumptions.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTQ_7f63b7bb-2893-4b12-a48c-d07acc11b18d": {
"value": "
l) Revenues and expenses
The Telef\u00f3nica Group revenues are derived principally
from providing the following telecommunications
services: traffic, connection fees, regular (normally
monthly) network usage fees, interconnection, network
and equipment leasing, handset sales and other digital
services such as Pay TV and value-added services or
maintenance. Products and services may be sold
separately or bundled in promotional packages.
Revenues from calls carried on Telef\u00f3nica\u2019s networks
(traffic) entail an initial call establishment fee plus a
variable call rate, based on call length, distance and type
of service. Both fixed and wireless traffic is recognized as
revenue as service is provided. For prepaid calls, the
amount of unused traffic generates deferred revenues
presented in Contractual liabilities on the statement of
financial position.
Revenues from traffic sales and services at a fixed rate
over a specified period of time (flat rate) are recognized
on a straight-line basis over the term covered by the rate
paid by the customer.
Installation fees are taken to the income statement on a
straight-line basis over the related period. Equipment
leases and other services are taken to the income
statement as they are consumed.
Interconnection revenues from fixed-wireless and
wireless-fixed calls and other customer services are
recognized in the period in which the calls are made.
Revenues from handset and equipment sales are
recognized once the sale is considered complete, i.e.,
generally when delivered to the end customer.
When the Group is in an intermediary position between a
supplier/vendor and an end customer, it must determine if
it is supplying the product or service as the principal in the
transaction or if it is acting as an agent on behalf of the
supplier (manufacturer, wholesaler). The distinction
determines who controls the goods or services being
provided and who has the primary obligation to satisfy the
performance obligation. This assessment affects the
timing and amount of revenue recognized in the financial
statements, either on a gross basis as the principal or on a
net basis as the agent, representing the margin earned by
the Group for arranging the transaction between the
principal and the customer. This is particularly relevant for
the Group in connection with digital services such as
streaming TV content and cloud-based software.
For bundled packages that include multiple elements sold
in the fixed, wireless, Internet and television businesses it
is determined whether it is necessary to identify the
separate performance obligations and apply the
corresponding revenue recognition policy to each one.
Total package revenues are allocated among the
identified performance obligations based on their
respective standalone selling prices.
As connection or initial activation fees, or upfront non-
refundable fees, are not separately identifiable
performance obligations in these types of packages, any
consideration received from the customer for these items
is allocated to the remaining elements.
When the customer has a right of return, the agreed
consideration is considered variable. The Group estimates
the amount of variable consideration to which it is entitled
using the expected value method (probability-weighted
possible amounts), considering all historical, current and
forecast information that is reasonably available, and only
to the extent that it determines that it is highly probable
that a significant reversal in the amount of cumulative
revenue recognized will not occur.
Expenses relating to customer contracts (mainly,
commissions payable to dealers for customer
acquisitions) are recognized as an asset to the extent that
they are incremental and are expected to be recovered.
Subsequently, these costs are amortized over the same
term as the revenues associated with such contract are
recognized, unless the expected amortization period is
one year or less, in which case they are expensed as
incurred.
As part of our strategy, the Group has increased its use of
renewable energy through power purchase agreements
(PPAs) to purchase energy from sustainable sources,
such as wind and solar. These contracts often have a long
term and provide the Group with a mechanism to ensure
the supply of green energy at fixed prices. When these
arrangements involve physical delivery of electricity and
are entered into for the purpose of receiving the energy
for the entity\u2019s expected purchase, sale or usage
requirements (i.e. volume agreed does not exceed actual
and expected power needs), the contract is for \u201cown use\u201d
and is generally accounted for as power purchases or
sales when the underlying transactions take place.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODM_a358f309-0018-4a07-a32a-91940cf7a519": {
"value": "
The Telef\u00f3nica Group revenues are derived principally
from providing the following telecommunications
services: traffic, connection fees, regular (normally
monthly) network usage fees, interconnection, network
and equipment leasing, handset sales and other digital
services such as Pay TV and value-added services or
maintenance. Products and services may be sold
separately or bundled in promotional packages.
Revenues from calls carried on Telef\u00f3nica\u2019s networks
(traffic) entail an initial call establishment fee plus a
variable call rate, based on call length, distance and type
of service. Both fixed and wireless traffic is recognized as
revenue as service is provided. For prepaid calls, the
amount of unused traffic generates deferred revenues
presented in Contractual liabilities on the statement of
financial position.
Revenues from traffic sales and services at a fixed rate
over a specified period of time (flat rate) are recognized
on a straight-line basis over the term covered by the rate
paid by the customer.
Installation fees are taken to the income statement on a
straight-line basis over the related period. Equipment
leases and other services are taken to the income
statement as they are consumed.
Interconnection revenues from fixed-wireless and
wireless-fixed calls and other customer services are
recognized in the period in which the calls are made.
Revenues from handset and equipment sales are
recognized once the sale is considered complete, i.e.,
generally when delivered to the end customer.
When the Group is in an intermediary position between a
supplier/vendor and an end customer, it must determine if
it is supplying the product or service as the principal in the
transaction or if it is acting as an agent on behalf of the
supplier (manufacturer, wholesaler). The distinction
determines who controls the goods or services being
provided and who has the primary obligation to satisfy the
performance obligation. This assessment affects the
timing and amount of revenue recognized in the financial
statements, either on a gross basis as the principal or on a
net basis as the agent, representing the margin earned by
the Group for arranging the transaction between the
principal and the customer. This is particularly relevant for
the Group in connection with digital services such as
streaming TV content and cloud-based software.
For bundled packages that include multiple elements sold
in the fixed, wireless, Internet and television businesses it
is determined whether it is necessary to identify the
separate performance obligations and apply the
corresponding revenue recognition policy to each one.
Total package revenues are allocated among the
identified performance obligations based on their
respective standalone selling prices.
As connection or initial activation fees, or upfront non-
refundable fees, are not separately identifiable
performance obligations in these types of packages, any
consideration received from the customer for these items
is allocated to the remaining elements.
When the customer has a right of return, the agreed
consideration is considered variable. The Group estimates
the amount of variable consideration to which it is entitled
using the expected value method (probability-weighted
possible amounts), considering all historical, current and
forecast information that is reasonably available, and only
to the extent that it determines that it is highly probable
that a significant reversal in the amount of cumulative
revenue recognized will not occur.
Revenue recognition
Bundled offers
Bundled offers that combine different elements are
assessed to determine whether it is necessary to separate
the different identifiable components and apply the
corresponding revenue recognition policy to each
element. Total package revenues are allocated among
the identified elements based on their respective
standalone selling prices.
Determining standalone selling prices for each identified
element requires estimates that are complex due to the
nature of the business.
A change in estimates of standalone selling prices could
affect the apportionment of revenue among the elements
and, as a result, the timing of recognition of revenues.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMTAyOA_257b9d71-9b16-4b99-9224-c1324de87382": {
"value": "
Expenses relating to customer contracts (mainly,
commissions payable to dealers for customer
acquisitions) are recognized as an asset to the extent that
they are incremental and are expected to be recovered.
Subsequently, these costs are amortized over the same
term as the revenues associated with such contract are
recognized, unless the expected amortization period is
one year or less, in which case they are expensed as
incurred.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerAcquisitionCostsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODQ_86641d7d-05e0-4c3c-bd0a-9143a4c2ea3d": {
"value": "
m) Non-current assets held for sale
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at
the lower of their carrying amount and fair value less
costs to sell and are presented separately in the
statement of financial position as \u201cNon-current assets and
disposal groups held for sale\u201d and \u201cLiabilities associated
with non-current assets and disposal groups held for
sale\u201d. Once classified as held for sale property, plant and
equipment and intangible assets (including right-of-use
assets) are no longer depreciated or amortized.
The criteria for held for sale classification is regarded as
met only when the Group determines the sale to be highly
probable: management is committed to a decision to sell
and all actions required to complete the sale indicate that
it is unlikely that significant changes to the sale will be
made or that the decision will be withdrawn. In addition,
the asset or disposal group is available for immediate sale
in its present condition (subject only to terms that are
usual and customary for such transactions) and the sale is
expected to be completed within one year from the date
of the classification.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTU_4010675a-4146-47e6-82fc-21013e1ca0b1": {
"value": "
m) Non-current assets held for sale
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at
the lower of their carrying amount and fair value less
costs to sell and are presented separately in the
statement of financial position as \u201cNon-current assets and
disposal groups held for sale\u201d and \u201cLiabilities associated
with non-current assets and disposal groups held for
sale\u201d. Once classified as held for sale property, plant and
equipment and intangible assets (including right-of-use
assets) are no longer depreciated or amortized.
The criteria for held for sale classification is regarded as
met only when the Group determines the sale to be highly
probable: management is committed to a decision to sell
and all actions required to complete the sale indicate that
it is unlikely that significant changes to the sale will be
made or that the decision will be withdrawn. In addition,
the asset or disposal group is available for immediate sale
in its present condition (subject only to terms that are
usual and customary for such transactions) and the sale is
expected to be completed within one year from the date
of the classification.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODU_055a7f0a-aaed-466a-a50b-9a3438e80fbc": {
"value": "
n) Use of estimates
The key assumptions concerning the future and other
relevant sources of uncertainty in estimates at the
reporting date that could have a significant impact on the
consolidated financial statements within the next financial
year are discussed below.
A significant change in the facts and circumstances on
which these estimates and related judgments are based
could have a material impact on the Group\u2019s results and
financial position. Accordingly, sensitivity analysis are
disclosed for the most relevant situations (see Notes 7
and 24).
Non-current assets and goodwill
The accounting treatment of investments in non-current
assets such as property, plant and equipment, intangible
assets and interests in associates and joint ventures,
entails the use of estimates to determine the useful life for
depreciation and amortization purposes and to assess fair
value at their acquisition dates for assets acquired in
business combinations.
Determining useful life requires making estimates in
connection with future technological developments and
alternative uses for assets. There is a significant element
of judgment involved in making technological
development assumptions, since the timing and scope of
future technological advances are difficult to predict.
Also, upon the sale or contribution of a controlled
business to an associate or joint venture, the Group
measures and recognizes any retained interest at its fair
value. The fair value assigned to the retained investment
is determined on the basis of its business plan, including
significant judgments when considering significant
assumptions such as long-term OIBDA margin, long-term
capital expenditure ratio, discount rate and perpetuity
growth rate which would be significantly affected by the
future trends in the economic, competitive, regulatory
and technological environment.
The decision to recognize an impairment loss involves
developing estimates that include, among others, an
analysis of the causes of the potential impairment, as well
as its timing and expected amount. Furthermore,
additional factors, such as technological obsolescence,
the suspension of certain services and other
circumstantial changes, which highlight the need to
evaluate a possible impairment, are taken into account.
The Telef\u00f3nica Group evaluates its cash-generating units\u2019
performance on a regular basis to identify potential
impairments of goodwill and other non-current assets.
Determining the recoverable amount of the cash-
generating units also entails the use of assumptions and
estimates and requires a significant element of judgment.
Deferred income taxes
The Group assesses the recoverability of deferred tax
assets based on estimates of future earnings, and of all
the options available to achieve an outcome, it considers
the most efficient one in tax terms within the legal
framework the Group is subject to. Such recoverability
ultimately depends on the Group\u2019s ability to generate
taxable earnings over the period for which the deferred
tax assets remain deductible. This analysis is based on the
estimated schedule for reversing deferred tax liabilities, as
well as estimates of taxable earnings, which are sourced
from internal projections that are continuously updated to
reflect the latest trends.
The recognition of tax assets and liabilities depends on a
series of factors, including estimates as to the timing and
realization of deferred tax assets and the projected tax
payment schedule. Actual Group company income tax
receipts and payments could differ from the estimates
made by the Group as a result of changes in tax
legislation, the outcome of underway tax proceedings or
unforeseen future transactions that could affect tax
balances.
Provisions
Provisions are recorded when, at the end of the period,
we have a present obligation as a result of past events,
whose settlement requires an outflow of resources that is
considered probable and can be measured reliably. This
obligation may be legal or constructive, arising from, but
not limited to, regulation, contracts, common practice or
public commitments, which have created a valid
expectation for third parties that we will assume certain
responsibilities.\u00a0 The amount recorded is the best
estimation performed by the management in respect of
the expenditure that will be required to settle the
obligations, considering all the information available at the
closing date, including the advice of external experts,
such as legal advisors or consultants.
Should we be unable to reliably measure the obligation,
no provision would be recorded and information would
then be presented in the notes to the Consolidated
Financial Statements.
Because of the inherent uncertainties in this estimation,
actual expenditures may be different from the originally
estimated amount recognized.
Revenue recognition
Bundled offers
Bundled offers that combine different elements are
assessed to determine whether it is necessary to separate
the different identifiable components and apply the
corresponding revenue recognition policy to each
element. Total package revenues are allocated among
the identified elements based on their respective
standalone selling prices.
Determining standalone selling prices for each identified
element requires estimates that are complex due to the
nature of the business.
A change in estimates of standalone selling prices could
affect the apportionment of revenue among the elements
and, as a result, the timing of recognition of revenues.
Leases
Accounting for rights and obligations as a lessee under a
lease contract requires the use of estimations to
determine the lease term in contracts that include
extension options or early termination options.
Determining the lease term involves making estimates
over the time horizon of the Group's strategic planning
process with respect to relevant factors such as expected
technological progress, possible regulatory
developments, market and competition trends or changes
in the business model. The assumptions regarding these
variables involve a significant degree of judgment to the
extent that the timing and nature of future changes are
difficult to anticipate.
Due to the uncertainties inherent to these estimates,
changes in the assumptions made in respect of uncertain
matters when determining the lease term of a lease
contract may have an impact on the amounts of the right
of use assets and lease liabilities recognized on the basis
of the estimates made by the Group.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODg_90777cce-a960-4c2f-87ab-b692dd85ab34": {
"value": "
Non-current assets and goodwill
The accounting treatment of investments in non-current
assets such as property, plant and equipment, intangible
assets and interests in associates and joint ventures,
entails the use of estimates to determine the useful life for
depreciation and amortization purposes and to assess fair
value at their acquisition dates for assets acquired in
business combinations.
Determining useful life requires making estimates in
connection with future technological developments and
alternative uses for assets. There is a significant element
of judgment involved in making technological
development assumptions, since the timing and scope of
future technological advances are difficult to predict.
Also, upon the sale or contribution of a controlled
business to an associate or joint venture, the Group
measures and recognizes any retained interest at its fair
value. The fair value assigned to the retained investment
is determined on the basis of its business plan, including
significant judgments when considering significant
assumptions such as long-term OIBDA margin, long-term
capital expenditure ratio, discount rate and perpetuity
growth rate which would be significantly affected by the
future trends in the economic, competitive, regulatory
and technological environment.
The decision to recognize an impairment loss involves
developing estimates that include, among others, an
analysis of the causes of the potential impairment, as well
as its timing and expected amount. Furthermore,
additional factors, such as technological obsolescence,
the suspension of certain services and other
circumstantial changes, which highlight the need to
evaluate a possible impairment, are taken into account.
The Telef\u00f3nica Group evaluates its cash-generating units\u2019
performance on a regular basis to identify potential
impairments of goodwill and other non-current assets.
Determining the recoverable amount of the cash-
generating units also entails the use of assumptions and
estimates and requires a significant element of judgment.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTI_eb97305a-d7f7-4f13-9f96-4ed235bb39ad": {
"value": "
Non-current assets and goodwill
The accounting treatment of investments in non-current
assets such as property, plant and equipment, intangible
assets and interests in associates and joint ventures,
entails the use of estimates to determine the useful life for
depreciation and amortization purposes and to assess fair
value at their acquisition dates for assets acquired in
business combinations.
Determining useful life requires making estimates in
connection with future technological developments and
alternative uses for assets. There is a significant element
of judgment involved in making technological
development assumptions, since the timing and scope of
future technological advances are difficult to predict.
Also, upon the sale or contribution of a controlled
business to an associate or joint venture, the Group
measures and recognizes any retained interest at its fair
value. The fair value assigned to the retained investment
is determined on the basis of its business plan, including
significant judgments when considering significant
assumptions such as long-term OIBDA margin, long-term
capital expenditure ratio, discount rate and perpetuity
growth rate which would be significantly affected by the
future trends in the economic, competitive, regulatory
and technological environment.
The decision to recognize an impairment loss involves
developing estimates that include, among others, an
analysis of the causes of the potential impairment, as well
as its timing and expected amount. Furthermore,
additional factors, such as technological obsolescence,
the suspension of certain services and other
circumstantial changes, which highlight the need to
evaluate a possible impairment, are taken into account.
The Telef\u00f3nica Group evaluates its cash-generating units\u2019
performance on a regular basis to identify potential
impairments of goodwill and other non-current assets.
Determining the recoverable amount of the cash-
generating units also entails the use of assumptions and
estimates and requires a significant element of judgment.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTY_62fd3683-a9d2-4bc3-8668-50148664700b": {
"value": "
Deferred income taxes
The Group assesses the recoverability of deferred tax
assets based on estimates of future earnings, and of all
the options available to achieve an outcome, it considers
the most efficient one in tax terms within the legal
framework the Group is subject to. Such recoverability
ultimately depends on the Group\u2019s ability to generate
taxable earnings over the period for which the deferred
tax assets remain deductible. This analysis is based on the
estimated schedule for reversing deferred tax liabilities, as
well as estimates of taxable earnings, which are sourced
from internal projections that are continuously updated to
reflect the latest trends.
The recognition of tax assets and liabilities depends on a
series of factors, including estimates as to the timing and
realization of deferred tax assets and the projected tax
payment schedule. Actual Group company income tax
receipts and payments could differ from the estimates
made by the Group as a result of changes in tax
legislation, the outcome of underway tax proceedings or
unforeseen future transactions that could affect tax
balances.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjQ3MzkwMTE2MjYxODk_a30e1a63-a410-4f5f-8bc5-a0f3c68d94f9": {
"value": "
Provisions
Provisions are recorded when, at the end of the period,
we have a present obligation as a result of past events,
whose settlement requires an outflow of resources that is
considered probable and can be measured reliably. This
obligation may be legal or constructive, arising from, but
not limited to, regulation, contracts, common practice or
public commitments, which have created a valid
expectation for third parties that we will assume certain
responsibilities.\u00a0 The amount recorded is the best
estimation performed by the management in respect of
the expenditure that will be required to settle the
obligations, considering all the information available at the
closing date, including the advice of external experts,
such as legal advisors or consultants.
Should we be unable to reliably measure the obligation,
no provision would be recorded and information would
then be presented in the notes to the Consolidated
Financial Statements.
Because of the inherent uncertainties in this estimation,
actual expenditures may be different from the originally
estimated amount recognized.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNC9mcmFnOjJhYmIzZDcwNTI1MjQyMzJiZTMyZGZkMWJlYmEzZDdiL3RleHRyZWdpb246MmFiYjNkNzA1MjUyNDIzMmJlMzJkZmQxYmViYTNkN2JfMjUyODg3Njc0NDAyNTc_5e7677fd-4c01-40ca-aff3-ac84d769b31e": {
"value": "
Provisions
Provisions are recorded when, at the end of the period,
we have a present obligation as a result of past events,
whose settlement requires an outflow of resources that is
considered probable and can be measured reliably. This
obligation may be legal or constructive, arising from, but
not limited to, regulation, contracts, common practice or
public commitments, which have created a valid
expectation for third parties that we will assume certain
responsibilities.\u00a0 The amount recorded is the best
estimation performed by the management in respect of
the expenditure that will be required to settle the
obligations, considering all the information available at the
closing date, including the advice of external experts,
such as legal advisors or consultants.
Should we be unable to reliably measure the obligation,
no provision would be recorded and information would
then be presented in the notes to the Consolidated
Financial Statements.
Because of the inherent uncertainties in this estimation,
actual expenditures may be different from the originally
estimated amount recognized.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNy9mcmFnOmNmMzVhNWE5MDdhNjRiNTA4NDAwZDIzYzlkYTI0ZDIzL3RleHRyZWdpb246Y2YzNWE1YTkwN2E2NGI1MDg0MDBkMjNjOWRhMjRkMjNfMjQ3MzkwMTE2MjUwODE_2a1198dd-ea40-4d51-ac9e-0ba7abdbae5d": {
"value": "
Note 4. Segment information
In 2022 the Telef\u00f3nica Group is reporting financial
information, both internally and externally, according to
the following segments: Telef\u00f3nica Spain, VMO2
(recorded by the equity method), Telef\u00f3nica Germany,
Telef\u00f3nica Brazil and Telef\u00f3nica Hispam (formed by the
Group's operators in Colombia, Mexico, Venezuela,
Ecuador, Argentina, Chile, Peru and Uruguay).
During 2021, compared to 2020, the Telef\u00f3nica Group
changed its reporting segments as follows:
(i) On June\u00a01, 2021, upon the establishment of the VMO2
joint venture (whose results are accounted for under the
equity method), the former Telef\u00f3nica United Kingdom
segment was replaced by the new VMO2 segment (see
notes 2 and 10). The 2021 results include the
consolidation of Telef\u00f3nica United Kingdom from January
1 to June 1, and the equity accounting of 50% of the net
result of VMO2 from June 1 to December 31 (see Note 10).
The gain registered on the establishment of VMO2,
amounting to 4,460 million euros (see notes 2 and 26), are
recorded in \"Other companies\".
(ii) The Telxius Group ceased to be a reporting segment
as a result of the sale of the telecommunications towers
divisions in Europe and Latin America (see Note 2). The
Telxius Group\u2019s results as well as the gain obtained for the
sale of the telecommunications towers divisions,
amounting to 6,099 million euros (see notes 2 and 26),
were recorded in \"Other companies\".
The impairment losses on goodwill and other assets of
Telef\u00f3nica Argentina recorded in 2020, the impairment
loss on goodwill of Telef\u00f3nica del Per\u00fa in 2021 (see Note
7) and the impairment losses on other assets of Telefonica
Argentina in 2022 (see notes 6 and 8), are included in the
Telef\u00f3nica Hispam segment.
The segments referred to above include the information
relating to the fixed, mobile, cable, data, internet,
television and other digital services businesses provided
in each country. Intersegment transactions are carried out
as if on an arm's length basis.\u00a0
Information relating to other Group companies not
specifically included in these segments is reported under
\"Other companies\" (see Appendix I), which includes
Telef\u00f3nica, S.A. and other holding companies, as well as
companies whose main purpose is to provide cross-
sectional services to Group companies and other
operations not included in the segments.The Incremental
Group and BE-terna Group, acquired in 2022, and
Cancom Group, acquired in 2021 (see Note 5), are
reported within \"Other companies\". \"Other companies\"
also includes the share of results of investments
accounted for by the equity method corresponding to the
fiber optic companies incorporated in 2021 and 2022 (see
Note 10).
The Group centrally manages borrowing activities, mainly
through Telef\u00f3nica, S.A. and other companies (see Note
19, Appendix III and Appendix V), so most of the Group's
financial assets and liabilities are reported under Other
companies. In addition, Telef\u00f3nica, S.A. is the head of the
Telef\u00f3nica tax group in Spain (see Note 25). Therefore, a
significant part of the deferred tax assets and liabilities is
included under Other companies. For these reasons, the
results of the segments are disclosed through operating
income.
The \"Eliminations\" of the Group at OIBDA level mainly
reflected the leases of Telxius Group (in 2020 and 2021,
up to the date of sale of these companies) to other
Telef\u00f3nica Group companies, due to the asymmetry in
accounting between lessor and lessee under IFRS 16. This
impact is mostly offset at operating income level.
Revenues and expenses arising from intra-group
invoicing for the use of the trademark and management
services were eliminated from the operating results of
each Group segment. The results of the holding
companies also exclude dividends from Group companies
and impairments of investments in Group companies.
These adjustments have no impact on the Group\u2019s
consolidated results. In addition, segment reporting
considers the impact of the purchase price allocation to
the assets acquired and the liabilities assumed by the
companies included in each segment. The assets and
liabilities presented in each segment are those managed
by the heads of each segment, regardless of their legal
structure.
The following table presents income, CapEx information (capital expenditures in intangible assets and property, plant and equipment, see Notes 6 and 8) and acquisitions of rights of
use (see Note 9) regarding the Group\u2019s operating segments:
| | | | | | | | |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other operating income and expenses(1) | | | | | | | | |
| | | | | | | | |
Depreciation and amortization | | | | | | | | |
| | | | | | | | |
Share of income (loss) of investments accounted for by the equity method | | | | | | | | |
| | | | | | | | |
Acquisitions of rights of use | | | | | | | | |
(1) Other operating income and expenses includes \u201cOther income\u201d, \u201cSupplies\u201d, \u201cPersonnel expenses\u201d and \u201cOther expenses\u201d. |
| | | | | | | | | |
|
| | Telef\u00f3nica United Kingdom | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Other operating income and expenses(1) | | | | | | | | | |
| | | | | | | | | |
Depreciation and amortization | | | | | | | | | |
| | | | | | | | | |
Share of (loss) income of investments accounted for by the equity method | | | | | | | | | |
| | | | | | | | | |
Acquisitions of rights of use(2) | | | | | | | | | |
(1)Other operating income and expenses includes \u201cOther income\u201d, \u201cSupplies\u201d, \u201cPersonnel expenses\u201d and \u201cOther expenses\u201d. |
(2) Additionally, rights of use in the amount of 2,633 million euros have been recorded in 2021 following the sale of the tower division of Telxius (see Note 9). |
| | | | | | | | |
|
| | Telef\u00f3nica United Kingdom | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other operating income and expenses(1) | | | | | | | | |
| | | | | | | | |
Depreciation and amortization | | | | | | | | |
| | | | | | | | |
Share of income (loss) of investments accounted for by the equity method | | | | | | | | |
| | | | | | | | |
Acquisitions of rights of use | | | | | | | | |
(1)Other operating income and expenses includes \u201cOther income\u201d, \u201cSupplies\u201d, \u201cPersonnel expenses\u201d and \u201cOther expenses\u201d. |
The table below shows the income, CapEx and acquisitions of rights of use of VMED O2 UK (VMO2) in 2022 and 2021 (see Note 2). VMO2 is a joint venture 50% owned by Telef\u00f3nica
and Liberty Global and is recorded under the equity method (see Note 10). The tables below show the information of the joint venture at 100% and the reconciliation with the
Telef\u00f3nica Group's share of income (loss) accounted for by the equity method.
| | |
| | |
| | June 1 to December 31, 2021 |
| | |
Other operating income and expenses | | |
| | |
Depreciation and amortization | | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
| | |
| | |
Realised and unrealised gains on derivative instruments, net | | |
Foreign currency transaction losses, net | | |
| | |
| | |
| | |
Result for the period (100% VMO2) | | |
50% attributable to Telef\u00f3nica Group | | |
| | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
Capital expenditures (CapEx) | | |
Acquisitions of rights of use | | |
| | | | | | | | |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Investments accounted for by the equity method | | | | | | | | |
Financial assets and other non-currents assets | | | | | | | | |
| | | | | | | | |
Other current financial assets | | | | | | | | |
Non-current assets and disposal groups held for sale | | | | | | | | |
| | | | | | | | |
Non-current financial liabilities | | | | | | | | |
Non-current lease liabilities | | | | | | | | |
| | | | | | | | |
Current financial liabilities | | | | | | | | |
Current lease liabilities | | | | | | | | |
Liabilities associated with non-current assets and disposal groups held for sale | | | | | | | | |
Total allocated liabilities | | | | | | | | |
The detail of assets and liabilities of VMO2 is as follows (amounts corresponding to
100% of the company, see Note 10):
| | |
|
| | |
| | |
| | |
Financial assets and other non-currents assets | | |
| | |
Other current financial assets | | |
| | |
Non-current financial liabilities | | |
Non-current lease liabilities | | |
| | |
Current financial liabilities | | |
Current lease liabilities | | |
| | |
The composition of segment revenues is as follows:
| | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Other and inter-segment eliminations | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Note: In the countries of Telef\u00f3nica Hispam segment with separate fixed and mobile operating companies, intercompany revenues were not considered.
(*) The detail of revenues for Telef\u00f3nica Spain is shown in the table below.
Given the convergence reached at Telef\u00f3nica Spain due to the high penetration of
convergent offers in Telef\u00f3nica Spain, the revenue breakdown by fixed and mobile is
less relevant in this segment. For this reason, management believes that the revenue
breakdown shown below is more meaningful.
| | | |
| | | |
| | | |
| | | |
Wholesalers, mobile handsets sales and others | | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8zNy9mcmFnOmNmMzVhNWE5MDdhNjRiNTA4NDAwZDIzYzlkYTI0ZDIzL3RleHRyZWdpb246Y2YzNWE1YTkwN2E2NGI1MDg0MDBkMjNjOWRhMjRkMjNfMjUyODg3Njc0NDQyODc_64788b87-64df-4e71-b90d-c1a83362665f": {
"value": "
Note 4. Segment information
In 2022 the Telef\u00f3nica Group is reporting financial
information, both internally and externally, according to
the following segments: Telef\u00f3nica Spain, VMO2
(recorded by the equity method), Telef\u00f3nica Germany,
Telef\u00f3nica Brazil and Telef\u00f3nica Hispam (formed by the
Group's operators in Colombia, Mexico, Venezuela,
Ecuador, Argentina, Chile, Peru and Uruguay).
During 2021, compared to 2020, the Telef\u00f3nica Group
changed its reporting segments as follows:
(i) On June\u00a01, 2021, upon the establishment of the VMO2
joint venture (whose results are accounted for under the
equity method), the former Telef\u00f3nica United Kingdom
segment was replaced by the new VMO2 segment (see
notes 2 and 10). The 2021 results include the
consolidation of Telef\u00f3nica United Kingdom from January
1 to June 1, and the equity accounting of 50% of the net
result of VMO2 from June 1 to December 31 (see Note 10).
The gain registered on the establishment of VMO2,
amounting to 4,460 million euros (see notes 2 and 26), are
recorded in \"Other companies\".
(ii) The Telxius Group ceased to be a reporting segment
as a result of the sale of the telecommunications towers
divisions in Europe and Latin America (see Note 2). The
Telxius Group\u2019s results as well as the gain obtained for the
sale of the telecommunications towers divisions,
amounting to 6,099 million euros (see notes 2 and 26),
were recorded in \"Other companies\".
The impairment losses on goodwill and other assets of
Telef\u00f3nica Argentina recorded in 2020, the impairment
loss on goodwill of Telef\u00f3nica del Per\u00fa in 2021 (see Note
7) and the impairment losses on other assets of Telefonica
Argentina in 2022 (see notes 6 and 8), are included in the
Telef\u00f3nica Hispam segment.
The segments referred to above include the information
relating to the fixed, mobile, cable, data, internet,
television and other digital services businesses provided
in each country. Intersegment transactions are carried out
as if on an arm's length basis.\u00a0
Information relating to other Group companies not
specifically included in these segments is reported under
\"Other companies\" (see Appendix I), which includes
Telef\u00f3nica, S.A. and other holding companies, as well as
companies whose main purpose is to provide cross-
sectional services to Group companies and other
operations not included in the segments.The Incremental
Group and BE-terna Group, acquired in 2022, and
Cancom Group, acquired in 2021 (see Note 5), are
reported within \"Other companies\". \"Other companies\"
also includes the share of results of investments
accounted for by the equity method corresponding to the
fiber optic companies incorporated in 2021 and 2022 (see
Note 10).
The Group centrally manages borrowing activities, mainly
through Telef\u00f3nica, S.A. and other companies (see Note
19, Appendix III and Appendix V), so most of the Group's
financial assets and liabilities are reported under Other
companies. In addition, Telef\u00f3nica, S.A. is the head of the
Telef\u00f3nica tax group in Spain (see Note 25). Therefore, a
significant part of the deferred tax assets and liabilities is
included under Other companies. For these reasons, the
results of the segments are disclosed through operating
income.
The \"Eliminations\" of the Group at OIBDA level mainly
reflected the leases of Telxius Group (in 2020 and 2021,
up to the date of sale of these companies) to other
Telef\u00f3nica Group companies, due to the asymmetry in
accounting between lessor and lessee under IFRS 16. This
impact is mostly offset at operating income level.
Revenues and expenses arising from intra-group
invoicing for the use of the trademark and management
services were eliminated from the operating results of
each Group segment. The results of the holding
companies also exclude dividends from Group companies
and impairments of investments in Group companies.
These adjustments have no impact on the Group\u2019s
consolidated results. In addition, segment reporting
considers the impact of the purchase price allocation to
the assets acquired and the liabilities assumed by the
companies included in each segment. The assets and
liabilities presented in each segment are those managed
by the heads of each segment, regardless of their legal
structure.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF80Ni9mcmFnOjliYmEzOGMxYzAxODQ4ZWU5NzcxYjUxNWU1MmU0NTA0L3RleHRyZWdpb246OWJiYTM4YzFjMDE4NDhlZTk3NzFiNTE1ZTUyZTQ1MDRfMjQ3MzkwMTE2MjUwNTU_6bf49871-d731-4063-929f-18bac333c8f1": {
"value": "
Note 5. Business combinations
2022
Acquisition of mobile assets of Oi Group
On April 20, 2022, the closing of the transaction related to
the Purchase Agreement for Acquisition of UPI Mobile
Assets of Oi Group took place, and Telef\u00f3nica Brasil
acquired, on such date, all the shares of the company
Garliava RJ Infraestrutura e Redes de Telecomunica\u00e7\u00f5es
S.A. (Garliava), to which the mobile assets of Oi Group
assigned to Telef\u00f3nica Brasil had been contributed, under
the segregation plan stated in the Oi Agreement (see
Note 29).
The mobile assets of Oi Group finally assigned to
Telef\u00f3nica Brasil were the following:
\u2022Customers: approximately 12.5 million (equivalent to
30% of the total customer base of the mobile assets of
Oi Group) \u2013 according to ANATEL\u2019s February 2022 data;
\u2022Spectrum: 43 MHz as national population-weighted
average (46% of the radiofrequency of the mobile
assets of Oi Group); and
\u2022Infrastructure: contracts for the use of approximately
2.7 thousand sites of mobile access (corresponding to
19% of the sites of the mobile assets of Oi Group).
This transaction brings benefits to the Brazilian
telecommunications sector, expanding the capacity to
make investments and create technological innovations in
a sustainable and rational manner, contributing to the
digitalization of the country through the construction and
expansion of networks in cutting-edge technologies, such
as 5G and fiber, which translates into services with better
coverage and quality to users. In addition, the transaction
has the potential to generate synergies for the Company,
through the optimization of operating costs and efficient
allocation of investments due to the integration of the
incorporated assets.
On the date of approval of these consolidated financial
statements, the Company has already concluded the
report for the allocation of the purchase price. The
following table presents the consideration, the fair value
of the identifiable assets and the liabilities assumed at the
acquisition date and the goodwill:
| |
| |
| |
| |
| |
| |
Property, plant and equipment | |
| |
| |
| |
| |
Cash and cash equivalents | |
| |
| |
| |
| |
| |
| |
The fair value of the licenses has been determined using
the discounted cash flow method of the Income
Approach, which considers the earning capacity of the
asset. The amortization period of the licenses ranges from
5 to 15 years (average period of 10.08 years).
The fair value of trade receivables amounts to 74 million
euros, which does not differ from the book value
consisting of a gross amount of 81 million euros, net of
estimated impairment losses of 7 million euros.
At the acquisition date, contingent liabilities have been
recognized at fair value in the amount of 90 million euros.
The contribution of Garliava since its inclusion in the
scope of consolidation and until December 31, 2022 was
206 million euros in revenues and 1 million euros in profit
for the period. The information is only available since the
mobile assets of Oi assigned to Telef\u00f3nica Brasil were
contributed to Garliava. Consequently, it is not
practicable to calculate these impacts as if the
transaction had taken place on January 1, 2022.
On September 17, 2022, Telef\u00f3nica Brasil, together with
Claro S.A. and TIM S.A. (\"Buyers\"), notified Oi, pursuant to
the Agreement, about (i) the determination of the post-
closing price adjustment in benefit of the Buyers; and (ii)
the losses known to date (as defined in the Agreement) in
relation to which the Buyers have indemnification rights
against the Seller in the total amount of 353 million
Brazilian reais, of which 64 million Brazilian reais
(approximately 12 million euros) are attributable to
Telef\u00f3nica Brasil. The post-closing adjustment notice
presents values and calculations determined with the
support of a specialized company, based on the best
analysis of the information received and understanding of
the Agreement, totaling the maximum amount of 3,187
million Brazilian reais for the price adjustment on behalf of
the Buyers. From the price adjustment amount calculated,
the amount attributable to Telef\u00f3nica Brasil is equivalent
to up to 1,075 million Brazilian reais (approximately 204
million euros), part of which (488 million Brazilian reais,
approximately 93 million euros) is guaranteed by the
retention of 10% on the amount paid for the acquisition
(see Note 2). On October 3, 2022, Telef\u00f3nica Brasil,
together with Claro S.A. and TIM S.A., started the
arbitration procedure against the Seller (see Note 29.c).
The Buyers made a judicial deposit of the amount
withheld from the updated purchase price (see Note 15),
until the dispute arising from the price adjustment is
resolved by arbitration, corresponding to Telef\u00f3nica Brazil
an amount of 522 million reais at December\u00a031, 2022
(approximately 94 million euros).
Acquisition of Incremental
On March 21, 2022, Telef\u00f3nica Telef\u00f3nica Tech UK &
Ireland, Ltd completed the acquisition of 100% of the
shares of the British group Perpetual TopCo, Limited and
affiliates (Incremental), one of Microsoft's fastest-growing
business partners in the UK, for a 104 million euros
consideration (including potential contingent payments
linked to its future performance). In addition, at the
closing of the transaction a payment was made in the
amount of 91 million euros to cancel payment obligations
of the acquired companies.
With this acquisition, the Group significantly increased its
scale and competencies in Microsoft technologies.
At the date of preparation of these consolidated financial
statements, the purchase price allocation is provisional.
The following table presents the consideration, the fair
value of assets and liabilities identified at the acquisition
date and the preliminary goodwill:
| |
| |
| |
Payment obligations cancelled | |
| |
| |
| |
| |
Property, plant and equipment | |
| |
| |
| |
Cash and cash equivalents | |
| |
| |
| |
| |
| |
Preliminary goodwill (Note 7) | |
The contribution of BE-terna Group to the profit for the
year, after the impact of the amortization of the assets
identified in the purchase price allocation, has been a 3
million euros loss.
2021
Acquisition of Cancom
On July\u00a029, 2021, Telef\u00f3nica Cybersecurity & Cloud Tech,
S.L.U. reached an agreement with Cancom Group for the
acquisition of 100% of the shares of the British company
Cancom Ltd.
Cancom Ltd (currently called Telef\u00f3nica Tech UK &
Ireland Ltd.) is a company that provides end-to-end
advanced cloud and cybersecurity services in the United
Kingdom and Ireland.
The following table presents the transaction, fair value of
assets and liabilities identified at the acquisition moment,
and the goodwill generated:
| |
| |
| |
Adjustments of debt and cash | |
Consideration (share purchase price) | |
| |
| |
| |
Property, plant and equipment | |
| |
| |
| |
| |
Cash and cash equivalents | |
| |
Other non-current liabilities | |
Other current liabilities | |
| |
| |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Furniture, tools and other items | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Total additions of property, plant and equipment in 2021 amounted to 4,286 million euros, including the additions corresponding to companies held for sale and
sold companies during the annual reporting period (see Note 2).
\"Business combinations\" in 2022 corresponds to the
acquisition of rights of use of Oi, the Incremental Group
and the BE-terna Group (see Note 5) amounting to 105, 1
and 5 million euros, respectively.
\"Business combinations\" in 2021 corresponded to the
inclusion of Cancom Ltd in the consolidation perimeter
(see Note 5) amounted to 8 million euros.
\"Business combinations\" in 2022 include 117 million euros
of lease liabilities related to the acquisition of rights of use
of Oi (see Note 29), as well as, 2 and 5 million euros for the
incorporation of the Incremental group and the BE-terna
group, respectively (see Note 2 and 5).
\"Business combinations\" in 2021 corresponded to the
acquisition of Cancom (see Note 5) amounted to 14 million
euros.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF80OS9mcmFnOmY1MjAwZTA2NDJlMzQwOGU5NDRiOWI2ODliYjExMzRjL3RleHRyZWdpb246ZjUyMDBlMDY0MmUzNDA4ZTk0NGI5YjY4OWJiMTEzNGNfMjQ3MzkwMTE2MjUyNjQ_74bc0289-e8b9-407d-bd97-fdbda6887428": {
"value": "
Note 6. Intangible assets
The composition of and movements in net intangible
assets in 2022 and 2021 are as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Intangible assets in process | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Intangible assets in process | | | | | | | | |
| | | | | | | | |
(1) Total additions of intangible assets in 2021 amounted to 2,981 million euros, including the additions corresponding to companies held for sale and sold
companies during the annual reporting period (see Note 2).
Additions of spectrum in 2022 amounted to 173 million
euros (1,704 million euros in 2021, including the additions
corresponding to \"Non-current assets and disposal
groups held for sale\").
In 2022 15 MHz of spectrum in the 1900 MHz band was
renewed in Colombia for an amount of 125 million euros.
The amount pending payment is detailed in Notes 21 and
22. In 2021 the acquisition of spectrum for 5G in Chile for
131 million euros was recorded.
In 2022 Telef\u00f3nica Brazil renewed spectrum in the 850
MHz band for an amount of 35 million euros. The amount
pending payment is detailed in Notes 21 and 22.
In 2021 Telef\u00f3nica Spain acquired one block of 10 MHz in
the 3.4 GHz band and 20 MHz of spectrum in the 700MHz
band for an amount of 352 million euros.
On December 3, 2021, ANATEL signed the terms of
authorization for the use of the blocks of radio frequencies
assigned to Telef\u00f3nica Brazil. Pursuant to the terms, in
addition to the amounts related to radio frequencies to be
paid to ANATEL, the Company is making contributions to
the Entidade Administradora de Faixa (\"EAF\" / Band
Management Entity) and to the Entidade Administradora
da Conectividade de Escolas (\"EACE\" / School
Connectivity Management Entity). The estimated total
cost, registered as addition in \"service concession
arrangements and licenses\" in 2021, amounted to 4,459
million Brazilian real (700 million euros at the 2021
average exchange rate), of which 929 million Brazilian real
from radio frequency licenses correspond to ANATEL (146
million euros at the 2021 average exchange rate), 2,104
million Brazilian real to \"EAF\" (330 million euros at the
2021 average exchange rate) and 1,426 million Brazilian
real to \"EACE\" (224 million euros at the 2021 average
exchange rate).
As a requirement for obtaining these authorizations, the
Company, as well as the other successful
telecommunication service bidder providers, assumed a
series of commitments. For the 2.3 GHz and 3.5 GHz
spectrum band obligations for coverage commitments
and fiber optic backbone network deployment in
locations with little or no connectivity infrastructure. In
addition, the successful bidders for the 3.5 GHz band
must fund all activities related to the migration of satellite
TV services from the C band to the Ku band, for the
construction of six high-capacity info-ways by laying sub
fluvial cables for the Integrated and Sustainable Amazon
Program (\"PAIS\") and the implementation of private (fixed
and mobile) communication networks reserved for the
Federal Public Administration. \"EAF\" will be responsible
for the execution of these activities. The successful
bidders for the 26 GHz spectrum bands will be required to
fund \"EACE's\" activities for broadband connectivity
projects for public schools to be selected across the
country.
In March 2021 Telef\u00f3nica United Kingdom acquired 40
MHZ of spectrum in the 3.6 GHz band and 20 MHz in the
700 MHz FDD band, amounting to 515 million euros. The
acquisition was accounted under \"Non-current assets
and disposal groups held for sale\" in the statement of
financial position (see Note 2).
\"Impairments\" in 2022 includes an impairment loss related
to licenses and sofware of Telef\u00f3nica Argentina,
amounting to 21 million euros.
\"Business combinations\u201d in 2022 corresponds mainly to
the acquisition of the intangible assets of Oi, the
Incremental Group and the BE-terna Group amounting to
539, 24 and 77 million euros (see Note 5), respectively.
\u201cBusiness combinations\u201d in 2021 corresponded to the
inclusion of Cancom Ltd in the consolidation perimeter
(see Note 5).
\"Transfers and others\" in 2021 included the
reclassification of the intangible assets of Telef\u00f3nica de El
Salvador amounting to 38 million euros to \"Non-current
assets and disposal groups held for sale\" of the statement
of financial position (see Note 30).
Appendix VI contains the details of the main concessions
and licenses which the Group operates.
The effect of the translation into euros of the intangible
assets of the Group's companies in Argentina and
Venezuela, together with the effect of the hyperinflation
adjustments (see Note 3.a), is shown in the column
\"Translation differences and hyperinflation adjustments\".
The gross cost, accumulated amortization and impairment
losses of intangible assets at December\u00a031, 2022 and 2021
are as follows:
| | | | |
Balance at December 31, 2022 |
| | | | |
Service concession arrangements and licenses | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Intangible assets in process | | | | |
| | | | |
| | | | |
Balance at December 31, 2021 |
| | | | |
Service concession arrangements and licenses | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Intangible assets in process | | | | |
| | | | |
Note 7. Goodwill
Movement in goodwill
The movement in goodwill assigned to each Group
segment was as follows:
Additions of Telef\u00f3nica Brazil in 2022 mainly correspond
to the goodwill from the acquisition of the assets of the
mobile business of Oi Group (see notes 2 and 5).
Additions in 2022 also include the preliminary goodwill
from the acquisitions of Incremental and BE-terna,
amounting to 170 million euros and 279 million euros,
respectively (see Note 5).
Additions in 2021 included the goodwill related to the
acquisition of Cancom amounting to 284 million euros
(see Note 5).
In 2021 an impairment loss was recognized on the
goodwill allocated to Telef\u00f3nica del Per\u00fa, amounting to
393 million euros, with a balancing entry in \u201cOther
expenses\u201d (see Note 26).
In August 2021 the closing of the second phase of the
agreement of the contract dated June 8, 2020 between
Telef\u00f3nica Germany and Telxius was carried out and the
sites corresponding to this phase were sold to ATC (see
Note 2). The goodwill assigned amounting to 172 million
euros was derecognized.
Disposals of Telef\u00f3nica Hispam in 2021 included 137
million euros following the agreement for the sale of 60%
of the shares of InfraCo, SpA by Telef\u00f3nica Chile (see
Note 2).
The amount of Disposals of Telef\u00f3nica Brazil in 2021
corresponded to the goodwill derecognized following the
agreement with Caisse de d\u00e9p\u00f4t et placement du
Qu\u00e9bec or the construction, deployment and
commercialization of a fiber-to-the-home (FTTH) network
in Brazil, that was closed in July 2021 (see Note 10).
Cash-generating units
In order to test for impairment, goodwill was allocated to
the different cash-generating units (CGUs), which are
grouped into the following reportable operating
segments:
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Telef\u00f3nica Tech UK & Ireland | | |
| | |
| | |
| | |
reference. For specific cases, extended business plans are
used to cover the five-year period of cash flows, when the
normalization period does not properly reflect the
expected evolution of the business.
Finally, to determine the terminal value of each CGU, a
constant free cash flows growth over time is assumed,
applying a terminal growth rate. The model used is similar
to the dividend discount model developed by Gordon-
Shapiro, internationally recognized for business
valuations.
The process of preparing the CGUs\u2019 business plans
considers the current market condition of each CGU,
analyzing the macroeconomic, competitive, regulatory
and technological environments, as well as the growth
opportunities of the CGUs, and the differentiation
capabilities compared to the competition based on
market projections. A growth target is therefore defined
for each CGU, based on the appropriate allocation of
operating resources and the capital investments required
to achieve the target. In addition, operating efficiency
improvements are defined, in line with the strategic
transformation initiatives, in order to increase the
forecasted operating cash flow. In this process, the Group
considers the compliance with business plans in the past.
Main assumptions used in calculating
value in use\u00a0
CGUs\u2019 value in use are calculated based on the approved
business plans. Certain variables are then considered,
including the long-term OIBDA margin and the long-term
Capital Expenditure ratio (expressed as a percentage of
revenue), which are considered the key operating
variables to measure business performance and to set
financial targets. Finally, the discount rates and the
perpetuity growth rates are considered.\u00a0
The main variables considered for the most significant
CGUs (T. Brazil, T. Spain, and T. Germany), are described
below.
Revenues
In terms of revenues, the plan is in line with the average
three-year estimates made by analysts, which include a
trend towards stability or improvement.
OIBDA margin and long-term Capital Expenditure
(CapEx) ratio
The values obtained, as described in the previous
paragraphs, are compared with the available data of
analysts and competitors in the geographic markets
where Telef\u00f3nica Group operates.
In Europe, the long-term OIBDA margins two-years
estimates of Telef\u00f3nica Group's analysts are within a
range of 34% to 39% for Spain and 30% to 33% for
Germany.
Regarding the long-term ratio of CapEx over revenues,
the valuations performed for the impairment tests for
Spain and Germany consider the opinions of Telef\u00f3nica
Group\u2019s analysts with regard to investment needs (around
12% for Spain and around 14% for Germany).
As for the long-term OIBDA margin two-years estimates
of Telef\u00f3nica Group's analysts for the operator in Brazil, it
is in a range within 41% to 46%. Regarding investments,
the operator will invest a percentage over the horizon of
the projected plan that is in line with the investment
needs foreseen for the development of its business,
which on average is around 16%.
Discount rate
The discount rate, applied to discount cash flows, is the
weighted average cost of capital (WACC), determined by
the weighted average cost of equity and cost of debt
according to the finance structure determined for each
CGU.
This rate is calculated using the capital asset pricing
model (CAPM), which considers the asset\u2019s systemic risk,
and the impact of those risks not already considered on
cash flows, such as country risk, business-specific credit
risk, currency risk and price risk specific to the financial
asset, constantly monitoring the fluctuations of the
financial markets.
The most significant components of WACC are
summarized as follows:
\u2022Risk-Free Rate: defined as the interest rate offered by
long-term sovereign bonds. The rate is determined
using current market data and equilibrium level
estimates (according to standard econometric models,
supported by modeling of neutral rates prepared by the
central banks themselves) in which the interest rates
should be located, thus adjusting the yields, influenced
by central banks interventions.
\u2022Political Risk Premium: adds the country's insolvency
risk due to political and/or financial events; calculation is
based on the quoted prices of credit default swaps for
each country or, the EMBI+ index published by JP
Morgan based on the information available and the
liquidity conditions of these swaps.
\u2022Equity Risk Premium: the return in excess that equity
assets are expected to yield over the risk-free rate. This
is determined using a combination of historical
approaches (ex post) backed by external publications
and studies based on historical market returns series,
and prospective approaches (ex-ante), based on
market publications, considering the medium- and
long-term profit expectations based on the degree of
maturity and development of each country.
\u2022Beta Coefficient: a measure of the volatility, or
systematic risk, of an equity asset in comparison to the
entire market. It is estimated based on a series of
historical share prices of comparable companies listed
on the stock exchange, to estimate the correlation
between the company shares\u00b4 returns and the stock
market returns, of the country where the company is
listed.
The main underlying data used in these calculations are
obtained from independent and renowned external
information sources.
The discount rates applied to the cash flow projections in
2022 and 2021 for the main CGUs are as follows:
| | |
| |
Discount rate in local currency | | |
| | |
| | |
| | |
| | |
| |
Discount rate in local currency | | |
| | |
| | |
| | |
Perpetuity growth rate
Cash flow projections from the sixth year are calculated
using an expected constant growth rate (g), considering
the analyst consensus estimates for each business, based
on the maturity of the industry and technology, and the
degree of development of each country. Each indicator is
compared to the forecasted long-term real and nominal
GDP growth of each country and growth data from
external sources, adjusting any particular case with
specific characteristics related to the business evolution.
The perpetuity growth rates applied to the cash flow
projections in 2022 and 2021 for the main CGUs are as
follows:
| | |
Perpetuity growth rate in local currency | | |
| | |
| | |
| | |
The perpetuity growth rates for 2022 remained stable
comparing to 2021. In Brazil, the perpetuity growth rate is
within the range of the estimations of the analysts, it is
consistent with the Brazilian Central Bank\u2019s medium-term
inflation target (in a range between 1.5% and 4.5%) and it
is below the nominal GDP growth rate of around 5.5%,
according to market expectations.
Sensitivity to changes in assumptions
The Group performs a sensitivity analysis of the
impairment test by considering reasonable changes in the
main assumptions used in the test. For the main CGU, the
following maximum increases or decreases were
assumed, expressed in percentage points:\u00a0
| | | |
Changes in key assumptions, In percentage points | | | |
| | | |
| | | |
| | | |
Long-term operating variables | | | |
| | | |
| | | |
short- and medium-term growth expectations. In this
context, the sharp rise in interest rates has increased the
discount rate to 9.4%. Therefore, in the sensitivity of the
calculation of the value in use of Telef\u00f3nica de Chile to
reasonable variations in the key assumptions, an increase
of around 50 points basis points in the WACC would
result in an impairment of goodwill of 60 million euros,
while a decrease of around 25 basis points in the
perpetuity growth rate (2.8%) would not have a negative
impact on the carrying amount. On the business side, a
1.25 percentage point decrease in the OIBDA margin
would result in an impairment of goodwill of 116 million
euros and an increase of 0.63 percentage points in the
investment ratio would have a negative impact of
approximately 60 million euros on the carrying amount of
goodwill.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF80OS9mcmFnOmY1MjAwZTA2NDJlMzQwOGU5NDRiOWI2ODliYjExMzRjL3RleHRyZWdpb246ZjUyMDBlMDY0MmUzNDA4ZTk0NGI5YjY4OWJiMTEzNGNfMjQ3MzkwMTE2MjUyNjQ_e123d302-8adb-4e02-a10b-67b45b8a6371": {
"value": "
Note 6. Intangible assets
The composition of and movements in net intangible
assets in 2022 and 2021 are as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Intangible assets in process | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Intangible assets in process | | | | | | | | |
| | | | | | | | |
(1) Total additions of intangible assets in 2021 amounted to 2,981 million euros, including the additions corresponding to companies held for sale and sold
companies during the annual reporting period (see Note 2).
Additions of spectrum in 2022 amounted to 173 million
euros (1,704 million euros in 2021, including the additions
corresponding to \"Non-current assets and disposal
groups held for sale\").
In 2022 15 MHz of spectrum in the 1900 MHz band was
renewed in Colombia for an amount of 125 million euros.
The amount pending payment is detailed in Notes 21 and
22. In 2021 the acquisition of spectrum for 5G in Chile for
131 million euros was recorded.
In 2022 Telef\u00f3nica Brazil renewed spectrum in the 850
MHz band for an amount of 35 million euros. The amount
pending payment is detailed in Notes 21 and 22.
In 2021 Telef\u00f3nica Spain acquired one block of 10 MHz in
the 3.4 GHz band and 20 MHz of spectrum in the 700MHz
band for an amount of 352 million euros.
On December 3, 2021, ANATEL signed the terms of
authorization for the use of the blocks of radio frequencies
assigned to Telef\u00f3nica Brazil. Pursuant to the terms, in
addition to the amounts related to radio frequencies to be
paid to ANATEL, the Company is making contributions to
the Entidade Administradora de Faixa (\"EAF\" / Band
Management Entity) and to the Entidade Administradora
da Conectividade de Escolas (\"EACE\" / School
Connectivity Management Entity). The estimated total
cost, registered as addition in \"service concession
arrangements and licenses\" in 2021, amounted to 4,459
million Brazilian real (700 million euros at the 2021
average exchange rate), of which 929 million Brazilian real
from radio frequency licenses correspond to ANATEL (146
million euros at the 2021 average exchange rate), 2,104
million Brazilian real to \"EAF\" (330 million euros at the
2021 average exchange rate) and 1,426 million Brazilian
real to \"EACE\" (224 million euros at the 2021 average
exchange rate).
As a requirement for obtaining these authorizations, the
Company, as well as the other successful
telecommunication service bidder providers, assumed a
series of commitments. For the 2.3 GHz and 3.5 GHz
spectrum band obligations for coverage commitments
and fiber optic backbone network deployment in
locations with little or no connectivity infrastructure. In
addition, the successful bidders for the 3.5 GHz band
must fund all activities related to the migration of satellite
TV services from the C band to the Ku band, for the
construction of six high-capacity info-ways by laying sub
fluvial cables for the Integrated and Sustainable Amazon
Program (\"PAIS\") and the implementation of private (fixed
and mobile) communication networks reserved for the
Federal Public Administration. \"EAF\" will be responsible
for the execution of these activities. The successful
bidders for the 26 GHz spectrum bands will be required to
fund \"EACE's\" activities for broadband connectivity
projects for public schools to be selected across the
country.
In March 2021 Telef\u00f3nica United Kingdom acquired 40
MHZ of spectrum in the 3.6 GHz band and 20 MHz in the
700 MHz FDD band, amounting to 515 million euros. The
acquisition was accounted under \"Non-current assets
and disposal groups held for sale\" in the statement of
financial position (see Note 2).
\"Impairments\" in 2022 includes an impairment loss related
to licenses and sofware of Telef\u00f3nica Argentina,
amounting to 21 million euros.
\"Business combinations\u201d in 2022 corresponds mainly to
the acquisition of the intangible assets of Oi, the
Incremental Group and the BE-terna Group amounting to
539, 24 and 77 million euros (see Note 5), respectively.
\u201cBusiness combinations\u201d in 2021 corresponded to the
inclusion of Cancom Ltd in the consolidation perimeter
(see Note 5).
\"Transfers and others\" in 2021 included the
reclassification of the intangible assets of Telef\u00f3nica de El
Salvador amounting to 38 million euros to \"Non-current
assets and disposal groups held for sale\" of the statement
of financial position (see Note 30).
Appendix VI contains the details of the main concessions
and licenses which the Group operates.
The effect of the translation into euros of the intangible
assets of the Group's companies in Argentina and
Venezuela, together with the effect of the hyperinflation
adjustments (see Note 3.a), is shown in the column
\"Translation differences and hyperinflation adjustments\".
The gross cost, accumulated amortization and impairment
losses of intangible assets at December\u00a031, 2022 and 2021
are as follows:
| | | | |
Balance at December 31, 2022 |
| | | | |
Service concession arrangements and licenses | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Intangible assets in process | | | | |
| | | | |
| | | | |
Balance at December 31, 2021 |
| | | | |
Service concession arrangements and licenses | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Intangible assets in process | | | | |
| | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF80OS9mcmFnOmY1MjAwZTA2NDJlMzQwOGU5NDRiOWI2ODliYjExMzRjL3RleHRyZWdpb246ZjUyMDBlMDY0MmUzNDA4ZTk0NGI5YjY4OWJiMTEzNGNfMjQ3MzkwMTE2MjUzNjI_8cb23252-b8e8-404b-b2c9-9625251fd1ff": {
"value": "
The composition of and movements in net intangible
assets in 2022 and 2021 are as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Intangible assets in process | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | Translation differences and hyperinflation adjustments | | |
Service concession arrangements and licenses | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Intangible assets in process | | | | | | | | |
| | | | | | | | |
(1) Total additions of intangible assets in 2021 amounted to 2,981 million euros, including the additions corresponding to companies held for sale and sold
companies during the annual reporting period (see Note 2).
The composition and movements in 2022 and 2021 of the
items comprising net \"Property, plant and equipment\"
were as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | |
| | | | | | | | | |
| | | | | | | | | |
Furniture, tools and other items | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Furniture, tools and other items | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Total additions of property, plant and equipment in 2021 amounted to 4,286 million euros, including the additions corresponding to companies held for sale and
sold companies during the annual reporting period (see Note 2).
In 2022, there was an increase in the depreciation of
property, plant and equipment amounting to 8 million
euros (47 million euros in 2021) due to the reduction in the
useful lives of certain assets of Telef\u00f3nica M\u00e9xico as a
result of the transformation of the operating model
announced in November 2019.
| | | | | | | | |
| | | | | | | | |
| | | | | | | Translation differences and hyperinflation | |
Rights of use on land and natural properties | | | | | | | | |
Rights of use on buildings | | | | | | | | |
Rights of use on plant and machinery | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Sale of the towers division of Telxius | | | | | Translation differences and hyperinflation | |
Rights of use on\u00a0 land and natural properties | | | | | | | | | |
Rights of use on buildings | | | | | | | | | |
Rights of use on plant and machinery | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
reference. For specific cases, extended business plans are
used to cover the five-year period of cash flows, when the
normalization period does not properly reflect the
expected evolution of the business.
Finally, to determine the terminal value of each CGU, a
constant free cash flows growth over time is assumed,
applying a terminal growth rate. The model used is similar
to the dividend discount model developed by Gordon-
Shapiro, internationally recognized for business
valuations.
The process of preparing the CGUs\u2019 business plans
considers the current market condition of each CGU,
analyzing the macroeconomic, competitive, regulatory
and technological environments, as well as the growth
opportunities of the CGUs, and the differentiation
capabilities compared to the competition based on
market projections. A growth target is therefore defined
for each CGU, based on the appropriate allocation of
operating resources and the capital investments required
to achieve the target. In addition, operating efficiency
improvements are defined, in line with the strategic
transformation initiatives, in order to increase the
forecasted operating cash flow. In this process, the Group
considers the compliance with business plans in the past.
Main assumptions used in calculating
value in use\u00a0
CGUs\u2019 value in use are calculated based on the approved
business plans. Certain variables are then considered,
including the long-term OIBDA margin and the long-term
Capital Expenditure ratio (expressed as a percentage of
revenue), which are considered the key operating
variables to measure business performance and to set
financial targets. Finally, the discount rates and the
perpetuity growth rates are considered.\u00a0
The main variables considered for the most significant
CGUs (T. Brazil, T. Spain, and T. Germany), are described
below.
Revenues
In terms of revenues, the plan is in line with the average
three-year estimates made by analysts, which include a
trend towards stability or improvement.
OIBDA margin and long-term Capital Expenditure
(CapEx) ratio
The values obtained, as described in the previous
paragraphs, are compared with the available data of
analysts and competitors in the geographic markets
where Telef\u00f3nica Group operates.
In Europe, the long-term OIBDA margins two-years
estimates of Telef\u00f3nica Group's analysts are within a
range of 34% to 39% for Spain and 30% to 33% for
Germany.
Regarding the long-term ratio of CapEx over revenues,
the valuations performed for the impairment tests for
Spain and Germany consider the opinions of Telef\u00f3nica
Group\u2019s analysts with regard to investment needs (around
12% for Spain and around 14% for Germany).
As for the long-term OIBDA margin two-years estimates
of Telef\u00f3nica Group's analysts for the operator in Brazil, it
is in a range within 41% to 46%. Regarding investments,
the operator will invest a percentage over the horizon of
the projected plan that is in line with the investment
needs foreseen for the development of its business,
which on average is around 16%.
Discount rate
The discount rate, applied to discount cash flows, is the
weighted average cost of capital (WACC), determined by
the weighted average cost of equity and cost of debt
according to the finance structure determined for each
CGU.
This rate is calculated using the capital asset pricing
model (CAPM), which considers the asset\u2019s systemic risk,
and the impact of those risks not already considered on
cash flows, such as country risk, business-specific credit
risk, currency risk and price risk specific to the financial
asset, constantly monitoring the fluctuations of the
financial markets.
The most significant components of WACC are
summarized as follows:
\u2022Risk-Free Rate: defined as the interest rate offered by
long-term sovereign bonds. The rate is determined
using current market data and equilibrium level
estimates (according to standard econometric models,
supported by modeling of neutral rates prepared by the
central banks themselves) in which the interest rates
should be located, thus adjusting the yields, influenced
by central banks interventions.
\u2022Political Risk Premium: adds the country's insolvency
risk due to political and/or financial events; calculation is
based on the quoted prices of credit default swaps for
each country or, the EMBI+ index published by JP
Morgan based on the information available and the
liquidity conditions of these swaps.
\u2022Equity Risk Premium: the return in excess that equity
assets are expected to yield over the risk-free rate. This
is determined using a combination of historical
approaches (ex post) backed by external publications
and studies based on historical market returns series,
and prospective approaches (ex-ante), based on
market publications, considering the medium- and
long-term profit expectations based on the degree of
maturity and development of each country.
\u2022Beta Coefficient: a measure of the volatility, or
systematic risk, of an equity asset in comparison to the
entire market. It is estimated based on a series of
historical share prices of comparable companies listed
on the stock exchange, to estimate the correlation
between the company shares\u00b4 returns and the stock
market returns, of the country where the company is
listed.
The main underlying data used in these calculations are
obtained from independent and renowned external
information sources.
The discount rates applied to the cash flow projections in
2022 and 2021 for the main CGUs are as follows:
| | |
| |
Discount rate in local currency | | |
| | |
| | |
| | |
| | |
| |
Discount rate in local currency | | |
| | |
| | |
| | |
Perpetuity growth rate
Cash flow projections from the sixth year are calculated
using an expected constant growth rate (g), considering
the analyst consensus estimates for each business, based
on the maturity of the industry and technology, and the
degree of development of each country. Each indicator is
compared to the forecasted long-term real and nominal
GDP growth of each country and growth data from
external sources, adjusting any particular case with
specific characteristics related to the business evolution.
The perpetuity growth rates applied to the cash flow
projections in 2022 and 2021 for the main CGUs are as
follows:
| | |
Perpetuity growth rate in local currency | | |
| | |
| | |
| | |
The perpetuity growth rates for 2022 remained stable
comparing to 2021. In Brazil, the perpetuity growth rate is
within the range of the estimations of the analysts, it is
consistent with the Brazilian Central Bank\u2019s medium-term
inflation target (in a range between 1.5% and 4.5%) and it
is below the nominal GDP growth rate of around 5.5%,
according to market expectations.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF81NS9mcmFnOjJiZTljYzI2NjNlNjRiZTA4MDIzOGI4MTBjZmNhNzkxL3RleHRyZWdpb246MmJlOWNjMjY2M2U2NGJlMDgwMjM4YjgxMGNmY2E3OTFfMjQ3MzkwMTE2MjU2MjI_e936c84a-e181-4249-93ef-41c10bbbd41e": {
"value": "
Note 8. Property, plant and equipment
The composition and movements in 2022 and 2021 of the
items comprising net \"Property, plant and equipment\"
were as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | |
| | | | | | | | | |
| | | | | | | | | |
Furniture, tools and other items | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | Translation differences and hyperinflation adjustments | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Furniture, tools and other items | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Total additions of property, plant and equipment in 2021 amounted to 4,286 million euros, including the additions corresponding to companies held for sale and
sold companies during the annual reporting period (see Note 2).
Telef\u00f3nica Spain's investments in property plant and
equipment in 2022 and 2021 amounted to 1,288 and 1,155
million euros, respectively. The rapid rollout of fiber
continues, with more than 28 million premises passed in
Telef\u00f3nica Spain by the end of 2022, as well as the
development of the 5G network reaching, 85% population
coverage by the end of the year.
Telef\u00f3nica Germany's investments in property, plant and
equipment in 2022 and 2021 amounted to 854 and 913
million euros, respectively. The strong progress in 5G
rollout and network modernization continues. 5G
population coverage stood at approximately 80% at the
end of 2022.
Telef\u00f3nica Brazil's investments in property, plant and
equipment in 2022 and 2021 amounted to 1,277 and 1,049
million euros, respectively. The investments were mainly
dedicated to the expansion of the coverage and capacity
of the 4G mobile networks, with a coverage of 96% of the
population, and to the improvement of the quality of the
network and the expansion of the FTTH network in the
fixed business, with more than 23.3\u00a0million premises
passed.
Telef\u00f3nica Hispam's investments in property, plant and
equipment in 2022 and 2021 amounted to 732 and 680
million euros, respectively. Investments continued to
focus on the improvement of the mobile networks (with
the expansion of the coverage and capacity
reinforcement), as well as on the deployment of its own
fixed network. Efficient management of available
resources and optimization of CapEx are the main
management levers in the region, with a focus on
simplification, digitalization of processes and the search
for synergies through the promotion of regional initiatives.
Telef\u00f3nica United Kingdom's investments in property,
plant and equipment in 2021, up to the completion of the
transaction (see Note 2), amounted to 366 million euros.
\"Impairments\" in 2022 includes an impairment loss related
to assets of Telef\u00f3nica Argentina, amounting to 56 million
euros.
\"Business combinations\" in 2022 mainly correspond to the
acquisition of property, plant and equipment of Oi, the
Incremental Group and the BE-terna Group amounting to
29, 1 and 6 million euros (see Note 5), respectively.
\"Business combinations\" in 2021 mainly corresponded to
the inclusion of Cancom Ltd in the consolidation
perimeter (see Note 5) amounted to 15 million euros.
In 2022, there was an increase in the depreciation of
property, plant and equipment amounting to 8 million
euros (47 million euros in 2021) due to the reduction in the
useful lives of certain assets of Telef\u00f3nica M\u00e9xico as a
result of the transformation of the operating model
announced in November 2019.
\"Transfers and others\" in 2021 included the
reclassifications of property, plant and equipment of
Telef\u00f3nica El Salvador and fiber optic assets of Telef\u00f3nica
Colombia amounted to 70 and 53 million euros
respectively, to \"Non-current assets and disposal groups
held for sale\" of the statement of financial position (see
Note 30).
