"Neither a borrower nor a lender be clearly" is a maxim José María Álvarez-Pallete has taken to heart.

So he found it pleasant to announce Telefónica's net debt was down 30% from this time in 2020, to €26.2 billion. This is half, for example, the €52 billion it was in June 2016.

Two important deals for Spain's telco giant closed just last month.

Figure 1: Forgive our debtors: Telefónica CEO José María Álvarez-Pallete announced Telefónica's net debt was down 30% from this time in 2020, to €26.2 billion.
(Source: Telefónica)

It became 50% owner of the UK's Virgin Media, when it mashed together O2 (which it had tried unsuccessfully to sell in 2016 to lessen its debts), with Liberty Global's Virgin Media. And it sold a first bundle of 20,000 Telxius towers to America Tower Corporation for €6.2 billion, with more where those came from, ready to sell in August.

Altogether the company's net income stood at an all-time record high, at €7.74 billion. To put that in context, a year ago, that was only €425 million. Its reported revenues, at £9.6 billion, dipped 3.6% from the year-ago quarter against unfavorable exchange rates, but in organic terms returned to 3.4% growth after falling 1.3% the quarter before. (These exchange rate headwinds lessened for the company in the second quarter.)

"These results demonstrate that Telefónica is on the right track," said CEO Álvarez-Pallete in a conference call.

Don't cry for me, LatAm fibre

For a chief executive who sometimes seems to meander around his once-sprawling empire wondering what to sell next, Latin America offers a welcome respite – where operations purr along nicely, with revenues up 9.5% on an organic basis, after three quarters of declines. So not surprisingly, it's planning further acquisitions in Brazil after launching its FiBrasil fiber joint venture this month.

The venture, with Canadian infrastructure investor Caisse de dépôt et placement du Québec (CDPQ), deploys fiber to the home amid booming broadband demand during the pandemic. Another joint fiber venture with an investor, this time a 60/40 split in Columbia with the private equity house KKR, awaits regulatory approval. And meanwhile, Telefónica is shopping around for financial partners for a further fiber infrastructure vehicle in the region, said CFO Laura Abasolo.

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Joint ventures are its family style, partly because it has in recent years had so little cash. In France, it operates a joint venture aimed at multinationals with France's Bouygues Telecom. In Latin America, it owns the Movistar mobile phone brand, and the largest fixed-line operators in Argentina, Brazil, Chile, and Peru.

Nearer home, the operator nabbed two bands of 10 MHz in Spain's 700 MHz auction last week – the same as Vodafone and Orange. Elsewhere, revenues from IoT connectivity improved their growth rates to 8.1% in the first half, year-on-year, said COO Angel Vilá Boix. And eyeing younger eyeballs, Telefónica also formed a partnership with TikTok a few weeks ago, which will see customers on its Movistar Home pay TV service able to access TikTok on their televisions.

Telefónica, one of the world's largest telephone and mobile network providers, is also Spain's second largest corporation, after Santander.

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— Pádraig Belton, contributing editor special to Light Reading