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Derivative Financial Instruments and Risk Management Policies (Tables)

12 Months Ended

Dec. 31, 2024

Financial Instruments [Abstract]

Schedule of Sensitivity Analysis

The following table illustrates the sensitivity of foreign currency gains and sensitivity losses and of equity to changes in exchange rates, where: a) in calculating the impact on the income statement, the exchange rate position affecting the income statement at the end of 2024 was considered constant during 2025; b) in calculating the impact on equity, only monetary items have been considered, namely debt and derivatives such as hedges of net investment and loans to subsidiaries related to the investment, breakdown of which is considered constant in 2025 and identical to that existing at the end of 2024. In both cases, Latin American currencies are assumed to change their value against the dollar and the rest of the currencies against the euro by 10%.

Millions of euros
Currency			Change			Impact on the consolidated income statement			Impact on consolidated equity
All currencies vs EUR			10%			(42)			(298)
USD vs EUR			10%			(4)			(42)
Other currencies vs EUR			10%			1			—
Latin American currencies vs USD			10%			(39)			(256)
All currencies vs EUR			(10%)			42			298
USD vs EUR			(10%)			4			42
Other currencies vs EUR			(10%)			(1)			—
Latin American currencies vs USD			(10%)			39			256

Millions of euros
Change in basis points (bp)			Impact on consolidated income statement			Impact on consolidated equity
+100bp			(41)			533
-100bp			41			(533)

Schedule of Financial Results

The breakdown of the financial results recognized in 2024, 2023 and 2022 is as follows:

Millions of euros			2024			2023			2022
Interest income			486			516			384
Dividends received			39			29			25
Other financial income			326			349			894
Subtotal			851			894			1,303
Changes in fair value of asset derivatives at fair value through profit or loss			145			114			377
Changes in fair value of liability derivatives at fair value through profit or loss			(88)			(42)			(861)
Changes in the fair value of debt instruments and other assets at fair value to profit or loss			4			4			8
Transfer from equity of results of cash flow hedges - future cash flows that are no longer expected to happen			—			—			(2)
(Loss)/Gain on fair value hedges			(226)			246			(1,818)
Gain/(loss) on adjustment to items hedged by fair value hedges			224			(292)			1,763
Subtotal			59			30			(533)
Interest expenses			(1,796)			(1,606)			(1,548)
Financial expenses on lease liabilities (see Note 20)			(512)			(435)			(393)
Ineffective portion of cash flow hedges			(2)			(12)			(15)
Accretion of provisions and other liabilities			(389)			(489)			276
Other financial expenses			(229)			(297)			(317)
Subtotal			(2,928)			(2,839)			(1,997)
Net finance costs excluding foreign exchange differences and inflation adjustments			(2,018)			(1,915)			(1,227)

Schedule of Derivatives, Fair Value, and Expected Maturity

The movement of the net position of derivatives during the years ended December 31, 2024 and December 31, 2023 is as follows:

Millions of euros			Movement in 2024			Movement in 2023
Opening balance of assets/(liabilities)			399			1,012
Financing payments			20			(33)
Financing proceeds			(385)			(20)
Interest (proceeds)/payments			(50)			97
Other (proceeds)/payments			123			87
Fair value adjustments through other comprehensive income			1,108			(584)
Movements with a corresponding entry under the income statement			(253)			(57)
Translation differences			40			(115)
Other movements			—			12
Closing balance of assets/(liabilities)			1,002			399

The breakdown of Telefónica’s hedges and other derivative instruments at December 31, 2024 and December 31, 2023, their fair value at year-end and the expected maturity schedule is as set forth in the table below:

