Q2 Call: Shares down -3%, despite TEF ticking many boxes

Research evidence excerpt

Q2 Call: Shares down -3%, despite TEF ticking many boxes

Update

July 29, 2026 10:53 AM GMT

Morgan Stanley & Co. International plc+MTelefonica SA | Europe Emmet B Kelly

Equity Analyst

Q2 Call: Shares down -3%, Emmet.Kelly@morganstanley.comTerence Tsui +44 20 7425-6830

Terence.Tsui@morganstanley.com +44 20 7425-3095

despite TEF ticking many boxes Harrison Williams, CFA

Harrison.Williams@morganstanley.com +44 20 7425-6627

Telefonica shares are trading -3%, despite a consensus beat, reporting Q2 EBITDAaL

Lindsey C Zastawny

growth of +5% (€, YoY), indicating a better H2, and striking a confident tone during Equity Analyst

the investor call. Lindsey.Zastawny@morganstanley.com +44 20 7425-1237

Telefonica SA (TEF.MC, TEF SQ)

Better outlook for H2 2026 in Spain (better EBITDAaL growth rate expected in

ADRTELFY.PK

H2e vs H1a). i. Low churn was the first reason cited. ii. Retail revenue strength was Telecommunications Services | Spain

part-driven by football subs (World Cup rights); TEF believes these can be Stock Rating Equal-weight

maintained in Q3 and Q4 (there may be question marks about long-term Industry View Attractive

Price target €4.30

sustainability of these subs/revenues, however). iii. Efficiency measures will deliver Shr price, close (Jul 28, 2026) €3.73

ongoing benefits. iv. Data sovereignty and defence are new layers of business 52-Week Range €4.89-3.24

Mkt cap, curr (mn) €20,866

opportunity. Net debt (12/26e) (mn)* €36,081

EV, curr (mn)* €61,110

TEF does not see signs of a more competitive Brazilian Telco market. * = GAAP or approximated based on GAAP

Management does not foresee a worse scenario emerging. Even if it does, TEF sees

its Brazilian arm as best positioned to manage changing market dynamics.

Telco competition in Germany. i.