# EDGAR Filing Document

**Accession Number:** 0000814052
**File Stem:** 0000814052-23-000033
**Filing Date:** 2023-2
**Character Count:** 84963
**Document Hash:** 1ef0a3a28eb9856a6934ae9a24319703
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000814052-23-000033.hdr.sgml**: 20230223

**ACCESSION NUMBER**: 0000814052-23-000033

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230223

**DATE AS OF CHANGE**: 20230223

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TELEFONICA S A
- **CENTRAL INDEX KEY:** 0000814052
- **STANDARD INDUSTRIAL CLASSIFICATION:** TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** U3
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-09531
- **FILM NUMBER:** 23658336

**BUSINESS ADDRESS:**
- **STREET 1:** GRAN VIA 28
- **CITY:** 28013 MADRID
- **STATE:** U3
- **ZIP:** 00000
- **BUSINESS PHONE:** 00 34 91 584 0640

**MAIL ADDRESS:**
- **STREET 1:** GRAN VIA 28
- **CITY:** 28013 MADRID
- **STATE:** U3
- **ZIP:** 00000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** NATIONAL TELEPHONE COMPANY OF SPAIN
- **DATE OF NAME CHANGE:** 19880708

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of February, 2023

Commission File Number: 001-09531

**Telefónica, S.A.**

(Translation of registrant's name into English)

**Distrito Telefónica, Ronda de la Comunicación s/n, 28050 Madrid, Spain**

**+34 91-482 87 00**

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F <u>X</u> Form 40-F 

------

Telefónica, S.A. ("**Telefónica**") hereby furnishes to the Securities and Exchange Commission the information set forth in the following Exhibit Index.

**Exhibit Index**

---

| | |
|:---|:---|
| **Item** | |
| 99.1 | Telefónica's 2022 Annual Accounts, including (i) the Auditor's Report, Annual financial statements and management report of Telefónica, S.A. and (ii) the Auditor's Report, Consolidated financial statements and Consolidated management report of Telefónica, S.A. and its subsidiaries composing the Telefónica Group, all for the year ended December 31, 2022 |

---

------

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Telefónica, S.A.** | **Telefónica, S.A.** | **Telefónica, S.A.** |
| Date: | February 23, 2023 | By: | /s/ Laura Abasolo García de Baquedano | /s/ Laura Abasolo García de Baquedano |
|  |  |  | Name: | Laura Abasolo García de Baquedano |
|  |  |  | Title: | Chief Finance and Control Officer |

---

### Attached PDF Documents

**Attachment 1:** `annacc2022.pdf`

Telefónica S.A.

![img-0.jpeg](img-0.jpeg)

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

# Individual Annual Report 2022

![img-3.jpeg](img-3.jpeg)

This version of our report is a free translation of the original, which was prepared in Spanish. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

# Independent auditor's report on the annual accounts

To the shareholders of Telefónica, S.A.:

# Report on the annual accounts

# Opinion

We have audited the annual accounts of Telefónica, S.A (the Company), which comprise the balance sheet as at 31 December 2022, and the income statement, statement of changes in equity, cash flow statement and related notes for the year then ended.

In our opinion, the accompanying annual accounts present fairly, in all material respects, the equity and financial position of the Company as at 31 December 2022, as well as its financial performance and cash flows for the year then ended, in accordance with the applicable financial reporting framework (as identified in note 2.a of the notes to the annual accounts), and in particular, with the accounting principles and criteria included therein.

# Basis for opinion

We conducted our audit in accordance with legislation governing the audit practice in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the annual accounts section of our report.

We are independent of the Company in accordance with the ethical requirements, including those relating to independence, that are relevant to our audit of the annual accounts in Spain, in accordance with legislation governing the audit practice. In this regard, we have not rendered services other than those relating to the audit of the accounts, and situations or circumstances have not arisen that, in accordance with the provisions of the aforementioned legislation, have affected our necessary independence such that it has been compromised.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

# Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers Auditores, S.L., Torre PwC, Po de la Castellana 259 B, 28046 Madrid, España
Tel.: +34 915 684 400 / +34 902 021 111, Fax: +34 915 685 400, www.pwc.es

R. M. Madrid, hoja 67.250-1, folio 75, tomo 9.267, libro 8.054, sección 3a
Inscrita en el R.O.A.C. con el número 50242 - CIF: B-79 031290

1

![img-4.jpeg](img-4.jpeg)

Telefónica, S.A.

# Key audit matters

Measurement of non-current investments in Group companies and associates

A relevant part of Telefónica, S.A.'s assets consist of equity investments in Group companies and associates. As described in note 8, non-current investments in Group companies and associates (equity instruments) amount to €55,445 million at 31 December 2022.

To assess if there is an impairment in the investments in Group companies and associates, management conducts an impairment test at least annually or more frequently if events or circumstances indicate the carrying value may not be fully recoverable. Management calculates the recoverable amount at the lower of the fair value less costs to sell and the value in use to which the investment relates.

As described in notes 4.c) and 8.2, when the recoverable amount is determined by calculating the present value of projected cash flows from the investments, management refers to the strategic plans approved by the Board of Directors covering a three-year period including the closing year.

Management's cash flows projections involved significant judgements when considering significant assumptions such as revenue growth, long-term OIBDA margin, long-term capital expenditure ratio, discount rates and perpetuity growth rates which would be significantly affected by the future trends in the economic, competitive, regulatory and technological environment in each of the countries.

As described in note 8.2, a net write down of impairment provision of €1,590 million has been recognised in the income statement for the year.

We identify this as a key audit matter due to the significant judgements made by management when estimating the significant assumptions that supports the recoverable amount of the investments in Group companies and associates which in turn led to a high degree of auditor judgement and audit effort in evaluating these assumptions.

# How our audit addressed the key audit matters

We have performed audit procedures on the process followed by the directors and management to determine the recoverable amount, fair value less cost to sell or value in use of investments in Group companies and associates, including:

Understanding of the control environment, assessment and testing of the relevant controls over the Company's process for calculating the present value of future cash flows from investments in Group companies and associates.
Verification of the consistency of the data used in the calculation of the actual value with respect to the strategic plans approved by the Board of Directors.
Evaluation of the cash flow discount model used, for which we have had the collaboration of our valuation experts.
Analysis of the degree of budget achievement, with respect to the strategic plan approved in the previous year, as well as historical achievement.
- Assessment of the significant assumptions employed to determine the recoverable amount, testing reasonableness and consistency with available external information. We have had the collaboration of our valuation experts in evaluating the discount rates and perpetual growth rates considered by management.
Evaluation of the adequacy of the disclosures included in the annual accounts in accordance with the applicable accounting standards.

Based on the procedures performed, we consider management's assessment to be reasonable and its conclusions on the value of investments in Group companies and associates are consistent with the information contained in the accompanying annual accounts.

2

![img-5.jpeg](img-5.jpeg)

Telefónica, S.A.

# Other information: Management report

Other information comprises only the management report for the 2022 financial year, the formulation of which is the responsibility of the Company's directors and does not form an integral part of the annual accounts.

Our audit opinion on the annual accounts does not cover the management report. Our responsibility regarding the management report, in accordance with legislation governing the audit practice, is to:

a) Verify only that the certain information included in the Annual Corporate Governance Report and the Annual Report on Remuneration of the Directors, as referred to in the Auditing Act, has been provided in the manner required by applicable legislation and, if not, we are obliged to disclose that fact.
b) Evaluate and report on the consistency between the rest of the information included in the management report and the annual accounts as a result of our knowledge of the Company obtained during the audit of the aforementioned financial statements, as well as to evaluate and report on whether the content and presentation of this part of the management report is in accordance with applicable regulations. If, based on the work we have performed, we conclude that material misstatements exist, we are required to report that fact.

On the basis of the work performed, as described above, we have verified that the information mentioned in section a) above has been provided in the manner required by applicable legislation and that the rest of the information contained in the management report is consistent with that contained in the annual accounts for the 2022 financial year, and its content and presentation are in accordance with applicable regulations.

# Responsibility of the directors and the audit and control committee for the annual accounts

The directors are responsible for the preparation of the accompanying annual accounts, such that they fairly present the equity, financial position and financial performance of the Company, in accordance with the financial reporting framework applicable to the entity in Spain, and for such internal control as the aforementioned directors determine is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The audit commission is responsible for overseeing the process of preparation and presentation of the annual accounts.

# Auditor's responsibilities for the audit of the annual accounts

Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with legislation governing the audit practice in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts.

3

![img-6.jpeg](img-6.jpeg)

Telefónica, S.A.