December 31, 2024
			Notional amount - Maturities (*)																		Book value of the derivative and no-derivative instruments (**)
Millions of euros			2025			2026			2027			Later			Total						Non-current asset			Current asset			Non-current liabilities			Current liabilities			Total
Derivative instruments of accounting hedges			(2,724)			2,408			1,293			3,133			4,110						(2,441)			(372)			1,526			67			(1,220)
Interest rate risk			(1,624)			1			1			(4,630)			(6,252)						(322)			(131)			545			20			112
Cash flow hedges			(2,150)			—			—			4,769			2,619						(12)			(22)			129			2			97
Fair value hedges			526			1			1			(9,399)			(8,871)						(310)			(109)			416			18			15
Exchange rate risk			(2,085)			2,331			714			5,324			6,284						(1,594)			(136)			837			43			(850)
Cash flow hedges			101			2,344			714			5,324			8,483						(1,594)			(54)			837			1			(810)
Fair value hedges			494			(13)			—			—			481						—			(12)			—			1			(11)
Net investment in a foreign business hedges			(2,680)			—			—			—			(2,680)						—			(70)			—			41			(29)
Interest rate and exchange rate risk			985			76			578			2,439			4,078						(525)			(105)			144			4			(482)
Cash flow hedges			985			76			472			1,892			3,425						(400)			(104)			64			—			(440)
Fair value hedges			—			—			106			547			653						(125)			(1)			80			4			(42)
Undesignated derivatives			(268)			(866)			(325)			(2,150)			(3,609)						(164)			(89)			339			132			218
Other derivatives of interest rate			(525)			(738)			(325)			(2,150)			(3,738)						(159)			(59)			330			8			120
Other derivatives of exchange rate			(125)			(521)			—			—			(646)						—			(20)			9			9			(2)
Other derivatives			382			393			—			—			775						(5)			(10)			—			115			100
Total derivative instruments			(2,992)			1,542			968			983			501						(2,605)			(461)			1,865			199			(1,002)
No derivatives instruments of accounting hedges (***)			—			—			—			29			29						—			—			29			—			29
Exchange rate risk			—			—			—			29			29						—			—			29			—			29
Fair value hedges			—			—			—			—			—						—			—			—			—			—
Net investment in a foreign business hedges			—			—			—			29			29						—			—			29			—			29

(*) For interest rate hedges, the positive amount is in terms of "fixed payment.” For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.

(**) Positive amounts indicate payables.

(***) Of the hedging instruments that are not derivatives,29 million euros correspond to "Loans and other debts"" (see Note 18).

December 31, 2023
			Notional amount - Maturities (*)																		Book value of the derivative and no-derivative instruments (**)
Millions of euros			2024			2025			2026			Later			Total						Non-current asset			Current asset			Non-current liabilities			Current liabilities			Total
Derivative instruments of accounting hedges			(3,225)			873			2,533			4,917			5,098						(1,785)			(272)			1,224			87			(746)
Interest rate risk			(1,190)			(123)			2			(4,070)			(5,381)						(334)			(163)			404			35			(58)
Cash flow hedges			(1,490)			(650)			—			3,532			1,392						(16)			—			83			35			102
Fair value hedges			300			527			2			(7,602)			(6,773)						(318)			(163)			321			—			(160)
Exchange rate risk			(2,115)			—			2,344			6,103			6,332						(1,124)			(69)			711			51			(431)
Cash flow hedges			657			—			2,344			6,038			9,039						(1,124)			(38)			708			20			(434)
Fair value hedges			401			—			—			65			466						—			(5)			3			20			18
Net investment in a foreign business hedges			(3,173)			—			—			—			(3,173)						—			(26)			—			11			(15)
Interest rate and exchange rate risk			80			996			187			2,884			4,147						(327)			(40)			109			1			(257)
Cash flow hedges			80			996			9			2,339			3,424						(281)			(40)			35			1			(285)
Fair value hedges			—			—			178			545			723						(46)			—			74			—			28
Undesignated derivatives			396			(416)			(738)			(1,625)			(2,383)						(155)			(80)			433			149			347
Other derivatives of interest rate			(288)			(525)			(738)			(1,625)			(3,176)						(155)			(54)			399			14			204
Other derivatives of exchange rate			(123)			—			—			—			(123)						—			(14)			—			13			(1)
Other derivatives			807			109			—			—			916						—			(12)			34			122			144
Total derivative instruments			(2,829)			457			1,795			3,292			2,715						(1,940)			(352)			1,657			236			(399)
No derivatives instruments of accounting hedges (***)			—			—			—			27			27						—			—			27			—			27
Exchange rate risk			—			—			—			27			27						—			—			27			—			27
Fair value hedges			—			—			—			—			—						—			—			—			—			—
Net investment in a foreign business hedges			—			—			—			27			27						—			—			27			—			27

(*) For interest rate hedges, the positive amount is in terms of "fixed payment.” For foreign currency hedges, a positive amount means payment in functional vs. foreign currency.

