tefacc

TELEFONICA EUROPE B.V.

Annual Report

December 31, 2024


Telefonica Europe B.V.	2024 Annual Report

Contents

Page

Directors’ Report …………………..……………………………………………………………………………… 3

Responsibility statement ………………………..……………………………………………………………..8

Financial Statements:

Balance Sheet (before appropriation of result) ….……….................................9

Statement of Profit and Loss …………………...……………………………………………….. 10

Notes to the Financial Statements……………....……………………………………………. 11

Other Information……………...………………………………………………………………………………….. 28


Telefonica Europe B.V.	2024 Annual Report

DIRECTORS’ REPORT

The management herewith submits the Financial Statements of Telefonica Europe B.V. ("the Company") for the

financial year ended on December 31, 2024. Unless stated otherwise the amounts presented below should be

read in thousands of EURO.

General Information and Principal Activities

Telefónica Europe B.V. ("the Company"), having its statutory seat, place of operations and registered office in

Amsterdam, The Netherlands, and registered with the Dutch Chamber of Commerce under number 24263798 is

engaged in holding and financing activities for related companies. The home member state selected by the

Company is Ireland. The office of the Company is located in Zuidplein 112, 1077XV, Amsterdam (The

Netherlands). The Company was incorporated on October 31, 1996.

The Company’s main activity is the financing of group companies, through bond offerings on the international

capital markets. The repayment of the bonds to the investors is guaranteed by Telefonica S.A, the ultimate

shareholder of the Company, as disclosed in the notes to the financial statements. We paid specific attention to

the areas of focus driven by the operations of the Company.

Company’s main stakeholders

The Company is a wholly owned subsidiary of Telefónica, S.A., located in Madrid, Spain. Telefónica, S.A. is the

ultimate parent and controlling company. At December 31, 2024 the Company does not own, directly or

indirectly, any capital stock or other equity interests in any subsidiary.

Result

During the year under review, the Company recorded a profit after taxes of EUR 2,662 thousand (2023: EUR 1,562

thousand), which is set out in detail in the enclosed Statement of Profit and Loss.

The Financial Net Result has increased, from EUR 4,545 thousand in 2023 to EUR 4,830 thousand in 2024 mainly

due to higher interest income accrual for subordinated obligations on-lent volumes in average terms.

Operational expenses, including personnel expenses, are EUR 1,261 thousand in 2024 after having decreased

when compared to the same period of 2023 (EUR 2,462 thousand at December 31, 2023) mainly due to decreases

in legal fees related to the non-executed hybrid in USD in 2023.

Financing Activity

In regular course of business, the Company continued its financing activities by entering into several financing

agreements unconditionally and irrevocably guaranteed by its parent company. The most relevant financing

operations formalized during 2024 are the following:

i) On March 15, 2024, the Company issued EUR 1,100,000 thousand Undated Deeply Subordinated

Guaranteed Fixed Rate Reset Securities (commonly known as hybrids) 8.1 years non-Call and

carrying an interest rate of 5.7522% and on March 18, 2024, the Company repurchased and

cancelled EUR 1,096,600 thousand of its Undated Deeply Subordinated Guaranteed Fixed Rate Reset

Securities issued on March 14, 2019, with an annual coupon of 4.375%. The notional amount

outstanding (after the cancellation of the notes) was EUR 203,400.

ii) On September 18, 2024, the Company issued EUR 200,000 thousand Undated Deeply Subordinated

Guaranteed Fixed Rate Reset Securities (commonly known as hybrids) 8 years Non-Call (Tap of the NC31)

and carrying an interest rate of 6.75% (Yield of 5.15%).

iii) On October 18, 2024, the Company called (following a Substantial Purchase Event contemplated in the

Terms and conditions of the instruments) and cancelled in full the total outstanding amount EUR 203,400


Telefonica Europe B.V.	2024 Annual Report

thousand of its Undated Deeply Subordinated Guaranteed Fixed Rate Reset Securities issued on March

14, 2019, with an annual coupon of 4.375%.

iv) In the short term, the Company continued with its issuing activity under the EUR 5,000,000 thousand

Euro Commercial Paper Programme and, during 2024, placed among several international investors 46

ECPs denominated in euro for a notional amount of EUR 3,016,500 thousand. The notional outstanding at

December 31, 2024 is EUR 1,165,000 thousand (December 31, 2023: EUR 1,000,000 thousand).

Research and development

The Company, due to its nature of business primarily being financing, does not engage in research and

development activities.

Subsequent events

No material subsequent events, affecting these Annual Financial Statements, have taken place until the date of

this report.

