Torsten Achtmann: Good morning, and welcome to Telefonica's conference call to discuss January to December 2025 results. I'm Torsten Achtmann from Investor Relations. Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. This financial information is unaudited. This conference call and webcast, including the Q&A session, may contain forward-looking statements and information relating to the Telefonica Group. These statements may include financial or operating forecasts and estimates or statements regarding plans, objectives and expectations regarding different matters. All forward-looking statements involve risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such statements. We encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators. If you don't have a copy of the relevant press release and the slides, please contact Telefonica's Investor Relations team. Now let me turn the call over to our Chairman and CEO, Mr. Marc Murtra.
Marc Murtra Millar: Good morning, everyone, and welcome to Telefonica's Fourth Quarter and Full Year Results Call. I am here today with Emilio Gayo, Chief Operating Officer; Juan Azcue, Chief Financial and Corporate Development Officer; and Lutz Schuler, CEO of Virgin Media O2. Last November, at our Capital Markets Day, we presented our strategic plan, Transform and Grow, that had a clear challenge to provide citizens the best access to digital technologies. The fundamental access on a high level are clear for us. We are committed to offering additional and enhanced customer services to drive growth in our core markets. We are building a more innovative and competitive company simplifying business units and shifting operational responsibility to markets with an ambitious and effective management focused on growth and efficiency, absolute commitment to guidance and financial discipline, and we are building a stronger, more competitive European operator. These access on purpose fit our 2025 results, where we delivered on our commitments and where we achieved important milestones. Let me highlight the 2025 results. where we have delivered on our financial commitments in 2025. At the same time, we made significant progress setting the business up for a stronger future. Importantly, we exited the year with improving momentum. In the quarter, momentum continued with adjusted EBITDA and operating cash flow after leases accelerated. Adjusted EBITDA constant ForEx growth reached 2.8% and adjusted operating cash flow after leases grew nearly 13%. B2B was particularly highlight, growing 7.3% in the quarter. Our business performance was equally encouraging. In Spain, we delivered the strongest growth in more than 7 years on the back of our premium positioning and improved commercial performance. In Brazil, our customer base grew to record levels. And in Germany, consumer perception of the O2 brand continued its positive trend. Beyond the financial results, we continued to both simplify and drive long-term value creation for the Telefonica Group. We accelerated the pace of our portfolio transformation, significantly reducing our exposure in Hispam and have now more or less exited the region with 6 out of 8 markets sold. We also reached a formal agreement with our labor unions to improve productivity in Spain, and this agreement is currently being implemented. This is an important step to build a leaner and faster-moving organization. These are part of a broader efficiency drive that is already flowing through our cost base. Taken together, these achievements represent a solid foundation for 2026 execution. Moving to Slide 3. At the Capital Markets Day, we defined the 6 strategic pillars underpinning our Transform and Grow strategy. During the end of 2025, we have already executed on these pillars. The first 3 are delivering a best-in-class customer experience, expanding B2C offering and scaling B2B. Let me highlight some of our achievements here that we are looking to build on in the future. In 2025, our network leadership drove commercial results. We won customers, retain them longer and delivered services they value as our NPS and customer lifetime value reflected. We also secured our leading position with, for example, the renewal of La Liga and the UEFA rights in Spain. In Brazil, Vivo total represents 43% of FTHH customers and we believe that we will grow that as we expand the customer proposition. We are building out the ecosystem into smart home, security, fintech and consumer electronics. In Germany, fixed broadband expansion is the path to converge our strong mobile base. The fourth pillar, evolving technological capabilities, we continue to invest in the best network experience for our customers. Beyond building networks, we are changing how we operate them with advanced automation, for example. The fifth pillar is simplifying our operating model. Our goal is making a leaner, more agile Telefonica, ensuring our investments deliver improved returns. Copper switch-off in Spain was a milestone this year and has already started in Brazil. The workforce transformation agreement is concluded and on track to deliver approximately EUR 0.6 billion in run rate savings by 2028. We made clear progress on portfolio management execution, completing 4 Hispam exits in 2025. Let me now turn to the priorities for 2026 in our Transform and Grow plan that will drive the next phase of growth. Delivering best-in-class customer experience is one of the clearest way to drive long-term value. When interactions are simpler, and more tailored satisfaction increases, leading to greater loyalty, higher ARPU, lower churn and higher customer lifetime value. At a group level, we are focused on ensuring faster incident resolution, and we are also rolling out AI-based hyperpersonalization across key channels. This effect is included in the 2026 CapEx of the group. In B2C, we are further driving convergence and deepening customer relationship by bringing more into each household. Customers who bundle multiple services such as connectivity, content devices and other services stay longer, spend more and churn less. This creates a structural opportunity to grow ARPU efficiently. In B2B, we are scaling our digital services portfolio across the group with a particular focus on cybersecurity and cloud as well as defense in Spain. Our trusted position with enterprise and public sector clients give us a strong foundation to grow recurring revenues. 