\u201cBusiness sale\u201d in 2021 mainly corresponded to the sales
of InfraCo, SpA and the second phase of the sale of
towers by Telefonica Germany (see Note 2) amounted to
158 and 126 million euros, respectively, and the assets
associated to Fibrasil following the Caisse de d\u00e9p\u00f4t et
placement du Qu\u00e9bec (CDPQ) agreement and the sale of
two data centers in Spain after the agreement with
Nabiax (see Note 10) for a total amount of 36 and\u00a0 63
million euros, respectively.
The effect of translating into euros of property, plant and
equipment of the Group's companies in Argentina and
Venezuela, together with the effect of the hyperinflation
adjustments (see Note 3.a), is shown in the column
\"Translation differences and hyperinflation adjustments\".
Telef\u00f3nica Group companies purchased insurance
policies to reasonably cover the possible risks to which
their property, plant and equipment used in operations
are subject, with suitable limits and coverage.
Additionally, as part of its commercial activities and
network deployment, the Group maintains several
property acquisition commitments. The timing of
scheduled payments in this regard is disclosed in Note 26.
The gross cost, accumulated depreciation and
impairment losses of property, plant and equipment at
December\u00a031, 2022 and 2021 were as follows:
| | | | |
Balance at December 31, 2022 |
| | | | |
| | | | |
| | | | |
Furniture, tools and other items | | | | |
| | | | |
| | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Sale of the towers division of Telxius | | | | | Translation differences and hyperinflation | |
Rights of use on\u00a0 land and natural properties | | | | | | | | | |
Rights of use on buildings | | | | | | | | | |
Rights of use on plant and machinery | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
together with the effect of the hyperinflation adjustments
(see Note 3.a) is shown in the column \"Translation
differences and hyperinflation adjustments\".
In 2022, there was an increase in amortization of rights of
use amounting to 17 million euros (40 million euros in
2021) due to the reduction in the useful lives of certain
rights of use of Telef\u00f3nica M\u00e9xico as a result of the
transformation of the operating model announced in
November 2019.
In 2021 Telxius sold its telecommunications towers
division to American Tower Corporation (see Note 2). The
Telef\u00f3nica Group operators maintained the leases
agreements of the towers signed with the companies
sold, subsidiaries of Telxius. Consequently, as of the
closing date of the transactions, rights of use were
recorded in the consolidated statement of financial
position in the amount of 2,633 million euros. \u201cSale of the
towers division of Telxius\u201d column also includes the
derecognition of rights of use with third parties
corresponding to the second phase of the sale agreement
between Telefonica Germany and Telxius in the amount
of 133 million euros.
\"Transfers and others\" in 2021 included the transfer to
\"Non-current assets and disposal groups held for sale\" of
the rights of use of Telef\u00f3nica El Salvador amounted to 36
million euros (see Note 30).
The gross cost and accumulated depreciation of the
rights of use at December 31, 2022 and 2021 are as
follows:
| | | |
Balance at December 31, 2022 |
| | | |
Rights of use on land and natural properties | | | |
Rights of use on buildings | | | |
Rights of use on plant and machinery | | | |
| | | |
| | | |
| | | |
Balance at December 31, 2021 |
| | | |
Rights of use on land and natural properties | | | |
Rights of use on buildings | | | |
Rights of use on plant and machinery | | | |
| | | |
| | | |
The detail of expenses related to leases included in
Supplies and Other expenses (see Note 3.g) of the
consolidated income statement for 2022 and 2021 are as
follows:
| | |
| | |
Short-term leases included in operating results as supplies | | |
Variable lease payments not included in the measurement of lease liabilities | | |
Total expenses as supplies | | |
Short-term leases included in external services | | |
Leases of low-value assets included in external services | | |
Variable lease payments not included in the measurement of lease liabilities | | |
Total expenses as external services (Note 26) | | |
| | |
(1) Total accrued interests in 2021 amounted to 274 million euros, including
the additions corresponding to companies held for sale and sold companies
during the annual reporting period (see Note 19).
\"Additions\" includes fixed asset sale and leaseback
transactions, which amounted to 125 million euros in 2022
(51 million euros in 2021). The gain recorded in 2022 and
2021 for sale and leaseback transactions amounted to 381
million euros and 263 million euros, respectively (see Note
26).\u00a0
\"Business combinations\" in 2022 include 117 million euros
of lease liabilities related to the acquisition of rights of use
of Oi (see Note 29), as well as, 2 and 5 million euros for the
incorporation of the Incremental group and the BE-terna
group, respectively (see Note 2 and 5).
\"Business combinations\" in 2021 corresponded to the
acquisition of Cancom (see Note 5) amounted to 14 million
euros.
There are commitments for leases not started at
December\u00a031, 2022 amounting to 1,569 million euros,
mainly related to the sites construction agreement
between Telef\u00f3nica Germany GmbH and Telxius Towers
Germany GmbH (at December\u00a031, 2021 1,307 million
euros).
In 2021 Telxius sold its telecommunications towers
division to American Tower Corporation (see Note 2). The
Telef\u00f3nica Group operators maintained the leases
agreements of the towers signed with the companies
sold subsidiaries of Telxius. Consequently, as of the
closing date of the transactions, lease liabilities were
recorded in the consolidated statement of financial
position in the amount of 2,775 million euros. \u201cSale of the
towers division of Telxius\u201d also includes the recognition of
lease liabilities with third parties corresponding to the
second phase of the sale agreement between Telefonica
Germany and ATC in the amount of 125 million euros.
\"Transfers and others\" in 2022 includes the
reclassification of lease liabilities on the shutdown site
contracts of Pegaso PCS amounting to 264 million euros.
\"Transfers and others\" in 2021 included the
reclassification of lease liabilities of Telef\u00f3nica El Salvador
amounted to 43 million euros to \"Liabilities associated
with non-current assets and disposal groups held for sale\"
of the statement of financial position (see Note 30).
The maturity schedule of lease liabilities at December\u00a031,
2022 is as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | Sale of the towers division of Telxius | | | | | Translation differences and hyperinflation | |
Rights of use on\u00a0 land and natural properties | | | | | | | | | |
Rights of use on buildings | | | | | | | | | |
Rights of use on plant and machinery | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
together with the effect of the hyperinflation adjustments
(see Note 3.a) is shown in the column \"Translation
differences and hyperinflation adjustments\".
In 2022, there was an increase in amortization of rights of
use amounting to 17 million euros (40 million euros in
2021) due to the reduction in the useful lives of certain
rights of use of Telef\u00f3nica M\u00e9xico as a result of the
transformation of the operating model announced in
November 2019.
In 2021 Telxius sold its telecommunications towers
division to American Tower Corporation (see Note 2). The
Telef\u00f3nica Group operators maintained the leases
agreements of the towers signed with the companies
sold, subsidiaries of Telxius. Consequently, as of the
closing date of the transactions, rights of use were
recorded in the consolidated statement of financial
position in the amount of 2,633 million euros. \u201cSale of the
towers division of Telxius\u201d column also includes the
derecognition of rights of use with third parties
corresponding to the second phase of the sale agreement
between Telefonica Germany and Telxius in the amount
of 133 million euros.
\"Transfers and others\" in 2021 included the transfer to
\"Non-current assets and disposal groups held for sale\" of
the rights of use of Telef\u00f3nica El Salvador amounted to 36
million euros (see Note 30).
The gross cost and accumulated depreciation of the
rights of use at December 31, 2022 and 2021 are as
follows:
| | | |
Balance at December 31, 2022 |
| | | |
Rights of use on land and natural properties | | | |
Rights of use on buildings | | | |
Rights of use on plant and machinery | | | |
| | | |
| | | |
| | | |
Balance at December 31, 2021 |
| | | |
Rights of use on land and natural properties | | | |
Rights of use on buildings | | | |
Rights of use on plant and machinery | | | |
| | | |
| | | |
The detail of expenses related to leases included in
Supplies and Other expenses (see Note 3.g) of the
consolidated income statement for 2022 and 2021 are as
follows:
| | |
| | |
Short-term leases included in operating results as supplies | | |
Variable lease payments not included in the measurement of lease liabilities | | |
Total expenses as supplies | | |
Short-term leases included in external services | | |
Leases of low-value assets included in external services | | |
Variable lease payments not included in the measurement of lease liabilities | | |
Total expenses as external services (Note 26) | | |
| | |
On January 11, 2022, once the corresponding
authorizations from the regulatory authorities were
obtained and after the fulfilment of certain agreed
conditions, the transaction between Colombia
Telecomunicaciones S.A. ESP BIC (Telef\u00f3nica Colombia)
and a Colombian company controlled by Kohlberg Kravis
Roberts - KKR (Onnet Fibra Colombia S.A.S) for the sale
and purchase of certain fiber assets owned by Telef\u00f3nica
Colombia and for the provision of wholesale connectivity
services by Onnet Fibra Colombia S.A.S to Telef\u00f3nica
Colombia, the development of activities of deployment of
fiber network, and other associated services, was
completed. Telef\u00f3nica Colombia received, as
consideration, 187\u00a0million U.S. dollars (approximately
165\u00a0million euros at the exchange rate at such date) and
40% of the shares of a Spanish company controlled by
KKR, Alamo HoldCo S.L., the sole shareholder of Onnet
Fibra Colombia S.A.S. (see Note 30). The gain included in
\"Other income\" in the consolidated income statement for
the year 2022 amounted to 162 million euros (see Note
26). Additions for the year 2022 include the fair value
assigned to the 40% of the investment in Alamo HoldCo,
S.L. amounting to 28 million euros.
On May 24, 2022, Telef\u00f3nica Infra, S.L. achieved a 20%
stake in Daytona Midco S.L. as a result of the agreement
reached on May 7, 2021 with Asterion Industrial Partners
(\"Asterion\") for the contribution to Nabiax (a subsidiary of
Asterion) of four data centers owned by the Telef\u00f3nica
Group (see Note 29.c). Additions for the year 2022
regarding this transaction amounted to 41 million euros.
Additions for the year 2022 also includes the capital
increase of 50 million euros at Unsere Gr\u00fcne Glasfaser (27
million euros in 2021, see Note 28).
On July 29, 2022, Telef\u00f3nica, Liberty Global and InfraVia
(see Note 29.c.) reached an agreement for the
establishment of a joint venture, \"nexfibre\", for the
deployment of fiber-to-the-home (FTTH) in the United
Kingdom. Once the relevant regulatory authorizations
were obtained and the other conditions were fulfilled, the
closing of the transaction took place on December 15,
2022. After closing, Liberty Global and Telef\u00f3nica
participate by halves in a joint vehicle that holds a 50%
interest in nexfibre, with InfraVia owning the remaining
50%.
\"Translation differences and other comprehensive income
(loss)\" for the year 2022 mainly includes the impact of the
pound sterling depreciation associated with the
investment in VMO2, amounting to 627 million euros and
the results of the defined benefit pension plan in VMO2
amounting to 106 million euros. This also includes gains
imputed to equity on derivatives financial instruments in
Unsere Gr\u00fcne Glasfaser amounting to 69 million euros.
In June, September and December 2022, dividends of 125
million pounds sterling (equivalent to 146 million euros)
290 million pounds sterling (equivalent to 324 million
euros) and 385 million pounds sterling (equivalent to 439
million euros), respectively, were received from VMED O2
UK Ltd. In December 2021, a dividend was received from
VMED O2 UK Ltd for an amount of 161 million pounds
sterling (equivalent to 187 million euros, see Note 28).
Additions for the year 2021 mainly includes the fair value
of the 50% stake in VMO2 at the date of incorporation,
which amounts to 12,012 million euros (see Note 2).
In July 2021, the sale transaction of 60% of the shares of
Infraco, SpA was completed. In 2021 additions, the value
of the shareholding after the operation is included,
amounting to 75 million euros.
Additionally, the value of the 50% stake in Fibrasil at the
date of the transaction amounting to 73 million euros is
included in additions for the year 2021.
In July 2021, the partial closing of the transaction with
Asterion took place, Telef\u00f3nica obtained 13.94% of the
company Daytona Midco S.L. and its subsidiary Digital
Data Center Bidco, S.L.U. (Nabiax), registering 81 million
euros in additions.
VMED O2 UK
Main assumptions used in the initial fair value
calculation
The fair value calculation for VMED O2 UK Ltd at the time
of its constitution was based on a discounted cash flows
valuation, using the methods of multiples of comparable
companies and multiples of transactions as a cross-
check.
The valuation emanated from the business plan of the
joint venture for the 2021-2023 period that resulted from
the aggregation of the individual business plans of O2 and
Virgin Media approved by Telef\u00f3nica and Liberty Global,
respectively, extended to 2030 and the synergies plan
prepared by the strategy teams of both groups. The
following is a description of the main variables considered
in the fair value calculation, according to the primary
method:
\u2022Revenues: the valuation scenario assumed growth
rates between 0% and 3% over the period, in line with
the estimations of analysts and supported in the
revenues synergies expected for the transaction.
\u2022EBITDA margin: the forecasted EBITDA (operating
income before depreciation and amortization) was
based on the stand-alone plans, The normalized margin
(post-IFRS 16, i.e., before amortization of rights of use),
adjusted to consider the impact of annual payments of
spectrum licenses once expired, was in the range of
36% to 40%.
\u2022Synergies: were considered taking into account
management\u2019s analysis performed at the individual
workstream level and benchmarked with analyst
estimates of probability of achievement.
\u2022Long-term capital expenditure ratio: it was
expected to be in a range of 16% to 22% (including
CapEx and rights of use additions), aligned with the
historical level of comparable companies.
\u2022The discount rate applied to the cash flow projections
was the weighted average cost of capital (WACC), the
expected return appropriate for the expected risk level.
A modified version of the Capital Asset Pricing Model
(\u201cCAPM\u201d) was used to estimate the required return on
equity. To relever the beta it was considered the intrinsic
leverage of the joint venture. In addition, it was
considered a specific premium or alpha, which captures
additional risks considered at the time of incorporation in
relation to the likelihood of realization of synergies and the
execution risk of the combined business plan.
For the cost of debt, in line with the leverage assumption
considered, the bonds issued by the joint venture were
analysed and their spreads were compared to a
comparable risk free rate (with a similar maturity, in the
same currency and issued in the same country, so that
there was not distortion due to the risk premia by
country). A return after taxes was used because the
interests on the financial debt are tax deductible.
In conclusion, the discount rate applied for the valuation
was 6.9%.
\u2022Perpetuity growth rate: revenues from 2028 were
normalized to the perpetuity growth rate (g),
considering the analysts' consensus for the companies
of the sector in the United Kingdom, contrasting with
the estimations of long-term inflation rates and with the
assumptions made by companies of the sector in their
impairment tests. The perpetuity growth rate
considered was 1.0%.
Impairment test as at December\u00a031, 2022
The Group has performed an impairment analysis of the
investment in VMO2 at the end of the year.
2022 has been a challenging year for the United Kingdom.
In addition to higher inflation due to external factors
(rising energy prices, supply chain problems and food
prices) and domestic factors (very dynamic labour
market), interest rates have risen, which has had a
negative impact on the disposable income of households
and businesses. This was followed after the summer by an
episode of high financial volatility as a result of
inconsistent fiscal policy decisions.
Despite the difficult macroeconomic context VMO2 has
delivered its set guidance and made strong strategic and
operational progress throughout the year. The company
introduced new products, like TV Stream and Switch up
and continues to drive fixed mobile convergence with its
VOLT product. VMO2 delivered synergies according to its
plan and the fixed footprint reached 16.1 million premises
passed, meeting the full year build targets. In mobile, it
expanded 5G services to more than 1,600 towns and
cities, on-track to deliver 5G services to 50% of the UK
population in 2023.
In addition, on December\u00a015, 2022, Telef\u00f3nica Infra,
Liberty Global and InfraVia Capital Partners entered into a
joint venture (see Note 29.c) which will deploy fibre to the
home (FTTH) to 5 million homes in the UK not currently
served by VMO2's network, with the possibility of
expansion to an additional 2 million homes. The fibre
network will offer wholesale FTTH access to
telecommunications service providers, with VMO2 acting
as the anchor tenant, as well as providing a range of
technical services.
As a result of the analysis performed, the Group has
concluded that as at December\u00a031, 2022 the value in use
continues to exceed the carrying value of the investment,
although the headroom has been reduced.
The discount rate used to calculate the value in use at
December 31, 2022 has increased from 6.9% to 7.3% due
to the macroeconomic tensions in the UK and despite the
downward revision, more than 20 months after the
establishment of the joint venture, of the specific
premium (alpha) considered in the calculation of the initial
fair value. The perpetuity growth rate has been
maintained at the 1% used in the initial valuation, which is
below the real terminal growth forecast for the UK
economy and despite higher inflation in the medium-term
than assumed in the initial scenario.
Regarding the sensitivity of the calculation to reasonably
possible variations in key assumptions:
\u2022An increase of about 18 basis points over the WACC
rate used of 7.3%, or a decrease of around 22 basis
points in the perpetuity growth rate (1%), would result in
the value in use being equal to the carrying value.
\u2022Regarding the operating variables used, which are
within the ranges considered in the calculation of the
initial fair value, a decrease of around 1 percentage
point in the EBITDA margin, or an increase of around 1.1
percentage points in the long-term investment ratio
would also equalize the value in use with the carrying
value.
The values of operating variables included in the valuation
are within the ranges expected by analysts for
comparable companies in the region.
Detail of the main items on the statements of
financial position and income statements of VMED
O2 UK Ltd
| | |
| | |
| | |
| | |
Cash and cash equivalents | | |
| | |
| | |
Non current financial liabilities | | |
Non-current lease liabilities | | |
Other non current liabilities | | |
| | |
Current financial liabilities | | |
Current lease liabilities | | |
Other current liabilities | | |
| | |
| | |
50% Telef\u00f3nica Group | | |
| | |
Investments accounted for by the equity method | | |
| | |
| January - December 31 2022 | June 1 - December 31 2021 |
| | |
| | |
| | |
| | |
Depreciation and amortization | | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
| | |
| | |
Realised and unrealised gains on derivative instruments, net (1) | | |
Foreign currency transaction losses, net | | |
| | |
| | |
| | |
Result for the period (100% VMO2) | | |
50% attributable to Telef\u00f3nica Group | | |
Share-based compensation (2) | | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
Other comprehensive income (100% VMO2) | | |
(1) VMO2\u00a0 entered into various derivative instruments to manage interest rate exposure and foreign currency exposure. Generally, VMO2 does not apply hedge accounting to its derivative instruments. Accordingly, changes in the fair values of most of its derivatives are recorded in the finance results of its consolidated income statement. |
(2) Amount related to incentive awards held by certain employees of VMO2 associated with ordinary shares of Liberty Global and Telef\u00f3nica. Share- based compensation expense is included in Operating expenses in the consolidated income statement of VMO2. |
Purchase commitments include unconditional and legally
binding obligations related to the purchase of customer
premises and other equipment and certain service-
related commitments, including call center, information
technology and maintenance services.
Programming commitments consist of obligations
associated with programming contracts that are
enforceable and legally binding that includes minimum
fees.
Network and connectivity commitments include service
commitments associated with the network extension
program in the U.K. and commitments associated with the
mobile virtual network operator (MVNO) agreements.
On the date of closing of the transaction, Telef\u00f3nica and
Liberty Global entered with VMO2 into certain service
agreements, either on a transitional or ongoing basis.
Likewise, Telef\u00f3nica licensed the use of Telef\u00f3nica and
O2 brand rights to VMO2 (see Note 29.c).
The breakdown of balances and transactions related to
associates and joint ventures recognized with VMO2 in
the consolidated statement of financial position and
consolidated income statement is as follows:
| | |
| | |
Receivables from associates and joint ventures for current operations | | |
Payables to associates and joint ventures | | |
| | |
| | |
Revenue from operations with associates and joint ventures | | |
Expenses from operations with associates and joint ventures | | |
\"Credits and other financial assets from associates and
joint ventures\" at December 31, 2022 includes 82 million
euros of loans and 59 million euros of trade receivables
granted by Colombia Telecomunicaciones, S.A. ESP BIC
to the associate company \u00c1lamo Holdco, S.L. and it
subsidiary Onnet Fibra Colombia S.A.S., respectively.
Additionally, this line includes 75 million euros
corresponding to the subordinated debt granted by
Telef\u00f3nica Chile to the associate company HoldCo
Infraco, SpA. generated by the sale of 40% of the fiber
optic business (87 million euros as of December 31, 2021,
see Note 12).
\"Long-term contractual liabilities to associates and joint
ventures\" at December 31, 2022 includes 82 million euros
corresponding to Colombia Telecomunicaciones, S.A.
ESP BIC with the associate company Onnet Fibra
Colombia, S.A.S.
\"Revenue from operations with associates and joint
ventures\" in 2022 mainly includes 88 million euros
corresponding to the transactions of the Group with the
associate company HoldCo Infraco SpA (52 million euros
in 2021) and 97 million euros with the associate company
Onnet Fibra Colombia, S.A.S. In 2021 it included 98 million
euros corresponding to the transactions of the Group
with the joint venture Tesco Mobile Ltd. from January 1, to
the date of the incorporation of VMED O2 UK (232 million
euros in 2020).
\"Expenses from operations with associates and joint
ventures\" in 2022 mainly includes 121 million euros
corresponding to the transactions of the Group with the
associate company HoldCo Infraco SpA (50 million euros
in 2021) and 39 million euros with the associate company
\u00c1lamo Holdco, S.L.
The main companies of the Telef\u00f3nica Group
The table below lists the main companies comprising the
Telef\u00f3nica Group at December 31, 2022 and the main
investments consolidated using the equity method.
Included for each company are the company name,
corporate purpose, country, functional currency, share
capital (in millions of functional currency units), the
Telef\u00f3nica Group\u2019s effective shareholding and the
company or companies through which the Group holds a
stake.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfJointVenturesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82MS9mcmFnOjkyMzNlODg3NmYwYjQ1ODY5OGViNDg4NmMwMzlhNjYzL3RleHRyZWdpb246OTIzM2U4ODc2ZjBiNDU4Njk4ZWI0ODg2YzAzOWE2NjNfMjQ3MzkwMTE2MjU2NzU_d00f9463-1952-4762-977a-89d3d8a030dc": {
"value": "
Note 10. Associates and joint ventures
The detail of investments accounted for by the equity
method and the share of income/(loss) of these
investments is the following:
| | | | | | | | |
| | | Investments accounted for by the equity method | | Share of income (loss) of investments accounted for by the equity method |
| | | | | | | | |
| | | | | | | | |
Movistar Prosegur Alarmas | | | | | | | | |
FiBrasil Infraestructura e Fibra \u00d3tica, S.A. | | | | | | | | |
Unsere Gr\u00fcne Glasfaser | | | | | | | | |
Opal Jvco Limited (nexfibre) | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Daytona Midco, S.L. (Nabiax) | | | | | | | | |
Adquira Espa\u00f1a, S.A. | | | | | | | | |
HoldCo Infraco SpA. (Onnet Fibra Chile) | | | | | | | | |
Alamo HoldCo S.L. (Onnet Fibra Colombia) | | | | | | | | |
Internet para todos S.A.C. | | | | | | | | |
Telef\u00f3nica Factoring Espa\u00f1a, S.A. | | | | | | | | |
Telef\u00f3nica Factoring do Brasil, Ltda. | | | | | | | | |
Telef\u00f3nica Factoring Peru, S.A.C. | | | | | | | | |
Telef\u00f3nica Factoring Colombia, S.A. | | | | | | | | |
Telef\u00f3nica Factoring M\u00e9xico, S.A.de C.V. | | | | | | | | |
Telef\u00f3nica Factoring Chile, SpA. | | | | | | | | |
Telef\u00f3nica Factoring Ecuador, S.A. | | | | | | | | |
Telef\u00f3nica Consumer Finance, Establecimiento Financiero de Cr\u00e9dito, S.A. | | | | | | | | |
Movistar Consumer Finance Colombia SAS | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
On January 11, 2022, once the corresponding
authorizations from the regulatory authorities were
obtained and after the fulfilment of certain agreed
conditions, the transaction between Colombia
Telecomunicaciones S.A. ESP BIC (Telef\u00f3nica Colombia)
and a Colombian company controlled by Kohlberg Kravis
Roberts - KKR (Onnet Fibra Colombia S.A.S) for the sale
and purchase of certain fiber assets owned by Telef\u00f3nica
Colombia and for the provision of wholesale connectivity
services by Onnet Fibra Colombia S.A.S to Telef\u00f3nica
Colombia, the development of activities of deployment of
fiber network, and other associated services, was
completed. Telef\u00f3nica Colombia received, as
consideration, 187\u00a0million U.S. dollars (approximately
165\u00a0million euros at the exchange rate at such date) and
40% of the shares of a Spanish company controlled by
KKR, Alamo HoldCo S.L., the sole shareholder of Onnet
Fibra Colombia S.A.S. (see Note 30). The gain included in
\"Other income\" in the consolidated income statement for
the year 2022 amounted to 162 million euros (see Note
26). Additions for the year 2022 include the fair value
assigned to the 40% of the investment in Alamo HoldCo,
S.L. amounting to 28 million euros.
On May 24, 2022, Telef\u00f3nica Infra, S.L. achieved a 20%
stake in Daytona Midco S.L. as a result of the agreement
reached on May 7, 2021 with Asterion Industrial Partners
(\"Asterion\") for the contribution to Nabiax (a subsidiary of
Asterion) of four data centers owned by the Telef\u00f3nica
Group (see Note 29.c). Additions for the year 2022
regarding this transaction amounted to 41 million euros.
Additions for the year 2022 also includes the capital
increase of 50 million euros at Unsere Gr\u00fcne Glasfaser (27
million euros in 2021, see Note 28).
On July 29, 2022, Telef\u00f3nica, Liberty Global and InfraVia
(see Note 29.c.) reached an agreement for the
establishment of a joint venture, \"nexfibre\", for the
deployment of fiber-to-the-home (FTTH) in the United
Kingdom. Once the relevant regulatory authorizations
were obtained and the other conditions were fulfilled, the
closing of the transaction took place on December 15,
2022. After closing, Liberty Global and Telef\u00f3nica
participate by halves in a joint vehicle that holds a 50%
interest in nexfibre, with InfraVia owning the remaining
50%.
\"Translation differences and other comprehensive income
(loss)\" for the year 2022 mainly includes the impact of the
pound sterling depreciation associated with the
investment in VMO2, amounting to 627 million euros and
the results of the defined benefit pension plan in VMO2
amounting to 106 million euros. This also includes gains
imputed to equity on derivatives financial instruments in
Unsere Gr\u00fcne Glasfaser amounting to 69 million euros.
In June, September and December 2022, dividends of 125
million pounds sterling (equivalent to 146 million euros)
290 million pounds sterling (equivalent to 324 million
euros) and 385 million pounds sterling (equivalent to 439
million euros), respectively, were received from VMED O2
UK Ltd. In December 2021, a dividend was received from
VMED O2 UK Ltd for an amount of 161 million pounds
sterling (equivalent to 187 million euros, see Note 28).
Additions for the year 2021 mainly includes the fair value
of the 50% stake in VMO2 at the date of incorporation,
which amounts to 12,012 million euros (see Note 2).
In July 2021, the sale transaction of 60% of the shares of
Infraco, SpA was completed. In 2021 additions, the value
of the shareholding after the operation is included,
amounting to 75 million euros.
Additionally, the value of the 50% stake in Fibrasil at the
date of the transaction amounting to 73 million euros is
included in additions for the year 2021.
In July 2021, the partial closing of the transaction with
Asterion took place, Telef\u00f3nica obtained 13.94% of the
company Daytona Midco S.L. and its subsidiary Digital
Data Center Bidco, S.L.U. (Nabiax), registering 81 million
euros in additions.
VMED O2 UK
Main assumptions used in the initial fair value
calculation
The fair value calculation for VMED O2 UK Ltd at the time
of its constitution was based on a discounted cash flows
valuation, using the methods of multiples of comparable
companies and multiples of transactions as a cross-
check.
The valuation emanated from the business plan of the
joint venture for the 2021-2023 period that resulted from
the aggregation of the individual business plans of O2 and
Virgin Media approved by Telef\u00f3nica and Liberty Global,
respectively, extended to 2030 and the synergies plan
prepared by the strategy teams of both groups. The
following is a description of the main variables considered
in the fair value calculation, according to the primary
method:
\u2022Revenues: the valuation scenario assumed growth
rates between 0% and 3% over the period, in line with
the estimations of analysts and supported in the
revenues synergies expected for the transaction.
\u2022EBITDA margin: the forecasted EBITDA (operating
income before depreciation and amortization) was
based on the stand-alone plans, The normalized margin
(post-IFRS 16, i.e., before amortization of rights of use),
adjusted to consider the impact of annual payments of
spectrum licenses once expired, was in the range of
36% to 40%.
\u2022Synergies: were considered taking into account
management\u2019s analysis performed at the individual
workstream level and benchmarked with analyst
estimates of probability of achievement.
\u2022Long-term capital expenditure ratio: it was
expected to be in a range of 16% to 22% (including
CapEx and rights of use additions), aligned with the
historical level of comparable companies.
\u2022The discount rate applied to the cash flow projections
was the weighted average cost of capital (WACC), the
expected return appropriate for the expected risk level.
A modified version of the Capital Asset Pricing Model
(\u201cCAPM\u201d) was used to estimate the required return on
equity. To relever the beta it was considered the intrinsic
leverage of the joint venture. In addition, it was
considered a specific premium or alpha, which captures
additional risks considered at the time of incorporation in
relation to the likelihood of realization of synergies and the
execution risk of the combined business plan.
For the cost of debt, in line with the leverage assumption
considered, the bonds issued by the joint venture were
analysed and their spreads were compared to a
comparable risk free rate (with a similar maturity, in the
same currency and issued in the same country, so that
there was not distortion due to the risk premia by
country). A return after taxes was used because the
interests on the financial debt are tax deductible.
In conclusion, the discount rate applied for the valuation
was 6.9%.
\u2022Perpetuity growth rate: revenues from 2028 were
normalized to the perpetuity growth rate (g),
considering the analysts' consensus for the companies
of the sector in the United Kingdom, contrasting with
the estimations of long-term inflation rates and with the
assumptions made by companies of the sector in their
impairment tests. The perpetuity growth rate
considered was 1.0%.
Impairment test as at December\u00a031, 2022
The Group has performed an impairment analysis of the
investment in VMO2 at the end of the year.
2022 has been a challenging year for the United Kingdom.
In addition to higher inflation due to external factors
(rising energy prices, supply chain problems and food
prices) and domestic factors (very dynamic labour
market), interest rates have risen, which has had a
negative impact on the disposable income of households
and businesses. This was followed after the summer by an
episode of high financial volatility as a result of
inconsistent fiscal policy decisions.
Despite the difficult macroeconomic context VMO2 has
delivered its set guidance and made strong strategic and
operational progress throughout the year. The company
introduced new products, like TV Stream and Switch up
and continues to drive fixed mobile convergence with its
VOLT product. VMO2 delivered synergies according to its
plan and the fixed footprint reached 16.1 million premises
passed, meeting the full year build targets. In mobile, it
expanded 5G services to more than 1,600 towns and
cities, on-track to deliver 5G services to 50% of the UK
population in 2023.
In addition, on December\u00a015, 2022, Telef\u00f3nica Infra,
Liberty Global and InfraVia Capital Partners entered into a
joint venture (see Note 29.c) which will deploy fibre to the
home (FTTH) to 5 million homes in the UK not currently
served by VMO2's network, with the possibility of
expansion to an additional 2 million homes. The fibre
network will offer wholesale FTTH access to
telecommunications service providers, with VMO2 acting
as the anchor tenant, as well as providing a range of
technical services.
As a result of the analysis performed, the Group has
concluded that as at December\u00a031, 2022 the value in use
continues to exceed the carrying value of the investment,
although the headroom has been reduced.
The discount rate used to calculate the value in use at
December 31, 2022 has increased from 6.9% to 7.3% due
to the macroeconomic tensions in the UK and despite the
downward revision, more than 20 months after the
establishment of the joint venture, of the specific
premium (alpha) considered in the calculation of the initial
fair value. The perpetuity growth rate has been
maintained at the 1% used in the initial valuation, which is
below the real terminal growth forecast for the UK
economy and despite higher inflation in the medium-term
than assumed in the initial scenario.
Regarding the sensitivity of the calculation to reasonably
possible variations in key assumptions:
\u2022An increase of about 18 basis points over the WACC
rate used of 7.3%, or a decrease of around 22 basis
points in the perpetuity growth rate (1%), would result in
the value in use being equal to the carrying value.
\u2022Regarding the operating variables used, which are
within the ranges considered in the calculation of the
initial fair value, a decrease of around 1 percentage
point in the EBITDA margin, or an increase of around 1.1
percentage points in the long-term investment ratio
would also equalize the value in use with the carrying
value.
The values of operating variables included in the valuation
are within the ranges expected by analysts for
comparable companies in the region.
Detail of the main items on the statements of
financial position and income statements of VMED
O2 UK Ltd
| | |
| | |
| | |
| | |
Cash and cash equivalents | | |
| | |
| | |
Non current financial liabilities | | |
Non-current lease liabilities | | |
Other non current liabilities | | |
| | |
Current financial liabilities | | |
Current lease liabilities | | |
Other current liabilities | | |
| | |
| | |
50% Telef\u00f3nica Group | | |
| | |
Investments accounted for by the equity method | | |
| | |
| January - December 31 2022 | June 1 - December 31 2021 |
| | |
| | |
| | |
| | |
Depreciation and amortization | | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
| | |
| | |
Realised and unrealised gains on derivative instruments, net (1) | | |
Foreign currency transaction losses, net | | |
| | |
| | |
| | |
Result for the period (100% VMO2) | | |
50% attributable to Telef\u00f3nica Group | | |
Share-based compensation (2) | | |
| | |
Share of income (loss) of investments accounted for by the equity method | | |
Other comprehensive income (100% VMO2) | | |
(1) VMO2\u00a0 entered into various derivative instruments to manage interest rate exposure and foreign currency exposure. Generally, VMO2 does not apply hedge accounting to its derivative instruments. Accordingly, changes in the fair values of most of its derivatives are recorded in the finance results of its consolidated income statement. |
(2) Amount related to incentive awards held by certain employees of VMO2 associated with ordinary shares of Liberty Global and Telef\u00f3nica. Share- based compensation expense is included in Operating expenses in the consolidated income statement of VMO2. |
Purchase commitments include unconditional and legally
binding obligations related to the purchase of customer
premises and other equipment and certain service-
related commitments, including call center, information
technology and maintenance services.
Programming commitments consist of obligations
associated with programming contracts that are
enforceable and legally binding that includes minimum
fees.
Network and connectivity commitments include service
commitments associated with the network extension
program in the U.K. and commitments associated with the
mobile virtual network operator (MVNO) agreements.
On the date of closing of the transaction, Telef\u00f3nica and
Liberty Global entered with VMO2 into certain service
agreements, either on a transitional or ongoing basis.
Likewise, Telef\u00f3nica licensed the use of Telef\u00f3nica and
O2 brand rights to VMO2 (see Note 29.c).
The breakdown of balances and transactions related to
associates and joint ventures recognized with VMO2 in
the consolidated statement of financial position and
consolidated income statement is as follows:
| | |
| | |
Receivables from associates and joint ventures for current operations | | |
Payables to associates and joint ventures | | |
| | |
| | |
Revenue from operations with associates and joint ventures | | |
Expenses from operations with associates and joint ventures | | |
\"Credits and other financial assets from associates and
joint ventures\" at December 31, 2022 includes 82 million
euros of loans and 59 million euros of trade receivables
granted by Colombia Telecomunicaciones, S.A. ESP BIC
to the associate company \u00c1lamo Holdco, S.L. and it
subsidiary Onnet Fibra Colombia S.A.S., respectively.
Additionally, this line includes 75 million euros
corresponding to the subordinated debt granted by
Telef\u00f3nica Chile to the associate company HoldCo
Infraco, SpA. generated by the sale of 40% of the fiber
optic business (87 million euros as of December 31, 2021,
see Note 12).
\"Long-term contractual liabilities to associates and joint
ventures\" at December 31, 2022 includes 82 million euros
corresponding to Colombia Telecomunicaciones, S.A.
ESP BIC with the associate company Onnet Fibra
Colombia, S.A.S.
\"Revenue from operations with associates and joint
ventures\" in 2022 mainly includes 88 million euros
corresponding to the transactions of the Group with the
associate company HoldCo Infraco SpA (52 million euros
in 2021) and 97 million euros with the associate company
Onnet Fibra Colombia, S.A.S. In 2021 it included 98 million
euros corresponding to the transactions of the Group
with the joint venture Tesco Mobile Ltd. from January 1, to
the date of the incorporation of VMED O2 UK (232 million
euros in 2020).
\"Expenses from operations with associates and joint
ventures\" in 2022 mainly includes 121 million euros
corresponding to the transactions of the Group with the
associate company HoldCo Infraco SpA (50 million euros
in 2021) and 39 million euros with the associate company
\u00c1lamo Holdco, S.L.
The main companies of the Telef\u00f3nica Group
The table below lists the main companies comprising the
Telef\u00f3nica Group at December 31, 2022 and the main
investments consolidated using the equity method.
Included for each company are the company name,
corporate purpose, country, functional currency, share
capital (in millions of functional currency units), the
Telef\u00f3nica Group\u2019s effective shareholding and the
company or companies through which the Group holds a
stake.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82NC9mcmFnOjk0ZDMwNjBlZDRmNzQyYTBhYjRjY2NkNzU0Mjk1MjMzL3RleHRyZWdpb246OTRkMzA2MGVkNGY3NDJhMGFiNGNjY2Q3NTQyOTUyMzNfMjQ3MzkwMTE2MjU0OTA_ff6ce81e-faea-4d32-821a-b4aaa8bee1aa": {
"value": "
Note 11. Related parties
Significant shareholders
The significant shareholders of the Company are Banco
Bilbao Vizcaya Argentaria, S.A. (BBVA), CaixaBank, S.A.
and BlackRock, Inc.
Based on the information provided by CaixaBank, S.A. for
the 2022 Annual Report Corporate Governance, as
updated per share capital of Telef\u00f3nica, S.A. as of
December 31, 2022, the shareholding of CaixaBank, S.A. in
Telef\u00f3nica\u2019s share capital were 3.50%.
Based on the information provided by Banco Bilbao
Vizcaya Argentaria, S.A. (BBVA) for the 2022 Annual
Report on Corporate Governance, as updated per share
capital of Telef\u00f3nica, S.A. as of December 31, 2022, the
shareholding of BBVA in Telef\u00f3nica\u2019s share capital were
4.87%. Likewise, and according to the aforementioned
information provided by BBVA, the percentage of
economic rights attributed to Telef\u00f3nica, S.A. shares
owned by BBVA amounts to 4.97% of the Company's
share capital.
Based on the information notified by BlackRock, Inc to the
CNMV on March 31, 2020, as updated per the share
capital of Telef\u00f3nica, S.A. as of December 31, 2022, the
shareholding of BlackRock, Inc in Telef\u00f3nica\u2019s share
capital were 4.48%. Based on the Schedule 13G/A filed
with the SEC, on October 7, 2022, BlackRock, Inc.
beneficially owned 4.96% of Telef\u00f3nica, S.A. shares and
4.49% of voting rights.
During 2022 and 2021, the Group carried out no
significant transactions with BlackRock, Inc. other than
the corresponding dividends paid.
The following is a summary of significant transactions
between the Telef\u00f3nica Group and BBVA and CaixaBank
companies, other than the payment of the dividend
corresponding to its shareholding. All transactions were
carried out at market prices.
Participated companies
On November 20, 2020, Telef\u00f3nica Digital Espa\u00f1a, S.L.U.
and Compa\u00f1\u00eda Chilena de Inversiones, S.L., an affiliated
company of BBVA, entered into an agreement related to
the incorporation of a subsidiary in Colombia with the aim
of commercializing loans to consumers and SME in such
country. On January 5, 2021, this company was
incorporated as a 50/50 joint venture between the two
companies, under the name Movistar Consumer Finance
Colombia, S.A.S (see Note 10).
The Telef\u00f3nica Group holds a 50% interest in Telef\u00f3nica
Consumer Finance, E.F.C., S.A., a company controlled by
CaixaBank (see Note 10).
The Telef\u00f3nica Group and BBVA each hold a 44.44%
interest in the joint venture Adquira Espa\u00f1a, S.A. (see
Note 10).
The Telef\u00f3nica Group has a 50% interest in Telef\u00f3nica
Factoring Espa\u00f1a and its subsidiaries in Brazil, Peru,
Colombia, Mexico, Chile and Ecuador, accounted for by
the equity method (see Note 10), in which BBVA and
CaixaBank have minority interests.
On July 21, 2022, Telef\u00f3nica, S.A. and CaixaBank
Payments and Consumer E.F.C., E.P., S.A. incorporated
the company Telef\u00f3nica Renting, S.A. 50% each. This
company is controlled by CaixaBank.
The balances as of December 31, 2022 and 2021, and the
transactions carried out in 2022 and 2021 of Telef\u00f3nica
Group companies with the aforementioned associates
and joint ventures in which BBVA and CaixaBank hold
interests are shown below:
| | |
| | |
Receivables from associates and joint ventures for current operations | | |
Payables to associates and joint ventures | | |
| | |
| | |
Revenue from operations with associates and joint ventures | | |
Expenses from operations with associates and joint ventures | | |
Finance cost from operations with associates and joint ventures | | |
Derivatives
The net fair value of the outstanding derivatives as of
December 31, 2022 contracted with BBVA and CaixaBank
amounts to 185 and 41 million euros, respectively (314 and
26 million euros, respectively, as of December 31, 2021).
The nominal value of these derivatives amounted to 5,778
and 264 million euros, respectively (6,664 million euros
with BBVA and 264 million euros with CaixaBank in 2021).
As explained in the 'Derivatives policy' section of Note 19,
this volume is so high because derivatives can be applied
several times to the same underlying asset for an amount
equal to its face value. As of December 31, 2022, the
derivatives contracted with BBVA and CaixaBank account
for approximately 7% of the total amount of outstanding
derivatives contracted by the Group with external
counterparties (see Note 19).
Additionally, at December 31, 2022, collateral guarantees
on derivatives from BBVA and CaixaBank have been
received, amounting to 236 million euros and 43 million
euros, respectively (262 million euros and 21 million euros
respectively at December 31, 2021).
Renting operations with CaixaBank
In mid-2021, a new Fusion portfolio came into force that
included a rental device. The Group has an agreement
with CaixaBank to in turn rent these devices (a model
known as \"rent to rent\"), covered by a framework
financing agreement previously formalized between
Telef\u00f3nica and CaixaBank. In 2022, the volume of these
operations with CaixaBank amount to 405 million euros
(186 million euros in 2021) which have involved 19 million
euros in financial expenses. As of December 31, 2022, the
balance of the account payable to CaixaBank amounted
to 501 million euros (176 million euros as of December 31,
2021).
Likewise, the Group carries out other equipment rental
operations with CaixaBank (equipment at customers'
homes, such as routers or decoders). In 2022, the volume
of this equipment leasing transactions was 82 million
euros (92 million euros in 2021), with financial expenses
amounting to 3 million euros (1 million euros in 2021). As of
December 31, 2022, the debt with CaixaBank for these
concepts amounts to 119 million euros (73 million euros in
2021).
Other operations
The impact on the consolidated income statement of the
Telef\u00f3nica Group of the rest of the operations with BBVA
and CaixaBank in 2022 and 2021 is shown below:
(1)\u00a0 At December 31, 2022, Telef\u00f3nica held a 0.73% stake (0.66% stake at
December 31, 2021) in the share capital of Banco Bilbao Vizcaya Argentaria,
S.A. (see Note 12).
| | |
| | |
| | |
Finance arrangements: loans, capital contributions and others (borrower) | | |
Finance arrangements: loans and capital contributions (lender) | | |
| | |
| | |
Other related parties
The most significant balances and transactions with
associates and joint ventures are detailed in Note 10.
During 2022 and 2021, the Directors and senior
executives performed no transactions with Telef\u00f3nica,
S.A. or any Telef\u00f3nica Group company other than those in
the Group\u2019s normal trading activity and business.
Compensation and other benefits paid to members of the
Board of Directors and senior executives are detailed in
Note 29.g and Appendix II.
Telef\u00f3nica contracted a civil liability insurance scheme
(D&O) for Directors, managers and staff with similar
functions in the Telef\u00f3nica Group, with standard
conditions for these types of insurance and a premium
attributable to 2022 of 6,598,467 euros (5,303,931 euros in
2021). This scheme provides coverage for Telef\u00f3nica, S.A.
and its subsidiaries in certain cases.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjU1ODc_97911b65-d89d-4bfa-86c3-cff9707299e7": {
"value": "
Note 12. Financial assets and
other non-current assets
The breakdown of financial assets and other non-current
assets of the Telef\u00f3nica Group at December 31, 2022 and
December 31, 2021 is as follows:
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
Non-current financial assets
The movement in investments, other long-term credits,
deposits and guarantees, trade receivables, long-term
receivables for subleases and impairment of trade
receivables in 2022 and 2021, is as follows:
| | | | | | |
| | | | | Long-term receivables for subleases | Impairment of trade receivables |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Fair value adjustments and financial updates | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Fair value adjustments and financial updates | | | | | | |
| | | | | | |
| | | | | | |
Investments
\u201cInvestments\u201d includes the fair value of investments in
companies where Telef\u00f3nica exercises no significant
influence or control and for which there is no specific
short-term disposal plan (see Note 3.i).
The Telef\u00f3nica Group\u2019s shareholding in Banco Bilbao
Vizcaya Argentaria, S.A. (BBVA) amounted to 249 million
euros (232 million euros at December\u00a031, 2021),
representing 0.73% of its share capital at December\u00a031,
2022 (0.66% at December 31, 2021).
At December\u00a031, 2022, Telef\u00f3nica maintained a 0.59%
stake in the share capital of China Unicom (Hong Kong)
Limited, valued at 105 million euros (same percentage at
December\u00a031, 2021, valued at 80 million euros).
On May 19, 2022 Telef\u00f3nica signed an agreement with
the company Global Alconaba, S.L., for the sale of
50,147,058 shares of Promotora de Informaciones, S.A.
(PRISA), equivalent to 7.076% of its share capital. As a
result of this sale, 71 million euros of losses from financial
assets measured at fair value through comprehensive
income have been reclassified to retained earnings. As of
December 31, 2022 Telef\u00f3nica's shareholding in PRISA
amounted to 1.87% of the company's share capital and
was valued at 4 million euros (9.03% at December 31, 2021
valued at 36 million euros).
Other long-term credits
This line item includes long-term financial assets of
Telef\u00f3nica Germany amounting to 104 million euros and
85 million euros at December 31, 2022 and 2021,
respectively, that are mainly intended to cover obligations
from the defined benefit plan of Telef\u00f3nica Germany but
do not represent \"plan assets\" in accordance with IAS 19
(see Note 24).
Additions for the year 2022 include financial instruments
(Federal Treasury Certificates) of Pegaso PCS, S.A. de
C.V. amounting to 260 million euros, for the purpose of
securing certain legal proceedings with the Mexican tax
Administration Service. These instruments are classified
as long-term based on the estimated term of the
proceedings and accrue interest according to the time
elapsed (see Note 28).
Additionally, additions for the year 2022 include 82 million
euros of loans granted by Colombia Telecomunicaciones,
S.A. ESP BIC to the associate company \u00c1lamo Holdco,
S.L. (see Note 10).
At December 31, 2022 other long-term credits include 75
million euros corresponding to the subordinated debt
granted by Telef\u00f3nica Chile to the associate company
HoldCo Infraco, SpA. generated by the sale of 40% of the
fiber optic business (87 million euros as of December 31,
2021, see Note 10).
\"Additions\" in 2021 included the notes issued by the
international issue platform Single Platform Investment
Repackaging Entity, S.A. (\"Spire\") deposited in a securities
account owned by Telef\u00f3nica, S.A. with a notional of
1,000 million dollars of which 295 million euros are
registered as \"Other long-term credits\" and 591 million
euros were registered as \"other current financial assets\".
Transfers for the year 2022 include the short-term
transfer of the notes mentioned above for an amount of
313 million euros, all of which were registered at
December 31, 2022 in \"Other current financial assets\" for
an amount of 939 million euros (see Note 15).
Additionally in 2021, Telxius recorded additions amounting
to 246 million euros associated with the collection right
arising with\u00a0 American Tower Corporation as a result of
the sale of the telecommunications towers division in
Europe (Spain and Germany) in June 2021. At December
31, 2022 the collection right amounted to 264 million
euros.
The vast majority of long-term credits, recognized at
amortized cost (Note 16), are considered to be low credit
risk assets, therefore the impairment analysis was carried
out on the basis of expected credit losses in the next
twelve months.\u00a0
Deposits and guarantees
Telef\u00f3nica Brazil has non-current judicial deposits
amounting to 501 million euros (see Note 24) at December
31, 2022 (431 million euros at December 31, 2021).
At December 31, 2022, there were deposits related to the
collateral guarantees on derivatives (CSA) signed by
Telef\u00f3nica, S.A. and its counterparties for the credit risk
management of derivatives amounting to 365 million
euros of which 42 million euros cross currency swap (564
million euros at December 31, 2021 that included 279
million euros related to cross currency swap).\u00a0 \u00a0
In relation with collateral contracts, in 2022 there is an
additional guarantee of 79,034 bonds issued by
Telef\u00f3nica Emisiones, S.A.U. deposited in a securities
account owned by Telef\u00f3nica, S.A. with a notional of 78
million euros at December 31, 2022 (166,678 bonds for a
nominal amount of 173 million euros at December 31,
2021).
The vast majority of deposits and guarantees recognized
at amortized cost (Note 16), are considered to be low
credit risk assets, therefore the impairment analysis was
carried out on the basis of expected credit losses in the
next 12 months.
Trade receivables
\"Additions\" for the year in 2022 include trade receivables
amounting to 69 million euros from Colombia
Telecomunicaciones, S.A. ESP BIC to the associate Onnet
Fibra Colombia SAS, 59 million euros at December 31,
2022, see Note 10.
At December 31, 2022 includes Telef\u00f3nica Germany trade
receivables at fair value through other comprehensive
income for an amount of 292 million euros (269 million
euros as of December 31, 2021, see Note 16).
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjYwMDk_0c79d9cd-6851-4848-87ae-3d4d1796ec6b": {
"value": "
The breakdown of financial assets and other non-current
assets of the Telef\u00f3nica Group at December 31, 2022 and
December 31, 2021 is as follows:
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
Trade receivables
\"Additions\" for the year in 2022 include trade receivables
amounting to 69 million euros from Colombia
Telecomunicaciones, S.A. ESP BIC to the associate Onnet
Fibra Colombia SAS, 59 million euros at December 31,
2022, see Note 10.
At December 31, 2022 includes Telef\u00f3nica Germany trade
receivables at fair value through other comprehensive
income for an amount of 292 million euros (269 million
euros as of December 31, 2021, see Note 16).
Note 14. Receivables
and other current assets
The detail of receivables and other current assets of the
Telef\u00f3nica Group at December 31, 2022 and December 31,
2021 is as follows:
| | |
| | |
| | |
| | |
Impairment of trade receivables | | |
Receivables from associates and joint ventures (Note 10) | | |
| | |
| | |
Contractual assets (Note 23) | | |
Capitalized costs (Note 23) | | |
| | |
| | |
The movement in impairment of trade receivables in 2022
and 2021 is as follows:
| |
| |
Impairment provision at December 31, 2020 | |
| |
| |
| |
Translation differences and other | |
Impairment provision at December 31, 2021 | |
| |
| |
| |
Translation differences and other | |
Impairment provision at December 31, 2022 | |
| | |
| |
| | |
| | |
Amount not overdue invoiced | | |
| | |
| | |
| | |
| | |
| | |
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjYwMDk_33ce7701-3e93-4616-94d7-ec7b436d1a17": {
"value": "
The breakdown of financial assets and other non-current
assets of the Telef\u00f3nica Group at December 31, 2022 and
December 31, 2021 is as follows:
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
| | |
| | |
| | |
Short-term deposits and guarantees | | |
Short-term derivative financial assets (Note 19) | | |
Other current financial assets | | |
| | |
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | |
|
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
Promissory notes & commercial paper | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Derivative instruments (Note 19) | | | | | | | | | |
| | | | | | | | | |
Evolution of derivative instruments\u00a0
The movement of the net position of derivatives during
the years ended December 31, 2022 and December 31,
2021 is as follows:
| | |
| | |
Opening balance of assets/ (liabilities) | | |
| | |
| | |
Interest (proceeds)/payments | | |
Other (proceeds)/payments | | |
Fair value adjustments through other comprehensive income | | |
Movements with counterparty in the income statement | | |
| | |
| | |
Closing balance of assets/ (liabilities) | | |
(*) For interest rate hedges, the positive amount is in terms of \"fixed payment.\u201d For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.
(**) Positive amounts indicate payables.
(***) Of the hedging instruments that are not derivatives, 141 million euros correspond to \"Loans and other debts\"\" (see Note 18).
| | | | | | | | | | | |
|
| Notional amount - Maturities (*) | | Book value of the derivative and no-derivative instruments (**) |
| | | | | | | | | | |
Derivative instruments of accounting hedges | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Interest rate and exchange rate risk | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other derivatives of interest rate | | | | | | | | | | | |
Other derivatives of exchange rate | | | | | | | | | | | |
| | | | | | | | | | | |
Total derivative instruments | | | | | | | | | | | |
No derivatives instruments of accounting hedges (***) | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
(*) For interest rate hedges, the positive amount is in terms of \"fixed payment.\u201d For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.\u00a0
(**) Positive amounts indicate payables.
(***) Of the hedging instruments that are not derivatives, 132 million euros correspond to \"Loans and other debts\" (see Note 18).\u00a0
The detail of hedged items by fair value hedges at December\u00a031, 2022 and December\u00a031,
2021 are as follows:
| | | | | | | | | | |
|
| Hedged items carrying amount | | Accumulated amount in the hedged item adjusted by fair value hedge (*) |
| | Interest rate and exchange rate risk | | | | | Interest rate and exchange rate risk | | Of which: accumulated amount of any hedge item that have cesased to be adjusted for gains and losses |
| | | | | | | | | | |
Financial assets and other non-current assets | | | | | | | | | | |
Receivables and other current assets | | | | | | | | | | |
Other current financial assets | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Non-current financial liabilities | | | | | | | | | | |
Payables and other non-current liabilities | | | | | | | | | | |
Current financial liabilities | | | | | | | | | | |
Payables and other current liabilities | | | | | | | | | | |
(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and viceversa.
| | | | | | | | | | |
|
| Hedged items carrying amount | | Accumulated amount in the hedged item adjusted by fair value hedge (*) |
| | Interest rate and exchange rate risk | | | | | Interest rate and exchange rate risk | | Of which: accumulated amount of any hedge item that have cesased to be adjusted for gains and losses |
| | | | | | | | | | |
Financial assets and other non-current assets | | | | | | | | | | |
Receivables and other current assets | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Non-current financial liabilities | | | | | | | | | | |
Non-current lease liabilities | | | | | | | | | | |
Payables and other non-current liabilities | | | | | | | | | | |
Current financial liabilities | | | | | | | | | | |
Payables and other current liabilities | | | | | | | | | | |
(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and vice versa.
The evolutions of hedges in equity at December\u00a031, 2022 and December\u00a031, 2021 are as
follows:
| | | | | | | | | |
| | | No derivative instruments | | | |
Gains (losses) of cash flow hedges | Derivatives - Net investment hedges | | No Derivatives - Net investment hedges |
| | Exchange rate and interest rate risks |
| | | | | | | | | |
Changes in the fair value registered in equity | | | | | | | | | |
Transfer to the initial value of hedged item | | | | | | | | | |
Transfer to the income statement of the period - the hedged future cash flows are no longer expected to happen | | | | | | | | | |
Transfer to the income statement of the period - the hedged item has affected profit or loss | | | | | | | | | |
Total translation differences | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Amounts remaining in equity for continuing hedges | | | | | | | | | |
Amounts remaining in equity from any hedging relationship for which hedge accounting is no longer applied | | | | | | | | | |
| | | | | | | | | |
| | | |
| | | |
| Changes in fair value of the hedging instrument | Changes in the fair value of hedges item for the hedged risk | Ineffective portion hedged registered in the income statement |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Interest rate and exchange rate risk | | | |
| | | |
| | | |
Appendix IV: Financial instruments
The detail of the net financial debt arranged by the Group
(notional amount) by currency and interest rates at
December 31, 2022 is as follows:
| | | | | | | | | | |
| | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Other european currencies | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | |
|
| | |
Trading accountant purposes | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | |
Trading accountant purposes | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Cash flows receivable or payable on derivative financial
instruments to be settled via the swap of nominals,
categorized by currency of collection/payment, along
with contractual maturities are as follows:
The largest volume of cash flows collected in this table falls into the following currency pairs. The average exchange rates to which the settlements have been
closed are: EUR/GBP (0.87), EUR/USD (1.03), USD/COP (4,660.76) and EUR/BRL (5.58).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjYwMDk_c15f46ad-083e-44bb-a505-93ed831204bb": {
"value": "
The breakdown of financial assets and other non-current
assets of the Telef\u00f3nica Group at December 31, 2022 and
December 31, 2021 is as follows:
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
Tax payables and receivables
Current tax payables and receivables at December\u00a031,
2022 and 2021 are as follows:
| | |
| | |
| | |
| | |
| | |
| | |
Current income taxes payable | | |
| | |
| | |
| | |
| | |
| | |
| | |
Current income taxes receivable | | |
| | |
| | |
Investments
\u201cInvestments\u201d includes the fair value of investments in
companies where Telef\u00f3nica exercises no significant
influence or control and for which there is no specific
short-term disposal plan (see Note 3.i).
The Telef\u00f3nica Group\u2019s shareholding in Banco Bilbao
Vizcaya Argentaria, S.A. (BBVA) amounted to 249 million
euros (232 million euros at December\u00a031, 2021),
representing 0.73% of its share capital at December\u00a031,
2022 (0.66% at December 31, 2021).
At December\u00a031, 2022, Telef\u00f3nica maintained a 0.59%
stake in the share capital of China Unicom (Hong Kong)
Limited, valued at 105 million euros (same percentage at
December\u00a031, 2021, valued at 80 million euros).
On May 19, 2022 Telef\u00f3nica signed an agreement with
the company Global Alconaba, S.L., for the sale of
50,147,058 shares of Promotora de Informaciones, S.A.
(PRISA), equivalent to 7.076% of its share capital. As a
result of this sale, 71 million euros of losses from financial
assets measured at fair value through comprehensive
income have been reclassified to retained earnings. As of
December 31, 2022 Telef\u00f3nica's shareholding in PRISA
amounted to 1.87% of the company's share capital and
was valued at 4 million euros (9.03% at December 31, 2021
valued at 36 million euros).
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMTQyMzg2NzU1ODAwMDM1_196ba5bd-5b2e-44e9-bcdd-208b679d29d6": {
"value": "
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMTQyMzg2NzU1ODAwMDM1_3a21efa5-fff4-41a6-b14e-94c139ee53b8": {
"value": "
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMTQyMzg2NzU1ODAwMDM1_d19a1e14-f394-410d-a872-203c8eee1502": {
"value": "
| | |
| | |
Non-current financial assets (Note 16) | | |
| | |
| | |
| | |
| | |
Receivables for subleases | | |
Impairment of trade receivables | | |
Derivative financial assets (Note 19) | | |
| | |
Contractual assets (Note 23) | | |
Deferred expenses (Note 23) | | |
Long-term receivables for taxes | | |
| | |
| | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjYwMTA_efaff389-9dc1-4b5c-b066-6227b0f43e72": {
"value": "
| | | | | | |
| | | | | Long-term receivables for subleases | Impairment of trade receivables |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Fair value adjustments and financial updates | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Fair value adjustments and financial updates | | | | | | |
| | | | | | |
| | | | | | |
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjgxOTc_4d6afd2c-7f53-4975-92b3-fda191d64b86": {
"value": "
Other long-term credits
This line item includes long-term financial assets of
Telef\u00f3nica Germany amounting to 104 million euros and
85 million euros at December 31, 2022 and 2021,
respectively, that are mainly intended to cover obligations
from the defined benefit plan of Telef\u00f3nica Germany but
do not represent \"plan assets\" in accordance with IAS 19
(see Note 24).
Additions for the year 2022 include financial instruments
(Federal Treasury Certificates) of Pegaso PCS, S.A. de
C.V. amounting to 260 million euros, for the purpose of
securing certain legal proceedings with the Mexican tax
Administration Service. These instruments are classified
as long-term based on the estimated term of the
proceedings and accrue interest according to the time
elapsed (see Note 28).
Additionally, additions for the year 2022 include 82 million
euros of loans granted by Colombia Telecomunicaciones,
S.A. ESP BIC to the associate company \u00c1lamo Holdco,
S.L. (see Note 10).
At December 31, 2022 other long-term credits include 75
million euros corresponding to the subordinated debt
granted by Telef\u00f3nica Chile to the associate company
HoldCo Infraco, SpA. generated by the sale of 40% of the
fiber optic business (87 million euros as of December 31,
2021, see Note 10).
\"Additions\" in 2021 included the notes issued by the
international issue platform Single Platform Investment
Repackaging Entity, S.A. (\"Spire\") deposited in a securities
account owned by Telef\u00f3nica, S.A. with a notional of
1,000 million dollars of which 295 million euros are
registered as \"Other long-term credits\" and 591 million
euros were registered as \"other current financial assets\".
Transfers for the year 2022 include the short-term
transfer of the notes mentioned above for an amount of
313 million euros, all of which were registered at
December 31, 2022 in \"Other current financial assets\" for
an amount of 939 million euros (see Note 15).
Additionally in 2021, Telxius recorded additions amounting
to 246 million euros associated with the collection right
arising with\u00a0 American Tower Corporation as a result of
the sale of the telecommunications towers division in
Europe (Spain and Germany) in June 2021. At December
31, 2022 the collection right amounted to 264 million
euros.
The vast majority of long-term credits, recognized at
amortized cost (Note 16), are considered to be low credit
risk assets, therefore the impairment analysis was carried
out on the basis of expected credit losses in the next
twelve months.",
"dimensions": {
"concept": "tef:DisclosureOfOtherLongTermCreditsTextBlock",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF82Ny9mcmFnOjUwZTFhZjgwM2VkODRlM2NhMmU2YTY3ZjBkNDcwOGJlL3RleHRyZWdpb246NTBlMWFmODAzZWQ4NGUzY2EyZTZhNjdmMGQ0NzA4YmVfMjQ3MzkwMTE2MjgxOTg_8951d9ac-7df8-434b-a4cf-79f6e8646dfc": {
"value": "
Deposits and guarantees
Telef\u00f3nica Brazil has non-current judicial deposits
amounting to 501 million euros (see Note 24) at December
31, 2022 (431 million euros at December 31, 2021).
At December 31, 2022, there were deposits related to the
collateral guarantees on derivatives (CSA) signed by
Telef\u00f3nica, S.A. and its counterparties for the credit risk
management of derivatives amounting to 365 million
euros of which 42 million euros cross currency swap (564
million euros at December 31, 2021 that included 279
million euros related to cross currency swap).\u00a0 \u00a0
In relation with collateral contracts, in 2022 there is an
additional guarantee of 79,034 bonds issued by
Telef\u00f3nica Emisiones, S.A.U. deposited in a securities
account owned by Telef\u00f3nica, S.A. with a notional of 78
million euros at December 31, 2022 (166,678 bonds for a
nominal amount of 173 million euros at December 31,
2021).
The vast majority of deposits and guarantees recognized
at amortized cost (Note 16), are considered to be low
credit risk assets, therefore the impairment analysis was
carried out on the basis of expected credit losses in the
next 12 months.
",
"dimensions": {
"concept": "tef:DisclosureOfDepositsAndGuaranteesTextBlock",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF83MC9mcmFnOmI3MGM5MmY3ZWNiYzQxMWU5NTIzNzU3YmZjNGZkYzRmL3RleHRyZWdpb246YjcwYzkyZjdlY2JjNDExZTk1MjM3NTdiZmM0ZmRjNGZfMTQyMzg2NzU1Nzk3MDQ3_a7039590-4b35-4a9e-aba3-deddb5f2dfa6": {
"value": "
Note 13. Inventories
The detail of inventories of the Telef\u00f3nica Group at
December 31, 2022 and December 31, 2021 is as follows:
| | |
| | |
| | |
Mobile terminals and other equipments | | |
| | |
Inventories impairment provision | | |
| | |
\"Audiovisual rights\" mainly includes the rights to
broadcast sport events (see Note 29.c) and rights to
broadcast films, television series and documentaries (see
Note 3.j).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInventoriesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF83My9mcmFnOjdhZmQ5MWUwMzM1MjQ5MDM5MDVjYmNhMDY4NDI0NGRlL3RleHRyZWdpb246N2FmZDkxZTAzMzUyNDkwMzkwNWNiY2EwNjg0MjQ0ZGVfMTQyMzg2NzU1Nzk4MzQy_61536283-2574-422c-b978-d3333c4ef0f0": {
"value": "
Note 14. Receivables
and other current assets
The detail of receivables and other current assets of the
Telef\u00f3nica Group at December 31, 2022 and December 31,
2021 is as follows:
| | |
| | |
| | |
| | |
Impairment of trade receivables | | |
Receivables from associates and joint ventures (Note 10) | | |
| | |
| | |
Contractual assets (Note 23) | | |
Capitalized costs (Note 23) | | |
| | |
| | |
The movement in impairment of trade receivables in 2022
and 2021 is as follows:
| |
| |
Impairment provision at December 31, 2020 | |
| |
| |
| |
Translation differences and other | |
Impairment provision at December 31, 2021 | |
| |
| |
| |
Translation differences and other | |
Impairment provision at December 31, 2022 | |
| | |
| |
| | |
| | |
Amount not overdue invoiced | | |
| | |
| | |
| | |
| | |
| | |
Note 15. Other current financial assets
The breakdown of other financial assets of the Telef\u00f3nica
Group at December 31, 2022 and December 31, 2021 is as
follows:
| | |
| | |
| | |
Short-term deposits and guarantees | | |
Short-term derivative financial assets (Note 19) | | |
Other current financial assets | | |
| | |
Short-term credits at December 31, 2021, included bank
deposits with a maturity in one month formalized by
Telfisa Global, B.V. which amounted to 1,190 million euros.
Short-term deposits and guarantees at December 31,
2022 include current judicial deposits amounting to 106
million euros (see Note 24) constituted by Telef\u00f3nica
Brazil (17 million euros at December 31, 2021) including the
judicial deposit of the amount withheld from the
acquisition price of OI's mobile assets, in the amount of
522 million Brazilian reais (94 million euros, see Note 5).\u00a0 \u00a0
At December 31, 2021, 433 million euros of deposits
maturing in more than 90 days from Telef\u00f3nica M\u00f3viles
Chile were included, contracted with the funds obtained
from the issue in November 2021 of a bond (see Appendix
III).
Additionally at December 31, 2022 there were 232 million
euros registered in deposits (150 million euros at
December 31, 2021), associated with collateral guarantees
of Telef\u00f3nica, S.A. classified as current according to the
maturity of the underlying derivative instruments which
they relate to.
The vast majority of short-term credits and deposits and
guarantees recognized at amortized cost and at fair value
with changes in \"Other comprehensive income\" (Note 16)
are considered to be low credit risk assets.
\"Other current financial assets\" include short-term
investments in financial instruments to cover
commitments undertaken by the Group\u2019s insurance
companies, amounted to 126 million euros at
December\u00a031, 2021 (105 million euros at December\u00a031,
2021) and were recorded at fair value.
Additionally at December 31, 2022 this included the notes
issued by the international issue platform Single Platform
Investment Repackaging Entity, S.A. (\"Spire\"). These notes
were deposited in a securities account owned by
Telef\u00f3nica, S.A. with a notional of 1,000\u00a0million dollars
equivalent to 939 million euros registered entirely under
\"Other current financial assets\". At December 31, 2021
1,000 million dollars were deposited, of which 591 million
euros were registered as \"Other current financial assets\"
and 295 million euros were registered as \"Other long-term
credits\" (see Note 12).
Current financial assets that are highly liquid and have
maturity periods of three months or less from the date
contracted, and present an insignificant risk of value
changes, are recorded under \u201cCash and cash equivalents\u201d
on the accompanying consolidated statement of financial
position.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF83My9mcmFnOjdhZmQ5MWUwMzM1MjQ5MDM5MDVjYmNhMDY4NDI0NGRlL3RleHRyZWdpb246N2FmZDkxZTAzMzUyNDkwMzkwNWNiY2EwNjg0MjQ0ZGVfMTQyMzg2NzU1Nzk4MzQz_bc30233e-0cad-4439-9bee-cf045cc19e0a": {
"value": "
The detail of the age of the accounts receivable balances
from customers and their corrections for impairment as of
December 31, 2022 and 2021 is as follows:
| | |
| |
| | |
| | |
Amount not overdue invoiced | | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
Amount not overdue invoiced | | |
| | |
| | |
| | |
| | |
| | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF83OS9mcmFnOjQ0NTJmY2JmZjIxYzRlOWZhYmQwN2FiNjBmMDNhNmM3L3RleHRyZWdpb246NDQ1MmZjYmZmMjFjNGU5ZmFiZDA3YWI2MGYwM2E2YzdfMjQ3MzkwMTE2MjUwNTc_986520d8-68fc-4696-81ae-ba3b662f64a8": {
"value": "
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | |
|
| Fair value through profit or loss | | | | | |
| | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | Liabilities at amortized cost | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total financial liabilities | | | | | | | | | |
| | | | | | | | | |
|
| Fair value through profit or loss | | | | | |
| | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | Liabilities at amortized cost | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total financial liabilities | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF83OS9mcmFnOjQ0NTJmY2JmZjIxYzRlOWZhYmQwN2FiNjBmMDNhNmM3L3RleHRyZWdpb246NDQ1MmZjYmZmMjFjNGU5ZmFiZDA3YWI2MGYwM2E2YzdfMjQ3MzkwMTE2MjUwNTc_b2fb66df-772d-4574-a616-0d0da74d40f1": {
"value": "
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2022 is as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
The calculation of the fair values of the Telef\u00f3nica Group's debt instruments required an estimate, for each currency and counterparty, of a credit spread curve using the prices of
the Group's bonds and credit derivatives.