Future developments

Subject to financial market conditions, the Company will continue to seek and prospect for new markets and

sources of finance for the Telefónica Group in order to extend its investor base.

Currently, there is no liquidity shortage within the Company in relation to the debts due for the coming 12

months. The Company will continue to monitor its solvency and liquidity position.

Risks and uncertainties

The main risk and uncertainties the Company will face are summarized as follows:

i) Liquidity and credit risk:

Liquidity and credit risks management is implemented according to the Telefonica Group policies. As of

December 31, 2024, the Company has lent the funds borrowed, to Telefónica, S.A. which guarantees most of the

external debt subscribed by the Company. However, from time to time the Company could invest funds in other

companies within the Group. In addition, the Company holds cash balances in several financial institutions.

In summary, any substantial credit or liquidity risk would be related to credit risk of Telefónica S.A. and its Group.

ii) Interest rate and Foreign Exchange risk:

Currently, the Company lends money to Telefónica S.A. denominated in the same currency although, from time

to time the Company may also lend money to other companies within the Group. At present, all loans granted

are denominated in the same currency as the funds it raises on the capital markets. Therefore, the Company is

implementing a natural hedge and foreign exchange fluctuation in exchange rates have very limited impact on its

financial result.

However, the Company may have a limited foreign exchange risk due to the financial margin earned in several

currencies different from Euro (mainly JPY and USD) and cash positions held in foreign currencies (USD, JPY and

GBP).

As of today, the Company policy is to hedge any interest rate exposure arising from funding raised, by investing

on the similar terms and conditions (tenors and type of interest, whether it may be floating or fixed interest

rates). Nevertheless, if that would not be eventually possible, or the management may not consider it

appropriate, the Company may look to mitigate any interest rate risk in other ways (by using derivatives or any

other suitable instrument), or eventually decide not to hedge it.


Telefonica Europe B.V.	2024 Annual Report

iii) Existing or worsening conditions in the financial markets may limit the Telefónica’s Group ability to

finance, and consequently, the ability to carry out its business plan:

Telefónica’s international presence enables the diversification of its activities across countries and regions, but it

exposes Telefónica to diverse legislation, as well as to the political and economic environments of the countries in

which it operates. Any adverse developments in these countries, such as economic uncertainty, inflationary

pressures, rapid normalization of monetary policy, exchange rate or sovereign-risk fluctuations, as well as

growing geopolitical tensions, may adversely affect Telefónica’s business, financial position, debt management,

cash flows and results of operations and/or the performance of some or all of the Group’s financial indicators.

In recent years, successive shocks have ushered in a period characterized by extraordinary uncertainty and the

simultaneous occurrence of multiple negative disruptions. Inflationary pressures arising from bottlenecks

associated with the rapid post-pandemic recovery, coupled with increases in commodity prices, led to a robust

response from central banks (raising interest rates and withdrawing liquidity from the system) and a significant

loss of purchasing power for consumers. Additionally, the recent higher wage demands observed internationally,

reflecting both the strength of labour markets, especially those in major developed economies, and the

prevalence (though to a lesser extent than in the past) of wage indexation mechanisms, have also contributed to

these inflationary pressures.

Although inflationary pressures eased in 2024, there are recent signs that progress is stalling in some countries

where the Group operates, or even reversing course as in Brazil. Price pressures and relatively high interest rates

persist in many countries. Geopolitical events such as the Russia-Ukraine war, armed conflict and political

instability in the Middle East and the possible imposition of tariffs by the US pose risks to inflation dynamics,

interest rates and exchange rates. Moreover, there is a risk that the decrease in global liquidity and higher-for-

longer interest rates could generate increased financial volatility, giving rise to new stress episodes, especially if

inflation proves to be more persistent than expected. Additionally, premature monetary easing by central banks

could lead to resurgent inflation, potentially triggering a new stagflation period akin to the 1970s.

Looking forward, elements that could worsen the effects of the current situation include the escalation of armed

conflicts and potential disruptions to energy and goods supply, as well as possible additional increases in

commodity prices. This could result in a potential de-anchoring of inflation expectations and higher-than-

expected wage hikes, prolonging and amplifying the inflation-recession scenario. As a consequence of the above,

economic growth is expected to remain weak in the short term, with the risk of recession still present in some

parts of the world.

So far, the main European countries where the Group operates have been affected by the ongoing geopolitical

conflicts mainly through the price channel (higher commodity prices, intermediate inputs and salary costs, among

others), as their direct trade and financial exposure is limited. However, there continues to be a concern in

Europe about energy dependence in the face of potential episodes of gas shortages and lengthening energy

transition. Latin America could be affected by lower external demand associated with slower global growth,

deteriorating terms of trade, tighter financial conditions and doubts about debt sustainability.