2026 is already a significant year for cost efficiencies. We are accelerating the simplification, optimizing leases, renegotiating vendor contracts and streamlining structures. In Brazil, we're now shutting down our copper network to concentrate our resources on a single modern infrastructure. We continue to focus on Hispam exit, already have closed 2 transactions in the year-to-date. Last week, Nexfibre announced the acquisition of Netomnia to become the largest full fiber outnet in the U.K. and will reach 8 million premises passed. We achieved this without a significant equity contribution from Telefonica. These initiatives show how Transform and Grow comes to life. We entered 2026 with a focused portfolio, stronger commercial momentum in core markets and a clear set of priorities already in execution. Moving to guidance for 2026. We expect constant revenue and adjusted EBITDA growth of 1.5% to 2.5% and CapEx to sales ratio of around 12%. We expected an adjusted operating cash flow after leases growth of more than 2%, demonstrating operating leverage at the adjusted operating cash flow after leases level. We expect free cash flow of EUR 3 billion, an upgrade to the upper end of the range given at the Capital Markets Day, supported by the Q4 momentum. We continue to expect leverage to progress towards our target of 2.5x net debt divided by adjusted EBITDA in 2028 to which we are fully committed to. We reconfirm our EUR 0.15 dividend per share in 2026. We also reconfirm all of our 3- and 5-year targets outlined at the Capital Markets Day. Now let me hand over to Emilio to take you through our operational performance in more detail.
Emilio Rodríguez: Thank you, Marc. On to Slide 6 to review our domestic business. 2025 was a landmark year for Telefonica Spain, delivering growth and record-breaking achievements. We recorded excellent commercial performance reporting in 2025, the best KPIs since 2018. This is the result of a strict daily execution to deliver excellent service, leveraging our superior network and quality, a strong ecosystem and digital services and a smart segmentation, all driving high customer satisfaction with the best NPS being a competitive advantage. I am proud to highlight the record fiber and TV net ads and a robust portability ratios. We achieved the highest customer base ever in contract mobile and fixed broadband. Convergent ARPU remains at leading levels around EUR 90 and churn reached 0.7% in Q4, the lowest level since we launched our convergent proposition. The key drivers of churn reduction is the improved customer experience. Our focus on operational excellence and improvement in key processes allowed us to reduce call volumes by 10% and claims by 50% in just 3 years. In B2C, our digital ecosystem and premium content are key levers to increase loyalty and customer lifetime value. Customers with alarms exceeded 600,000. Customers with football grew year-on-year and 3 out of 4 customers have a device. All these customers have a significant lower churn while driving revenues up. In B2B, we also have a strong momentum. We are the best positioned player in the IT business, which is a growth engine. Lines such as Titan Connect assure continuous connectivity for businesses and drive new digital services that will foster further growth. From a financial standpoint, Spain is delivering profitable growth and solid cash generation with all key financial metrics growing at the same time for the first time since 2008. Revenues grow steadily supported by both residential and B2B with IP maintaining double-digit growth. Adjusted EBITDA continues to grow year-on-year with margins around 57%, reflecting operating leverage and cost discipline. New personnel efficiency initiatives signed at the end of 2025 that will deliver more than EUR 250 million in savings by 2026. Finally, our CapEx intensity supports sustainable adjusted EBITDA and cash flow growth with fiber and 5G networks already deployed. To sum up, 2025 has been a remarkable year for our business in Spain, delivering a strong performance and better positioning us to capture growth ahead. In 2026, we aim to accelerate year-on-year growth rates across key financial metrics, leveraging further commercial momentum and execution of our efficiency agenda. On to the next slide. Telefonica Brasil consolidated its position as the leading digital platform in the market, delivering a strong commercial and financial performance in 2025. Our operating strategy proved successful in Vivo reached an all-time high in the accesses base. At the same time, our focus on upselling data, new B2C digital services and convergence enhance the lifetime value of our accesses. In mobile, differentiated network quality and customer experience, drive growth in the contract segment with positive portability versus all operators. ARPU continues to grow, while churn remains at very low levels. In fixed, fiber connection increased double digit mainly driven by our flagship conversion offer and churn reduction. Vivo Total saw an impressive increase year-on-year