The breakdown of financial assets of the Telef\u00f3nica Group at December\u00a031, 2021 was as follows:
| | | | | | | | | | | | |
|
| Fair value through profit or loss | | \u00a0Fair value through other comprehensive income | | | | | |
| | | | | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | | | |
Non-current financial assets (Note 12) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Credits and other financial assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables for subleases | | | | | | | | | | | | |
Impairment of trade receivables | | | | | | | | | | | | |
| | | | | | | | | | | | |
Trade receivables (Note 14) | | | | | | | | | | | | |
Impairment of trade receivables (Note 14) | | | | | | | | | | | | |
Other current financial assets (Note 15) | | | | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | | | | |
| | | | | | | | | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF84Mi9mcmFnOjRiY2ExZmZhOTYyYTRhNTE4NjI0ZjJkZjNjYWFmZTA2L3RleHRyZWdpb246NGJjYTFmZmE5NjJhNGE1MTg2MjRmMmRmM2NhYWZlMDZfMjU4Mzg1MjMyNTI3NjQ_5b43ea3d-3e08-479e-9f26-0d68b625dadb": {
"value": "
Note 17. Equitya) Share capital and share premium
2022
At December 31, 2022, Telef\u00f3nica, S.A.\u00b4s share capital
amounted to 5,775,237,554 euros and is divided into
5,775,237,554 common shares, of a single series and with
a par value of 1 euro each, fully paid in. All the shares of
the Company have the same characteristics and carry the
same rights and obligations.\u00a0
The Board of Directors of Telef\u00f3nica, S.A. at its meeting
held on April 8, 2022, has resolved to carry out the
implementation of the share capital reduction through the
cancellation of own shares approved by the Annual
General Shareholders\u2019 Meeting held on April 8, 2022.
In April 2022, the share capital of Telef\u00f3nica, S.A. was
reduced in the amount of 139,275,057 euros, through the
cancellation of 139,275,057 own shares of the Company
held as treasury stock, with a nominal value of one euro
each. The share capital of the Company resulting from the
reduction was set at 5,639,772,963 euros corresponding
to 5,639,772,963 shares with a nominal value of one euro
each. Related to the capital reduction the share premium
was reduced by 409 million euros.
The reduction did not entail the return of contributions to
the shareholders since the Company is the owner of the
cancelled shares. The reduction was carried out with a
charge to unrestricted reserves, through the allocation of
a reserve for cancelled share capital in an amount equal
to the nominal value of the cancelled shares (i.e. for an
amount of 139,275,057 euros), which may only be used in
compliance with the same requirements as those
established for the reduction of share capital, by
application of the provisions of section 335. c) of the
Spanish Companies Act. Accordingly, as laid down in
such section, the creditors of the Company will not have
the right to oppose the reduction mentioned in section
334 of the Spanish Companies Act in connection with the
share capital reduction.
On April 22, 2022, the deed relating to the share capital
reduction was registered in the Commercial Registry of
Madrid.
On June 24, 2022 the deed of capital increase amounting
to 135,464,591 euros, divided into 135,464,591 ordinary
shares, with a nominal value of one euro each, and issued
against reserves as part of the scrip dividend, was filed in
the Madrid Commercial registry. Following the share
capital increase, the share capital was set up at
5,775,237,554 euros.
The shares of Telef\u00f3nica, S.A. are represented by book
entries that are listed on the Spanish Electronic Market
(within the selective Ibex 35 index) and on the four
Spanish Stock Exchanges (Madrid, Barcelona, Valencia
and Bilbao), as well as on the New York and Lima Stock
Exchanges (on these latter two Exchanges through
American Depositary Shares (ADSs), with each ADS
representing one share of the Company).
2021
At December 31, 2021, Telef\u00f3nica, S.A.\u00b4s share capital
amounted to 5,779,048,020 euros and is divided into
5,779,048,020 common shares, of a single series and with
a par value of 1 euro each, fully paid in.
The Board of Directors of Telef\u00f3nica, S.A. at its meeting
held on April 23, 2021, resolved to carry out the
implementation of the share capital reduction through the
cancellation of own shares approved by the Annual
General Shareholders\u2019 Meeting held on April 23, 2021.
The share capital of Telef\u00f3nica, S.A. was reduced in the
amount of 82,896,466 euros, through the cancellation of
82,896,466 own shares of the Company held as treasury
stock, with a nominal value of one euro each. The share
capital of the Company resulting from the reduction was
set at 5,443,534,596 euros corresponding to
5,443,534,596 shares with a nominal value of one euro
each. Related to the capital reduction the share premium
was reduced by 305 million euros.
The reduction was carried out with a charge to
unrestricted reserves, through the allocation of a reserve
for cancelled share capital in an amount equal to the
nominal value of the cancelled shares (i.e. for an amount
of 82,896,466 euros), which may only be used in
compliance with the same requirements as those
established for the reduction of share capital.
Accordingly, the creditors of the Company did not have
the right to oppose the reduction mentioned in section
334 of the Spanish Companies Act in connection with the
share capital reduction.
On May 5, 2021, the deed relating to the share capital
reduction was registered in the Commercial Registry of
Madrid.
On June 22, 2021 the deed of capital increase amounting
to 194,518,911 euros, divided into 194,518,911 ordinary
shares, with a nominal value of one euro each, and issued
against reserves as part of the scrip dividend, was filed in
the Madrid Commercial registry. Following the share
capital increase, the share capital was set up at
5,638,053,507 euros.
On November 3, 2021, the Board of Directors agreed to
submit for the approval of the General Shareholders
Meeting of the Company the adoption of the appropriate
corporate resolutions to execute a capital reduction by
means of a redemption of treasury shares representing
approximately 1.65% of the share capital.
On December 23, 2021, the capital increased in the
amount of 140,994,513 euros, in which 140,994,513
ordinary shares with a par value of one euro each were
issued against reserves as part of the scrip dividend.
Following the share capital increase, the share capital
was set at 5,779,048,020 euros. On that date, the deed
was filed in Madrid Companies' Register.
Authorizations by Shareholders\u2019 Meeting
As regards the authorizations conferred in respect of the
share capital, the shareholders acting at the Ordinary
General Shareholders\u2019 Meeting held on June 12, 2020
resolved to delegate to the Board of Directors, as broadly
as required by Law, pursuant to the provisions of Section
297.1.b) of the Companies Act, the power to increase the
share capital on one or more occasions and at any time,
within a period of five year from the date of adoption of
such resolution, by the maximum nominal amount of
2,596,065,843 euros, equal to one-half of the share
capital of the Company on the date of adoption of the
resolution at the General Shareholders\u2019 Meeting, issuing
and floating the respective new shares for such purpose
with or without a premium, the consideration for which
will consist of monetary contributions, with express
provision for incomplete subscription of the shares to be
issued. The Board of Directors was also authorized to
exclude pre-emptive rights in whole or in part, as
provided in section 506 of the Companies Act. However,
the power to exclude pre-emptive rights is limited to 20%
of the share capital on the date on which the resolution is
adopted. In accordance with the above-mentioned
authorization, as of the end of fiscal year 2022, the Board
would be authorized to increase the share capital by the
maximum nominal amount of 2,596,065,843 euros.
Furthermore, the shareholders acting at the Ordinary
General Shareholders\u2019 Meeting of Telef\u00f3nica, S.A. held on
June 12, 2020 delegated to the Board of Directors, in
accordance with the general rules governing the issuance
of debentures and pursuant to the provisions of
applicable law and the Company\u2019s By-Laws,\u00a0 the power to
issue securities, including preferred shares and warrants,
with the power to exclude the pre-emptive rights of
shareholders. The aforementioned securities may be
issued on one or more occasions, within a maximum
period of five years as from the date of adoption of the
resolution. The securities issued may be debentures,
bonds, notes and other fixed-income securities, or debt
instruments of a similar nature, or hybrid instruments in
any of the forms admitted by Law (including, among
others, preferred interests) both simple and, in the case of
debentures, bonds and hybrid instruments, convertible
into shares of the Company and/or exchangeable for
shares of the Company, of any of the companies of its
Group or of any other company and/or giving the holders
thereof an interest in the corporate earnings. Such
delegation also includes warrants or other similar
instruments that may entitle the holders thereof, directly
or indirectly, to subscribe for or acquire newly-issued or
outstanding shares, payable by physical delivery or
through differences. The aggregate amount of the
issuance or issuances of instruments that may be
approved in reliance on this delegation may not exceed,
at any time, 25,000 million euros or the equivalent thereof
in another currency. In the case of notes and for purposes
of the above-mentioned limits, the outstanding balance of
those issued in reliance on the delegation shall be
computed. In the case of warrants, and also for the
purpose of such limit, the sum of the premiums and
exercise prices of each issuance shall be taken into
account.\u00a0
Furthermore, under the aforementioned delegation
resolution, the shareholders at the Ordinary General
Shareholders\u2019 Meeting of Telef\u00f3nica, S.A. resolved to
authorize the Board of Directors to guarantee, in the
name of the Company, the issuance of the
aforementioned instruments issued by the Companies
belonging to its Group of Companies, within a maximum
period of five years as from the date of adoption of the
resolution.
Furthermore, on June 8, 2018, shareholders voted to
authorize the acquisition by the Board of Directors of
Telef\u00f3nica, S.A. treasury shares, up to the limits and
pursuant to the terms and conditions established at the
Shareholders\u2019 Meeting, within a maximum five-year
period from that date. However, it specified that in no
circumstances could the par value of the shares acquired,
added to that of the treasury shares already held by
Telef\u00f3nica, S.A. and by any of its controlled subsidiaries,
exceed the maximum legal percentage at any time.
b) Dividends
Dividends distribution in 2022
Approval was given at the General Shareholders\u2019 Meeting
of April 8, 2022 to pay a dividend in two tranches. The first
tranche through a scrip dividend amounting to
approximately 0.15 euros per share took place on June
2022 and consist on the assignment of free allotment
rights with an irrevocable purchase commitment by the
Company. The\u00a0 second tranch amounting to
approximately 0.15 euros per share took place in
December 2022, after the adoption of the corresponding
corporate resolutions.
At its meeting held on May 25, 2022, the Executive
Commission of Telef\u00f3nica, S.A. Board of Directors agreed
to carry out the execution of the increase in paid-up
capital, related to the shareholders compensation by
means of a scrip dividend. Thus, each shareholder
received one free allotment right for each Telef\u00f3nica
share held. Such free allotment rights were traded on the
Continuous Market in Spain during a period of 15 calendar
days. Once this trading period ended, the shareholders of
25.54% of the free-of-charge allotment rights accepted
the irrevocable purchase commitment assumed by
Telef\u00f3nica, S.A. The payment to these shareholders was
made on June 16, 2022. The gross impact of this dividend
amounts to 213 million euros.
On the other hand, the shareholders of 74.46% of the
free-of-charge allotment rights were entitled, therefore,
to receive new shares of Telef\u00f3nica, S.A. So the final
number of shares issued on June 24, 2022 in the capital
increase was 135,464,591 shares with a nominal value of 1
euro each.
The second tranch of the dividend was paid on
December 15, 2022 and had an impact in equity
amounting to 854 million euros.
Dividends distribution in 2021
Approval was given at the General Shareholders\u2019 Meeting
of April 23, 2021 to pay a scrip dividend amounting to
approximately 0.35 euros per share in two tranches,
consisting of the assignment of free allotment rights with
an irrevocable purchase commitment by the Company,
and a subsequent capital increase by means of the issue
of new shares to fulfill said allotments, following a specific
calculation mechanism which might result in variations of
the amount. The distribution of the first tranch, amounting
approximately 0.20 euros per share, took place in June of
2021 and the second tranch amounting approximately
0.15 euros per share took place in December 2021, after
the adoption of the corresponding corporate resolutions.
At its meeting held on May 26, 2021, the Executive
Commission of Telef\u00f3nica, S.A. Board of Directors agreed
to carry out the execution of the increase in paid-up
capital, related to the shareholders compensation by
means of a scrip dividend. Thus, each shareholder
received one free allotment right for each Telef\u00f3nica
share held. Such free allotment rights were traded on the
Continuous Market in Spain during a period of 15 calendar
days. Once this trading period ended, the shareholders of
28.53% of the free-of-charge allotment rights accepted
the irrevocable purchase commitment assumed by
Telef\u00f3nica, S.A. Cash payment to these shareholders was
made on June 17, 2021. The gross impact of this dividend
amounts to 308 million euros.
On the other hand, the shareholders of 71.47% of the free-
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of shares issued after June 22, 2021 in the capital increase
was 194,518,911 shares with a nominal value of 1 euro each.
The Executive Commission of Telef\u00f3nica, S.A. Board of
Directors meeting of November 3, 2021 agreed the
implementation of the second capital increase with
charge to reserves related to the shareholder
compensation by means of a scrip dividend. Thus, each
shareholder received 1 free allotment right for each
Telef\u00f3nica share held. The shareholders of 34.98% of the
free-of-charge allotment rights accepted the irrevocable
purchase commitment assumed by Telef\u00f3nica, S.A. Cash
payment was made on December 17, 2021 and had an
impact in equity amounting to 292 million euros.
On the other hand, the shareholders of 65.02% of the
free-of-charge allotment rights were entitled, therefore,
to receive new shares of Telef\u00f3nica, S.A. So the final
number of shares issued on December 23, 2021 in the
capital increase was 140,994,513 shares with a nominal
value of one euro each.
Dividends distribution in 2020
Approval was given at the General Shareholders\u2019 Meeting
of June 12, 2020 to pay a scrip dividend amounting to
approximately 0.40 euros per share in two tranches,
consisting of the assignment of free allotment rights with
an irrevocable purchase commitment by the Company,
and a subsequent capital increase by means of the issue
of new shares to fulfill said allotments, following a specific
calculation mechanism which might result in variations of
the amount. The distribution of the first tranche,
amounting approximately 0.20 euros per share, took
place in June of 2020 and the second tranche, amounting
approximately 0.20 euros per share, took place in
December 2020, after the adoption of the corresponding
corporate resolutions.
At its meeting held on June 12, 2020, the Board of
Directors agreed to carry out the execution of the
increase in paid-up capital, related to the shareholders
compensation by means of a scrip dividend. Thus, each
shareholder received one free allotment right for each
Telef\u00f3nica share held. Such free allotment rights were
traded on the Continuous Market in Spain during a period
of 15 calendar days. Once this trading period ended, the
shareholders of 36.99% of the free-ofcharge allotment
rights accepted the irrevocable purchase commitment
assumed by Telef\u00f3nica, S.A. Cash payment was made on
July 3, 2020 and had an impact in equity amounting to 371
million euros.
On the other hand, the shareholders of 63.01% of the free
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of shares issued after June 30, 2020 in the capital
increase was 136,305,986 shares with a nominal value of 1
euro each.
The Executive Commission of Telef\u00f3nica, S.A. Board of
Directors meeting of December 4, 2020 agreed the
implementation of the second capital increase with
charge to reserves related to the shareholder
compensation by means of a scrip dividend. The
shareholders of 33.12% of the free of- charge allotment
rights accepted the irrevocable purchase commitment
assumed by Telef\u00f3nica, S.A. Cash payment was made on
December 30, 2020 and had an impact in equity
amounting to 342 million euros.
On the other hand, the shareholders of 66.88%of the free
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of ordinary shares with a nominal value of 1 euro issued in
the capital increase was 197,993,390 corresponding to
3.72% of the share capital, being 197,993,390 euros the
capital increase.
Proposed distribution of results of the parent
company
Telef\u00f3nica, S.A. generated 880 million euros of losses in
2022.
The Company\u2019s Board of Directors will submit the
following proposed distribution of 2022 results for
approval at the Shareholders\u2019 Meeting:
c) Other equity instruments
Undated deeply subordinated securities
Unless specified otherwise, undated deeply subordinated
securities were issued by Telef\u00f3nica Europe, B.V.
The characteristic of undated deeply subordinated
securities, the detail of the tender offer and the amounts
repurchased in the operations and the amount amortized
in advance, are the following (million euros):
| | | | | | | | |
| | | | | | | | |
| | from 11/23/28 rate SWAP + spread incremental | | | | | | |
| | from 05/24/28 rate SWAP + spread incremental | | | | | | |
| | from 05/12/29 rate SWAP + spread incremental | | | | | | |
| | from 05/05/27 rate SWAP + spread incremental | | | | | | |
| | from 09/24/27 rate SWAP + spread incremental | | | | | | |
| | from 03/14/25 rate SWAP + spread incremental | | | | | | |
| | from 12/04/23 rate SWAP + spread incremental | | | | | | |
| from 09/22/26 rate SWAP + spread incremental | | | | | | |
| | from 06/07/23 rate SWAP + spread incremental | | | | | | |
| | from 03/31/24 rate SWAP + spread incremental | | | | | | |
| | | | | | | | |
(1) Green undated deeply subrodinated securities (see Note 29d)
(2) Sustanible undated deeply subordinated securities (see Nota 29d)
In all issuances of undated deeply subordinated securities
(hybrid instruments), the issuer has an option to defer the
payment of coupons and holders of such securities
cannot call for payment.
As the repayment of principal and the payment of
coupons depend solely on Telef\u00f3nica\u2019s decision, these
undated deeply subordinated securities are equity
instruments and are presented under \u201cOther equity
instruments\u201d in the accompanying consolidated
statement of changes in equity.
In November 2022, Telef\u00f3nica Europe, B.V. carried out
several transactions on its hybrid capital: (a) a new issue
amounting to 750 million euros, guaranteed by
Telef\u00f3nica, S.A. (see Note 29.d); (b) a tender offer on a
hybrid instruments, denominated in euros, with first call
dates in March and September 2023. The issuer accepted
the purchase in cash of the tendered securities in a
principal amount of 621 million euros.
In December 2022, Telef\u00f3nica Europe, B.V. was exercised
the clean-up call option for the remaining hybrid
instruments with first non-call date March 2023, with an
aggregate principal amount of 129 million euros.
In 2022, the payment of the coupons related to hybrids
instruments, in an aggregate amount, net of tax effects, of
201 million euros (263 million and 335 million euros in 2021
and 2020, respectively), was recorded as \u201cRetained
earnings\u201d in the consolidated statements of changes in
equity. In 2022 and 2021, the payments related to the
undated deeply subordinated securities include the
premium of the tender offers carried out in these periods
amounting to -1 million euros and 61 million euros,
respectively.
d) Legal reserve
According to the consolidated text of the Spanish
Corporate Enterprises Act, companies must transfer 10%
of profit for the year to a legal reserve until this reserve
reaches at least 20% of share capital. The legal reserve
can be used to increase capital by the amount exceeding
10% of the increased share capital amount. Except for this
purpose, until the legal reserve exceeds the limit of 20%
of share capital, it can only be used to offset losses, if
there are no other reserves available. At of December 31,
2022 the legal reserve amounts to 1,059 million euros
representing 18.34% of the share capital at the date.
e) Retained earnings
These reserves include undistributed profits of companies
constituting the consolidated Group minus interim
dividends paid against profit for the year, actuarial gains
and losses, the impact of the asset ceiling on defined
benefit plans and the payment of coupons related to
subordinated securities, if applicable.
These reserves also include revaluation reserves and the
reserve for canceled share capital. These reserves are
regulated by some restrictions for their distribution.
Revaluation reserves
The balance of Revaluation reserves arose as a result of
the revaluation made pursuant to Spanish Royal Decree-
Law 7/1996 of June 7, and may be used, free of tax, to
offset any losses incurred in the future and to increase
capital. It may also be allocated to unrestricted reserves,
provided that the capital gain has been realized.
The capital gain will be deemed to have been realized in
respect of the portion on which the depreciation was
recorded for accounting purposes or when the revalued
assets were transferred or recognized. In this respect, 4
million euros were reclassified to \u201cRetained earnings\u201d in
2022 (4 million euros in 2021) corresponding to
revaluation reserves subsequently considered to be
unrestricted. At December\u00a031, 2022, this reserve
amounted to 54 million euros (58 million euros at
December\u00a031, 2021).
Reserve for canceled share capital
In accordance with Section 335.c) of the Spanish
Corporate Enterprises Act and to render null and void the
right of opposition provided for in Section 334 of the same
Act, whenever the Company decreases capital, it should
record a reserve for canceled share capital for an amount
equal to the par value of the canceled shares, which can
only be used upon satisfaction of the same requirements
as those applicable to the reduction of share capital. In
2022 was recorded in this account 139 million euros (83
million euros in 2021). The cumulative amount as of
December 31, 2022 is 954 million euros.
f) Translation differences
The breakdown of the accumulated contribution of
translation differences attributable to equity holders of
the parent at December 31 is as follows:
In 2022, \"sales of non-controlling interest and inclusion of
companies\" reflected the impact of the acquisition by the
consortion form by CAA and Vauban of 45% of the
company Bluevia for 23 million euros (see Note 2).
In 2021 noteworthy is the result attributable to minority
shareholders of Telxius from the sale of its
telecommunications towers division (see Note 2) and the
dividend distribution related with this transaction (Note
28).
In 2020, \"Sales of non-controlling interests and inclusion
of companies\" reflected the capital increase of Telxius
amounting to 645 million euros, of which 323 million euros
correspond to non-controlling interest. The profit for the
year attributed to Telxius Group in 2020 includes the
effect of the recognition of deferred tax assets for
temporary differences of Telxius Towers Germany
amounting to 184 million euros.
Note 4 contains the revenues, OIBDA, Operating income,
capital expenditure and the main items of the statement
of financial position for the main segments of the
Telef\u00f3nica Group with non-controlling interests, namely
Telef\u00f3nica Brazil and Telef\u00f3nica Germany. The detail of
these figures for Colombia Telecomunicaciones and
Telxius Telecom is as follows:
| | | |
| | | |
Colombia Telecomunicaciones | | | |
| | | |
| | | |
Depreciation and amortization | | | |
| | | |
| | | |
| | | |
| | | |
Total allocated liabilities | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Depreciation and amortization | | | |
| | | |
| | | |
| | | |
| | | |
Total allocated liabilities | | | |
The statements of cash flows of these companies are as
follows:
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow used in investing activities | | | |
Net cash flow used in financing activities | | | |
| | | |
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow used in investing activities | | | |
Net cash flow used in financing activities | | | |
| | | |
| | | |
| | | |
Colombia Telecomunicaciones | | | |
Net cash flow provided by operating activities | | | |
Net cash flow provided by (used in) investing activities | | | |
Net cash flow provided by (used in) financing activities | | | |
| | | |
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow provided by (used in) investing activities | | | |
Net cash flow provided by (used in) financing activities | | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF84NS9mcmFnOmVjMzg3YzNjYjViODRmMjFhZTM0ODg4Njk0YzQxNmExL3RleHRyZWdpb246ZWMzODdjM2NiNWI4NGYyMWFlMzQ4ODg2OTRjNDE2YTFfMjQ3MzkwMTE2MjUyODc_fb25f6df-3538-419c-bf30-8ecd4416caa1": {
"value": "
a) Share capital and share premium
2022
At December 31, 2022, Telef\u00f3nica, S.A.\u00b4s share capital
amounted to 5,775,237,554 euros and is divided into
5,775,237,554 common shares, of a single series and with
a par value of 1 euro each, fully paid in. All the shares of
the Company have the same characteristics and carry the
same rights and obligations.\u00a0
The Board of Directors of Telef\u00f3nica, S.A. at its meeting
held on April 8, 2022, has resolved to carry out the
implementation of the share capital reduction through the
cancellation of own shares approved by the Annual
General Shareholders\u2019 Meeting held on April 8, 2022.
In April 2022, the share capital of Telef\u00f3nica, S.A. was
reduced in the amount of 139,275,057 euros, through the
cancellation of 139,275,057 own shares of the Company
held as treasury stock, with a nominal value of one euro
each. The share capital of the Company resulting from the
reduction was set at 5,639,772,963 euros corresponding
to 5,639,772,963 shares with a nominal value of one euro
each. Related to the capital reduction the share premium
was reduced by 409 million euros.
The reduction did not entail the return of contributions to
the shareholders since the Company is the owner of the
cancelled shares. The reduction was carried out with a
charge to unrestricted reserves, through the allocation of
a reserve for cancelled share capital in an amount equal
to the nominal value of the cancelled shares (i.e. for an
amount of 139,275,057 euros), which may only be used in
compliance with the same requirements as those
established for the reduction of share capital, by
application of the provisions of section 335. c) of the
Spanish Companies Act. Accordingly, as laid down in
such section, the creditors of the Company will not have
the right to oppose the reduction mentioned in section
334 of the Spanish Companies Act in connection with the
share capital reduction.
On April 22, 2022, the deed relating to the share capital
reduction was registered in the Commercial Registry of
Madrid.
On June 24, 2022 the deed of capital increase amounting
to 135,464,591 euros, divided into 135,464,591 ordinary
shares, with a nominal value of one euro each, and issued
against reserves as part of the scrip dividend, was filed in
the Madrid Commercial registry. Following the share
capital increase, the share capital was set up at
5,775,237,554 euros.
The shares of Telef\u00f3nica, S.A. are represented by book
entries that are listed on the Spanish Electronic Market
(within the selective Ibex 35 index) and on the four
Spanish Stock Exchanges (Madrid, Barcelona, Valencia
and Bilbao), as well as on the New York and Lima Stock
Exchanges (on these latter two Exchanges through
American Depositary Shares (ADSs), with each ADS
representing one share of the Company).
2021
At December 31, 2021, Telef\u00f3nica, S.A.\u00b4s share capital
amounted to 5,779,048,020 euros and is divided into
5,779,048,020 common shares, of a single series and with
a par value of 1 euro each, fully paid in.
The Board of Directors of Telef\u00f3nica, S.A. at its meeting
held on April 23, 2021, resolved to carry out the
implementation of the share capital reduction through the
cancellation of own shares approved by the Annual
General Shareholders\u2019 Meeting held on April 23, 2021.
The share capital of Telef\u00f3nica, S.A. was reduced in the
amount of 82,896,466 euros, through the cancellation of
82,896,466 own shares of the Company held as treasury
stock, with a nominal value of one euro each. The share
capital of the Company resulting from the reduction was
set at 5,443,534,596 euros corresponding to
5,443,534,596 shares with a nominal value of one euro
each. Related to the capital reduction the share premium
was reduced by 305 million euros.
The reduction was carried out with a charge to
unrestricted reserves, through the allocation of a reserve
for cancelled share capital in an amount equal to the
nominal value of the cancelled shares (i.e. for an amount
of 82,896,466 euros), which may only be used in
compliance with the same requirements as those
established for the reduction of share capital.
Accordingly, the creditors of the Company did not have
the right to oppose the reduction mentioned in section
334 of the Spanish Companies Act in connection with the
share capital reduction.
On May 5, 2021, the deed relating to the share capital
reduction was registered in the Commercial Registry of
Madrid.
On June 22, 2021 the deed of capital increase amounting
to 194,518,911 euros, divided into 194,518,911 ordinary
shares, with a nominal value of one euro each, and issued
against reserves as part of the scrip dividend, was filed in
the Madrid Commercial registry. Following the share
capital increase, the share capital was set up at
5,638,053,507 euros.
On November 3, 2021, the Board of Directors agreed to
submit for the approval of the General Shareholders
Meeting of the Company the adoption of the appropriate
corporate resolutions to execute a capital reduction by
means of a redemption of treasury shares representing
approximately 1.65% of the share capital.
On December 23, 2021, the capital increased in the
amount of 140,994,513 euros, in which 140,994,513
ordinary shares with a par value of one euro each were
issued against reserves as part of the scrip dividend.
Following the share capital increase, the share capital
was set at 5,779,048,020 euros. On that date, the deed
was filed in Madrid Companies' Register.
Authorizations by Shareholders\u2019 Meeting
As regards the authorizations conferred in respect of the
share capital, the shareholders acting at the Ordinary
General Shareholders\u2019 Meeting held on June 12, 2020
resolved to delegate to the Board of Directors, as broadly
as required by Law, pursuant to the provisions of Section
297.1.b) of the Companies Act, the power to increase the
share capital on one or more occasions and at any time,
within a period of five year from the date of adoption of
such resolution, by the maximum nominal amount of
2,596,065,843 euros, equal to one-half of the share
capital of the Company on the date of adoption of the
resolution at the General Shareholders\u2019 Meeting, issuing
and floating the respective new shares for such purpose
with or without a premium, the consideration for which
will consist of monetary contributions, with express
provision for incomplete subscription of the shares to be
issued. The Board of Directors was also authorized to
exclude pre-emptive rights in whole or in part, as
provided in section 506 of the Companies Act. However,
the power to exclude pre-emptive rights is limited to 20%
of the share capital on the date on which the resolution is
adopted. In accordance with the above-mentioned
authorization, as of the end of fiscal year 2022, the Board
would be authorized to increase the share capital by the
maximum nominal amount of 2,596,065,843 euros.
Furthermore, the shareholders acting at the Ordinary
General Shareholders\u2019 Meeting of Telef\u00f3nica, S.A. held on
June 12, 2020 delegated to the Board of Directors, in
accordance with the general rules governing the issuance
of debentures and pursuant to the provisions of
applicable law and the Company\u2019s By-Laws,\u00a0 the power to
issue securities, including preferred shares and warrants,
with the power to exclude the pre-emptive rights of
shareholders. The aforementioned securities may be
issued on one or more occasions, within a maximum
period of five years as from the date of adoption of the
resolution. The securities issued may be debentures,
bonds, notes and other fixed-income securities, or debt
instruments of a similar nature, or hybrid instruments in
any of the forms admitted by Law (including, among
others, preferred interests) both simple and, in the case of
debentures, bonds and hybrid instruments, convertible
into shares of the Company and/or exchangeable for
shares of the Company, of any of the companies of its
Group or of any other company and/or giving the holders
thereof an interest in the corporate earnings. Such
delegation also includes warrants or other similar
instruments that may entitle the holders thereof, directly
or indirectly, to subscribe for or acquire newly-issued or
outstanding shares, payable by physical delivery or
through differences. The aggregate amount of the
issuance or issuances of instruments that may be
approved in reliance on this delegation may not exceed,
at any time, 25,000 million euros or the equivalent thereof
in another currency. In the case of notes and for purposes
of the above-mentioned limits, the outstanding balance of
those issued in reliance on the delegation shall be
computed. In the case of warrants, and also for the
purpose of such limit, the sum of the premiums and
exercise prices of each issuance shall be taken into
account.\u00a0
Furthermore, under the aforementioned delegation
resolution, the shareholders at the Ordinary General
Shareholders\u2019 Meeting of Telef\u00f3nica, S.A. resolved to
authorize the Board of Directors to guarantee, in the
name of the Company, the issuance of the
aforementioned instruments issued by the Companies
belonging to its Group of Companies, within a maximum
period of five years as from the date of adoption of the
resolution.
Furthermore, on June 8, 2018, shareholders voted to
authorize the acquisition by the Board of Directors of
Telef\u00f3nica, S.A. treasury shares, up to the limits and
pursuant to the terms and conditions established at the
Shareholders\u2019 Meeting, within a maximum five-year
period from that date. However, it specified that in no
circumstances could the par value of the shares acquired,
added to that of the treasury shares already held by
Telef\u00f3nica, S.A. and by any of its controlled subsidiaries,
exceed the maximum legal percentage at any time.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF84OC9mcmFnOjYwYThmOGI5ZDdkODQ5OWI5NDdkYjcxYTI3MGVjNzM2L3RleHRyZWdpb246NjBhOGY4YjlkN2Q4NDk5Yjk0N2RiNzFhMjcwZWM3MzZfMjQ3MzkwMTE2MjU0MzM_39493daf-e555-4535-aed5-a04e89c0194e": {
"value": "
b) Dividends
Dividends distribution in 2022
Approval was given at the General Shareholders\u2019 Meeting
of April 8, 2022 to pay a dividend in two tranches. The first
tranche through a scrip dividend amounting to
approximately 0.15 euros per share took place on June
2022 and consist on the assignment of free allotment
rights with an irrevocable purchase commitment by the
Company. The\u00a0 second tranch amounting to
approximately 0.15 euros per share took place in
December 2022, after the adoption of the corresponding
corporate resolutions.
At its meeting held on May 25, 2022, the Executive
Commission of Telef\u00f3nica, S.A. Board of Directors agreed
to carry out the execution of the increase in paid-up
capital, related to the shareholders compensation by
means of a scrip dividend. Thus, each shareholder
received one free allotment right for each Telef\u00f3nica
share held. Such free allotment rights were traded on the
Continuous Market in Spain during a period of 15 calendar
days. Once this trading period ended, the shareholders of
25.54% of the free-of-charge allotment rights accepted
the irrevocable purchase commitment assumed by
Telef\u00f3nica, S.A. The payment to these shareholders was
made on June 16, 2022. The gross impact of this dividend
amounts to 213 million euros.
On the other hand, the shareholders of 74.46% of the
free-of-charge allotment rights were entitled, therefore,
to receive new shares of Telef\u00f3nica, S.A. So the final
number of shares issued on June 24, 2022 in the capital
increase was 135,464,591 shares with a nominal value of 1
euro each.
The second tranch of the dividend was paid on
December 15, 2022 and had an impact in equity
amounting to 854 million euros.
Dividends distribution in 2021
Approval was given at the General Shareholders\u2019 Meeting
of April 23, 2021 to pay a scrip dividend amounting to
approximately 0.35 euros per share in two tranches,
consisting of the assignment of free allotment rights with
an irrevocable purchase commitment by the Company,
and a subsequent capital increase by means of the issue
of new shares to fulfill said allotments, following a specific
calculation mechanism which might result in variations of
the amount. The distribution of the first tranch, amounting
approximately 0.20 euros per share, took place in June of
2021 and the second tranch amounting approximately
0.15 euros per share took place in December 2021, after
the adoption of the corresponding corporate resolutions.
At its meeting held on May 26, 2021, the Executive
Commission of Telef\u00f3nica, S.A. Board of Directors agreed
to carry out the execution of the increase in paid-up
capital, related to the shareholders compensation by
means of a scrip dividend. Thus, each shareholder
received one free allotment right for each Telef\u00f3nica
share held. Such free allotment rights were traded on the
Continuous Market in Spain during a period of 15 calendar
days. Once this trading period ended, the shareholders of
28.53% of the free-of-charge allotment rights accepted
the irrevocable purchase commitment assumed by
Telef\u00f3nica, S.A. Cash payment to these shareholders was
made on June 17, 2021. The gross impact of this dividend
amounts to 308 million euros.
On the other hand, the shareholders of 71.47% of the free-
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of shares issued after June 22, 2021 in the capital increase
was 194,518,911 shares with a nominal value of 1 euro each.
The Executive Commission of Telef\u00f3nica, S.A. Board of
Directors meeting of November 3, 2021 agreed the
implementation of the second capital increase with
charge to reserves related to the shareholder
compensation by means of a scrip dividend. Thus, each
shareholder received 1 free allotment right for each
Telef\u00f3nica share held. The shareholders of 34.98% of the
free-of-charge allotment rights accepted the irrevocable
purchase commitment assumed by Telef\u00f3nica, S.A. Cash
payment was made on December 17, 2021 and had an
impact in equity amounting to 292 million euros.
On the other hand, the shareholders of 65.02% of the
free-of-charge allotment rights were entitled, therefore,
to receive new shares of Telef\u00f3nica, S.A. So the final
number of shares issued on December 23, 2021 in the
capital increase was 140,994,513 shares with a nominal
value of one euro each.
Dividends distribution in 2020
Approval was given at the General Shareholders\u2019 Meeting
of June 12, 2020 to pay a scrip dividend amounting to
approximately 0.40 euros per share in two tranches,
consisting of the assignment of free allotment rights with
an irrevocable purchase commitment by the Company,
and a subsequent capital increase by means of the issue
of new shares to fulfill said allotments, following a specific
calculation mechanism which might result in variations of
the amount. The distribution of the first tranche,
amounting approximately 0.20 euros per share, took
place in June of 2020 and the second tranche, amounting
approximately 0.20 euros per share, took place in
December 2020, after the adoption of the corresponding
corporate resolutions.
At its meeting held on June 12, 2020, the Board of
Directors agreed to carry out the execution of the
increase in paid-up capital, related to the shareholders
compensation by means of a scrip dividend. Thus, each
shareholder received one free allotment right for each
Telef\u00f3nica share held. Such free allotment rights were
traded on the Continuous Market in Spain during a period
of 15 calendar days. Once this trading period ended, the
shareholders of 36.99% of the free-ofcharge allotment
rights accepted the irrevocable purchase commitment
assumed by Telef\u00f3nica, S.A. Cash payment was made on
July 3, 2020 and had an impact in equity amounting to 371
million euros.
On the other hand, the shareholders of 63.01% of the free
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of shares issued after June 30, 2020 in the capital
increase was 136,305,986 shares with a nominal value of 1
euro each.
The Executive Commission of Telef\u00f3nica, S.A. Board of
Directors meeting of December 4, 2020 agreed the
implementation of the second capital increase with
charge to reserves related to the shareholder
compensation by means of a scrip dividend. The
shareholders of 33.12% of the free of- charge allotment
rights accepted the irrevocable purchase commitment
assumed by Telef\u00f3nica, S.A. Cash payment was made on
December 30, 2020 and had an impact in equity
amounting to 342 million euros.
On the other hand, the shareholders of 66.88%of the free
of-charge allotment rights were entitled, therefore, to
receive new shares of Telef\u00f3nica, S.A. So the final number
of ordinary shares with a nominal value of 1 euro issued in
the capital increase was 197,993,390 corresponding to
3.72% of the share capital, being 197,993,390 euros the
capital increase.
Proposed distribution of results of the parent
company
Telef\u00f3nica, S.A. generated 880 million euros of losses in
2022.
The Company\u2019s Board of Directors will submit the
following proposed distribution of 2022 results for
approval at the Shareholders\u2019 Meeting:
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDividendsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF85NC9mcmFnOjI1M2FhMWRmNDUyMjRlZDBiOTM4MjY1Y2ZiZWEzY2IxL3RleHRyZWdpb246MjUzYWExZGY0NTIyNGVkMGI5MzgyNjVjZmJlYTNjYjFfMjQ3MzkwMTE2MjUwMTE_8b476060-9292-4bc4-a6b5-1275185b7cd5": {
"value": "
d) Legal reserve
According to the consolidated text of the Spanish
Corporate Enterprises Act, companies must transfer 10%
of profit for the year to a legal reserve until this reserve
reaches at least 20% of share capital. The legal reserve
can be used to increase capital by the amount exceeding
10% of the increased share capital amount. Except for this
purpose, until the legal reserve exceeds the limit of 20%
of share capital, it can only be used to offset losses, if
there are no other reserves available. At of December 31,
2022 the legal reserve amounts to 1,059 million euros
representing 18.34% of the share capital at the date.
f) Translation differences
The breakdown of the accumulated contribution of
translation differences attributable to equity holders of
the parent at December 31 is as follows:
In 2022, \"sales of non-controlling interest and inclusion of
companies\" reflected the impact of the acquisition by the
consortion form by CAA and Vauban of 45% of the
company Bluevia for 23 million euros (see Note 2).
In 2021 noteworthy is the result attributable to minority
shareholders of Telxius from the sale of its
telecommunications towers division (see Note 2) and the
dividend distribution related with this transaction (Note
28).
In 2020, \"Sales of non-controlling interests and inclusion
of companies\" reflected the capital increase of Telxius
amounting to 645 million euros, of which 323 million euros
correspond to non-controlling interest. The profit for the
year attributed to Telxius Group in 2020 includes the
effect of the recognition of deferred tax assets for
temporary differences of Telxius Towers Germany
amounting to 184 million euros.
Note 4 contains the revenues, OIBDA, Operating income,
capital expenditure and the main items of the statement
of financial position for the main segments of the
Telef\u00f3nica Group with non-controlling interests, namely
Telef\u00f3nica Brazil and Telef\u00f3nica Germany. The detail of
these figures for Colombia Telecomunicaciones and
Telxius Telecom is as follows:
| | | |
| | | |
Colombia Telecomunicaciones | | | |
| | | |
| | | |
Depreciation and amortization | | | |
| | | |
| | | |
| | | |
| | | |
Total allocated liabilities | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Depreciation and amortization | | | |
| | | |
| | | |
| | | |
| | | |
Total allocated liabilities | | | |
The statements of cash flows of these companies are as
follows:
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow used in investing activities | | | |
Net cash flow used in financing activities | | | |
| | | |
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow used in investing activities | | | |
Net cash flow used in financing activities | | | |
| | | |
| | | |
| | | |
Colombia Telecomunicaciones | | | |
Net cash flow provided by operating activities | | | |
Net cash flow provided by (used in) investing activities | | | |
Net cash flow provided by (used in) financing activities | | | |
| | | |
| | | |
| | | |
| | | |
Net cash flow provided by operating activities | | | |
Net cash flow provided by (used in) investing activities | | | |
Net cash flow provided by (used in) financing activities | | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xMTIvZnJhZzoyY2JkYjUzODM5MGI0ZjgxYmI0ZDE2NzhjOTgxZWRjNC90ZXh0cmVnaW9uOjJjYmRiNTM4MzkwYjRmODFiYjRkMTY3OGM5ODFlZGM0XzI0NzM5MDExNjI1MTc1_a5443918-f45b-4f2f-b55f-dcb090f2f043": {
"value": "
Note 18. Financial liabilities
The breakdown of financial liabilities at December\u00a031,
2022 and the corresponding maturities schedule is as
follows:
| | | | | | | | | |
|
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
Promissory notes & commercial paper | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Derivative instruments (Note 19) | | | | | | | | | |
| | | | | | | | | |
The estimate of future payments for interest on these
financial liabilities at December 31, 2022 is as follows: 1,254
million euros in 2023, 1,147 million euros in 2024, 1,057
million euros in 2025, 978 million euros in 2026, 871 million
euros in 2027 and 7,840 million euros in years after 2027.
For floating rate financing, the Group mainly estimates
future interest using the forward curve of the various
currencies at December 31, 2022.
Derivative instruments in the table above include the fair
value of derivatives classified as financial liabilities, i.e.
when they have a negative mark-to-market, yet excluding
the fair value of derivatives classified as current financial
assets (712 million euros, see Note 15) and non-current
financial assets (2,668 million euros, see Note 12).
In 2021 and 2022, the Group entered into agreements to
extend payment terms with various suppliers, and with
factoring companies when such payments are
discounted. When the new extended payment terms
exceed customary payment terms in the industry, trade
liabilities are reclassified to other financial liabilities and
the deferred payments made are recognized in net cash
flows used in financing activities (see Note 28). At
December\u00a031, 2022,there was no outstanding balance
pending payment. At December\u00a031, 2021 the
corresponding amount pending payment recognized in
\"Loans and other payables\" line was 36 million euros.\u00a0
The deferred payments made in relation to this item
during the year amounted to 41 million euros (108 million
euros in 2021).\u00a0
The composition of the financial liabilities by category at
December\u00a031, 2022 and 2021 is as follows:
| | | | | | | | | |
|
| Fair value through profit or loss | | | | | |
| | | | | Level 2 (Other directly observable market inputs) | Level 3 (Inputs not based on observable market data) | Liabilities at amortized cost | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total financial liabilities | | | | | | | | | |
| | | | | | | |
| Cash used in financing activities | |
| | | | Translation differences and exchange gains and losses | | | |
| | | | | | | |
Promissory notes and commercial paper | | | | | | | |
| | | | | | | |
Debentures and bonds
Financial updates of debenture and bond issues include
mainly the value adjustment of the basis adjustment
bonds due to their fair value hedges, impacted by interest
rate hikes.
At December\u00a031, 2022, the nominal amount of
outstanding debentures and bonds issues was 31,095
million euros (32,156 million euros at December\u00a031, 2021).
Appendix III presents the characteristics of all outstanding
debentures and bond issues at the year-end 2022, and
the significant issues made during the year.
Telef\u00f3nica, S.A. has a full and unconditional guarantee on
issues made by Telef\u00f3nica Emisiones, S.A.U., and
Telef\u00f3nica Europe, B.V., both of which are wholly owned
finance subsidiaries of Telef\u00f3nica, S.A. No other
subsidiaries of Telef\u00f3nica, S.A. provide guarantees on
these issues.
Promissory notes and commercial paper
The main programs for issuance of promissory notes and
commercial paper are the following:
\u2022At December\u00a031, 2022, Telef\u00f3nica Europe, B.V. had a
commercial paper issuance program guaranteed by
Telef\u00f3nica, S.A. for up to 5,000 million euros. The
outstanding balance of commercial paper issued under
this program at December\u00a031, 2022 was 500 million
euros, issued at an average interest rate of 0.28% for
2022 (999 million euros issued in 2021 at an average
rate of -0.46%).
\u2022At December\u00a031, 2022, Telef\u00f3nica, S.A. had a corporate
promissory note program for 500 million euros
expandable to 2,000 million euros, with no outstanding
balance at December\u00a031, 2022 (30 million euros at
December 31, 2021).
Interest-bearing debt
Other movements in \"Loans and other payables\" at
December 31, 2022 include collections and payments
related to collateral liabilities deposit associated with
Telef\u00f3nica, S.A. debt for a net amount of 580 million
euros (309 million euros at December 31, 2021).
The average interest rate on outstanding loans and other
payables at December\u00a031, 2022 was 3.45% (1.30% in
2021). This percentage does not include the impact of
hedges arranged by the Group.
The main financing transactions included under
\u201cInterest-bearing debt\u201d line outstanding at December\u00a031,
2022 and 2021 and their nominal amounts are provided
in Appendix V.
Interest-bearing debt arranged or repaid in 2022 mainly
includes the following:
| | | | | | | |
| Limit 12/31/2022\u00a0 (million euros) | | Outstanding balance 12/31/2022 (million euros) | | | Drawndown 2022 (million euros) | Repayment 2022 (million euros) |
| | | | | | | |
| | | | | | | |
Sustainable syndicated (1) | | | | | | | |
| | | | | | | |
Colombia Telecomunicaciones S.A. E.S.P. | | | | | | | |
| | | | | | | |
Telef\u00f3nica Brasil, S.A. | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
(1) On January 13, 2022 there was maturity extension of the sustainability-linked syndicated loan facility for 5,500 million euros. The loan has two annual
extension options at Telef\u00f3nica, S.A. request with a maturity maximum up to 2029 (see Note 29.d).
(2) On January 26, 2022 there was an early repayment for 132 million dollars of the bilateral loan originally scheduled to mature in 2023.\u00a0
At December\u00a031, 2022, the Telef\u00f3nica Group presented
availabilities of financing from different sources that
amounted to approximately 11,737 million euros (12,182
million euros at December\u00a031, 2021), of which 11,434
million euros will mature in more than twelve months.
Within these availabilities of financing, 10,114 million euros
are included, whose interests are linked to the fulfillment
of sustainability objectives. Of these, 3,864 million euros
correspond to committed lines and bilateral financing,
750 million euros correspond to the sustainable
syndicated loan of Telef\u00f3nica Germany GmbH & Co.
OHG (see Annex V) and 5,500 million euros correspond
to the sustainable syndicated loan of Telef\u00f3nica, S.A.
(see Note 29.d).
Loans by currency
The breakdown of \u201cLoans and other payables\u201d line by
currency at December\u00a031, 2022 and 2021, and the
equivalent value of foreign-currency loans in euros, is as
follows:
| | | | | |
| Outstanding balance (in millions) |
| | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xMTIvZnJhZzoyY2JkYjUzODM5MGI0ZjgxYmI0ZDE2NzhjOTgxZWRjNC90ZXh0cmVnaW9uOjJjYmRiNTM4MzkwYjRmODFiYjRkMTY3OGM5ODFlZGM0XzE0MjM4Njc1NTc5NzIzNA_31e67372-b382-45d1-a90d-30ebfd54bba7": {
"value": "
| | | | | | | | | |
|
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
Promissory notes & commercial paper | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Derivative instruments (Note 19) | | | | | | | | | |
| | | | | | | | | |
Issues, promissory notes, commercial
paper, loans and other payables
The movement in issues, promissory notes, commercial
paper, loans and other payables in 2022 and 2021 arising
from financial activities is as follows:
| | | | | | | |
| Cash used in financing activities | | | |
| | | | Translation differences and exchange gains and losses | | | |
| | | | | | | |
Promissory notes and commercial paper | | | | | | | |
| | | | | | | |
| | | | | | | |
| Cash used in financing activities | |
| | | | Translation differences and exchange gains and losses | | | |
| | | | | | | |
Promissory notes and commercial paper | | | | | | | |
| | | | | | | |
Interest-bearing debt
Other movements in \"Loans and other payables\" at
December 31, 2022 include collections and payments
related to collateral liabilities deposit associated with
Telef\u00f3nica, S.A. debt for a net amount of 580 million
euros (309 million euros at December 31, 2021).
The average interest rate on outstanding loans and other
payables at December\u00a031, 2022 was 3.45% (1.30% in
2021). This percentage does not include the impact of
hedges arranged by the Group.
The main financing transactions included under
\u201cInterest-bearing debt\u201d line outstanding at December\u00a031,
2022 and 2021 and their nominal amounts are provided
in Appendix V.
Interest-bearing debt arranged or repaid in 2022 mainly
includes the following:
| | | | | | | |
| Limit 12/31/2022\u00a0 (million euros) | | Outstanding balance 12/31/2022 (million euros) | | | Drawndown 2022 (million euros) | Repayment 2022 (million euros) |
| | | | | | | |
| | | | | | | |
Sustainable syndicated (1) | | | | | | | |
| | | | | | | |
Colombia Telecomunicaciones S.A. E.S.P. | | | | | | | |
| | | | | | | |
Telef\u00f3nica Brasil, S.A. | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
(1) On January 13, 2022 there was maturity extension of the sustainability-linked syndicated loan facility for 5,500 million euros. The loan has two annual
extension options at Telef\u00f3nica, S.A. request with a maturity maximum up to 2029 (see Note 29.d).
(2) On January 26, 2022 there was an early repayment for 132 million dollars of the bilateral loan originally scheduled to mature in 2023.\u00a0
At December\u00a031, 2022, the Telef\u00f3nica Group presented
availabilities of financing from different sources that
amounted to approximately 11,737 million euros (12,182
million euros at December\u00a031, 2021), of which 11,434
million euros will mature in more than twelve months.
Within these availabilities of financing, 10,114 million euros
are included, whose interests are linked to the fulfillment
of sustainability objectives. Of these, 3,864 million euros
correspond to committed lines and bilateral financing,
750 million euros correspond to the sustainable
syndicated loan of Telef\u00f3nica Germany GmbH & Co.
OHG (see Annex V) and 5,500 million euros correspond
to the sustainable syndicated loan of Telef\u00f3nica, S.A.
(see Note 29.d).
Loans by currency
The breakdown of \u201cLoans and other payables\u201d line by
currency at December\u00a031, 2022 and 2021, and the
equivalent value of foreign-currency loans in euros, is as
follows:
| | | | | |
| Outstanding balance (in millions) |
| | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Appendix V: Interest-bearing debt
The main financing transactions at December 31, 2022 and 2021 and their nominal amounts are as follows:
| | | | | | |
| | Outstanding principal balance (millions of euros) | | |
| Current limit\u00a0 (millions) | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Sustainable syndicated (1) | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Telef\u00f3nica Germany GmbH & Co. OHG | | | | | | |
| | | | | | |
| | | | | | |
EIB Financing (Tranche 1) | | | | | | |
EIB Financing (Tranche 2) | | | | | | |
Colombia Telecomunicaciones, S.A. E.S.P. | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Telef\u00f3nica M\u00f3viles Chile, S.A. | | | | | | |
| | | | | | |
| | | | | | | |
| Cash used in financing activities | |
| | | | Translation differences and exchange gains and losses | | | |
| | | | | | | |
Promissory notes and commercial paper | | | | | | | |
| | | | | | | |
Interest-bearing debt
Other movements in \"Loans and other payables\" at
December 31, 2022 include collections and payments
related to collateral liabilities deposit associated with
Telef\u00f3nica, S.A. debt for a net amount of 580 million
euros (309 million euros at December 31, 2021).
The average interest rate on outstanding loans and other
payables at December\u00a031, 2022 was 3.45% (1.30% in
2021). This percentage does not include the impact of
hedges arranged by the Group.
The main financing transactions included under
\u201cInterest-bearing debt\u201d line outstanding at December\u00a031,
2022 and 2021 and their nominal amounts are provided
in Appendix V.
Interest-bearing debt arranged or repaid in 2022 mainly
includes the following:
| | | | | | | |
| Limit 12/31/2022\u00a0 (million euros) | | Outstanding balance 12/31/2022 (million euros) | | | Drawndown 2022 (million euros) | Repayment 2022 (million euros) |
| | | | | | | |
| | | | | | | |
Sustainable syndicated (1) | | | | | | | |
| | | | | | | |
Colombia Telecomunicaciones S.A. E.S.P. | | | | | | | |
| | | | | | | |
Telef\u00f3nica Brasil, S.A. | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
(1) On January 13, 2022 there was maturity extension of the sustainability-linked syndicated loan facility for 5,500 million euros. The loan has two annual
extension options at Telef\u00f3nica, S.A. request with a maturity maximum up to 2029 (see Note 29.d).
(2) On January 26, 2022 there was an early repayment for 132 million dollars of the bilateral loan originally scheduled to mature in 2023.\u00a0
At December\u00a031, 2022, the Telef\u00f3nica Group presented
availabilities of financing from different sources that
amounted to approximately 11,737 million euros (12,182
million euros at December\u00a031, 2021), of which 11,434
million euros will mature in more than twelve months.
Within these availabilities of financing, 10,114 million euros
are included, whose interests are linked to the fulfillment
of sustainability objectives. Of these, 3,864 million euros
correspond to committed lines and bilateral financing,
750 million euros correspond to the sustainable
syndicated loan of Telef\u00f3nica Germany GmbH & Co.
OHG (see Annex V) and 5,500 million euros correspond
to the sustainable syndicated loan of Telef\u00f3nica, S.A.
(see Note 29.d).
Loans by currency
The breakdown of \u201cLoans and other payables\u201d line by
currency at December\u00a031, 2022 and 2021, and the
equivalent value of foreign-currency loans in euros, is as
follows:
| | | | | |
| Outstanding balance (in millions) |
| | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Appendix III: Debentures and bonds
The detail and key features of outstanding debentures and bonds at December 31, 2022 are as follows (in millions of
euros):
| | | | | | | | | |
Total Telef\u00f3nica and its instrumental companies |
| | | |
| | | | | | | | | |
T. EUROPE BV SEP_00 BOND GLOBAL D | | | | | | | | | |
TEBV FEB_03 EMTN FIXED TRANCHE B | | | | | | | | | |
Telef\u00f3nica Europe, B.V. | | | | | | | | | |
TELEF. EMISIONES JANUARY 2013 | | | | | | | | | |
TELEF. EMISIONES FEBRUARY 2019 (1) | | | | | | | | | |
TELEF. EMISIONES JANUARY 2017 | | | | | | | | | |
TELEF. EMISIONES SEPTEMBER 2018 | | | | | | | | | |
| | | | | | | | | |
TELEF. EMISIONES APRIL 2016 | | | | | | | | | |
TELEF. EMISIONES JANUARY 2018 | | | | | | | | | |
TELEF. EMISIONES MARCH 2017 | | | | | | | | | |
TELEF. EMISIONES MAY 2020 | | | | | | | | | |
TELEF. EMISIONES JANUARY\u00a0 2017 | | | | | | | | | |
TELEF. EMISIONES SEPTEMBER 2017 | | | | | | | | | |
TELEF. EMISIONES MARCH 2017 | | | | | | | | | |
TELEF. EMISIONES MARCH 2019 | | | | | | | | | |
EMTN GBP 10/08/2029 400 GBP | | | | | | | | | |
TELEF. EMISIONES OCTOBER 2014 | | | | | | | | | |
TELEF. EMISIONES FEBRUARY 2020 | | | | | | | | | |
TELEF. EMISIONES MAY 2022 (2) | | | | | | | | | |
TELEF. EMISIONES OCTOBER 2016 | | | | | | | | | |
TELEF. EMISIONES MAY 2020 | | | | | | | | | |
TELEF. EMISIONES JUNE 06 TRANCHE D | | | | | | | | | |
TELEF. EMISIONES APRIL 2017 | | | | | | | | | |
TELEF. EMISIONES MARCH 2018 | | | | | | | | | |
TELEF. EMISIONES JULY 2019 | | | | | | | | | |
TELEF. EMISIONES JULY 2020 | | | | | | | | | |
TELEF. EMISIONES APRIL 2022 | | | | | | | | | |
TELEF. EMISIONES MARCH 2017 | | | | | | | | | |
TELEF. EMISIONES APRIL 2017 | | | | | | | | | |
TELEF. EMISIONES MARCH 2018 | | | | | | | | | |
TELEF. EMISIONES MARCH 2019 | | | | | | | | | |
TELEF. EMISIONES DECEMBER 2016 | | | | | | | | | |
Telef\u00f3nica Emisiones, S.A.U. | | | | | | | | | |
Total Telef\u00f3nica, S.A. and its instrumental companies | | | | | | | | | |
| | | | | | | | | |
|
| | | |
| | | | | | | | | |
| | | | | | | | | |
Telef\u00f3nica Chile, S.A. | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Telef\u00f3nica M\u00f3viles Chile, S.A. | | | | | | | | | |
Bond T. Peru 4th Program (19th Serie A) | | | | | | | | | |
Bond T. Peru 4th Program (19th Serie B) | | | | | | | | | |
Bond T. Peru 4th Program (37th Serie A) | | | | | | | | | |
Bond T. Peru 4th Program (19th Serie C) | | | | | | | | | |
Bond T. Peru 6th Program (17th Serie A) | | | | | | | | | |
Bond T. Peru 6th Program (11th Serie A) | | | | | | | | | |
Bond T. Peru 6th Program (11th Serie B) | | | | | | | | | |
Bond T. Peru 6th Program (15th Serie A) | | | | | | | | | |
Bond T. Peru 6th Program (16th Serie A) | | | | | | | | | |
Bond T. Peru 1st Private Program (1st Serie A) | | | | | | | | | |
Bond T. Peru 1st Program International Issue (1sr Serie A) | | | | | | | | | |
Telef\u00f3nica del Per\u00fa, S.A. | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Telef\u00f4nica Brasil, S.A. | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Colombia Telecomunicaciones, S.A, ESP | | | | | | | | | |
| | | | | | | | | |
O2 Telef\u00f3nica Deutschland Finanzierungs, GmbH | | | | | | | | | |
Total Outstanding Debentures and Bonds Foreign operators | | | | | | | | | |
Total Outstanding Debentures and Bonds | | | | | | | | | |
degree of exchange rate hedging varies depending on
the type of investment and may easily and actively be
adjusted. For transactions of purchase or sale of business
in currencies other than euro, additional hedges can be
made on the estimated prices of the transactions or on
estimated cash flows and OIBDA.
At December\u00a031, 2022, the net financial debt in Latin
American currencies was equivalent to approximately
6,360 million euros (6,853 million euros in 2021). However,
the Latin American currencies in which this debt is
denominated is not distributed in proportion to the OIBDA
generated in each currency. The future effectiveness of
the strategy described above as an economic hedge of
exchange rate risks therefore depends on which
currencies depreciate relative to the euro.
Telef\u00f3nica occasionally takes out dollar-denominated
debt to hedge the euro-dollar intermediate component in
the relation Euro-Latin American currencies, either in
Spain (where such debt is associated with an investment
as long as it is considered to be an effective hedge) or in
the country itself, where the market for local currency
financing or hedges may be inadequate or non-existent.
At December\u00a031, 2022, the Telef\u00f3nica Group\u2019s net
financial debt denominated in dollars to hedge that
component was equivalent to 978 million euros of asset
position (418 million euros of asset position in 2021).
At December\u00a031, 2022, net financial debt in pounds
sterling was equivalent to 597 million euros (374 million
euros at December\u00a031, 2021). As a consequence of setting
up in June 2021 of the joint venture VMO2 (see Note 2),
the previous objective of maintaining a debt in pounds
sterling in the consolidated balance sheet of the Group of
twice OIBDA has been modified, as a result of changing
the consolidation of UK assets (VMO2 is registered by
equity method) and incorporating VMO2 to leverage
higher than the ratio of twice Debt OIBDA. The synthetic
debt target denominated in pounds will be directly related
to the flows that are expected to be repatriated from
VMO2.
The Telef\u00f3nica Group also manages exchange rate risk by
seeking to reduce the negative impact of any exchange
rate exposure on the income statement, as a result of
transactions recognized on the statement of financial
position sheet and highly probable transactions,
regardless of whether there are open positions. Such
open position exposure can arise for any of three reasons:
(i) a thin market for local derivatives or difficulty in
sourcing local currency finance which makes it impossible
to arrange a low-cost hedge (as in Argentina and
Venezuela), (ii) financing through intra-group loans,
where the accounting treatment of exchange rate risk is
different from that for financing through capital
contributions, and (iii) as the result of a deliberate policy
decision, to avoid the high cost of hedges that are not
warranted by expectations or high risk of depreciation.
The main transactions that generate or may generate
exchange rate risk (regardless of whether or not they
have an impact on the income statement) are, among
others, as follows: issues in currencies other than the
functional currency of the Group company, highly
probable transactions in other currencies, future cash
inflows in other currencies, investments and divestments,
provisions for collections or payments and collections in
foreign currency, the actual value of the investments
(subsidiaries) in currencies other than the euro.
In 2022, net foreign exchange results were obtained from
the management of the exchange rate (excluding
monetary correction) for a total negative net result of 23.4
million euros (negative net result of 0.2 million euros in
2021).
The following table illustrates the sensitivity of foreign
currency gains and sensitivity losses and of equity to
changes in exchange rates, where: a) in calculating the
impact on the income statement, the exchange rate
position affecting the income statement at the end of
2022 was considered constant during 2023; b) in
calculating the impact on equity, only monetary items
have been considered, namely debt and derivatives such
as hedges of net investment and loans to subsidiaries
related to the investment, breakdown of which is
considered constant in 2023 and identical to that existing
at the end of 2022. In both cases, Latin American
currencies are assumed to change their value against the
dollar and the rest of the currencies against the euro by
10%.
| | | |
| | | |
| | Impact on the consolidated income statement | Impact on consolidated equity |
| | | |
| | | |
| | | |
Latin American currencies vs USD | | | |
| | | |
| | | |
| | | |
Latin American currencies vs USD | | | |
The Group\u2019s monetary position in Venezuela at
December\u00a031, 2022 is a net asset position of 4,206 million
Venezuelan digital bolivars equivalent to 87 million euros
(240 million Venezuelan digital bolivars equivalent to 13
million euros at December\u00a031, 2021). The net monetary
position exposure in 2022 has been an asset position,
which led to a higher financial expense of 101 million euros
due to the effect of the monetary correction for inflation
during the year (24 million euros of income in 2021).
Interest rate risk
The main objective of the interest rate risk management
policy is to bring the Company's financing costs in line
with the budget for financial expenses for the current
year, as well as the current strategic plan. In accordance
with this objective, Telef\u00f3nica decided to actively adjust
the exposure of its debt to interest rates, i.e., the amount
of debt that would accrue interest at fixed rates and
variable rates.
In order to meet this target, Telef\u00f3nica mainly carried out
the following:
a) The interest rate of borrowings tied to a variable
interest rate was set.
b) Interest rate fluctuations of debt tied to a variable
interest rate were reduced.
c) Fixed rate debt instruments were converted into
variable market rate debt instruments.
These transactions may be carried out against an existing
underlying asset or those that are highly likely to take
place in the future (for example, a highly probable future
issue of debt).
The Telef\u00f3nica Group\u2019s financial expenses are exposed to
changes in interest rates. In 2022 the Euro, Brazilian Real,
British Pound, American Dollar and Chilean peso were the
short-term rates that accounted for most of the exposure.
In nominal terms, at December\u00a031, 2022, 88.3% of
Telef\u00f3nica\u2019s net financial debt was pegged to fixed
interest rates for a period greater than one year,
compared to 95.4% in 2021. Of the remaining 11.7% (net
debt at floating rates or at fixed rates maturing within one
year), no debt had interest rates bounded in a period over
one year, the same as on December\u00a031, 2021.
In addition, early retirement and Individual Suspension
Plan liabilities (see Note 24) were discounted to present
value over the year, based on the curve for instruments
with very high credit quality. The increase in interest rates
during the year has led to a decrease in the market value
of these liabilities. However, this decrease was nearly
completely offset by the decrease in the market value of
the hedges on these positions.
Net financial expenses amounted to 1,313 million euros in
2022, down 51 million euros compared to 2021, mainly due
to extraordinary income related to the payment by the
Spanish administration to the Group of delayed interest in
connection with tax litigation in Spain, which more than
offset the increase in the expenses due to the increase in
interest rates and a higher level of debt denominated in
Brazilian reais.
To illustrate the sensitivity of the Company's net financial
expense to fluctuations in short-term interest rates, on
one hand a 100 basis point increase in interest rates in all
currencies in which Telef\u00f3nica has financial positions at
December\u00a031, 2022, and a 100 basis point decrease in all
currencies has been assumed, and on the other hand a
constant position equal to the position at year-end has
been considered.
To calculate the sensitivity of equity to fluctuations in
interest rates, on one hand a 100 basis point increase in
interest rates in all currencies and in all periods on the
yield curve in which Telef\u00f3nica has financial positions at
December\u00a031, 2022, and a 100 basis point decrease in all
currencies and all periods was assumed, and on the other
hand only positions with cash flow hedges were
considered, which are basically the only positions in
which changes in market value due to interest rate
fluctuations are recognized in equity.
| | |
|
Change in basis points (bp) | Impact on consolidated income statement | Impact on consolidated equity |
| | |
| | |
Share price risk
The Telef\u00f3nica Group is exposed to changes in the value
of equity investments, of derivatives associated with such
investments, of share-based payments plans, of treasury
shares and of equity derivatives over treasury shares.
According to the share-based payments plans (see Note
27), the shares to be delivered to employees under such
plan may be either Telef\u00f3nica S.A. treasury shares,
acquired by itself or any of its Group companies, or newly
issued shares. The possibility of delivering shares to
beneficiaries of the plans in the future, implies a risk since
there could be an obligation to hand over a maximum
number of shares at the end of each phase, whose
acquisition (in the event of acquisition in the market) in
the future could imply a higher cash outflow than
required on the start date of each phase if the share price
is above the corresponding price on the phase start date.
In the event that new shares are issued for delivery to the
beneficiaries of the plan, there would be a dilutive effect
for ordinary shareholders of Telef\u00f3nica as a result of the
higher number of shares delivered under such plan
outstanding.
In 2018, the General Shareholder\u2019s Meeting approved a
Long-Term Incentive Plan allocated to Senior Executive
Officers of the Telef\u00f3nica Group consisting of the delivery
of shares of Telef\u00f3nica, S.A. This plan has a total duration
of five years and is divided into three mutually exclusive
cycles of three years each. Each of the cycles
commenced, respectively, in January 2018, 2019 and
2020. The first (2018) and the second (2019) of the three
cycles matured on December 31, 2020 and on December
31, 2021 with a result of a delivery of shares to its
participants in 2021 and in 2022, respectively.
In 2021, the General Shareholder\u2019s Meeting approved a
new Long-Term Incentive Plan allocated to Senior
Executive Officers of the Telef\u00f3nica Group consisting of
the delivery of shares of Telef\u00f3nica, S.A. This plan has a
total duration of five years and is divided into three
mutually exclusive cycles of three years each. In January
2021 and in January 2022 two cycles have commenced
and the last one will start in January 2023 (see Note 27).
Finally, the 2022 Shareholder\u2019s Meeting approved a
Global Employee Incentive Share Purchase Plan for
shares of Telef\u00f3nica, S.A. for the Employees of the
Telef\u00f3nica Group, which is expected to deliver shares to
its participants in 2024 (see Note 27).\u00a0
To reduce the risk associated with variations in share
price under these plans, Telef\u00f3nica could acquire
instruments that hedge the risk profile of some of these
plans.
In addition, the Group may use part of the treasury shares
of Telef\u00f3nica, S.A. held at December\u00a031, 2022 to cover
shares deliverable under the outstanding Plans. The net
asset value of the treasury shares could increase or
decrease depending on variations in Telef\u00f3nica, S.A.\u2019s
share price.
Liquidity risk
The Telef\u00f3nica Group seeks to match the schedule for its
debt maturity payments to its capacity to generate cash
flows to meet these maturities, while allowing for some
flexibility. In practice, this has been translated into two key
principles:
1.The Telef\u00f3nica Group\u2019s average maturity of net
financial debt is intended to stay above six years or be
restored above that threshold in a reasonable period
of time if it eventually falls below it. This principle is
considered as a guideline when managing debt and
access to credit markets, but not a rigid requirement.
When calculating the average maturity for the net
financial debt, a portion of the undrawn credit lines
can be considered as offsetting the shorter debt
maturities, and extension options on some financing
facilities may be considered as exercised, for
calculation purposes.
2.The Telef\u00f3nica Group must be able to pay all
commitments over the next 12 months without
accessing new borrowing or tapping the capital
markets (drawing upon firm credit lines arranged with
banks), assuming budget projections are met.
At December\u00a031, 2022, the average maturity of net
financial debt (26,687 million euros) was 13.11 years
(including undrawn committed credit facilities).
At December\u00a031, 2022, financial liabilities (Note 18) and
lease liabilities (Note 20) scheduled to mature in 2023
amounted to 4,020 and 2,020 million euros, respectively.
These maturities are lower than the amount of funds
available, calculated as the sum of: a) cash and cash
equivalents and current financial assets; b) annual cash
generation projected for 2022, and c) undrawn credit
facilities arranged with banks whose original maturity is
over one year (an aggregate of 11,434 million euros at
December 31, 2022), providing flexibility to the Telef\u00f3nica
Group with regard to accessing capital or credit markets
in the next two years. For a further description of the
Telef\u00f3nica Group\u2019s liquidity and capital resources in 2022,
see Note 18 and Appendix V.
Country risk
The Telef\u00f3nica Group managed or mitigated country risk
by pursuing two lines of action (in addition to its normal
business practices):
1.Partly matching assets to liabilities (those not
guaranteed by the Parent company) in the Telef\u00f3nica
Group\u2019s Latin American companies such that any
potential asset impairment would be accompanied by
a reduction in liabilities; and
2.Repatriating funds generated in Latin America that are
not required for the pursuit of new, profitable business
development opportunities in the region.
Regarding the first point, at December\u00a031, 2022, the
Telef\u00f3nica Group\u2019s Latin American companies had net
financial debt not guaranteed by the Parent company of
2,462 million euros, which represents 9.2% of net financial
debt of the Group. Nevertheless, in certain countries,
such as Venezuela, there is a net cash balance (instead of
a net liability balance).
Regarding the net repatriation of funds to Spain, 693
million euros from Latin America companies have been
received in 2022, of which 652 million euros was in the
form of dividends.
Credit risk
The Telef\u00f3nica Group trades in derivatives with
creditworthy counterparties. Therefore, Telef\u00f3nica, S.A.
generally trades with credit entities whose \u201csenior debt\u201d
ratings are of at least \u201cA-\u201d or in case of Spanish entities in
line with the credit rating of the Kingdom of Spain. In
Spain, where most of the Group\u2019s derivatives portfolio is
held, there are netting agreements with financial
institutions, with debtor or creditor positions offset in case
of bankruptcy, limiting the risk to the net position. In
addition, the CDS (Credit Default Swap) of all the
counterparties with which Telef\u00f3nica, S.A. operates is
monitored at all times in order to assess the maximum
allowable CDS for operating at any given time.
Transactions are generally only carried out with
counterparties whose CDS is below the threshold.
Net CVA (CVA+DVA) or Credit Valuation Adjustment is
the method used to measure credit risk for both
counterparties and Telef\u00f3nica in order to determine the
fair value of the derivatives portfolio. This adjustment
reflects the probability of default or the deterioration of
the credit quality of both Telef\u00f3nica and its
counterparties. The simplified formula to calculate CVA is
Expected Exposure times Probability of Default times Loss
Given Default (LGD). In order to calculate these variables
standard market practices are used.
At the same time, and in order to address the credit risk,
Telef\u00f3nica considers the use of CDS, novations,
derivatives with break clauses and signing CSA's under
certain conditions.
For other subsidiaries, particularly those in Latin America,
assuming a stable sovereign rating provides a ceiling
which is below \u201cA\u201d, trades are with local financial entities
whose rating by local standards is considered to be of
high creditworthiness.
Meanwhile, with credit risk arising from cash and cash
equivalents, the Telef\u00f3nica Group places its cash
surpluses in high quality money-market assets. These
placements are regulated by a general framework, revised
annually. Counterparties are chosen according to criteria
of liquidity, solvency and diversification based on the
conditions of the market and countries where the Group
operates. The general framework sets: the maximum
amounts to be invested by counterparty based on its
rating (long-term debt rating) and the instruments in
which the surpluses may be invested (money-market
instruments). Additionally, for Treasury surpluses
managed at Telef\u00f3nica S.A, a criteria based on CDs has
been added, similar to that used for the selection of
counterparties to operate with derivatives, for the
selection of counterparties for the placement of those
surpluses.
The Telef\u00f3nica Group considers customer credit risk
management as a key element to achieve its business and
customer base growth targets in a sustainable way. This
management approach relies on the active evaluation of
the risk-reward balance within the commercial operations
and on the adequate separation between the risk
ownership and risk management functions.
Formal delegation of authority procedures and
management practices are implemented in the different
Group companies, taking into account benchmark risk
management techniques, adapted to the local
characteristics of each market. Commercial debtors that
may cause a relevant impact on the Telef\u00f3nica Group
consolidated financial statements and increased risk
profile products - due to customer target, term, channels
or other commercial characteristics - are subject to
specific management practices in order to mitigate the
exposure to credit risk.
This customer credit risk management model is
embedded in the day-to-day operational processes of the
different companies, where the credit risk assessment
guides both the product and services available for the
different customers and the collection strategy.
The Telef\u00f3nica Group\u2019s maximum exposure to credit risk
is initially represented by the carrying amounts of the
financial assets and the guarantees given by the
Telef\u00f3nica Group.
Several Telef\u00f3nica Group companies provide operating
guarantees granted by external counterparties, which are
offered during their normal commercial activity, in bids for
licenses, permits and concessions, and spectrum
acquisitions. At December\u00a031, 2022, these guarantees
amounted to approximately 6,657 million euros (6,192
million euros at December\u00a031, 2021).
Capital management
Telef\u00f3nica\u2019s corporate finance department takes into
consideration several factors for the evaluation of the
Telef\u00f3nica\u2019s capital structure, with the aim of maintaining
the solvency and creating value to the shareholders.
The corporate finance department estimates the cost of
capital on a continuous basis through the monitoring of
the financial markets and the application of standard
industry approaches for calculating weighted average
cost of capital, or WACC, so that it can be applied in the
valuation of businesses in course and in the evaluation of
investment projects. In addition, Telef\u00f3nica also uses as
reference net financial debt (excluding items of a non-
recurring or exceptional nature) that allows for a
comfortable investment grade credit rating as assigned
by credit rating agencies, aiming at protecting credit
solvency and making it compatible with alternative uses
of cash flow that could arise at any time.
These general principles are refined by other
considerations and the application of specific variables,
such as country risk in the broadest sense, or the volatility
in cash flows generation that are considered, when
evaluating the financial structure of the Telef\u00f3nica Group
and its different areas.
Interest rate benchmark reform and
associated risks
During 2020 a fundamental reform of major interest rate
benchmarks was launched globally, including the
replacement of some interbank offered rates (IBORs) with
alternative nearly risk-free rates (referred to as \u2018IBOR
reform\u2019). The Group has exposures to IBORs on its
financial instruments that will be replaced or reformed as
part of these market-wide initiatives, thus the Group
anticipates that IBOR reform will impact its Risk
Management Areas.
During 2022, the transition has been made to the new
reference indices affected as of December 31, 2022,
except for the USD Libor, whose transition will be made in
June 2023. In the 2022 financial year, thanks to the
decisions agreed in 2021 to manage the changes in the
GBP Libor and CHF Libor, there have been no impacts
from those changes.
Regarding to the Euribor, and according to the European
Union Benchmarks Regulation, the Group expects that it
will continue to exist as a benchmark rate for the
foreseeable future.
The Group applies the amendments to IFRS 9 to those
hedging relationships directly affected by IBOR reform,
and therefore it assumes that the benchmark interest rate
is not altered as a result of it. The detail of notional
amounts of the hedging instruments in hedging
relationships which are subject to the reform as of
December\u00a031, 2022 and December 31, 2021 is as follows:
| | |
| Gross notional in original currency (in millions) |
Interest rate index/Tenor | | |
| | |
| | |
| | |
The corporate finance department leads a working team
to manage the transition in the Group. It closely monitors
the market and the outputs from the industry, including
announcements by the IBOR regulators on the
discontinuation dates of current IBORs, which have
recently undergone changes.
Another relevant aspect of the reform is the need to
incorporate substitute indexes (known as fallbacks) of the
reference rates used into the contracts. In order to
incorporate these substitute indexes into the contracts,
The Group has decided not to adhere to the ISDA
Protocol and has negotiated bilateral contracts with each
affected counterparty during 2022 and 2021.
The Group will continue to apply the amendments of IFRS
9 until the uncertainty arising from the benchmark
interest rate reforms with respect to the timing and
amount of the underlying cash-flows to which the Group
is exposed ends.
In relation to the benchmark interest rate reform, IFRS
regulations have incorporated information requirements
on the exposure of entities to benchmark interest rates in
the process of transition at the close of financial year
2022.
At December\u00a031, 2022 the book value of assets
referenced to USD Libor rates amounts to 516 million
euros (333 million euros at December 31, 2021) and the
book value of financial liabilities including lease liabilities
referenced to USD Libor rates amounts to 920 million
euros (661 million euros at December 31, 2021).
Derivatives policy
At December\u00a031, 2022, the nominal value of outstanding
derivatives with external counterparties amounted to
83,706 million euros equivalent, a 1% decrease from
December\u00a031, 2021 (84,794 million euros equivalent). This
figure is inflated by the use in some cases of several levels
of derivatives applied to the nominal value of a single
underlying liability. For example, a foreign currency loan
can be hedged into floating rate, and then each interest
rate period can be fixed using a fixed rate hedge, or FRA
(forward rate agreement) The high volume is also due to
the fact that when a derivative transaction is canceled,
the company may either cancel the derivative or take the
opposite position, which cancels out the variability
thereof. The second option is usually chosen in order to
cut costs. Even using such techniques to reduce the
position, it is still necessary to take extreme care in the
use of derivatives to avoid potential problems arising
through error or a failure to understand the real position
and its associated risks.
The main principles in the management of derivatives are
detailed below:
1) Derivatives based on a clearly identified hedged items.
Telef\u00f3nica\u2019s derivatives policy emphasizes the following
points:
\u2022Acceptable underlyings include assets and liabilities,
profits, revenues and cash flows in either a company\u2019s
functional currency or another currency. These flows
can be contractual (debt and interest payments,
settlement of foreign currency payables, etc.),
reasonably certain or foreseeable (PP&E purchases,
future debt issues, commercial paper programs, etc.).
The acceptability of an underlying asset in the above
cases does not depend on whether it complies with
accounting rules requirements for hedge accounting,
as is required in the case of certain intra-group
transactions, for instance. Parent company investments
in subsidiaries with functional currencies other than the
euro also qualify as acceptable underlying assets.
\u2022Economic hedges are hedges that have a designated
underlying asset and that, under certain circumstances,
may offset the changes in the value of the underlying
asset. These economic hedges may not always meet
the requirements to be treated as hedges for
accounting purposes. The decision to arrange these
hedges if they do not meet certain requirements will
depend on the marginal impact on the income
statement and, therefore, on how far this may
compromise the goal of having a stable income
statement. In any case, the changes are recognized in
the income statement.
2) Matching of the hedged item to one side of the
derivative.
This matching basically applies to foreign currency debt
and derivatives hedging foreign currency payments by
Telef\u00f3nica Group subsidiaries. The aim is to eliminate the
risk arising from changes in foreign currency interest
rates. Nonetheless, even when the aim is to achieve
perfect hedging for all cash flows, the lack of liquidity in
certain markets, especially in Latin American currencies,
has meant that historically there have been mismatches
between the terms of the hedges and those of the debts
they are meant to hedge. The Telef\u00f3nica Group intends to
reduce these mismatches, provided that doing so does
not involve disproportionate costs. In this regard, if
adjustment does prove too costly, the financial timing of
the underlying asset in foreign currency will be modified
in order to minimize interest rate risk in foreign currency.
In certain cases, the timing of the underlying as defined
for derivative purposes may not be exactly the same as
the timing of the contractual underlying.
3) Matching the company contracting the derivative and
the company that owns the hedged item.
Generally, the aim is to ensure that the hedging derivative
and the hedged asset or liability belong to the same
company. Sometimes, however, the holding companies
(Telef\u00f3nica, S.A. and Telef\u00f3nica Latinoam\u00e9rica Holding,
S.L.) have arranged hedges on behalf of a subsidiary that
owns the underlying asset. The main reasons for
separating the hedge and the underlying asset were the
chance of differences in the legal validity of local and
international hedges (as a result of unforeseen legal
changes) and the different credit ratings of the
counterparties (of the Telef\u00f3nica Group companies as
well as those of the banks).
4) Ability to measure the derivative\u2019s fair value using the
valuation systems available to the Telef\u00f3nica Group.
Telef\u00f3nica uses several tools to evaluate and manage the
risk involved in derivatives and debt. Among these tools
are the Calypso system, extensively used in various
financial institutions, and the specialized libraries in the
MBRM financial calculation, both of which are
widespread throughout the market and have shown
proven reliability. In order to perform these calculations,
customary market techniques are used when configuring
the calculation methods, and information from money
market curves is used on a daily basis as market inputs
(swaps, depos, FRA, etc.) for interest rates, official fixings
for exchange rates and the interest rates and volatility
matrices for interest and exchange rates that are listed in
the multi-contributor systems, Reuters and Bloomberg.
For those yield curves that are less liquid or whose prices
published in Reuters and Bloomberg are considered not
to adequately reflect the market situation, these curves
will be requested from relevant banks in these markets.
5) Sale of options only when there is an underlying
exposure.
Telef\u00f3nica considers the sale of options when: i) there is
an underlying exposure (on the consolidated statement of
financial position or associated with a highly probable
cash outflow) that would offset the potential loss for the
year if the counterparty exercised the option. This
exposure does not have to be treated as a purchased
option, but rather it can be another type of hedged item
(in these cases, hedge accounting does not apply since
this hedging instrument does not meet the criteria
required by accounting standards to treat the sale of
options as hedging instruments), or ii) the option is part of
a structure in which another derivative offsets any loss.
The sale of options is also permitted in option structures
where, at the moment they are taken out, the net
premium is either positive or zero.
For instance, it would be possible to sell short-term
options on interest rate swaps that entitle the
counterparty to receive a certain fixed interest rate, below
the level prevailing at the time the option was sold. This
would mean that if rates fell and the counterparty
exercised its option, the Group would swap part of its
debt from floating rate to a lower fixed rate, having
received a premium.
6) Hedge accounting.
The main risks that may qualify for hedge accounting are
as follows:
\u2022Variations in market interest rates (either money-market
rates, credit spreads or both) that affect the value of the
underlying asset or the measurement of the cash flows.
\u2022Variations in exchange rates that change the value of
the underlying asset in the company\u2019s functional
currency and affect the measurement of the cash flow
in the functional currency.
\u2022Variations in the valuation of any financial asset,
particularly shares of companies included in the
portfolio of \u201cEquity instruments\u201d.
\u2022Variations in the price of commodities related to
contracts that the Group has with third parties.
Regarding the underlying:
\u2022Hedges can cover all or part of the value of the
underlying.
\u2022The risk to be hedged can be for the whole period of
the transaction or for only part of the period.
\u2022The underlying may be a highly probable future
transaction, or a contractual underlying (loan, foreign
currency payment, investment, financial asset, etc.) or a
combination of both that defines an underlying with a
longer term.
The main coverage instruments used are:
\u2022Forwards / NDF: they are used mainly for exchange rate
hedges related to commercial positions in foreign
currency. They can also be used to hedge financing in
foreign currency and net investment hedge in foreign
currency.
\u2022Exchange Rate Options: in some cases, this type of
instruments can be used linked to future CapEx and
OpEx operations and investments and divestments in
foreign currency.
\u2022Spots: for purchases and sales of currencies that are
made same day value or two days\u2019 value. Generally
used for operational needs or for divestments of
operations in foreign currency.
\u2022Currency swaps: this type of transaction is generally
executed to hedge bonds issuance or loans issued in
foreign currency or net investment hedge.
\u2022Interest Swaps / Interest Rate Options: these
instruments are used to manage the interest rate of the
debt portfolio. Their use of them is ruled by the
Financial Expenses Budget with the objective of its
fulfillment. Both the volume to be contracted and the
maturity of these products are determined by the
underlying assets to be hedged.
It is possible that in several markets the maturity, as
well as the low liquidity, does not allow to contract a
\"perfect\u201d hedge, but this circumstance will have to be
analyzed case by case.
\u2022CDS: in order to manage the counterparty credit risk or
CVA / DVA, CDS operations can be arranged to
mitigate this risk.
\u2022Derivatives of Commodities associated to:
\u25aaPrice risk hedge (mainly Electricity) associated with
the Group's own contracts.
\u25aaSupporting the business lines that may need it and
always hedging the commercial risks of the signed
contracts. They would be settled by differences,
this is, in a non-deliverable format.
\u2022Equity Derivatives: these are derivatives that address
strategic decisions or hedging needs, either to hedge
future investments or hedge existing risks. They protect
Telef\u00f3nica from the potential appreciation or
depreciation in the price of the shares they hold as
underlying.
Between the hedged item and the hedging instrument
there is an economic relationship, this is, in general terms
they move in opposite directions due to the same risk or
risk covered. In other words, there must be an expectation
that the value of the hedging instrument and the value of
the hedged item will change systematically in opposite
directions in response to the movements of one of the
following elements:
\u2022the same underlying item; or
\u2022Underlying items that are economically related in such
sense that they respond similarly to the risk that is being
hedged.
Depending on the complexity of the hedge relationship
and the way in which the hedge has been structured, a
quantitative or qualitative analysis will have to be
performed to demonstrate that there is an economic
relationship between the hedged item and the hedging
instrument.
This may on occasion mean that the hedging instruments
have longer terms than the related contractual
underlying. This happens when the Telef\u00f3nica Group
enters into long-term swaps, caps or collars to protect the
Group against interest rate increases that may raise the
financial expense of its promissory notes, commercial
paper and some floating rate loans which mature earlier
than their hedges. These floating rate financing programs
are highly likely to be renewed and Telef\u00f3nica commits to
this by defining the underlying asset in a more general
way as a floating rate financing program whose term
coincides with the maturity of the hedge. In those cases in
which the underlying assets representing the risk hedged
are canceled or refinanced early, and if there is an open
risk with similar characteristics as the underlying asset
that was canceled or refinanced early, either because
there is new financing or because there is an underlying
asset with similar characteristics and risk profile, the
hedge may remain in force with the derivatives assigned
thereto and the risk will be subject to the hedge arranged
in the aforementioned refinancing. When either of these
situations occurs, the effectiveness of the hedge will be
reviewed taking into account the new situation.
There can be three types of hedges:
\u2022Fair value hedges.
\u2022Cash flow hedges. Such hedges can be set at any value
of the risk to be hedged (interest rates, exchange rates,
etc.) or for a defined range (interest rates between 2%
and 4%, above 4%, etc.). In this last case, the hedging
instrument used is options.
\u2022Hedges of net investment in consolidated foreign
subsidiaries. Generally, such hedges are arranged by
Telef\u00f3nica S.A. and other Telef\u00f3nica holding
companies. Wherever possible, these hedges are
implemented through real debt in foreign currency.
Often, however, this is not always possible as many
Latin American currencies are non-convertible, making
it impossible for non-resident companies to issue local
currency debt. It may also be that, due to the debt
market deepness, the debt in the currency concerned is
not enough to accommodate the required hedge, or
that an acquisition is made in cash with no need for
market financing. In these circumstances derivatives
either forwards or cross-currency swaps are mainly
used to hedge the net investment.
When using options, forwards or cross-currency swaps as
hedging instruments, the exclusion of the time value of
the option, the element at maturity of the forward and the
currency spread of the cross-currency swap of the
hedging relationship are evaluated on a case by case
basis, in order to be treated as hedge costs.
Hedges can comprise a combination of different
derivatives.
Management of accounting hedges is not static, and the
hedging relationship may change before maturity. The
interruption of the hedge accounting is possible within
the framework of the management of financial risks and
described in the internal document of \u201cfinancial risks
management and hedging strategy under IFRS 9\u201d. To
gauge the efficiency of transactions defined as
accounting hedges, the Group analyzes the extent to
which the changes in the fair value or in the cash flows
attributable to the hedged item would offset the changes
in fair value or cash flows attributable to the hedged risk
using a linear regression model prospectively. To evaluate
the effectiveness of hedges, under IFRS 9, there is no
numerical range under which it is accepted that a hedge
is effective and hence the hedge accounting standards
are applicable. Therefore, Telef\u00f3nica considers that if
there is an economic relationship, not dominated by
changes in credit risk and if the appropriate hedging
rationale has been designated, the requirements for
effectiveness are met. However, at the moment when
ineffectiveness arises, Telef\u00f3nica will evaluate whether
there is still an economic relationship or whether the
designated hedging rationale is appropriate. The possible
sources of ineffectiveness that Telef\u00f3nica can have when
designing a hedging relationship and that will be
considered when establishing the hedging rationale are:
\u2022The hedging instrument and the hedged item have
different maturity dates, initial dates, contract dates,
repricing dates, etc.
\u2022The hedging instrument starts with initial value and a
financing effect is produced.
\u2022When the underlying items have different sensitivity
and are not homogeneous, for example EURIBOR 3M
versus EURIBOR 6M.
The main guiding principles for risk management are laid
down by Telef\u00f3nica\u2019s Finance Department and
implemented by the company financial officers (who are
responsible for balancing the interests of each company
and those of the Telef\u00f3nica Group). The Corporate
Finance Department may allow exceptions to this policy
where these can be justified, normally when the market is
too thin for the volume of transactions required or on
clearly limited and small risks. New companies joining the
Telef\u00f3nica Group as a result of mergers or acquisitions
may also need time to adapt.
7) Cancellation of derivatives.
When a derivative transaction is canceled, the company
may:
\u2022Cancel the derivative and pay its market value.
\u2022Take the opposite position which cancels out the
variability thereof, if cancellation costs are high or if it is
recommended for operating or business reasons.
Breakdown of financial results
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
\"Other financial income\" in 2022 includes 526 million
euros corresponding to delayed interest after the
Agreement for the Execution of the Judgment of the
Audiencia Nacional issued on October 24, 2022 (see Note
25, Inspections of the tax group in Spain).
\"Other financial income\" in 2022 included 139 million
euros corresponding to the default interest as a result of
the final decisions in favor of Telef\u00f3nica Brazil about the
right to deduct the ICMS from the calculation basis of
PIS/COFINS (90 million euros and 85 million euros in 2021
and 2020, respectively, see Note 25).
\"(Loss)/Gain on fair value hedges\" includes mainly the
impact on income of fair value hedges contracted by
Telef\u00f3nica, S.A., which are similarly reflected under \"Gain/
(loss) on adjustment to items hedged by fair value
hedges\" and therefore, have no significant net impact on
the consolidated income statement. The increase in both
items with respect to previous years is a consequence of
the increase in interest rates.
The impact of hyperinflation on the net monetary position
of the Group\u2019s subsidiaries in Argentina amounted to
39\u00a0million euros in 2022 (25 million euros in 2021 and 43
million euros in 2020) and is recorded under Exchange
differences in the consolidated income statement.
Evolution of derivative instruments\u00a0
The movement of the net position of derivatives during
the years ended December 31, 2022 and December 31,
2021 is as follows:
| | |
| | |
Opening balance of assets/ (liabilities) | | |
| | |
| | |
Interest (proceeds)/payments | | |
Other (proceeds)/payments | | |
Fair value adjustments through other comprehensive income | | |
Movements with counterparty in the income statement | | |
| | |
| | |
Closing balance of assets/ (liabilities) | | |
(*) For interest rate hedges, the positive amount is in terms of \"fixed payment.\u201d For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.
(**) Positive amounts indicate payables.
(***) Of the hedging instruments that are not derivatives, 141 million euros correspond to \"Loans and other debts\"\" (see Note 18).
| | | | | | | | | | | |
|
| Notional amount - Maturities (*) | | Book value of the derivative and no-derivative instruments (**) |
| | | | | | | | | | |
Derivative instruments of accounting hedges | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Interest rate and exchange rate risk | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other derivatives of interest rate | | | | | | | | | | | |
Other derivatives of exchange rate | | | | | | | | | | | |
| | | | | | | | | | | |
Total derivative instruments | | | | | | | | | | | |
No derivatives instruments of accounting hedges (***) | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
(*) For interest rate hedges, the positive amount is in terms of \"fixed payment.\u201d For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.\u00a0
(**) Positive amounts indicate payables.
(***) Of the hedging instruments that are not derivatives, 132 million euros correspond to \"Loans and other debts\" (see Note 18).\u00a0
The detail of hedged items by fair value hedges at December\u00a031, 2022 and December\u00a031,
2021 are as follows:
| | | | | | | | | | |
|
| Hedged items carrying amount | | Accumulated amount in the hedged item adjusted by fair value hedge (*) |
| | Interest rate and exchange rate risk | | | | | Interest rate and exchange rate risk | | Of which: accumulated amount of any hedge item that have cesased to be adjusted for gains and losses |
| | | | | | | | | | |
Financial assets and other non-current assets | | | | | | | | | | |
Receivables and other current assets | | | | | | | | | | |
Other current financial assets | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Non-current financial liabilities | | | | | | | | | | |
Payables and other non-current liabilities | | | | | | | | | | |
Current financial liabilities | | | | | | | | | | |
Payables and other current liabilities | | | | | | | | | | |
(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and viceversa.
| | | | | | | | | | |
|
| Hedged items carrying amount | | Accumulated amount in the hedged item adjusted by fair value hedge (*) |
| | Interest rate and exchange rate risk | | | | | Interest rate and exchange rate risk | | Of which: accumulated amount of any hedge item that have cesased to be adjusted for gains and losses |
| | | | | | | | | | |
Financial assets and other non-current assets | | | | | | | | | | |
Receivables and other current assets | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Non-current financial liabilities | | | | | | | | | | |
Non-current lease liabilities | | | | | | | | | | |
Payables and other non-current liabilities | | | | | | | | | | |
Current financial liabilities | | | | | | | | | | |
Payables and other current liabilities | | | | | | | | | | |
(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and vice versa.
The evolutions of hedges in equity at December\u00a031, 2022 and December\u00a031, 2021 are as
follows:
| | | | | | | | | |
| | | No derivative instruments | | | |
Gains (losses) of cash flow hedges | Derivatives - Net investment hedges | | No Derivatives - Net investment hedges |
| | Exchange rate and interest rate risks |
| | | | | | | | | |
Changes in the fair value registered in equity | | | | | | | | | |
Transfer to the initial value of hedged item | | | | | | | | | |
Transfer to the income statement of the period - the hedged future cash flows are no longer expected to happen | | | | | | | | | |
Transfer to the income statement of the period - the hedged item has affected profit or loss | | | | | | | | | |
Total translation differences | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Amounts remaining in equity for continuing hedges | | | | | | | | | |
Amounts remaining in equity from any hedging relationship for which hedge accounting is no longer applied | | | | | | | | | |
| | | | | | | | | |
| | | |
| | | |
| Changes in fair value of the hedging instrument | Changes in the fair value of hedges item for the hedged risk | Ineffective portion hedged registered in the income statement |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Interest rate and exchange rate risk | | | |
| | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xMjQvZnJhZzpiZjUzYjFiNGFmM2Y0ZGRjYTA3NDk4NDNmMjc1NmRhOS90ZXh0cmVnaW9uOmJmNTNiMWI0YWYzZjRkZGNhMDc0OTg0M2YyNzU2ZGE5XzI0NzM5MDExNjI1MDg0_6744f256-5d31-4bb0-a2af-74e109df2056": {
"value": "
Exchange rate risk: arises primarily from: (i) Telef\u00f3nica\u2019s international presence, through its
investments and businesses in countries that use
currencies other than the euro (primarily in Latin
America, but also in the United Kingdom), (ii) debt
denominated in currencies other than that of the
country where the business is conducted or the home
country of the company incurring such debt ,and (iii) for
those trade receivables or payables in foreign currency
related to the company with the transaction registered.\u00a0
\u2022Interest rate risk: arises primarily in connection with
changes in interest rates affecting: (i) financial expenses
on floating-rate debt (or short-term debt likely to be
renewed), (ii) the value of long-term liabilities at fixed
interest rates and (iii) financial expenses and principal
payments of inflation-linked financial instruments,
considering interest rate risk as the impact of changes
in inflation rates.
\u2022Share price risk: arises primarily from changes in the
value of the equity investments (that may be bought,
sold or otherwise involved in transactions), from
changes in the value of derivatives associated with
such investments, from changes in the value of treasury
shares and from changes in the value of equity
derivatives.
Country risk: refers to the possible decline in the value of assets, cash flows generated or cash flows returned
to the Parent company as a result of political, economic
or social instability in the countries where the
Telef\u00f3nica Group operates, especially in Latin America.
Exchange rate risk
The fundamental objective of the exchange rate risk
management policy is that, in event of depreciation in
foreign currencies relative to the euro, any potential
losses in the value of the OIBDA generated by the
businesses in such currencies (caused by depreciation in
exchange rates of a foreign currency relative to the euro)
are offset (to some extent) by savings from the reduction
in the euro value of debt denominated in such currencies.
This objective is also reflected on the decrease of the
sensitivity to exchange rate variations of the net debt to
OIBDA ratio, in order to protect the Group's solvency. The
degree of exchange rate hedging varies depending on
the type of investment and may easily and actively be
adjusted. For transactions of purchase or sale of business
in currencies other than euro, additional hedges can be
made on the estimated prices of the transactions or on
estimated cash flows and OIBDA.
At December\u00a031, 2022, the net financial debt in Latin
American currencies was equivalent to approximately
6,360 million euros (6,853 million euros in 2021). However,
the Latin American currencies in which this debt is
denominated is not distributed in proportion to the OIBDA
generated in each currency. The future effectiveness of
the strategy described above as an economic hedge of
exchange rate risks therefore depends on which
currencies depreciate relative to the euro.
Telef\u00f3nica occasionally takes out dollar-denominated
debt to hedge the euro-dollar intermediate component in
the relation Euro-Latin American currencies, either in
Spain (where such debt is associated with an investment
as long as it is considered to be an effective hedge) or in
the country itself, where the market for local currency
financing or hedges may be inadequate or non-existent.
At December\u00a031, 2022, the Telef\u00f3nica Group\u2019s net
financial debt denominated in dollars to hedge that
component was equivalent to 978 million euros of asset
position (418 million euros of asset position in 2021).
At December\u00a031, 2022, net financial debt in pounds
sterling was equivalent to 597 million euros (374 million
euros at December\u00a031, 2021). As a consequence of setting
up in June 2021 of the joint venture VMO2 (see Note 2),
the previous objective of maintaining a debt in pounds
sterling in the consolidated balance sheet of the Group of
twice OIBDA has been modified, as a result of changing
the consolidation of UK assets (VMO2 is registered by
equity method) and incorporating VMO2 to leverage
higher than the ratio of twice Debt OIBDA. The synthetic
debt target denominated in pounds will be directly related
to the flows that are expected to be repatriated from
VMO2.
The Telef\u00f3nica Group also manages exchange rate risk by
seeking to reduce the negative impact of any exchange
rate exposure on the income statement, as a result of
transactions recognized on the statement of financial
position sheet and highly probable transactions,
regardless of whether there are open positions. Such
open position exposure can arise for any of three reasons:
(i) a thin market for local derivatives or difficulty in
sourcing local currency finance which makes it impossible
to arrange a low-cost hedge (as in Argentina and
Venezuela), (ii) financing through intra-group loans,
where the accounting treatment of exchange rate risk is
different from that for financing through capital
contributions, and (iii) as the result of a deliberate policy
decision, to avoid the high cost of hedges that are not
warranted by expectations or high risk of depreciation.
The main transactions that generate or may generate
exchange rate risk (regardless of whether or not they
have an impact on the income statement) are, among
others, as follows: issues in currencies other than the
functional currency of the Group company, highly
probable transactions in other currencies, future cash
inflows in other currencies, investments and divestments,
provisions for collections or payments and collections in
foreign currency, the actual value of the investments
(subsidiaries) in currencies other than the euro.
In 2022, net foreign exchange results were obtained from
the management of the exchange rate (excluding
monetary correction) for a total negative net result of 23.4
million euros (negative net result of 0.2 million euros in
2021).
The following table illustrates the sensitivity of foreign
currency gains and sensitivity losses and of equity to
changes in exchange rates, where: a) in calculating the
impact on the income statement, the exchange rate
position affecting the income statement at the end of
2022 was considered constant during 2023; b) in
calculating the impact on equity, only monetary items
have been considered, namely debt and derivatives such
as hedges of net investment and loans to subsidiaries
related to the investment, breakdown of which is
considered constant in 2023 and identical to that existing
at the end of 2022. In both cases, Latin American
currencies are assumed to change their value against the
dollar and the rest of the currencies against the euro by
10%
| | | |
| | | |
| | Impact on the consolidated income statement | Impact on consolidated equity |
| | | |
| | | |
| | | |
Latin American currencies vs USD | | | |
| | | |
| | | |
| | | |
Latin American currencies vs USD | | | |
The Group\u2019s monetary position in Venezuela at
December\u00a031, 2022 is a net asset position of 4,206 million
Venezuelan digital bolivars equivalent to 87 million euros
(240 million Venezuelan digital bolivars equivalent to 13
million euros at December\u00a031, 2021). The net monetary
position exposure in 2022 has been an asset position,
which led to a higher financial expense of 101 million euros
due to the effect of the monetary correction for inflation
during the year (24 million euros of income in 2021).
| | |
|
Change in basis points (bp) | Impact on consolidated income statement | Impact on consolidated equity |
| | |
| | |
Share price risk
The Telef\u00f3nica Group is exposed to changes in the value
of equity investments, of derivatives associated with such
investments, of share-based payments plans, of treasury
shares and of equity derivatives over treasury shares.
According to the share-based payments plans (see Note
27), the shares to be delivered to employees under such
plan may be either Telef\u00f3nica S.A. treasury shares,
acquired by itself or any of its Group companies, or newly
issued shares. The possibility of delivering shares to
beneficiaries of the plans in the future, implies a risk since
there could be an obligation to hand over a maximum
number of shares at the end of each phase, whose
acquisition (in the event of acquisition in the market) in
the future could imply a higher cash outflow than
required on the start date of each phase if the share price
is above the corresponding price on the phase start date.
In the event that new shares are issued for delivery to the
beneficiaries of the plan, there would be a dilutive effect
for ordinary shareholders of Telef\u00f3nica as a result of the
higher number of shares delivered under such plan
outstanding.
In 2018, the General Shareholder\u2019s Meeting approved a
Long-Term Incentive Plan allocated to Senior Executive
Officers of the Telef\u00f3nica Group consisting of the delivery
of shares of Telef\u00f3nica, S.A. This plan has a total duration
of five years and is divided into three mutually exclusive
cycles of three years each. Each of the cycles
commenced, respectively, in January 2018, 2019 and
2020. The first (2018) and the second (2019) of the three
cycles matured on December 31, 2020 and on December
31, 2021 with a result of a delivery of shares to its
participants in 2021 and in 2022, respectively.
In 2021, the General Shareholder\u2019s Meeting approved a
new Long-Term Incentive Plan allocated to Senior
Executive Officers of the Telef\u00f3nica Group consisting of
the delivery of shares of Telef\u00f3nica, S.A. This plan has a
total duration of five years and is divided into three
mutually exclusive cycles of three years each. In January
2021 and in January 2022 two cycles have commenced
and the last one will start in January 2023 (see Note 27).
Finally, the 2022 Shareholder\u2019s Meeting approved a
Global Employee Incentive Share Purchase Plan for
shares of Telef\u00f3nica, S.A. for the Employees of the
Telef\u00f3nica Group, which is expected to deliver shares to
its participants in 2024 (see Note 27).\u00a0
To reduce the risk associated with variations in share
price under these plans, Telef\u00f3nica could acquire
instruments that hedge the risk profile of some of these
plans.
In addition, the Group may use part of the treasury shares
of Telef\u00f3nica, S.A. held at December\u00a031, 2022 to cover
shares deliverable under the outstanding Plans. The net
asset value of the treasury shares could increase or
decrease depending on variations in Telef\u00f3nica, S.A.\u2019s
share price.
Country risk
The Telef\u00f3nica Group managed or mitigated country risk
by pursuing two lines of action (in addition to its normal
business practices):
1.Partly matching assets to liabilities (those not
guaranteed by the Parent company) in the Telef\u00f3nica
Group\u2019s Latin American companies such that any
potential asset impairment would be accompanied by
a reduction in liabilities; and
2.Repatriating funds generated in Latin America that are
not required for the pursuit of new, profitable business
development opportunities in the region.
Regarding the first point, at December\u00a031, 2022, the
Telef\u00f3nica Group\u2019s Latin American companies had net
financial debt not guaranteed by the Parent company of
2,462 million euros, which represents 9.2% of net financial
debt of the Group. Nevertheless, in certain countries,
such as Venezuela, there is a net cash balance (instead of
a net liability balance).
Regarding the net repatriation of funds to Spain, 693
million euros from Latin America companies have been
received in 2022, of which 652 million euros was in the
form of dividends.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfMarketRiskExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xMjQvZnJhZzpiZjUzYjFiNGFmM2Y0ZGRjYTA3NDk4NDNmMjc1NmRhOS90ZXh0cmVnaW9uOmJmNTNiMWI0YWYzZjRkZGNhMDc0OTg0M2YyNzU2ZGE5XzI0NzM5MDExNjI1MDgz_5a8f9466-3dd0-4d11-b3d1-c6a0cdeb47f2": {
"value": "
Liquidity risk: arises due to a mismatch between financing needs (including operating and financial
expenses, investment, debt redemptions and dividend
commitments) and sources of finance (including
revenues, divestments, credit lines from financial
institutions and capital market transactions). The cost of
finance could also be affected by movements in the
credit spreads (over benchmark rates) demanded by
lenders.
Liquidity risk
The Telef\u00f3nica Group seeks to match the schedule for its
debt maturity payments to its capacity to generate cash
flows to meet these maturities, while allowing for some
flexibility. In practice, this has been translated into two key
principles:
1.The Telef\u00f3nica Group\u2019s average maturity of net
financial debt is intended to stay above six years or be
restored above that threshold in a reasonable period
of time if it eventually falls below it. This principle is
considered as a guideline when managing debt and
access to credit markets, but not a rigid requirement.
When calculating the average maturity for the net
financial debt, a portion of the undrawn credit lines
can be considered as offsetting the shorter debt
maturities, and extension options on some financing
facilities may be considered as exercised, for
calculation purposes.
2.The Telef\u00f3nica Group must be able to pay all
commitments over the next 12 months without
accessing new borrowing or tapping the capital
markets (drawing upon firm credit lines arranged with
banks), assuming budget projections are met.
At December\u00a031, 2022, the average maturity of net
financial debt (26,687 million euros) was 13.11 years
(including undrawn committed credit facilities).
At December\u00a031, 2022, financial liabilities (Note 18) and
lease liabilities (Note 20) scheduled to mature in 2023
amounted to 4,020 and 2,020 million euros, respectively.
These maturities are lower than the amount of funds
available, calculated as the sum of: a) cash and cash
equivalents and current financial assets; b) annual cash
generation projected for 2022, and c) undrawn credit
facilities arranged with banks whose original maturity is
over one year (an aggregate of 11,434 million euros at
December 31, 2022), providing flexibility to the Telef\u00f3nica
Group with regard to accessing capital or credit markets
in the next two years. For a further description of the
Telef\u00f3nica Group\u2019s liquidity and capital resources in 2022,
see Note 18 and Appendix V.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xMjQvZnJhZzpiZjUzYjFiNGFmM2Y0ZGRjYTA3NDk4NDNmMjc1NmRhOS90ZXh0cmVnaW9uOmJmNTNiMWI0YWYzZjRkZGNhMDc0OTg0M2YyNzU2ZGE5XzEwNw_f8e79f2b-5cf7-499c-9c9a-4687eea1ede5": {
"value": "
Credit risk: appears when a counterparty fails to meet or delays its payment obligations in accordance with
the agreed terms, driving an impairment in an asset due
to: (i) solvency issues, or (ii) no intention to pay.
Credit risk
The Telef\u00f3nica Group trades in derivatives with
creditworthy counterparties. Therefore, Telef\u00f3nica, S.A.
generally trades with credit entities whose \u201csenior debt\u201d
ratings are of at least \u201cA-\u201d or in case of Spanish entities in
line with the credit rating of the Kingdom of Spain. In
Spain, where most of the Group\u2019s derivatives portfolio is
held, there are netting agreements with financial
institutions, with debtor or creditor positions offset in case
of bankruptcy, limiting the risk to the net position. In
addition, the CDS (Credit Default Swap) of all the
counterparties with which Telef\u00f3nica, S.A. operates is
monitored at all times in order to assess the maximum
allowable CDS for operating at any given time.
Transactions are generally only carried out with
counterparties whose CDS is below the threshold.
Net CVA (CVA+DVA) or Credit Valuation Adjustment is
the method used to measure credit risk for both
counterparties and Telef\u00f3nica in order to determine the
fair value of the derivatives portfolio. This adjustment
reflects the probability of default or the deterioration of
the credit quality of both Telef\u00f3nica and its
counterparties. The simplified formula to calculate CVA is
Expected Exposure times Probability of Default times Loss
Given Default (LGD). In order to calculate these variables
standard market practices are used.
At the same time, and in order to address the credit risk,
Telef\u00f3nica considers the use of CDS, novations,
derivatives with break clauses and signing CSA's under
certain conditions.
For other subsidiaries, particularly those in Latin America,
assuming a stable sovereign rating provides a ceiling
which is below \u201cA\u201d, trades are with local financial entities
whose rating by local standards is considered to be of
high creditworthiness.
Meanwhile, with credit risk arising from cash and cash
equivalents, the Telef\u00f3nica Group places its cash
surpluses in high quality money-market assets. These
placements are regulated by a general framework, revised
annually. Counterparties are chosen according to criteria
of liquidity, solvency and diversification based on the
conditions of the market and countries where the Group
operates. The general framework sets: the maximum
amounts to be invested by counterparty based on its
rating (long-term debt rating) and the instruments in
which the surpluses may be invested (money-market
instruments). Additionally, for Treasury surpluses
managed at Telef\u00f3nica S.A, a criteria based on CDs has
been added, similar to that used for the selection of
counterparties to operate with derivatives, for the
selection of counterparties for the placement of those
surpluses.
The Telef\u00f3nica Group considers customer credit risk
management as a key element to achieve its business and
customer base growth targets in a sustainable way. This
management approach relies on the active evaluation of
the risk-reward balance within the commercial operations
and on the adequate separation between the risk
ownership and risk management functions.
Formal delegation of authority procedures and
management practices are implemented in the different
Group companies, taking into account benchmark risk
management techniques, adapted to the local
characteristics of each market. Commercial debtors that
may cause a relevant impact on the Telef\u00f3nica Group
consolidated financial statements and increased risk
profile products - due to customer target, term, channels
or other commercial characteristics - are subject to
specific management practices in order to mitigate the
exposure to credit risk.
This customer credit risk management model is
embedded in the day-to-day operational processes of the
different companies, where the credit risk assessment
guides both the product and services available for the
different customers and the collection strategy.
The Telef\u00f3nica Group\u2019s maximum exposure to credit risk
is initially represented by the carrying amounts of the
financial assets and the guarantees given by the
Telef\u00f3nica Group.
Several Telef\u00f3nica Group companies provide operating
guarantees granted by external counterparties, which are
offered during their normal commercial activity, in bids for
licenses, permits and concessions, and spectrum
acquisitions. At December\u00a031, 2022, these guarantees
amounted to approximately 6,657 million euros (6,192
million euros at December\u00a031, 2021).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCreditRiskExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNDgvZnJhZzphNjY5NjI5OWU5ZjE0MTNkOGRjNzVkZDAzNDNmNWE4MS90ZXh0cmVnaW9uOmE2Njk2Mjk5ZTlmMTQxM2Q4ZGM3NWRkMDM0M2Y1YTgxXzI0NzM5MDExNjI1MDY5_55f23177-105d-4c95-b9c4-aabc31aa3c8c": {
"value": "
Capital management
Telef\u00f3nica\u2019s corporate finance department takes into
consideration several factors for the evaluation of the
Telef\u00f3nica\u2019s capital structure, with the aim of maintaining
the solvency and creating value to the shareholders.
The corporate finance department estimates the cost of
capital on a continuous basis through the monitoring of
the financial markets and the application of standard
industry approaches for calculating weighted average
cost of capital, or WACC, so that it can be applied in the
valuation of businesses in course and in the evaluation of
investment projects. In addition, Telef\u00f3nica also uses as
reference net financial debt (excluding items of a non-
recurring or exceptional nature) that allows for a
comfortable investment grade credit rating as assigned
by credit rating agencies, aiming at protecting credit
solvency and making it compatible with alternative uses
of cash flow that could arise at any time.
These general principles are refined by other
considerations and the application of specific variables,
such as country risk in the broadest sense, or the volatility
in cash flows generation that are considered, when
evaluating the financial structure of the Telef\u00f3nica Group
and its different areas.
Interest rate benchmark reform and
associated risks
During 2020 a fundamental reform of major interest rate
benchmarks was launched globally, including the
replacement of some interbank offered rates (IBORs) with
alternative nearly risk-free rates (referred to as \u2018IBOR
reform\u2019). The Group has exposures to IBORs on its
financial instruments that will be replaced or reformed as
part of these market-wide initiatives, thus the Group
anticipates that IBOR reform will impact its Risk
Management Areas.
During 2022, the transition has been made to the new
reference indices affected as of December 31, 2022,
except for the USD Libor, whose transition will be made in
June 2023. In the 2022 financial year, thanks to the
decisions agreed in 2021 to manage the changes in the
GBP Libor and CHF Libor, there have been no impacts
from those changes.
Regarding to the Euribor, and according to the European
Union Benchmarks Regulation, the Group expects that it
will continue to exist as a benchmark rate for the
foreseeable future.
The Group applies the amendments to IFRS 9 to those
hedging relationships directly affected by IBOR reform,
and therefore it assumes that the benchmark interest rate
is not altered as a result of it. The detail of notional
amounts of the hedging instruments in hedging
relationships which are subject to the reform as of
December\u00a031, 2022 and December 31, 2021 is as follows:
| | |
| Gross notional in original currency (in millions) |
Interest rate index/Tenor | | |
| | |
| | |
| | |
The corporate finance department leads a working team
to manage the transition in the Group. It closely monitors
the market and the outputs from the industry, including
announcements by the IBOR regulators on the
discontinuation dates of current IBORs, which have
recently undergone changes.
Another relevant aspect of the reform is the need to
incorporate substitute indexes (known as fallbacks) of the
reference rates used into the contracts. In order to
incorporate these substitute indexes into the contracts,
The Group has decided not to adhere to the ISDA
Protocol and has negotiated bilateral contracts with each
affected counterparty during 2022 and 2021.
The Group will continue to apply the amendments of IFRS
9 until the uncertainty arising from the benchmark
interest rate reforms with respect to the timing and
amount of the underlying cash-flows to which the Group
is exposed ends.
In relation to the benchmark interest rate reform, IFRS
regulations have incorporated information requirements
on the exposure of entities to benchmark interest rates in
the process of transition at the close of financial year
2022.
At December\u00a031, 2022 the book value of assets
referenced to USD Libor rates amounts to 516 million
euros (333 million euros at December 31, 2021) and the
book value of financial liabilities including lease liabilities
referenced to USD Libor rates amounts to 920 million
euros (661 million euros at December 31, 2021).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_02c14930-7a62-4bac-9d3f-467d98d5abf0": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
Other expenses
The breakdown of \u201cOther expenses\u201d is as follows:
| | | |
| | | |
Leases included in \"Other expenses\"(1) | | | |
| | | |
Taxes other than income tax | | | |
Change in trade provisions | | | |
Losses on disposal of fixed assets and changes in provisions for fixed assets | | | |
Goodwill impairment (Note 7) | | | |
| | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_41333701-965d-4b39-8ab1-e62d7075068d": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_5207b784-cfda-4f5f-b425-f4e7234cc4b5": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_5f5ea9ec-d78d-4684-bf66-bb78411864ba": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_d32907ae-2875-4321-8e7a-f48a28c116a0": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNTEvZnJhZzpmZDI1MmE4YzQ0ZmY0OGNmODhjMDUwMjI1OTg0MTNiZC90ZXh0cmVnaW9uOmZkMjUyYThjNDRmZjQ4Y2Y4OGMwNTAyMjU5ODQxM2JkXzI0NzM5MDExNjI2MjYz_e2a039fc-66a8-444d-b7e8-faa8163e3711": {
"value": "
The breakdown of the financial results recognized in
2022, 2021 and 2020 is as follows:
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Changes in fair value of asset derivatives at fair value through profit or loss | | | |
Changes in fair value of liability derivatives at fair value through profit or loss | | | |
Changes in the fair value of debt instruments and other assets at fair value to profit or loss | | | |
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen | | | |
(Loss)/Gain on fair value hedges | | | |
Gain/(loss) on adjustment to items hedged by fair value hedges | | | |
| | | |
| | | |
Financial expenses on lease liabilities (see Note 20) | | | |
Ineffective portion of cash flow hedges | | | |
Accretion of provisions and other liabilities | | | |
| | | |
| | | |
Net finance costs excluding foreign exchange differences and hyperinflation adjustments | | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzI0NzM5MDExNjI1MTk3_43ae8f27-2829-4c41-aff7-3e2f52e1c655": {
"value": "
Note 21. Payables and other
non-current liabilities
The composition of \u201cPayables and other non-current
liabilities\u201d of the Telef\u00f3nica Group at December\u00a031, 2022
and December\u00a031, 2021 is as follows:
| | |
| | |
| | |
| | |
Payables for spectrum acquisition | | |
| | |
Other non-current liabilities | | |
Contractual liabilities (Note 23) | | |
| | |
| | |
| | |
The outstanding liabilities at December\u00a031, 2022 from the
acquisition of spectrum licenses by Telef\u00f3nica Brazil in
November 2021 (see Note 6) amounted to 1,844 million
Brazilian real (331 million euros) including 1,192 million
Brazilian reais (214 million euros) are classified as non-
current. At December 31, 2021, outstanding liabilities
amounted to 4,451 million Brazilian reais (704 million euros
at exchange rate of 2021), including 1,704 million Brazilian
reais (270 million euros at closing exchange rate of 2021)
were classified as non-current.
In June 2019 Telef\u00f3nica Germany acquired a total of 90
MHz spectrum at a cost of 1,425 million euros. The
Company, like the other auction participants, reached an
agreement to defer payments in interest-free annual
installments until 2030, instead of an upfront one-time
payment (see Appendix VI). In 2022 and 2021, payments
amounting to 108 million euros have been made each
year (see Note 28). The current value of the debt at
December 31, 2022 amounted to 998 million euros (1,097
million euros at December\u00a031, 2021), 891 million euros have
a maturity of more than twelve months (990 million euros
at December\u00a031, 2021).
Payments for financed licenses for the years 2022 and
2021 amounted to 657 and 165 million euros, respectively
(see Note 28).
\u201cDeferred revenues\u201d include grants amounting to 53
million euros at December 31, 2022 (55 million euros at
December 31, 2021).
Note 22. Payables and
other current liabilities
The composition of \u201cPayables and other current liabilities\u201d
at December\u00a031, 2022 and December\u00a031, 2021 is as
follows:\u00a0
| | |
| | |
| | |
| | |
Payables to suppliers of property, plant and equipment | | |
Payables for spectrum acquisition | | |
| | |
Dividends pending payment | | |
Payables to associates and joint ventures (Note 10) | | |
Other current liabilities | | |
Contract liabilities (Note 23) | | |
| | |
| | |
Other liabilities to associates and joint ventures (Note 10) | | |
| | |
\"Current debt for spectrum acquisition\" as of
December\u00a031, 2022 and December\u00a031, 2021, is detailed
below:
Information on average payment period to
suppliers. Third additional provision,
\u201cInformation requirement\u201d of Law 15/2010
of July 5, modified by Law 18/2022, of
September 28.
In accordance with the aforementioned Law 15/2010, the
following information corresponding to the Spanish
companies of the Telef\u00f3nica Group is disclosed:
| | |
| | |
|
Weighted average maturity period | | |
| | |
Ratio of outstanding invoices | | |
|
| | |
| | |
On October 19, 2022, Law 18/2022, of September 28, on
the creation and growth of companies, came into force,
which modifies the third additional provision of Law
15/2010. The new standard establishes the obligation to
publish in annual accounts, in addition to the information
already required, the monetary volume and number of
invoices paid in a period less than the maximum
established in the late payment regulations, and the
percentage they represent of the total number of invoices
and on the total monetary payments to your suppliers.
This information for the 2022 financial year is shown
below:
| |
| |
Monetary volume of invoices paid in a period less than the maximum established in the regulations (millions of euros) | |
Percentage of total payments | |
Number of invoices paid in a period less than the maximum established in the regulations | |
Percentage of the total number of invoices paid | |
The Telef\u00f3nica Group\u2019s Spanish companies adapted their
internal processes and payment schedules to the
provisions of Law 15/2010 (amended by Law 31/2014) and
Royal Decree-Law 4/2013, amending Law 3/2004, which
establishes measures against late payment in commercial
transactions. Engagement conditions with commercial
suppliers in 2022 included payment periods of up to 60
days, according to the terms agreed between the parties.
For efficiency purposes and in line with general business
practices, Telef\u00f3nica Group companies in Spain have
agreed payment schedules with suppliers, whereby most
of the payments are made on set days of each month.
Invoices falling due between two payment days are
settled on the following payment date in the schedule.
Payments to Spanish suppliers in 2022 surpassing the
established legal limit were the result of circumstances or
incidents beyond the payment policies, mainly the delay
in issuing invoices (legal obligation of the supplier), the
closing of agreements with suppliers over the delivery of
goods or rendering of services, or occasional processing
issues.
The average payment period to suppliers of the
Telef\u00f3nica Group\u2019s companies in Spain in 2022,
calculated in accordance with the only additional
provision of the Resolution of the Instituto de
Contabilidad y Auditor\u00eda de Cuentas (Spanish Accounting
and Audit Institute) of January 29, 2016, amounted to 53
days (54 days in 2021).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzI0NzM5MDExNjI1MTk3_61de3f4f-f820-4cba-ad5a-32eade6fa9bc": {
"value": "
Note 21. Payables and other
non-current liabilities
The composition of \u201cPayables and other non-current
liabilities\u201d of the Telef\u00f3nica Group at December\u00a031, 2022
and December\u00a031, 2021 is as follows:
| | |
| | |
| | |
| | |
Payables for spectrum acquisition | | |
| | |
Other non-current liabilities | | |
Contractual liabilities (Note 23) | | |
| | |
| | |
| | |
The outstanding liabilities at December\u00a031, 2022 from the
acquisition of spectrum licenses by Telef\u00f3nica Brazil in
November 2021 (see Note 6) amounted to 1,844 million
Brazilian real (331 million euros) including 1,192 million
Brazilian reais (214 million euros) are classified as non-
current. At December 31, 2021, outstanding liabilities
amounted to 4,451 million Brazilian reais (704 million euros
at exchange rate of 2021), including 1,704 million Brazilian
reais (270 million euros at closing exchange rate of 2021)
were classified as non-current.
In June 2019 Telef\u00f3nica Germany acquired a total of 90
MHz spectrum at a cost of 1,425 million euros. The
Company, like the other auction participants, reached an
agreement to defer payments in interest-free annual
installments until 2030, instead of an upfront one-time
payment (see Appendix VI). In 2022 and 2021, payments
amounting to 108 million euros have been made each
year (see Note 28). The current value of the debt at
December 31, 2022 amounted to 998 million euros (1,097
million euros at December\u00a031, 2021), 891 million euros have
a maturity of more than twelve months (990 million euros
at December\u00a031, 2021).
Payments for financed licenses for the years 2022 and
2021 amounted to 657 and 165 million euros, respectively
(see Note 28).
\u201cDeferred revenues\u201d include grants amounting to 53
million euros at December 31, 2022 (55 million euros at
December 31, 2021).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzI0NzM5MDExNjI1MTk3_9c38ec3b-442a-4335-b048-56646185f79b": {
"value": "
Note 21. Payables and other
non-current liabilities
The composition of \u201cPayables and other non-current
liabilities\u201d of the Telef\u00f3nica Group at December\u00a031, 2022
and December\u00a031, 2021 is as follows:
| | |
| | |
| | |
| | |
Payables for spectrum acquisition | | |
| | |
Other non-current liabilities | | |
Contractual liabilities (Note 23) | | |
| | |
| | |
| | |
The outstanding liabilities at December\u00a031, 2022 from the
acquisition of spectrum licenses by Telef\u00f3nica Brazil in
November 2021 (see Note 6) amounted to 1,844 million
Brazilian real (331 million euros) including 1,192 million
Brazilian reais (214 million euros) are classified as non-
current. At December 31, 2021, outstanding liabilities
amounted to 4,451 million Brazilian reais (704 million euros
at exchange rate of 2021), including 1,704 million Brazilian
reais (270 million euros at closing exchange rate of 2021)
were classified as non-current.
In June 2019 Telef\u00f3nica Germany acquired a total of 90
MHz spectrum at a cost of 1,425 million euros. The
Company, like the other auction participants, reached an
agreement to defer payments in interest-free annual
installments until 2030, instead of an upfront one-time
payment (see Appendix VI). In 2022 and 2021, payments
amounting to 108 million euros have been made each
year (see Note 28). The current value of the debt at
December 31, 2022 amounted to 998 million euros (1,097
million euros at December\u00a031, 2021), 891 million euros have
a maturity of more than twelve months (990 million euros
at December\u00a031, 2021).
Payments for financed licenses for the years 2022 and
2021 amounted to 657 and 165 million euros, respectively
(see Note 28).
\u201cDeferred revenues\u201d include grants amounting to 53
million euros at December 31, 2022 (55 million euros at
December 31, 2021).
Note 22. Payables and
other current liabilities
The composition of \u201cPayables and other current liabilities\u201d
at December\u00a031, 2022 and December\u00a031, 2021 is as
follows:\u00a0
| | |
| | |
| | |
| | |
Payables to suppliers of property, plant and equipment | | |
Payables for spectrum acquisition | | |
| | |
Dividends pending payment | | |
Payables to associates and joint ventures (Note 10) | | |
Other current liabilities | | |
Contract liabilities (Note 23) | | |
| | |
| | |
Other liabilities to associates and joint ventures (Note 10) | | |
| | |
\"Current debt for spectrum acquisition\" as of
December\u00a031, 2022 and December\u00a031, 2021, is detailed
below:
Information on average payment period to
suppliers. Third additional provision,
\u201cInformation requirement\u201d of Law 15/2010
of July 5, modified by Law 18/2022, of
September 28.
In accordance with the aforementioned Law 15/2010, the
following information corresponding to the Spanish
companies of the Telef\u00f3nica Group is disclosed:
| | |
| | |
|
Weighted average maturity period | | |
| | |
Ratio of outstanding invoices | | |
|
| | |
| | |
On October 19, 2022, Law 18/2022, of September 28, on
the creation and growth of companies, came into force,
which modifies the third additional provision of Law
15/2010. The new standard establishes the obligation to
publish in annual accounts, in addition to the information
already required, the monetary volume and number of
invoices paid in a period less than the maximum
established in the late payment regulations, and the
percentage they represent of the total number of invoices
and on the total monetary payments to your suppliers.
This information for the 2022 financial year is shown
below:
| |
| |
Monetary volume of invoices paid in a period less than the maximum established in the regulations (millions of euros) | |
Percentage of total payments | |
Number of invoices paid in a period less than the maximum established in the regulations | |
Percentage of the total number of invoices paid | |
The Telef\u00f3nica Group\u2019s Spanish companies adapted their
internal processes and payment schedules to the
provisions of Law 15/2010 (amended by Law 31/2014) and
Royal Decree-Law 4/2013, amending Law 3/2004, which
establishes measures against late payment in commercial
transactions. Engagement conditions with commercial
suppliers in 2022 included payment periods of up to 60
days, according to the terms agreed between the parties.
For efficiency purposes and in line with general business
practices, Telef\u00f3nica Group companies in Spain have
agreed payment schedules with suppliers, whereby most
of the payments are made on set days of each month.
Invoices falling due between two payment days are
settled on the following payment date in the schedule.
Payments to Spanish suppliers in 2022 surpassing the
established legal limit were the result of circumstances or
incidents beyond the payment policies, mainly the delay
in issuing invoices (legal obligation of the supplier), the
closing of agreements with suppliers over the delivery of
goods or rendering of services, or occasional processing
issues.
The average payment period to suppliers of the
Telef\u00f3nica Group\u2019s companies in Spain in 2022,
calculated in accordance with the only additional
provision of the Resolution of the Instituto de
Contabilidad y Auditor\u00eda de Cuentas (Spanish Accounting
and Audit Institute) of January 29, 2016, amounted to 53
days (54 days in 2021).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzI0NzM5MDExNjI1MTk3_cd53a120-aa9b-4413-9eea-4f6cd7d73a2e": {
"value": "
Note 21. Payables and other
non-current liabilities
The composition of \u201cPayables and other non-current
liabilities\u201d of the Telef\u00f3nica Group at December\u00a031, 2022
and December\u00a031, 2021 is as follows:
| | |
| | |
| | |
| | |
Payables for spectrum acquisition | | |
| | |
Other non-current liabilities | | |
Contractual liabilities (Note 23) | | |
| | |
| | |
| | |
The outstanding liabilities at December\u00a031, 2022 from the
acquisition of spectrum licenses by Telef\u00f3nica Brazil in
November 2021 (see Note 6) amounted to 1,844 million
Brazilian real (331 million euros) including 1,192 million
Brazilian reais (214 million euros) are classified as non-
current. At December 31, 2021, outstanding liabilities
amounted to 4,451 million Brazilian reais (704 million euros
at exchange rate of 2021), including 1,704 million Brazilian
reais (270 million euros at closing exchange rate of 2021)
were classified as non-current.
In June 2019 Telef\u00f3nica Germany acquired a total of 90
MHz spectrum at a cost of 1,425 million euros. The
Company, like the other auction participants, reached an
agreement to defer payments in interest-free annual
installments until 2030, instead of an upfront one-time
payment (see Appendix VI). In 2022 and 2021, payments
amounting to 108 million euros have been made each
year (see Note 28). The current value of the debt at
December 31, 2022 amounted to 998 million euros (1,097
million euros at December\u00a031, 2021), 891 million euros have
a maturity of more than twelve months (990 million euros
at December\u00a031, 2021).
Payments for financed licenses for the years 2022 and
2021 amounted to 657 and 165 million euros, respectively
(see Note 28).
\u201cDeferred revenues\u201d include grants amounting to 53
million euros at December 31, 2022 (55 million euros at
December 31, 2021).
Note 22. Payables and
other current liabilities
The composition of \u201cPayables and other current liabilities\u201d
at December\u00a031, 2022 and December\u00a031, 2021 is as
follows:\u00a0
| | |
| | |
| | |
| | |
Payables to suppliers of property, plant and equipment | | |
Payables for spectrum acquisition | | |
| | |
Dividends pending payment | | |
Payables to associates and joint ventures (Note 10) | | |
Other current liabilities | | |
Contract liabilities (Note 23) | | |
| | |
| | |
Other liabilities to associates and joint ventures (Note 10) | | |
| | |
\"Current debt for spectrum acquisition\" as of
December\u00a031, 2022 and December\u00a031, 2021, is detailed
below:
Information on average payment period to
suppliers. Third additional provision,
\u201cInformation requirement\u201d of Law 15/2010
of July 5, modified by Law 18/2022, of
September 28.
In accordance with the aforementioned Law 15/2010, the
following information corresponding to the Spanish
companies of the Telef\u00f3nica Group is disclosed:
| | |
| | |
|
Weighted average maturity period | | |
| | |
Ratio of outstanding invoices | | |
|
| | |
| | |
On October 19, 2022, Law 18/2022, of September 28, on
the creation and growth of companies, came into force,
which modifies the third additional provision of Law
15/2010. The new standard establishes the obligation to
publish in annual accounts, in addition to the information
already required, the monetary volume and number of
invoices paid in a period less than the maximum
established in the late payment regulations, and the
percentage they represent of the total number of invoices
and on the total monetary payments to your suppliers.
This information for the 2022 financial year is shown
below:
| |
| |
Monetary volume of invoices paid in a period less than the maximum established in the regulations (millions of euros) | |
Percentage of total payments | |
Number of invoices paid in a period less than the maximum established in the regulations | |
Percentage of the total number of invoices paid | |
The Telef\u00f3nica Group\u2019s Spanish companies adapted their
internal processes and payment schedules to the
provisions of Law 15/2010 (amended by Law 31/2014) and
Royal Decree-Law 4/2013, amending Law 3/2004, which
establishes measures against late payment in commercial
transactions. Engagement conditions with commercial
suppliers in 2022 included payment periods of up to 60
days, according to the terms agreed between the parties.
For efficiency purposes and in line with general business
practices, Telef\u00f3nica Group companies in Spain have
agreed payment schedules with suppliers, whereby most
of the payments are made on set days of each month.
Invoices falling due between two payment days are
settled on the following payment date in the schedule.
Payments to Spanish suppliers in 2022 surpassing the
established legal limit were the result of circumstances or
incidents beyond the payment policies, mainly the delay
in issuing invoices (legal obligation of the supplier), the
closing of agreements with suppliers over the delivery of
goods or rendering of services, or occasional processing
issues.
The average payment period to suppliers of the
Telef\u00f3nica Group\u2019s companies in Spain in 2022,
calculated in accordance with the only additional
provision of the Resolution of the Instituto de
Contabilidad y Auditor\u00eda de Cuentas (Spanish Accounting
and Audit Institute) of January 29, 2016, amounted to 53
days (54 days in 2021).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzI0NzM5MDExNjI1Mzcw_705be6c1-cc66-4219-a668-14753d6f5925": {
"value": "
| | |
| | |
| | |
| | |
Payables for spectrum acquisition | | |
| | |
Other non-current liabilities | | |
Contractual liabilities (Note 23) | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Payables to suppliers of property, plant and equipment | | |
Payables for spectrum acquisition | | |
| | |
Dividends pending payment | | |
Payables to associates and joint ventures (Note 10) | | |
Other current liabilities | | |
Contract liabilities (Note 23) | | |
| | |
| | |
Other liabilities to associates and joint ventures (Note 10) | | |
| | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjMvZnJhZzpiOTFkYTBhOWU4ZGY0Zjc1OTJlNTY4ZjhjMzI0MzA2ZS90ZXh0cmVnaW9uOmI5MWRhMGE5ZThkZjRmNzU5MmU1NjhmOGMzMjQzMDZlXzE0MjM4Njc1NTc5NzM5Mw_3401a54e-df9c-45c5-9041-1a14d13e0174": {
"value": "
\u201cDeferred revenues\u201d include grants amounting to 53
million euros at December 31, 2022 (55 million euros at
December 31, 2021).
| | | |
| | | |
| | | |
Gain on disposal of businesses | | | |
Gain on disposal of property, plant and equipment | | | |
Gain on disposal of intangible assets | | | |
| | | |
| | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xNjkvZnJhZzowZDAzYzE5MGZmZTE0YmQ1YWEwNWMwNzAyMDg1MDJhZS90ZXh0cmVnaW9uOjBkMDNjMTkwZmZlMTRiZDVhYTA1YzA3MDIwODUwMmFlXzI0NzM5MDExNjI1MTY1_db25bbbd-455d-420b-819a-40981536cc75": {
"value": "
Note 23. Breakdown of contractual
assets and liabilities, and
capitalized\u00a0costs
The movement of contractual assets and capitalized costs
in 2022 and 2021 is as follows:
| | | | | | |
| | | | | Translation differences and hyperinflation adjustments | |
Long-term contractual assets (Note 12) | | | | | | |
| | | | | | |
| | | | | | |
Short-term contractual assets (Note 14) | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Once the amounts recognized as contract assets become
receivables, which normally occurs when they are
invoiced, they are transferred to the \"Trade receivables\"
heading. In this regard, the balance of the contract assets
account basically represents amounts not yet due.
The movement of the deferred expenses in 2021 and
2020 is as follows:
| | | | | | | |
| | | | | Translation differences and hyperinflation adjustments | | |
Non-current capitalized costs (Note 12) | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Current capitalized costs (Note 14) | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | Translation differences and hyperinflation adjustments | | |
Non-current capitalized costs (Note 12) | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Current capitalized costs (Note 14) | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
In 2020, the Group revisited the allocation to profit or loss
period of incremental costs of obtaining a contract with
indefinite duration, to match it with the pattern of transfer
of goods or services under the contract to which those
costs relate. Pursuant to this analysis such costs are
recognized as an asset and expensed on a systematic
basis, considering the renewals estimated on the basis of
the customer churn rate, except in situations in which
there are costs on contract renewal that are
commensurate with the costs paid on the initial contract.
