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Segment Information | 12 Months Ended
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Dec. 31, 2022
Operating Segments [Abstract] |
Segment Information | Segment information In 2022 the Telefónica Group is reporting financial information, both internally and externally, according to the following segments: Telefónica Spain, VMO2 (recorded by the equity method), Telefónica Germany, Telefónica Brazil and Telefónica Hispam (formed by the Group's operators in Colombia, Mexico, Venezuela, Ecuador, Argentina, Chile, Peru and Uruguay). During 2021, compared to 2020, the Telefónica Group changed its reporting segments as follows: (i) On June 1, 2021, upon the establishment of the VMO2 joint venture (whose results are accounted for under the equity method), the former Telefónica United Kingdom segment was replaced by the new VMO2 segment (see notes 2 and 10). The 2021 results include the consolidation of Telefónica United Kingdom from January 1 to June 1, and the equity accounting of 50% of the net result of VMO2 from June 1 to December 31 (see Note 10). The gain registered on the establishment of VMO2, amounting to 4,460 million euros (see notes 2 and 26), are recorded in "Other companies". (ii) The Telxius Group ceased to be a reporting segment as a result of the sale of the telecommunications towers divisions in Europe and Latin America (see Note 2). The Telxius Group’s results as well as the gain obtained for the sale of the telecommunications towers divisions, amounting to 6,099 million euros (see notes 2 and 26), were recorded in "Other companies". The impairment losses on goodwill and other assets of Telefónica Argentina recorded in 2020, the impairment loss on goodwill of Telefónica del Perú in 2021 (see Note 7) and the impairment losses on other assets of Telefonica Argentina in 2022 (see notes 6 and 8), are included in the Telefónica Hispam segment. The segments referred to above include the information relating to the fixed, mobile, cable, data, internet, television and other digital services businesses provided in each country. Intersegment transactions are carried out as if on an arm's length basis. Information relating to other Group companies not specifically included in these segments is reported under "Other companies" (see Appendix I), which includes Telefónica, S.A. and other holding companies, as well as companies whose main purpose is to provide cross-sectional services to Group companies and other operations not included in the segments.The Incremental Group and BE-terna Group, acquired in 2022, and Cancom Group, acquired in 2021 (see Note 5), are reported within "Other companies". "Other companies" also includes the share of results of investments accounted for by the equity method corresponding to the fiber optic companies incorporated in 2021 and 2022 (see Note 10). The Group centrally manages borrowing activities, mainly through Telefónica, S.A. and other companies (see Note 19, Appendix III and Appendix V), so most of the Group's financial assets and liabilities are reported under Other companies. In addition, Telefónica, S.A. is the head of the Telefónica tax group in Spain (see Note 25). Therefore, a significant part of the deferred tax assets and liabilities is included under Other companies. For these reasons, the results of the segments are disclosed through operating income. The "Eliminations" of the Group at OIBDA level mainly reflected the leases of Telxius Group (in 2020 and 2021, up to the date of sale of these companies) to other Telefónica Group companies, due to the asymmetry in accounting between lessor and lessee under IFRS 16. This impact is mostly offset at operating income level. Revenues and expenses arising from intra-group invoicing for the use of the trademark and management services were eliminated from the operating results of each Group segment. The results of the holding companies also exclude dividends from Group companies and impairments of investments in Group companies. These adjustments have no impact on the Group’s consolidated results. In addition, segment reporting