Telefónica boasts ‘Transform & Grow’ success

• The telco announced its ‘Transform & Grow’ strategy a year ago
• Its sales and earnings are growing and it has updated its full year targets, mostly for the better
• AI is playing a key role in its overall operational transformation
• Telefónica provided an update on its Autonomous Network Journey programme

Telefónica says it is reaping the benefits of the ‘Transform & Grow’ strategy it introduced a year ago, as it has reported its largest earnings growth in a decade and grown its “key financial metrics… for the fourth consecutive quarter, at both real and constant exchange rates”.

For the first nine months of 2026, the giant telco, which counts Spain, Brazil, Germany and the UK as its main markets, reported group revenues of €24.83bn, up by 2.8% compared with the same period in 2025, while its adjusted EBITDA hit €8.85bn, up by  4.6%, “the largest increase in the last decade”, the teco boasted. 

For the third quarter (July-September), the telco reported group revenues of €8.43bn, up by 4.8%, and adjusted EBITDA of €3.1bn, up by 6.2%. 

It ended September with a total of 302.1 million network access connections, up by 5% year on year, of which 104.8 million are contract mobile connections and 14.5 million are fibre-to-the-premises connections. Across all of its markets, the telco’s fibre access networks reach 77.6 million premises. Telefónica boasts 5G coverage of 96% in Spain, 99% in Germany, 73% in Brazil and 88% in the UK. 

According to Telefónica, its Transform & Grow strategy, unveiled in early November 2025, “has enabled the group’s key financial metrics to grow simultaneously between July and September for the fourth consecutive quarter, at both real and constant exchange rates.”

The operator did, though, reduce its full year revenues growth target (at constant exchange rates) to 1%-1.5% from the previous 1.5%-2.5%, with lower-than-expected device sales seeming to be the reason for that reassessment.

Emilio Gayo, Telefónica’s chief operating officer, noted:  “We are pleased to announce another strong set of results. The fundamentals of our Transform & Grow strategy remain intact and the execution during 2026 has reinforced our confidence in delivering our plan. We are undergoing a comprehensive transformation process to boost our competitiveness, underpinned by decisions such as the almost complete exit of Hispam [Telefónica Hispanoamérica], restructuring programmes in Spain, the global units and Germany, efficiencies delivery coming from a more simplified operational model, AI, digitalisation, automation, legacy shut-downs. We are developing new sources of growth like digital services in B2B [business to business], ecosystem in B2C [business to consumer], opportunities in sovereign digital infrastructure, edge computing, AI services and the AI gigafactory initiative.” 

Its move to create a joint venture to bid for European AI gigafactory funding was approved by the European Commission in September, with the operator stating it is “strategically positioned to accelerate European technology sovereignty”.

A key part of the strategy, of course, is improved efficiency and cost efficiency and that is also having an impact. Its capex-to-revenues ratio is already at just 12% – low for a major telco – and group-wide moves have enabled the operator to reduce its debt pile: During the first nine months of this year, Telefónica reduced its debt by €1.6bn to (a still considerable) €25.19bn.

In his prepared notes, Gayo noted that Telefónica has simplified its operational model in Spain, Germany, and the UK – where Virgin Media O2, the telco in which Telefónica holds a 50% stake, is about to embark on a major cost-reduction programme – and that AI is playing an increasingly important role, not only in customer interactions and network operations but also in service delivery. AI will “deliver capabilities in cybersecurity and sovereign cloud, from network infrastructure to enterprise services,” the operator noted in its third-quarter report. 

On the telco’s earnings conference call, Gayo noted that “AI is embedded across our strategic plan and is a key catalyst to improve customer experience, commercial performance, network automation and process efficiency.” 

The operator’s network automation efforts are already well underway, of course, as Telefónica’s chief technology and information officer (CTIO), Andrea Folgueiras, told TelecomTV earlier this year – see Telefónica is all in on autonomous networking.

And in its third-quarter report, the telco provided an update on its Autonomous Network Journey programme. Referencing the TM Forum’s six-step autonomous network (AN) levels taxonomy, the company noted that “Level 4 use cases are already in full operation, progressing to global average of autonomy for 2028 (Level 3.75).”

Telefónica stated that it is making progress “towards the industrialisation of AI through service-centric operations, multi-agent architectures and governed closed loops. These reinforce autonomy as a strategic lever for increasing efficiency, resilience and the quality-of-service delivery.” 

Specifically, it noted that in Spain, it is improving network operations efficiency and autonomy through “intelligent base station management, adapting resources to low-traffic periods. By optimising infrastructure use, it reduces operational complexity and unnecessary network events, enables controlled maintenance and preserves service quality, accelerating the transition to data-driven, self-optimising operations.” 

In Germany it is “enhancing its mobile network by making network operations increasingly efficient and autonomous through AI-driven activities, achieving a Level 4 of autonomy in this process.” 

At Vivo, its operation in Brazil, it has “implemented closed-loop automation to predict capacity constraints and provision resources. As such, it prevents service degradation before customers are affected, and maintains uninterrupted delivery. This predictive, self-managing capability enhances customer experience, strengthens service resilience and accelerates the transition towards truly autonomous operations.”

Telefónica added that, overall, its Autonomous Network Journey programme “continues to improve data quality, harmonise information sources and modernise operational systems. This is creating a robust digital foundation that enables greater automation, more accurate decision-making and the reliable deployment of future autonomous capabilities, while ensuring the governance, resilience and data quality required to support increasingly intelligent and autonomous network operations.”

- Ray Le Maistre, Editorial Director, TelecomTV