The movement of contractual liabilities of contracts with
customers in 2022 and 2021 is as follows:
| | | | | | | | |
| | | Disposals (previous years) | | | Translation differences and hyperinflation adjustments | | |
Long-term contractual liabilities (Note 21) | | | | | | | | |
Short-term contractual liabilities (Note 22) | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | Disposals (previous years) | | | Translation differences and hyperinflation adjustments | | |
Long-term contractual liabilities (Note 21) | | | | | | | | |
Short-term contractual liabilities (Note 22) | | | | | | | | |
| | | | | | | | |
a) Employee benefits
In 2022 the Group recorded a provision of 179 million
euros (1,663 million euros in 2021). In 2022, 57 million
euros corresponds to Tel\u00e9fonica Spain (1,382 million euros
in 2021, mainly relating to the Individual Suspension Plan
described in \u201cOther benefits\u201d). The distribution by
segment of the restructuring costs, in terms of their
impact on operating income, is as follows:
Termination plans
The movement in provisions for termination plans in 2022
and 2021 is as follows:
| |
| |
Provisions for termination plans at 12/31/2020 | |
| |
Retirements/amount applied | |
Translation differences, hyperinflation adjustments and accretion | |
Provisions for termination plans at 12/31/2021 | |
| |
Retirements/amount applied | |
| |
Translation differences, hyperinflation adjustments and accretion | |
Provisions for termination plans at 12/31/2022 | |
Telef\u00f3nica Spain
The 2011-2013 labor force reduction plan in Telef\u00f3nica de
Espa\u00f1a, concluded with 6,830 participating employees
and the provisions recorded at December\u00a031, 2022 and
2021 amounted to 38 million euros and 145 million euros,
respectively.
The companies bound by these commitments calculated
provisions required at 2022 and 2021 year-ends using the
biometric table PERM2020 published in the resolution of
December 17, 2020 combined with the invalidity table
published in the ministerial order of 1977 and a high
quality credit market based interest rate.
The discount rate used for the termination plans of
Telef\u00f3nica Spain at December\u00a031, 2022 was 3.43% with an
average plan length of 0.74 years.
Post-employment defined benefit plans
The Group has a number of defined benefit plans in the
countries where it operates. The following tables present
the main data of these plans:
| | | | | |
|
| | | | | |
| | | | | |
| | | | | |
Net provision before asset ceiling | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
|
| | | | | |
| | | | | |
| | | | | |
Net provision before asset ceiling | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
The movement in the present value of obligations in 2022
and 2021 is as follows:
| | | | | |
| | | | | |
Present value of obligation at 12/31/2020 | | | | | |
| | | | | |
| | | | | |
| | | | | |
Actuarial losses and gains | | | | | |
| | | | | |
| | | | | |
| | | | | |
Present value of obligation at 12/31/2021 | | | | | |
| | | | | |
| | | | | |
| | | | | |
Actuarial losses and gains | | | | | |
| | | | | |
| | | | | |
| | | | | |
Present value of obligation at 12/31/2022 | | | | | |
The main actuarial assumptions used in valuing these
plans are as follows:
| | |
| | |
| | |
Nominal rate of salary increase | | |
| | |
Growth rate for medical costs | | |
| | |
| | | |
| Present value of the obligation at the current growth rate for medical costs | Present value of the obligation by increasing the rate by 1% | Present value of the obligation by reducing the rate by 1% |
| | | |
| | | |
| | | |
Other employee benefits
Telef\u00f3nica de Espa\u00f1a, Telef\u00f3nica M\u00f3viles Espa\u00f1a
and Telef\u00f3nica Soluciones Individual Suspension
Plans
In 2015 Telef\u00f3nica de Espa\u00f1a, S.A.U., Telef\u00f3nica M\u00f3viles
Espa\u00f1a, S.A.U. and Telef\u00f3nica Soluciones de Inform\u00e1tica y
Comunicaciones de Espa\u00f1a, S.A.U. signed the first
Collective Bargaining Agreement of Related Companies
(CEV). This agreement considered elements that included
a plan of measures for individual suspension of the
employment relationship in 2016 and 2017, applying
principles of voluntariness, universality, non-
discrimination and social responsibility. In December 2016,
the Collective Bargaining Agreement of Related
Companies was extended until 2018 by virtue of the
provisions thereof. In September 2019 Telef\u00f3nica Espa\u00f1a
signed the second Collective Agreement of Related
Companies that includes, among other aspects, an
\"Individual Suspension Plan\" that is completely voluntary
for the year 2019, with the same conditions as the
previous one. In 2021, Telef\u00f3nica Espa\u00f1a signed a Social
Pact for Employment supported by the largest trade
unions, which contemplate and Individual Suspension
Plan of employment, fully voluntary (see Note 2).
These plans are based on mutual agreement between the
company and employees and entail the possibility of
voluntarily suspending the employment relationship for an
initial three-year period, renewable for consecutive three-
year periods until the retirement age. Employees who
meet the age and seniority requirements may enter the
Individual Suspension Plans (PSI) in the periods opened
for these purposes.
At the end of each period, the current value of the
forecast payment flows to meet the commitments of
these programs (applying certain hypotheses regarding
estimated number of accessions and future reintegration
ratio) is recognized. At 2022 and 2021 year-ends, this
figure was calculated using the biometric table
PERM2020 published in the resolution of December 17,
2020 combined with the invalidity table published in the
ministerial order of 1977 and a high quality credit market
based interest rate.
The provision at December\u00a031, 2022 amounted to 4,150
million euros (5,240 million euros at December\u00a031, 2021).
The discount rate used for these provisions at
December\u00a031, 2022 was 3.71% with an average plans
length of 3.53 years.
Sensitivity of the valuation
The table below shows the sensitivity of the value of
termination, post-employment and other obligations,
including the Individual Suspension Plans of Telef\u00f3nica
Group companies in Spain to changes in the discount
rate:
| | | | |
| | |
| Impact on income statement | | | Impact on\u00a0 income statement |
| | | | |
A 100 b.p. increase in the discount rate would reduce the
value of the liabilities by 138 million euros and have a
positive impact on the income statement of 138 million
euros before tax. On the other hand, a 100 b.p. decrease
in the discount rate would increase the value of the
liabilities by 147 million euros and have a negative impact
on the income statement of 147 million euros before tax.
The Telef\u00f3nica Group actively manages this position and
has arranged a derivatives portfolio to significantly reduce
the impact of changes in the discount rate (see Note 19).
b) Provisions for dismantling of assets
The movement of provision for dismantling of assets in
2022 and 2021 is as follows:
| |
| |
Dismantling of assets at December 31, 2020 | |
| |
| |
Retirements/amount applied | |
| |
| |
Translation differences and other | |
Dismantling of assets at December 31, 2021 | |
| |
| |
Retirements/amount applied | |
| |
Translation differences and other | |
Dismantling of assets at December 31, 2022 | |
\"Business combinations\" in 2022 mainly correspond to
provisions related to the acquisition of mobiles assets of
Oi (see Note 5).
The Group is exposed to risks of claims and litigation,
mainly relating to tax and regulatory proceedings, and
labor and civil claims.\u00a0
Given the nature of the risks covered by these
provisions, no reliable schedule of potential payments, if
any, can be determined.
Telef\u00f3nica Brazil
Telef\u00f4nica Brasil, S.A. and its subsidiaries are party to
administrative and judicial proceedings and labor, tax and
civil claims filed in different courts. The Telef\u00f3nica Group
management based on the opinion of its legal counsel,
recognized provisions for proceedings for which an
unfavorable outcome is considered likely.
The balance of these provisions at December 31, 2022
and December 31, 2021 is shown in the following table:
| | |
| | |
| | |
| | |
| | |
| | |
Amounts to be refunded to customers | | |
Provision for fines for canceling lease agreements | | |
| | |
Additionally, Telef\u00f3nica Brazil recognized contingent
liabilities according to IFRS 3 generated on acquisition of
the controlling interest of Vivo Participa\u00e7oes in 2011, GVT
in 2015 and the mobile assets of Oi in 2022 (see Note 5).
These contingent liabilities amounted to 176 million euros
at December\u00a031, 2022 (77 million euros at December\u00a031,
2021).
In 2022, Complementary Law No. 194 was enacted in
Brasil, leading to a reduction in the tax rate ICMS on
communications services and the respective refund of
these amounts to customers. The provision in Telef\u00f3nica
Brasil at December 31, 2022 amounted to 108 million
euros.
\"Provision for fines for canceling lease agreements\"
relates to the acquisition of Garliava, resulting from the
sale or shutdown of sites (see Note 5).
The detail of provisions for tax proceedings by nature of
risk is as follows:
The breakdown of changes in provisions for tax
proceedings in 2022 and 2021 is as follows:
| |
| |
| |
Movements with a counterparty in the income statement | |
Write-offs due to payment | |
| |
| |
| |
Movements with a counterparty in the income statement | |
Write-offs due to payment | |
| |
| |
| |
Group management and legal counsel understand that
losses are possible from tax contingencies in federal,
state, municipal and other taxes for an aggregated
amount of 33,473 million Brazilian reals (6,009 million
euros) as of December\u00a031, 2022 (30,249 million Brazilian
reals, 4,786 million euros as of December\u00a031, 2021). The
possible contingencies from the main income tax
proceedings (federal tax) are described in Note 25.
Noteworthy state tax-related contingencies include the
\"ICMS\" tax (see Note 25). Moreover, Telef\u00f3nica Brazil
presently has different open proceedings regarding the
Fundo de Universaliza\u00e7\u00e3o de Servi\u00e7os de
Telecomunica\u00e7\u00f5es (FUST, refer to Note 29).
With regard to regulatory proceedings, Telef\u00f3nica Brazil is
party to administrative proceedings against Agencia
Nacional de Telecomunica\u00e7\u00f5es (ANATEL) based on an
alleged failure to meet sector regulations and judicial
proceedings to contest sanctions applied by ANATEL at
the administrative level. Consolidated provisions totaled
1,869 million Brazilian reals (336 million euros) at
December 31, 2022 (1,986 million Brazilian reals, 314 million
euros at December\u00a031, 2021). In addition, Group
management and legal counsel understand that losses
are possible from regulatory contingencies amounting to
5,845 million Brazilian reals (1,049 million euros) at
December\u00a031, 2022 (4,545 million Brazilian reals, 719
million euros at December\u00a031, 2021), including the
sanction for breaches of the Fixed Telephony Regulation
(see Note 29.a).
In addition, Group management and legal counsel
understand that losses are possible from civil
proceedings, amounting to 391 million euros at
December\u00a031, 2022 (335 million euros at December\u00a031,
2021).
In some situations, in connection with a legal requirement
or presentation of guarantees, judicial deposits are made
to secure the continuance of the claims under discussion.
The judicial deposits by nature of risk at December\u00a031,
2022 and December\u00a031, 2021 are as follows:
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Non-current (see Note 12) | | |
Termination plans
The movement in provisions for termination plans in 2022
and 2021 is as follows:
| |
| |
Provisions for termination plans at 12/31/2020 | |
| |
Retirements/amount applied | |
Translation differences, hyperinflation adjustments and accretion | |
Provisions for termination plans at 12/31/2021 | |
| |
Retirements/amount applied | |
| |
Translation differences, hyperinflation adjustments and accretion | |
Provisions for termination plans at 12/31/2022 | |
Telef\u00f3nica Spain
The 2011-2013 labor force reduction plan in Telef\u00f3nica de
Espa\u00f1a, concluded with 6,830 participating employees
and the provisions recorded at December\u00a031, 2022 and
2021 amounted to 38 million euros and 145 million euros,
respectively.
The companies bound by these commitments calculated
provisions required at 2022 and 2021 year-ends using the
biometric table PERM2020 published in the resolution of
December 17, 2020 combined with the invalidity table
published in the ministerial order of 1977 and a high
quality credit market based interest rate.
The discount rate used for the termination plans of
Telef\u00f3nica Spain at December\u00a031, 2022 was 3.43% with an
average plan length of 0.74 years.
Post-employment defined benefit plans
The Group has a number of defined benefit plans in the
countries where it operates. The following tables present
the main data of these plans:
| | | | | |
|
| | | | | |
| | | | | |
| | | | | |
Net provision before asset ceiling | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
|
| | | | | |
| | | | | |
| | | | | |
Net provision before asset ceiling | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
The movement in the present value of obligations in 2022
and 2021 is as follows:
| | | | | |
| | | | | |
Present value of obligation at 12/31/2020 | | | | | |
| | | | | |
| | | | | |
| | | | | |
Actuarial losses and gains | | | | | |
| | | | | |
| | | | | |
| | | | | |
Present value of obligation at 12/31/2021 | | | | | |
| | | | | |
| | | | | |
| | | | | |
Actuarial losses and gains | | | | | |
| | | | | |
| | | | | |
| | | | | |
Present value of obligation at 12/31/2022 | | | | | |
The main actuarial assumptions used in valuing these
plans are as follows:
| | |
| | |
| | |
Nominal rate of salary increase | | |
| | |
Growth rate for medical costs | | |
| | |
| | | |
| Present value of the obligation at the current growth rate for medical costs | Present value of the obligation by increasing the rate by 1% | Present value of the obligation by reducing the rate by 1% |
| | | |
| | | |
| | | |
Other employee benefits
Telef\u00f3nica de Espa\u00f1a, Telef\u00f3nica M\u00f3viles Espa\u00f1a
and Telef\u00f3nica Soluciones Individual Suspension
Plans
In 2015 Telef\u00f3nica de Espa\u00f1a, S.A.U., Telef\u00f3nica M\u00f3viles
Espa\u00f1a, S.A.U. and Telef\u00f3nica Soluciones de Inform\u00e1tica y
Comunicaciones de Espa\u00f1a, S.A.U. signed the first
Collective Bargaining Agreement of Related Companies
(CEV). This agreement considered elements that included
a plan of measures for individual suspension of the
employment relationship in 2016 and 2017, applying
principles of voluntariness, universality, non-
discrimination and social responsibility. In December 2016,
the Collective Bargaining Agreement of Related
Companies was extended until 2018 by virtue of the
provisions thereof. In September 2019 Telef\u00f3nica Espa\u00f1a
signed the second Collective Agreement of Related
Companies that includes, among other aspects, an
\"Individual Suspension Plan\" that is completely voluntary
for the year 2019, with the same conditions as the
previous one. In 2021, Telef\u00f3nica Espa\u00f1a signed a Social
Pact for Employment supported by the largest trade
unions, which contemplate and Individual Suspension
Plan of employment, fully voluntary (see Note 2).
These plans are based on mutual agreement between the
company and employees and entail the possibility of
voluntarily suspending the employment relationship for an
initial three-year period, renewable for consecutive three-
year periods until the retirement age. Employees who
meet the age and seniority requirements may enter the
Individual Suspension Plans (PSI) in the periods opened
for these purposes.
At the end of each period, the current value of the
forecast payment flows to meet the commitments of
these programs (applying certain hypotheses regarding
estimated number of accessions and future reintegration
ratio) is recognized. At 2022 and 2021 year-ends, this
figure was calculated using the biometric table
PERM2020 published in the resolution of December 17,
2020 combined with the invalidity table published in the
ministerial order of 1977 and a high quality credit market
based interest rate.
The provision at December\u00a031, 2022 amounted to 4,150
million euros (5,240 million euros at December\u00a031, 2021).
The discount rate used for these provisions at
December\u00a031, 2022 was 3.71% with an average plans
length of 3.53 years.
Sensitivity of the valuation
The table below shows the sensitivity of the value of
termination, post-employment and other obligations,
including the Individual Suspension Plans of Telef\u00f3nica
Group companies in Spain to changes in the discount
rate:
| | | | |
| | |
| Impact on income statement | | | Impact on\u00a0 income statement |
| | | | |
A 100 b.p. increase in the discount rate would reduce the
value of the liabilities by 138 million euros and have a
positive impact on the income statement of 138 million
euros before tax. On the other hand, a 100 b.p. decrease
in the discount rate would increase the value of the
liabilities by 147 million euros and have a negative impact
on the income statement of 147 million euros before tax.
The Telef\u00f3nica Group actively manages this position and
has arranged a derivatives portfolio to significantly reduce
the impact of changes in the discount rate (see Note 19).
Appendix II: Board and Senior
Management Compensation
TELEF\u00d3NICA, S.A.
(Amounts in euros)
| | | | | | | |
| | | | Short-term variable remuneration4 | Remuneration for belonging to the Board Committees5 | | |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | | | | | | | |
Mr. Isidro Fain\u00e9 Casas | | | | | | | |
Mr. Jos\u00e9 Mar\u00eda Abril P\u00e9rez | | | | | | | |
Mr. Jos\u00e9 Javier Echenique Landir\u00edbar | | | | | | | |
Mr. \u00c1ngel Vil\u00e1 Boix | | | | | | | |
Mr. Juan Ignacio Cirac Sasturain | | | | | | | |
| | | | | | | |
Ms. Carmen Garc\u00eda de Andr\u00e9s | | | | | | | |
Ms. Mar\u00eda Luisa Garc\u00eda Blanco | | | | | | | |
| | | | | | | |
Ms. Ver\u00f3nica Pascual Bo\u00e9 | | | | | | | |
Mr. Francisco Javier de Paz Mancho | | | | | | | |
Mr. Francisco Jos\u00e9 Riberas Mera | | | | | | | |
Ms. Mar\u00eda Rotondo Urcola | | | | | | | |
Ms. Claudia Sender Ram\u00edrez | | | | | | | |
1. Salary: Amount of non-variable remuneration earned by the Director from other companies of the Telef\u00f3nica Group for his/her executive functions.\u00a0
2. Fixed remuneration: Amount of the compensation in cash, with a pre-established payment periodicity, subject to consolidation over time or not, earned by the
member for his/her position on the boards of other companies of the Telef\u00f3nica Group.
3. Allowances: Total amount of the allowances for attending the board meetings of other companies of the Telef\u00f3nica Group.
4. Variable short-term remuneration (bonuses): Variable amount linked to the performance or achievement of a series of individual or group objectives
(quantitative or qualitative) within a period of time equal to or less than a year, corresponding to the year 2022 and to be paid in the year 2023 by other
companies of the Telef\u00f3nica Group.
5. Remuneration for belonging to the Board Committees of other companies of the Telef\u00f3nica Group: Amount of items other than allowances, which the
directors are beneficiaries through their position on the Advisory or Steering Committees of other companies of the Telef\u00f3nica Group, regardless of the effective
attendance of the board member such Committee meetings.
6. Other concepts: This includes, among others, the amounts received as remuneration in kind (general medical and dental coverage and vehicle insurance), paid
by other companies of the Telef\u00f3nica Group. Also included are the amounts received for membership of the Advisory Boards of Telef\u00f3nica Espa\u00f1a, Telef\u00f3nica
Hispanoam\u00e9rica, Telef\u00f3nica Tech and Telef\u00f3nica Ingenier\u00eda de Seguridad.
Additionally, as mentioned in the Remuneration Policy
section, the Executive Board Members have a series of
Assistance Services. Below, the contributions made
during 2022 are detailed for the Company to long-term
savings systems (Pension Plans and Social Welfare Plan):
LONG-TERM SAVINGS SYSTEMS
(Amounts in euros)
| |
| Contributions for fiscal year 2022 |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
The breakdown of the long-term saving systems includes
contributions to Pension Plans, to the Benefit Plan and to
the Unit link-type Insurance, as set out below:
(Amounts in euros)
| | | |
| Contribution to Pension Plans | Contribution to Executive Social Welfare Plan1 | Contributions to Unit link- type Insurance/ Pension Plan Surplus2 |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez- Pallete L\u00f3pez | | | |
Mr. \u00c1ngel Vil\u00e1 Boix | | | |
REMUNERATION PLANS BASED ON
SHARES
As regards to remuneration plans based on shares
(involving Executive Directors), the following long-term
variable remuneration plans were in existence during the
year 2022:
The so-called Performance Share Plan (\"PSP\"), made
up of three cycles (2018-2021; 2019-2022;
2020-2023), approved by the General Shareholders'
Meeting held on June 8, 2018.
The maximum number of Telef\u00f3nica shares to be
delivered depends (i) 50% of the compliance with the
targets set out for Total Shareholder Return (\"TSR\") on
Telef\u00f3nica, S.A. shares with respect to the TSRs of a
comparison group of companies in the
telecommunications sector weighted according to their
relevance to Telef\u00f3nica, and (ii) 50%, of the Free Cash
Flow (the \"FCF\") of the Telef\u00f3nica Group.
The target measurement period for the First Cycle started
on January 1, 2018 and ended on December 31, 2020,
resulting in a weighted payout ratio of 50%.
Notwithstanding the foregoing, the Executive Chairman
stated to the Nominating, Compensation and Corporate
Governance Committee, at its meeting of February 23,
2021, that he considered it appropriate to propose his
waiver of the incentive, as a gesture of responsibility
towards the company, customers, shareholders and
employees of Telef\u00f3nica, as well as a measure of
prudence following the economic effects derived from
COVID-19. The CEO expressed the same view. The
resignation was accepted by the Board of Directors.
The target measurement period for the Second Cycle
started on January 1, 2019 and ended on December 31,
2021, resulting in a weighted payout ratio of 50%.The
evaluation of the degree of compliance was carried out
on the basis of the evolution of the share price, as well as
the audited results of the Company. Thus, at the end of
the Plan's Second Cycle, Executive Directors received
234,000 gross shares in the case of the Executive
Chairman, Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez, and
173,500 gross shares in the case of the Chief Operating
Officer (C.O.O.) Mr. \u00c1ngel Vil\u00e1 Boix.\u00a0
The target measurement period of the Third and last
Cycle started on January 1, 2020 and ended on December
31, 2022.
This Cycle had a maximum of 465,000 shares allocated
on January 1, 2020, to the executive Directors, with a unit
fair value of 3.2136 euros per share for FCF (\"Free Cash
Flow\") and 1.6444 euros for TSR (\"Total Shareholder
Return\"). At the end of the cycle date, Kepler has
submitted the Nominating, Compensation and Good
Governance Committee the calculation of Total
Shareholder Return for Telef\u00f3nica, S.A., which has
concluded below the median according to the
performance scale. Therefore, there is no right to perceive
the number of shares linked to the relative TSR objective.
With respect to Free Cash Flow objective, considering the
partial fulfillment of 2020, 2021 and 2022, the average
weighted payment coefficient is 50%. Performance
assessment has been carried out based on the results
audited both by independent and internal auditors of the
Company, analyzed firstly by the Audit and Control
Committee and subsequently submitted to the
Nominating, Compensation and Corporate Governance
Committee and approved by the Board of Directors.
Thus, at the end of the Plan's Third and last Cycle,
Executive Directors are entitled to receive 133,500 gross
shares in the case of the Executive Chairman, Mr. Jos\u00e9
Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez, and 99,000 gross shares in
the case of the Chief Operating Officer (C.O.O.) Mr \u00c1ngel
Vil\u00e1 Boix.
On the other hand, the denominated Performance
Share Plan (PSP), consisting of three cycles
(2021-2024; 2022- 2025; 2023-2026), approved by the
Ordinary General Meeting of Shareholders held on April
23, 2021, was also in force during the financial year 2022.
There were two Cycles of the Plan in force during the
2022 financial year. The First Cycle, which started on
January 1, 2021 and will end on December 31, 2023. If
targets are met, the shares will be delivered in 2024. And
the Second Cycle, which started on January 1, 2022 and
will end on December 31, 2024. If targets are met, the
shares will be delivered in 2025.
In both Cycles, the number of Telef\u00f3nica, S.A. shares that,
within the established maximum, could be delivered, as
the case may be, to the Participants, is conditioned and is
determined based on the compliance of the established
targets: 50% of the compliance of the Total Shareholder
Return objective (the TSR) of the Telef\u00f3nica, S.A. share,
40% of the generation of Free Cash Flow of the
Telef\u00f3nica Group (the FCF), and 10% of the Neutralization
of CO2 Emissions.
To determine compliance with the TSR target and
calculate the specific number of shares to be delivered for
this concept, the performance of the TSR on Telef\u00f3nica,
S.A.'s shares will be measured during the measurement
period of each three-year cycle, in relation to the TSRs
experienced by certain companies in the
telecommunications sector, weighted according to their
relevance to Telef\u00f3nica, S.A., which for purposes of the
Plan will constitute a comparison group (hereinafter the
\"Comparison Group\"). The companies included in the
Comparison Group are listed below: Am\u00e9rica M\u00f3vil, BT
Group, Deutsche Telekom, Orange, Telecom Italia,
Vodafone Group, Proximus, Koninklijke KPN, Millicom,
Swisscom, Telenor, TeliaSonera, TIM Brasil, and Liberty
Global.
With regard to complying with the TSR objective, the Plan
will foresee that the number of shares to be delivered
associated with meeting this objective will range from 15%
of the number of theoretical shares assigned, assuming
that the TSR performance of Telef\u00f3nica, S.A. shares is at
least the median of the comparison group, to 50% if the
performance is in the third quartile or above in the
Comparison Group, with the percentage calculated by
linear interpolation for cases falling between the median
and third quartile.
In order to determine the compliance with the FCF
objective and calculate the specific number of shares to
be delivered for this concept, the FCF level generated by
the Telef\u00f3nica Group during each year will be measured
and compared to the value set in the budgets approved
by the Board of Directors for each financial year.
With regard to the FCF, for each of the two cycles in force
during the fiscal year 2022, the Board of Directors, at the
proposal of the Appointments, Remunerations and
Corporate Governance Committee, determined a scale of
achievement that includes a minimum threshold of 90%
compliance, below which no incentive is paid and
compliance with which will entail the delivery of 20% of
the theoretical shares assigned, and a maximum level of
100% compliance, which will entail the delivery of 40% of
the theoretical shares assigned.
To determine compliance with the CO2 Emissions
Neutralization target and calculate the specific number of
shares to be delivered for this item, the level of CO2
emissions neutralization achieved at the end of the cycle
will be measured, with the incentive being paid upon
reaching a certain level of scope 1 + 2 emissions
reduction.
The level of direct and indirect CO2 emissions from our
daily activity shall be calculated according to the
following:
CO2 Emission = Activity x Emission Factor, where:
-\u00a0 Activity: Amount of energy, fuel, gas, etc. consumed by
the Company.
-\u00a0 Emission Factor: Amount of CO2 emitted to the
atmosphere by the consumption of each unit of activity.
The emission factor provided by official sources
(European Union, Ministries, CNMC, etc.) is used for
electricity and the GHG Protocol emission factors are
used for fuels.
At the beginning of both cycles, the Board of Directors, at
the proposal of the Appointments, Remunerations and
Corporate Governance Committee, determined a scale of
achievement that includes a minimum threshold of 90%
compliance, below which no incentive is paid and
compliance with which will entail the delivery of 5% of the
theoretical shares assigned, and a maximum level of 100%
compliance, which will entail the delivery of 10% of the
theoretical shares assigned. In addition, a minimum level
of emission reductions of Scope 1 + 2 will need to be
achieved for the incentive to be paid.
In any case, 100% of the shares delivered under the Plan
to the Executive Directors and other Participants as
determined by the Board of Directors shall be subject to a
two-year holding period.
In addition, in accordance with the provisions of the
Remuneration Policy for Directors of Telef\u00f3nica, SA, the
Executive Directors must maintain (directly or indirectly) a
number of shares (including those delivered as
remuneration) equivalent to two years of their Gross Fixed
Remuneration, as long as they continue to belong to the
Board of Directors and perform executive functions. Until
such time as this requirement is met, the holding period
for any shares delivered under the Plan to Executive
Directors will be three years.
The maximum number of allocated shares to be delivered
in the event of maximum compliance with the TSR (Total
Shareholder Return), FCF (Free Cash Flow) and CO2
Emission Neutralization targets set for the First and
Second Cycle of the Plan is shown below.
PSP - First Cycle / 2021-2024
| |
| Maximum number of shares (*) |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
(*) Maximum possible number of shares to be received in case of maximum
completion of TSR, FCF and Neutralization of CO2 Emissions\u00a0 target.\u00a0
In any case, it is noted that no shares have been delivered
to Executive Directors under the first cycle of the PSP and
that the above table only reflects the number of
potentially deliverable shares, without in any way implying
that all or part of the shares will actually be delivered.
PSP - Second Cycle / 2022-2025
| |
| Maximum number of shares (*) |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
Meeting held on June 8, 2018.
The target measurement period of the First Cycle started
on January\u00a01, 2018 and ended on December 31, 2020,
resulting in a weighted payment coefficient of
50%.Consequently, the number of shares corresponding
to the First Cycle (2018-2021) of the Performance Share
Plan that were delivered in the 2021 financial year to the
Company's Senior Executives amounted to 220,085 gross
shares.
The target measurement period of the Second Cycle
started on January\u00a01, 2019 and ended on December\u00a031,
2021, resulting in a weighted payment coefficient of 50%.
Consequently, the number of shares corresponding to the
Second Cycle (2019-2022) of the Performance Share Plan
that were delivered in the 2022 financial year to the
Company's Senior Executives amounted to 256,246 gross
shares.
The target measurement period of the Third and last
Cycle started on January 1, 2020 and ended on December
31, 2022. This cycle had a maximum of 316,762 shares
allocated on January 1, 2020 to the group of directors
forming part of the Company's Senior Management, with
a unit fair value of 3.2136 euros per share for FCF and
1.6444 euros for TSR. At the end of the cycle date, Kepler
has submitted the Nominating, Compensation and Good
Governance Committee the calculation of TSR for
Telef\u00f3nica, S.A., which has concluded below the median
according to the performance scale. Therefore, there is
no right to perceive the number of shares linked to the
relative TSR objective.
With respect to Free Cash Flow objective, considering the
partial fulfillment of 2020, 2021 and 2022, the average
weighted payment coefficient is 50%. Performance
assessment has been carried out based on the results
audited both by independent and internal auditors of the
Company, analyzed firstly by the Audit and Control
Committee and subsequently submitted to the
Nominating, Compensation and Corporate Governance
Committee and approved by the Board of Directors.
Thus, at the end of the Third Cycle (2020-2023) of the
Performance Share Plan, the Company's Senior
Executives are entitled to receive 158,381 gross shares.
On the other hand, the Performance Share Plan (PSP),
consisting of three cycles (2021-2024; 2022-2025;
2023- 2026), approved by the Ordinary General Meeting
of Shareholders held on April 23, 2021, was also in force
during the financial year 2022.
The target measurement period of the First Cycle started
on January 1, 2021 and will end on December 31, 2023. The
maximum number of shares allocated to be delivered in
2023 in the event of maximum compliance with the TSR
(Total Shareholder Return), FCF (Free Cash Flow) and
CO2 Emission Neutralization targets set for the First Cycle
(2021-2024) for all the Company's Senior Executives was
1,333,081.
The target measurement period of the Second Cycle
started on January 1, 2022 and will end on December 31,
2024. The maximum number of shares allocated to be
delivered in 2025 in the event of maximum compliance
with the TSR (Total Shareholder Return), FCF (Free Cash
Flow) and CO2 Emission Neutralization targets set for the
Second Cycle (2022-2025) for all the Company's Senior
Executives was 1,241,015.
On the other hand, Telef\u00f3nica, S.A. General Meeting of
Shareholders held on April 8, 2022, approved a new
Global Telef\u00f3nica, S.A. Incentive Share Purchase Plan for
Telef\u00f3nica Group Employees, in which the Senior
Management participate as a token of their commitment
to the Company and in order to encourage other
employees to participate in the Plan. The Plan will end in
March 2024, and the maximum amount that each
employee can allocate to it is 1,800 euros.
(1) For these purposes, Senior Management is understood to be those
persons who perform, de jure or de facto, senior management functions
reporting directly to the Board of Directors or Executive Committees or
Managing Directors of the Company, including, in all cases, the person
responsible for Internal Audit.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF81MDkyL2ZyYWc6ZmYwODZmOWRmMmI2NDZhMjkzMmNjZTI0MTc2YzliODkvdGV4dHJlZ2lvbjpmZjA4NmY5ZGYyYjY0NmEyOTMyY2NlMjQxNzZjOWI4OV8xNDE4MzY5OTk5ODQ0MjI_b4eff102-113d-4c13-8bf8-935d4d088658": {
"value": "
Telef\u00f3nica Brazil
Telef\u00f4nica Brasil, S.A. and its subsidiaries are party to
administrative and judicial proceedings and labor, tax and
civil claims filed in different courts. The Telef\u00f3nica Group
management based on the opinion of its legal counsel,
recognized provisions for proceedings for which an
unfavorable outcome is considered likely.
The balance of these provisions at December 31, 2022
and December 31, 2021 is shown in the following table:
| | |
| | |
| | |
| | |
| | |
| | |
Amounts to be refunded to customers | | |
Provision for fines for canceling lease agreements | | |
| | |
Additionally, Telef\u00f3nica Brazil recognized contingent
liabilities according to IFRS 3 generated on acquisition of
the controlling interest of Vivo Participa\u00e7oes in 2011, GVT
in 2015 and the mobile assets of Oi in 2022 (see Note 5).
These contingent liabilities amounted to 176 million euros
at December\u00a031, 2022 (77 million euros at December\u00a031,
2021).
In 2022, Complementary Law No. 194 was enacted in
Brasil, leading to a reduction in the tax rate ICMS on
communications services and the respective refund of
these amounts to customers. The provision in Telef\u00f3nica
Brasil at December 31, 2022 amounted to 108 million
euros.
\"Provision for fines for canceling lease agreements\"
relates to the acquisition of Garliava, resulting from the
sale or shutdown of sites (see Note 5).
The detail of provisions for tax proceedings by nature of
risk is as follows:
The breakdown of changes in provisions for tax
proceedings in 2022 and 2021 is as follows:
| |
| |
| |
Movements with a counterparty in the income statement | |
Write-offs due to payment | |
| |
| |
| |
Movements with a counterparty in the income statement | |
Write-offs due to payment | |
| |
| |
| |
Group management and legal counsel understand that
losses are possible from tax contingencies in federal,
state, municipal and other taxes for an aggregated
amount of 33,473 million Brazilian reals (6,009 million
euros) as of December\u00a031, 2022 (30,249 million Brazilian
reals, 4,786 million euros as of December\u00a031, 2021). The
possible contingencies from the main income tax
proceedings (federal tax) are described in Note 25.
Noteworthy state tax-related contingencies include the
\"ICMS\" tax (see Note 25). Moreover, Telef\u00f3nica Brazil
presently has different open proceedings regarding the
Fundo de Universaliza\u00e7\u00e3o de Servi\u00e7os de
Telecomunica\u00e7\u00f5es (FUST, refer to Note 29).
With regard to regulatory proceedings, Telef\u00f3nica Brazil is
party to administrative proceedings against Agencia
Nacional de Telecomunica\u00e7\u00f5es (ANATEL) based on an
alleged failure to meet sector regulations and judicial
proceedings to contest sanctions applied by ANATEL at
the administrative level. Consolidated provisions totaled
1,869 million Brazilian reals (336 million euros) at
December 31, 2022 (1,986 million Brazilian reals, 314 million
euros at December\u00a031, 2021). In addition, Group
management and legal counsel understand that losses
are possible from regulatory contingencies amounting to
5,845 million Brazilian reals (1,049 million euros) at
December\u00a031, 2022 (4,545 million Brazilian reals, 719
million euros at December\u00a031, 2021), including the
sanction for breaches of the Fixed Telephony Regulation
(see Note 29.a).
In addition, Group management and legal counsel
understand that losses are possible from civil
proceedings, amounting to 391 million euros at
December\u00a031, 2022 (335 million euros at December\u00a031,
2021).
In some situations, in connection with a legal requirement
or presentation of guarantees, judicial deposits are made
to secure the continuance of the claims under discussion.
The judicial deposits by nature of risk at December\u00a031,
2022 and December\u00a031, 2021 are as follows:
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Non-current (see Note 12) | | |
decision rejecting the appeal for cassation filed by the
State Attorney's Office against the judgment of the
Audiencia Nacional (National High Court) of October\u00a029,
2021. This confirmed the criteria used by Telef\u00f3nica, S.A.
for the use of tax losses carryforward and deductions in
relation to the liquidation agreements derived from the
Corporate Income Tax inspection of those years.
On October\u00a024, 2022, an Agreement for the Execution of
the Judgment of the Audiencia Nacional (National High
Court) was issued, which orders the refund to Telef\u00f3nica
of an amount of 790 million euros for taxes paid in those
years, as well as an amount of 526 million euros as
delayed interest. Said amounts were collected on
October\u00a028, 2022.
As a consequence of the final outcome of the litigation
above mentioned, no additional liabilities were recorded
as of December 31, 2022
Tax litigation in Telef\u00f3nica Brazil
State taxes
The Telef\u00f3nica Group is involved in a range of tax
litigation in Brazil over direct and indirect taxes (including
those relating to GVT). This includes a number of appeals
relating to ICMS tax (a tax similar to VAT, levied on
telecommunications services). There is a dispute with the
Brazilian tax authorities over which services should be
subject to this tax.
To date the most significant issues have focused on the
requirement to collect ICMS on penalties charged to
customers for non-compliance, and complementary or
additional services to the basic telecommunications
services such as value-added services, modem rental,
and the application of this tax on the basic fee (assinatura
b\u00e1sica). In the case of the latter (assinatura b\u00e1sica), the
Supreme Court has established that the tax is only
payable in respect of assessments for periods after
October 2016.
All related procedures are being contested in all instances
(administrative and court proceedings). The aggregate
amount of the relevant proceedings, updated to take into
account interest, fines and other items, is approximately
21,712 million Brazilian reais as of December 31, 2022
(approximately 3,898 million euros at the exchange rate
on that date, see Note 24 to the Consolidated Financial
Statements), 19,164 million Brazilian reais as of December
31, 2021 (approximately 3,032 million euros at the
exchange rate on that date). Telef\u00f3nica Brazil has
obtained independent expert reports supporting its
position, i.e. that the aforesaid services are not subject to
ICMS.
Federal taxes
In addition, there are possible contingencies in relation to
the income tax federal taxes for the total amount of
29,778 million Brazilian reais as of December 31, 2022
(approximately 5,346 million euros at the exchange rate
on that date), 18,078 million Brazilian reais as of\u00a0
December 31, 2021 (approximately 2,860 million euros at
the exchange rate on that date), mainly related to the tax
amortization in Brazil in the years 2011 to 2020 of the
goodwill originated in the acquisitions of Vivo and GVT
and their subsequent merger with Telef\u00f3nica Brasil.
These proceedings are at the administrative and judicial
stage and no provisions have been made since the
potential risk associated with them has been classified as
\"not probable\" and Telef\u00f3nica Brazil has received
independent expert reports that support this view.
There are other probable contingencies in relation to the
income tax federal taxes for the total amount of 104
million Brazilian reais as of December 31, 2022
(approximately 19 million euros at the exchange rate on
that date), 98 million Brazilian reais as of\u00a0 December 31,
2021 (approximately 16 million euros at the exchange rate
on that date). The Company has recognized a provision
for this amount.
Tax litigation in Telef\u00f3nica del Per\u00fa
In relation to tax claims in Peru, it should be noted that
Telef\u00f3nica del Per\u00fa is party to numerous legal
proceedings (contentious administrative proceedings
(ACAs) and appeals (amparos)) for tax matters relating to
corporate income tax and VAT, mainly for the years 1998
to 2005, the most relevant being those corresponding to
the years 1998 to 2001 (relating to corporate income tax,
payments in advance, credit balances, associated VAT,
interest and applicable penalties).
The evolution of the appeals of the different cases from
the period 1998 to 2001 has been uneven and complex
over the last few years, but we can highlight the second
instance Judgment of 2015, which was partially upheld;
the Supreme Court Judgments of 2019; the January 2020
Supreme Court Ruling, annulling the previous rulings of
2000 and 2001 in relation to the provision for doubtful
debts; the Constitutional Court Rulings in 2021 in relation
to the settlement of late payment interest, partially
upheld; and the Supreme Court Rulings of 2021 and 2022
on the credit balance from 1999 used in 2000.
On January 17 and 18, 2023, Telef\u00f3nica del Per\u00fa received
notifications of the judgments handed down by the
Supreme Court that resolved, in the last instance and
unfavorably to the Company (references to the
\u201cCompany\u201d in this section refer to Telef\u00f3nica del Per\u00fa),
the contentious administrative proceedings relating to
income tax for the years 1998, 2000 and 2001.
The rulings issued by the Fifth Chamber of Constitutional
and Social Transitory of the Supreme Court do not
contain any payment mandate to the Company, as the
rulings issued in the administrative contentious
proceedings were resolved on concepts derived from a
pronouncement of the Tax Court. At the end of these
proceedings - and any others that may be applicable - the
Tax Administration, through an administrative act, will
determine the amount of the corresponding payment
obligations.
Because there were certain adjustments on which the
rulings had been definitive since 2015 (positively for the
Company in relation to the deductibility of the rental of
public spaces and negatively in the case of the
deductibility of certain financial charges), the Company
previously recorded a provision with an impact on income
tax, the amount of which has been updated periodically
and constantly depending on the evolution of the various
proceedings and the applicable interest rates.
In addition to the above, in June 2022 a new ruling was
received from the Tax Court in relation to the corporate
income tax of Telef\u00f3nica M\u00f3viles del Per\u00fa for 2000. This
ruling was favorable to the Company with respect to the
recognition of the tax value of certain network assets and
unfavorable with respect to the deductibility of the
exchange rate tax.
In relation to all these proceedings, the Group considers
that the initial amount claimed by the Peruvian
government has been exponentially increased by the
accrual of interest generated by the delay, not
attributable to the Company, of almost 20 years in
processing the lawsuits, meaning that almost 80% of the
total amount claimed is due to interest and fines. And all
this, despite the fact that in 2021 the Constitutional Court
itself ruled in favor of Telef\u00f3nica del Per\u00fa, recognizing that
it had been charged interest for delays not attributable to
the company.
For this and other reasons, the Group has been in
international arbitration before ICSID since March 2021
for various conducts of the Peruvian State in violation of
the Agreement for the Promotion and Reciprocal
Protection of Investments between Spain and Peru (see
Note 29.a).
The Company has recorded the necessary provisions for
the contingencies considered probable, leaving as
possible contingencies an amount of 560 million Peruvian
soles at December 31, 2022 (approximately 138 million
euros).
As of December 31, 2022, the total amount of tax
contingencies related to Telef\u00f3nica del Per\u00fa that the
Group has recognized in its consolidated financial
statements, including as the most relevant amount that
related to the aforementioned judgements and rulings
received since 2015, plus accrued interest and other
above-mentioned impacts, amounts to 3,849 million
Peruvian soles which is equivalent to 945 million euros at
the exchange rate of December 31, 2022.
a) Litigation and arbitration
Telef\u00f3nica and its Group companies are party to several
legal proceedings which are currently in progress in the
courts of law and the arbitration bodies of the various
countries in which we are present.
Based on the advice of our legal counsel it is reasonable
to assume that these legal proceedings will not materially
affect the financial condition or solvency of the Telef\u00f3nica
Group.
The contingencies arising from the litigation and
commitments described below were evaluated (see Note
3.n) when the consolidated financial statements for the
year ended December 31, 2022 were prepared. The
provisions recorded in respect of the commitments taken
as a whole are not material.
The following unresolved legal proceedings or those
underway in 2022 are highlighted (see Note 25 for details
of tax-related cases):
Appeal against the decision by Agencia Nacional
de Telecomunica\u00e7\u00f5es (\u201cANATEL\u201d) regarding the
inclusion of interconnection and network usage
revenues in the Fundo de Universaliza\u00e7\u00e3o de
Servi\u00e7os de Telecomunica\u00e7\u00f5es (\u201cFUST\u201d)
Vivo Group operators (currently \"Telef\u00f3nica Brasil\"),
together with other cellular operators, appealed
ANATEL\u2019s decision of December 16, 2005, to include
interconnection and network usage revenues and
expenses in the calculation of the amounts payable into
the FUST (Fundo de Universaliza\u00e7\u00e3o de Servi\u00e7os de
Telecomunica\u00e7\u00f5es) \u2013a fund which pays for the
obligations to provide Universal Service\u2013 with retroactive
application from 2000. On March 13, 2006, Brasilia
Federal Regional Court no. 1 granted a precautionary
measure which stopped the application of ANATEL\u2019s
decision. On March 6, 2007, a ruling in favor of the
wireless operators was issued, stating that it was not
appropriate to include the revenues received by transfer
from other operators in the taxable income for the FUST\u2019s
calculation and rejecting the retroactive application of
ANATEL\u2019s decision. On January 26, 2016, ANATEL filed an
appeal to overturn this decision with Brasilia Federal
Regional Court no. 1, which was also dismissed. On May
10, 2017 ANATEL appealed to the higher courts on the
merits of the case.
At the same time, Telef\u00f3nica Brasil and Telef\u00f3nica
Empresas, S.A., together with other wireline operators
through ABRAFIX (Associa\u00e7\u00e3o Brasileira de
Concession\u00e1rias de Servi\u00e7o Telefonico Fixo Comutado)
appealed ANATEL\u2019s decision of December 16, 2005, also
obtaining the precautionary measures requested. On
June 21, 2007, Brasilia Federal Regional Court no. 1 ruled
that it was not appropriate to include the interconnection
and network usage revenues in the FUST\u2019s taxable
income and rejected the retroactive application of
ANATEL\u2019s decision. ANATEL filed an appeal to overturn
this ruling on April 29, 2008, before Brasilia Federal
Regional Court no. 1, which was dismissed on May 10,
2016. ANATEL filed an appeal against this dismissal.
The fixed operators filed an appeal to clarify that revenues
obtained through interconnection and dedicated line
operation should not be included in the calculation of the
amounts payable to the FUST. In addition, the court was
also requested to rule on two grounds which had not
been analyzed in the initial decision: (i) that the FUST has
become obsolete, among other reasons, by the advance
of mobile telephony; and (ii) that amounts collected are
not applied to the purpose for which the FUST was
created, since only a very low percentage of the revenues
collected by the FUST is used to finance fixed telephony.
Although the petition for clarification was dismissed on
August 23, 2016, the court noted that the FUST should
not be funded with revenues from interconnection and
dedicated line operation. ABRAFIX appealed to the higher
courts on these two elements that had not been analyzed.
ANATEL appealed all the holdings of the ruling to the
higher courts.
The amount of the claim is quantified at 1% of the
interconnection revenues.
Appeal against the Decision of the European
Commission dated January 23, 2013, to sanction
Telef\u00f3nica for the infringement of Article 101 of
the Treaty on the functioning of the European
Union
On January 19, 2011, the European Commission initiated
formal proceedings to investigate whether Telef\u00f3nica,
S.A. (Telef\u00f3nica) and Portugal Telecom SGPS, S.A.
(Portugal Telecom) had infringed European Union
antitrust laws with respect to a clause contained in the
sale and purchase agreement of Portugal Telecom\u2019s
ownership interest in Brasilcel, N.V., a joint venture in
which both companies were venturers and which was the
owner of the Brazilian company Vivo.
On January 23, 2013, the European Commission passed a
ruling on the formal proceedings. The ruling imposed a
fine on Telef\u00f3nica in the amount of 67 million euros, as the
European Commission ruled that Telef\u00f3nica and Portugal
Telecom committed an infraction of Article 101 of the
Treaty on the Functioning of the European Union for
having entered into the agreement set forth in Clause
Nine of the sale and purchase agreement of Portugal
Telecom\u2019s ownership interest of Brasilcel, N.V.
On April 9, 2013, Telef\u00f3nica filed an appeal for annulment
of this ruling with the European Union General Court. On
August 6, 2013, the European Union General Court
notified Telef\u00f3nica of the response issued by the
European Commission, in which the European
Commission reaffirmed the main arguments of its ruling
and, specifically, that Clause Nine includes a competition
restriction. On September 30, 2013, Telef\u00f3nica filed its
reply. On December 18, 2013, the European Commission
filed its appeal.
A hearing was held on May 19, 2015, at the European
Union General Court.
On June 28, 2016, the European Union General Court
ruled. Although it declared the existence of an
infringement of competition law, it annulled Article 2 of
the contested Decision and required the European
Commission to reassess the amount of the fine imposed.
The General Court considered that the European
Commission has not neutralized the allegations and
evidences provided by Telef\u00f3nica on services in which
there was not potential competition or were outside the
scope of Clause Nine.
Telef\u00f3nica understands that there are grounds for
believing that the ruling does not suit at law;
consequently, it filed an appeal to the Court of Justice of
the European Union, on September 11, 2016.
On November 23, 2016, the European Commission filed its
response against the Telef\u00f3nica's appeal. On January 30,
2017, Telef\u00f3nica filed its response. On March 9, 2017, the
European Commission filed its rejoinder.
On December 13, 2017, the General Court dismissed the
appeal filed by Telef\u00f3nica. The European Commission,
which was urged to recalculate the amount of the fine in
the judgment of the General Court of June 2016, issued a
resolution on January 25, 2022, imposing a fine of
67million euros on Telef\u00f3nica. In April 2022, Telef\u00f3nica
paid the fine of 67 million euros imposed, bringing the
procedure to an end.
Decision by the High Court regarding the
acquisition by Telef\u00f3nica of shares in \u010cesk\u00fd
Telecom by way of a tender offer
Venten Management Limited (\"Venten\") and Lexburg
Enterprises Limited (\"Lexburg\") were non-controlling
shareholders of \u010cesk\u00fd Telecom. In September 2005, both
companies sold their shares to Telef\u00f3nica in a mandatory
tender offer. Subsequently, Venten and Lexburg, in 2006
and 2009, respectively, filed actions against Telef\u00f3nica
claiming a higher price than the price for which they sold
their shares in the mandatory tender offer.
On August 5, 2016, the hearing before the High Court in
Prague took place in order to decide the appeal against
the second decision of the Municipal Court, which had
been favorable to Telef\u00f3nica's position (as was also the
case with the first decision of the Municipal Court). At the
end of the hearing, the High Court announced the
Second Appellate Decision by which it reversed the
second decision of the Municipal Court and ordered
Telef\u00f3nica to pay 644 million Czech korunas
(approximately 23 million euros) to Venten and 227 million
Czech korunas (approximately 8 million euros) to Lexburg,
in each case plus interest.\u00a0
On December 28, 2016, the decision was notified to
Telef\u00f3nica. Telef\u00f3nica filed an extraordinary appeal,
requesting the suspension of the effects of the decision.
In March 2017, Telef\u00f3nica was notified of the decision of
the Supreme Court, which ordered the suspension of the
effects of the unfavorable decision to Telef\u00f3nica issued
by the High Court.
Venten and Lexburg filed with the Supreme Court a
motion to partially abolish the suspension of enforceability
of the Decision of the High Court in Prague. On January
17, 2018, Telef\u00f3nica filed its response seeking dismissal of
such motion for lack of legal basis.
On February 14, 2019,\u00a0notification was given to Telef\u00f3nica
of the resolution of the Supreme Court which, based on
the extraordinary appeal filed by Telef\u00f3nica, abolished the
decision of the High Court in Prague dated August 5, 2016
and remanded the case back to the High Court.
In December 2021, the High Court of Prague confirmed its
appointment of an expert in order to produce a new
expert report to assess the reliability of market-based
price criteria used in the mandatory tender offer and
further technical issues discussed in this litigation,
including a new discounted cashflow valuation of the
shares of \u010cesk\u00fd Telecom in 2005.
Appeal against the resolution of ANATEL to
sanction Telef\u00f3nica Brasil for breaches of the
Fixed Telephony Regulation
In May 2018, Telef\u00f3nica filed a judicial action for
annulment against a resolution issued by ANATEL (the
National Telecommunications Agency of Brazil) in March
2018 concluding the administrative process for
determination of non-compliance with obligations
(Processo Administrativo para Apura\u00e7\u00e3o de
Descumprimento de Obriga\u00e7\u00f5es or \"PADO\") investigating
alleged infractions of the Fixed Telephony Regulation by
Telef\u00f3nica Brasil.\u00a0 \u00a0
This PADO investigation had been suspended during the
negotiations of the conduct adjustment term (Termo de
Ajustamento de Conduta or \"TAC\") between Telef\u00f3nica
and ANATEL relating to this and certain other PADO
investigations. Since the negotiations concluded without
agreement, the suspended PADO sanctioning procedures
were reactivated and finalized.
In its resolution of March 2018, ANATEL considered that
Telef\u00f3nica Brasil committed several infractions,
specifically those related to the inadequate notice of
suspension of services to defaulting users, the terms of
reactivation of services after payment of outstanding
amounts by defaulting users and the disagreement with
the terms of refunds claimed by users of the services.
The fine imposed by ANATEL and appealed by Telef\u00f3nica
Brasil is approximately 211 million Brazilian reals
(approximately 38 million euros), which amounted to
approximately 575 million Brazilian reals after currency
value updates and accrued interest as of December 31,
2022 (approximately 103 million euros).
Telef\u00f3nica Brasil has appealed the fine imposed by
ANATEL based, fundamentally, on the following
arguments: (i) ANATEL should have considered a smaller
universe of users to determine the fine and (ii) the
calculation of the fine is disproportionate and based on
insufficient grounds.
Telef\u00f3nica Brasil has not yet paid the fine, although
Telef\u00f3nica Brasil has guaranteed its payment through a
guarantee insurance submitted to the court.
As of the date of these financial statements, there has
been no conciliation and the proceeding is following its
normal course.
ICSID Arbitration Telef\u00f3nica, S.A. vs. Republic of
Colombia
In the local arbitration brought by Colombia against
Colombia Telecomunicaciones (\u201cColTel\u201d), on July 25, 2017,
the local arbitration tribunal ordered ColTel to pay 470
million euros as economic compensation for the reversion
of assets related to voice services in relation to the
concession granted between 1994 and 2013.
On August 29, 2017, ColTel\u2019s share capital was increased
in order to make the payment ordered by the local arbitral
award; Telef\u00f3nica, S.A. contributed and disbursed an
amount equivalent to 67.5% of the award\u2019s amount (317
million euros) and the Colombian Government
contributed an amount equivalent to the remaining 32.5%
(153 million euros).
On February 1, 2018, Telef\u00f3nica, S.A. filed a Request for
Arbitration against Colombia at the International Centre
for Settlement of Investment Disputes (\"ICSID\"), which
was formally registered on February 20, 2018.
The ICSID Court was constituted on February 26, 2019,
with Jos\u00e9 Emilio Nunes Pinto as President, Horacio A.
Grigera Na\u00f3n appointed by Telef\u00f3nica, S.A., and Yves
Derains appointed by Colombia.
Colombia filed Preliminary Objections on Jurisdiction on
August 5, 2019. Telef\u00f3nica, S.A. responded to Colombia\u2019s
objections in its Claimant\u2019s Memorial on September 23,
2019, in which it also requested that Colombia pay
compensation for damages caused to Telef\u00f3nica, S.A.
On October 23, 2019, Colombia submitted its
Complementary Objections on Jurisdiction as well as a
request for Bifurcation, to which Telef\u00f3nica, S.A.
responded on November 29, 2019.
On January 24, 2020, the Court dismissed the request for
Bifurcation presented by Colombia, ordering the
continuation of the proceeding. A decision on the merits
of Telef\u00f3nica, S.A.\u2019s claim is pending.
On July 3, 2020, Colombia filed its reply to the claim filed
by Telef\u00f3nica before the ICSID.
On November 2, 2020, Telef\u00f3nica presented its response
to Colombia's reply.
After the hearing held in April 2021, on July 27, 2021 the
hearing of closing arguments was held, and the parties
are awaiting the issuance of the arbitration award.
Telef\u00f3nica's lawsuit against Millicom
International Cellular for default in the sale of
Telef\u00f3nica de Costa Rica
Telef\u00f3nica, S.A. (Telef\u00f3nica) and Millicom International
Cellular, S.A. (Millicom) reached an agreement on
February 20, 2019 for the purchase and sale of the entire
capital stock of Telef\u00f3nica de Costa Rica TC, S.A.
In March 2020, Telef\u00f3nica informed Millicom that, once
the pertinent regulatory authorizations had been obtained
and all the other conditions established in the
aforementioned agreement for the execution of the sale
had been completed, the execution of the contract and
the closing of the transaction should be in April 2020.
Millicom expressed its refusal to proceed with the closing,
arguing that the competent Costa Rican administrative
authorities had not issued the appropriate authorization.
On May 25, 2020, Telef\u00f3nica filed a lawsuit against
Millicom before the New York Supreme Court,
considering that Millicom had breached the terms and
conditions established in the sale contract, demanding
compliance with the provisions of the aforementioned
agreement, and compensation for all damages that this
unjustified breach could cause to Telef\u00f3nica.
On June 29, 2020, Millicom filed a Motion to Dismiss, to
which Telef\u00f3nica replied on July 8, 2020.
On August 3, 2020, Telef\u00f3nica submitted an amendment
to the lawsuit, removing the requirement to comply with
the provisions of the sale and purchase contract and
requesting only compensation for all damages that the
unjustified breach of said agreement could cause to
Telef\u00f3nica.
On January 5, 2021, the Motion to Dismiss filed by
Millicom in June 2020 was dismissed by the New York
Supreme Court.
ICSID Arbitration Telef\u00f3nica, S.A. vs. Republic of
Peru
On February 5, 2021, Telef\u00f3nica filed a request for
arbitration against the Republic of Peru at the ICSID,
which was formally registered on March 12, 2021.
Telef\u00f3nica bases its claims on the Agreement for the
Promotion and Reciprocal Protection of Investments
between the Kingdom of Spain and the Republic of Peru
(\"APRPI\") signed on November 17, 1994. Telef\u00f3nica argues
that the Peruvian tax administration (called
Superintendencia Nacional de Aduanas y de
Administraci\u00f3n Tributaria, known as \"SUNAT\") and other
state bodies have failed to comply with the obligations
established in the APRPI, including by adopting arbitrary
and discriminatory actions.
It is requested that the defendant be ordered to fully
compensate Telef\u00f3nica for all damages suffered.
Once the Tribunal was constituted, on February 9, 2023,
Telef\u00f3nica filed a request for urgent injunctive relief
together with a request for injunctive relief, requesting
the suspension of the administrative litigation (acci\u00f3n
contencioso-administrativa or ACA) related to the income
tax for the years 1998, 2000 and 2001, as well as the
extension of the deadline for submission by Telef\u00f3nica of
the memorial or claim. Following response of Peru, on
February 16, 2023, the Tribunal ruled to dismiss
Telef\u00f3nica's request for urgent injunctive relief, to
establish the procedural calendar to process the request
for injunctive relief and to grant Telefonica two additional
weeks to file the memorial or claim.
Appeal against the ANATEL resolution on the
calculation of amounts for the renewal of radio
frequencies in Brazil associated with the
provision of the personal mobile services (filed
in 2013)
In 2013, Telef\u00f3nica Brasil filed a lawsuit against the
resolution of ANATEL which sets forth the calculation of
the amount to be paid by Telef\u00f3nica Brasil for the renewal
of radio frequencies associated with the provision of
personal mobile services (which has been granted to
Telef\u00f3nica Brasil for a period of fifteen years).
According to ANATEL the renewals, which must be
carried out every two years, should be accompanied by a
payment equivalent to 2% of all income derived from the
provision of personal mobile services, while Telef\u00f3nica
Brasil believes that the calculation must be made with
respect to the income derived from voice services only,
which would exclude data services and interconnection
revenues.
In February 2020, Telef\u00f3nica Brasil filed an appeal before
the Regional Federal Court of Brasilia after obtaining an
unfavorable ruling in the Court of First Instance, which
considered that the criteria defended by ANATEL was the
one to be followed.
As of December 31, 2022, the amount under litigation was
774\u00a0million Brazilian reais (139 million euros based on the
exchange rate of such date), resulting from the method of
calculation of ANATEL that has been appealed.
Appeal against the ANATEL resolution on the
calculation of amounts for the renewal of radio
frequencies in Brazil associated with the
provision of the personal mobile services (filed
in 2015)
In 2015, Telef\u00f3nica Brasil filed a lawsuit against the
resolution of ANATEL which sets forth the calculation of
the amount to be paid by Telef\u00f3nica Brasil for the renewal
of radio frequencies associated with the provision of
personal mobile services (which has been granted to
Telef\u00f3nica Brasil for a period of fifteen years).
According to ANATEL the renewals, which must be
carried out every two years, should be accompanied by a
payment equivalent to 2% of all income derived from the
provision of personal mobile services, while Telef\u00f3nica
Brasil believes that the calculation must be made with
respect to the income derived from voice services only,
which would exclude data services and interconnection
revenues.
In August 2016, Telef\u00f3nica Brasil filed an appeal before
the Regional Federal Court of Brasilia after obtaining an
unfavorable ruling in the Court of First Instance, which
considered that the criteria defended by ANATEL was the
one to be followed. Pending judgment on appeal.
As of December 31, 2022, the amount under litigation was
400\u00a0million Brazilian reais (72\u00a0million euros based on the
exchange rate of such date), resulting from the method of
calculation of ANATEL that has been appealed.
UK High Court claim by Phones 4 U Limited
against various mobile network operators and
other companies, among others, Telef\u00f3nica, S.A.,
Telefonica O2 Holdings Limited and Telefonica
UK Limited
In late 2018, Phones 4U Limited (in administration) (\u201cP4U\u201d)
commenced a claim in the English High Court in London
against various mobile network operators: Everything
Everywhere, Deutsche Telekom, Orange, Vodafone,
Telef\u00f3nica, S.A., Telefonica O2 Holdings Limited and
Telefonica UK Limited (together the \u201cDefendants\u201d).\u00a0
P4U carried on a business of selling mobile phones and
connections to the public, such connections being
supplied by mobile network operators including the
Defendants.\u00a0 In 2013 and 2014, the Defendants declined
to extend and / or terminated their contracts to supply
connections to P4U.
P4U went into administration in September 2014.
P4U alleges that the Defendants ceased to supply
connections because they had colluded between
themselves in contravention of the United Kingdom and
the European Union competition laws and asserts that it
has a basis to claim damages for breach of competition
law by all the Defendants. The Defendants deny all P4U\u2019s
allegations.
The claim commenced on December 18, 2018 by P4U. The
Defendants filed their initial Defences in the course of
April and May 2019, with P4U filing replies on October 18,
2019. The first case management conference took place
on March 2, 2020.
The trial was held between May and July 2022. The
parties are awaiting the issuance of the sentence.
b) Other proceedings
The Group is currently cooperating with governmental
authorities (and, where appropriate, conducting the
relevant internal investigations) regarding requests for
information potentially related, directly or indirectly, to
possible violations of applicable anti-corruption laws.
Telef\u00f3nica believes that, considering the size of the
Group, any potential penalty as a result of matters relating
to those specific information requests would not
materially affect the Group's financial condition.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xODcvZnJhZzo5MWVhNWUzMDZlMTE0ZjcyODA1YzIzNDM1NGUzNmZlZC90ZXh0cmVnaW9uOjkxZWE1ZTMwNmUxMTRmNzI4MDVjMjM0MzU0ZTM2ZmVkXzI1ODM4NTIzMjUyNzk1_f4cc6245-3c08-42b6-84ed-4fcbec7223f5": {
"value": "
Note 25. Tax matters
Pursuant to a Ministerial Order dated December 27, 1989,
Telef\u00f3nica, S.A. files consolidated tax returns in Spain for
certain Group companies. The consolidated tax group
comprised 47 companies at December\u00a031, 2022 (45
companies at December\u00a031, 2021).
This tax consolidation regime applies indefinitely
providing the companies continue to meet the
requirements set down in prevailing legislation, and that
application of the regime is not expressly waived.
Group companies which are resident in Spain and which
are not part of this consolidation regime and non-resident
companies file individual or aggregated tax returns under
the tax law applicable in each country.
Reconciliation of book profit before taxes
to taxable income
The reconciliation between book profit before tax and
the income tax expense from continuing operations for
2022, 2021 and 2020 is as follows:
| | | |
| | | |
Accounting profit before tax | | | |
Tax expense at prevailing statutory rate | | | |
| | | |
Changes in deferred tax charge due to changes in tax rates | | | |
(Capitalization)/reversal of tax deduction and tax relief | | | |
(Capitalization)/reversal of loss carryforwards | | | |
Increase/(decrease) in tax expense arising from temporary differences | | | |
| | | |
| | | |
Breakdown of current/deferred tax expense | | | |
| | | |
| | | |
Total Corporate income tax | | | |
2022
\"Permanent differences\" in 2022, mainly includes 651
million of income corresponding to the last corporate
simplification implemented in Brazil due to the approval in
2021 of a new Telecommunications Law (Law 14.195 of 26
August 2021), the consequent repeal of Decree
2.617/1998, which abolishes the obligation to control a
telecommunications company through a Brazilian
company.
Likewise, as a result of the closure of the tax inspection of
Group 3G UMTS Holding GmbH for several years up to
2015 and once it was confirmed that no adjustment was
proposed, the company has reversed the provision that
had been recorded for this purpose, with an impact on
Corporate income tax of 186 million euros and in Finance
income of 69 million euros. This movement has not had
any cash effect.
(Capitalization)/reversal of tax deduction and tax relief in
2022 mainly includes the reversal of deferred tax assets
for tax credits of the Telef\u00f3nica, S.A. tax group amounting
to 112 million euros, with a balancing entry in deferred tax
expense.
(Capitalization)/reversal of loss carryforwards in 2022
mainly includes the effect of unrecorded tax loss
carryforwards generated in the year and the reversal of
tax loss carryforwards generated in prior years of the
Telef\u00f3nica, S.A. tax group, amounting to 326 million euros
and 85 million euros, respectively. On the other hand, the
recognition of tax credits for tax loss carryforwards
generated in previous years of Telef\u00f3nica Germany and
Group 3G UMTS Holding GmbH are included too in
(Capitalization)/reversal of loss carryforwards in 2022,
amounting to 152 million euros (see Main changes
registered in 2022 above in this note).
Other items in 2022 mainly include an expense of 241
million euros as a result of the provision for tax
contingencies recorded during the year by Telef\u00f3nica del
Per\u00fa (see Tax litigation at Telef\u00f3nica del Per\u00fa later in this
note).
2021
\"Permanent differences\" in 2021 mainly included the
effect of the corporate income tax exemption on capital
gains generated on the constitution of VMED O2 UK and
on the sale of Telxius' telecommunications tower division
(see Note 2). It also included 387 million euros expense for
the signing of the Settlement Agreement following the
closure of the corporate income tax audit for the years
2014 to 2017 in Spain referred to in the section
\"Inspections of the tax group in Spain\" of this note.
\"Changes in deferred tax charge due to changes in tax
rates\" in 2021 included the impact of the change in the
corporate income tax rate in Argentina, United Kingdom
and Colombia. In Argentina the Law 27,630 of June 16,
2021 of the Corporation Tax established an increase in the
nominal tax rate from 30% to 35% with retroactive effect
from January 1st, 2021. In addition, on May 24, 2021 a
change in the nominal tax rate from 19% to 25% was
substantially enacted in the United Kingdom, which will
begin to apply on April 1st, 2023. In September 2021, the
so-called Social Investment Law (Law 2155 of 2021) was
approved in Colombia, which established that as of 2022,
the general income tax rate for legal entities is 35%. As a
result of these changes in tax rates, a net deferred tax
effect was recorded with a counterpart in Corporate
income tax, amounting to 51 million euros.
\"(Capitalization)/reversal of loss carryforwards\" in 2021
included the recognition of tax credits in Telef\u00f3nica
Germany and Group 3G UMTS amounting to 77 million
euros and 72 million euros, respectively, the recognition of
tax credits in Brazil amounting to 221 million euros as a
result of the decision of the Supreme Federal Court of 24
September 2021 referred to in the section \"Main changes
registered in 2021\" of this note, partially compensated by
the reversal of the tax group in Spain amounting to 65
million euros.
\"Increase/(decrease) in tax expense arising from
temporary differences\" in 2021 mainly included the effect
of deductible temporary differences not recognized in
Telef\u00f3nica M\u00e9xico, amounting to 83 million euros.
The heading \"Other concepts\" in 2021 included an
expense of 97 million euros as a result of the provision for
tax contingencies recorded by Telef\u00f3nica del Per\u00fa in the
year (see \"Tax litigation in Telef\u00f3nica del Per\u00fa\" later in this
note) and 97 million euros for the taxation of dividend
income from Spanish companies.
2020
\"Permanent differences\" in 2020 included the effect of
the non-deductible charge for the impairment losses on
goodwill and other assets of Telef\u00f3nica Argentina (see
Note 7).
\"(Capitalization)/reversal of loss carryforwards\" in 2020
included the recognition of tax credits in Telef\u00f3nica
Germany and Group 3G UMTS amounting to 159 million
euros and 24 million euros, respectively, partially
compensated by the reversal of the tax group in Spain
amounting to 101 million euros.
\"Increase/(decrease) in tax expense arising from
temporary differences\" in 2020 mainly included the
recognition of deferred tax assets amounting to 184
million euros corresponding to deductible temporary
differences of assets of Telxius Towers Germany, partially
compensated by the effect of deductible temporary
differences not recognized in Telef\u00f3nica M\u00e9xico,
amounting to 152 million euros.
98 million Brazilian reais as of\u00a0 December 31, 2021 (approximately 16 million euros at the exchange rate
on that date). The Company has recognized a provision
for this amount.
