Telefonica slightly lifts 2026 core profit, cash flow targets

MADRID, Nov 12 (Reuters) - Spain's Telefonica on Thursday upgraded its 2026 core profit and free cash flow targets after posting faster growth and reducing leverage in the third quarter, although it also lowered its revenue-growth forecast for the year.

• The telecoms group said earnings before interest, tax, depreciation and amortisation (EBITDA) should increase by slightly more than 2.5% this year, compared with its prior 1.5%-2.5% range

• Telefonica also expects free cash flow of €3.1 billion ($3.4 billion) instead of the previous €3 billion

• It sees adjusted operating cash flow after leases growing more than 3.5% by year-end from more than 3% previously

• However, Telefonica now expects revenue to rise 1%-1.5% this year at constant exchange rates, compared with a previous outlook of 1.5%-2.5% growth

• The revised targets come as Telefonica aims to translate a simplified operating model and cost efficiencies into cash generation and lower debt, while navigating subdued growth across its core markets of Spain, Britain, Brazil and Germany

• The company had already raised its OpCFaL target in July, citing stronger operating momentum in Spain and Brazil

• Third-quarter revenue rose 2.2% on a constant-currency basis to €8.43 billion, accelerating from the pace posted earlier in the year and supported by 1.8% growth in service revenue

• Between July and September, adjusted EBITDA increased 2.8% at constant exchange rates to €3.08 billion, while adjusted OpCFaL rose 7.2% year-on-year

• Telefonica's leverage ratio fell by 0.05 times from June to 2.63 times in September, as it works towards a target of around 2.5 times by 2028

• The company confirmed a cash dividend of €0.15 per share, payable in June 2027($1 = 0.9018 euros)

(Reporting by David Latona; Editing by Christopher Cushing and Mrigank Dhaniwala)