considers the impact of the purchase price allocation to the assets acquired and the liabilities assumed by the companies included in each segment. The assets and liabilities presented in each segment are those managed by the heads of each segment, regardless of their legal structure. Operating income before depreciation and amortization (OIBDA) is calculated by excluding solely depreciation and amortization from operating income. OIBDA is used to track the performance of the business and to establish operating and strategic targets of the Telefónica Group companies. OIBDA is a commonly reported measure and is widely used among analysts, investors and other interested parties in the telecommunications industry, although not a measure explicitly defined in IFRS, and therefore, may not be comparable to similar indicators used by other companies. OIBDA should not be considered as a substitute for operating income. The following table presents income, CapEx information (capital expenditures in intangible assets and property, plant and equipment, see Notes 6 and 8) and acquisitions of rights of use (see Note 9) regarding the Group’s operating segments:
2022
Millions of euros | Telefónica Spain |  | VMO2 | Telefónica Germany | Telefónica Brazil | Telefónica Hispam | Other companies | Eliminations | Total Group
Revenues | 12,497 |  |  | — |  | 8,224 |  | 8,870 |  | 9,141 |  | 3,243 |  | (1,982) |  | 39,993 |
External revenues | 12,224 |  |  | — |  | 8,195 |  | 8,854 |  | 9,026 |  | 1,685 |  | 9 |  | 39,993 |
Intersegment revenues | 273 |  |  | — |  | 29 |  | 16 |  | 115 |  | 1,558 |  | (1,991) |  | — |
Other operating income and expenses(1) | (7,909) |  |  | — |  | (5,666) |  | (5,138) |  | (7,183) |  | (3,149) |  | 1,904 |  | (27,141) |
OIBDA | 4,588 |  |  | — |  | 2,558 |  | 3,732 |  | 1,958 |  | 94 |  | (78) |  | 12,852 |
Depreciation and amortization | (2,157) |  |  | — |  | (2,295) |  | (2,369) |  | (1,799) |  | (218) |  | 42 |  | (8,796) |
Operating income | 2,431 |  |  | — |  | 263 |  | 1,363 |  | 159 |  | (124) |  | (36) |  | 4,056 |
Share of income (loss) of investments accounted for by the equity method | (15) |  |  | 292 |  | — |  | — |  | (19) |  | (41) |  | — |  | 217 |
CapEx | 1,550 |  |  | — |  | 1,209 |  | 1,795 |  | 1,058 |  | 212 |  | (5) |  | 5,819 |
Acquisitions of rights of use | 724 |  |  | — |  | 594 |  | 596 |  | 514 |  | 17 |  | 3 |  | 2,448 |
(1) Other operating income and expenses includes “Other income”, “Supplies”, “Personnel expenses” and “Other expenses”.
2021
Millions of euros | Telefónica Spain | Telefónica United Kingdom | VMO2 | Telefónica Germany | Telefónica Brazil | Telefónica Hispam | Other companies | Eliminations | Total Group
Revenues | 12,417 |  | 2,628 |  | — |  | 7,765 |  | 6,910 |  | 8,362 |  | 3,059 |  | (1,864) |  | 39,277 |
External revenues | 12,156 |  | 2,609 |  | — |  | 7,738 |  | 6,897 |  | 8,258 |  | 1,628 |  | (9) |  | 39,277 |
Intersegment revenues | 261 |  | 19 |  | — |  | 27 |  | 13 |  | 104 |  | 1,431 |  | (1,855) |  | — |
Other operating income and expenses(1) | (9,040) |  | (1,709) |  | — |  | (5,341) |  | (3,772) |  | (6,644) |  | 7,589 |  | 1,623 |  | (17,294) |
OIBDA | 3,377 |  | 919 |  | — |  | 2,424 |  | 3,138 |  | 1,718 |  | 10,648 |  | (241) |  | 21,983 |
Depreciation and amortization | (2,153) |  | — |  | — |  | (2,394) |  | (1,918) |  | (1,873) |  | (356) |  | 297 |  | (8,397) |
Operating income | 1,224 |  | 919 |  | — |  | 30 |  | 1,220 |  | (155) |  | 10,292 |  | 56 |  | 13,586 |
Share of (loss) income of investments accounted for by the equity method | (2) |  | — |  | (103) |  | — |  | — |  | (6) |  | (16) |  | — |  | (127) |
CapEx | 1,815 |  | 933 |  | — |  | 1,284 |  | 2,069 |  | 978 |  | 206 |  | (18) |  | 7,267 |
Acquisitions of rights of use(2) | 482 |  | 389 |  | — |  | 833 |  | 489 |  | 387 |  | 113 |  | (254) |  | 2,439 |
(1)Other operating income and expenses includes “Other income”, “Supplies”, “Personnel expenses” and “Other expenses”. (2) Additionally, rights of use in the amount of 2,633 million euros were recorded in 2021 following the sale of the tower division of Telxius (see Note 9).