Tax litigation in Telef\u00f3nica del Per\u00fa
Years open for inspection in the Group
companies
The years open for review by the tax inspection
authorities for the main applicable taxes vary from one
consolidated company to another, based on each
country\u2019s tax legislation, taking into account their
respective statute of limitations periods. In Spain the
taxes from 2018 onwards are open to inspection.
In the other countries in which the Telef\u00f3nica Group has a
significant presence, the years open for inspection by the
relevant authorities are generally as follows:
\u2022 The last eleven years in Germany.
\u2022The last eight years in the United Kingdom.
\u2022The last seven years in Argentina.
\u2022The last six years in Venezuela
\u2022The last five years in Brazil, Mexico, Colombia, Uruguay
and the Netherlands.\u00a0
\u2022The last four years in Peru.
\u2022The last three years in Chile, Ecuador and the United
States.
The tax inspection of the open years is not expected to
give rise to additional material liabilities for the Group.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8xODcvZnJhZzo5MWVhNWUzMDZlMTE0ZjcyODA1YzIzNDM1NGUzNmZlZC90ZXh0cmVnaW9uOjkxZWE1ZTMwNmUxMTRmNzI4MDVjMjM0MzU0ZTM2ZmVkXzI1ODM4NTIzMjUyNzk1_24f0dd21-4a64-4b84-b1d9-af16813c61ab": {
"value": "
Note 25. Tax mattersDeferred taxes movement
The movements in deferred taxes in the Telef\u00f3nica Group
in 2022 and 2021 are as follows:
| | |
| | |
Balance at December 31, 2021 | | |
| | |
| | |
| | |
Translation differences and hyperinflation adjustments | | |
Company movements and others | | |
Balance at December 31, 2022 | | |
Attorney's Office against the Supreme Court's ruling of
October 29, 2021, which had upheld the criteria for the
use of tax losses and deductions maintained by
Telef\u00f3nica in relation to the settlement agreements
arising from the corporate income tax audit for those
years (see Inspections of the tax group in Spain in this
note). On October 24, 2022, the Supreme Court's ruling
was enforced, ordering the refund to Telef\u00f3nica of 790
million euros for taxes paid in those years, as well as 526
million euros in late-payment interest (see \"Breakdown of
financial result\" in Note 19). As a result of the new
assessments made, in 2022 tax credits of Telef\u00f3nica,
S.A.'s tax group that had been capitalized at December 31,
2021, amounting to 512 million euros for tax loss
carryforwards and 278 million euros for tax credits, were
derecognized. Also, in relation to the above, an addition of
deferred tax assets of the tax group was recorded, with a
balancing entry in the income tax of the consolidated
income statement of tax loss carryforwards in the amount
of 58 million euros and a derecognition of tax credits for
deductions in the amount of 16 million euros.
In December 2022, the consortium formed by CAA and
Vauban (see Note 2) acquired 45% of Bluevia Fibra, S.L.
(Bluevia) for an amount of 1,021 million euros in cash. The
transaction has not had any impact on the consolidated
income statement as it is a change in the percentage of
ownership that has not resulted in a loss of control. In the
context of this transaction, Bluevia acquired from
Telef\u00f3nica de Espa\u00f1a a number of assets constituting the
business object of Bluevia (see Note 29.c) at their fair
value at the transaction date, which was higher than the
pre-existing net book value, generating an accounting
gain at the headquarters of Telef\u00f3nica de Espa\u00f1a which,
as Bluevia is outside the consolidation perimeter of the
tax group of Telef\u00f3nica, S.A., forms part of the taxable
income of the aforementioned tax group.\u00a0 However, from
an accounting point of view, this difference in value is not
reflected in the consolidated accounts as it is a
transaction between companies of the same Group. The
difference between the tax value of these assets in
Bluevia and their book value in the Group's consolidated
accounts has generated an asset for deductible
temporary differences amounting to 548 million euros,
recorded as additions in the table above.
As of December 31, 2022, the estimated recoverability of
the deferred tax assets of the companies that continue to
form part of the tax group after the exit of Bluevia has
been assessed. As a result of this analysis, a reversal of
deferred tax assets for tax loss carryforwards amounting
to 85 million euros and 112 million euros of deductions has
been recorded.
In 2022 there were additions of deferred tax assets for 10
million euros as a result of the provisions recognized
during the year in relation to the various workforce
restructuring plans and other obligations with employees
of the companies include in the group in Spain (see Note
24). Likewise, disposals of deferred tax assets in 2022
included the impact of the materialization of these
provisions and its financial update, amounting to 319
million euros.
Telef\u00f3nica Germany recognized tax credits for loss
carryforwards generated in previous years amounting to
76 million euros and applied tax loss carryforwards
amounting to 46 million euros in 2022. Furthermore,
Telef\u00f3nica Germany recognized deferred tax liabilities
disposals amounting to 42 million euros.
The additions of deferred tax assets included tax credits
recognized for 76 million euros by the German company
Group 3G UMTS Holding GmbH. Furthermore, this
company applied tax loss carryforwards in 2022
amounting to 76 million euros.
Telef\u00f3nica Brazil recognized deferred tax assets
amounting to 78 million euros and applied tax loss
carryforwards amounting 86 million euros in 2022. In
addition Telef\u00f3nica Brazil, recognized deferred tax
liabilities amounting to 59 million euros and disposals
amounting to 212 million euros.
Telef\u00f3nica Colombia recognized deferred tax assets
amounting to 26 million euros and applied tax loss
carryforwards amounting 119 million euros in 2022.
Furthermore, recognized deferred tax liabilities amounting
to 22 million euros.
The movements relating to deferred taxes recognized
directly in equity in 2022 amounted to 238 million euros of
additions (net position of higher deferred tax liabilities)
and 44 million euros of disposals (net position of higher
deferred tax liabilities).
Likewise, the amount of recognized deferred tax liabilities
associated with investments in subsidiaries amounted to
319 million euros as of December 31, 2022 (220 million
euros as of December 31, 2021). The amount of
unrecognized deferred tax liabilities associated with
investments in subsidiaries amounted to 234 million euros
as of December 31, 2022 (256 million euros as of
December 31, 2021).
Main changes registered in 2021
Following the recoverability analysis of the Tax Group's
deferred tax assets in Spain as of December 31, 2021, a
reversal of deferred tax assets for tax loss carryforwards
and deductions was recorded, with a balancing entry in
income tax, amounting to 294 million euros (69 million
euros of tax loss carryforwards and 225 million euros of
deductions).
In addition in 2021, the company completed the tax audit
procedure for the years 2014 to 2017, which involved the
consumption of deferred tax assets amounting to 199
million euros of tax loss carryforwards and 193 million
euros of deductions.
In addition to this, deferred tax liabilities and the
associated deferred tax asset of 143 million euros was
derecognized, after the state aid recuperation procedure
corresponding to the years 2005 to 2018 goodwill tax
amortization (see Tax deductibility of financial goodwill in
Spain, later in this note).
In 2021 there were additions of deferred tax assets for 348
million euros as a result of the provisions recognized
during the year in relation to the various workforce
restructuring plans and other obligations with employees
of the companies included in the group in Spain (see Note
24). Likewise, disposals of deferred tax assets in 2021
included the impact of the materialization of these
provisions, amounting to 240 million euros.
Telef\u00f3nica Brazil recognized deferred tax assets
amounting to 221 million euros, mainly as a consequence
of the Federal Supreme Court ruling of September 24,
2021, recognizing the unconstitutionality of the taxation in
the Corporate Income Tax of interest received on taxes
unduly paid in previous periods. In addition, recognized
deferred tax liabilities amounting to 179 million euros
mainly related to the tax amortization of goodwill.
Telef\u00f3nica Germany recognized tax credits for loss
carryforwards generated in previous years amounting to
77 million euros and applied tax loss carryforwards
amounting to 118 million euros in 2021. Furthermore,
Telef\u00f3nica Germany recognized deferred tax liabilities
disposals amounting to 110 million euros.
The additions of deferred tax assets included tax credits
recognized for 72 million euros by the German company
Group 3G UMTS Holding GmbH. Furthermore, this
company applied tax loss carryforwards in 2021
amounting to 66 million euros.
In September 2021, the Social Investment Law (Law 2155
of 2021) was approved in Colombia, which establishes
that as of 2022, the general income tax rate for legal
entities is 35%. As a result of this amendment, the
company recorded deferred tax assets additions of 71
million euros in 2021.
The movements relating to deferred taxes recognized
directly in equity in 2021 amounted to 27 million euros of
additions (net position of higher deferred tax liabilities)
and 196 million euros of disposals (net position of higher
deferred tax assets).
Expected realization of deferred tax
assets and liabilities
The estimated realization of deferred tax assets and
liabilities recognized in the consolidated statement of
financial position in 2022 is as follows:
Deferred tax assets less than one year mainly come from
the Tax Group in Spain (458 million euros at December 31,
2022).
Deferred tax assets
Deferred tax assets in the accompanying consolidated
statements of financial position include the tax loss
carryforwards, unused tax credits recognized and
deductible temporary differences recognized at the end
of the reporting period.
| | |
| | |
Tax credits for loss carryforwards | | |
| | |
Deferred tax assets for temporary differences | | |
Total deferred tax assets | | |
Tax credits for loss carryforwards
The movements in Tax credits for loss carryforwards in
the Telef\u00f3nica Group in 2022 and 2021 are as follows:
| | | | | | |
Location of the company (Millions of euros) | | | | | Translation differences and other | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Total tax credits for loss carryforwards | | | | | | |
Total tax credits for loss carryforwards in Spain in the
statement of financial position at December 31, 2022
amounted to 457 million euros (999 million euros at
December 31, 2021). Total unrecognized tax credits for
loss carryforwards of the Spanish tax group amounted to
498 million euros. These tax credits do not expire.
The Group companies in Germany have recognized 810
million euros of tax credits for loss carryforwards at
December\u00a031, 2022. Total unrecognized tax credits for
loss carryforwards of these companies amount to 5,452
million euros. These tax credits do not expire.
Recognized tax credits in the consolidated statement of
financial position arising from the Latin American
subsidiaries at December\u00a031, 2022 amounted to 741 million
euros. Total unrecognized tax credits for tax loss
carryforwards in Latin America amounted to 683 million
euros.
Deductions
The Group has recognized 565 million euros of tax credits
from deductions at December\u00a031, 2022, in Spain (903
millIon euros in 2021), generated primarily from export
activity, R+D+i, double taxation and donations to non-
profit organizations.
Temporary differences
The sources of deferred tax assets and liabilities from
temporary differences recognized at December\u00a031, 2022
and 2021 are as follows:
| | |
| | |
Goodwill and intangible assets | | |
Property, plant and equipment | | |
| | |
| | |
Inventories and receivables | | |
| | |
| | |
| | |
Total deferred tax assets for temporary differences | | |
Deferred tax assets and liabilities offset | | |
Total deferred tax assets for temporary differences registered in the statement of financial position | | |
decision rejecting the appeal for cassation filed by the
State Attorney's Office against the judgment of the
Audiencia Nacional (National High Court) of October\u00a029,
2021. This confirmed the criteria used by Telef\u00f3nica, S.A.
for the use of tax losses carryforward and deductions in
relation to the liquidation agreements derived from the
Corporate Income Tax inspection of those years.
On October\u00a024, 2022, an Agreement for the Execution of
the Judgment of the Audiencia Nacional (National High
Court) was issued, which orders the refund to Telef\u00f3nica
of an amount of 790 million euros for taxes paid in those
years, as well as an amount of 526 million euros as
delayed interest. Said amounts were collected on
October\u00a028, 2022.
As a consequence of the final outcome of the litigation
above mentioned, no additional liabilities were recorded
as of December 31, 2022
Tax litigation in Telef\u00f3nica Brazil
State taxes
The Telef\u00f3nica Group is involved in a range of tax
litigation in Brazil over direct and indirect taxes (including
those relating to GVT). This includes a number of appeals
relating to ICMS tax (a tax similar to VAT, levied on
telecommunications services). There is a dispute with the
Brazilian tax authorities over which services should be
subject to this tax.
To date the most significant issues have focused on the
requirement to collect ICMS on penalties charged to
customers for non-compliance, and complementary or
additional services to the basic telecommunications
services such as value-added services, modem rental,
and the application of this tax on the basic fee (assinatura
b\u00e1sica). In the case of the latter (assinatura b\u00e1sica), the
Supreme Court has established that the tax is only
payable in respect of assessments for periods after
October 2016.
All related procedures are being contested in all instances
(administrative and court proceedings). The aggregate
amount of the relevant proceedings, updated to take into
account interest, fines and other items, is approximately
21,712 million Brazilian reais as of December 31, 2022
(approximately 3,898 million euros at the exchange rate
on that date, see Note 24 to the Consolidated Financial
Statements), 19,164 million Brazilian reais as of December
31, 2021 (approximately 3,032 million euros at the
exchange rate on that date). Telef\u00f3nica Brazil has
obtained independent expert reports supporting its
position, i.e. that the aforesaid services are not subject to
ICMS.
Federal taxes
In addition, there are possible contingencies in relation to
the income tax federal taxes for the total amount of
29,778 million Brazilian reais as of December 31, 2022
(approximately 5,346 million euros at the exchange rate
on that date), 18,078 million Brazilian reais as of\u00a0
December 31, 2021 (approximately 2,860 million euros at
the exchange rate on that date), mainly related to the tax
amortization in Brazil in the years 2011 to 2020 of the
goodwill originated in the acquisitions of Vivo and GVT
and their subsequent merger with Telef\u00f3nica Brasil.
These proceedings are at the administrative and judicial
stage and no provisions have been made since the
potential risk associated with them has been classified as
\"not probable\" and Telef\u00f3nica Brazil has received
independent expert reports that support this view.
There are other probable contingencies in relation to the
income tax federal taxes for the total amount of 104
million Brazilian reais as of December 31, 2022
(approximately 19 million euros at the exchange rate on
that date), 98 million Brazilian reais as of\u00a0 December 31,
2021 (approximately 16 million euros at the exchange rate
on that date). The Company has recognized a provision
for this amount.
Tax litigation in Telef\u00f3nica del Per\u00fa
In relation to tax claims in Peru, it should be noted that
Telef\u00f3nica del Per\u00fa is party to numerous legal
proceedings (contentious administrative proceedings
(ACAs) and appeals (amparos)) for tax matters relating to
corporate income tax and VAT, mainly for the years 1998
to 2005, the most relevant being those corresponding to
the years 1998 to 2001 (relating to corporate income tax,
payments in advance, credit balances, associated VAT,
interest and applicable penalties).
The evolution of the appeals of the different cases from
the period 1998 to 2001 has been uneven and complex
over the last few years, but we can highlight the second
instance Judgment of 2015, which was partially upheld;
the Supreme Court Judgments of 2019; the January 2020
Supreme Court Ruling, annulling the previous rulings of
2000 and 2001 in relation to the provision for doubtful
debts; the Constitutional Court Rulings in 2021 in relation
to the settlement of late payment interest, partially
upheld; and the Supreme Court Rulings of 2021 and 2022
on the credit balance from 1999 used in 2000.
On January 17 and 18, 2023, Telef\u00f3nica del Per\u00fa received
notifications of the judgments handed down by the
Supreme Court that resolved, in the last instance and
unfavorably to the Company (references to the
\u201cCompany\u201d in this section refer to Telef\u00f3nica del Per\u00fa),
the contentious administrative proceedings relating to
income tax for the years 1998, 2000 and 2001.
The rulings issued by the Fifth Chamber of Constitutional
and Social Transitory of the Supreme Court do not
contain any payment mandate to the Company, as the
rulings issued in the administrative contentious
proceedings were resolved on concepts derived from a
pronouncement of the Tax Court. At the end of these
proceedings - and any others that may be applicable - the
Tax Administration, through an administrative act, will
determine the amount of the corresponding payment
obligations.
Because there were certain adjustments on which the
rulings had been definitive since 2015 (positively for the
Company in relation to the deductibility of the rental of
public spaces and negatively in the case of the
deductibility of certain financial charges), the Company
previously recorded a provision with an impact on income
tax, the amount of which has been updated periodically
and constantly depending on the evolution of the various
proceedings and the applicable interest rates.
In addition to the above, in June 2022 a new ruling was
received from the Tax Court in relation to the corporate
income tax of Telef\u00f3nica M\u00f3viles del Per\u00fa for 2000. This
ruling was favorable to the Company with respect to the
recognition of the tax value of certain network assets and
unfavorable with respect to the deductibility of the
exchange rate tax.
In relation to all these proceedings, the Group considers
that the initial amount claimed by the Peruvian
government has been exponentially increased by the
accrual of interest generated by the delay, not
attributable to the Company, of almost 20 years in
processing the lawsuits, meaning that almost 80% of the
total amount claimed is due to interest and fines. And all
this, despite the fact that in 2021 the Constitutional Court
itself ruled in favor of Telef\u00f3nica del Per\u00fa, recognizing that
it had been charged interest for delays not attributable to
the company.
For this and other reasons, the Group has been in
international arbitration before ICSID since March 2021
for various conducts of the Peruvian State in violation of
the Agreement for the Promotion and Reciprocal
Protection of Investments between Spain and Peru (see
Note 29.a).
The Company has recorded the necessary provisions for
the contingencies considered probable, leaving as
possible contingencies an amount of 560 million Peruvian
soles at December 31, 2022 (approximately 138 million
euros).
As of December 31, 2022, the total amount of tax
contingencies related to Telef\u00f3nica del Per\u00fa that the
Group has recognized in its consolidated financial
statements, including as the most relevant amount that
related to the aforementioned judgements and rulings
received since 2015, plus accrued interest and other
above-mentioned impacts, amounts to 3,849 million
Peruvian soles which is equivalent to 945 million euros at
the exchange rate of December 31, 2022.
Years open for inspection in the Group
companies
The years open for review by the tax inspection
authorities for the main applicable taxes vary from one
consolidated company to another, based on each
country\u2019s tax legislation, taking into account their
respective statute of limitations periods. In Spain the
taxes from 2018 onwards are open to inspection.
In the other countries in which the Telef\u00f3nica Group has a
significant presence, the years open for inspection by the
relevant authorities are generally as follows:
\u2022 The last eleven years in Germany.
\u2022The last eight years in the United Kingdom.
\u2022The last seven years in Argentina.
\u2022The last six years in Venezuela
\u2022The last five years in Brazil, Mexico, Colombia, Uruguay
and the Netherlands.\u00a0
\u2022The last four years in Peru.
\u2022The last three years in Chile, Ecuador and the United
States.
The tax inspection of the open years is not expected to
give rise to additional material liabilities for the Group.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTQvZnJhZzo5ZGUzZjliYmEzMTQ0NDVmOGM5Y2EyNWFiMTJkZTNiNi90ZXh0cmVnaW9uOjlkZTNmOWJiYTMxNDQ0NWY4YzljYTI1YWIxMmRlM2I2XzI0NzM5MDExNjI1NTY2_aba052c0-5c6b-4443-a742-7004a8080faf": {
"value": "
Revenues
The breakdown of Revenues for the years 2022, 2021 and
2020 is as follows:
Sales mainly include the sale of mobile terminals.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTQvZnJhZzo5ZGUzZjliYmEzMTQ0NDVmOGM5Y2EyNWFiMTJkZTNiNi90ZXh0cmVnaW9uOjlkZTNmOWJiYTMxNDQ0NWY4YzljYTI1YWIxMmRlM2I2XzI0NzM5MDExNjI1NTY1_342a8b2d-d342-4db5-a36d-b5bb04c311dd": {
"value": "
Other income
The breakdown of \u201cOther income\u201d is as follows:
| | | |
| | | |
| | | |
Gain on disposal of businesses | | | |
Gain on disposal of property, plant and equipment | | | |
Gain on disposal of intangible assets | | | |
| | | |
| | | |
| | | |
\"Gain on disposal of businesses\" in 2022 mainly includes
the gain from the sale of fiber optics assets of Colombia
Telecomunicaciones, amounting to 162 million euros.and
the gain from the establishment of the joint company for
the deployment of fiber in the United Kingdom amounting
to 20 million euros (see Note 10).
\"Gain on disposal of businesses in 2021 mainly included
the gain from the sale of the towers division of Telxius
(6,099 million euros, see Note 2), the gain generated in
the constitution of the joint venture VMO2 (4,460 million
euros, see Note 2), the gain from the sale of 60% of the
shares of InfraCo, SpA (274 million euros, see Note 2) and
the gain from the sale of Telef\u00f3nica de Costa Rica (136
million euros, see Note 2).
\"Gains on disposal of companies\" in 2020 included the
impact of the initial registration of Telef\u00f3nica's joint
venture with Allianz for the deployment of fiber (FTTH) in
Germany (see Note 29.c).
\"Gain on disposal of property, plant and equipment\"
includes the gains on sale and leaseback transactions,
which amounted to 381 million euros, 263 million euros
and 79 million euros in 2022, 2021 and 2020, respectively
(Note 20).
Other expenses
The breakdown of \u201cOther expenses\u201d is as follows:
| | | |
| | | |
Leases included in \"Other expenses\"(1) | | | |
| | | |
Taxes other than income tax | | | |
Change in trade provisions | | | |
Losses on disposal of fixed assets and changes in provisions for fixed assets | | | |
Goodwill impairment (Note 7) | | | |
| | | |
| | | |
\"Gain on disposal of businesses\" in 2022 mainly includes
the gain from the sale of fiber optics assets of Colombia
Telecomunicaciones, amounting to 162 million euros.and
the gain from the establishment of the joint company for
the deployment of fiber in the United Kingdom amounting
to 20 million euros (see Note 10).
\"Gain on disposal of businesses in 2021 mainly included
the gain from the sale of the towers division of Telxius
(6,099 million euros, see Note 2), the gain generated in
the constitution of the joint venture VMO2 (4,460 million
euros, see Note 2), the gain from the sale of 60% of the
shares of InfraCo, SpA (274 million euros, see Note 2) and
the gain from the sale of Telef\u00f3nica de Costa Rica (136
million euros, see Note 2).
\"Gains on disposal of companies\" in 2020 included the
impact of the initial registration of Telef\u00f3nica's joint
venture with Allianz for the deployment of fiber (FTTH) in
Germany (see Note 29.c).
\"Gain on disposal of property, plant and equipment\"
includes the gains on sale and leaseback transactions,
which amounted to 381 million euros, 263 million euros
and 79 million euros in 2022, 2021 and 2020, respectively
(Note 20).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTQvZnJhZzo5ZGUzZjliYmEzMTQ0NDVmOGM5Y2EyNWFiMTJkZTNiNi90ZXh0cmVnaW9uOjlkZTNmOWJiYTMxNDQ0NWY4YzljYTI1YWIxMmRlM2I2XzI0NzM5MDExNjI1NTY3_fb1b244a-9eef-4dde-99a8-2101fee9d4c7": {
"value": "
Other expenses
The breakdown of \u201cOther expenses\u201d is as follows:
| | | |
| | | |
Leases included in \"Other expenses\"(1) | | | |
| | | |
Taxes other than income tax | | | |
Change in trade provisions | | | |
Losses on disposal of fixed assets and changes in provisions for fixed assets | | | |
Goodwill impairment (Note 7) | | | |
| | | |
| | | |
The purchases and other contractual commitments in the
table above include 850 million euros corresponding to
power purchase agreements (PPAs), mainly from
Telef\u00f3nica Spain for the period from 2023 to 2031 and
Telef\u00f3nica Germany from 2025 to 2035 (see Note 29.d).
The Group uses these contracts to purchase energy from
sustainable sources, such as wind and solar, at generally
fixed prices (see Note 3.l).
Commitments for short-term leases and low value leases
amounted to 33 million euros as of December\u00a031, 2022. In
addition, lease collection commitments amounted to 8
million euros as of December\u00a031, 2022.
c) Commitments
Agreement related to the Sale of Customer
Relationship Management (\u201cCRM\u201d) Business,
Atento
As a result of the sale agreement of Atento by Telef\u00f3nica,
announced on October 12, 2012, and ratified on December
12, 2012, both companies signed a Master Service
Agreement which regulates Atento\u2019s relationship with the
Telef\u00f3nica Group as a service provider for a period of nine
years and which has been amended on May 16, 2014,
November 8, 2016, May 11, 2018, November 28, 2019 and
February 4, 2022. The term of the agreement was
extended for Spain and Brazil in November 2016, for two
additional years until the end of 2023, and for Latin
America in February 2022, for one additional year until the
end of 2022.
By virtue of this agreement, Atento became Telef\u00f3nica\u2019s
preferred Contact Center and Customer Relationship
Management (\u201cCRM\u201d) service provider, stipulating annual
commitments in terms of turnover which is updated
based on inflation and deflation that vary from country to
country, pursuant to the volume of services Atento has
been providing to the entire Group. Effective January 1,
2017, the minimum volume commitments that Telef\u00f3nica
must comply with have significantly decreased for Brazil
and Spain. Additionally, from January 1, 2019 a new
reduction of the minimum commitment has been agreed,
in this case only for Spain.
Failure to meet the annual turnover commitments in
principle results in the obligation to the counterparty, to
pay additional amounts, which would be calculated based
on the difference between the actual amount of turnover
and the predetermined commitment, applying a
percentage based on the Contact Center\u2019s business
margin to the final calculation.
Notwithstanding the above, as a consequence of the
amendment signed with the Atento Group on May 11,
2018, from January 1, 2018 the payment obligation for
failure to meet the annual turnover commitment
continues to be calculated every year but will only be
liquidated upon termination of the agreement. Such
payment will only be due if the balance is in favor of
Atento after adding certain amounts agreed between the
parties and deducting an annual percentage of the
Atento Group\u2019s sales to the Telef\u00f3nica Group.
The Master Agreement sets forth a reciprocal
arrangement, whereby Atento assumes similar
commitments to subscribe certain telecommunications
services from Telef\u00f3nica.
Investment Framework Agreement between the
shareholders of Colombia Telecomunicaciones,
S.A. ESP BIC - Sale of shares
Pursuant to the Framework Investment Agreement
entered into between the shareholders of Colombia
Telecomunicaciones, S.A. ESP BIC (a) if Telef\u00f3nica
decides to dispose or transfer of all or part of its
shareholding in Colombia Telecomunicaciones, S.A. ESP
BIC to third parties, Telef\u00f3nica commits that: (i) the
acquirer or transferee will be obliged to adhere to the
Framework Investment Agreement; and (ii) that the
acquirer or transferee will be obliged to present an offer
to purchase all of the shares in Colombia
Telecomunicaciones, S.A. ESP BIC held by the Colombian
Government (that amounts to\u00a0 32.5% of the share capital)
at the same price and under the same terms and
conditions negotiated with Telef\u00f3nica and through the
procedure established by Law 226 of 1995 for the disposal
of shares held by public entities and, (b) if the Colombian
Government transfer its shares in Colombia
Telecomunicaciones, S.A. ESP BIC under certain
circumstances, the Strategic Partner shall subscribe with
the acquirer of the shares a new shareholders agreement
which will have to be then negotiated by the parties and
which, as the case may be, will include some of the rights
currently held by the Colombian Government under the
Framework Investment Agreement currently in force.
Agreement for the sale of the shares of
Telef\u00f3nica Gesti\u00f3n de Servicios Compartidos
Espa\u00f1a, S.A.U., Telef\u00f3nica Gesti\u00f3n de Servicios
Compartidos Argentina, S.A. and T-Gestiona
Servicios Contables y Capital Humano, S.A.C.
On March 1, 2016, a share purchase agreement between,
on one hand, Telef\u00f3nica, S.A., Telef\u00f3nica Servicios
Globales, S.L.U. and Telef\u00f3nica Gesti\u00f3n de Servicios
Compartidos Per\u00fa, S.A.C. (as sellers), and, on the other
hand, IBM Global Services Espa\u00f1a, S.A., IBM del Per\u00fa,
S.A.C., IBM Canada Limited and IBM Americas Holding,
LLC (as purchasers) for the sale of the companies
Telef\u00f3nica Gesti\u00f3n de Servicios Compartidos Espa\u00f1a,
S.A.U., Telef\u00f3nica Gesti\u00f3n de Servicios Compartidos
Argentina, S.A. and T-Gestiona Servicios Contables y
Capital Humano, S.A.C., for a total price of approximately
22 million euros, was ratified before Notary Public. This
share purchase agreement was subscribed on December
31, 2015.
Following the aforementioned share purchase agreement
and in connection with the latter transaction, also, on
December 31, 2015, Telef\u00f3nica subscribed a master
services agreement with IBM for the outsourcing of
economic-financial and HR activities and functions to be
provided to the Telef\u00f3nica Group during a period of ten
years, for a total amount of approximately 450 million
euros. Most of the Telef\u00f3nica Group\u2019s subsidiary
companies have already adhered to that master services
agreement.
On March 31, 2021 and March 31, 2022 the master
services agreement with IBM for the outsourcing of
economic-financial and HR activities and functions to be
provided to the Telef\u00f3nica Group was amended. By virtue
of these amendments the term may be extended for
those adhered companies that decide to extend their
services beyond the initial term.
In addition, on July 29, 2022 a new amendment was
executed by virtue of which the term may be extended for
those adhered companies in Latinoamerica that decide to
extend some of their services.
Commitments derived from the agreements
reached for the acquisition of football (soccer)
related rights between Telef\u00f3nica (through its
affiliate Telef\u00f3nica Audiovisual Digital, S.L.U.)
and LaLiga, UEFA and RFEF
On June 25, 2018, Telef\u00f3nica was provisionally awarded
with the broadcasting rights for all football (soccer)
matches of the Spanish First Division Football League
National Championship in the residential subscribers
market for exploitation on pay television for the
2019-2022 cycle (packages 4 and 5 of the auction called
by the Professional Football League). The definitive
agreements were signed on July 5, 2018.
The award was granted for a total amount of 2,940 million
euros, at an identical price of 980 million euros for each of
the three seasons, which represents a slight decrease
compared to the last season of the previous cycle.
Telef\u00f3nica, as the operator of these broadcasting rights
for the 2019-2022 cycle, has the right to decide, design
and develop the broadcasting content, which carried the
Movistar hallmark for the 2019-2020 season.
On December 21, 2018, Telef\u00f3nica was provisionally
awarded with the broadcasting rights for all football
(soccer) matches of the Spanish Second Division Football
League National Championship in the residential
subscribers market for exploitation on pay television for
the 2019-2022 cycle (package 6 of the auction called by
the Professional Football League). No other bids were
submitted for such package during the first round of the
auction called by the Professional Football League. The
award was granted for a total amount of 105 million euros
(i.e., 35 million euros for each of the 3 seasons).
On January 11, 2019 the definitive agreement on such
broadcasting rights (package 6) was signed.
On July 2, 2020 Telef\u00f3nica signed an agreement for
acquiring the exclusive media rights in Spain of UEFA
Champions League and UEFA Europa League, as well as
the UEFA Europa Conference League (a new competition
to be separated from the UEFA Europa League) and UEFA
Youth League, for the next cycle comprising seasons
2021/22, 2022/23 and 2023/2024, after the expiration of
the agreement with Mediapro of June 28, 2018 for
previous cycle 2018/2019 to 2020/2021.
The agreement guarantees Telef\u00f3nica all media rights
with respect to the main European football competitions
for all its customers, both residential and horecas (hotels,
restaurants, cafes, etc.).
The direct acquisition from UEFA of this \"premium\"
content will also allow Telef\u00f3nica to continue designing
and selling its own produced channels and content with
the best European football that could be, likewise,
accessible to other operators in the market interested in
this content.\u00a0
The total award price for all competitions amounted to
975 million euros (i.e. 325 million euros for each of the
seasons 2021/22, 2022/23 and 2023/2024) which is less
than the license fees paid for the previous cycle and
without any year-to-year increase.
On December 13, 2021, Telef\u00f3nica was provisionally
awarded the exclusive broadcasting rights of five
matches per matchday of the Campeonato Nacional de
Liga de Primera Divisi\u00f3n (\u201cLaLiga\u201d), for pay television in
the residential market, in Spain. Telef\u00f3nica received the
first pick in 18 matchdays of each season and second pick
in 17 matchdays, including \"El Cl\u00e1sico\" of the second
round (Option D bis, Lot D.1 bis).
Likewise, Telef\u00f3nica was awarded the exclusive
broadcasting rights of three matchdays, which contain
ten matches each matchday, including matches of Real
Madrid C.F., F.C. Barcelona and Club Atl\u00e9tico de Madrid
against the six first classified of the previous season; and
Valencia C.F., Athletic Club de Bilbao or Real Betis
Balompi\u00e9, if they were not among the aforementioned
first classified (Option D bis, Lot D.3 bis).
The award includes the cycle 2022/2023 to 2026/2027
although the 2025/2026 and 2026/2027 seasons are
subject to the CNMC lifting or modifying the resolution
that limits the maximum duration of the contracts entered
into by Telef\u00f3nica for the acquisition of sports rights
(Expte. VC/0612/14).
The award has been made at a price of 520\u00a0million euros
for each of the seasons.
The award was subject to the execution of an agreement
between Telef\u00f3nica and LaLiga with the remaining terms
and requirements established in the LaLiga tender, which
was signed on January 19, 2022.
On March 28, 2022, Telef\u00f3nica entered into an agreement
with the company DAZN for the distribution of the so-
called DAZN LaLiga Package. Such package includes the
remaining five football matches per match-weekend of
the Spanish First Division Football Championship, in 35
out of 38 match-weekends for exploitation on pay
television for residential subscribers in Spain (Option D
bis, Package D.2 bis).
This is a non-exclusive agreement for five seasons, from
2022/2023 to 2026/2027. The agreed value amounts
280\u00a0million euros for each of the seasons.
In addition, on July 29, 2022, Telef\u00f3nica signed a new
contract with LaLiga for the non-exclusive broadcasting
of the channel that broadcasts matches of Second
Division of National Football Championship League for
seasons 2022/2023, 2023/2024 and 2024/2025, with
Telef\u00f3nica\u2019s unilateral option to extend for two additional
seasons, with a variable cost that amounts to
approximately 16\u00a0million euros per season.
Similarly, on August 4, 2022, a contract was formalized
with LaLiga for the non-exclusive broadcast of the LaLiga
TV Bar Channel for non-residential subscribers for the
2022/2023 season with a minimum guarantee of 29
million euros, being the final price variable.
On November 2, 2022, Telefonica was also awarded by
Real Federacion Espa\u00f1ola de f\u00fatbol (RFEF) exclusive pay
television rights of Copa del Rey Competiton and
Supercopa de Espa\u00f1a for seasons 2022/2023, 2023/2024
and 2024/2025.
Wholesale Access Services Agreement with
AT&T Mexico
On November 21, 2019, Pegaso PCS, S.A. de C.V.
(\u201cTelef\u00f3nica M\u00e9xico\u201d) and AT&T Comunicaciones
Digitales, S. de R.L. de C.V. (\u201cAT&T Mexico\u201d) entered into a
Wholesale Access Services Agreement (\u201cWholesale
Agreement\u201d), under which AT&T Mexico agreed to
provide wholesale wireless access to Telef\u00f3nica M\u00e9xico
on 3G, 4G and any other future technology available in
Mexico.
The Wholesale Agreement has a minimum duration of
eight years, renewable for additional consecutive periods
of three years. Such Wholesale Agreement establishes a
gradual migration of Telef\u00f3nica M\u00e9xico\u2019s traffic to AT&T
Mexico's access network over the first three years of the
agreement.
As set forth in the Wholesale Agreement such migration
was completed during the first half of 2022. As a result,
Telef\u00f3nica M\u00e9xico\u2019s wireless access infrastructure was
turned off and Telef\u00f3nica M\u00e9xico no longer uses the
licensed spectrum that it used in the past to operate its
network.
Agreement to share network infrastructure
between Telef\u00f4nica Brasil (VIVO) and TIM.
On December 19, 2019 Telef\u00f4nica Brasil S.A. and TIM S.A.
executed two agreements for the share of 2G, 3G and 4G
mobile network infrastructure. Both companies reiterate
that they will preserve their commercial and customer
management autonomy, regardless of any infrastructure
sharing agreement.
The agreements cover the following matters:
1.2G network Sharing: to be implemented in areas
where both operators are present, so that the
operator reminiscent will provide 2G mobile
connectivity services to the Vivo and TIM customer
base, resulting in the disconnection of overlapping
sites and therefore achieving cost reduction and the
optimization of spectrum use.
2.3G and 4G network Sharing: covering only cities
with less than 30 thousand inhabitants with the aim
of sharing 4G and 3G network in cities where only
one operator is present (coverage expansion) and
where both already provide services (network
consolidation).
Both agreements were approved by the
Telecommunications and Competition regulatory
authorities (\"Ag\u00eancia Nacional de Telecomunica\u00e7\u00f5es\u201d -
ANATEL and \u201cConselho Administrativo de Defesa
Econ\u00f3mica\u201d - CADE).
Contracts for the provision of IT services with
Nabiax
In 2019 Telef\u00f3nica, S.A. signed an agreement for the sale
of a portfolio of eleven data center businesses to a
company (hereinafter \"Nabiax\") controlled by Asterion
Industrial Partners SGEIC, S.A.
At the same time as this sale, agreements were entered
into with Nabiax to provide housing services to the
Telef\u00f3nica Group, allowing Telef\u00f3nica to continue
providing housing services to its customers, in
accordance with its previous commitments.\u00a0Such service
provision agreements have an initial term of ten years and
include minimum consumption commitments in terms of
capacity. These commitments are consistent with the
Group's expected consumption volumes, while prices are
subject to review mechanisms based on inflation and
market reality.
On May 7, 2021, Asterion Industrial Partners SGEIC, S.A.
and Telef\u00f3nica Infra (T. Infra), the infrastructure unit of the
Telef\u00f3nica Group, reached an agreement for the
contribution to Nabiax of four additional data centers
owned by the Telef\u00f3nica Group (two of them located in
Spain and two in Chile). In exchange for the contribution
of these four data centers, T. Infra will receive a 20%
equity stake in Nabiax. Once the relevant authorizations
and other conditions precedent to the contribution of the
two data centers located in Spain were obtained, the
partial closing of the transaction took place as of July 21,
2021, whereby Telef\u00f3nica Group contributed those data
centers to Nabiax, with T. Infra receiving in exchange a
13.94% stake in Nabiax at this stage. The agreement was
complemented by the signing of a contract for the
provision to Telef\u00f3nica of housing services from those
two data centers under terms and conditions equivalent
to those established in the transaction executed in 2019,
for an initial period of ten years.
Once the conditions related to the contribution of the two
data centers located in Chile were fulfilled, on May 24,
2022, the complete closing of the transaction took place,
and T. Infra reached a 20% stake in Nabiax (see Note 10).
The agreement was complemented by the signing of a
contract for the provision to Telef\u00f3nica of housing
services from those two data centers under terms and
conditions equivalent to those established in the
transaction executed in 2019, for an initial period ending in
2031.
50:50 joint venture with Liberty Global for the
combination of both groups' businesses in the
United Kingdom
On May 7, 2020, Telef\u00f3nica agreed to enter into a joint
venture with Liberty Global plc (\"Liberty Global\") pursuant
to a contribution agreement (as amended, the
\"Contribution Agreement\") between Telef\u00f3nica,
Telefonica O2 Holdings Limited, Liberty Global, Liberty
Global Europe 2 Limited and a newly formed entity of
which, after closing, each of Telef\u00f3nica and Liberty Global
would hold 50% of its share capital named VMED O2 UK
Limited.
After having obtained the clearance from the Competition
and Market Authority (the antitrust authority in the UK) to
complete this transaction and having fulfilled all the other
pre-closing conditions included in the Contribution
Agreement, the transaction was completed on June 1,
2021. From such date, Telef\u00f3nica and Liberty Global each
hold an equal number of shares in VMED O2 UK Limited;
after: (i) Telef\u00f3nica having contributed to VMED O2 UK
Limited its O2 mobile business in the United Kingdom and
(ii) Liberty Global having contributed its Virgin Media
business in the United Kingdom to VMED O2 UK Limited.
The corporate governance of VMED O2 UK Limited is
regulated by a shareholders' agreement, which was
entered into by the parties to the Contribution Agreement
on June 1, 2021 (the \"Shareholders' Agreement\").
On the date of closing of the transaction, Telef\u00f3nica,
Liberty Global, and certain companies belonging to each
shareholder\u2019s corporate group entered into certain
services, reverse services, licensing and data protection
agreements with VMED O2 UK Limited and certain
entities belonging to the VMED O2 UK Limited group. In
particular, Telef\u00f3nica and Liberty Global agreed that each
shareholder\u2019s group would provide certain services, either
on a transitional or ongoing basis to VMED O2 UK Limited
and its group and that, for a limited period of time, VMED
O2 UK Limited would also provide certain reverse services
to specific companies belonging to the corporate group
of each of its shareholders.
Pursuant to the terms of the above referred services
agreements, the transitional services that are to be
provided by the Telef\u00f3nica Group to VMED O2 UK Limited
shall be provided for terms ranging from 7 to 24 months
while the ongoing services that are to be provided by the
Telef\u00f3nica Group to VMED O2 UK Limited will be provided
for periods of two to six years, depending on the service.
The services provided by the Telefonica Group to VMED
O2 UK Limited consist primarily of technology and
telecommunication services that will be used by or will
otherwise benefit VMED O2 UK Limited. In addition to
providing VMED O2 UK Limited with such services, the
mobile operators of the Telefonica Group and VMED O2
UK Limited will maintain their roaming commercial
relationships in order to reciprocally provide roaming
services for their respective customers.
Likewise, as of closing of the transaction Telef\u00f3nica
granted certain trademark license agreements to VMED
O2 UK Limited (the \u201cVMED O2 UK Limited Trademark
Licenses\u201d). Pursuant to the VMED O2 UK Limited
Trademark Licenses, Telefonica Group licensed the use of
Telef\u00f3nica and O2 brand rights to VMED O2 UK Limited.\u00a0
Purchase Agreement for Acquisition of UPI Mobile
Assets of Oi Group
On January 28, 2021, Telef\u00f3nica Brasil executed the
Purchase and Sale Agreement of Shares and Other
Covenants (the \u201cOi Agreement\u201d), by and among Oi M\u00f3vel
SA - In Judicial Recovery, as \"Seller\", Telef\u00f3nica Brasil, Tim
S.A. and Claro S.A., as \u201cBuyers\u201d, and Oi S.A. - In Judicial
Recovery and Telemar Norte Leste S.A. - In Judicial
Recovery, as intervening parties and guarantors of the
seller\u2019s obligations.
On April 20, 2022, the closing of the transaction related to
the purchase agreement for the acquisition of the assets
of Oi Group's mobile business operations\u00a0 (the \"UPI
Mobile Assets\") took place, and Telef\u00f3nica Brasil
acquired, on such date, all the shares of Garliava RJ
Infraestrutura e Redes de Telecomunica\u00e7\u00f5es S.A.
(Garliava), a special purpose company, to which the
mobile assets of Oi Group assigned to Telef\u00f3nica Brasil
had been contributed under the segregation plan stated
in the Oi Agreement.
Telef\u00f3nica Brasil thus acquired its share of mobile assets
of the Oi Group for an amount of 5,373 million Brazilian
reais (approximately 1,063 million euros at the exchange
rate at such date), having paid, on such day, the amount
of 4,885 million Brazilian reais (approximately 972 million
euros). The remaining amount, equivalent to 10% of the
payment made on that date, was withheld and its release
is currently subject to certain ongoing discussions
regarding price adjustments, as provided for in the Oi
Agreement.
Likewise, on such date, Telef\u00f3nica Brasil: (i) committed to
an additional payment of 110 million Brazilian reais
(approximately 23 million euros) of which 40 million
Brazilian reais were paid at that date (approximately 8
million euros), subject to the fulfilment of certain targets
by Oi; (ii) made a payment of approximately 148 million
Brazilian reais (approximately 29 million euros) for certain
transition services to be provided by Oi to Garliava; and
(iii) entered into a take-or-pay data transmission capacity
agreement, with a net present value of 179 million
Brazilian reais (approximately 35 million euros), to be paid
in monthly installments during a period of 10 years.
The mobile assets of Oi Group finally assigned to
Telef\u00f3nica Brasil were the following:
a.Customers: approximately 12.5 million (equivalent
to 30% of the total customer base of the mobile assets of
Oi Group) \u2013 according to ANATEL\u2019s February 2022 data;
b.Spectrum: 43MHz as national population-
weighted average (46% of the radiofrequency of the
mobile assets of Oi Group); and
c.Infrastructure: contracts for the use of
approximately 2.7 thousand sites of mobile access
(corresponding to 19% of the sites of the mobile assets of
Oi Group).
All commitments assumed were duly submitted to
ANATEL and CADE during 2022.
On October 3, 2022, Telef\u00f3nica Brasil initiated an
arbitration procedure against Oi S.A. \u2013 In Judicial
Recovery (\u201cSeller\u201d), pursuant to the terms of the Oi
Agreement, alleging manifest breach by Seller of certain
terms of the Oi Agreement, after the exchange of notices
about the post-closing price adjustment between Buyers
and Seller, upon the competent request of arbitration filed
with the Market Arbitration Chamber.
On February 1, 2023, Telef\u00f3nica Brasil's Extraordinary
Shareholders' Meeting was held and Garliava\u2019s merger
into Telef\u00f3nica Brasil was approved, subject to prior
approval from ANATEL and the conclusion of certain
systemic operations. Once such conditions are fulfilled,
Telef\u00f3nica Brasil\u2019s Board of Directors will convene a new
meeting to verify the accomplishment of such conditions
and to give effects to said merger.
Investment Agreement with Allianz and Telef\u00f3nica
Germany
On October 29, 2020, Telef\u00f3nica Infra Germany GmbH
(\u201cTEF Infra Germany\u201d, a subsidiary indirectly wholly-
owned by Telef\u00f3nica through Telef\u00f3nica Infra, S.L.U.)
entered into an investment agreement (and related
contracts, including a partners\u2019 agreement which sets
forth the principles of corporate governance of the joint
venture) with several entities belonging to the Allianz
Group (\"Allianz\") and Telef\u00f3nica Germany 1.
Beteiligungsgesellschaft mbH (a subsidiary wholly-owned
by Telef\u00f3nica Germany GmbH & Co. OHG) (\u201cTEF
Germany\u201d) for the creation of a joint venture to deploy
Fiber-to-the-Home (FTTH) in Germany, pursuant to
which TEF Infra Germany and TEF Germany conditionally
agreed to invest up to 500 million euros equity in total
(400 million euros by TEF Infra Germany and 100 million
euros by TEF Germany) and Allianz conditionally agreed
to invest up to 1,000 million euros through different
sources of funding over a six year period.
The closing of the transaction and the acquisition of the
joint control took place on December 18, 2020. The
registration of Allianz and TEF Germany as limited
partners of the joint venture in the German commercial
registry occurred on January 21, 2021. After the closing of
the transaction, the Allianz Group and the Telef\u00f3nica
Group each holds 50% in the joint venture under a co-
control governance model. Telef\u00f3nica Group\u2019s ownership
is held through TEF Infra Germany holding 40% and TEF
Germany holding a 10% stake.
New long-term master services agreement in the
United Kingdom
On January 7, 2021, each of Telef\u00f3nica U.K. and Vodafone
U.K. entered into new Master Services Agreements with
Cornerstone Telecommunications Infrastructure Limited
(\u201cCTIL\u201d), their passive tower network infrastructure
partnership which is 50:50 jointly owned and operated by
the two operators. The new agreements came into effect
on January 1, 2021, with initial terms of 8 years, with three
additional 8-year renewal periods.
CTIL was formed in 2012 through the consolidation of
both Telef\u00f3nica U.K. and Vodafone U.K.\u2019s existing basic
network infrastructure, including towers and masts, which
were transferred to the joint operation. CTIL currently
operates c.14,200 macro sites with a 2.0x tenancy ratio
(including active sharing) and c.1,400 micro sites. CTIL
also provides management services for the anchor
tenants for a further c.5,100 third party sites where their
active equipment is deployed. Telef\u00f3nica's stake in CTIL is
currently held through VMED O2 UK Limited (see Note
10), the joint venture between Telefonica and Liberty
Global plc in the United Kingdom.
The new agreements do not materially impact existing
network agreements and will continue to allow CTIL to
primarily serve its shareholders as well as some third
parties.
Transaction between Colombia Telecomunicaciones
S.A. ESP BIC and Kohlberg Kravis Roberts (\u201cKKR\u201d)
On July 16, 2021, Colombia Telecomunicaciones S.A. ESP
BIC and KKR entered into an agreement to sign the
following contracts:
(i) An assets purchase agreement for the fiber optic
assets owned by Colombia Telecomunicaciones S.A. ESP
BIC with a Colombian company controlled by KKR
(InfraCo, SpA), in consideration for an initial payment of
320\u00a0million U.S. dollars, which may be subject to post-
closing adjustments under usual conditions for this type
of operation. As well as a subsequent payment, consisting
of the possibility of receiving a higher consideration from
its result in network deployment activities, for an amount
of up to an additional 100\u00a0million U.S. dollars.
(ii) A contract through which Colombia
Telecomunicaciones S.A. ESP BIC will acquire a 40%
stake in a Spanish company controlled by KKR, which it
holds the remaining 60%. The Colombia
Telecomunicaciones S.A. ESP BIC\u00b4s contribution would
be a portion of the consideration received from assets
purchase agreement for the fiber optic assets.
(iii) Several commercial contracts between Colombia
Telecomunicaciones S.A. ESP BIC and InfraCo, SpA for
the provision of wholesale connectivity services by
InfraCo, SpA to Colombia Telecomunicaciones S.A. ESP
BIC, deployment of fiber optic network and other related
services.
The signing of the contracts of numerals (i) and (iii), as
well as the execution of the aforementioned operations
contracts, was subject to the respective contractual
provisions and to the obtaining of the necessary
regulatory authorizations.
On January 11, 2022, after obtaining the necessary
regulatory authorizations and meeting certain agreed
conditions, the transaction was executed. Therefore,
Colombia Telecomunicaciones S.A. ESP BIC executed the
sale of fiber optic assets to Onnet Fibra Colombia S.A.S.
(\u201cOnnet\u201d), a company with which it also entered into a
series of commercial contracts by virtue of which (i)
Onnet will provide wholesale connectivity services to
Colombia Telecomunicaciones S.A. ESP BIC, and (ii)
Colombia Telecomunicaciones S.A. ESP BIC will provide
to Onnet fiber optic network deployment services and
other related services. Simultaneously, Colombia
Telecomunicaciones S.A. ESP BIC acquired shares
equivalent to a 40% in Alamo HoldCo S.L., a Spanish
company that owns 100% of Onnet's shares (see Note 10).
Agreement for the purchase of 40% of the share
capital of Telxius Telecom, S.A.
On February 1, 2022, Telef\u00f3nica\u2019s subsidiary, Pontel
Participaciones, S.L. (\u201cPontel\u201d), a company which is held
83.35% by Telef\u00f3nica and 16.65% by Pontegadea
Inversiones, S.L. (\u201cPontegadea\u201d), reached an agreement
with Taurus Bidco S.\u00e0 r.l. (\u201cTaurus\u201d, a company managed
by KKR) for the purchase of\u00a0 40% of the share capital of
Telxius Telecom, S.A. (\u201cTelxius\u201d), held by Taurus, for an
estimated amount of 215.7\u00a0million euros, being the
referred price subject to, among others, adjustments
derived from the sale of the towers business to American
Tower.
On January 18, 2023, after obtaining the necessary
regulatory and competition authorizations, the transaction
was completed. (See Note 31).
As a result of the transaction, Pontel, which prior to the
closing of the transaction held the remaining 60% of the
share capital of Telxius, has become the sole shareholder
of this company. Pontegadea has increase its holding in
Pontel to 30% and Telef\u00f3nica holds a 70% stake. Thus, in
terms of indirect holding in Telxius, Pontegadea has
increased its holding from 9.99% to 30% and Telef\u00f3nica
from 50.01% to 70%.
Agreement reached between Telef\u00f3nica Espa\u00f1a
Filiales, S.A.U. (\u201cTelef\u00f3nica Espa\u00f1a Filiales\u201d), T.
Infra, Vauban and Cr\u00e9dit Agricole Assurances for
the establishment of Bluevia Fibra
On July 25, 2022, Telef\u00f3nica Espa\u00f1a Filiales S.A.U,
Telef\u00f3nica Infra S.L.U. (T. Infra) and the consortium
formed by Vauban Infrastructure Partners (\"Vauban\") and
Cr\u00e9dit Agricole Assurances (\"CAA\") reached an
agreement for the establishment of a company, Bluevia
Fibra, S.L. (\"Bluevia\"), whose corporate purpose is the
deployment and commercialization of a fiber-to-the-
home (FTTH) network mainly in rural areas in Spain.
Once the relevant regulatory authorizations were
obtained, the closing of the transaction took place on
December 20, 2022. After closing, the Telef\u00f3nica Group
holds 55% of the capital of Bluevia (30% through
Telef\u00f3nica Espa\u00f1a Filiales and 25% through T. Infra), with
Vauban/CAA holding the remaining 45%. At closing,
Bluevia purchased from Telef\u00f3nica Espa\u00f1a 3.9\u00a0million
already passed real estate units, and agreed to deploy
1.1\u00a0million additional units over the next 2 years, reaching a
total footprint of 5\u00a0million passed real estate units. The
3.9\u00a0million already passed real estate units acquired by
Bluevia represent 14% of Telef\u00f3nica's FTTH network in
Spain, with Telef\u00f3nica Espa\u00f1a retaining ownership of the
remainder of the network. In addition, as part of the
transaction, the Telef\u00f3nica Group has entered into a
series of service provision agreements with Bluevia which
entail the mutual provision and receipt of services by/to
Telefonica Group and Bluevia. As part of the transaction
Telefonica Group has contributed equity funds to Bluevia
in the amount of approximately 1,247\u00a0million euros and the
Vauban/CAA consortium has acquired 45% of Bluevia
from Telef\u00f3nica Espa\u00f1a for 1,021\u00a0million euros in cash (see
Note 2).
Agreement reached by T. Infra, Liberty Global
and InfraVia for the establishment of a fiber-to-
the-home (FTTH) joint venture in the United
Kingdom
On July 29, 2022, T. Infra, Liberty Global plc (\"Liberty
Global\") and InfraVia Capital Partners (\"InfraVia\") reached
an agreement for the establishment of a joint venture,
\"nexfibre\", for the deployment of fiber-to-the-home
(FTTH) to 5\u00a0million homes in the United Kingdom not
reached by VMED O2 UK Limited's (VMO2) network, with
potential for expansion to an additional 2\u00a0million homes.
The fiber network will offer wholesale FTTH access to
telecommunications service providers, with VMO2 acting
as the lead customer, as well as providing a range of
technical services.
Once the relevant regulatory authorizations were
obtained and the other conditions were fulfilled, the
closing of the transaction took place on December 15,
2022. After closing, Liberty Global and T. Infra participate
by halves in a joint vehicle that holds a 50% interest in
nexfibre, with InfraVia owning the remaining 50%.
The business plan for the initial rollout to 5\u00a0million homes
envisages an investment of approximately 4,500\u00a0million
pounds (approximately 5,072 million euros at the
exchange rate at December 31, 2022). The three partners
have funded their pro-rata share of equity funding for the
construction, totaling up to 1,400\u00a0million pounds
(approximately 1,578 million euros at the exchange rate at
December 31, 2022). In addition, nexfibre has entered into
a facilities agreement with a consortium of banks for an
amount of up to 3,300\u00a0million pounds (approximately
3,719 million euros at the exchange rate at December 31,
2022). As part of the transaction, InfraVia has made and
will continue to make certain payments to Liberty Global
and T. Infra, a portion of which will be linked to the
progress of the construction of the network.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCommitmentsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTQvZnJhZzo5ZGUzZjliYmEzMTQ0NDVmOGM5Y2EyNWFiMTJkZTNiNi90ZXh0cmVnaW9uOjlkZTNmOWJiYTMxNDQ0NWY4YzljYTI1YWIxMmRlM2I2XzE0MTgzNjk5OTk4NDE4Ng_c352ace1-fd93-4322-be5f-21ff7601339f": {
"value": "
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
Telef\u00f3nica United Kingdom | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | |
Number of shares (thousands) | | | |
Weighted average number of ordinary shares for basic earnings per share\u00a0 (does not include treasury shares) | | | |
Telef\u00f3nica, S.A. plans of rights over shares | | | |
Weighted average number of ordinary shares outstanding for diluted earnings per share (excluding treasury shares) | | | |
(*) Revised data.
For the purposes of calculating the earnings per share
(basic and diluted) attributable to equity holders of the
parent, the weighted average number of shares
outstanding is retrospectively adjusted for transactions
that have changed the number of shares outstanding
without a corresponding change in resources, as if such
transactions had occurred at the beginning of the earliest
period presented. Such is the case of the bonus share
issues carried out to meet the scrip dividend (see Note
17.b).
Thus, basic and diluted earnings per share attributable to
equity holders of the parent are as follows:
| | | |
Earnings per share (euros) | | | |
| | | |
| | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTQvZnJhZzo5ZGUzZjliYmEzMTQ0NDVmOGM5Y2EyNWFiMTJkZTNiNi90YWJsZTowYTY2ZDFiZGJiNzA0YmI4YmZhMmVjYzkwMWQ0NDQ2Yy90YWJsZXJhbmdlOjBhNjZkMWJkYmI3MDRiYjhiZmEyZWNjOTAxZDQ0NDZjXzEtMS0xLTEtNTEwNDI5_f537bce9-a123-46ba-b16b-3088db3c5de7": {
"value": "0.31",
"decimals": 2,
"dimensions": {
"concept": "ifrs-full:BasicEarningsLossPerShare",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00",
"unit": "iso4217:EUR/xbrli:shares"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMTcvZnJhZzo0N2Y4Mzg4M2Q3NjI0NTlkOTA2NTFmYjhkODAwZDQwNi90ZXh0cmVnaW9uOjQ3ZjgzODgzZDc2MjQ1OWQ5MDY1MWZiOGQ4MDBkNDA2XzI0NzM5MDExNjI1NDc2_87ea46b1-3e8e-4bc6-b9d4-802308b6b800": {
"value": "
Note 27. Share-based payment plans
Long-term incentive plan based on
Telef\u00f3nica, S.A. shares: Performance
Share Plan 2018-2022\u00a0
At the General Shareholders\u2019 Meeting held on June\u00a08,
2018, a long-term incentive plan was approved, consisting
of the delivery of shares of Telef\u00f3nica, S.A. aimed at senior
executive officers of the Telef\u00f3nica Group, including the
Executive Directors of Telef\u00f3nica, S.A. The plan consists
of the delivery to the participants of a certain number of
shares of Telef\u00f3nica, S.A. based on compliance with the
objectives established for each of the cycles into which
the plan is divided.
The number of shares to deliver depend (i) 50% on
achievement of the total shareholder return (\"TSR\")
objective for shares of Telef\u00f3nica, S.A. with regard to the
TSRs of a comparison group made up of companies of the
telecommunication sector, weighted by its relevance for
Telef\u00f3nica, and (ii) 50% on the generation of free cash
flow of Telef\u00f3nica Group (\"FCF\").\u00a0
The plan has a duration of five years and is divided into
three cycles of three years each. The first cycle
commenced in 2018 and finalized on December\u00a031, 2020.
The maximum number of shares assigned to this cycle of
the plan was 8,466,996, assigned as of January\u00a01, 2018
with a unit fair value of 6.4631 euros per share for FCF
objective and 4.516 euros for TSR. As of December\u00a031,
2020 the number of outstanding shares was 7,093,162.
Once considered the target fulfillment levels for 2018,
2019, and 2020, a weighted achievement ratio of 50%
was reached. Performance assessment was carried out
based on the evolution of the stock price and on the
audited results of the Company.
Nevertheless, on February\u00a023, 2021, the Chairman & CEO
declared in the Nominating, Retribution and Good
Governance Committee that he considered appropriate
to renounce to this incentive perception as a sign of
responsibility with society, customers, shareholders and
employees of Telef\u00f3nica as well as a cautious measure
after the economic impacts of the COVID-19 crisis. The
COO made the same declaration. The renounce was
accepted by the Board of Directors.
The second cycle commenced in 2019 and finalized on
December\u00a031, 2021 The maximum number of shares
assigned to this cycle of the plan was 9,471,489 with a unit
fair value of 6.1436 euros per share for FCF objective and
4.4394 euros for TSR. As of December\u00a031, 2021 the
number of outstanding shares was 7,494,896. Once
considered the target fulfillment levels for 2019, 2020, and
2021, a weighted achievement ratio of 50% was reached.
Performance assessment was carried out based on the
evolution of the stock price and on the audited results of
the Company.
In 2020 the third and final cycle commenced, which
finalized on December\u00a031, 2022. The maximum number of
shares assigned to this cycle of the plan was 5,346,508,
assigned as of January\u00a01, 2020 with a unit fair value of
3.2136 euros per share for FCF objective and 1.6444 euros
for TSR. As of December\u00a031, 2022 the number of
outstanding shares was 4,595,621. Once considered the
target fulfillment levels for 2020, 2021, and 2022, a
weighted achievement ratio of 50% has been reached.
Performance assessment has been carried out based on
the evolution of the stock price and on the audited results
of the Company.
Long-term incentive plan based on
Telef\u00f3nica, S.A. shares: Performance
Share Plan 2021-2025
At the General Shareholders\u2019 Meeting held on April\u00a023,
2021, a long-term incentive plan was approved, consisting
of the delivery of shares of Telef\u00f3nica, S.A. aimed at senior
executive officers of the Telef\u00f3nica Group, including the
Executive Directors of Telef\u00f3nica, S.A. The plan consists
of the delivery to the participants of a certain number of
shares of Telef\u00f3nica, S.A. based on compliance with the
objectives established for each of the cycles into which
the plan is divided.
The number of shares to deliver depend (i) 50% on
achievement of the total shareholder return (\"TSR\")
objective for shares of Telef\u00f3nica, S.A. with regard to the
TSRs of a comparison group made up of companies of the
telecommunication sector, weighted by its relevance for
Telef\u00f3nica, (ii) 40% on the generation of free cash flow of
Telef\u00f3nica Group (\"FCF\"), and (iii) 10% on CO2 Emission
Neutralization, in line with the goal set by the Company.
The plan has a duration of five years and is divided into
three cycles of three years each. The first cycle
commenced in 2021, with delivery of the respective
shares in 2024. The maximum number of shares assigned
to this cycle of the plan was 19,425,499 and the
outstanding shares at December\u00a031, 2022 was 18,544,534,
with the following breakdown:
| | | |
| | Outstanding shares at 12/31/2022 | |
| | | |
| | | |
| | | |
The second cycle commenced in 2022, with delivery of
the respective shares in 2025. The maximum number of
shares assigned to this cycle of the plan was 15,069,650
and the outstanding shares at December\u00a031, 2022 was
14,969,799, with the following breakdown:
| | | |
| | Outstanding shares at 12/31/2022 | |
| | | |
| | | |
| | | |
Long-term incentive plan based on
Telef\u00f3nica, S.A. shares: \u201cTalent for the
Future Share Plan 2018-2022\u201d (TFSP)\u00a0
At its meeting on June\u00a08, 2018, the Telef\u00f3nica, S.A.'s Board
of Directors agreed to launch the long-term incentive
plan \"Talent for the Future Share Plan\".
The term of this plan is five years and it is divided into
three cycles. As in the case of the Performance Share
Plan 2018-2022 described above, the number of shares to
deliver will depend (i) 50% on achievement of the total
shareholder return (\"TSR\") objective for shares of
Telef\u00f3nica, S.A. and (ii) 50% on the generation of free
cash flow of the Telef\u00f3nica Group (\"FCF\").
The first cycle commenced in 2018 and finalized on
December\u00a031, 2020. The maximum number of shares
assigned to this cycle of the plan was 787,500, assigned
as of January\u00a01, 2018 with a unit fair value of 6.4631 euros
per share for FCF objective and 4.516 euros for TSR. As of
December\u00a031, 2020 the number of outstanding shares
was 691,750. Once considered the target fulfillment levels
for 2018, 2019, and 2020, a weighted achievement ratio of
50% was reached. Performance assessment was carried
out based on the evolution of the stock price and on the
audited results of the Company.
The second cycle commenced in 2019 and finalized on
December\u00a031, 2021. The maximum number of shares
assigned to this cycle of the plan was 812,000, assigned
as of January\u00a01, 2019 with a unit fair value of 6.1436 euros
per share for FCF objective and 4.4394 euros for TSR.\u00a0 As
of December\u00a031, 2021 the number of outstanding shares
was 690,750. Once considered the target fulfillment
levels for 2019, 2020, and 2021, a weighted achievement
ratio of 50% was reached. Performance assessment was
carried out based on the evolution of the stock price and
on the audited results of the Company.
In 2020 the third and final cycle commenced, which
finalized on December\u00a031, 2022. The maximum number of
shares assigned to this cycle of the plan was 897,400,
assigned as of January\u00a01, 2020 with a unit fair value of
3.2136 euros per share for FCF objective and 1.6444 euros
for TSR. As of December\u00a031, 2022 the number of
outstanding shares was 761,600. Once considered the
target fulfillment levels for 2020, 2021, and 2022, a
weighted achievement ratio of 50% has been reached.
Performance assessment has been carried out based on
the evolution of the stock price and on the audited results
of the Company.
Long-term incentive plan based on
Telef\u00f3nica, S.A. shares: \u201cTalent for the
Future Share Plan 2021-2025\u201d (TFSP)
At its meeting on March\u00a017, 2021, the Telef\u00f3nica, S.A.'s
Board of Directors agreed to launch a new installment of
the long-term incentive plan \"Talent for the Future Share
Plan\".
The term of this plan is also five years and it is divided into
three cycles. As in the case of the Performance Share
Plan 2021-2025 described above, the number of shares to
deliver will depend (i) 50% on achievement of the total
shareholder return (\"TSR\") objective for shares of
Telef\u00f3nica, S.A. with regard to the TSRs of a comparison
group\u00a0 made up of companies of the telecommunication
sector, weighted by its relevance for Telef\u00f3nica, (ii) 40%
on the generation of free cash flow of Telef\u00f3nica Group
(\"FCF\"), and (iii) 10% on CO2 Emission Neutralization, in
line with the goal set by the Company.
The first cycle commenced in 2021, with delivery of the
respective shares in 2024. The maximum number of
shares assigned to this cycle of the plan was 1,751,500
and the outstanding shares at December\u00a031, 2022 was
1,659,500, with the following breakdown:
| | | |
| | Outstanding shares at 12/31/2022 | |
| | | |
| | | |
| | | |
The second cycle commenced in 2022, with delivery of
the respective shares in 2025. The maximum number of
shares assigned to this cycle of the plan was 1,646,500
and the outstanding shares at December\u00a031, 2022 was
1,611,000, with the following breakdown:
| | | |
| | Outstanding shares at 12/31/2022 | |
| | | |
| | | |
| | | |
Incentivized purchases of Telef\u00f3nica, S.A.
shares for employees
The Telef\u00f3nica, S.A. Ordinary General Shareholders\u2019
meeting on April 8, 2022 approved a new voluntary plan
for incentivized purchases of shares of Telef\u00f3nica, S.A. for
the employees of the Group. Under this Plan, employees
are offered the option to acquire Telef\u00f3nica, S.A. shares
during a twelve-month period, with the company
undertaking to deliver a certain number of free shares to
participants, subject to certain requirements. The
maximum amount that each employee can invest is
limited to 1,800 euros. The total number of free shares to
be delivered for the whole plan may never exceed 0.38%
of the share capital of Telef\u00f3nica, S.A. at the date of
approval of the plan at the General Shareholders'
Meeting.
The purchase period commenced in October 2022 and
will finalize in September 2023. In March 2024 the vesting
period of the plan will end. At December 31, 2022, 27,518
employees had registered for the plan.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMjAvZnJhZzoyNTY0OWQ3Y2I5NzQ0ZmZiOWMyYjU5NWUzNWNhOWQwZS90ZXh0cmVnaW9uOjI1NjQ5ZDdjYjk3NDRmZmI5YzJiNTk1ZTM1Y2E5ZDBlXzI0NzM5MDExNjI1NDQz_c8c0215f-7a07-4c34-a9f6-f9cfaf73fa30": {
"value": "
Note 28. Cash flow detail
Net cash flow provided by operating
activities
The detail of net cash flow provided by operating
activities is the following:
| | | |
| | | |
Cash received from operations | | | |
Cash paid from operations | | | |
| | | |
| | | |
Payments related to cancellation of commitments | | | |
Net payments of interest and other financial expenses net of dividends received | | | |
Net interest and other financial expenses paid | | | |
| | | |
Taxes proceeds/ (payments) | | | |
Net cash flow provided by operating activities | | | |
In 2022, dividends amounting to 800 million pounds were
received from VMED O2 UK Ltd (see Note 10) equivalent
to 909 million euros (161 million pounds, equivalent to 187
million euros in 2021).
Net cash flow used in investing activities
The following is a detail of the items comprising the net
cash flow used in investing activities.
| | | |
| | | |
Proceeds from the sale in property, plant and equipment and intangible assets | | | |
Payments on investments in property, plant and equipment and intangible assets | | | |
(Payments on investments)/proceeds from the sale in property, plant and equipment and intangible assets | | | |
Payments for non-financed spectrum in 2022 totaled 27
million euros, mainly due to the payment of 11 million euros
for Telef\u00f3nica M\u00f3viles Argentina and 8 million euros for
Telef\u00f3nica de Espa\u00f1a.