and already accounts for 53% of fiber connections, setting a new standard for quality and customer retention. On financial, let me highlight the solid growth above inflation in key metrics. Revenue, adjusted EBITDA and operating cash generation increased year-on-year in real terms, with growth rates accelerating across all metrics, showing Vivo's operating leverage. Revenue increased over 7%, thanks to the robust acceleration in mobile service revenue in the fourth quarter and the strong growth in new businesses. In B2C, revenue from the ecosystem, including health and wellness, consumer electronics, financial services and entertainment rose more than 20%. The penetration of these services provide a significant upside. In parallel, the B2B segment marked it's stronger revenue growth in last years. This performance reflects the growing demand for digital solutions, which already represent close to 40% of B2B revenues. Adjusted EBITDA grew 8% in the quarter, while adjusted operating cash flow after leases rose almost 20%, thanks to the sound revenue growth and solid operating cost structure. In summary, once again, Vivo delivered a set of strong results, showing real growth across main financial KPIs, boosted by quality commercial growth and the focus on customer experience. Our ambition for 2026 is to continue growing revenue and adjusted EBITDA above inflation, supported by mobile, fiber, B2B digital services and new B2C businesses as well as by the benefit unlocked by the migration from concession to authorization. Moving to Slide 8 to discuss Germany. Our core business momentum continued in the fourth quarter in a market where we have recently seen signals pointing towards a reduction in promotional activity. The O2 brand was a key driver of mobile contract trading, benefiting from our key strength, network quality. Network rollout and densification continued at a high pace, bringing 5G population coverage to 99%. We achieved the target of questioning nationwide coverage according to plan. The Connect Magazine rated O2 network quality as very good, and we made a quantum leap forward to achieve second place for the first time. In the 5 biggest German cities, Connect even rated the network as outstanding. Contracts were robust in the quarter, while churn remained at a low level of 1.1%. Notably, IoT accesses growth accelerated in the fourth quarter. Fixed broadband reaffirmed its return to slight growth for the second quarter in a row, while ARPU continued to increase. B2B segment offers huge growth opportunities with some initiatives already paying off and supporting underlying revenue growth in 2025. Regarding financial results, revenue and adjusted EBITDA declined mainly reflecting the completion of 1&1 customer migration by year-end and tough comps with Q4 '24. We continue to deliver on our efficiency plan and a strict cost control but the contributor -- the contribution is not linear. To highlight in 2025, underlying financial performance was positive year-on-year. With an EC already in place, we continue working on defining and executing further transformational growth and efficiency initiatives in Germany. Our high-quality network and a solid brand positioning laid a foundation for a return to growth in 2027 after leaving behind 1&1 impacts alone this year. Moving to Slide 9. Virgin Media O2 ended 2025, delivering guidance with a strong progress in the fiber network and 5G deployment. We improved fixed line trading for the second consecutive quarter, reflecting progress in commercial initiatives such as Netflix and an improved retention strategy despite strong market headwinds. Mobile contract ARPU grew 1.2% year-on-year. while net adds were affected mainly due to the October price rise announcement, elevating churn in the no-closed 30-day exit window, Revenue and adjusted EBITDA trends continue to be impacted by lower handset sales, net fiber construction and the intense competition, which mainly impacted the consumer fixed revenue. However, 2025 guided revenue increased 0.2% year-on-year and guided EBITDA increased 0.9%. In summary, Virgin Media O2 is scaling its infrastructure while streamlining operations to pave the way for long-term profitable growth. The revenue and adjusted EBITDA expectation for 2026 reflects increased promotional intensity and ongoing uncertainty in the consumer fixed market alongside planned simplification for the B2B product portfolio. Continued cost efficiency will support profitability but will be partially offset by a higher number of customers on Nexfibre footprint with associated wholesale fees. Finally, Nexfibre announced last week the agreement for the acquisition of Netomnia. This acquisition will strengthen our network, accelerating fiber rollout and penetration with a clear value creation through VMO2 and Nexfibre. On to Slide 10, review our global units. First, in 2025, Telefonica Tech confirmed its position as the engine for our B2B growth in digital services. Revenue growth rate accelerated quarter-on-quarter, boosted by Spain, where we recorded a strong growth in IoT [indiscernible] sales. In 2025, revenue increased close to 20%. This performance is driven by the strong demand in Europe, where we see huge opportunity to grow. We continue to scale our capabilities to capture the digitization opportunity while making progress on the operating model simplification. Additionally, we have sold operations in Hispam. Regarding Telefonica Infra, let me highlight that our fiber costs represented 24% of group deployment in 2025. Also, our subsea cable business delivered sustained profitability in 2025 with an EBITDA margin of over 45%. Now let me hand it over to Juan, who will present the main financial topics and ESG.