As part of an audit in accordance with legislation governing the audit practice in Spain, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
- Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the entity's audit and control committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the entity's audit commission with a statement that we have complied with relevant ethical requirements, including those relating to independence, and we communicate with the aforementioned those matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the entity's audit commission, we determine those matters that were of most significance in the audit of the annual accounts of the current period and are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

# Report on other legal and regulatory requirements

# European single electronic format

We have examined the digital file of the European single electronic format (ESEF) of Telefónica, S.A. for the 2022 financial year that comprises an XHTML file of the annual accounts for the financial year, which will form part of the annual financial report.

4

pwc

Telefónica, S.A.

The directors of Telefónica, S.A. are responsible for presenting the annual financial report for financial year in accordance with the formatting requirements established in the Delegated Regulation (EU) 2019/815 of 17 December 2018 of the European Commission (hereinafter the ESEF Regulation). In this regard, the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration have been incorporated by reference in the management report.

Our responsibility is to examine the digital file prepared by the Company's directors, in accordance with legislation governing the audit practice in Spain. This legislation requires that we plan and execute our audit procedures in order to verify whether the content of the annual accounts included in the aforementioned file completely agrees with that of the annual accounts that we have audited, and whether the format of these accounts has been affected, in all material respects, in accordance with the requirements established in the ESEF Regulation.

In our opinion, the digital file examined completely agrees with the audited annual accounts, and these are presented, in all material respects, in accordance with the requirements established in the ESEF Regulation.

# Report to the audit and control committee

The opinion expressed in this report is consistent with the content of our additional report to the audit commission of the Company dated 21 February 2023.

# Appointment period

The General Ordinary Shareholders' Meeting held on 8 April of 2022 appointed us as auditors for a period of one year, for the year ended 31 December 2022.

Previously, we were appointed by resolution of the General Ordinary Shareholders' Meeting for a period of three years and we have audited the accounts continuously since the year ended 31 December 2017.

# Services provided

Services provided to the audited entity for services other than the audit of the accounts are disclosed in note 20.g) to the annual accounts.

PricewaterhouseCoopers Auditores, S.L. (S0242)

Vanesa González Prieto (21500)

23 de febrero de 2023

5

Telefónica S.A.

![img-7.jpeg](img-7.jpeg)

![img-8.jpeg](img-8.jpeg)

![img-9.jpeg](img-9.jpeg)

# Annual financial statements and management report

for the year ended

**2022**

Telefónica

Financial Statements 2022

# Index

| Balance sheet at December 31 | 3 |
| --- | --- |
| Income statements for the years ended December 31 | 5 |
| Statements of changes in equity for the years ended December 31 | 6 |
| Cash flow statements for the years ended December 31 | 7 |
| Note 1. Introduction and general information | 9 |
| Note 2. Basis of presentation | 10 |
| Note 3. Proposed appropriation of net results | 12 |
| Note 4. Recognition and measurement accounting policies | 13 |
| Note 5. Intangible assets | 16 |
| Note 6. Property, plant and equipment | 17 |
| Note 7. Investment properties | 18 |
| Note 8. Investments in group companies and associates | 19 |
| Note 9. Financial investments | 27 |
| Note 10. Trade and other receivables | 32 |
| Note 11. Equity | 33 |
| Note 12. Financial liabilities | 38 |
| Note 13. Bonds and other marketable debt securities | 40 |
| Note 14. Interest-bearing debt and derivatives | 41 |
| Note 15. Payable to group companies and associates | 43 |
| Note 16. Derivative financial instruments and risk management policies | 45 |
| Note 17. Income tax | 55 |
| Note 18. Trade, other payables and provisions | 59 |
| Note 19. Revenue and expenses | 61 |
| Note 20. Other information | 68 |
| Note 21. Cash flow analysis | 77 |
| Note 22. Events after the reporting period | 80 |
| Note 23. Additional note for English translation | 81 |
| Appendix I: Details of subsidiaries and associates at December 31, 2022 | 82 |
| Appendix II: Board and Senior Management Compensation | 86 |
| Management report 2022 | 92 |
| Business Model | 92 |
| Economic results of Telefónica, S.A. | 94 |
| Investment activity | 94 |
| Share price performance | 94 |
| Contribution and innovation | 95 |
| Environment, human resources and managing diversity | 97 |
| Liquidity and capital resources | 108 |
| Risks factors associated with the issuer | 110 |
| Events after the reporting period | 123 |
| Annual Corporate Governance Report for Listed Companies | 123 |
| Annual Report on the Remuneration of Directors | 123 |

Individual Annual Report 2022

Telefónica, S. A.

2

Financial Statements 2022

### Balance sheet at December 31

| Millions of euros |  |  |  |
| --- | --- | --- | --- |
| ASSETS | Notes | 2022 | 2021 |
| NON-CURRENT ASSETS |  | 59,929 | 60,476 |
| Intangible assets | 5 | 13 | 21 |
| Software |  | 7 | 7 |
| Other intangible assets |  | 6 | 14 |
| Property, plant and equipment | 6 | 131 | 136 |
| Land and buildings |  | 77 | 85 |
| Plant and other property, plant and equipment items |  | 50 | 49 |
| Property, plant and equipment under construction and prepayments |  | 4 | 2 |
| Investment property | 7 | 309 | 314 |
| Land |  | 100 | 100 |
| Buildings |  | 209 | 214 |
| Non-current investments in Group companies and associates | 8 | 55,705 | 55,067 |
| Equity instruments |  | 55,445 | 54,929 |
| Loans to Group companies and associates |  | 245 | 131 |
| Other financial assets |  | 15 | 7 |
| Financial investments | 9 | 3,288 | 3,890 |
| Equity instruments | 9 | 358 | 348 |
| Derivatives | 16 | 2,555 | 2,675 |
| Other financial assets | 9 | 375 | 867 |
| Deferred tax assets | 17 | 423 | 1,009 |
| Non current account receivables and other |  | 60 | 39 |
| CURRENT ASSETS |  | 8,813 | 11,399 |
| Trade and other receivables | 10 | 474 | 333 |
| Current investments in Group companies and associates | 8 | 1,530 | 3,698 |
| Loans to Group companies and associates |  | 1,470 | 3,641 |
| Derivatives | 16 | 5 | 9 |
| Other financial assets |  | 55 | 48 |
| Investments | 9 | 1,814 | 1,550 |
| Loans to companies |  | 26 | 53 |
| Derivatives | 16 | 614 | 751 |
| Other financial assets |  | 1,174 | 746 |
| Current deferred expenses |  | 6 | 11 |
| Cash and cash equivalents |  | 4,989 | 5,807 |
| TOTAL ASSETS |  | 68,742 | 71,875 |

The accompanying Notes 1 to 23 and Appendices I and II are an integral part of these balance sheets.

Individual Annual Report 2022

Telefónica, S. A.

3

Financial Statements 2022

# **Millions of euros**

| EQUITY AND LIABILITIES | Notes | 2022 | 2021 |
| --- | --- | --- | --- |
| EQUITY |  | 20,325 | 22,754 |
| CAPITAL AND RESERVES |  | 19,793 | 22,713 |
| Share capital | 11 | 5,775 | 5,779 |
| Share premium | 11 | 3,825 | 4,233 |
| Reserves | 11 | 11,414 | 13,041 |
| Legal & Statutory |  | 1,113 | 1,096 |
| Other reserves |  | 10,301 | 11,945 |
| Treasury shares and own equity instruments | 11 | (341) | (546) |
| Profit (Loss) for the year | 3 | (880) | 206 |
| UNREALIZED GAINS (LOSSES) RESERVE | 11 | 532 | 41 |
| Financial assets at fair value with changes though equity |  | (14) | (52) |
| Hedging instruments |  | 546 | 93 |
| NON-CURRENT LIABILITIES |  | 37,659 | 38,740 |
| Non-current provisions | 18 | 601 | 660 |
| Non-current borrowings | 12 | 3,438 | 2,818 |
| Bank borrowings | 14 | 372 | 415 |
| Derivatives | 16 | 1,908 | 1,824 |
| Other debts |  | 1,158 | 579 |
| Non-current borrowings from Group companies and associates | 15 | 33,405 | 35,141 |
| Deferred tax liabilities | 17 | 189 | 91 |
| Long term deferred revenues |  | 26 | 30 |
| CURRENT LIABILITIES |  | 10,758 | 10,381 |
| Current provisions | 18 | 28 | 30 |
| Current borrowings | 12 | 458 | 1,782 |
| Bonds and other marketable debt securities | 13 | - | 30 |
| Bank borrowings | 14 | 181 | 1,416 |
| Derivatives | 16 | 276 | 336 |
| Other financial liabilities | 14 | 1 | - |
| Current borrowings from Group companies and associates | 15 | 9,950 | 8,364 |
| Trade and other payables | 18 | 301 | 191 |
| Current deferred revenues |  | 21 | 14 |
| TOTAL EQUITY AND LIABILITIES |  | 68,742 | 71,875 |

The accompanying Notes 1 to 23 and Appendices I and II are an integral part of these balance sheets.