Payments for non-financed spectrum in 2021 totaled 999
million euros, mainly due to the payment of 521 million
euros for Telef\u00f3nica United Kingdom, 343 million euros for
Telef\u00f3nica Spain and 131 million euros for Telef\u00f3nica Chile.
| | | |
| | | |
Constitution of VMO2 (1) (Note 2) | | | |
Sale of Telecommunications towers divisions of Telxius (Note 2) | | | |
Tax associated with the sale of the tower division of Telxius (Note 25) | | | |
Sale of Telef\u00f3nica de Costa Rica | | | |
| | | |
Tax associated with the sale of InfraCo | | | |
Sale of Telef\u00f3nica M\u00f3viles El Salvador | | | |
Sale of fiber assets of Colombia Telecomunicaciones | | | |
Deferred collection sale of T. Ireland | | | |
Tax associated with the sales of operating businesses in Guatemala, Nicaragua and Panama in Telef\u00f3nica Centroam\u00e9rica Inversiones, S.L. | | | |
| | | |
(Payments)/proceeds on disposals of companies, net of cash and cash equivalents disposed | | | |
Oi mobile assets acquisition (Note 2) | | | |
Incremental acquisition (Note 5) | | | |
BE-terna acquisition (Note 5) | | | |
Cancom acquisition (Note 5) | | | |
Capital increase of UGG TopCo (Note 10) | | | |
| | | |
Payments on investments in companies, net of cash and cash equivalents acquired | | | |
(1) Cash received (see Note 2) less: (i) Cash and cash equivalents of Telefonica UK at the date of its exit from the scope of consolidation, and (ii) payments made in
2021 and 2022\u00a0 to the O2 UK pension plan and other expenses (see Note 29.c).
| | | |
| | | |
Collateral guarantees on derivatives | | | |
| | | |
| | | |
Proceeds on financial investments not included under cash equivalents | | | |
| | | |
Collateral guarantees on derivatives | | | |
Investment in funds shares of Telef\u00f3nica Brasil | | | |
Long-term financial instruments of Pegaso PCS (Note 12) | | | |
| | | |
Payments on financial investments not included under cash equivalents | | | |
Net proceeds/(payments) for temporary financial investments | | | |
(*) Data converted at the exchange rate at the end of each of the corresponding periods. The impact of the exchange rate with respect to the date of the
transaction is included in the \"Others\" line within the same sub-heading.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMjAvZnJhZzoyNTY0OWQ3Y2I5NzQ0ZmZiOWMyYjU5NWUzNWNhOWQwZS90YWJsZTo5NjgzNTViY2E4OTY0ZWUyYWFjZTllNWJkMzgwMGY0Mi90YWJsZXJhbmdlOjk2ODM1NWJjYTg5NjRlZTJhYWNlOWU1YmQzODAwZjQyXzEyLTEtMS0xLTEwMDM1MjY_ec05085f-d3ce-4bae-bb56-522d59fcafe4": {
"value": "1532000000",
"decimals": -6,
"dimensions": {
"concept": "tef:ProceedsFromPaymentsForPlacementsOfCashSurplusesNotIncludedInCashEquivalents",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00",
"unit": "iso4217:EUR"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMjAvZnJhZzoyNTY0OWQ3Y2I5NzQ0ZmZiOWMyYjU5NWUzNWNhOWQwZS90YWJsZTo5NjgzNTViY2E4OTY0ZWUyYWFjZTllNWJkMzgwMGY0Mi90YWJsZXJhbmdlOjk2ODM1NWJjYTg5NjRlZTJhYWNlOWU1YmQzODAwZjQyXzEyLTItMS0xLTEwMDM1MjY_e37cdc0b-ac22-40c0-93fa-428d05297105": {
"value": "-1584000000",
"decimals": -6,
"dimensions": {
"concept": "tef:ProceedsFromPaymentsForPlacementsOfCashSurplusesNotIncludedInCashEquivalents",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2021-01-01T00:00:00/2022-01-01T00:00:00",
"unit": "iso4217:EUR"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMjAvZnJhZzoyNTY0OWQ3Y2I5NzQ0ZmZiOWMyYjU5NWUzNWNhOWQwZS90YWJsZTo5NjgzNTViY2E4OTY0ZWUyYWFjZTllNWJkMzgwMGY0Mi90YWJsZXJhbmdlOjk2ODM1NWJjYTg5NjRlZTJhYWNlOWU1YmQzODAwZjQyXzEyLTMtMS0xLTEwMDM1MjY_dec8a2d0-d15d-4ec1-9f10-d7e683259532": {
"value": "217000000",
"decimals": -6,
"dimensions": {
"concept": "tef:ProceedsFromPaymentsForPlacementsOfCashSurplusesNotIncludedInCashEquivalents",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2020-01-01T00:00:00/2021-01-01T00:00:00",
"unit": "iso4217:EUR"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMzUvZnJhZzpmNzdmZWM3NWY2ODA0NTNlYmNkOTUzYThlMzY5ZjM0ZC90ZXh0cmVnaW9uOmY3N2ZlYzc1ZjY4MDQ1M2ViY2Q5NTNhOGUzNjlmMzRkXzI0NzM5MDExNjI1MDQ0_271ee419-de04-4367-bb4c-9e0bb6e99e2e": {
"value": "
d) Environmental and climate change
matters
Environmental management of the Group
Commitment to protect the environment is part of the
Company's general strategy and is the responsibility of
the Board of Directors. The performance in this area is
regularly supervised by the Board's Sustainability
Committee and the Responsible Business Office, made
up of the global areas which execute that strategy
alongside the business units.
The Group has global environmental and energy
management policies, and externally certified
environmental management systems in accordance with
ISO 14001 in all Group companies. The environment is a
central issue throughout the Company, involving both
operational and management areas as well as business
and innovation areas.
Managing environmental impact and energy
consumption is a strategic priority and carbon reduction
targets are part of the variable remuneration of all
Company employees, including the Senior Management.
In addition, Telef\u00f3nica, S.A.'s long-term share-based
incentive plans 2021-2025 (see Note 27) include CO2
Emission Neutralization targets, in line with the target set
by the Company.
Climate change and energy
In managing climate change, Telef\u00f3nica identifies
adaptation and mitigation measures and new
opportunities for growth and development. To analyse
climate change risks, the recommendations of the Task
Force on Climate Related Financial Disclosures (TCFD)
are followed, identifying short, medium and long-term
risks. Specifically, physical and transition risks identify the
importance of reducing GHG emissions and energy
consumption, and are managed in accordance with
Telef\u00f3nica's decarbonization roadmap. Opportunities,
meanwhile, identify different lines on which Telef\u00f3nica
seeks to develop its activity through the Energy Efficiency
Plan and the Renewable Energy Plan, the Sustainable
Finance Framework and the development of new
products and services.
All of this is contained in the Climate Action Plan, which
defines Telef\u00f3nica's decarbonization process to achieve
net zero emissions by 2040, which involves minimising its
own emissions (Scope 1 and 2) and those of the value
chain (Scope 3).
For Telef\u00f3nica, it is a priority to keep energy consumption
stable despite the sharp increase in the digitalization of
society and, therefore, in data traffic flowing through the
networks. The Group's Energy Efficiency Plan therefore
includes initiatives such as network modernization, for
example, with investments in fibre optics (more efficient)
replacing the copper network, or 5G, and specific projects
such as climate modernization.
The Company's decarbonization requires not only
maximum efficiency in the use of energy, but also that it
comes from renewable sources. Telef\u00f3nica's Renewable
Energy Plan contemplates different solutions such as self-
generation, the purchase of renewable electricity with a
guarantee of origin and long-term power purchase
agreements (PPAs, see Note 26), and prioritizes non-
conventional renewable electricity sources, defines the
strategy that allows us to reduce operating costs and
reduces exposure to fluctuations in electricity prices.
Most of the electricity consumption in own facilities come
from renewable sources. In Brazil, it is worth highlighting
the continuation of the distributed generation project. In
Spain, the four long-term renewable power purchase
agreements (PPAs) signed for the period 2022-2031 have
come into operation, equivalent to 482 GWh per year for
10 years. These new agreements follow on from the one
signed in 2020, enabling Telef\u00f3nica to achieve a total of
582 GWh of renewable electricity covered by PPAs in
Telef\u00f3nica Spain. In October 2022, Telefonica Germany
concluded a PPA with an energy supplier which provides
long-term energy security and energy supply with
renewable energies from an offshore wind farm over the
period from 2025 to 2035. In February 2023 Telefonica
Germany has concluded a further PPA for the period
2025 to 2040.
In terms of renewable self-generation, the Group has
photovoltaic self-generation systems in several buildings
in Spain, with solar production for self-consumption
(without surplus to the grid) under two models: the first
with its own CapEx and the second under a service
model, where the electricity generated is paid for at a
lower market value.
As part of its net zero objective, Telef\u00f3nica supports
projects that absorb or reduce carbon emissions in order
to offset and neutralize emissions that are not reduced. To
this end, it purchases carbon credits from projects under
the highest standards in certain regions where Telef\u00f3nica
operates.
The Telef\u00f3nica Group contracted, both locally and
globally, several insurance programs in order to mitigate
the possible occurrence of an incident stemming from the
risks of environmental liability and/or natural disasters, to
guarantee the continuity of its activity.
Sustainable financing
Sustainable financing is a key tool for supporting the
transformation of the business through investment in
projects with a positive environmental and social impact.
In 2018, the Company published its Sustainable Financing
Framework. This was updated in January 2021 and, in
both cases, was endorsed by a second party opinion from
Sustainalytics. The framework is linked to the United
Nations Sustainable Development Goals and aligned with
the Green Bond, Social Bond and Sustainable Bond
Principles of the International Capital Market Association
(ICMA).
Telef\u00f3nica was the first issuer of senior green bonds and
hybrid instruments (green and sustainable) in the
telecommunications sector. The funds that were obtained
have been allocated to projects focused on switching our
network from copper to fiber, which is more efficient and
suffers fewer faults; the rollout and improvement of
mobile connectivity in rural areas; and the promotion of
entrepreneurship and job creation through investments in
start-ups.
In addition to senior green bonds and hybrid instruments,
the Group use other sustainable bank financing tools,
such as loans and credits linked to sustainability
objectives that make it possible to progress steadily
towards such important corporate targets as reducing
emissions and gender equality. Also in this case, the main
syndicated loan of the Telef\u00f3nica Group is linked to
sustainability criteria in line with the corporate
Sustainability-linked Loan Framework, which was drawn
up in late 2021 with a second opinion from Sustainalytics.
In 2022, the Company maintained an active presence in
the capital market through several issuances. These
included its first sustainable senior bond issuance for
1,000 million euros in May (see Appendix III) with a term of
nine years. The funds obtained from this issuance will be
allocated to projects related to transformation of the
telecommunications network via the rollout of fiber optics
and 5G technology, as well as social projects aimed at
promoting inclusive connectivity, entrepreneurship and
job creation.
The Company\u2019s second hybrid green instrument issuance
took place in November for the value of 750 million euros
(see Note 17.c), with the first redemption date at 6 years.
In this case, the investment from funds will be used to
switch off obsolete equipment and transform mobile
infrastructures through energy efficiency projects.
Despite the market instability, these two issues were well
received by the market with a broadly international and
diversified investor base.
Already in January 2023, a new green hybrid instrument
has been issued for an amount of 1,000 million euros has
been carried out (see Note 31).
Telef\u00f3nica Brazil carried out its first issuance of\u00a0
sustainability-linked bonds, to an aggregated amount of
3,500 million reais (equivalent to 628 million euros at
closing 2022 exchange rate, see Appendix III). Financing
costs are linked to compliance with sustainability targets
between now and 2027.
In terms of bank financing, the Telef\u00f3nica Group\u2019s main
syndicated loan was refinanced at a corporate level in
early 2022 for the amount of 5,500 million euros (see
Note 18 and Appendix V), the interest applied to which will
be linked to compliance with sustainability targets. The
deal was supported by nearly 30 entities.
Committed lines and bilateral financing operations were
also carried out during the year with numerous financial
entities, obtaining a total volume of 3,864 million euros at
the close of 2022, the interest applied to which is also
linked to compliance with sustainability targets.
Overall, as at December\u00a031, 2022, the Group's sustainable
financing amounts to 15,956 million euros, broken down
as follows:
| |
| |
| |
| |
Senior green bond of Telef\u00f3nica Emisiones (Appendix III) | |
Senior sustainable bond of Telef\u00f3nica Emisiones (Appendix III) | |
Sustainability linked bonds of Telef\u00f3nica Brazil (Appendix III) | |
Sustainability linked facilities of Colombia Telecomunicaciones | |
Undated deeply subordinated securities (hybrid instruments) (Note 17.c) | |
Undrawn facilities at December 31, 2022 (Note 18) | |
Sustainability linked facility of Telef\u00f3nica, S.A. | |
Sustainability linked facility of Telefonica Germany | |
Sustainability linked bilateral facilities | |
| |
",
"dimensions": {
"concept": "tef:DisclosureOfEnvironmentalAspectsTextBlock",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yMzgvZnJhZzozNWIwYmM3YzM2N2Q0ZjA1YjIxMzQ1ZWZmN2ZjY2VjMC90ZXh0cmVnaW9uOjM1YjBiYzdjMzY3ZDRmMDViMjEzNDVlZmY3ZmNjZWMwXzI0NzM5MDExNjI1MDQ3_6234c68a-903c-4076-9111-2cdf87b8ce07": {
"value": "
e) Auditors\u2019 fees
The services commissioned to the auditors meet the
independence requirements stipulated by the Spanish
Audit Law 22/2015, July 20, the US SEC rules and the
Public Company Accounting Oversight Board (PCAOB).\u00a0
The expenses accrued by the Group, in respect of the
fees for services rendered to the various member firms of
the PwC network, of which PricewaterhouseCoopers
Auditores, S.L. (\"PwC Auditores, S.L.\"), the auditors of
Telef\u00f3nica, S.A., forms part, amounted to 20.07 million
euros and 19.99 million euros in 2022 and 2021,
respectively.\u00a0
The detail of these amounts is as follows:
Audit services includes audit fees of Telef\u00f3nica, S.A.
individual and consolidated financial statements and its
subsidiaries, as well as reviews of interim financial
statements. These Audit services also incorporate the
integrated audits of the financial statements for the
annual report Form 20-F to file with the US SEC for those
entities currently required including, therefore, the
internal control audit over the financial information to
comply with the requirements of the Sarbanes-Oxley
2002 Act (Section 404). Also includes audit work related
with legal and regulatory requirements that the auditor
must necessarily perform in their function and audit and
reviews of financial statements in connection with
financial transactions.
Audit-related services: services related to the review of
the information required by regulatory authorities, agreed
financial reporting procedures not requested by legal or
regulatory bodies, the issuance of comfort letters, the
report on the information relating to the system of internal
control over financial reporting (ICFR) and the verification
of the non-financial information in the annual reports.
During the years 2022 and 2021, the Principal Auditor has
not performed other services than the Audit services or
the Audit-related services in the Group.
PwC Auditores, S.L., has provided the following services
to the Group during the years 2022 and 2021: the
individual and consolidated financial statements audit,
reviews of interim financial statements, the integrated
audit of the financial statements for the annual report
Form 20-F to file with the US SEC, the internal control
audit over the financial information to comply with the
requirements of the Sarbanes-Oxley 2002 Act (Section
404), the issuance of comfort letters, agreed financial
reporting procedures and the verification of the non-
financial information in the annual reports.
The expenses accrued to Other Audit Firms, other than
those integrated in the international PwC network, that
have provided audit services to companies included in the
consolidation of the Group for the year 2022 have
amounted to a total of 1.46 million euros (1.58 million euros
in 2021), the detail of the audit services corresponds to
0.83 million euros (0.55 million euros in 2021).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yNDEvZnJhZzo1ODhiNzJiYzE0MDc0OWM0YjMxNTAxNmZiYTAwZTRmYS90ZXh0cmVnaW9uOjU4OGI3MmJjMTQwNzQ5YzRiMzE1MDE2ZmJhMDBlNGZhXzI0NzM5MDExNjI1MzA1_40709fac-d710-49cc-81bf-21fd5cffdd89": {
"value": "
f) Trade and other guarantees
The Company is required to issue trade guarantees and
deposits for concession and spectrum tender bids (see
Note 19) and in the ordinary course of its business. No
significant additional liabilities in the accompanying
consolidated financial statements are expected to arise
from guarantees and deposits issued.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCollateralExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yNDQvZnJhZzo1YTMzMzE5NTBiZjA0ODFiYjgzOTUxZTcxMDBiYjdkNy90ZXh0cmVnaW9uOjVhMzMzMTk1MGJmMDQ4MWJiODM5NTFlNzEwMGJiN2Q3XzI0NzM5MDExNjI1ODAy_acea552d-3493-41b1-abd5-6d4cb582f81a": {
"value": "
g) Directors\u2019 and Senior Executives\u2019
compensation and other benefits
The compensation of the members of Telef\u00f3nica\u2019s Board
of Directors is governed by article 35 of the Company\u2019s
By-Laws, which provides that the annual amount of the
compensation to be paid thereby to all of the Directors in
their capacity as such, i.e., as members of the Board of
Directors and for the performance of the duty of
supervision and collective decision-making inherent in
such body, shall be fixed by the shareholders at the
General Shareholders' Meeting. The Board of Directors
shall determine the exact amount to be paid within such
limit and the distribution thereof among the Directors,
taking into account the duties and responsibilities
assigned to each Director, their membership on
Committees within the Board of Directors and other
objective circumstances that it deems relevant.
Furthermore, Executive Directors shall receive such
compensation as the Board determines for the
performance of executive duties delegated or entrusted
to them by the Board of Directors. Such compensation
shall conform to the Director compensation policy
approved by the shareholders at the General
Shareholders\u2019 Meeting.\u00a0
In accordance with the foregoing, the shareholders acting
at the Ordinary General Shareholders\u2019 Meeting held on
April 11, 2003 set at 6\u00a0million euros the maximum amount
of annual gross compensation to be received by the
Board of Directors as a fixed allotment and as attendance
fees for attending the meetings of the Advisory or Control
Committees of the Board of Directors. Thus, as regards
fiscal year 2022, the total amount of compensation
accrued by the Directors of Telef\u00f3nica, in their capacity as
such, was 2,851,801 euros for the fixed allocation and for
attendance fees.\u00a0
The compensation of the Directors of Telef\u00f3nica in their
capacity as members of the Board of Directors, of the
Executive Commission and/or of the Advisory or Control
Committees consists of a fixed amount payable monthly
and of attendance fees for attending the meetings of the
Advisory or Control Committees.
Set forth below are the amounts established in fiscal year \u00a0
2022 as fixed amounts for belonging to the Board of
Directors, the Executive Commission and the Advisory or
Control Committees of Telef\u00f3nica and the attendance
fees for attending meetings of the Advisory or Control
Committees of the Board of Directors:
Compensation of the Board of Directors and of
the Committees thereof
| | | |
|
| | | Advisory or Control Committees (*) |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
(*) In addition, the amount of the attendance fee for each of the
meetings of the Advisory or Control Committees is 1,000 euros.
In this regard, it is noted that the Executive Chairman, Mr.
Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez, waived the receipt of
the above amounts (i.e., 240,000 euros as Chairman of
the Board of Directors and 80,000 euros as Chairman of
the Executive Commission).
Likewise, the fixed remuneration of 1,923,100 euros
established for the 2023 financial year related to
executive roles carried out by Executive Chairman, Mr.
Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez is equal to that received
in the previous seven years (i.e. 2022, 2021, 2020, 2019,
2018, 2017 and 2016), which was set in his capacity as
Chief Operating Officer, remaining invariably after his
appointment as Chairman in 2016.
The fixed remuneration, for his executive roles, of
1,600,000 euros that the Chief Operating Officer (C.O.O.),
Mr. \u00c1ngel Vil\u00e1 Boix, has established for the 2023\u00a0 financial
year is equal to the one received in the years 2022, 2021,
2020 and 2019.
Individualized description
Appendix II provides an individual breakdown by item of
the compensation and benefits that the members of the
Board of Directors and of the Senior Management of the
Company have accrued and/or received from Telef\u00f3nica,
S.A. and from other companies of the Telef\u00f3nica Group
during fiscal year 2022. Likewise, the compensation and
benefits accrued and/or received, during such year, by
the members of the Company's Senior Management are
broken down.
Appendix II: Board and Senior
Management Compensation
TELEF\u00d3NICA, S.A.
(Amounts in euros)
| | | | | | | |
| | | | Short-term variable remuneration4 | Remuneration for belonging to the Board Committees5 | | |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | | | | | | | |
Mr. Isidro Fain\u00e9 Casas | | | | | | | |
Mr. Jos\u00e9 Mar\u00eda Abril P\u00e9rez | | | | | | | |
Mr. Jos\u00e9 Javier Echenique Landir\u00edbar | | | | | | | |
Mr. \u00c1ngel Vil\u00e1 Boix | | | | | | | |
Mr. Juan Ignacio Cirac Sasturain | | | | | | | |
| | | | | | | |
Ms. Carmen Garc\u00eda de Andr\u00e9s | | | | | | | |
Ms. Mar\u00eda Luisa Garc\u00eda Blanco | | | | | | | |
| | | | | | | |
Ms. Ver\u00f3nica Pascual Bo\u00e9 | | | | | | | |
Mr. Francisco Javier de Paz Mancho | | | | | | | |
Mr. Francisco Jos\u00e9 Riberas Mera | | | | | | | |
Ms. Mar\u00eda Rotondo Urcola | | | | | | | |
Ms. Claudia Sender Ram\u00edrez | | | | | | | |
1. Salary: Amount of non-variable remuneration earned by the Director from other companies of the Telef\u00f3nica Group for his/her executive functions.\u00a0
2. Fixed remuneration: Amount of the compensation in cash, with a pre-established payment periodicity, subject to consolidation over time or not, earned by the
member for his/her position on the boards of other companies of the Telef\u00f3nica Group.
3. Allowances: Total amount of the allowances for attending the board meetings of other companies of the Telef\u00f3nica Group.
4. Variable short-term remuneration (bonuses): Variable amount linked to the performance or achievement of a series of individual or group objectives
(quantitative or qualitative) within a period of time equal to or less than a year, corresponding to the year 2022 and to be paid in the year 2023 by other
companies of the Telef\u00f3nica Group.
5. Remuneration for belonging to the Board Committees of other companies of the Telef\u00f3nica Group: Amount of items other than allowances, which the
directors are beneficiaries through their position on the Advisory or Steering Committees of other companies of the Telef\u00f3nica Group, regardless of the effective
attendance of the board member such Committee meetings.
6. Other concepts: This includes, among others, the amounts received as remuneration in kind (general medical and dental coverage and vehicle insurance), paid
by other companies of the Telef\u00f3nica Group. Also included are the amounts received for membership of the Advisory Boards of Telef\u00f3nica Espa\u00f1a, Telef\u00f3nica
Hispanoam\u00e9rica, Telef\u00f3nica Tech and Telef\u00f3nica Ingenier\u00eda de Seguridad.
Additionally, as mentioned in the Remuneration Policy
section, the Executive Board Members have a series of
Assistance Services. Below, the contributions made
during 2022 are detailed for the Company to long-term
savings systems (Pension Plans and Social Welfare Plan):
LONG-TERM SAVINGS SYSTEMS
(Amounts in euros)
| |
| Contributions for fiscal year 2022 |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
The breakdown of the long-term saving systems includes
contributions to Pension Plans, to the Benefit Plan and to
the Unit link-type Insurance, as set out below:
(Amounts in euros)
| | | |
| Contribution to Pension Plans | Contribution to Executive Social Welfare Plan1 | Contributions to Unit link- type Insurance/ Pension Plan Surplus2 |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez- Pallete L\u00f3pez | | | |
Mr. \u00c1ngel Vil\u00e1 Boix | | | |
REMUNERATION PLANS BASED ON
SHARES
As regards to remuneration plans based on shares
(involving Executive Directors), the following long-term
variable remuneration plans were in existence during the
year 2022:
The so-called Performance Share Plan (\"PSP\"), made
up of three cycles (2018-2021; 2019-2022;
2020-2023), approved by the General Shareholders'
Meeting held on June 8, 2018.
The maximum number of Telef\u00f3nica shares to be
delivered depends (i) 50% of the compliance with the
targets set out for Total Shareholder Return (\"TSR\") on
Telef\u00f3nica, S.A. shares with respect to the TSRs of a
comparison group of companies in the
telecommunications sector weighted according to their
relevance to Telef\u00f3nica, and (ii) 50%, of the Free Cash
Flow (the \"FCF\") of the Telef\u00f3nica Group.
The target measurement period for the First Cycle started
on January 1, 2018 and ended on December 31, 2020,
resulting in a weighted payout ratio of 50%.
Notwithstanding the foregoing, the Executive Chairman
stated to the Nominating, Compensation and Corporate
Governance Committee, at its meeting of February 23,
2021, that he considered it appropriate to propose his
waiver of the incentive, as a gesture of responsibility
towards the company, customers, shareholders and
employees of Telef\u00f3nica, as well as a measure of
prudence following the economic effects derived from
COVID-19. The CEO expressed the same view. The
resignation was accepted by the Board of Directors.
The target measurement period for the Second Cycle
started on January 1, 2019 and ended on December 31,
2021, resulting in a weighted payout ratio of 50%.The
evaluation of the degree of compliance was carried out
on the basis of the evolution of the share price, as well as
the audited results of the Company. Thus, at the end of
the Plan's Second Cycle, Executive Directors received
234,000 gross shares in the case of the Executive
Chairman, Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez, and
173,500 gross shares in the case of the Chief Operating
Officer (C.O.O.) Mr. \u00c1ngel Vil\u00e1 Boix.\u00a0
The target measurement period of the Third and last
Cycle started on January 1, 2020 and ended on December
31, 2022.
This Cycle had a maximum of 465,000 shares allocated
on January 1, 2020, to the executive Directors, with a unit
fair value of 3.2136 euros per share for FCF (\"Free Cash
Flow\") and 1.6444 euros for TSR (\"Total Shareholder
Return\"). At the end of the cycle date, Kepler has
submitted the Nominating, Compensation and Good
Governance Committee the calculation of Total
Shareholder Return for Telef\u00f3nica, S.A., which has
concluded below the median according to the
performance scale. Therefore, there is no right to perceive
the number of shares linked to the relative TSR objective.
With respect to Free Cash Flow objective, considering the
partial fulfillment of 2020, 2021 and 2022, the average
weighted payment coefficient is 50%. Performance
assessment has been carried out based on the results
audited both by independent and internal auditors of the
Company, analyzed firstly by the Audit and Control
Committee and subsequently submitted to the
Nominating, Compensation and Corporate Governance
Committee and approved by the Board of Directors.
Thus, at the end of the Plan's Third and last Cycle,
Executive Directors are entitled to receive 133,500 gross
shares in the case of the Executive Chairman, Mr. Jos\u00e9
Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez, and 99,000 gross shares in
the case of the Chief Operating Officer (C.O.O.) Mr \u00c1ngel
Vil\u00e1 Boix.
On the other hand, the denominated Performance
Share Plan (PSP), consisting of three cycles
(2021-2024; 2022- 2025; 2023-2026), approved by the
Ordinary General Meeting of Shareholders held on April
23, 2021, was also in force during the financial year 2022.
There were two Cycles of the Plan in force during the
2022 financial year. The First Cycle, which started on
January 1, 2021 and will end on December 31, 2023. If
targets are met, the shares will be delivered in 2024. And
the Second Cycle, which started on January 1, 2022 and
will end on December 31, 2024. If targets are met, the
shares will be delivered in 2025.
In both Cycles, the number of Telef\u00f3nica, S.A. shares that,
within the established maximum, could be delivered, as
the case may be, to the Participants, is conditioned and is
determined based on the compliance of the established
targets: 50% of the compliance of the Total Shareholder
Return objective (the TSR) of the Telef\u00f3nica, S.A. share,
40% of the generation of Free Cash Flow of the
Telef\u00f3nica Group (the FCF), and 10% of the Neutralization
of CO2 Emissions.
To determine compliance with the TSR target and
calculate the specific number of shares to be delivered for
this concept, the performance of the TSR on Telef\u00f3nica,
S.A.'s shares will be measured during the measurement
period of each three-year cycle, in relation to the TSRs
experienced by certain companies in the
telecommunications sector, weighted according to their
relevance to Telef\u00f3nica, S.A., which for purposes of the
Plan will constitute a comparison group (hereinafter the
\"Comparison Group\"). The companies included in the
Comparison Group are listed below: Am\u00e9rica M\u00f3vil, BT
Group, Deutsche Telekom, Orange, Telecom Italia,
Vodafone Group, Proximus, Koninklijke KPN, Millicom,
Swisscom, Telenor, TeliaSonera, TIM Brasil, and Liberty
Global.
With regard to complying with the TSR objective, the Plan
will foresee that the number of shares to be delivered
associated with meeting this objective will range from 15%
of the number of theoretical shares assigned, assuming
that the TSR performance of Telef\u00f3nica, S.A. shares is at
least the median of the comparison group, to 50% if the
performance is in the third quartile or above in the
Comparison Group, with the percentage calculated by
linear interpolation for cases falling between the median
and third quartile.
In order to determine the compliance with the FCF
objective and calculate the specific number of shares to
be delivered for this concept, the FCF level generated by
the Telef\u00f3nica Group during each year will be measured
and compared to the value set in the budgets approved
by the Board of Directors for each financial year.
With regard to the FCF, for each of the two cycles in force
during the fiscal year 2022, the Board of Directors, at the
proposal of the Appointments, Remunerations and
Corporate Governance Committee, determined a scale of
achievement that includes a minimum threshold of 90%
compliance, below which no incentive is paid and
compliance with which will entail the delivery of 20% of
the theoretical shares assigned, and a maximum level of
100% compliance, which will entail the delivery of 40% of
the theoretical shares assigned.
To determine compliance with the CO2 Emissions
Neutralization target and calculate the specific number of
shares to be delivered for this item, the level of CO2
emissions neutralization achieved at the end of the cycle
will be measured, with the incentive being paid upon
reaching a certain level of scope 1 + 2 emissions
reduction.
The level of direct and indirect CO2 emissions from our
daily activity shall be calculated according to the
following:
CO2 Emission = Activity x Emission Factor, where:
-\u00a0 Activity: Amount of energy, fuel, gas, etc. consumed by
the Company.
-\u00a0 Emission Factor: Amount of CO2 emitted to the
atmosphere by the consumption of each unit of activity.
The emission factor provided by official sources
(European Union, Ministries, CNMC, etc.) is used for
electricity and the GHG Protocol emission factors are
used for fuels.
At the beginning of both cycles, the Board of Directors, at
the proposal of the Appointments, Remunerations and
Corporate Governance Committee, determined a scale of
achievement that includes a minimum threshold of 90%
compliance, below which no incentive is paid and
compliance with which will entail the delivery of 5% of the
theoretical shares assigned, and a maximum level of 100%
compliance, which will entail the delivery of 10% of the
theoretical shares assigned. In addition, a minimum level
of emission reductions of Scope 1 + 2 will need to be
achieved for the incentive to be paid.
In any case, 100% of the shares delivered under the Plan
to the Executive Directors and other Participants as
determined by the Board of Directors shall be subject to a
two-year holding period.
In addition, in accordance with the provisions of the
Remuneration Policy for Directors of Telef\u00f3nica, SA, the
Executive Directors must maintain (directly or indirectly) a
number of shares (including those delivered as
remuneration) equivalent to two years of their Gross Fixed
Remuneration, as long as they continue to belong to the
Board of Directors and perform executive functions. Until
such time as this requirement is met, the holding period
for any shares delivered under the Plan to Executive
Directors will be three years.
The maximum number of allocated shares to be delivered
in the event of maximum compliance with the TSR (Total
Shareholder Return), FCF (Free Cash Flow) and CO2
Emission Neutralization targets set for the First and
Second Cycle of the Plan is shown below.
PSP - First Cycle / 2021-2024
| |
| Maximum number of shares (*) |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
(*) Maximum possible number of shares to be received in case of maximum
completion of TSR, FCF and Neutralization of CO2 Emissions\u00a0 target.\u00a0
In any case, it is noted that no shares have been delivered
to Executive Directors under the first cycle of the PSP and
that the above table only reflects the number of
potentially deliverable shares, without in any way implying
that all or part of the shares will actually be delivered.
PSP - Second Cycle / 2022-2025
| |
| Maximum number of shares (*) |
Mr. Jos\u00e9 Mar\u00eda \u00c1lvarez-Pallete L\u00f3pez | |
Mr. \u00c1ngel Vil\u00e1 Boix | |
Meeting held on June 8, 2018.
The target measurement period of the First Cycle started
on January\u00a01, 2018 and ended on December 31, 2020,
resulting in a weighted payment coefficient of
50%.Consequently, the number of shares corresponding
to the First Cycle (2018-2021) of the Performance Share
Plan that were delivered in the 2021 financial year to the
Company's Senior Executives amounted to 220,085 gross
shares.
The target measurement period of the Second Cycle
started on January\u00a01, 2019 and ended on December\u00a031,
2021, resulting in a weighted payment coefficient of 50%.
Consequently, the number of shares corresponding to the
Second Cycle (2019-2022) of the Performance Share Plan
that were delivered in the 2022 financial year to the
Company's Senior Executives amounted to 256,246 gross
shares.
The target measurement period of the Third and last
Cycle started on January 1, 2020 and ended on December
31, 2022. This cycle had a maximum of 316,762 shares
allocated on January 1, 2020 to the group of directors
forming part of the Company's Senior Management, with
a unit fair value of 3.2136 euros per share for FCF and
1.6444 euros for TSR. At the end of the cycle date, Kepler
has submitted the Nominating, Compensation and Good
Governance Committee the calculation of TSR for
Telef\u00f3nica, S.A., which has concluded below the median
according to the performance scale. Therefore, there is
no right to perceive the number of shares linked to the
relative TSR objective.
With respect to Free Cash Flow objective, considering the
partial fulfillment of 2020, 2021 and 2022, the average
weighted payment coefficient is 50%. Performance
assessment has been carried out based on the results
audited both by independent and internal auditors of the
Company, analyzed firstly by the Audit and Control
Committee and subsequently submitted to the
Nominating, Compensation and Corporate Governance
Committee and approved by the Board of Directors.
Thus, at the end of the Third Cycle (2020-2023) of the
Performance Share Plan, the Company's Senior
Executives are entitled to receive 158,381 gross shares.
On the other hand, the Performance Share Plan (PSP),
consisting of three cycles (2021-2024; 2022-2025;
2023- 2026), approved by the Ordinary General Meeting
of Shareholders held on April 23, 2021, was also in force
during the financial year 2022.
The target measurement period of the First Cycle started
on January 1, 2021 and will end on December 31, 2023. The
maximum number of shares allocated to be delivered in
2023 in the event of maximum compliance with the TSR
(Total Shareholder Return), FCF (Free Cash Flow) and
CO2 Emission Neutralization targets set for the First Cycle
(2021-2024) for all the Company's Senior Executives was
1,333,081.
The target measurement period of the Second Cycle
started on January 1, 2022 and will end on December 31,
2024. The maximum number of shares allocated to be
delivered in 2025 in the event of maximum compliance
with the TSR (Total Shareholder Return), FCF (Free Cash
Flow) and CO2 Emission Neutralization targets set for the
Second Cycle (2022-2025) for all the Company's Senior
Executives was 1,241,015.
On the other hand, Telef\u00f3nica, S.A. General Meeting of
Shareholders held on April 8, 2022, approved a new
Global Telef\u00f3nica, S.A. Incentive Share Purchase Plan for
Telef\u00f3nica Group Employees, in which the Senior
Management participate as a token of their commitment
to the Company and in order to encourage other
employees to participate in the Plan. The Plan will end in
March 2024, and the maximum amount that each
employee can allocate to it is 1,800 euros.
(1) For these purposes, Senior Management is understood to be those
persons who perform, de jure or de facto, senior management functions
reporting directly to the Board of Directors or Executive Committees or
Managing Directors of the Company, including, in all cases, the person
responsible for Internal Audit.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yNDcvZnJhZzpiODEwZDg0ZDFjOWI0ZWM1OGZkOWUzMTRiNmExZDYzMy90ZXh0cmVnaW9uOmI4MTBkODRkMWM5YjRlYzU4ZmQ5ZTMxNGI2YTFkNjMzXzI0NzM5MDExNjI1MzQ0_5bc7a5ce-2f47-4a0c-ab93-2348cccaa382": {
"value": "
Note 30. Operations classified
as\u00a0held\u00a0for\u00a0sale
The breakdown of non-current assets and disposal
groups held for sale and liabilities associated at
December\u00a031, 2022 and December\u00a031, 2021 is as follows:
| | |
| | |
Telef\u00f3nica M\u00f3viles El Salvador | | |
Fiber optic assets in Colombia | | |
| | |
Non-current assets and disposal groups held for sale | | |
| | |
| | |
Telef\u00f3nica M\u00f3viles El Salvador | | |
| | |
Liabilities associated with non- current assets and disposal groups held for sale | | |
has become the sole shareholder of Telxius Telecom,
S.A. Likewise, Pontegadea Inversiones, S.L. increased its
holding in Pontel Participaciones, S.L. to 30% and
Telef\u00f3nica has now a 70% stake.
\u2022On January 23, 2023, Telef\u00f3nica Emisiones, S.A.U.
redeemed 1,277 million euros of its notes issued on
January 22, 2013. These notes were guaranteed by
Telef\u00f3nica, S.A.
\u2022In January 2023, Telef\u00f3nica Europe, B.V. carried out the
following transactions related to its capital structure:
\u25e6a new issue amounting to 1,000 million euros,
guaranteed by Telef\u00f3nica, S.A. An amount equal to
the net proceeds of the issue of the securities will be
subject to specific eligibility criteria to be applied to
finance new or refinance existing projects, as detailed
in Telef\u00f3nica's SDG Framework. The settlement took
place on February 2, 2023; and
\u25e6a tender offer for the following hybrid instruments: (i)
any outstanding 1,250 million euros Undated 5.7 Year
Non-Call Deeply Subordinated Guaranteed Fixed
Rate Reset Securities (the \"September 2023 Notes\")
and (ii) any outstanding 1,000 million euros Undated
10 Year Non-Call Deeply Subordinated Guaranteed
Fixed Rate Reset Securities (the \"March 2024 Notes\"),
irrevocably guaranteed by Telef\u00f3nica, S.A. Telef\u00f3nica
Europe, B.V. accepted the purchase in cash of the
tendered securities for an aggregate principal
amount, with respect to the September 2023 Notes,
of 388 million euros, and an aggregate principal
amount, with respect to the March 2024 Notes, of 612
million euros. The tender offer settled on February 3,
2023.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory",
"language": "en",
"entity": "scheme:549300EEJH4FEPDBBR25",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOjNkODQ0YTY0MjVkMzQ3MzA4MjQ3MzE4NzkwMmU0NDI0L3NlYzozZDg0NGE2NDI1ZDM0NzMwODI0NzMxODc5MDJlNDQyNF8yNTYvZnJhZzpkMmM3ZWI5MGJhOTA0NDU3Yjk4NDM3MzFjN2FmYjQ2Yy90ZXh0cmVnaW9uOmQyYzdlYjkwYmE5MDQ0NTdiOTg0MzczMWM3YWZiNDZjXzI0NzM5MDExNjI2MTQ3_0733d6ee-66e4-42b7-893e-abd5604cc573": {
"value": "
Appendix I: Scope of consolidation
The main companies of the Telef\u00f3nica Group
The table below lists the main companies comprising the
Telef\u00f3nica Group at December 31, 2022 and the main
investments consolidated using the equity method.
Included for each company are the company name,
corporate purpose, country, functional currency, share
capital (in millions of functional currency units), the
Telef\u00f3nica Group\u2019s effective shareholding and the
company or companies through which the Group holds a
stake.
Parent Company
Telef\u00f3nica, S.A.
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Telef\u00f3nica de Espa\u00f1a, S.A.U. Telecommunications service provider | | | | | |
Telef\u00f3nica M\u00f3viles Espa\u00f1a, S.A.U. Wireless communications services provider | | | | | |
Teleinform\u00e1tica y Comunicaciones, S.A.U. (Telyco) Promotion, marketing and distribution of telephone and telematic equipment and services | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Telef\u00f3nica Soluciones de Inform\u00e1tica y Com. de Espa\u00f1a S.A.U. Telecommunications systems, networks and infrastructure engineering | | | | | Telef\u00f3nica de Espa\u00f1a, S.A.U. |
Telef\u00f3nica Soluciones de Outsourcing, S.A. Promotion and networks management | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Telef\u00f3nica Servicios Integrales de Distribuci\u00f3n S.A.U. Logistic service provider | | | | | Telef\u00f3nica de Espa\u00f1a, S.A.U. |
Telef\u00f3nica Espa\u00f1a Filiales, S.A. Organization and operation of multimedia service-related business | | | | | |
Telef\u00f3nica Servicios Audiovisuales, S.A.U. Provision of all type of audiovisual telecommunications services | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Telef\u00f3nica Broadcast Services, S.L.U. DSNG-based transmission and operation services | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
TBSC Barcelona Producciones, S.L.U. Provision of audiovisual telecommunications services | | | | | Telef\u00f3nica Broadcast Services, S.L.U. |
Telef\u00f3nica\u00a0 Audiovisual Digital, S.L.U. Provision of all type of audiovisual telecommunications services | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Telef\u00f3nica Global Technology, S.A.U. Global management and operation of IT systems | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Telef\u00f3nica Educaci\u00f3n Digital, S.L. Vertical e-learning portal | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
| | | | | |
Name and corporate purpose | | | | | |
Telef\u00f3nica Spain (cont.) | | | | | |
Bluevia Fibra, S.L. Operations and exploitation of FTTH network and other connectivity services. | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. (30%) Telef\u00f3nica Infra,\u00a0 S.L.\u00a0 (25%) |
Solar360 Soluciones de Instalacion y Mantenimiento S.L. Marketing and management in the installation, sale and maintenance of photovoltaic equipment | | | | | Telef\u00f3nica de Espa\u00f1a, S.A.U. |
| | | | | |
Telef\u00f3nica Deutschland Holding A.G Holding company | | | | | Telef\u00f3nica Germany Holdings Limited (69.22%) Telef\u00f3nica, S.A. (1.36%) |
Telef\u00f3nica Germany GmbH & Co. OHG Wireless communications services operator | | | | | Telef\u00f3nica Deutschland Holding A.G (70.57%) T. Germany Management, GmbH (0.01%)\u00a0 \u00a0 |
E-Plus Service GmbH Wireless communications services operator | | | | | Telef\u00f3nica Germany GmbH & Co. OHG |
Telef\u00f3nica Germany Business Sales GmbH Technological and consulting services in Big Data provider | | | | | Telef\u00f3nica Germany GmbH & Co. OHG |
O2 Telef\u00f3nica Deutschland Finanzierungs GmbH Integrated cash management, consulting and financial support for Group companies | | | | | Telef\u00f3nica Germany GmbH & Co. OHG |
| | | | | |
Telef\u00f4nica Brasil, S.A. Wireline telephony operator | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. (36.31%) Telef\u00f3nica, S.A. (37.83%) Telef\u00f3nica Chile, S.A. (0.06%) |
Terra Networks Brasil, Ltda. ISP and portal | | | | | Telef\u00f4nica Brasil, S.A. |
Telef\u00f4nica Infraestructura e Seguran\u00e7a Brasil Ltda. Security services and systems | | | | | Terra Networks Brasil, Ltda. |
Garliava RJ Infraestrutura e Redes de Telecomunicacoes S.A. Wireline telephony operator | | | | | Telef\u00f4nica Brasil, S.A. |
Vivo ventures fundo de investimento em participacoes multiestrategia. Investment funds | | | | | Telef\u00f4nica Brasil, S.A. (73.29%) Telefonica Open Innovation S.L (2.00%) |
Vita IT Com\u00e9rcio e Servi\u00e7os de Solu\u00e7\u00f5es em TI Ltda. Technical support, maintenance and other IT services | | | | | Telef\u00f4nica Infraestructura e Seguran\u00e7a Brasil Ltda. |
| | | | | |
Telef\u00f3nica Hispanoam\u00e9rica, S.A. Holding company | | | | | |
TLH Holdco, S.L. Holding company | | | | | |
| | | | | |
Name and corporate purpose | | | | | |
Telef\u00f3nica Hispam (cont.) | | | | | |
Telef\u00f3nica Venezolana, C.A. Wireless communications operator | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. (86.72%) Comtel Comunicaciones Telef\u00f3nicas, S.A. (2.56%) |
Colombia Telecomunicaciones S.A. ESP BIC Communications services operator | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
Operaciones Tecnol\u00f3gicas y Comerciales S.A.S Communications services operator | | | | | Colombia Telecomunicaciones S.A. ESP BIC |
Pegaso Pcs S.A. de C.V. Communications services operator | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. (99.95%) Celular de Telefon\u00eda S.A. de CV. (0.05%) |
Terra Networks M\u00e9xico, S.A. de C.V. ISP, portal and real-time financial information services | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
Fisatel M\u00e9xico, S.A. de C.V. SOFOM E.N.R. Integrated cash mangement, consulting and financial support for Group companies | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. (99.99%) Pegaso Pcs S.A. de CV. (0.01%) |
Otecel, S.A. Wireless communications services provider | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
Telef\u00f3nica de Argentina, S.A. Telecommunications service provider | | | | | Telef\u00f3nica M\u00f3viles Argentina, S.A. (77.64%) TLH Holdco, S.L. (22.36%) |
Telef\u00f3nica M\u00f3viles Argentina, S.A. Telecommunications service provider | | | | | |
Telef\u00f3nica M\u00f3viles Chile, S.A. Wireless communications services operator | | | | | Inversiones Telef\u00f3nica Internacional Holding SpA. (98.96%) Telef\u00f3nica Hispanoam\u00e9rica, S.A.\u00a0 (1.04%) |
Telef\u00f3nica Chile, S.A. Local and international long distance telephony services provider | | | | | Telef\u00f3nica M\u00f3viles Chile, S.A. |
Telef\u00f3nica Chile Holdings, S.L.U. Holding Company | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
Telef\u00f3nica del Per\u00fa, S.A.A. Local, domestic and international long distance telephone service provider | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
Media Networks Latin America, S.A.C Telecommunications research activities and proyects | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. |
Telef\u00f3nica M\u00f3viles del Uruguay, S.A. Wireless communications and services operator | | | | | Telef\u00f3nica Hispanoam\u00e9rica, S.A. |
| | | | | |
Telef\u00f3nica Infra,\u00a0 S.L. Holding company | | | | | |
Telef\u00f3nica Infra Germany GmbH Broadband telecommunications operator | | | | | Telef\u00f3nica Infra,\u00a0 S.L.\u00a0 |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Telef\u00f3nica O2 Holdings Ltd. Holding company | | | | | Telef\u00f3nica, S.A.\u00a0 (99.99%) Telef\u00f3nica Capital S.A. (0.01%) |
| | | | | Telef\u00f3nica O2 Holding Ltd. |
O2 International Holdings Ltd. Holding company | | | | | |
O2 (Netherlands ) Holdings BV. Holding company | | | | | O2 International Holdings Ltd. |
Telef\u00f3nica Germany Holdings Ltd. Holding company | | | | | |
O2 (Europe) Ltd. Holding company | | | | | |
Telef\u00f3nica International Holding, B.V Holding company | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. |
Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. Sociedad holding | | | | | \u00a0 \u00a0 \u00a0Telef\u00f3nica, S.A. |
Telef\u00f3nica Global Solutions, S.L.U. International service provider | | | | | |
Telefonica Global Solutions USA, Inc. Provision of telecommunications services | | | | | Telef\u00f3nica Global Solutions, S.L.U. |
Telef\u00f3nica Global Solutions Germany GmbH. International service provider | | | | | Telef\u00f3nica Global Solutions, S.L.U. |
Telef\u00f3nica Global Solutions M\u00e9xico, S.A. de C.V. Carrying out research activities and projects in the field of telecommunications | | | | | Telef\u00f3nica Global Solutions, S.L.U. |
Telef\u00f3nica Digital Espa\u00f1a, S.L. Developer Telco Services Holding Company | | | | | |
Telef\u00f3nica Digital Ltd. Developer Telco Services | | | | | Telef\u00f3nica Digital Espa\u00f1a, S.L. |
Telefonica Open Innovation S.L. Talent identification and development in ICT. | | | | | Telef\u00f3nica Digital Espa\u00f1a, S.L. |
Wayra Chile Tecnolog\u00eda e Innovaci\u00f3n Limitada Technological innovation based business project development | | | | | Telefonica Open Innovation S.L. |
Wayra Brasil Desenvolvedora e Apoiadora de Projetos Ltda Technological innovation based business project development | | | | | Telefonica Open Innovation S.L. |
WY Telecom, S.A. de C.V. Talent identification and development in ICT | | | | | Telefonica Open Innovation S.L. |
Wayra Argentina, S.A. Talent identification and development in ICT | | | | | Telefonica Open Innovation S.L. (95%) Telef\u00f3nica, S.A. (5%) |
Wayra Colombia, S.A.S. Technological innovation based business project development | | | | | Telefonica Open Innovation S.L. |
Proyecto Wayra, C.A. Commercial, industrial and mercantile activities | | | | | Telef\u00f3nica Venezolana, C.A. |
Wayra Per\u00fa Aceleradora de Proyectos, S.A.C. Technological innovation based business project development | | | | | Telefonica Open Innovation S.L. |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Wayra UK Ltd. Technological innovation based business project development | | | | | Telefonica Open Innovation S.L. |
Terra Networks Per\u00fa, S.A. ISP and portal | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. |
Terra Networks Argentina, S.A. ISP and portal | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. (99.99%) Telef\u00f3nica International Holding, B.V. (0.01%) |
Telfisa Global, B.V. Integrated cash management, consulting and financial support for Group companies | | | | | |
Telef\u00f3nica Global Activities Holding, B.V. Holding Company | | | | | |
Telef\u00f3nica Global Services, GmbH Purchasing services | | | | | Group 3G UMTS Holding, GmbH |
Telef\u00f3nica Global Roaming, GmbH Optimization of network traffic | | | | | Telef\u00f3nica Global Services, GmbH |
Group 3G UMTS Holding GmbH Holding Company | | | | | Telef\u00f3nica Global Activities Holdings, B.V |
Telef\u00f3nica Compras Electr\u00f3nicas, S.L. Development and provision of information Society services | | | | | Telef\u00f3nica Global Services, GmbH |
Telefonica Iot & Big Data Tech S.A. Provision of telemarketing services | | | | | Telef\u00f3nica Tech S.L. |
Geprom Software Engineering S.L. Technical engineering services and other consultancy activities | | | | | Telefonica Iot & Big Data Tech S.A. |
Geprom Software Engineering\u00a0 S.A. de C.V. Technical engineering services and other consultancy activities | | | | | Geprom Software Engineering S.L. |
Telfin Ireland DAC. Intragroup financing | | | | | |
Telef\u00f3nica Ingenier\u00eda de Seguridad, S.A.U. Security services and systems | | | | | |
TIS Hispanoam\u00e9rica, S.L. Security services and systems | | | | | |
Telef\u00f3nica Capital, S.A.U. Finance company | | | | | |
Lotca Servicios Integrales, S.L. Aircraft ownership and operation | | | | | |
Fonditel Pensiones, Entidad Gestora de Fondos de Pensiones, S.A Administration of pension funds | | | | | Telef\u00f3nica Capital, S.A. |
Fonditel Gesti\u00f3n, Soc. Gestora de Instituciones de Inversi\u00f3n Colectiva, S.A. Administration and representation of collective investment schemes | | | | | Telef\u00f3nica Capital, S.A. |
Telef\u00f3nica Investigaci\u00f3n y Desarrollo, S.A.U. Telecommunications research activities and projects | | | | | |
Telef\u00f3nica Luxembourg Holding, S.\u00e0.r.L. Holding company | | | | | |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Nova Casiopea RE S.A. Reinsurance | | | | | Telef\u00f3nica Luxembourg Holding, S.\u00e0.r.L. |
Telef\u00f3nica Seguros y Reaseguros Compa\u00f1\u00eda Aseguradora, S.A.U. Realizaci\u00f3n de operaciones de seguros directos | | | | | Telef\u00f3nica Luxembourg Holding, S.\u00e0.r.L. |
Telef\u00f3nica Finanzas, S.A.U. Integrated cash management, consulting and financial support for Group companies | | | | | |
Telef\u00f3nica Corredur\u00eda de Seguros y Reaseguros Compa\u00f1\u00eda de Mediaci\u00f3n, S.A. Distribution, promotion or preparation of insurance contracts | | | | | Telef\u00f3nica Finanzas, S.A.U. (TELFISA) (83.33%) Telef\u00f3nica, S.A. (16.67%) |
Telef\u00f3nica Europe, B.V. Fund raising in capital markets | | | | | |
Telef\u00f3nica Participaciones, S.A.U. Financial debt instrument issuer | | | | | |
Telef\u00f3nica Emisiones, S.A.U. Financial debt instrument issuer | | | | | |
Alian\u00e7a Atl\u00e2ntica Holding B.V. Holding company | | | | | Telef\u00f3nica, S.A. (50%) Telef\u00f4nica Brasil, S.A. (37.40%) |
Telef\u00f3nica Servi\u00e7os Empresariais do BRASIL, Ltda. Management and administrative services rendered | | | | | Telef\u00f3nica Servicios Globales, S.L. |
Telef\u00f3nica Gesti\u00f3n Integral de Edificios y Servicios S.L. Management and administrative services rendered | | | | | Telef\u00f3nica Servicios Globales, S.L. |
Tempotel, Empresa de Trabajo Temporal, S.A. Temporary employment agency | | | | | Telef\u00f3nica Servicios Globales, S.L. |
O2 Worldwide Limited Wireless telecommunications activities | | | | | |
Telef\u00f3nica Servicios Globales, S.L. Sociedad Holding | | | | | |
Telef\u00f3nica Holding Atticus, B.V. Holding company | | | | | Telef\u00f3nica Latinoam\u00e9rica Holding, S.L. |
Telef\u00f3nica Soluciones de Criptograf\u00eda, S.A. Engineering, research and development | | | | | |
Telef\u00f3nica Centroam\u00e9rica Inversiones ,S.L. Communications services provider | | | | | |
Telef\u00f3nica Tech S.L. Holding Company | | | | | |
Telef\u00f3nica Cybersecurity & Cloud Tech SL. Ciberseguridad, seguridad de informaci\u00f3n electr\u00f3nica y consultor\u00eda inform\u00e1tica | | | | | Telef\u00f3nica Tech S.L. |
Telef\u00f3nica Cybersecurity & Cloud Tech Chile SpA. Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f3nica Tech Inc. Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
iHackLabs Ltd. Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Audertis Audit Services S.L. Provision of audit services in the areas of security, privacy and data protection | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Govertis Advisory Services S.L. Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f3nica Cybersecurity & Cloud Tech Colombia SAS Ciberseguridad, seguridad de informaci\u00f3n electr\u00f3nica y consultor\u00eda inform\u00e1tica | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telefonica Cybersecurity Tech Mexico, S.A de C.V. Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f4nica Ciberseguran\u00e7a e Tecnolog\u00eda do Brasil Ltda Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f3nica Cybersecurity & Cloud Tech Per\u00fa S.A.C Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Tech S.L. |
Telefonica Cybersecurity Tech Ecuador Tctech S.A. Cybersecurity, electronic information security and IT consulting | | | | | Otecel, S.A. (99%) Telef\u00f3nica Global Solutions Ecuador TGSE, S.A. (1%) |
Telef\u00f3nica Cybersecurity & Cloud Tech Deutschland GmbH Cybersecurity, electronic information security and IT consulting | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Acens Technologies, S.L. Holding housing and telecommunications solutions Service provider | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Altostratus Solutions, S.L. Provision of IT services | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f3nica Tech UK & Ireland, Limited Holding company | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech S.L. |
Telef\u00f3nica Tech UK Holdings Limited Holding company | | | | | Telef\u00f3nica Tech UK & Ireland, Limited |
Telef\u00f3nica Tech UK TOG Limited\u00a0 Headquarters activities | | | | | Telef\u00f3nica Tech UK Holdings Limited |
Telef\u00f3nica Tech UK Managed Services Limited Information technology, management and IT services consultancy | | | | | Telef\u00f3nica Tech UK TOG Limited |
Telef\u00f3nica Tech UK Limited Information technology, management and IT services consultancy | | | | | Telef\u00f3nica Tech UK TOG Limited |
Telef\u00f3nica Tech Northern Ireland Holdings Limited Other computer service activities | | | | | Telef\u00f3nica Tech UK & Ireland, Limited |
Telef\u00f3nica Tech Communication & Collaboration Limited Other computer service activities | | | | | Telef\u00f3nica Tech Northern Ireland Holdings Limited |
Telef\u00f3nica Tech Northern Ireland Limited Other computer service activities | | | | | Telef\u00f3nica Tech Northern Ireland Holdings Limited\u00a0 |
Telef\u00f3nica Tech Ireland Limited Provision of IT services | | | | | Telef\u00f3nica Tech Northern Ireland Holdings Limited |
Telef\u00f3nica Tech Ocean Limited Holding company | | | | | Telef\u00f3nica Tech UK & Ireland, Limited. |
Perpetual Topco Limited Holding company | | | | | Telef\u00f3nica Tech UK & Ireland Limited |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Perpetual Midco Limited Holding company | | | | | |
Perpetual Bidco Limited Holding company | | | | | |
Incremental Group Holdings Limited Holding company | | | | | |
Redspire Limited Software development and information technology consultancy activities | | | | | Incremental Group Holdings Limited |
Incremental Group Limited Information technology consultancy activities and other services activities | | | | | Incremental Group Holdings Limited |
Adatis Group Limited Holding company | | | | | Incremental Group Holdings Limited |
Adatis Consulting Limited Information technology consultancy activities | | | | | |
Adatis BG LTD Information technology consultancy activities | | | | | Adatis Consulting Limited |
Adatis India Private Limited Information technology consultancy activities | | | | | Adatis Group Limited (99%) Adatis Consulting Limited (1%) |
Kumo Analytics Limited Information technology consultancy activities | | | | | |
Adatis Managed Services Limited Information technology consultancy activities | | | | | |
BE-terna Acceleration Holding GmbH Holding company and provision of marketing, consultancy, implementation and commercialisation services for software and information technology | | | | | Telef\u00f3nica Cybersecurity & Cloud Tech SL. |
BE-terna Acceleration GmbH Holding company | | | | | BE-terna Accelera Holding |
BE-terna\u00a0Enhancement GmbH Holding company | | | | | |
BE-terna\u00a0Germany GmbH Holding company | | | | | BE- terna\u00a0Enhancement |
BE-terna AB (Sweden) Technology services | | | | | BE- terna\u00a0Enhancement |
Boydak Automation AG Technology services | | | | | BE- terna\u00a0Enhancement |
BE-terna ApS (Denmark) Computer programming activities | | | | | BE- terna\u00a0Enhancement |
BE-terna B.V. (Netherlands) Technology services | | | | | |
BE-terna\u00a0GmbH (Leipzig) Software production, electronic data processing, consultancy, services and project management | | | | | BE-terna\u00a0Germany GmbH |
BE-terna\u00a0Austria GmbH Holding company | | | | | BE- terna\u00a0Enhancement |
BE-terna\u00a0GmbH (Innsbruck) Services in automatic data processing and information technology | | | | | BE-terna\u00a0Austria GmbH |
Pipol A/S Conduct business with international implementation of business-oriented software solutions | | | | | BE- terna\u00a0Enhancement |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
BE-terna\u00a0A/S (Norway) Computer programming activities | | | | | BE- terna\u00a0Enhancement |
BE-terna\u00a0Business Solutions GmbH Software development and consulting, distribution of corresponding products, systems and processes | | | | | BE-terna\u00a0GmbH (Innsbruck) |
BE-terna\u00a0Industry Solutions GmbH Sales, implementation and maintenance of international ERP products | | | | | BE-terna\u00a0GmbH (Innsbruck) |
BE-terna\u00a0AG (Switzerland) Service provision, analysis and optimisation of business processes, selection of business software and implementation of ERP solutions | | | | | BE-terna\u00a0GmbH (Innsbruck) |
BE-terna\u00a0Adriatic d.o.o Holding company | | | | | BE-terna\u00a0Austria GmbH |
BE-terna\u00a0d.o.o Belgrade (Serbia) Technology services | | | | | |
BE-terna\u00a0d.o.o Ljubijana (Slovenia) Technology services | | | | | |
BE-terna\u00a0d.o.o Zagreb (Croatia) Technology services | | | | | |
Pontel Participaciones, S.L. Holding company | | | | | |
Telxius Telecom, S.A. Telecommunications service provider | | | | | Pontel Participaciones, S.L. |
Telxius Cable Am\u00e9rica, S.A. Provision of high bandwidth communications services | | | | | |
Telxius Cable Espa\u00f1a, S.L.U. Establishment and operation of any kind of communications infrastructure and/or network | | | | | |
Telxius Cable Rep\u00fablica Dominicana, S.A.S. Telecommunications service provider | | | | | Telxius Cable Am\u00e9rica, S.A. (49.51%) Telxius Cable Espa\u00f1a, S.L.U. (0.50%) |
Telxius Cable Argentina, S.A. Operation and deployment of telecommunications infraestructure | | | | | Telxius Cable Am\u00e9rica, S.A. (49.98%) Telxius Cable Espa\u00f1a, S.L.U. (0.03%) |
Telxius Cable Panam\u00e1, S.A. Installation and operation of telecommunications networks for wholesalers | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Puerto Rico, Inc. High capacity optical fibre network communications services | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable USA, Inc. High bandwidth communications services | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Ecuador, S.A. Sale of usage of data transmission capacity via an underwater optical fibre network | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Chile, S.A. Involvement in businesses related to public or private telecommunications services | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Guatemala, S.A. Installation and operation of telecommunications networks for wholesalers | | | | | Telxius Cable Am\u00e9rica, S.A. |
| | | | | |
Name and corporate purpose | | | | | |
| | | | | |
Telxius Cable Per\u00fa, S.A.C. Involvement in the operation and deployment of international telecommunications services via underwater cables and others means | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Colombia, S.A. Supply of data transmission capacity via underwater cable system | | | | | Telxius Cable Am\u00e9rica, S.A. (47.50%) Telxius Cable Chile, S.A. (0.83%) Telxius Cable Per\u00fa, S.A.C. (0.84%) Telxius Cable Guatemala, S.A. (0.83%) Telxius Cable Argentina, S.A. (0.01%) |
Telxius Cable Brasil Participa\u00e7oes, Ltda. Holding company | | | | | Telxius Cable Am\u00e9rica, S.A. |
Telxius Cable Brasil, Ltda. Operation and deployment of telecommunications infrastructures | | | | | Telxius Cable Brasil Participa\u00e7oes, Ltda. |
Telxius Cable Bolivia, S.A. Establishment and operation of any kind of communications infrastructure and/or network | | | | | Telxius Cable Am\u00e9rica, S.A. (49.01%) Telxius Cable Espa\u00f1a, S.L.U. (0.5%) Telxius Cable Argentina, S.A. (0.5%) |
Companies accounted for using the equity method | | | | | |
VMED O2 UK Limited Integrated provider of fixed and mobile services | | | | | Telef\u00f3nica O2 Holdings\u00a0 Limited |
FiBrasil Infraestrutura e Fibra \u00d3tica S.A. Fibre wholesale supplier | | | | | Telef\u00f4nica Brasil, S.A. (18.7%) Telef\u00f3nica Infra S.L. (25%) |
VivaE Educa\u00e7\u00e3o Digital S.A. Training for professional and management development | | | | | Telef\u00f4nica Brasil, S.A. |
HoldCo InfraCo SpA Investment in money and/or securities | | | | | Telef\u00f3nica Chile, S.A. |
Infraco SpA. Operation of physical fibre optic infrastructure | | | | | |
Telef\u00f3nica Factoring Espa\u00f1a, S.A. Factoring services provider | | | | | |
Telef\u00f3nica Factoring Do Brasil, Ltda. Factoring services provider | | | | | Telef\u00f3nica, S.A. (40%) Telef\u00f3nica Factoring Espa\u00f1a, S.A. (10)% |
Telef\u00f3nica Factoring Mexico, S.A. de C.V. SOFOM ENR Factoring services provider | | | | | Telef\u00f3nica, S.A. (40.5%) Telef\u00f3nica Factoring Espa\u00f1a, S.A. (9.5)% |
Telef\u00f3nica Factoring Per\u00fa, S.A.C. Factoring services provider | | | | | Telef\u00f3nica, S.A. (40.5%) Telef\u00f3nica Factoring Espa\u00f1a, S.A. (9.5%) |
Telef\u00f3nica Factoring Colombia, S.A. Factoring services provider | | | | | Telef\u00f3nica, S.A. (40.5%) Telef\u00f3nica Factoring Espa\u00f1a, S.A. (9.5%) |
| | | | | |
Name and corporate purpose | | | | | |
Companies accounted for using the equity method (cont.) | | | | | |
Telef\u00f3nica Factoring Chile, SpA. Factoring services provider | | | | | Telef\u00f3nica Factoring Espa\u00f1a, S.A. |
Mobile Financial Services Holding SPRL Financial services | | | | | Telef\u00f3nica Internacional Holding, B.V \u00a0(26.28%) Telef\u00f3nica Holding Atticus, B.V (23.72%) |
Telef\u00f3nica Consumer Finance, Establecimiento Financiero de Cr\u00e9dito, S.A. Specialised credit institution | | | | | |
Movistar Consumer Finance Colombia SAS. Specialised credit institution | | | | | Telef\u00f3nica Digital Espa\u00f1a, S.L. |
Alamo Holdco S.L. Holding company | | | | | Colombia Telecomunicaciones S.A. ESP BIC\u00a0 |
ONNET Fibra Colombia S.A.S. Fibre wholesale supplier | | | | | |
The Smart Steps Data Technology Company Big data services in China | | | | | Telefonica Iot & Big Data Tech S.A. |
Internet para todos S.A.C Telecommunications service provider | | | | | Telef\u00f3nica del Per\u00fa, S.A.A. |
Movistar Prosegur Alarmas, S.L. Private security services | | | | | Telef\u00f3nica Espa\u00f1a Filiales, S.A. |
Prosegur Soluciones S.A.U. Private security services | | | | | Movistar Prosegur Alarmas, S.L. |
Buend\u00eda Producci\u00f3n, S.L. Service provision related to film and video production activities | | | | | Telef\u00f3nica\u00a0 Audiovisual Digital, S.L.U. |
Buend\u00eda Estudios, S.L. Service provision related to film and video production activities | | | | | Telef\u00f3nica\u00a0 Audiovisual Digital, S.L.U. |
Buend\u00eda Estudios Uno, S.L.U. Service provision related to film and video production activities | | | | | Buend\u00eda Estudios, S.L. |
Buend\u00eda Estudios Dos, S.L.U. Service provision related to film and video production activities | | | | | Buend\u00eda Estudios, S.L. |
Buend\u00eda Estudios Canarias, S.L.U Service provision related to film and video production activities | | | | | Buend\u00eda Estudios, S.L. |
Buend\u00eda Estudios Bizkaia, S.L. Service provision related to film and video production activities | | | | | Buend\u00eda Estudios, S.L. |
Solar360 de Repsol y Movistar S.L. Development and marketing of photovoltaic self- consumption products and/or services | | | | | Telef\u00f3nica de Espa\u00f1a, S.A.U. |
UGG TopCo/HoldCo General Partner GmbH. Holding company | | | | | Telef\u00f3nica Infra Germany GmbH. (40%) Telef\u00f3nica Deutschland Holding A.G. (7.06%) |
UGG TopCo GmbH & Co KG Holding company | | | | | Telef\u00f3nica Infra Germany GmbH. (40%) Telef\u00f3nica Deutschland Holding A.G. (7.06%) |
| | | | | |
Name and corporate purpose | | | | | |
Companies accounted for using the equity method (cont.) | | | | | |
UGG HoldCo GmbH& Co KG Holding company | | | | | |
UGG General Partner GmbH Holding company | | | | | |
Unsere Gr\u00fcne Glasfaser GmbH & Co KG Broadband telecommunications operator | | | | | |
Daytona Midco S.L. Securities transactions | | | | | Telef\u00f3nica Infra,\u00a0 S.L.\u00a0 |
Digital Data Centre BidCo, S.L.U. Management and administration of equity securities | | | | | |
Telef\u00f3nica Renting, S.A. Purchase, sale and leasing of all kinds of movable property and provision of services ancillary to the leasing thereof | | | | | |
Opal Holdco Limited Holding company | | | | | Telef\u00f3nica Infra, S.L. |
Opal Jvco Limited Holding company | | | | | |
Main changes in the scope of consolidation for the
year 2022
Acquisition of new companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
VivaE Educa\u00e7\u00e3o Digital S.A. Training for professional and management development | | | |
Garliava RJ Infraestrutura e Redes de Telecomunicacoes S.A. Wireline telephony operator | | | |
Vivo ventures fundo de investimento em participacoes multiestrategia. Fondos de inversi\u00f3n | | | |
Vita IT Com\u00e9rcio e Servi\u00e7os de Solu\u00e7\u00f5es em TI Ltda. Technical support, maintenance and other IT services | | | |
| | | |
Geprom Software Engineering S.L. Technical engineering services and other consultancy activities | | | |
Geprom Software Engineering\u00a0 S.A. de C.V. Technical engineering services and other consultancy activities | | | |
Perpetual Topco Limited Holding company | | | |
Perpetual Midco Limited Holding company | | | |
Perpetual Bidco Limited Holding company | | | |
Incremental Group Holdings Limited Holding company | | | |
Redspire Limited Software development and information technology consultancy activities | | | |
Incremental Group Limited Information technology consultancy activities and other services activities | | | |
Adatis Group Limited Holding company | | | |
Adatis Consulting Limited Information technology consultancy activities | | | |
Adatis BG LTD Information technology consultancy activities | | | |
Adatis India Private Limited Information technology consultancy activities | | | |
Kumo Analytics Limited Information technology consultancy activities | | | |
Adatis Managed Services Limited Information technology consultancy activities | | | |
BE-terna Acceleration Holding GmbH Holding company and provision of marketing, consultancy, implementation and commercialisation services for software and information technology | | | |
BE-terna Acceleration GmbH Holding company | | | |
BE-terna\u00a0Enhancement GmbH Holding company | | | |
BE-terna\u00a0Germany GmbH Holding company | | | |
BE-terna AB (Sweden) Technology services | | | |
Boydak Automation AG Technology services | | | |
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
BE-terna ApS (Denmark) Computer programming activities | | | |
BE-terna B.V. (Netherlands) Technology services | | | |
BE-terna\u00a0GmbH (Leipzig) Software production, electronic data processing, consultancy, services and project management | | | |
BE-terna\u00a0Austria GmbH Holding company | | | |
BE-terna\u00a0GmbH (Innsbruck) Services in automatic data processing and information technology | | | |
Pipol A/S Conduct business with international implementation of business-oriented software solutions | | | |
BE-terna\u00a0A/S (Norway) Computer programming activities | | | |
BE-terna\u00a0Business Solutions GmbH Software development and consulting, distribution of corresponding products, systems and processes | | | |
BE-terna\u00a0Industry Solutions GmbH Sales, implementation and maintenance of international ERP products | | | |
BE-terna\u00a0AG (Switzerland) Service provision, analysis and optimisation of business processes, selection of business software and implementation of ERP solutions | | | |
BE-terna\u00a0Adriatic d.o.o Holding company | | | |
BE-terna\u00a0d.o.o Belgrade (Serbia) Technology services | | | |
BE-terna\u00a0d.o.o Ljubijana (Slovenia) Technology services | | | |
BE-terna\u00a0d.o.o Zagreb (Croatia) Technology services | | | |
Companies accounted for using the equity method | | | |
Alamo Holdco S.L. Holding company | | | |
ONNET Fibra Colombia S.A.S. Fibre wholesale supplier | | | |
Opal Holdco Limited Holding company | | | |
Liberty Global Investment Jvco Limited Holding company | | | |
Incorporation of companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Bluevia Fibra, S.L. Operations and exploitation of FTTH network and other connectivity services. | | | |
Solar360 Soluciones de Instalacion y Mantenimiento S.L. Marketing and management in the installation, sale and maintenance of photovoltaic equipment | | | |
| | | |
TLH Holdco, S.L. Holding company | | | |
| | | |
TIS Hispanoam\u00e9rica, S.L. Security services and systems | | | |
Companies accounted for using the equity method | | | |
Buend\u00eda Estudios Canarias, S.L.U Service provision related to film and video production activities | | | |
Buend\u00eda Estudios Bizkaia, S.L. Service provision related to film and video production activities | | | |
Solar360 de Repsol y Movistar S.L. Development and marketing of photovoltaic self-consumption products and/or services | | | |
Telef\u00f3nica Renting, S.A. Purchase, sale and leasing of all kinds of movable property and provision of services ancillary to the leasing thereof | | | |
Merged companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Compa\u00f1\u00eda Independiente de Televisi\u00f3n, S.L. Provision of all type of audiovisual telecommunications services | | | Telef\u00f3nica\u00a0 Audiovisual Digital, S.L.U. |
Divestment companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Bluevia Fibra, S.L.U. Operations and exploitation of FTTH network and other connectivity services. | | | |
| | | |
Telef\u00f3nica M\u00f3viles El Salvador, S.A. de C.V. Provision of wireless and international long distance communications services | | | |
Companies accounted for using the equity method | | | |
VivaE Educa\u00e7\u00e3o Digital S.A. Training for professional and management development | | | |
Opal Jvco Limited Holding company | | | |
Liquidated companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Telef\u00f3nica Cybersecurity Tech Argentina S.A. Cybersecurity, electronic information security and IT consulting | | | |
Sao Paulo Telecomunica\u00e7oes Participa\u00e7oes Ltda Holding company | | | |
Main changes in the scope of consolidation for
the year 2021
Acquisition of new companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Altostratus Solutions, S.L. Provision of IT services | | | |
Telef\u00f3nica Cybersecurity & Cloud Tech Deutschland GmbH Cybersecurity, electronic information security and IT consulting | | | |
Telef\u00f3nica Tech UK & Ireland, Limited Holding company | | | |
Telef\u00f3nica Tech UK Holdings Limited Holding company | | | |
Telef\u00f3nica Tech UK TOG Limited\u00a0 Headquarters activities | | | |
Telef\u00f3nica Tech UK Managed Services Limited Information technology, management and IT services consultancy | | | |
Telef\u00f3nica Tech UK Limited Information technology, management and IT services consultancy | | | |
Telef\u00f3nica Tech Northern Ireland Holdings Limited Other computer service activities | | | |
Telef\u00f3nica Tech Communication & Collaboration Limited Other computer service activities | | | |
Telef\u00f3nica Tech Northern Ireland Limited Other computer service activities | | | |
Cancom Ireland Limited Provision of IT services | | | |
Telef\u00f3nica Tech Ocean Limited Holding company | | | |
Companies accounted for using the equity method | | | |
Prosegur Soluciones S.A.U. Private security services | | | |
Daytona Midco S.L. Securities transactions | | | |
Merged companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Govertis Advisory Services Per\u00fa S.A.C. Cybersecurity, electronic information security and IT consulting | | | Telef\u00f3nica Cybersecurity & Cloud Tech Per\u00fa S.A.C |
Cyberrange S.L. Cybersecurity, electronic information security and IT consulting | | | Telef\u00f3nica Cybersecurity & Cloud Tech SL. |
Ace & Niu Consulting S.L. Cybersecurity, electronic information security and IT consulting | | | Govertis Advisory Services S.L. |
Telef\u00f3nica Innovaci\u00f3n Alpha, S.L. Electronic communications and\u00a0 audiovisual services provider | | | Telefonica Open Innovation S.L. |
Divestment companies
| | | |
Companies/Segment/Subsidiaries | | | |
| | | |
Inmosites, S.A.U. Purchase and leasing of real estate related to the telecommunications infrastructure business | | | |
Telxius Torres Latam, S.L.U. Establishment and operation of any kind of communications infrastructure and/or network | | | |
Telxius Torres Espa\u00f1a, S.L.U. Establishment and operation of any kind of communications infrastructure and/or network | | | |
Telxius Towers Germany, Gmbh. Telecommunications service provider | | | |
Telxius Torres Per\u00fa S.A.C. Telecommunications service provider | | | |
Telxius Torres Chile Holding, S.A. Holding company | | | |
Telxius Torres Chile, S.A. Telecommunications service provider | | | |
Telxius Torres Brasil, Ltda. Telecommunications service provider | | | |
Inmosites Brasil Participa\u00e7oes Imobiliarias Ltda Telecommunications service provider | | | |
Telxius Torres Argentina, S.A. Telecommunications service provider | | | |
Telef\u00f3nica de Costa Rica TC, S.A. Wireless communications | | | |
Companies accounted for using the equity method | | | |
HoldCo InfraCo SpA Investment in money and/or securities | | | |
| | | |
O2 Holdings Ltd Holding company | | | |
Telef\u00f3nica United Kingdom Ltd. Wireless communications | | | |
Giffgaff Ltd Wireless communications services provider | | | |
O2 Networks Ltd. Holding company | | | |
Cornerstone Telecomunications Network sharing | | | |
Tesco Mobile Ltd. Wireless telephony services | | | |
Telef\u00f3nica Cybersecurity Tech UK Limited\u00a0 Cybersecurity, electronic information security and IT consulting | | | |
20% in
the event of repeated infringements.