(**) Positive amounts indicate payables.

(***) Of the hedging instruments that are not derivatives, 27 million euros correspond to "Loans and other debts" (see Note 18).

The detail of hedged items by fair value hedges at December 31, 2024 and December 31, 2023 are as follows:

December 31, 2024
			Hedged items carrying amount															Accumulated amount in the hedged item adjusted by fair value hedge (*)
Millions of euros			Interest rate risk			Exchange rate risk			Interest rate and exchange rate risk			Total						Interest rate risk			Exchange rate risk			Interest rate and exchange rate risk			Total			Of which: accumulated amount of any hedge item that have ceased to be adjusted for gains and losses
Assets			55			259			—			314						15			1			—			16			—
Financial assets and other non-current assets			55			13			—			68						15			—			—			15			—
Receivables and other current assets			—			225			—			225						—			1			—			1			—
Other heading of assets			—			21			—			21						—			—			—			—			—
Liabilities			9,195			1,314			1,594			12,103						(89)			15			39			(35)			37
Non-current financial liabilities			9,083			548			1,454			11,085						(89)			—			39			(50)			31
Payables and other non-current liabilities			—			50			—			50						—			1			—			1			—
Current financial liabilities			112			11			140			263						—			—			—			—			—
Payables and other current liabilities			—			705			—			705						—			14			—			14			6

(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and viceversa.

December 31, 2023
			Hedged items carrying amount															Accumulated amount in the hedged item adjusted by fair value hedge (*)
Millions of euros			Interest rate risk			Exchange rate risk			Interest rate and exchange rate risk			Total						Interest rate risk			Exchange rate risk			Interest rate and exchange rate risk			Total			Of which: accumulated amount of any hedge item that have ceased to be adjusted for gains and losses
Assets			32			249			—			281						(15)			—			—			(15)			—
Financial assets and other non-current assets			28			96			—			124						(14)			—			—			(14)			—
Receivables and other current assets			—			150			—			150						—			—			—			—			—
Other current financial assets			4			—			—			4						(1)			—			—			(1)			—
Other heading of assets			—			3			—			3						—			—			—			—			—
Liabilities			8,092			1,365			1,495			10,952						153			(8)			34			179			(9)
Non-current financial liabilities			8,009			452			1,397			9,858						153			—			34			187			33
Payables and other non-current liabilities			—			44			—			44						—			(1)			—			(1)			—
Current financial liabilities			83			10			98			191						—			—			—			—			—
Payables and other current liabilities			—			859			—			859						—			(7)			—			(7)			(42)

(*) Accumulated amount adjusted by fair value hedge is shown with negative sign when it reduces the value (lowest liability or lowest asset) and vice versa.

The evolutions of hedges in equity at December 31, 2024 and December 31, 2023 are as follows:

			Derivative instruments																								No derivative instruments						Total Gross amount			Tax effect			Total hedges in equity
			Gains (losses) of cash flow hedges									Derivatives - Net investment hedges												No Derivatives - Net investment hedges
Millions of euros			Interest rate risk			Exchange rate risk			Exchange rate and interest rate risks
Balance at 12/31/2023			(56)			441			176			(100)																		(11)						450			(137)			313
Changes in the fair value registered in equity			(8)			430			159			382																		(1)						962			(252)			710
Transfer to the initial value of hedged item			1			—			2			—																		—						3			(1)			2
Transfer to the income statement of the period - the hedged future cash flows are no longer expected to happen			—			—			—			—																		—						—			—			—
Transfer to the income statement of the period - the hedged item has affected profit or loss			7			(710)			(166)			—																		—						(869)			220			(649)
Total translation differences			3			(1)			—			—																		—						2			—			2
Other movements			—			—			—			26																		—						26			(16)			10
Balance at 12/31/2024			(53)			160			171			308																		(12)						574			(186)			388
Amounts remaining in equity for continuing hedges			(24)			127			240			308																		(12)						639
Amounts remaining in equity from any hedging relationship for which hedge accounting is no longer applied			(29)			33			(69)			—																		—						(65)
Balance at 12/31/2024			(53)			160			171			308																		(12)						574

			Derivative instruments																								No derivative instruments						Total Gross amount			Tax effect			Total hedges in equity
			Gains (losses) of cash flow hedges									Derivatives - Net investment hedges												No Derivatives - Net investment hedges
Millions of euros			Interest rate risk			Exchange rate risk			Exchange rate and interest rate risks
Balance at 12/31/2022			(37)			861			210			(30)																		(9)						995			(270)			725
Changes in the fair value registered in equity			(49)			(445)			(66)			(66)																		2						(624)			155			(469)
Transfer to the initial value of hedged item			1			6			13			—																		—						20			(5)			15
Transfer to the income statement of the period - the hedged future cash flows are no longer expected to happen			—			—			—			—																		—						—			—			—
Transfer to the income statement of the period - the hedged item has affected profit or loss			32			19			19			—																		—						70			(17)			53
Total translation differences			(3)			—			—			(1)																		—						(4)			—			(4)
Other movements			—			—			—			(3)																		(4)						(7)			—			(7)
Balance at 12/31/2023			(56)			441			176			(100)																		(11)						450			(137)			313
Amounts remaining in equity for continuing hedges			(33)			408			250			(100)																		(11)						514
Amounts remaining in equity from any hedging relationship for which hedge accounting is no longer applied			(23)			33			(74)			—																		—						(64)
Balance at 12/31/2023			(56)			441			176			(100)																		(11)						450

The evolution of cost of hedging in equity in 2024 and 2023 are as follows:

			Exchange rate risk			Total gross amount			Tax effect			Total cost of hedging in equity
			Forward element /CBS
Millions of euros			A time - period related hedge item
Balance at 12/31/2022			(25)			(25)			6			(19)
Changes in the fair value registered in equity			79			79			(20)			59
Transfer to the income statement of the period - the hedged item has affected profit or loss			(9)			(9)			2			(7)
Balance at 12/31/2023			45			45			(12)			33
Changes in the fair value registered in equity			168			168			(42)			126
Transfer to the income statement of the period - the hedged item has affected profit or loss			(10)			(10)			3			(7)
Balance at 12/31/2024			203			203			(51)			152

The details of the ineffective portion of accounting hedges with impact on the income statement in 2024 and 2023 are as follows:

2024
Millions of euros			Changes in fair value of the hedging instrument			Changes in the fair value of hedges item for the hedged risk			Ineffective portion hedged registered in the income statement
Interest rate risk			(288)			(289)			1
Cash flow hedges			23			23			—
Fair value hedges			(311)			(312)			1
Exchange rate risk			804			804			—
Cash flow hedges			539			540			(1)
Exchange rate risk - fair value hedges			1			—			1
Net investment hedges			264			264			—
Interest rate and exchange rate risk			179			179			—
Cash flow hedges			179			179			—
Total			695			694			1

2023
Millions of euros			Changes in fair value of the hedging instrument			Changes in the fair value of hedges item for the hedged risk			Ineffective portion hedged registered in the income statement
Interest rate risk			97			98			(1)
Cash flow hedges			(39)			(39)			—
Fair value hedges			136			137			(1)
Exchange rate risk			(702)			(699)			(3)
Cash flow hedges			(409)			(406)			(3)
Net investment hedges			(293)			(293)			—
Interest rate and exchange rate risk			(45)			(35)			(10)
Cash flow hedges			(45)			(35)			(10)
Total			(650)			(636)			(14)

X

- Definition

The disclosure of the sensitivity analysis for types of market risk to which the entity is exposed, showing how profit or loss and equity would have been affected by changes in the relevant risk variable that were reasonably possible at that date. [Refer: Market risk [member]]

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