Individual Annual Report 2022

Telefónica, S. A.

4

Financial Statements 2022

# **Telefónica, S.A.**

# **Income statements for the years ended December 31**

| Millions of euros | Notes | 2022 | 2021 |
| --- | --- | --- | --- |
| Revenue | 19 | 1,949 | 6,426 |
| Rendering of services to Group companies and associates |  | 463 | 432 |
| Rendering of services to non-group companies |  | 21 | 15 |
| Dividends from Group companies and associates |  | 1,450 | 5,943 |
| Interest income on loans to Group companies and associates |  | 15 | 36 |
| Impairment and gains (losses) on disposal of financial instruments | 8 | (1,590) | (4,411) |
| Impairment losses and other losses |  | (1,590) | (4,574) |
| Gains (losses) on disposal and other gains and losses |  | - | 163 |
| Other operating income | 19 | 46 | 55 |
| Non-core and other current operating revenue - Group companies and associates |  | 36 | 36 |
| Non-core and other current operating revenue - non-group companies |  | 10 | 19 |
| Employees benefits expense | 19 | (196) | (212) |
| Wages, salaries and others |  | (163) | (180) |
| Social security costs |  | (33) | (32) |
| Other operational expense |  | (313) | (417) |
| External services - Group companies and associates | 19 | (92) | (97) |
| External services - non-group companies | 19 | (213) | (292) |
| Taxes other than income tax |  | (8) | (28) |
| Depreciation and amortization | 5, 6 and 7 | (28) | (27) |
| Gains (losses) on disposal of fixed assets |  | (8) | - |
| OPERATING PROFIT (LOSS) |  | (140) | 1,414 |
| Finance revenue | 19 | 1,429 | 423 |
| Finance costs | 19 | (2,650) | (1,544) |
| Change in fair value of financial instruments |  | 1 | (50) |
| Net result on financial assets at fair value with changes through equity | 9 and 11 | 1 | (50) |
| Exchange rate gains (losses) | 19 | (181) | 5 |
| NET FINANCIAL EXPENSE |  | (1,401) | (1,166) |
| PROFIT (LOSS) BEFORE TAX | 21 | (1,541) | 248 |
| Income tax | 17 | 661 | (42) |
| PROFIT (LOSS) FOR THE YEAR |  | (880) | 206 |

The accompanying Notes I to 23 and Appendices I and II are an integral part of these income statements

Individual Annual Report 2022

Telefónica, S. A.

5

**Telefónica**

Financial Statements 2022

# **Telefónica, S.A.**

# **Statements of changes in equity for the years ended December 31**

# **A) Statement of recognized income and expense**

| Millions of euros | Notes | 2022 | 2021 |
| --- | --- | --- | --- |
| Profit (Loss) for the period |  | (880) | 206 |
| Total income and expense recognized directly in equity | 11 | 888 | 1,218 |
| From valuation of financial assets at fair value with impact in equity |  | 37 | 122 |
| From cash flow hedges |  | 1,135 | 1,461 |
| Income tax impact |  | (284) | (365) |
| Total amounts transferred to income statement | 11 | (397) | (562) |
| From valuation of financial assets at fair value with changes through equity |  | 1 | (50) |
| From cash flow hedges |  | (531) | (683) |
| Income tax impact |  | 133 | 171 |
| TOTAL RECOGNIZED INCOME AND EXPENSE |  | (389) | 862 |

The accompanying Notes 1 to 23 and Appendices I and II are an integral part of these statements of changes in equity.

# **B) Statements of total changes in equity for the years ended December 31**

| Millions of euros | Share capital | Share premium and Reserves | Treasury shares | Profit (Loss) for the year | Net unrealized gains (losses) reserve | Total |
| --- | --- | --- | --- | --- | --- | --- |
| Balance at December 31, 2020 | 5,526 | 20,198 | (476) | (1,685) | (615) | 22,948 |
| Total recognized income and expense | - | - | - | 206 | 656 | 862 |
| Transactions with shareholders and owners | 253 | (1,239) | (70) | - | - | (1,056) |
| Capital decreases (Note 11) | (83) | (305) | 388 | - | - | - |
| Dividend distributions (Note 11) | 336 | (935) | - | - | - | (599) |
| Other transactions with shareholders and owners | - | 1 | (458) | - | - | (457) |
| Appropriation of prior year profit (loss) | - | (1,685) | - | 1,685 | - | - |
| Balance at December 31, 2021 | 5,779 | 17,274 | (546) | 206 | 41 | 22,754 |
| Total recognized income and expense | - | - | - | (880) | 491 | (389) |
| Transactions with shareholders and owners | (4) | (1,575) | 205 | - | - | (1,374) |
| Capital decreases (Note 11) | (139) | (409) | 548 | - | - | - |
| Dividend distributions (Note 11) | 135 | (1,202) | - | - | - | (1,067) |
| Other transactions with shareholders and owners (Note 11) | - | 36 | (343) | - | - | (307) |
| Other movements (Note 11) | - | (666) | - | - | - | (666) |
| Appropriation of prior year profit (loss) | - | 206 | - | (206) | - | - |
| Balance at December 31, 2022 | 5,775 | 15,239 | (341) | (880) | 532 | 20,325 |

The accompanying Notes 1 to 23 and Appendices I and II are an integral part of these statements of changes in equity.

Individual Annual Report 2022

Telefónica, S. A.

6

Financial Statements 2022

# **Telefónica, S.A.**

# **Cash flow statements for the years ended December 31**

| Millions of euros | Notes | 2022 | 2021 |
| --- | --- | --- | --- |
| A) CASH FLOWS FROM OPERATING ACTIVITIES |  | 4,194 | 11,148 |
| Profit (Loss) before tax |  | (1,541) | 248 |
| Adjustments to net results: |  | 1,526 | (331) |
| Depreciation and amortization | 5, 6 and 7 | 28 | 27 |
| Impairment of investments in Group companies and associates | 8 | 1,590 | 4,574 |
| Change in long term provisions |  | (36) | 44 |
| Gains on the sale of financial assets | 8 | - | (163) |
| Losses on disposal of fixed and intangible assets |  | 8 | - |
| Dividends from Group companies and associates | 19 | (1,450) | (5,943) |
| Interest income on loans to Group companies and associates | 19 | (15) | (36) |
| Net financial expense |  | 1,401 | 1,166 |
| Change in working capital |  | (68) | (26) |
| Trade and other receivables |  | 43 | 7 |
| Other current assets |  | (4) | (28) |
| Trade and other payables |  | (107) | (5) |
| Other cash flows from operating activities | 21 | 4,277 | 11,257 |
| Net interest paid |  | (1,062) | (1,431) |
| Dividends received and other |  | 3,777 | 12,520 |
| Income tax receipts |  | 1,562 | 168 |
| B) CASH FLOWS (USED IN) / FROM INVESTING ACTIVITIES | 21 | (2,769) | 865 |
| Payments on investments |  | (6,290) | (12,410) |
| Proceeds from disposals |  | 3,521 | 13,275 |
| C) CASH FLOWS USED IN FINANCING ACTIVITIES |  | (2,245) | (9,208) |
| Proceeds from equity instruments |  | 13 | - |
| (Payments) / Proceeds from financial liabilities | 21 | (934) | (8,113) |
| Debt issues |  | 4,743 | 3,518 |
| Repayment and redemption of debt |  | (5,677) | (11,631) |
| Acquisition of treasury shares | 11 | (365) | (478) |
| Dividends paid | 21 | (959) | (617) |
| D) NET FOREIGN EXCHANGE DIFFERENCE |  | 2 | (28) |
| E) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS |  | (818) | 2,777 |
| Cash and cash equivalents at January 1 |  | 5,807 | 3,030 |
| Cash and cash equivalents at December 31 |  | 4,989 | 5,807 |

The accompanying Notes 1 to 23 and Appendices I and II are an integral part of these cash flow statements.

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# Telefónica, S.A.
## Annual financial statements
## for the ended December 31, 2022

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# Note 1. Introduction and general information

Telefónica, S.A. ('Telefónica' or 'the Company') is a public limited company incorporated for an indefinite period on April 19, 1924, under the corporate name of Compañía Telefónica Nacional de España, S.A. It adopted its present name in April 1998.

The Company's registered office is at Gran Vía 28, Madrid (Spain) and its Employer Identification Number (CIF) is A-28/015865.