Juan Azcue Vich: Thank you, Emilio. It's a pleasure to be speaking with you for the first time as Chief Financial and Corporate Development Officer. Let me take you through the financial details for the quarter and the full year. Starting with the full year. Revenue reached EUR 35.1 billion, growing 1.5% year-on-year in constant terms. Adjusted EBITDA came in at EUR 11.9 billion, up 2%, and adjusted operating cash flow after leases grew 5.9% to just over EUR 5 billion. CapEx to sales came in at 12.4%, within our target. We reported free cash flow of EUR 2.8 billion, above our base guidance of approximately EUR 2.7 billion. The free cash flow included employee restructuring commitments and VMO2 dividends reached EUR 2.1 billion, exceeding our updated guidance for 2025. Net financial debt decreased 1.2% year-on-year to EUR 26.8 billion, helped by our exits in Hispam. Q4 trends reflected the underlying momentum in the business. Revenue grew 1.3% in constant terms, adjusted EBITDA 2.8% and adjusted operating cash flow after leases nearly 13%. Free cash flow accelerated to EUR 1.4 billion in Q4, with net debt down by the same amount. Foreign exchange was a meaningful headwind through 2025. A drag of around 3 percentage points in revenue, adjusted EBITDA and adjusted operating cash flow after leases. That impact lessened in Q4. A quick notes on perimeter. After Hispam disposals, Argentina, Peru, Ecuador, Uruguay, Colombia and other small companies are classified as discontinued operations. alongside the segment reclassification of Hispam with Chile, Venezuela and Mexico now reported under other companies. These are the portfolio decisions Marc referred earlier. They affect comparability but they create a stronger, more focused business going forward. Looking at the revenue mix. B2B grew 7.1% in constant terms for the full year and 7.3% in Q4. B2C revenue increased to 2.1% in Q4, up 1.8% for the full year. To summarize, we delivered on our 2025 guidance. The business exited the year with improving trends and the underlying quality of earnings is strengthened as well as we head into 2026. On to the next slide and turning to free cash flow. As usual, the majority of cash generation was concentrated in Q4, consistent with our typical seasonability. In 2025, we generated free cash flow of EUR 2.8 billion, exceeding our initial free cash flow base for guidance of EUR 2.7 billion. For 2026, we are upgrading our guidance to approximately EUR 3 billion, the upper end of the range given at the Capital Market Day. The path to get there is underpinned by a positive operating performance and efficient cost management of all lines below. In the next slide, our net debt-to-EBITDA ratio fell to 2.78x in December from 2.87x in September. Net financial debt at year-end declined to EUR 26 billion, including the sale of Colombia, Chile and the Fiberpass stake, net debt fell to EUR 24.6 billion. Telefonica is well on track to achieve our leverage target of around 2.5x by 2028. At the end of December, we had liquidity of EUR 17.4 billion, which is a significant higher than our upcoming debt maturities. The average cost of debt has been reduced by 0.21 percentage points year-on-year to 2.98% in December. We continued with our proactive financing -- refinancing approach during the first months of the year. We already successfully issued a green hybrid bond of EUR 1.8 billion to refinance hybrids with reset dates in December '26 and November '28 at very attractive conditions. Therefore, we have ample flexibility to refinance the next hybrid with the first reset date in May '27. On top of that Telefonica issued a CHF 170 million bond and a EUR 1 billion green bond demonstrated strong market access and ESG financing leadership. We will continue with our prudent financial policy and free cash flow management, which are key priorities for us. On to the next slide. Let me spend a few moments highlighting Telefonica's financial priorities. Growing our free cash flow in a predictable manner is central to everything we do. Strong and growing free cash flow give us the optionality to invest in our business, return cash to shareholders and do value-accretive M&A if it makes sense. We will deploy that cash flow to grow Telefonica sustainably. With a clear guardrail to maintain our investment-grade rating and continue our deleveraging path towards a 2.5 ratio by 2028. Our dividend policy is sustainable and aligned to free cash flow generation, as our cash flow grows, so does our capacity to reward shareholders. On M&A, our framework is clear. We will be opportunistic and disciplined. Any transaction must deliver clear, compelling and measurable synergies, create value for our shareholders, be within our leverage target ambitions and compatible with our commitment to our investment-grade rating. We will not compromise our balance sheet to just add revenues. We have no interest in transactions that dilute the quality of the business we're building. Every opportunity will be judged on its merits. And if it doesn't meet our criteria, we won't pursue it. More broadly, our focus is on building improved financial flexibility. The combination of the risk and growing free cash flow, a clear deleveraging trajectory and a disciplined capital allocation is what positions Telefonica to create sustainable value for our shareholders. Turning to our sustainability initiatives. On the environmental front, we continue to cut emissions, making the business more efficient while ensuring stable energy costs. On the social side, we highlight the expansion of our rural mobile broadband coverage, which allows us to provide more communities with secure digital services. Moving to governance. We are actively strengthening our supply chain resilience, including over 17,000 sustainability-related audits in 2025. Lastly, we are proud to report leadership position across several prestigious international rankings. I will now hand back to Marc, who will wrap up.
