Telefónica's €750M Green Bond Targets Sustainable Networks
November 16, 2022
Telefónica
has reopened the European corporate hybrid market, closed since mid-September,
with the successful issue of a €750 million 6-year green hybrid bond. At the
same time, the company has presented an offer to purchase two hybrids with
redemption dates in March and September 2023. According to the planned schedule,
the offer will end on 21th of November and the closing date of the operation
will be on the 24th.
Regarding the hybrid bond issue, the operation was very well received by
institutional investors, with a book of more than 300 orders – exceeding the
amount finally issued by more than 6 times – and a broadly diversified investor
base, with international investors accounting for more than 90%. Thanks to this
good response, the company has managed to improve the conditions significantly,
with a coupon reduction of 62.5 basis points and a final cost of 7.125% from the
initial indications of 7.75%. The closing and final settlement will be on the
23rd of November.
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.
Energy efficiency and renewable energy generation
The funds obtained will be allocated to investments in green projects consisting
mainly on the shutdown of obsolete equipment and the deployment and improvement
of network infrastructure. These will be projects that seek to achieve greater
energy efficiency thanks to the transformation of telecommunications networks
through fibre and 5G technology, on the one hand, and renewable energy
generation plans, on the other.
Once the projects have been identified and awarded, and in accordance with the
company’s Sustainable Finance Framework in force, Telefónica will report their
impact on energy consumption per petabyte unit of data traffic, on the energy
savings they represent and on the estimated CO² emissions avoided.
Global leadership in sustainable finance
Today’s
issue is in line with Telefónica’s objective that 25% of its financing until
2024 should be based on sustainability criteria. It also links, in a more
generic way, with the company’s sustainability objectives, which are integrated
into its business strategy and aligned with the United Nations Development Goals
(SDGs). In environmental terms, and in line with SDGs 7, 11, 12 and 13,
Telefónica is working to achieve net zero emissions by 2040 across its entire
value chain, with the intermediate goal of neutralising emissions to reach 1+2
by 2025 in its main markets.
It also fits with the company’s goal to help its customers avoid more than 50
million tonnes of CO² emissions between 2020 and 2025 thanks to digital
solutions and to achieve zero waste by 2030. The roll-out of fibre optics and 5G
infrastructure as part of the transformation of the networks, together with
plans to extend renewable energy, are key to achieving these objectives. Optical
fibre is 85% more energy efficient than copper, and 5G consumes, per unit of
traffic, up to 90% less than 4G.
Telefónica is a pioneer in the sustainable financing segment. In 2019 the
company launched the industry’s first green bond, in 2020 it issued the first
green hybrid bond, and in 2021 it placed the sector’s first sustainable hybrid
bond.
With today’s issuance, Telefónica leads the global telco sector as leader in
sustainable financing in public markets. Including this transaction, Telefónica
Group’s sustainable activity exceeds €15 billion as of January 2019, including
sustainable financing facilities.