Telefónica's basic corporate purpose, pursuant to Article 4 of its Bylaws, is the provision of all manner of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. All the business activities that constitute this stated corporate purpose may be performed either in Spain or abroad and wholly or partially by the Company, either through shareholdings or equity interests in other companies or legal entities with an identical or a similar corporate purpose.

In keeping with the above, Telefónica is currently the parent company of a group that offers both fix and mobile telecommunications with the aim to turn the challenges of the new digital business into reality and being one of the most important players. The objective of the Telefónica Group is positioning as a Company with an active role in the digital business taking advantage of the opportunities of its size and industrial and strategic alliances.

The Company is taxed under the general tax regime established by the Spanish State, the Spanish Autonomous Communities and local governments, and files consolidated tax returns with most of the Spanish subsidiaries of its Group under the consolidated tax regime applicable to corporate groups.

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# Note 2. Basis of presentation

## d) True and fair view

These financial statements have been prepared from Telefónica, S.A.'s accounting records by the Company's Directors in accordance with the accounting principles and standards contained in the Spanish GAAP in force approved by Royal Decree 1514/2007, on November 16 (PGC 2007), modified by Royal Decree (RD) 602/2016, dated December 2, 2016, and by Royal Decree (RD) 1/2021, dated January 12, 2021, and other prevailing legislation at the date of these financial statements, to give a true and fair view of the Company's equity, financial position, income statements and of the cash flows obtained and applied in 2022.

The accompanying financial statements for the year ended December 31, 2022 were prepared by the Company's Board of Directors at its meeting on February 22, 2023 for submission for approval at the General Shareholders' Meeting, which is expected to occur without modification.

The figures in these financial statements are expressed in millions of euros, unless indicated otherwise, and therefore may be rounded. The euro is the Company's functional currency.

## b) Comparison of information

Accounting policies applied in 2022 are consistent with those applied in 2021. 2021 figures are included in these financial statements for comparison purposes.

On October 31, 2022 the Boletín Oficial del Instituto de Contabilidad y Auditoría de Cuentas no 131 (BOICAC 131) was published. Its 2nd question clarifies the valuation criteria to be used when assessing business units in a merger or spin-off agreement carried out among Group companies (see note 4). The impacts generated by the application of this criteria in 2022 has been detailed in notes 8 and 11.

## c) Materiality

These financial statements do not include any information or disclosures that, not requiring presentation due to their qualitative significance, have been determined as immaterial or of no relevance pursuant to the concepts of *materiality* or *relevance* defined in the PGC 2007 conceptual framework.

## d) Use of estimates

The financial statements have been prepared using estimates based on historical experience and other factors considered reasonable under the circumstances. The carrying value of assets and liabilities, which is not readily apparent from other sources, was established based on these estimates. The Company periodically reviews these estimates.

A significant change in the facts and circumstances on which these estimates are based could have an impact on the Company's results and financial position.

Key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the financial statements of the following year are discussed below.

### Provisions for impairment of investments in Group companies and associates

Investments in group companies, joint ventures and associates are tested for impairment at each year end to determine whether an impairment loss must be recognized in the income statement or a previously recognized impairment loss be reversed. The decision to recognize an impairment loss (or a reversal) involves estimates of the reasons for the potential impairment (or recovery), as well as the timing and amount. In note 8.2 it is assessed the impairment of these investments.

There is a significant element of judgment involved in the estimates required to determine recoverable amount and the assumptions regarding the performance of these investments, since the timing and scope of future changes in the business are difficult to predict.

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## Deferred taxes

The Company assesses the recoverability of deferred tax assets based on estimates of future earnings, and of all the options available to achieve an outcome, it considers the most efficient one in terms of tax within the legal framework the Company is subject to. The ability to recover these taxes depends ultimately on the Company's ability to generate taxable earnings over the period for which the deferred tax assets remain deductible. This analysis is based on the estimated schedule for reversing deferred tax liabilities, the expected outcome from pending lawsuits affecting the estimations as well as estimates of taxable earnings, which are sourced from internal projections and are continuously updated to reflect the latest trends.

The appropriate valuation of tax assets and liabilities depends on a series of factors, including estimates as to the timing and realization of deferred tax assets and the projected tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by the Company as a result of changes in tax legislation, the outcome of ongoing tax proceedings or unforeseen future transactions that could affect tax balances. The information about deferred tax assets and unused tax credits for loss carryforwards, whose effect has been registered when necessary in balance, is included in note 17.

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## Note 3. Proposed appropriation of net results

Telefónica, S.A. obtained 880 million euros of losses in 2022.

Accordingly, the Company's Board of Directors will submit the following proposed appropriation of 2022 net results for approval at the General Shareholders' Meeting:

| Millions of euros |  |
| --- | --- |
| Proposed appropriation: |  |
| Loss for the year | (880) |
| Distribution to: |  |
| Unrestricted reserves | (880) |

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# Note 4. Recognition and measurement accounting policies

As stated in note 2, the Company's financial statements have been prepared in accordance with the accounting principles and standards contained in the Código de Comercio, which are further developed in the Plan General de Contabilidad currently in force (PGC 2007), modified by RD 602/2016 and RD 1/2021 as well as any commercial regulation in force at the reporting date.

Accordingly, only the most significant accounting policies used in preparing the accompanying financial statements are set out below, in light of the nature of the Company's activities as a holding.

## a) Intangible assets

Intangible assets are stated at acquisition or production cost, less any accumulated amortization or any accumulated impairment losses.

Intangible assets are amortized on a straight-line basis over their useful lives. The most significant items included in this caption are computer software, which are generally amortized on a straight-line basis over three years.

## b) Property, plant and equipment and investment property

Property, plant and equipment is stated at cost, net of accumulated depreciation and any accumulated impairment in value.

The Company depreciates its property, plant and equipment once the assets are in full working conditions using the straight-line method based on the assets' estimated useful lives, calculated in accordance with technical studies which are revised periodically based on technological advances and the rate of dismantling, as follows:

| Estimated useful life | Years |
| --- | --- |
| Buildings | 40 |
| Plant and machinery | 3 - 25 |
| Other plant or equipment, furniture and office equipment | 10 |
| Other items of property, plant and equipment | 4 - 10 |

Investment property is measured and depreciated using the same criteria described for land and buildings for own use.

## c) Impairment of non-current assets

Non-current assets are assessed at each reporting date for indicators of impairment. Where such indicators exist, or in the case of assets which are subject to an annual impairment test, the Company estimates the asset's recoverable amount as the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future post-tax cash flows deriving from the use of the asset or its cash generating unit, as applicable, are discounted to their present value, using a post-tax discount rate reflecting current market assessments of the time value of money and the risks specific to the asset, whenever the result obtained is the same that would be obtained by discounting pre-tax cash flows at a pre-tax discount rate.

Telefónica bases the calculation of impairment on the business plans of the various companies to which the assets are allocated, approved by the Board of Directors' of Telefónica, S.A. The projected cash flows, based on strategic business plans, cover a period of five years not including the present year when the analysis is calculated. Starting with the sixth year, an expected constant growth rate is applied.

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## d) Financial assets and liabilities

The main future assumptions as well as other uncertainties related to estimations at year end which could cause a significant effect in the financial statements are disclosed below.

### Financial investments

'Investments in group companies, joint ventures and associates' are classified into a category of the same name and are shown at cost less any impairment loss (see note 4.c). Group companies are those over which the Company exercises control, either by exercising effective control or by virtue of agreements with the other shareholders. Joint ventures are companies which are jointly controlled with third parties. Associates are companies in which there is significant influence, but not control or joint control with third parties. Telefónica assesses the existence of significant influence not only in terms of percentage ownership but also in qualitative terms such as presence on the board of directors, involvement in decision-making, the exchange of management personnel, and access to technical information.

Financial investments which the Company intends to hold for an unspecified period of time and could be sold at any time to meet specific liquidity requirements or in response to interest rate movements and which have not been included in the other categories of financial assets defined in the RD 1/2021, which amends PGC 2007, are classified as *financial assets at fair value through equity*. These investments are recorded under 'Non-current assets,' unless it is probable and feasible that they will be sold within 12 months.

### Derivative financial instruments and hedge accounting

When Telefónica chooses not to apply hedge accounting criteria but economic hedging, gains or losses resulting from changes in the fair value of derivatives are taken directly to the income statement.

## e) Revenue and expenses

Revenue and expenses are recognized on the income statement based on an accrual basis; i.e. when the goods or services represented by them take place, regardless of when actual payment or collection occurs.

A distribution of unrestricted reserves is considered as dividend distribution, and therefore, is registered as dividend revenue in the accounting of the receiving Company whenever the distributing company and/or any of its group's subsidiaries have gathered profits above the amount of equity distributed.

When the Company receives free-allotment rights, known as scrip dividends, that can be used to acquire new shares at no cost or be sold in the market or to the

distributing company, it accounts for the concept as dividend revenue with a counterpart of account receivable on the distribution date.

The income obtained by the Company in dividends received from Group companies and associates, and from the interest accrued on loans and credits given to them, are included in revenue in compliance with the provisions of consultation No. 2 of BOICAC 79, published on September 30, 2009.

## f) Related party transactions

In business merger or spin-off transactions involving the parent company and its direct or indirect subsidiary, as well as in the case of non-monetary contributions of business units between Group companies and in the case of in-kind dividend distributions, the valuation of the assets and liabilities should be done in accordance with the Standards on Preparing Consolidated Financial Statements (Spanish 'NOFCAC'), at their pre-transaction carrying amount in the consolidated financial statements of the group or subgroup with a Spanish parent company. Prior to the filing of BOICAC 131, 2nd question (see note 2), which was filed in 2022, the valuation of assets and liabilities could be done applying the carrying value in the standalone financial statements as of the transaction date, when the group was discharged from the obligation of preparing NOFCAC consolidated financial statements. Nevertheless, there was also the option of using consolidated values under IFRS as adopted by the European Union, provided that this consolidated information did not significantly differ from that obtained by applying NOFCAC. In addition, the Company could also opt to use the values resulting from a reconciliation to NOFCAC.

In the particular case of a contribution to a group company of the shares of another group company, the pre-transaction carrying amount in the standalone financial statements of the contributing company could be used, unless the net equity amount was higher, in which case this amount was used.

The change in value arising in the contributing company as a result of the above accounting treatment is recognized in reserves.

## g) Financial guarantees

The Company has provided guarantees to a number of subsidiaries to secure their transactions with third parties (see note 20.a). Where financial guarantees provided have a counter-guarantee on the Company's balance sheet, the value of the counter-guarantee is estimated to be equal to the guarantee given, with no additional liability recognized as a result.

Guarantees provided for which there is no item on the Company's balance sheet acting as a counter-guarantee are initially measured at fair value which, unless there is

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evidence to the contrary, is the same as the premium received plus the present value of any premiums receivable. After initial recognition, these are subsequently measured at the higher of:

i) The amount resulting from the application of the rules for measuring provisions and contingencies.

ii) The amount initially recognized less, when applicable, any amounts take to the income statement corresponding to accrued income.

## h) Consolidated data

As required under prevailing legislation, the Company has prepared separate consolidated annual financial statements, drawn up in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The balances of the main headings of the Telefónica Group's consolidated financial statements for 2022 and 2021 are as follows:

| Millions of euros |  |  |
| --- | --- | --- |
| Item | 2022 | 2021 |
| Total assets | 109,642 | 109,213 |
| Equity: |  |  |
| Attributable to equity holders of the parent | 25,088 | 22,207 |
| Attributable to minority interests | 6,620 | 6,477 |
| Revenue from operations | 39,993 | 39,277 |
| Profit for the year: |  |  |
| Attributable to equity holders of the parent | 2,011 | 8,137 |
| Attributable to minority interests | 308 | 2,580 |

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# Note 5. Intangible assets

The movements in the items composing intangible assets and the related accumulated amortization in 2022 and 2021 are as follows:

| 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| INTANGIBLE ASSETS, GROSS | 269 | 7 | - | - | 276 |
| Software | 167 | 4 | - | 1 | 172 |
| Other intangible assets | 102 | 3 | - | (1) | 104 |
| ACCUMULATED AMORTIZATION | (248) | (7) | - | - | (255) |
| Software | (160) | (5) | - | - | (165) |
| Other intangible assets | (88) | (2) | - | - | (90) |
| DEPRECIATION ACCRUAL | - | (8) | - | - | (8) |
| NET CARRYING AMOUNT | 21 | (8) | - | - | 13 |

| 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| INTANGIBLE ASSETS, GROSS | 262 | 10 | (3) | - | 269 |
| Software | 163 | 4 | (1) | 1 | 167 |
| Other intangible assets | 99 | 6 | (2) | (1) | 102 |
| ACCUMULATED AMORTIZATION | (242) | (7) | 1 | - | (248) |
| Software | (155) | (5) | - | - | (160) |
| Other intangible assets | (87) | (2) | 1 | - | (88) |
| NET CARRYING AMOUNT | 20 | 3 | (2) | - | 21 |

As of December 31, 2022 and 2021 commitments to acquire intangible assets amount to 2.9 and 3.8 million euros, respectively.

As of December 31, 2022 and 2021, the Company had 243 and 231 million euros, respectively, of fully amortized intangible assets.

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## Note 6. Property, plant and equipment

The movements in the items composing property, plant and equipment (PP&E) and the related accumulated depreciation in 2022 and 2021 are as follows:

| 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| PROPERTY, PLANT AND EQUIPMENT, GROSS | 551 | 11 | - | (3) | 559 |
| Land and buildings | 201 | - | - | (2) | 199 |
| Plant and other PP&E items | 348 | 6 | - | 2 | 356 |
| PP&E under construction and prepayments | 2 | 5 | - | (3) | 4 |
| ACCUMULATED DEPRECIATION | (415) | (13) | - | - | (428) |
| Buildings | (116) | (6) | - | - | (122) |
| Plant and other PP&E items | (299) | (7) | - | - | (306) |
| NET CARRYING AMOUNT | 136 | (2) | - | (3) | 131 |

| 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| PROPERTY, PLANT AND EQUIPMENT, GROSS | 548 | 8 | (1) | (4) | 551 |
| Land and buildings | 203 | 1 | - | (3) | 201 |
| Plant and other PP&E items | 342 | 5 | (1) | 2 | 348 |
| PP&E under construction and prepayments | 3 | 2 | - | (3) | 2 |
| ACCUMULATED DEPRECIATION | (403) | (12) | - | - | (415) |
| Buildings | (111) | (5) | - | - | (116) |
| Plant and other PP&E items | (292) | (7) | - | - | (299) |
| NET CARRYING AMOUNT | 145 | (4) | (1) | (4) | 136 |

Firm commitments to acquire property, plant and equipment at December 31, 2022 and 2021 amounted to 0.2 and 1.2 million euros, respectively.

At December 31, 2022 and 2021, the Company had 264 and 261 million euros, respectively, of fully depreciated items of property, plant and equipment.

Telefónica, S.A. has taken on insurance policies with appropriate limits to cover the potential risks which could affect its property, plant and equipment.

'Property, plant and equipment' includes the net carrying amount of the land and buildings occupied by Telefónica, S.A. at its Distrito Telefónica headquarters, amounting to 62 and 65 million euros at 2022 and 2021 year-ends, respectively. It also includes the net carrying amount of the remaining assets in this site (mainly property, plant and equipment items) of 22 and 16 million euros at December 31, 2022 and 2021, respectively.

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# Note 7. Investment properties

The movements in the items composing investment properties in 2022 and 2021 and the related accumulated depreciation are as follows:

| 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| INVESTMENT PROPERTIES, GROSS | 436 | - | - | 3 | 439 |
| Land | 100 | - | - | - | 100 |
| Buildings | 336 | - | - | 3 | 339 |
| ACCUMULATED DEPRECIATION | (122) | (8) | - | - | (130) |
| Buildings | (122) | (8) | - | - | (130) |
| NET CARRYING AMOUNT | 314 | (8) | - | 3 | 309 |

| 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Millions of euros | Opening balance | Additions and allowances | Disposals | Transfers | Closing balance |
| INVESTMENT PROPERTIES, GROSS | 432 | - | - | 4 | 436 |
| Land | 100 | - | - | - | 100 |
| Buildings | 332 | - | - | 4 | 336 |
| ACCUMULATED DEPRECIATION | (114) | (8) | - | - | (122) |
| Buildings | (114) | (8) | - | - | (122) |
| NET CARRYING AMOUNT | 318 | (8) | - | 4 | 314 |

"Investment properties" mainly includes in both 2022 and 2021 the value of land and buildings leased by Telefónica, S.A. to other Group companies at Distrito Telefónica, headquarters in Madrid.

In 2022 the Company has buildings with a total area of 290.881 square meters (334,499 square meters in 2021) leased to several Telefónica Group companies, equivalent to an occupancy rate of 82.22% of the buildings it has earmarked for lease (94.31% in 2021).

Total income from leased buildings in 2022 and 2021 (see note 19.1.a) amounted to 37 and 42 million euros respectively.