On\u00a0 July 5, 2022 the text was finally endorsed by
European Parliament and entered into force as of
November 1, 2022 (following its publication in the
Official Journal on October 12, 2022). After entering
application on\u00a0 May 2, 2023, the designation process
might last until September and gatekeepers will have
up to six months to comply with the requirements in the
DMA, at the latest by March 6, 2024.
Data Protection
In relation with Data Protection & Privacy, the new
General Data Protection Regulation (GDPR) of April 27,
2016, directly applicable in all member States in Europe
from May 25, 2018, introduced administrative fines of up
to 4% of an undertaking\u2019s annual global turnover of the
preceding financial year for breaching the new data
protection rules. Spain, Germany and the United Kingdom
have adopted implementing measures of this Regulation.\u00a0
On January 10, 2017, the EC put forward its proposal for a
Regulation on ePrivacy, which will replace the current
Directive 2002/58/EC on privacy in the electronic
communications sector and will complement the GDPR.
The EC proposal also introduces administrative fines of up
to 4% of an undertaking\u2019s annual global turnover of the
preceding financial year for breaching new regulation.
The Regulation could be adopted in first half of 2023
under the Swedish Presidency.
On the other hand, on December 13, 2022 European
Commission issued a draft Adequacy Decision on a new
EU/US Data Privacy Framework. Since European Court of
Justice (ECJ) struck down the Privacy Shield framework in
July 2020, EU and US have been working on a new
framework for transatlantic data flows, especially after Joe
Biden\u2019s new Administration entered into office. In March
2022, President of the European Commission Ursula von
de Leyen and US President Joe Biden announced an
agreement in principle for a renewed framework for
transatlantic data flows \u201cbalancing security and the right
to privacy and data protection\u201d. This political
announcement had to be translated into a legal text. For
that, on October 7, 2022 President Biden signed an
Executive Order addressing the main concerns raised by
ECJ in its Judgement on Schrems II Case (namely, new
safeguards to limit US LEAs\u2019 and Intelligence Agencies\u2019
powers to access personal data of EU citizens and new
redress mechanism for non-US persons whose data has
been accessed by US Authorities). Taking into account
these concrete changes introduced by the Executive
Order, European Commission published the draft
Adequacy Decision. Commission expects to have the
Adequacy Decision adopted by Summer 2023.
Radio spectrum policy
On December 14, 2016, the European institutions reached
an agreement on how to coordinate the use of the 700
MHz band facilitating the introduction of 5G as of 2020.
Duly justified exceptions on grounds defined in Decision
2017/899/CE were allowed until June 30, 2022. But, the
assignment processes were finally completed during
2021, with Telef\u00f3nica securing 2x10 MHz in each of our
European markets\u2019 footprint (Germany, Spain and UK).
The European Electronic Communications Code grants
the Radio Spectrum Committee (RSC) the powers to
harmonize the use of spectrum bands for the provision of
electronic communications services and lays down the
rules governing the process through which Member
States authorize those bands to specific users. It also
mandates Member States to allow the use of sufficiently
large blocks of the 3400-3800 MHz band, and at least 1
GHz in the 24,25-27,5 GHz band, in order to facilitate the
roll-out of 5G.
Assignment processes have been completed across our
European footprint in the 3400-3800 MHz band, with
Telef\u00f3nica securing at least 70 MHz in each market (see
table at the end for details).
Regarding the 24,25-27,5 GHz band, it is being assigned in
Germany through local licences awarded on a first-come-
first-served basis. In Spain, a competitive tender took
place in December 2022 and Telef\u00f3nica secured a
national licence of 1 GHz. In the UK, Ofcom launched a
public consultation in Q2 2022 on how to enable new
uses, including 5G, in the 26 GHz band.
Once the harmonization and assignment of the priority
bands for 5G (700 MHz, 3500 MHz and 26 GHz) has been
nearly completed, the European institutions are beginning
the process to identify new bands that in a 2025-2030
horizon may be available for the provision of wireless
broadband services. Among the most relevant bands for
Telef\u00f3nica are the 470-694 MHz and the 6425-7125 MHz
bands, that will be discussed at the ITU world conference
in 2023, and the 3800-4200 MHz band, for which the
RSC approved in December 2021 a mandate to the CEPT
with a view to its harmonization for local low and mid-
power networks.
EU competition law
European competition provisions have the force of law in
Member States and, therefore, are applicable to our
operations in those States.
The Treaty on the Functioning of the European Union
(TFEU) prohibits \u201cconcerted practices\u201d and any
agreement between companies that may affect trade
between Member States and that restricts or has the
objective of restricting competition in domestic market.
The Treaty also prohibits any abuse of dominant position
within the European Union or any considerable part
thereof that may affect trade between Member States.
The Community Merger Regulation requires that all
mergers, acquisitions and joint ventures involving
companies that meet certain volume thresholds are
subject to review by the EC rather than the national
competition authorities. In accordance with the amended
Community Merger Regulation, market concentrations
that significantly impede effective competition in the
market will be prohibited. The European Commission has
the authority to apply the EU framework for the defense
of the competition.
There are similar competition rules in the legislation of
each Member State. Those responsible for ensuring
compliance are the national competition authorities.
Spain
General regulatory framework
The legal framework for the regulation of the
telecommunications sector in Spain is governed by the
General Telecommunications Law (11/2022) of June 28,
transposing the implementation of the \"EECC\" into
national law.
The Market and Competition National Commission, or
CNMC, created by the Law 3/2013, assumed in 2013 its
role as telecommunications and audiovisual service
regulator in Spain. This organism is also the competition
authority in Spain and the national regulatory authority for
transport, postal services and energy.
The main licenses and concessions held by Telef\u00f3nica in
Spain are listed at the end of this Appendix VI under the
title \u201cMain concessions and licenses held by the
Telef\u00f3nica Group\u201d.
Market analysis
The obligations imposed by the national regulator in the
most relevant markets in which Telef\u00f3nica is deemed to
have Significant Market Power (SMP) are detailed below.
The EU Commission\u2019s delegated act on termination rates
entered into force on July 1, 2021 and the approved
charges have been amended accordingly:
Fixed markets
Wholesale fixed access and call origination market
On January 17, 2017, the CNMC approved the definition
and the analysis of the market for access and call
origination on fixed networks. Considering that Telef\u00f3nica
has SMP, the CNMC imposed specific obligations to
Telef\u00f3nica regarding the provision of origination services,
preselection and wholesale access service to the
telephone line on a cost-oriented bases, and regarding
the implementation of an accounting system. Telef\u00f3nica
was imposed, among others, the obligation of no
discrimination, transparency and separation of accounts.\u00a0
Fixed call termination market on individual networks
In July 2019, the CNMC carried out a new round of
market analysis in terminated fixed networks, reaching
the same conclusions as in the prior analysis and
concluded that every single provider, including Telef\u00f3nica
de Espa\u00f1a, are dominants in terminating fixed networks
and, accordingly are obliged to provide call termination
service at cost-orientation and non-discrimination\u00a0 to the
rest of operators, according to a purely incremental costs
model.\u00a0
Relevant developments were the updating of terminating
prices for the period 2019-2021, as well as the possibility
of charging a surcharge for traffic originated outside the
EU under the principle of reciprocity. The approved prices
from January 1, 2021 are 0.0545 euro cents per minute.
Mobile market
Mobile network call termination
On January 2018, the CNMC adopted the final decision
where all mobile operators were considered SMP for the
call termination in their networks.
As established by the European Commission\u2019s Delegated
Act, from January 1, 2022 to December 31, 2022, tariffs
amount to 0.55 euro cents per minute.
Wholesale (physical) to network infrastructure
access and wholesale broadband access
On January 18, 2017, the CNMC adopted a Resolution
which approved the reference offer of the new wholesale
unbundled virtual access service to Telef\u00f3nica's new
broadband Ethernet service (local NEBA). NEBA services
allow alternative operators more flexibility to structure
their retail offers over Telef\u00f3nica's fiber network. In March
2018, the CNMC approved the methodology to be used to
assess the maximum wholesale access price which
Telef\u00f3nica could charge to other operators for accessing
the optical fiber network in regulated areas (NEBA Local
and NEBA services), set at 16.68 euros per month. This
price is reviewed once a year in order to assess whether
Telef\u00f3nica's retail offers (broadband flagship products)
are economically replicable with such price. \u00a0
On November 12, 2020, by means of a resolution to the
revision of the parameters of the Economic Replicability
Test, CNMC has considered that one of Telef\u00f3nica\u2019s
flagship products was not replicable with existing
wholesale access price, encouraging Telefonica to
reduce that price in order to restore the economic
replicability of all its retail flagship products.
The resolutions from March 2018, July 2018 and
November 2020 have been appealed by Telef\u00f3nica de
Espa\u00f1a.
In July 2018, the CNMC approved the methodology to
analyze whether Telef\u00f3nica\u2019s business offers can be
replicated by other operators.
On October 7, 2021, CNMC has completed the the
broadband market analysis (1/2020, 3b/2014 markets).
The most remarkable aspects stated by CNMC are:
\u2022To expand the competitive area in new generation
networks, from 66 to 696 municipalities, which
represent the 70.5% where the Spanish population
lives. In these areas the obligation to offer a wholesale
broadband access service (NEBA) will not be imposed
on Telef\u00f3nica\u2019s fiber network.
\u2022In the remaining municipalities, CNMC requires
Telef\u00f3nica to provide other operators with a virtual
disaggregated access service (local NEBA) and a
wholesale broadband access service (NEBA) on its fiber
network.
\u2022Throughout the whole territory, CNMC has decided to
maintain the obligation by which Telef\u00f3nica must
provide wholesale access service to its civil
infrastructure (ducts, conduits and poles).
Universal service obligations
On February 6, 2023, the Minister for Economic Affairs
and Digital Transformation issued the Ministerial Order
designating Telef\u00f3nica de Espa\u00f1a, S.A.U. as the operator
responsible for the provision of the services included in
Article 37.1 of the General Telecommunications Law:
adequate broadband internet access service at a fixed
location with a minimum download speed of 10 Mbps as
well as voice communications services at a fixed location.
The territorial scope of the designation is the entire
national territory and the designation is made for a period
beginning at zero hours on February 10, 2023 and ending
at zero hours on January 1, 2025.
Spectrum
On February 22, 2021, Telef\u00f3nica Espa\u00f1a acquired a 10
MHz block in the 3.4-3.8 GHz band for 21 million euros.
With this spectrum acquisition, Telef\u00f3nica completes
100MHz which corresponds to the maximum carrier width
in the 5G standard. In order for all the operators to have
contiguous frequency blocks and ensure a more efficient
use of the spectrum to deploy 5G technology and
associated services, it is expected that the Ministry of
Economic Affairs and Digital Transformation will adopt a
resolution for the reorganization of the 3.4-3.8 GHz band,
during March 2022. Following this resolution, operators
will have 6 months to migrate their frequencies.
Regarding the 700 MHz band, Telef\u00f3nica Espa\u00f1a
acquired 2x10 MHz for 310\u00a0million euros in the spectrum
auction which took place in July 2021.
Additionally, Telef\u00f3nica has already extended its
administrative concessions in the 3.4-3.6 GHz band (2x20
MHz) and the 2.1 GHz band (2x5 MHz+ 5 MHz) until 2030.
Telef\u00f3nica was awarded with 5 blocks of 20 MHz for an
amount of 20 million euros in the auction of the 26 GHz
band that took place on the December 21, 2022 which is
expected to be formalized in the first quarter of 2023.
Contribution to RTVE funding
In August 2009, the Radio and Television Corporation
Finance Law (Ley de Financiaci\u00f3n de la Corporaci\u00f3n de
Radio y Television Espa\u00f1ola) was approved establishing
that: (i) telecommunication operators which operate
nationwide or at least in more than one region, have to
pay a fixed annual contribution of 0.9% of the invoiced
operating income of the year (excluding the revenues of
the wholesale reference market), and (ii) the
concessionaire companies and providers of TV services
which operate nationwide or at least in more than one
region have to pay an annual fixed contribution to the
RTVE funding as follows: (a) 3% on the gross revenue of
the year for open concessionaire companies or TV
services providers; and (b) 1.5% on the gross revenue of
the year for concessionaire companies to provide Pay TV
services.
Contributions made to the funding of RTVE were
appealed by Telef\u00f3nica Espa\u00f1a and Telef\u00f3nica M\u00f3viles
Espa\u00f1a. The proceedings are currently on hold waiting for
the ruling on (i) a prejudicial question submitted by the
National High Court to the Court of Justice of the
European Union; and (ii) also on an unconstitutionality
question submitted to the Spanish Constitutional Court
regarding compliance of the underlying law with the
European legislation and the Spanish Constitution.
The draft Audiovisual Communications General Law
includes a provision to withdraw the 0,9% of the invoiced
operating income contribution to RTVE funding which
would entry in force by January 1, 2023.
Acquisition of Distribuidora de Televisi\u00f3n Digital,
S.A. (DTS)
The Resolution of the CNMC of April 22, 2015 authorized
the acquisition of the exclusive control of DTS
(Distribuidor Oficial de Televisi\u00f3n, S.A.) by Telef\u00f3nica de
Contenidos, S.A.U. As a result of such authorization, the
new entity assumed a set of commitments for a five-year
period, which briefly are: i) the obligation to make
available a wholesale offer of channels with premium
content, that allows the replicability of Telef\u00f3nica retail
Pay TV offer; ii) the prohibition of including a period of
permanence clause in contracts for Pay TV packages; iii)
the prohibition of attract DTS customers for a period of
two months; iv) the obligation to keep at least three
international routes uncongested with three Internet
Connectivity Providers; and v) the prohibition of
formalizing exclusive contracts exceeding three years
with content providers.
In July 2020, CNMC decided to extend the application of
the commitments on the DTS merger for an additional
period of three years. After analyzing the existence of
relevant modifications in the markets affected by the
operation, the CNMC considered that it was justified to
maintain all the commitments except for the broadcasting
rights in the video on-demand modality (SVOD), whose
commitment to limit the exclusivity, validity period and
exploitation period of the contracts that Telef\u00f3nica could
sign is eliminated. In the TV channel commercialization
area, the commitment prohibiting Telef\u00f3nica from early
termination of contracts with third party TV channel
owners whose term ends within the commitment
extension period is softened, allowing the early
termination through good faith negotiation, under
reasonable and non-discriminatory conditions. The
commitments related to the pay-TV market in Spain,
expressly subject to a term that has already expired.
Telef\u00f3nica has appealed the decision.
Germany
General regulatory framework
The European Union legislative framework was
implemented in Germany at the end of June 2004, by the
approval of Telecommunications Act
(Telekommunikationsgesetz). The Telecommunications
Act has been repeatedly amended over the last years,
most recently through the transposition of the European
Code of Electronic Communications (EECC) into German
law with effect from 1 December 2021. The national
regulatory authority responsible for regulation of
electronic communication networks and services is the
Bundesnetzagentur, or BNetzA.
The main licenses and concessions held by Telef\u00f3nica in
Germany are listed at the end of this Appendix VI under
the title \u201cMain concessions and licenses held by the
Telef\u00f3nica Group\u201d.
Spectrum
With regard to provision of the 800 MHz, 1.8 GHz and 2.6
GHz spectrum expiring end of 2025, BNetzA published
points of orientation for consultation by March 21, 2022. In
conjunction with this, an initial demand survey was
conducted to examine signs of a possible spectrum
scarcity. The points of orientation essentially spoke only of
an extension and/or an auction as the most probable
provision mechanisms. The Telef\u00f3nica Deutschland
Group gave its opinion on the points of orientation by the
prescribed deadline. After evaluating the comments
submitted, BNetzA published a position paper at the end
of September 2022 with an initial opinion on the next
steps. BNetzA started from the assumption that there was
an obvious spectrum scarcity, based on the results of the
initial demand survey. This would be an argument in favor
of awarding the spectrum in the form of an auction.
To ease the demand situation in the 800 MHz band, the
position paper proposes a frequency swap to the same
extent with the 900 MHz band. The result would be that
the 800 MHz frequencies would run until the end of 2033
and the 900 MHz frequencies until the end of 2025. The
frequencies at 900, 1,800 and 2,600 MHz would be
auctioned off. The Telef\u00f3nica Deutschland Group
commented in due time and advocated again for an
extension of the frequencies to be made available
through at least 2033. BNetzA intends to make a decision
about frequency provision in 2023.
Regarding the coverage requirements resulting from the
2019 frequency auction, the Telef\u00f3nica Deutschland
Group notified the BNetzA at the beginning of January
2023 that it had fulfilled the obligations due at the end of
2022 to cover households and major routes, and to
commission 1,000 5G base stations and base stations in
500 white spots, respectively, in line with the obligations.
Regarding the coverage requirements resulting from the
2019 frequency auction, the Telef\u00f3nica Deutschland
Group, the Deutsche Telekom Group and the Vodafone
Group in July 2021 entered into a cooperation for the joint
construction of additional radio towers and masts, as well
as their technical support and use. The cooperation is
designed to meet coverage obligations, especially for
transport routes and in rural areas, where frequency
holders are allowed to enter into cooperation agreements
to fulfil these obligations.
In November 2021, the Telef\u00f3nica Deutschland Group
concluded an agreement with the Deutsche Telekom
Group on active shared network usage at \u201cgrey spots\u201d,
which are areas in which only one mobile network
operator offers mobile network access to its customers. A
similar agreement with the Vodafone Group has been
concluded on 25 January 2022. In both cooperation
agreements, live operations were launched in the third
quarter of 2022 with reciprocal access to the first mobile
network sites.
On May 21, 2021, the Telef\u00f3nica Deutschland Group
entered into a National Roaming Agreement (NRA) with
the 1&1 Group (formerly: 1&1 Drillisch Group). With this
NRA, the Telef\u00f3nica Deutschland Group fulfilled one of
the EU requirement imposed by the EU Commission
arising from the merger of the Telef\u00f3nica Deutschland
Group and E-Plus in 2014.
Market reviews
The EU Commission\u2019s delegated act on termination rates
entered into force on July 1, 2021 and the approved
charges have been amended accordingly:
Mobile termination rates (MTR)
A glide path applies for the MTR, according to which a
charge of 0.70 euro cents per minute will apply from July
1, 2021, decreasing to 0.55 euro cents per minute from
January 1, 2022, to 0.40 euro cents per minute from
January 1, 2023 and to 0.20 euro cents per minute from
January 1, 2024. These charges will apply to all German
providers of these services.
Fixed termination rates (FTR)
FTRs have been subject to a charge of 0.07 euro cents
per minute since July 1, 2021. These charges will apply to
all German providers of these services.
BNetzA consultation and market studies on fiber optic
infrastructures
The BNetzA has identified the existence of significant
Germany-wide market power of Telekom Deutschland
GmbH on wholesale market 3a (= market for wholesale
access provided locally at a fixed location) and still deems
it to be in need of regulation. This applies to both the
copper network of Telekom Deutschland GmbH and the
newly constructed fibre-optic network for the
implementation of FTTH. On July 21, 2022, after prior
notification to the EU Commission, the BNetzA issued the
framework conditions under which charges and other
access conditions will be controlled by the BNetzA in
future. This relates both to access to the local loop in the
copper network, the \u201clast mile\u201d, and also to virtual
unbundled local access (VULA) to the copper and fibre
connections of Telekom Deutschland GmbH. In essence,
the BNetzA is maintaining its first draft of October 2021.
On October 26, 2022, the BNetzA published a draft
decision for wholesale market 3b (= market for wholesale
mass market products provided centrally at a fixed
location). The draft also stipulates that the copper and
fibre-optic infrastructure of Telekom Deutschland GmbH
must be regulated, but that in future regulatory
obligations will only apply to municipalities with a
population of less than 60,000. The regulatory obligations
will be lifted in larger municipalities. Otherwise, the
remaining regulatory obligations are closely aligned with
the requirements for local access to VULA in accordance
with the regulatory order on wholesale market 3a.
The BNetzA is maintaining its flexible approach to access
to fibre-optic networks. On the one hand, Telekom
Deutschland GmbH will be required to grant wholesale
customers equivalent access to the FTTH network.
However, price regulation measures will not be evaluated
in advance. Instead, they will only be considered if there
are indications that the conditions of competition for
wholesale customers will be impaired. The BNetzA does
not consider this to be the case at present.
United Kingdom
General legislative framework
The EU Regulatory Framework was implemented in the
United Kingdom by the Communications Act in 2003. The
Office of Communications, or Ofcom, is designated as the
NRA responsible for the regulation of electronic
communications networks and services. Under the terms
of the Withdrawal Agreement, the UK implemented the
2020 Electronic Communications and Wireless
Telegraphy Regulation (Amendment) (European
Electronic Communications Code and EU Exit) which
made amendments to the Communications Act, with
effect from December 21, 2020, in order to transpose the
EECC into UK law.
The main licenses and concessions held by Telef\u00f3nica in
the United Kingdom are listed at the end of this Appendix
VI under the title \u201cMain concessions and licenses held by
the Telef\u00f3nica Group\u201d. These licenses are part now of the
joint venture with Liberty Global plc (VMED O2 UK
Limited) (see Note 2).
Wholesale price regulation
Mobile termination rates (MTR)\u00a0
Following a market review, mobile termination rates for all
mobile providers, including the four national mobile
communications operators are subject to controls based
on the pure long-run incremental cost approach (\"pure
LRIC\"). In its 2021-2026 price control decisions, Ofcom set
a charge control, with the prevailing rate as of April 1,
2022 set at 0.391ppm.
However, termination rates for calls originating outside
the UK to be no more than the reciprocal termination rate
charged by the relevant international telecoms provider
for a call originating in the UK, or the MCT provider\u2019s
domestic rate, whichever is the higher.
MTR caps will be updated annually on April 1, based on
inflation (CPI measured for 12 months at December 31,
each year) plus X, with X specified as +2.1% (2023); +2.4%
(2024) and +1.5% (2025).
Fixed termination rates (FTR)\u00a0
In the same decision, Ofcom decided to rise by 6.1% to
0.0292 ppm from April 2021. Annual indexation to CPI will
apply, but with no \u201cX\u201d adjustment based on the same time
period for CPI. VMO2\u2019s current FTR is 0.031ppm from
April 1, 2022.
Spectrum\u00a0
Following an agreement between the Government and
industry to provide for a \u201cShared Rural Network\u201d, the
mobile operators, including Telefonica United Kingdom,
agreed to amend their 900 and 1800 MHz licences to
provide for 88% geographic coverage by 2024 and 90%
geographic coverage by 2026.
Ofcom is currently consulting on a future award of 26GHz
and 40GHz mmwave spectrum. This process is currently
scheduled to take place in 2024.
Brazil
General legislative framework
The delivery of telecommunications services in Brazil is
subject to regulation under the regulatory framework
provided in the General Telecommunications Law
enacted in July 1997. The National Agency for
Telecommunications (Ag\u00eancia Nacional de
Telecomunica\u00e7\u00f5es or ANATEL), is the principal regulatory
authority for the Brazilian telecommunications sector. On
October 4, 2019, Law 13.879/2019 was published,
introducing significant changes to the
telecommunications framework.
Brazilian competition regulation is based on Law No.
12529 of November 30, 2011. The Administrative Council
for Economic Defense, or CADE, is the agency in charge
of enforcing the competition rules. The antitrust law
establishes a pre-merger notification regime for
concentration transactions, with turnover thresholds (one
participant with gross revenue of 750 million Brazilian
reals in Brazil and other participant with gross revenue of
75 million Brazilian reals in Brazil) and maximum time
length for merger review procedure (240 days,
extendable to 330 days).On October 18, 2016, CADE
issued the Resolution No 17, which changed the rules
concerning the mandatory notification of the so called
\u2018associative agreements\u2019. The new regulation tends to
reduce notifications of associative agreements that do
not raise antitrust concerns.
Licenses
The main licenses and concessions of spectrum held by
Telef\u00f3nica in Brazil are listed at the end of this Appendix
VI.
In the state of S\u00e3o Paulo, Telef\u00f3nica Brasil provides fixed
telephony services (STFC) under the so-called public
regime, through a concession agreement which is
expected to remain in force until December 31, 2025. On
October 4, 2019, Law 13.879/2019 (resulting from PLC
79/2016) was published. This Law introduces changes to
the telecommunications regulatory framework by
allowing fixed-line concessions operators to migrate from
a concession regime for limited time (in which the
underlying assets reverts to the government at the end of
the concession) to an authorization regime.
On July 5, 2022, and according to the Law, ANATEL
presented a methodology with an estimation of the
economic value associated with the migration of the
concession regime to authorization, to be validated by the
Federal Court of Accounts. After the vote of the
rapporteur minister supporting the legality of the
methodology presented by ANATEL, it is under analysis
by another minister, and should resume to the court's
agenda in March. After the final decision by the Federal
Court of Accounts about de methodology applied,
ANATEL will indicate the final amount for\u00a0 migrating\u00a0 the
concession instrument for authorization. This final
amount, after confirmation and acceptance by Telef\u00f3nica,
will be converted into investment projects not yet defined
by ANATEL.
On April 4, 2021, the Ministry of Telecommunications and
ANATEL approved the Resolution No. 744, which adopts
the Regulation for the Continuity of the Provision of Fixed
Commuted Telephony Service for Use by the General
Public (\"STFC\") under the Public Regime - RCON. This
Regulation established that at the end of Telef\u00f3nica
Brazil\u2019s STFC concession, the assets belonging to its
patrimony (which are used for the provision of multiple
services including the STFC under the public regime) will
be subject to a contract between the company and the
new concessionaire or the Federal Government, to
transfer their right of use under fair and reasonable
economic conditions.
On the other hand, the assets that are indispensable and
exclusively used to ensure the continuity of the provision
of STFC under the public regime, will have their
possession reverted to the Federal Government through
compensation and under the terms of the RCON. It
should be noted that these assets constitute residual and
decreasing assets of the company's assets.\u00a0
In this way, the Concessionaire's assets, at the end of the
concession contract on December 31, 2025, will not be
susceptible to the reversal of its ownership to the Union.
The assignment of the use of shared assets and the
possession of exclusive assets of the STFC is now defined
by means of specific contracts already provided for in the
operational manual of the RCON, approved by Decision
No. 269/2021/COUN/SCO.
After the adoption of Resolution No. 744, the obligation to
submit a list of reversible assets (\"RBR\") to ANATEL is
merely informative with the objective of maintaining
transparency of the assets used by the Concessionaire in
the provision of STFC under the public regime.
Nevertheless, it is important to emphasize that in the
scope of administrative proceeding TC n\u00ba.
003.342/2022-0, in progress at the Federal Court of
Accounts, a technical report stated that the RCON should
be reviewed, such understanding shall still be submitted
to the court\u2019s ruling.
In the other Brazilian states, Telef\u00f4nica Brasil provides
local, international and long-distance STFC, personal
mobile service (SMP) and broadband multimedia
communication services (which include the provision of
fixed broadband connection) and pay TV services, all
under the private regime.
On June 17, 2020, the Decree that regulates Law
13,879/2019 was published. The Decree 10,402/2020
allows the renewal of existing licenses. Previously, only a
single license renewal was allowed for the same period.
Currently, the successive renewals will be made in a
competitive process at market price. The renewal amount
can be converted, totally or partially, into investment
commitments.
Regarding the extension of the 850 MHz band
authorizations, if the legal and regulatory requirements
are met, ANATEL agreed to extend the current
authorizations for the use of radio frequencies in Bands A
and B, proposing their approval, on a primary basis, until
November 29, 2028. However, specific conditions for
renewal, including those related to the economic
valuation criteria and obligations, were challenged by the
affected service providers (including Telef\u00f3nica).
After ANATEL dismissed the appeals filed by the
providers, ANATEL referred the case to the federal court
of accounts of Brazil (\u201cTCU\u201d), and in September 2022,
TCU decided that the possibility of successive extensions
brought by Law 13.879/19 should be considered as an
exception, applicable only when certain requirements are
met (art. 167 of Law 13.879/19 and article 12 of decree
10.402/20). Telef\u00f3nica appealed that decision, defending
the successive extension of licenses as a rule and not as
an exception, in accordance to Law 13.879/19.
In addition, on December 8, 2022, ANATEL revoked
Telef\u00f3nica\u00b4s 450 MHz spectrum authorization (451 - 458
MHz and 461- 468 MHz) covering the states of Alagoas,
Cear\u00e1, Minas Gerais, Para\u00edba, Pernambuco Piau\u00ed, Rio
Grande do Norte, Sergipe and part of S\u00e3o Paulo. The
decision was motivated by the fact that Telef\u00f3nica could
not provide evidence of service activation in the 450 MHz
band as a result of the unavailability of\u00a0 450 MHz devices
ecosystem and of the waiver clause contained in the
tender notice, interpreted by ANATEL as meaning that
the waiver would operate automatically in case of non-
activation of the frequency within the contractual term.
Previously, on September 2022, ANATEL revoked
authorizations held by other providers.
In November 2021, ANATEL held the greatest spectrum
auction in its history, with 700 MHz, 2.3 GHz, 3.5 GHz and
26 GHz lots. On that occasion, Telef\u00f3nica acquired 3.5
GHz and 26 GHz national licenses (100 MHz and 600 MHz
bandwidths, respectively). The Company also won
regional 2.3 GHz licenses, with 50 MHz bandwidth in
Southeast Region (except Sao Paulo state and PGO
Sector 3) and 40 MHz bandwidth in Sao Paulo state,
North and Midwest Regions (except PGO Sectors 22 and
25). These licenses guarantee the necessary spectrum to
provide 5G services and are valid for 20 years, renewable
under existing legal conditions at the end of this time.
Interconnection, tariffs and prices
Interconnection among public networks is mandatory in
Brazil. Generally, parties can freely negotiate the terms
and conditions about technical points, economic
discounts and rights/obligations, of the interconnection
agreements. Interconnection rates for fixed network
operators identified as operators with significant market
power (SMP) (Resolution No. 588/2012) are defined by
ANATEL; the interconnection rates for the use of mobile
operators networks (Resolution No. 438/2006), may be
agreed between the parties. However, if the parties fail to
reach a consensus, particularly regarding charges to fixed
operators (Resolution No. 576/2011), ANATEL imposes the
rates to be used. The mobile termination market is based
on the model of incremental costs and, pursuant to
applicable laws, variations in VU-M must be reflected in
VC1 (retail price paid by users for local fixed-mobile calls).
Regarding VC2 and VC3 (retail price paid by users for
national long distance fixed-mobile calls), variations in
VU-M no longer need to impact these values, as is still the
case of VC1. In March 2020, ANATEL approved
Resolution No. 724, which established the Standard for
the implementation and monitoring of tariff freedom in
the Fixed Telephone Service (STFC) for use by the
general public, in the National Long-Distance mode. Since
then, the company has been free to determine domestic
long-distance fees according to the market.
The Telef\u00f3nica Group, including VIVO, has been identified
as an operator with SMP in the following markets: (i) fixed
network infrastructure access for data transmission in
copper pairs or coaxial cables at speeds up to 12 MBps in
the region of S\u00e3o Paulo; (ii) wholesale fixed network
infrastructure to transport local and long distance
transmission at speeds up to 34 MBps in the region of S\u00e3o
Paulo; (iii) passive ducts and trenches infrastructure
throughout Brazil; (iv) call termination on mobile network
in Brazil; (v) national roaming market throughout Brazil.
ANATEL's Resolution no. 694/2018 in July 2018 changed
the PGMC, which, besides others changes, recognized a
new relevant wholesale market of high capacity data
transport services with speeds higher than 34 Mbps, in
which Telef\u00f3nica is established as SMP throughout Brazil.
In addition, operators without SMP are no longer entitled
to charge fixed termination fees up to 20% higher than
the highest fee adopted by fixed operators with SMP in
the same region, since the publication of the Resolution
no. 694/2018 in July 2018.
Further, ANATEL\u2019s Resolution No. 694 of July 17, 2018,
changed article 41 of the Appendix II of the General Plan
of Competition Goals (PGMC), and established the Bill
and Keep between SMP and the non-SMP operators as
50/50%, from February 24, 2018 for the next 4 years,
when this might be revised by ANATEL. Accordingly, the
VU-M values (in Brazilian reals) for 2022 applicable to
Telef\u00f3nica Brazil are the following: (i) Region I: 0,01422; (ii)
Region 2: 0,01550; and (iii) Region 3: 0,02947,
nevertheless Telef\u00f3nica can reach an agreement for
higher values.
Regulation on Universal Service
Currently, only Fixed Switched Telephony Services are
subject to universalization obligations. These obligations
are established in the General Plan of Universalization
Targets (PGMU) and can be reviewed every five years.
Mexico
General regulatory framework
In Mexico, the provision of telecommunication services is
governed by the Constitution and the Federal
Telecommunication and Broadcasting Law (LFTy R),
published on July 14, 2014. The Federal Law of Economic
Competition published on May 23, 2014, its regulations
and the Regulatory Provisions of the Federal Law of
Economic Competition for telecommunications and
broadcasting published by the Federal
Telecommunications Institute on January 12, 2015.
The Federal Telecommunications Institute (IFT) is the
authority responsible for the regulation, promotion and
supervision of the use, development and exploitation of
radio spectrum, networks and the provision of
broadcasting services and telecommunications, as well as
the antitrust authority for broadcasting and
telecommunications sectors. Furthermore, on August 26,
2015, a special division on Telecommunications affairs
was established by the Consumers Affair Authority to
monitor, coordinate, control, substantiate and resolve
conciliation, arbitration and infringements, review,
modification and grant the use of adhesion contracts in
terms of Federal Consumer Act.
The IFT, as the Mexican national authority in
communications and broadcasting sectors, declared in
2014 the Am\u00e9rica M\u00f3vil Group a preponderant operator in
the telecommunications market, imposing specific
measures with asymmetric obligations to avoid damaging
competition and free market participation. Within these
measures are the imposition of a regulated framework
interconnection agreement and a set of reference offers
for: leasing of dedicated links, access and shared use of
passive infrastructure in fixed and mobile networks,
MVNOs, roaming and local loop unbundling. In this sense,
on November 17, 2016, Telef\u00f3nica M\u00e9xico and Am\u00e9rica
M\u00f3vil Group signed an agreement in order for Am\u00e9rica
M\u00f3vil to provide the wholesale service of national roaming
in the areas where Telef\u00f3nica M\u00e9xico might have an
interest. Telef\u00f3nica Mexico and Telcel engaged in
successive extensions of this agreement and on June 1,
2018 entered into Telcel's current Reference Offer as well
as and an amendment agreement whereby the Offer, the
original agreement and the Pricing and Tariff Annex were
replaced entirety, which is in force due to the successive
agreements reached to date.
On April 16, 2021, the decree that reforms the Federal
Telecommunications and Broadcasting Law was
published in Diario Oficial de la Federacion creating the
National Register of Mobile Telephony Users (PANAUT),
which sought to integrate a database with information on
the natural person or legal entity who are holders of
mobile lines; including biometric data in order to prevent
and attack the crime of extortion.
On April 26, 2022 the Supreme Court of Justice of the
Nation declared the total invalidity of the regulatory
system that integrates the decree mentioned in the
previous paragraph (and therefore the PANAUT), as a
result of several unconstitutional actions filed by both the
INAI (National Institute of Transparency, Access to
Information and Protection of Personal Data) and a group
of senators.
Licenses
Pegaso PCS, S.A. de C.V. (Pegaso PCS) has multiple
concessions and licenses for installation and operation of
a Public Telecommunications Network to provide
telecommunications services and use spectrum for the
provision of mobile wireless service nationwide.
Telef\u00f3nica M\u00e9xico accepted the terms and conditions
established by the IFT for the renewal of the 1900 MHz
licenses nationwide, which expired in 2018.
Notwithstanding the foregoing, on November 21, 2019,
Pegaso PCS, S.A. de C.V. notified IFT of the waiver of the
totality of its spectrum licenses in four different stages. On
December 31, 2020 IFT was informed that the
concessions for the 850 and 1900 MHz bands for regions
1, 3 and 4 were returned. Similarly, on December 31, 2021,
the IFT was notified the same about the 1900 MHz
concessions for regions 5, 6 and 9. Finally on June 30,
2022 the IFT was notified of the return of the remaining
spectrum in the 850 and 1900 MHz bands for regions 2, 7
and 8.
Prices and tariffs
Tariffs charged to customers are not regulated. They are
set by companies and must be registered with the IFT, in
order to be enforced.
Interconnection
On November 17, 2020, the IFT published the mobile
termination rates (MTRs) applicable to solve any conflicts
regarding MTR during 2021, 2022 and 2023. For 2021
MTRs were set, for the Preponderant Economic Agent
(Radiom\u00f3vil Dipsa, S.A. de CV- Telcel-) at 0.018489 pesos
per minute, while for the non-preponderant ones they
were set at 0.073714 pesos per minute. These rates were
calculated using was an LRIC cost model used in the past
with new criteria and variables. Since 2018, Telef\u00f3nica has
been challenging the interconnection rate resolutions
issued by the IFT based on the inoperability of the cost
model authorized by the IFT; notwithstanding this, to date
the established rates have been applied. At the end of
2022, the SCJN has not yet resolved the lawsuits filed by
Telef\u00f3nica M\u00e9xico and other concessionaires during the
years 2018 to 2022.\u00a0
Foreign ownership/restrictions on transfer of ownership
Since the amendments to the Constitution published in
June 2013 foreign investment (FDI) up to one hundred
percent in telecommunications is allowed.
Chile\u00a0
General regulatory framework\u00a0
The General Telecommunications Law No. 18168 of 1982,
as amended, establishes the legal framework for the
provision of telecommunications services in Chile. The
main regulatory authority in Chile is SUBTEL (the Under-
Secretary of Telecommunications). On February 13, 2014,
the Regulation on Telecommunications Services was
published and came into force on June 14, 2014, regulating
a number of new services as Internet, Pay TV, etc.\u00a0
In May 2014, law No. 20750 allowing the introduction of
Digital Terrestrial Television was published in the Official
Journal. It set an extensible deadline of five years for the
blackout analog. It also set forth that the concessions of
free-to-air broadcasting could be nationwide, regional,
local and with European coverage.
The principal regulation concerning competition in Chile
is Decree No. 211 of 1973, whose current text was
established in Law Decree No. 1 of 2005 (Ministerio of
Econom\u00eda, Fomento y Reconstrucci\u00f3n). The Competition
Court deals with infringements of competition law. Law
N\u00ba. 20.945 was published on August 30, 2016 increasing
the administrative fines up to 30% of the sales relating to
the product line or services associated with the
infringement during the period in which the alleged
infringement took place, or up to the double of the
economic profit reached by the infringement.
Other relevant laws that have an impact on the operation
are Law No. 20,808, published in the Official Gazette on
January 28, 2015, which protects the free choice of users
in cable, Internet or telephony services, Law No. 21,046
that establishes the obligation of a guaranteed minimum
speed of Internet access, published in the Official Gazette
of November 25, 2017 and Law No. 21,245, published in
the Official Gazette on July 15, 2020 that establishes the
obligation to provide the Automatic National Roaming
service in certain areas and Law No. 19.496 concerning
consumer data protection.\u00a0
Licenses\u00a0
The main licenses and concessions to use spectrum are
shown in the table at the end of this Annex.\u00a0
Additionally, Telef\u00f3nica Chile has been granted licenses
of public local phone services, Voice Over Internet
Protocol services, concessions of long distance and
concessions to install and exploit the national fiber optic
network and mobile satellite. 2.6 GHz and 700 MHz
concessions established an obligation for Telef\u00f3nica
M\u00f3viles Chile to provide a wholesale service to MVNOs,
under a non-discriminatory and complete Reference
Offer (including prices). This same obligation extends to
the new 5G technology recently deployed in its first
phase.
On December 5, 2019, the TDLC notified resolution 59
through which it modified the 60 MHz spectrum cap,
establishing percentage caps by macrobands. Against
this resolution, claims were filed by some operators and
Conadecus, which were partially accepted by the
Supreme Court on July 13, 2020, in the sense of: i)
maintaining the percentage caps set by the TDLC, with
the exception of the low macroband (up to 1 GHz) which
went from 32% to 30%, and ii) establishing certain
complementary measures to the Mobile Network
Operators such as, national mandatory and temporary
roaming; or keeping an offer of facilities and resale plans
for MVNOs permanently available and updated, among
others.
On February 16, 2021, the auction for the 3.5GHz band,
initiated in 2020, was completed and Telef\u00f3nica M\u00f3viles
Chile has been awarded 50MHz. On October 2, 2021, the
decree granting the concession to Telef\u00f3nica M\u00f3viles
Chile in the 3.35-3.40 GHz band was published in the
Chilean Official Gazette. From that date, the terms
conferred started as follows: (i) 30-year period of the
concession and (ii) implementation of the terms for the
start of service of the 5G project (12 months for stage 1
and 24 months for stage 2). Telef\u00f3nica M\u00f3viles Chile
completed the deployment of all base stations
corresponding to phase 1 of the 5G project
Prices and tariffs
Public telecommunication services prices and prices for
intermediate telecommunication services are freely
established by operators, unless there is an express
resolution by Chile's Competition Court on existing
conditions in the market confirming that there is not
enough competition. Additionally, maximum prices for
interconnection services (access charges for network use,
mainly) are subject to tariff regulation for all operators,
being set by stipulated procedures.
The Ministries set maximum tariffs under efficient
operator model basis.
Maximum interconnection tariffs for telephony services
are set every five years jointly by the Ministry of Transport
and Telecommunications and the Ministry of Economy.
Interconnection
Interconnection is obligatory for all license holders with
the same type of public telecommunications services and
between telephony public services and intermediate
services that provide international long distance services.
Every five years, SUBTEL sets the applicable tariffs for
services provided through the interconnected networks.
On May 9, 2019, a new Tariff Decree regarding fixed
termination rate was adopted for the 2019-2024 period.
The new tariff decree for the period 2019-2024, entered
into force retroactively in May 2019 and represents a 65%
drop from the previous value to reach a value of 1.3 CLP
per minute during normal business hours.
Regarding mobile termination rates, in 2019 a new decree
was issued, which will be applicable for the next 5 years,
The average tariff which will apply until 2024 was 1.8 CLP
per minute (0.0024 euros, without VAT, based on the
exchange rate as of February 6, 2019, to be charged on a
per second basis). The validity of the new tariff decree
starts on January 26, 2019.\u00a0 In January 2024, the current
decree on interconnection tariffs for mobile services will
expire, while in May of the same year the current decree
on interconnection tariffs for fixed services will expire.
Argentina\u00a0
General regulatory framework\u00a0
The basic legal framework for the provision of
telecommunications services in Argentina is set forth in
the Law \u201cArgentina Digital\u201d No. 27078 issued on January 7,
2015. This legal framework declared of public interest the
development and regulation of information technology,
communications and its associated resources (ICT's).
Thus, this law became the specific regulatory regime for
the free market, including rules on interconnection,
universal service and radio spectrum, and setting out the
principles of network neutrality and giving to the
technological, informational and communicational
companies the possibility of providing broadcasting
services (except satellite infrastructure), and setting a
single license system.
Additionally, the Government approved the Decree No.
267/2015, published in the Official Gazette on January 4,
2016, which amended the Argentina Digital Act creating
the National Communication Agency (ENACOM), which is
the continuation of the Federal Authority for ICTs
(Autoridad Federal de Tecnolog\u00edas de la Informaci\u00f3n y las
Comunicaciones).
By the Decree of Need and Urgency No. 690/2020, it was
resolved to amend Law 27078, establishing that
Information and Communication Technology Services
and Access to telecommunications networks for and
among licensees are essential and strategic public
services. At the same time, it determined that the prices of
ICT essential and strategic public services will be
regulated by the authority. Finally, it incorporated mobile
communication services as public services. In connection
with DNU 690/2020, Telef\u00f3nica de Argentina, S.A. and
Telef\u00f3nica M\u00f3viles Argentina, S.A. (collectively,
\u201cTelef\u00f3nica\u201d) were forced to file a lawsuit against the
Argentine State, in connection with a series of contracts
for licenses to provide services and spectrum use
authorizations entered into between Telef\u00f3nica and the
Argentine State, including the licenses resulting from the
2014 spectrum auction. Such contracts and their
regulatory framework provided that the services provided
by Telef\u00f3nica were private and prices would be freely set
by Telef\u00f3nica. The lawsuit filed was dismissed in
September 2021 and Telef\u00f3nica appealed this decision.
On December 17, 2021, the first instance ruling was
overturned and the scope of articles 1, 2, 3, 5 and 6 of
DNU 690/2020 and the resolutions of the National
Telecommunications Agency that sought to control tariffs
(Resolutions 1666/2020 and 204/2021) and provide for a
Mandatory Universal Basic Provision (Resolution
1467/2020) were suspended for six months or until a final
ruling is issued. During this period, Telef\u00f3nica will not be
subject to the provisions considered in the DNU
690/2020 in relation to price and public service
regulations. On June 10, 2022, the Federal Contentious
Administrative Court No. 5 extended by six months the
precautionary suspension of the effects of the DNU
690/2020 in favor of Telef\u00f3nica. On December 27, 2022,
the Federal Contentious Administrative Court No. 5
extended for an additional six months the precautionary
suspension of the effects of the DNU 690/2020 in\u00a0 favor
of Telef\u00f3nica.
Furthermore, \u201cLaw on Defense of Competition\u201d No. 27442
prohibits any acts or behaviors contrary to such law and
establishes an authority of competition that is pending to
be constituted In the meantime, the Secretary of
Commerce continues to act, assisted by the National
Commission for the Defense of Competition created by
Law No. 22262.
Licenses
The main licenses and concessions to use spectrum are
shown in the table at the end of this Annex.
Additionally, Telef\u00f3nica de Argentina has licenses for an
indefinite period of time for the provision of
communications services; local telephone services; long-
distance national and international, telex, international
communication and data transfer services; national and
international value-added services, and other
telecommunication services provided by the different
license agreements entered into with the National State,
and administrative acts entered into with the National
State.
Roaming
By means of Law 27.497 (BO 10/01/2019) the Economic
Complementation Agreement No.35 between the States
part of Mercosur and the Republic of Chile was approved,
which includes the Commercial Agreement between the
Republic of Chile and the Republic of Argentina by which
these countries are obligated to implement the
international roaming services in the territory of the other
party with the same tariffs or prices they charge for the
mobile services in their own country.
Finally, by means of Resolution ENACOM 927/2020, the
International Roaming Regime between the Republic of
Argentina and the Republic of Chile was approved,
establishing as from August 29, 2020, the price for
international roaming service between the two countries
as a local service.
Prices and tariffs
Since the amendment of the Argentine Digital Act by
Decree of Need and Urgency No. 690/2020, the licensees
may set the prices, which must be fair and reasonable,
must cover exploitation costs and aim to an efficient
provision and a reasonable operation margin. The
authority may regulate the prices for reason of public
interest.
On December 21, 2020, the BO published the ENACOM
Resolution No. 1467/2020, which regulates the Mandatory
Universal Basic Provision (PBU) for fixed and mobile
telephone services, internet services and radio
broadcasting by subscription through physical or radio
links. Both the PBU benefits and the prices are
established by the control authority. Only a certain group
of persons who are covered by the cases set by the
regulation (social plans beneficiaries, unemployed, etc.)
may have access to the PBU.
Interconnection
The National Entity of Communications (ENACOM) has
the power to control interconnection prices and tariffs,
and also to set them in order to the general costs or other
compensation mechanism.
The Ministry of Modernization issued resolution 286/2018
establishing a new interconnection regulation. Based on
this, ENACOM set a local origination or termination rate in
the Fixed Telephony Service's networks equivalent to
0.0045 dollars per minute, for the local transit service an
interim rate equivalent 0.0010 dollars per minute and for
the service of long distance transport an interim rate
equivalent to 0.0027 dollars per minute. A rate of 0.0108
dollars per minute applies to local origination or
termination services in mobile networks. For all cases, the
second was set as the appraisal unit of measurement.
Colombia
General regulatory framework
In Colombia there are different agencies responsible for
decision-making in the Information Technology and
Communications sector (ICT), among them are the
Ministry of Information and Communication Technologies
(MinTIC), the Communications Regulation Commission
(CRC), the National Spectrum Agency (ANE), the
Superintendence of Industry and Commerce (SIC).
Through Law 1341 of July 30, 2009, principles and
concepts applicable to Information societies and the
Organization of Information and Communications
Technologies -ICT- are defined, the National Spectrum
Agency is created and other provisions are issued and
establishes the general framework for the formulation of
public policies in the Information Technology and
Communications sector. This Law was amended by Law
1978 of 2019, ICT sector is modernized, the competences
are distributed and a single regulator is created, with the
purpose of encouraging investment in the sector and
focus on connectivity, creating more and better services,
as well as unifying the regulatory framework and
strengthening public television and radio.
Likewise, article 10 of Law 1341 of 2009 establishes the
general rating regime for the provision of
telecommunications networks and services, this rating is
understood to be formally assorted, when the interested
party is registered in the ICT register, provided by Article
15 of the abovementioned Law, in the same way. With the
reform of this Law carried out with the Law 1978 of 2019,
the subscription television service is included as provision
of telecommunications networks and services and by
virtue of the provisions of the transition regime
established by such last mentioned regulation, the
operators that to date of its publication, had concession
contracts for the provision of television can qualify for
general authorization and provide services in an
environment of technological neutrality. In addition,
telecommunication services continue to be public
services in charge of the State, and Internet access has
been declared an essential public service by Law 2108 of
2021.
Also, in accordance with the provisions of Article 11 of the
Law 1341 of 2009, the use of the spectrum requires prior,
express and granted permission by the MinTIC. As of
2019, with the amendment of Article 8 of the Law 1978,
the validity of the use permit is extended of spectrum and
its renewal from 10 to 20 years. The regulation provides
that the granting or renewal of the permit to use a
segment of the radio spectrum will result in payment, in
favor of the Information and Communications Technology
Fund and in charge of the permit holder. With the
amendment of 2019, this consideration may be partially
paid, up to 60% of the total amount, through the
execution of obligations to do, to expand the quality,
capacity and coverage of the service, which benefits the
poor and vulnerable population, or in remote areas, in
public schools located in rural areas and other official
institutions such as health centers and public libraries, as
well as providing emergency networks.
On the other hand, the Colombian competition law is
included in Law No. 155/1959, Decree No. 2153/1992 and
Law No. 1340/2009 on restrictive trade practices.
Licenses
The main concessions and licenses for spectrum use are
reflected in the table, at the end of the Annex.
Telefonica applied in 2021 for the renewal of the permit
for 15 MHz of spectrum in the 1900 MHz band, which was
valid until October 18, 2021. For the renewal, on October
19, 2021 the MinTIC issued the resolution 2803 setting the
price of renewal for 20 years.
Telef\u00f3nica appealed this resolution and the Ministry
resolved, through Resolution 2143 of 2022, to decrease
the renewal cost and eliminate the technological update
obligations considered in the resolution of October 2021.\u00a0
Telef\u00f3nica filed a request for direct revocation of the
Resolution 2143, which was denied through Resolution
4454 of 2022.
In Colombia, a Spectrum Auction Action Plan was
published in December 2022 which announced that the
conditions for the renewal of spectrum permits to expire
in 2023 and 2024 will be defined and actions will be taken
to carry out auctions of the remaining spectrum in the
700 MHz, 1900 MHz and 2500 MHz bands, and the 3.5
GHz and 26 GHz 5G bands, indicating that the
assignment process would be carried out in the third
quarter of 2023. In development of this, Min Tic published
a resolution inviting parties to express interest in
participating in the Auction Process for the granting of
permits for the use of radio spectrum in the three
aforementioned bands and adding to the process the
3.5GHz and 26GHz bands with the following amounts of
spectrum available: 10MHz of 700 MHz and 1900MHz, 30
MHz in the 2500MHz band, 400 MHz in the 3500MHz
band and 2.8 GHz in the 26 GHz band. An important
change is that the ICT Ministry in 2022 modified the
maximum spectrum caps for Telecommunications
Networks and Services provider for use in terrestrial
mobile services (IMT).
The caps were set at 50 MHz for the low bands (below 1
GHz), 100 MHz for the medium bands (between 1 GHz and
below 3GHz) and 100 MHz for the high medium bands
(between 3 GHz and 6 GHz). In the expression of interest
Telef\u00f3nica stressed, among other points, the importance
of an adequate spectrum pricing policy, transparency in
valuation methodologies, an adequate framework to
correct the problems of dominance in the mobile market
and the elimination of barriers.
Finally, although Telef\u00f3nica is in favor of increasing the
spectrum caps, has requested additional measures to
avoid resource monopolization by the dominant operator.
Interconnection
Mobile and fixed operators in Colombia have the right to
interconnect to other operators\u2019 networks. Before the
intervention of regulatory authorities, operators must
attempt direct negotiations. Interconnection must assure
compliance with the objectives of non-discriminatory
treatment, transparency, prices based on costs plus a
reasonable profit and promotion of competition.
In February 2022 the CRC published Resolution 6522 of
2022 whereby some provisions related to the access, use
and interconnection of telecommunications networks are
modified, modifying the signaling conditions by
introducing the mandatory use of the SIP protocol in at
least one node of the network;\u00a0 access conditions on the
part of content and application providers (PCA) or
Technology Integrators for the provision of content, some
articles were modified regarding user protection with
regards to sending SMS and USSD for commercial and
advertising purposes, and establishing new obligations for
assignees of short codes, the content of the Basic
Interconnection Offer (OBI) was also changed with
regards to the guarantees, establishing the option of
prepayment and the obligation to update them.
In December 2022 the CRC issued Resolution 7007
which modifies the remuneration conditions for mobile
services as of January 2023. The charges for termination
in mobile networks, termination of text messages, and the
remuneration of National Automatic Roaming and OMVs
are reduced.\u00a0 Bill and Keep will apply on remuneration of
termination in mobile networks and SMS from May 1,
2025; it does not apply to the use of mobile networks by
technology integrators, PCAs and international long
distance providers.
Prices and tariffs
The Technologies of Information and Communications
Law provides for a free pricing system for communication
services, unless there are market failures or quality
problems. From 2016 retail tariffs for fix to mobile calls are
no longer regulated except for TIGO (one of the
commercial names under which Colombia Movil
operates) which still holds concession for the provision of
personal communication services (PCS's).
Peru
General regulatory framework
The provision of telecommunications services in Peru is
governed by the Telecommunications Law, its General
Regulation and related regulations. In July 2012, the
Peruvian Congress approved the Law of Promotion of the
Broad Band and Construction of the National Fiber Optic
Backbone, Law No. 29904. This Law declared both (i) the
construction of a National Fiber Optic Backbone available
to the government to make possible the connectivity by
the broad band; and (ii) the access and use of the
infrastructure associated with the public services of
energy and hydrocarbon to facilitate the display of the
telecommunication network for the provision of the broad
band of public necessity. In addition, Law No. 29904
implied that operators of electric, transport and
hydrocarbon infrastructure projects would have to install
fiber optic that would be available to the government and
given in concession to telecommunication operators.
Also, this law established that a percentage of the
capacity of the National Fiber Optic Backbone would be
reserved to the government to satisfy its necessities.
Additionally, this Law incorporated the obligation of the
Internet services providers to comply with the Net
Neutrality regulations. In this sense, the NRA, the
Organismo Supervisor de las Telecomunicaciones
(OSIPTEL), adopted regulations aimed at providing clear
guidelines on the implementation of the net neutrality
regime adopted in Peru in 2012 that are in force since
January 1, 2017.
Law No. 30083 was approved in September 2013, which
seeks to strengthen competition in the public mobile
market service by introducing MVNOs and mobile rural
infrastructure operators (MRIO). Regulations developing
the Act were published in August 2015.
The general competition framework in Peru is based on
the Legislative Decree No. 1034. This Law it is applied, in
the telecommunication sector, by OSIPTEL.
In November 2019, the government approved the Prior
Control of Business Concentration Operations, applicable
for those mergers, acquisitions, constitution of joint
ventures or the acquisition of productive assets of
economic agents that produce effects that restrict
competition in the National territory. This regulation shall
enter into force in March 2021.
Licenses
The main licenses and concessions to use spectrum are
shown in the table at the end of this Annex. \u00a0
Telef\u00f3nica del Per\u00fa S.A.A faces seven concession
renewal processes which correspond to requests made
between 2014 and 2020, all of them are pending of
decisions on the part of the Ministry of Transportation and
Communications (\u201cMTC\u201d). These concessions, according
with Peruvian legislation, remain valid while the
proceedings are still ongoing.
One of these renewal processes corresponds to the
fourth gradual renewal of the concessions for the
provision of fixed telephony services, which must be
reevaluated as Telef\u00f3nica del Per\u00fa S.A.A won the
arbitration process against the MTC\u00b4s decision to deny
this renewal.
The cable distribution broadcasting service concessions
were renewed in May 2016 until March 2032 and 2033,
respectively.
On November 2020, the Ministry of Transportation and
Communications granted Pangeaco, S.A.C. concession
for the provision of telecommunications public services
for a 20-year term, renewable. This Group company was
created in March 2020 in order to provide all kind of
telecommunications services, as well as to acquire, have
and exploit telecommunications infrastructure. The
company signed on January 15, 2021 the respective
concession contract.
Regarding to the auction on the 1,750 - 1,780 MHz, 2,150 -
2,180 MHz, and 2,300 - 2,330 MHz bands, Telef\u00f3nica del
Per\u00fa S.A.A. was preselected for the 2022 auction, which
was suspended. The process was restarted at the
beginning of January 2023, and it is expected that the
spectrum will be awarded by the end of the first half of
2023.\u00a0 With regards to 5G, and the spectrum auction for
the 3.5 GHz and 26 GHz band, no decision has been taken
as of yet.
Wholesale regulation for Major Suppliers
OSIPTEL reviews the markets identified as priority (fixed
Internet, mobile, pay TV and circuits) every 3 years in
order to determine the existence of major suppliers
(companies with market power) in such markets and to
impose obligations such as infrastructure sharing and
services resale. On June 17, 2021, OSIPTEL resolved to
declare Telef\u00f3nica del Per\u00fa S.A.A. and its Economic
Group in the country as an important provider in the
wholesale Pay TV market in 10 regional markets.
Telef\u00f3nica del Per\u00fa S.A.A. won an appeal for
reconsideration against this decision, eliminating the
obligation of sharing/reselling content.
Prices and tariffs
Tariffs for fixed local telephony and long distance services
are adjusted every three months considering services
baskets, pursuant to a price cap formulae from inflation
and a productivity and must be approved by OSIPTEL in
accordance with a price cap formula based on a
productivity factor. Rates charged by mobile providers to
their customers have been subject to a free tariff regime
supervised by OSIPTEL. Tariffs must be reported to
OSIPTEL prior to implementation. On 2011, OSIPTEL
approved a new price cap system by which the operators
of fixed services determine the rates of the local fixed-
mobile calls. Such rate is adjusted every time there is an
adjustment mobile interconnection rate. On June 17, 2022,
OSIPTEL adjusted the rate applicable to local calls made
from Telef\u00f3nica del Per\u00fa S.A.A.\u2019s fixed telephones to
mobile networks in PEN 0.0006 per second without IGV.
Said rate entered into force on June 19, 2022. In the 2022
adjustment, the level of the ceiling rate was maintained.
Interconnection
On May 3, 2022, OSIPTEL published the amendment of
the MTR, at 0.00129 U.S. dollars per minute rated at the
second, which is applicable as of May 4, 2022 and applies
to all mobile service operators.
Main concessions and licenses held by
the Telef\u00f3nica Group
The following tables list the concessions and licenses as
at December 31, 2022 to use spectrum for mobile services
and selected other applications in each country.
(1) Initial term until 1 December 1, 2041, can be extended for 20 additional years.
(2) Initial term until 2020, extended concession until April 18, 2030.
(3) Regional licenses in Madrid and Melilla.
(4) National license excluding 2 regions (Madrid and Melilla).
(5) These licenses are part of the joint venture with Liberty Global plc (VMED
O2 UK Limited).
(1) Expiration date accounts for initial term of 15 years for 450, 700, 2100 and 2500 MHz bands, another 15 years extension are contemplated in these licenses. In
2300 MHz, 3.5 and 26 GHz the initial term is 20 years, with additional 20 years extension.
(2) Regional codes are included in Annex 1.
(3) Except regions 2', 4', 6', 7', 7\u2019\u2019 and 10.
(4) Regional licenses second term expiring in different dates. Concession extended until 2028.\u00a0
(5) Regional licenses of 5 MHz or 10 MHz. Not in regions 1 and 10.
(6) Regional licenses: second term expiration and renewal dates are dependent on the region.
(7) Regional licenses between 30 MHz and 65 MHz.\u00a0
(8) 40 MHz national license, plus Band P (20 MHz) in some areas.
(9) The initial term of Band X will expire in 2027 and Band P will expire in 2031.
(10) 30 MHz in some regions.
(11) Regional licenses: 40 MHz in North, SP and CO; 50 MHz in RJ, ES e MG.
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| 900 MHz (Lima and Callao) | | | |
| 900 MHz (Rest of provinces) | | | |
| | | | |
| 1900 MHz (Lima and Callao) | | | |
| 1900 MHz (Rest of provinces) | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |