TELEFONICA : 1Q26 Conf. Call Feedback

Research evidence excerpt

TELEFONICA : 1Q26 Conf. Call Feedback

EQUITIES

TELECOM OPERATORS

TELEFONICA UNDERPERFORMPRICE* EUR3.82  TARGET PRICE EUR3.20 (DOWNSIDE 16%)

TELEFONICA ADR UNDERPERFORMPRICE* USD4.45  TARGET PRICE USD3.60 (DOWNSIDE 19%)

FLASH NOTE

1Q26 Conf. Call Feedback

14 MAY 2026 Securities Research Report Production time: 10:26* (London time)

Research Analyst & Publishing Entities

Joshua Mills, CFA BNP Paribas London Branch (+44) 203 430 8670 Joshua.Mills@uk.bnpparibas.com

What happened?

The Telefonica 1Q26 conference call has just concluded – shares are now +6%, outperforming our expectations this

morning. Whilst we see solid trends in Spain this quarter there is little in the results to change our more cautious view on

TEF’s growth outlook/ leverage position or the continued uncertainty around M&A strategy/ potential capital raise. See

below for our 3x key takeaways:

1) Spanish growth outlook: Spanish service revenue/EBITDAaL beat cons expectations by +0.5%/+0.6% this

quarter, and TEF’s tone on the call was upbeat on the outlook for the rest of the year with growth expected to

accelerate further in 2H vs. 1H. Regarding competition, TEF noted that they see no ‘important changes’ with the

low end o the market remainign competitive but the mid/high end more rational – also highlighting that despite

raising bacbkook prices in 1Q, churn remains low.

2) Germany trends and competition: TEF highlighed this morning that they see 1Q26 as the ‘peak’ quarter for

revenue headwinds from the 1&1 wholesale contract loss. The company does not disclose the split between

underlyign and reported rveenue trends, but did state that their organic performance was ‘fairly stable’ vs

previous quarters and that ‘excluding the 1&1 effect, we continue working to return to growth in 2027’. TEF also