2020
Millions of euros | Telefónica Spain | Telefónica United Kingdom | Telefónica Germany | Telefónica Brazil | Telefónica Hispam | Other companies | Eliminations | Total Group
Revenues | 12,401 |  | 6,708 |  | 7,532 |  | 7,422 |  | 7,922 |  | 2,647 |  | (1,556) |  | 43,076 |
External revenues | 12,118 |  | 6,666 |  | 7,500 |  | 7,406 |  | 7,786 |  | 1,610 |  | (10) |  | 43,076 |
Intersegment revenues | 283 |  | 42 |  | 32 |  | 16 |  | 136 |  | 1,037 |  | (1,546) |  | — |
Other operating income and expenses(1) | (7,355) |  | (4,644) |  | (5,223) |  | (4,234) |  | (6,932) |  | (2,288) |  | 1,098 |  | (29,578) |
OIBDA | 5,046 |  | 2,064 |  | 2,309 |  | 3,188 |  | 990 |  | 359 |  | (458) |  | 13,498 |
Depreciation and amortization | (2,184) |  | (389) |  | (2,394) |  | (1,965) |  | (2,274) |  | (468) |  | 315 |  | (9,359) |
Operating income | 2,862 |  | 1,675 |  | (85) |  | 1,223 |  | (1,284) |  | (109) |  | (143) |  | 4,139 |
Share of income (loss) of investments accounted for by the equity method | (4) |  | — |  | — |  | — |  | — |  | 6 |  | — |  | 2 |
CapEx | 1,408 |  | 913 |  | 1,094 |  | 1,372 |  | 833 |  | 454 |  | (213) |  | 5,861 |
Acquisitions of rights of use | 138 |  | 116 |  | 1,159 |  | 768 |  | 364 |  | 378 |  | (909) |  | 2,014 |
(1)Other operating income and expenses includes “Other income”, “Supplies”, “Personnel expenses” and “Other expenses”.
The table below shows the income, CapEx and acquisitions of rights of use of VMED O2 UK (VMO2) in 2022 and 2021 (see Note 2). VMO2 is a joint venture 50% owned by Telefónica and Liberty Global and is recorded under the equity method (see Note 10). The tables below show the information of the joint venture at 100% and the reconciliation with the Telefónica Group's share of income (loss) accounted for by the equity method.
VMO2
Millions of euros | January-December, 2022 | June 1 to December 31, 2021
Revenues | 12,155 |  | 7,223 |
Other operating income and expenses | (7,754) |  | (4,773) |
OIBDA | 4,401 |  | 2,450 |
Depreciation and amortization | (4,170) |  | (2,395) |
Operating income | 231 |  | 55 |
Share of income (loss) of investments accounted for by the equity method | 1 |  | — |
Financial income | 24 |  | 27 |
Financial expenses | (1,020) |  | (504) |
Realised and unrealised gains on derivative instruments, net | 2,567 |  | 489 |
Foreign currency transaction losses, net | (1,296) |  | (367) |
Net financial expense | 275 |  | (355) |
Result before taxation | 507 |  | (300) |
Income tax | (15) |  | 65 |
Result for the period (100% VMO2) | 492 |  | (235) |
50% attributable to Telefónica Group | 246 |  | (117) |
Share-based compensation | 14 |  | 14 |
Other adjustments | 32 |  | — |
Share of income (loss) of investments accounted for by the equity method | 292 |  | (103) |
Capital expenditures (CapEx) | 2,707 |  | 1,508 |
Acquisitions of rights of use | 118 |  | 75 |
The following table presents main assets and liabilities by segment:
2022
Millions of euros | Telefónica Spain |  | VMO2 | Telefónica Germany | Telefónica Brazil | Telefónica Hispam | Other companies | Eliminations | Total Group
