Telefonica issues €1 bn green hybrid with cost of 6.135%

Telefonica has issued a €1 billion green hybrid with a 7.25-year maturity, slashing cost to 6.135 percent from an initial coupon rate of 6.75 percent.
Telefonica’s 5G network in SpainTelefonica has managed to increase the volume from the initial idea of €750 million to the final amount of €1 billion due to favorable market conditions.

In parallel, Telefonica also submitted an offer to purchase two green hybrids with redemption dates in September 2023 and March 2024.

Both operations, the green hybrid issue and the buyback offer, are aimed at continuing to proactively manage the company’s hybrid capital base. At the end of September, the average maturity of the debt was 13 years.

Telefonica will allocate the funds for investments in green projects that seek to achieve greater energy efficiency, consisting mainly of the shutdown of obsolete equipment and the deployment and improvement of network infrastructure. The transformation of telecommunications networks (fibre and 5G deployments) as well as renewable energy generation plans are the main levers to improve efficiency and reduce the carbon footprint.

The new green hybrid also aligns with the company’s goal to help its customers avoid more than 50 million tons of CO² emissions between 2020 and 2025 thanks to digital solutions, and to achieve zero waste by 2030.

Precisely, the projects to which the funds raised will be allocated, i.e. fibre optic and 5G infrastructure deployments or plans to extend renewable energy, are key to achieving these goals: fiber optic is 85 percent more energy efficient than copper; and 5G consumes, per unit of traffic, up to 90 percent less than 4G, said Telefonica.

Telefonica sustainable financing is close to 17 billion euro, since launching the industry’s first green bond in 2019, and including today’s transaction and the company’s sustainable financing lines. In terms of issuance, the company stands as the leading telco in the industry with more than €6.6bn of funds raised in the capital markets.