Future minimum rentals receivable under non-cancellable leases are as follows:

| Millions of euros | 2022 | 2021 |
| --- | --- | --- |
|  | Future minimum recoveries | Future minimum recoveries |
| Up to one year | 29 | 31 |
| Between two and five years | - | - |
| Total | 29 | 31 |

The most significant lease contracts held with subsidiaries occupying Distrito Telefónica have been renewed in 2022 for a non-cancellable period of 12 months.

The main operating leases in which Telefónica, S.A. acts as lessee are described in note 19.5.

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# Note 8. Investments in group companies and associates

## 8.1. Detail and evolution of investment in group companies and associates:

**2022**

| Millions of euros | Opening balance | Additions | Disposals | Transfers | Exchange rate impacts | Dividends | Net investment hedges | Closing balance | Fair value |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Equity instruments (Net) (1) | 54,929 | 5,116 | (5,231) | - | - | (66) | 698 | 55,445 | 75,396 |
| Equity instruments (Cost) | 93,986 | 6,706 | (8,513) | - | - | (66) | 698 | 92,810 |  |
| Impairment losses | (39,057) | (1,590) | 3,282 | - | - | - | - | (37,365) |  |
| Loans to Group companies and associates | 131 | - | - | 121 | (7) | - | - | 245 | 238 |
| Other financial assets | 7 | 27 | - | (19) | - | - | - | 15 | 15 |
| Total non-current investment in Group companies and associates | 55,067 | 5,143 | (5,231) | 102 | (7) | (66) | 698 | 55,705 | 75,649 |
| Loans to Group companies and associates | 3,641 | 2,534 | (4,636) | (121) | 53 | - | - | 1,470 | 1,471 |
| Derivatives | 9 | - | (4) | - | - | - | - | 5 | 5 |
| Other financial assets | 48 | 10 | (22) | 19 | - | - | - | 55 | 55 |
| Total current investments in Group companies and associates | 3,698 | 2,544 | (4,662) | (102) | 53 | - | - | 1,530 | 1,531 |

(1) Fair value at December 31, 2022 of Group companies and associates quoted in an active market (Telefónica Brasil, S.A. and Telefónica Deutschland Holding, A.G.) was calculated taking the listing of the investments on the last day of the year, the rest of the shareholdings are stated at the value of discounted cash flows based on those entities business plans.

**2021**

| Millions of euros | Opening balance | Additions | Disposals | Transfers | Exchange losses | Dividends | Net investment hedges | Closing balance | Fair value |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Equity instruments (Net) (1) | 58,754 | 4,404 | (2) | (1) | - | (8,620) | 394 | 54,929 | 76,958 |
| Equity instruments (Cost) | 93,285 | 8,978 | (13) | (38) | - | (8,620) | 394 | 93,986 |  |
| Impairment losses | (34,531) | (4,574) | 11 | 37 | - | - | - | (39,057) |  |
| Loans to Group companies and associates | 590 | 1 | (360) | (100) | - | - | - | 131 | 136 |
| Other financial assets | 24 | 10 | - | (27) | - | - | - | 7 | 7 |
| Total non-current investment in Group companies and associates | 59,368 | 4,415 | (362) | (128) | - | (8,620) | 394 | 55,067 | 77,101 |
| Loans to Group companies and associates | 9,550 | 7,224 | (13,477) | 100 | 244 | - | - | 3,641 | 3,643 |
| Derivatives | 19 | - | (10) | - | - | - | - | 9 | 9 |
| Other financial assets | 39 | 32 | (50) | 27 | - | - | - | 48 | 48 |
| Total current investments in Group companies and associates | 9,608 | 7,256 | (13,537) | 127 | 244 | - | - | 3,698 | 3,700 |

(1) Fair value at December 31, 2021 of Group companies and associates quoted in an active market (Telefónica Brasil, S.A.) was calculated taking the listing of the investments on the last day of the year, the rest of the shareholdings are stated at the value of discounted cash flows based on those entities business plans.

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The most significant transactions occurred in 2022 and 2021 as well as their accounting impacts are described below:

## 2022

In June 2022 the Company, as sole shareholder of Telefónica Tech, S.L., decided to increase the share capital in the subsidiary by an in-kind contribution of the shares of Telefónica Cybersecurity & Cloud Tech, S.L. which amounted to 1,122 million euros. The impact of this transaction implies an addition to the investment in Telefónica Tech, S.L. amounting to 839 million euros, which is shown within Additions in the 2022 chart of movements and a disposal of the carrying amount of the contributed investment. Prior to this transaction, Telefónica Cyber Cloud & Tech, S.L. carried out a capital increase of 342 million euros fully subscribed and paid by Telefónica, S.A. also reflected within Additions in the same chart.

On August 10, 2022 the deed of partial segregation of Telefónica, S.A. to Telefónica Latinoamérica Holding, S.L. (TLH) was filed to Madrid Companies' Register. The segregation involved the business consisting in the shares owned by Telefónica, S.A. in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. together with some other items associated with the business. This transaction has increased the net investment value of TLH by 1,150 million euros, shown as Additions in the 2022 chart of movements as well as the disposal of the investment in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A., reflected as net Disposals accordingly by 1,006 and 88 million euros, respectively in the already mentioned 2022 chart of movements (Cost of investment by 1,360 million offset by 354 million euros of impairment losses for Telefónica Móviles Argentina, S.A. and Cost of investment by 119 million euros offset by 31 million euros of impairment losses for Telefónica de Argentina, S.A.).

On September 15, 2022, a partial spin-off of TLH took place. This transaction involved the transfer of the business consisting in the shares owned by TLH in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. together with some other related items to a newly created subsidiary, TLH Holdco, S.L. owned 100% by Telefónica, S.A. This transaction implies an addition of the new company, TLH Holdco, S.L. amounting to 1,582 million euros and a net disposal in TLH by 1,561 million euros (2,396 million euros of investment cost offset by 835 million euros of impairment losses). These amounts have been reflected as Additions and Disposals, respectively, in the 2022 chart of movements.

On October 31, 2022 the liquidation of Sao Paulo Telecomunicações, Ltda. has completed with the distribution to its shareholders of the assets and liabilities pro-rata their ownership percentage. As a consequence of the liquidation, an amount of 3,493 million euros has been recorded as disposal in the cost of investment line offset by a 2,039 million euros of impairment loss

disposal. Telefónica owned 39.40% of the subsidiary and after the liquidation receives an additional 8.06% of the share capital in Telefónica Brasil, S.A. (calculated based on the issued share capital) amounting to 903 million euros and is shown as Addition in 2022 chart of movements.

All the aforementioned transactions have been valued in accordance with BOICAC 131, 2nd question (see note 2)

## 2021

On July 30, 2020, Telefónica reached an agreement with Liberty Latin America Ltd. for the sale of the entire share capital of Telefónica de Costa Rica TC, S.A. On August 9, 2021, after the satisfaction of the closing conditions and obtaining the relevant regulatory approvals, the entire share capital of Telefónica de Costa Rica TC, S.A. was transferred to Liberty Latin America Ltd. for an amount of 538 million dollars, approximately 457 million euros. The net carrying value of the investment was included under the caption 'Net assets held for sale' and the net profit of the transaction, 163 million euros, is shown as 'gains on disposals' in the 2021 income statement.

On September 27, 2021 the deed of merger between Telefónica Innovación Alpha, S.L. (absorbed company) and Telefónica Open Innovation, S.L. (merging company) was filed to the Madrid Companies' Register. The absorbed company was 100% directly owned by Telefónica, S.A. and after the transaction, its net book value amounting to 38 million euros was reclassified as an investment in Telefónica Digital España, S.L., the parent company of the merging entity, which was also a direct investment of Telefónica, S.A. This transaction had had no impact in the income statement, and it is shown as Transfers in 2021 chart of movements.

## Other movements

After the sale of the investment in El Salvador, on January 13, 2022, the General Shareholders' Meeting of Telefónica Centroamérica Inversiones, S.L. agreed a dividend distribution to its shareholders pro-rata the ownership percentage. 76 million USD (equivalent to 66 million euros) were distributed to Telefónica, S.A. This proceed has been registered as an investment reimbursement and reflected as Dividends in 2022 chart of movements.

'Transfers' of 'Loans to Group Companies and Associates' in 2022 includes the reclassification from current to long-term of the loan granted in March 2022 to Telefónica Cybersecurity & Cloud Tech, S.L., and whose maturity was extended in June 2022 until 2027 (see note 8.5).

In May 2021 Telefónica, S.A. carried out capital increases in its subsidiaries O2 (Europe) Ltd. by 5,656 million euros and Telefónica O2 Holdings, Ltd. by 1,631 million euros in order to enable these companies to pay back the intercompany loans granted to them by Telfin Ireland, Ltd. On July 21, 2021 the Board of Directors of Telfin

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Ireland, Ltd. approved the distribution of reserves amounting to 8,269 million euros. Out of this figure, 8,189 million euros corresponded to contribution payback and was shown as "Dividends" in 2021 chart of movements. The rest of the amount was registered as "Dividend revenue" (see note 19).

On December 10, 2021 the General Shareholders' Meeting of Pontel, S.L. agreed to a distribution of reserves amounting to 751 million euros. On the same date the Board of Directors of the company approved a dividend distribution of 2,400 million euros. Telefónica, S.A. has received 2,627 million euros pro-rata its percentage of ownership. Out of this figure, 431 million euros corresponded to contribution payback, shown as "Dividends" in 2021 chart of movements. The rest of the amount was registered as "Dividend revenue" (see note 19).

"Transfers" of "Loans to Group Companies and Associates" in 2021 included the reclassification from long-term to current of the loans granted to Telxius Telecom, S.A.U. which were due in 2022 and have been cancelled accordingly during this year.

a) Acquisitions of investments and capital increases (Additions):

| Millions of euros | 2022 | 2021 |
| --- | --- | --- |
| Companies |  |  |
| TLH Holdco, S.L. | 1,646 | - |
| Telefónica Hispanoamérica, S.A. | 1,192 | 370 |
| Telefónica Latinoamérica Holding, S.L. | 1,150 | - |
| Telefónica Brasil, S.A. | 903 | - |
| Telefónica Tech, S.L. | 839 | 52 |
| Telefónica Infra, S.L. | 555 | 197 |
| Telefónica Cybersecurity & Cloud Tech, S.L. | 342 | 750 |
| Telefónica Deutschland, A.G. | 48 | 51 |
| Telefónica O2 Holdings, Ltd | - | 1,631 |
| Telefónica Digital España, S.L.U. | - | 185 |
| O2, Ltd. | - | 5,656 |
| Other companies | 31 | 86 |
| Total group and associated companies | 6,706 | 8,978 |

2022

On December 20, 2022 TLH Holdco, S.L. has carried out a capital increase of 64 million euros, fully subscribed and paid by Telefónica, S.A.. The amount in 2022 Additions chart includes not only this amount but also the figure of the segregation transaction of Argentinian businesses as detailed at the beginning of this note (1,582 million euros).

On February 2, 2022 Telefónica Hispanoamérica, S.A. filed the deed of the capital increase by 1,192 million euros subscribed and paid in full by the Company.

The amounts related to Telefónica Latinoamérica Holding, S.L., Telefónica Brasil, S.A. and Telefónica Tech, S.L. refer to the transactions described at the beginning of this note.

On May 11, 2022 the deed of capital increase carried out by Telefónica Infra, S.L. amounting to 38 million euros was filed to the Companies' Register. It had been fully subscribed and paid by Telefónica, S.A. In addition, during 2022 the Company has agreed to fund contributions to Telefónica Infra, S.L. (with no new shares issued) totaling 517 million euros.

During 2022 the Company has continued acquiring in the stock market shares of Telefónica Deutschland Holding, A.G. (19.1 million shares) up to a 1.36% of direct ownership as of 31.12.2022 as detailed in Appendix I of the present financial statements.

2021

On January 28, 2021 the deed of the capital increase of Telefónica Hispanoamérica, S.A. amounting to 370 million euros was filed in the Companies' Register. It was fully subscribed and paid by Telefónica, S.A.

On December 23, 2021 Telefónica Tech, S.L. carried out a capital increase amounting to 52 million euros totally subscribed and paid by Telefónica, S.A.

On June 14, 2021 the deed of capital increase of Telefónica Infra, S.L. by 197 million euros was filed in the Companies' Register. It had been fully subscribed and disbursed by the Company.

On March 25, 2021 Telefónica Cybersecurity & Cloud Tech, S.L. carried out a capital increase of 530 million euros. On September 28, 2021, the subsidiary carried out a second capital increase of 220 million euros. Both transactions were fully subscribed and paid by Telefónica, S.A.

During the second half of 2021 the Company acquired in the stock market 21,3 million shares of Telefónica Deutschland Holding, A.G. obtaining a 0,71% direct ownership in the subsidiary.

On May 26, 2021 Telefónica O2 Holdings, Ltd. carried out a capital increase of 1,631 million euros fully subscribed and disbursed by the Company, within the framework detailed at the beginning of this note.

On January 13, 2021 the deed of the capital increase of Telefónica Digital España, S.L.U. amounting to 185 million euros was filed in the Companies' Register. It was fully subscribed and paid by the Company.

On May 26, 2021 O2, Ltd. carried out a capital increase of 5,656 million euros fully subscribed and disbursed by the Company within the framework detailed at the beginning of this note.

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In 2021 Telefónica decided to partly cancel the accounts receivable that the subsidiaries had with the Group companies in Argentina. Telefónica, S.A. purchased these accounts receivable and the funds collected have been used to carry out capital increases in Telefónica de Argentina, S.A. After the transactions the percentage of ownership in the subsidiary raised to 11.43%.

# b) Disposals of investments and capital decreases:

| Millions of euros | 2022 | 2021 |
| --- | --- | --- |
| Companies |  |  |
| Sao Paulo Telecomunicações, Ltda. | 3,493 | - |
| Telefónica Latinoamérica Holding, S.L. | 2,396 | - |
| Telefónica Móviles Argentina, S.A. | 1,360 | - |
| Telefónica Cybersecurity & Cloud Tech, S.L. | 1,122 | - |
| Telefónica de Argentina, S.A. | 119 | - |
| Jubii Europe, N.V. | - | 13 |
| Other companies | 23 | - |
| Total group and associated companies: | 8,513 | 13 |

# 2022

The figure of Sao Paulo Telecomunicações, Ltda. relates to the liquidation of the Company detailed at the beginning of the note.

The amounts for Telefónica Latinoamérica Holding, S.L., Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. refer to the transaction of segregation and unification of the Argentinian business described at the beginning of this note.

The Disposal of Telefónica Cybersecurity & Cloud Tech, S.L. is framed in the in-kind contribution described at the beginning of this note.

Other companies includes the liquidation of Corporación Real Time Team, S.L., Centro de Experimentación de la Realidad Virtual, S.L. y Telco TE, which have been carried out in 2022. The companies were fully impaired and the same amount has been recorded as disposals in the impairment losses line.

# 2021

In June 2021 the deed of liquidation of Jubii Europe, N.V. was filed with a disbursement to its shareholders' by 0,022 euros per class AA and AB share. Telefónica, S.A. received 2,2 million euros and the liquidation had no effect in the income statement.

# 8.2. Assessment of impairment of investments in group companies, joint ventures and associates

At each year end, the Company re-estimates the future cash flows derived from its investments in Group companies and associates. The estimate is based on the expected cash flows to be received from each subsidiary in its functional currency, discounted using the appropriate rate, net of the liabilities associated with each investment (mainly net debt), considering the percentage of ownership in each subsidiary and translated to euros at the official closing rate of each currency at December 31. The main assessments used to determine the discounted cash flows are the revenue growth, the long term OIBDA margin, the long term investment ratio, the weighted average cost of capital (WACC) and the perpetual growth rate, indicators employed by the Group in its investments valuation.

Moreover, and only for the companies where discounted cash flow analysis is not available due to the specific nature of their businesses, the impairment is calculated by comparing their equity figure as of the end of the period and the net book value of those investments.

As a result of these estimations and the effect of the net investment hedge in 2022, an impairment provision of 1,590 million euros was recognized (write-off of 4,574 million euros in 2021). This amount derives mainly from the following companies:

a. a write down, net of hedges, of 1,594 million euros for Telefónica O2 Holdings, Ltd. (write down of 2,790 million euros, net of hedges, was registered in 2021);
b. a write down reversal, net of hedges, of 449 million euros for Telefónica Brasil, S.A. (write down amounting to 588 million euros in 2021) and a reversal of 15 million euros for Sao Paulo Telecomunicações, Ltda, registered prior to its liquidation (write down amounting to 64 million euros in 2021);
c. a write down by 1,252 million euros for Telefónica Hispanoamérica, S.A. (write down of 1,008 million euros in 2021) mainly due to the impact of the valuation in its investments in Chile and Colombia.
d. a write down reversal of 1,001 million euros for Telefónica Latinoamérica Holding, S.L. (write down by 277 million euros in 2021) mainly due to its investment in Brazil.
e. a write down of 130 million euros for Telefónica Digital España, S.L.U. (a write down of 22 million euros in 2021).
f. In 2021 a write down reversal of 155 million euros was recorded for Telefónica Móviles Argentina, S.A.