Fixed assets | 14,285 |  |  | — |  | 11,602 |  | 18,217 |  | 7,870 |  | 2,237 |  | (9) |  | 54,202 |
Rights of use | 1,722 |  |  | — |  | 3,277 |  | 2,048 |  | 1,169 |  | 100 |  | (37) |  | 8,279 |
Investments accounted for by the equity method | 252 |  |  | 10,779 |  | — |  | — |  | 146 |  | 410 |  | — |  | 11,587 |
Financial assets and other non-currents assets | 875 |  |  | — |  | 992 |  | 984 |  | 1,578 |  | 6,082 |  | (2,410) |  | 8,101 |
Deferred tax assets | 2,395 |  |  | — |  | 463 |  | 485 |  | 612 |  | 929 |  | — |  | 4,884 |
Other current financial assets | 32 |  |  | — |  | 34 |  | 162 |  | 222 |  | 7,435 |  | (5,441) |  | 2,444 |
Non-current assets and disposal groups held for sale | — |  |  | — |  | — |  | — |  | — |  | 7 |  | — |  | 7 |
Total allocated assets | 27,917 |  |  | 10,779 |  | 19,142 |  | 24,875 |  | 15,951 |  | 26,288 |  | (15,310) |  | 109,642 |
Non-current financial liabilities | 2,089 |  |  | — |  | 1,510 |  | 653 |  | 2,502 |  | 30,425 |  | (2,120) |  | 35,059 |
Non-current lease liabilities | 1,317 |  |  | — |  | 2,663 |  | 1,531 |  | 1,115 |  | 45 |  | (14) |  | 6,657 |
Deferred tax liabilities | 95 |  |  | — |  | 274 |  | 1,032 |  | 744 |  | 922 |  | — |  | 3,067 |
Current financial liabilities | 1,840 |  |  | — |  | 128 |  | 350 |  | 4,120 |  | 8,449 |  | (10,867) |  | 4,020 |
Current lease liabilities | 392 |  |  | — |  | 597 |  | 629 |  | 402 |  | 19 |  | (19) |  | 2,020 |
Liabilities associated with non-current assets and disposal groups held for sale | — |  |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total allocated liabilities | 16,782 |  |  | — |  | 10,246 |  | 9,437 |  | 13,861 |  | 42,869 |  | (15,261) |  | 77,934 |
2021
Millions of euros | Telefónica Spain |  | VMO2 | Telefónica Germany | Telefónica Brazil | Telefónica Hispam | Other companies | Eliminations | Total Group
Fixed assets | 14,499 |  |  | — |  | 12,124 |  | 15,056 |  | 7,637 |  | 1,667 |  | (14) |  | 50,969 |
Rights of use | 1,433 |  |  | — |  | 3,349 |  | 1,701 |  | 1,064 |  | 99 |  | (67) |  | 7,579 |
Investments accounted for by the equity method | 263 |  |  | 12,129 |  | — |  | — |  | 128 |  | 253 |  | — |  | 12,773 |
Financial assets and other non-currents assets | 549 |  |  | — |  | 883 |  | 888 |  | 1,001 |  | 7,428 |  | (3,402) |  | 7,347 |
Deferred tax assets | 2,345 |  |  | — |  | 433 |  | 454 |  | 713 |  | 1,671 |  | — |  | 5,616 |
Other current financial assets | 40 |  |  | — |  | 70 |  | 56 |  | 838 |  | 8,379 |  | (5,548) |  | 3,835 |
Non-current assets and disposal groups held for sale | — |  |  | — |  | — |  | — |  | 102 |  | 256 |  | — |  | 358 |
Total allocated assets | 24,971 |  |  | 12,129 |  | 19,953 |  | 21,461 |  | 15,628 |  | 29,544 |  | (14,473) |  | 109,213 |
Non-current financial liabilities | 2,140 |  |  | — |  | 1,627 |  | 11 |  | 2,778 |  | 31,288 |  | (2,554) |  | 35,290 |
Non-current lease liabilities | 1,082 |  |  | — |  | 2,781 |  | 1,317 |  | 1,192 |  | 55 |  | (36) |  | 6,391 |
Deferred tax liabilities | 119 |  |  | — |  | 291 |  | 1,040 |  | 594 |  | 558 |  | — |  | 2,602 |