In Europe, there are several economic and political risks. Firstly, the evolution of armed conflicts poses a threat to

growth and inflation prospects. Any worsening in the supply of gas, oil, food, or other goods due to disruptions in

the supply chain would negatively impact their prices, with a consequent effect on the disposable income of both

households and businesses. In the medium term, this could result in wage increases, a persistent rise in inflation,

and tighter monetary policy. Any of the above could have a negative impact on the cost of financing for the

private sector, including Telefónica, and could trigger episodes of financial stress.

In addition, there is also a risk of financial fragmentation in the eurozone, meaning that interest rates may react

differently in different countries within the eurozone, leading to differences in yields on bonds issued by more

indebted countries (including Spain) and those issued by less indebted countries, making it challenging for the

former to access credit at low rates.


Telefonica Europe B.V.	2024 Annual Report

Lastly, Europe faces three significant long-term risks. First, Europe may fall behind in the global technological race

in particular because of both its dependence on several critical raw materials, indispensable for key sectors, that

must be imported from other regions, and its lag in technological innovation. Second, a burdensome regulatory

environment in the European Union poses a significant threat to business, impeding growth and eroding

competitiveness, with companies based in countries and regions where regulations are relatively less complex,

extensive or restrictive. Third, demographic factors such as declining birth rates and population aging may have a

negative impact on the region's labor force and long-term growth prospects.

Regarding political risk, centrist political groups maintained a majority following the 2024 European Parliament

elections but nationalist and populist parties made significant gains. It remains to be seen whether greater

fragmentation in the parliament will hinder governance and the continuity of the ongoing agenda in fiscal and

economic matters, climate and energy policy as well as other aspects of regional governance.

iv) Fraud/Bribery/Anticorruption:

Telefónica Europe, B.V as a company belonging to Telefónica, S.A. falls within the control environment of the

Telefónica S.A. group. In ethics and compliance management, we follow several lines of action to ensure ethical

behavior throughout our Company, based on zero tolerance of corruption and bribery. The system is based on

legal compliance, employee training, and the establishment of internal mechanisms for reporting potential non-

compliance. It is accompanied by principles of fair competition, political neutrality, fiscal transparency and

responsible communication, and is monitored by the Company’s internal control processes including processes

such as the authorization of payments. Telefónica Europe, B.V has accessibility to the same whistleblower

channel as Telefónica S.A. that allows employees and stakeholders to make a complaint anonymously or

personally to report any alleged irregularity or act contrary to the law or internal regulations. Since the end of

2020, it has been accessible through a form on the website to give access to all stakeholders and thus comply

with the European Directive on the Protection of Persons Reporting Breaches of EU Law and with the update of

the Good Governance Code for listed companies. Management of the Complaints Channel is governed by the

principles of confidentiality of the data provided, i.e. respect, substantiation and completeness. In cases where

irregularities are Identified, the Audit and Control Committee of Telefónica S.A. and the board of directors of

Telefónica Europe B.V. are informed. In 2024, no instances have been reported with respect to Telefónica Europe

B.V.

v) Climate Change:

Telefónica Europe B.V.’s exposure to climate change is mainly through potential impacts on climate change from

the Telefónica group. The Telefónica Group is committed to deploying the most efficient telecommunications

networks (fibre and 5G) powered by renewable energy. The Telefónica Group is working to become a leading

supplier of solutions that help our customers to reduce their CO2 emissions and promotes the circular economy

in the use of electronic devices through eco-design, reuse and recycling. No significant direct impacts are

expected for Telefonica Europe B.V.’s financial position.

ESG reporting regulation, Corporate Sustainability Reporting Directive (short: CSRD), is being implemented in

Europe. The broader group is implementing CSRD at a group level to report over financial year 2024 and working

together with Telefonica Europe B.V. to translate the group DMA into meeting the requirements for the

Company. Telefónica Europe B.V. is monitoring the enactment of the regulation into Dutch law. After this

enactment is completed and Omnibus proposal is issued it will become final what the standalone reporting

requirements of the entity will be, potentially over financial year 2025 in 2026.

No significant impact regarding risks and uncertainties occurred during past financial year.

Solvency of the Company

The solvency of the Company is linked to the liquidity and credit risk described below in the financial risk note.


Telefonica Europe B.V.	2024 Annual Report

Dutch Act on Management and Supervision

The Dutch Act on Management and Supervision indicated target figures for a balanced gender distribution when,

of the seats occupied by individuals, at least 30% are occupied by women and at least 30% by men.

Given the law enactment the Company did not meet the above-mentioned gender balance in 2024 (25%) neither

in 2023 (25%). The Company will pursue a policy to comply with the guidelines of the act and continue to strive

for an adequate and balanced composition of its board of directors in future appointments, by considering all

relevant selection criteria, including but not limited to gender balance and executive experience.

On an annual basis and since 2023 the Company is reporting to the Diversity Portal as an iniciative of the Sociaal

Economische Raad (SER) and established a plan of action to set an appropriate and ambitious target to comply

with the guidelines of the act and continue to strive for an adequate and balanced composition of its board of

directors in future appointments (The Diversity Portal is an initiative to motivate and facilitate companies in the

Netherlands to work on gender diversity in the boardrooms). The target for the board of directors is set at

33.33% for 2026.

Audit Committee

The Company has not established an audit committee, as it is delegated to the audit committee ofthe parent

company by using the exemption for subsidiaries as mentioned under article 3 of the legislation as announced on

July 26, 2008 (“Koninklijk Besluit 323”).

Average number of employees

During the period under review the Company employed 2 persons until September 2024 and 1 person for the rest

of the period, none of them working outside The Netherlands.

Amsterdam, February 25, 2025

/s/ /s/

Mr. Carlos David Maroto Sobrado Mr. François V. N. Declève

/s/ /s/

Mr. Lennart Pieter Schoenmaker Mrs. Priscilla Schraal


Telefonica Europe B.V.	2024 Annual Report

Responsibility Statement

The board of directors have signed these financial statements pursuant to their statutory obligations under art.

5:25c(2)(c) Financial Markets Supervision Act. to the best of their knowledge, the financial statements give a true

and fair value of the assets, liabilities, financial position and profit or loss of the company in accordance with Title

9 Book 2 of the Dutch Civil Code, and the board of director’s report gives a true and fair view of the position and

performance of the business of the company, and reflects the significant risks related to the business.

The Directors of the Company wish to state:

-That the financial statements give a true and fair view of the assets, liabilities, financial position and

result of the Company;

-That the annual report gives a true and fair view of the position as per the balance sheet date, the

development during the financial year of the Company, together with a description of principal risks it faces;

-That the director’s report gives a true and fair review of the development and the performance of the

business of the Company during the financial year to which the report relates.

Amsterdam, February 25, 2025

/s/ /s/

Mr. Carlos David Maroto Sobrado Mr. François V. N. Declève

/s/ /s/

Mr. Lennart Pieter Schoenmaker Mrs. Priscilla Schraal


Telefonica Europe B.V.	2024 Annual Report

FINANCIAL STATEMENTS

BALANCE SHEET

AS AT DECEMBER 31, 2024

(before appropriation of result)


				Euros in thousands
ASSETS		Note	2024		2023
Fixed Assets
Tangible fixed assets		1	1		1
Financial fixed assets		2	9,324,751		9,238,280
Total Fixed Assets			9,324,752		9,238,281

Current Assets
Loans receivable		3	1,143,746		985,792
Interest receivable			245,328		240,713
Other current assets			763		1,517
Cash at bank		4	3,135		2,300
Total Current Assets			1,392,972		1,230,322
TOTAL ASSETS			10,717,724		10,468,603

SHAREHOLDER'S EQUITY AND LIABILITIES	Note		2024		2023
Shareholder's Equity		5
Issued share capital			46		46
Retained earnings			4,701		4,701
Result for the year			2,662		1,562
Interim dividend Undivided result			(2,227) 435		(1,206) 356
Total Shareholder´s Equity			5,182		5,103

Long Term Liabilities
Bonds and loans		6	9,325,004		9,238,562
Total Long Term Liabilities			9,325,004		9,238,562

Current Liabilities
Short term loans and bonds		7	1,143,746		985,792
Interest payable			243,096		238,522
Taxes payable			166		89
Other debts and accrued liabilities			530		535
Total Current Liabilities			1,387,538		1,224,938
TOTAL EQUITY & LIABILITIES			10,717,724		10,468,603


Telefonica Europe B.V.	2024 Annual Report

STATEMENT OF PROFIT AND LOSS

FOR THE YEAR ENDED

DECEMBER 31, 2024


		Euros in thousands
	Note			2024	2023
Financial Income and Expenses
Interest Income				541,579	499,056
Interest Expense				(536,736)	(494,512)
Currency Exchange result				(13)	1
Net financial result			8	4,830	4,545
Operational Expenses
Personnel expenses				(174)	(186)
Administrative expenses			9	(1,087)	(2,276)
Result from ordinary activities before taxation				3,569	2,083
Taxation			10	(907)	(521)
RESULT AFTER TAXATION				2,662	1,562


Telefonica Europe B.V.	2024 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED