Madrid, November 4, 2025 — Telefónica has unveiled Transform & Grow, a comprehensive five-year strategic plan for 2026–2030 aimed at driving sustainable growth, operational simplification, and shareholder value across its four core markets: Spain, Germany, the United Kingdom, and Brazil. The plan, presented at the company’s Capital Markets Day in Madrid, is designed to position Telefónica as a world-class European telco with profitable scale while accelerating its technological, operational, and commercial evolution.
Key Takeaways
- Transform & Grow is built on six pillars: customer experience, B2C expansion, B2B scale, technology evolution, operating model simplification, and talent development.
- The plan focuses on four core markets — Spain, Germany, the UK, and Brazil — with the goal of achieving profitable scale as a European leader.
- Telefónica targets a revenue CAGR of 1.5–2.5% (2025–2028), rising to 2.5–3.5% (2028–2030), and a similar growth profile for adjusted EBITDA over the same periods.
- Operational efficiency measures are expected to deliver up to €2.3 billion in savings by 2028 and €3 billion by 2030, supported by digital transformation and legacy network shutdowns.
- The plan reiterates Telefónica’s commitment to European strategic autonomy and highlights the value-creation potential of telecom consolidation in its core markets.
Six Strategic Pillars of Transform & Grow
1. Deliver the Best-in-Class Customer Experience
Telefónica plans to elevate customer satisfaction by enhancing network performance and customer care across all channels. Service excellence and differentiated customer experience are core priorities, supported by significant investments in Artificial Intelligence to improve support, streamline interactions, and proactively resolve issues before they impact users.
2. Expand the B2C Offering
In the consumer segment, Telefónica will deepen and broaden its presence by reinforcing converged fixed–mobile offerings in Spain and Brazil, and expanding convergence in the UK and Germany. The company also plans to scale its digital ecosystem services — including entertainment, smart home, security, and adjacent digital services — to grow B2C revenues and increase household penetration. Convergence and ecosystem expansion are positioned as two key growth drivers over the plan horizon.
3. Scale the B2B and Public Administration Business
Telefónica aims to accelerate its B2B and public sector footprint by modernising communication services in its core markets and leveraging the capabilities of Telefónica Tech and its Global Business Units. The company will push growth in cloud, cybersecurity, IoT, and advanced connectivity, supported by local partnerships with technology providers, channels, and integrators to address enterprise and public administration digitalisation needs.
4. Evolve Technological Capabilities
The group will continue investing in fixed and mobile network evolution, including fiber and 5G, while upgrading its IT platforms and embracing greater automation and software-driven architectures. Innovation efforts will focus on technologies that enhance product performance, improve the customer value proposition, and shorten time-to-market for new services, reinforcing Telefónica’s positioning as a digital infrastructure and services provider.
5. Simplify the Operating Model
Transform & Grow places strong emphasis on simplifying the Group operating model. Telefónica plans to evolve toward a structure with greater autonomy for individual countries, while maintaining global units in roles where scale clearly creates value, such as procurement, network platforms, and shared services. The goal is to deliver tangible, measurable efficiencies throughout execution, with a clear roadmap and firm commitment to meeting targets and timelines.
6. Develop Talent and Execution Culture
The sixth pillar focuses on talent development and culture. Telefónica intends to attract and retain top professionals across all its markets and strengthen a culture centered on impact and execution. The company highlights upskilling, internal mobility, and performance alignment as levers to support delivery of the strategic plan and accelerate decision-making at all levels.
Financial Plan: Efficiency, Growth, and Cash Discipline
The Transform & Grow plan incorporates a set of initiatives aimed at improving operational efficiency across the Group. Telefónica expects these measures to deliver a gross impact of up to €2.3 billion in savings by 2028 and €3 billion by 2030. Key levers include:
- Technological and operational excellence across networks and IT.
- Streamlined processes and end-to-end digitalisation of core operations.
- Shutdown and sale of legacy network assets as part of ongoing modernisation.
Within this framework, Telefónica has set out clear financial objectives for 2026–2030:
- Revenue CAGR: 1.5–2.5% between 2025 and 2028, accelerating to 2.5–3.5% between 2028 and 2030.
- Adjusted EBITDA CAGR: 1.5–2.5% between 2025 and 2028, rising to 2.5–3.5% between 2028 and 2030.
- Free Cash Flow: growing and de-risked, with a clear link to shareholder remuneration.
The company also reiterates its commitment to maintaining an investment-grade credit rating and preserving financial flexibility while supporting network investments and shareholder returns.
Dividend Policy and Capital Allocation
Dividend policy is positioned as a central component of Telefónica’s capital allocation strategy and will be anchored in the company’s free cash flow after investments and an appropriate leverage profile.
- 2025 dividend: confirmed at €0.30 per share, to be paid in two tranches (December 2025 and June 2026).
- 2026 dividend: a cash dividend of €0.15 per share, payable in June 2027.
- 2027–2028 remuneration framework: a target range of 40–60% of base free cash flow to be allocated to dividends, payable in June of the following year.
This approach is designed to balance investment in future growth with predictable shareholder remuneration, while supporting Telefónica’s leverage and rating objectives.
European Strategic Autonomy and the Case for Scale
Telefónica uses the Transform & Grow announcement to restate its commitment to European strategic autonomy in digital infrastructure and technology. The company argues that the lack of consolidation in the European telecom market has led to structurally inefficient investment levels compared to the United States and China, where markets are served by fewer, larger operators and where national strategies have encouraged scale and technological independence.
While the 2026–2030 plan does not embed any specific consolidation transactions, Telefónica emphasises that it is fully prepared to act on opportunities should they arise within the plan’s timeframe. The company cites estimates from financial analysts and industry experts suggesting that potential consolidation in its core markets could generate synergies in the range of €18–22 billion, creating value that could be shared among buyers, sellers, customers, and future investment and innovation.
Analysis: From Legacy Telco to Scaled Digital Operator
Transform & Grow signals Telefónica’s recognition that Europe’s telecom landscape demands both scale and simplification to remain competitive in an environment defined by 5G, fiber rollout, and the rise of AI-enhanced services. The emphasis on a simplified, country-centric operating model points to a shift away from legacy centralised structures and toward faster, locally driven execution while still capturing the benefits of Group-wide scale where it matters most.
The dual focus on convergence in B2C and digitisation in B2B mirrors global trends where operators evolve into integrated digital infrastructure and service platforms. Investments in AI-driven customer care, network automation, and Telefónica Tech’s portfolio are intended to lift margins, deepen customer relationships, and open higher-value revenue streams. Delivering on the ambitious savings targets and growth CAGRs will be critical for Telefónica to close the gap with larger global peers and to capitalise on any future market consolidation in Europe.
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