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## Main assumptions used for the calculation of the discounted cash flows of investments

During 2022 United Kingdom has passed through a difficult year. In addition to the inflation rate increase due to external factors (such as a rise in the energy price, mismatches in the supply chain and rising prices of food) and internal factors (a highly dynamic labour market) there has been an increase in the interest rates, negatively impacting the families' and companies' incomes resulting in a reduction unknown in decades. During the second half of the year a highly volatile financial scenario originated by inconsistent fiscal policy measures causing further uncertainty. Despite the difficult macroeconomic context VMED O2 UK has delivered its set guidance and made strong strategic and operational progress throughout the year. The company introduced new products, such as TV Stream and Switch up and continues to drive fixed mobile convergence with its VOLT product. VMED O2 UK delivered synergies according to its plan and the fixed footprint reached 16.1 million homes passed, meeting the full year build targets. In mobile, it expanded 5G services to more than 1,600 towns and cities, on-track to deliver 5G services to 50% of the UK population in 2023. In addition, on December 15, 2022, Telefónica Infra, Liberty Global and InfraVia Capital Partners entered into a joint venture which will deploy fibre to the home (FTTH) to 5 million homes in the UK not currently served by VMED O2 UK's network, with the possibility of expansion to an additional 2 million homes. The fibre network will offer wholesale FTTH access to telecommunications service providers, with VMED O2 UK acting as the anchor tenant, as well as providing a range of technical services.

The ratios of operating variables included in the valuation are within the ranges expected by analysts for comparable companies in the region. As far as the revenues are concerned, the UK business plan envisages trend of improvement or stability in the projections aligned with the evolution of the group's analysts expectation. Moreover, the long-term OIBDA margin two-year analysts' estimates for VMED O2 UK are in a range within 35% to 39%. With respect to the long-term investment over revenues ratio, the investment needs are forecasted by analysts to be around 19%. The WACC (Weighted average cost of capital) used to discount the cash flows is 7.3% for 2022. Terminal growth rate is set at 1%, below the real terminal growth forecast for the UK economy. Finally, it is necessary to consider the evolution of the exchange rate of the pound sterling against the euro in 2022, with a depreciation of 5.31% (see note 19.8), which has a direct effect on the value in use of the investment in euro terms.

During 2022 Brazil has been one of the only countries whose growth perspectives have been substantially improved notwithstanding external uncertainties. Estimations at the beginning of the year envisaged a growth stagnation in the country. However, the final

growth rate in 2022 situated in 3%. The positive economic evolution can be explained because the country has profited from the rising prices of raw materials (Brazil being an exporter of these products), the policies supporting families income and preventing a higher rise in the inflation rate and a swifter than expected overcome of the pandemic. In terms of revenues, the plan is in line with the average three-year estimates made by analysts, which include a trend towards stability or improvement. As for the long-term OIBDA margin two-year estimates of Telefónica's Group analysts for the operator in Brazil, it is in a range within 41% to 46%. Regarding investments, the operator will invest a percentage within the range of the investment needs forecasted by analysts (around 16%). The interest rates increase has resulted in an increase in the cost of debt of the company, and the WACC has risen from 12% in 2021 to 12.6% in 2022. The perpetuity growth rate is within the range of the estimations of the analysts, and it is consistent with the Brazilian Central Bank's medium-term inflation target (within a range between 1.5% and 4.5%) and it is below the nominal GDP growth rate of around 5.5%, according to market expectations. Moreover, the appreciation of Brazilian real against euro by 13.48% should also be taken into account as it has an impact, net of hedges, in the value of the investment (see note 19.8).

The economic activity in Colombia has continued growing at a significant rates. Despite this growth and the rising prices of raw materials worldwide, the country has failed in correcting the imbalances in relation with external (deficit of current debt) and internal (tax deficit) stakeholders. This fact, in addition to a period of political uncertainties caused by a change in the government, has created volatility in financial variables. Within this framework, the financial discount rate has increased by 140 b.p. when compared to the previous year, with a negative impact in the fair value of the investment in Telefónica Colombia. With respect to revenues, the business plan figures are estimated in accordance with the evolution previewed by the Groups analysts. Regarding OIBDA margin, the projections envisage a future scenario of stability after a change in the investment plans. For long term investment ratio, and as a consequence of the change in the fiber deployment programs, capex investments will be focused on mobile business and the investment ratio is aligned with the analysts' estimations for the region in the middle term.

Chilean economy dramatically slowed down in 2022 as a consequence of several factors negatively impacting families' income. The most relevant were the withdrawal of tax policies, the deceleration in the labour market and the high inflation rate above 10% which forced the Chilean Central Bank to increase interest rates abruptly. On the other hand, the constitutional reforms set in force and then withdrawn have added further uncertainties about the short term growth estimation in the country. In this scenario, the financial discount rate has increased to 9.4%, that is, about 60 b.p. when compared to the previous year. This fact as well as the economic

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slowdown reflected in the 2022 business figures have resulted in a decline in the value of the investment in Telefónica Chile. Business plans for the following years involve a sustained revenue growth with a stable margin. For long term investment ratio, and as a consequence of the change in the fiber deployment programs, capex investments will be focused on mobile business and the investment ratio is aligned with the analysts' estimations for the region in the middle term.

### 8.3. Detail of subsidiaries and associates

The detail of subsidiaries and associates is shown in Appendix I.

### 8.4. Transactions protected for tax purposes

Transactions carried out in 2021 that qualify for special tax regime, as defined in Articles 76 and 87, as applicable, of Chapter VII of Title VII of Legislative Royal Decree 27/2014 of November 27 approving the Spanish Corporate Income Tax Law, are detailed in the following paragraphs. Transactions qualified for special tax regime carried out in prior years are disclosed in the financial statements for those years.

As of June 1, 2022 Telefónica Audiovisual Digital, S.L. (TAD) carried out the merger by absorption of CIT, Compañía Independiente de Televisión, S.L. with the consequent dissolution of the latter entity and the full transfer of its corporate assets which, as the absorbing company, acquired by universal succession the rights and obligations of the absorbed entity.

On June 28, 2022 Telefónica, S.A. as sole shareholders of Telefónica Tech, S.L. approved and signed a decision to a capital increase carried out by an in-kind contribution of the shares of Telefónica Cybersecurity & Cloud Tech, S.L. The deed was filed in the Companies' Register on July 8, 2022. This transaction meant the contribution of the shares of Telefónica Cybersecurity & Cloud Tech, S.L. with a net book value of 1,122 million euros (fiscal value of 1,182 million euros) in exchange for shares of Telefónica Tech, S.L. with a net book value of 839 million euros.

On July 28, 2022 Telefónica, S.A. as sole shareholder of Telefónica Ingeniería de Seguridad, S.A. approved a partial segregation for the latter in favor of a new subsidiary named TIS Hispanoamérica, S.L. The deed has been filed to the Companies' Register on September 30, 2022. Telefónica, the sole owner of the segregated company, delivered shares of Telefónica Ingeniería de Seguridad, S.A. amounting to 0.8 million euros (both net book value and tax value) and received shares of the new company with the same net book value.

On August 10, 2022 Telefónica, S.A. transferred to its subsidiary Telefónica Latinoamérica Holding, S.L. via share exchange and an in-kind contribution of the investment in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. as well as some other balances associated with the business. After the completion of the transaction, Telefónica Latinoamérica Holdings S.L. acquires 73,20% and 10,75% of the shares in Telefónica Móviles Argentina S.A. y Telefónica de Argentina S.A., respectively. Telefónica Latinoamérica Holding, S.L. has booked the shares received by a net book value of 1,155 million euros. The tax value of the shares is 1,460 million euros.

Telefónica, S.A. has delivered the investments in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. with a net book value of 1,093 million euros and a tax value of 1,460 million euros. In addition, the Company has received shares of Telefónica Latinoamérica Holding, S.L. with a net book value of 1,150 million euros.

On September 15, 2022 Telefónica Latinoamérica Holding, S.L. carried out a segregation of the Argentinian business to TLH Holdco, S.L. The segregation included the shares in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A. as well as other balances related to the business. With the conclusion of the segregation, TLH Holdco, S.L. acquires 100% and 19,81% of the ownership in Telefónica Móviles Argentina, S.A. and Telefónica de Argentina, S.A., respectively. Telefónica, S.A. became the sole stockholder of TLH Holdco, S.L.

TLH Holdco, S.L. registered the investment received with a net book value of 1,623 million euros. The tax value of the assets received amounts to 4,008 million euros.

As for Telefónica, S.A. the net book value of the shares delivered is 1,561 million euros and its tax value totals 4,008 million euros. The book value of the shares received amounts to 1,582 million euros.

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