Current financial liabilities | 1,019 |  |  | — |  | 89 |  | 199 |  | 4,620 |  | 9,669 |  | (8,591) |  | 7,005 |
Current lease liabilities | 378 |  |  | — |  | 548 |  | 460 |  | 295 |  | 14 |  | (16) |  | 1,679 |
Liabilities associated with non-current assets and disposal groups held for sale | — |  |  | — |  | — |  | — |  | — |  | 134 |  | — |  | 134 |
Total allocated liabilities | 17,042 |  |  | — |  | 10,819 |  | 7,600 |  | 14,306 |  | 45,129 |  | (14,367) |  | 80,529 |
The detail of assets and liabilities of VMO2 is as follows (amounts corresponding to 100% of the company, see Note 10):
VMO2
Millions of euros | December 2022 | December 2021
Fixed assets | 42,576 |  | 46,258 |
Rights of use | 862 |  | 1,058 |
Financial assets and other non-currents assets | 2,763 |  | 1,348 |
Deferred tax assets | 79 |  | 115 |
Other current financial assets | 511 |  | 214 |
Total assets | 50,062 |  | 52,333 |
Non-current financial liabilities | 19,668 |  | 19,185 |
Non-current lease liabilities | 725 |  | 885 |
Deferred tax liabilities | 1 |  | 9 |
Current financial liabilities | 3,248 |  | 2,841 |
Current lease liabilities | 221 |  | 219 |
Total liabilities | 28,626 |  | 28,198 |
The composition of segment revenues is as follows:
Millions of euros | 2022 | 2021 | 2020
Country by segments | Fixed | Mobile | Others and elims. | Total | Fixed | Mobile | Others and elims. | Total | Fixed | Mobile | Others and elims. | Total
Spain (*) |  |  |  | 12,497 |  |  |  |  | 12,417 |  |  |  |  | 12,401 |
United Kingdom | — |  | — |  | — |  | — |  | 96 |  | 2,532 |  | — |  | 2,628 |  | 232 |  | 6,476 |  | — |  | 6,708 |
Germany | 806 |  | 7,394 |  | 24 |  | 8,224 |  | 814 |  | 6,942 |  | 9 |  | 7,765 |  | 785 |  | 6,730 |  | 17 |  | 7,532 |
Brazil | 2,764 |  | 6,106 |  | — |  | 8,870 |  | 2,300 |  | 4,610 |  | — |  | 6,910 |  | 2,531 |  | 4,891 |  | — |  | 7,422 |
Hispam | 3,138 |  | 6,003 |  | — |  | 9,141 |  | 2,907 |  | 5,444 |  | 11 |  | 8,362 |  | 2,836 |  | 5,070 |  | 16 |  | 7,922 |
Other and inter-segment eliminations |  |  | 1,261 |  | 1,261 |  |  |  | 1,195 |  | 1,195 |  |  |  | 1,091 |  | 1,091 |
Total Group |  |  |  | 39,993 |  |  |  |  | 39,277 |  |  |  |  | 43,076 |
Note: In the countries of Telefónica Hispam segment with separate fixed and mobile operating companies, intercompany revenues were not considered. (*) The detail of revenues for Telefónica Spain is shown in the table below. Given the convergence reached at Telefónica Spain due to the high penetration of convergent offers in Telefónica Spain, the revenue breakdown by fixed and mobile is less relevant in this segment. For this reason, management believes that the revenue breakdown shown below is more meaningful.
Millions of euros |  |  |
Telefónica Spain | 2022 | 2021 | 2020 |  |  |  |  |  |  |  |  |
Retailers | 9,662 |  | 9,699 |  | 9,906 |  |  |  |  |  |  |  |  |  |
Wholesalers, mobile handsets sales and others | 2,835 |  | 2,718 |  | 2,495 |  |  |  |  |  |  |  |  |  |
Total | 12,497 |  | 12,417 |  | 12,401 |  |  |  |  |  |  |  |  |  |

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