Marc Murtra Millar: Thank you, Juan. Let me close with where we stand and where we are heading. Telefonica delivered on all its 2025 commitments with accelerating momentum in Q4. Across our 4 markets, Spain, Brazil, Germany and the U.K. we made strong operating progress with each market advancing on its strategic priorities. We continued to simplify the business. Our efficiency initiatives are ramping and the workforce restructuring is on track. Telefonica is a leaner and more focused company than it was a year ago. Looking ahead, our 2026 guidance reflects continued momentum with growth in revenue and adjusted EBITDA, accelerating in adjusted operating cash flow after leases and free cash flow upgrading to approximately EUR 3.0 billion, supporting both our dividend and our deleveraging path. During 2026, we already executed the sale of Chile and Colombia, under Netomnia acquisition. We are executing on transform and grow with a clear framework, driving growth with consolidation as an upside. We have a strong foundation and the best plan to become a world-class European telco with profitable scale. I'm confident in our strategy that will drive shareholder value creation. Thank you for your time. We are now happy to take your questions.
Operator: [Operator Instructions] Our first question comes from the line of Andrew Lee from Goldman Sachs.
Andrew Lee: I had a couple of questions on operational organic issues. Firstly, on Spanish growth and then secondly, on free cash flow generation outside the EUR 3 billion you are guiding for 2026. Just on Spain, obviously, you're growing and it's improved versus a year ago, but the growth seems stuck on 1% service revenue and 1% EBITDA growth over the past few quarters. You talked quite clearly about an acceleration and expectation of an acceleration in growth in 2026 today. Do you think the EBITDA growth is accelerating or will accelerate without the EUR 250 million of restructuring efficiencies. If so, why is the underlying EBITDA growth accelerating? And if not, why not? The second question is on free cash flow generation. Your previous guidance, the employee contributions in 2026 would be higher than the EUR 1 billion originally planned in 2025. Do you still expect employee contributions to be higher than EUR 1 billion in 2026? And also we know that U.K. dividends will be lower this year. Are there any other below-the-line free cash flow movements we should be aware of below the line by that. I mean, below the EUR 3 billion that you're guiding for 2026. Are there any other below the line movements we should be aware of that you are anticipating?
Marc Murtra Millar: Thanks, Andrew. Emilio will answer the first question and Juan your second question.
Emilio Rodríguez: Okay. Andrew, thank you for the question. All the saving measures that we are taking in Spain is part of our guidance for '26. We are seeing acceleration in all the financial metrics, both in revenues, EBITDA and operating cash flow after leases. But it's true that restructural savings coming from the agreements is part of this equation. The reason that not all the savings of the restructural savings goes to the EBITDA is because there are other parts, for example, wholesale revenues that are declining. As you know, in 2024, we signed several agreements that led us to have a very sustainable business for the next coming year in wholesale. But at the same time, in the first year of the agreement, means declining of our revenues. And other costs that increase, for example, is the personnel cost that is not included in the restructural agreement. Of course, we are facing a change in the revenue mix that bring business or revenues with less margin. And because of that, we are looking for saving in all the company, that is possible. Technology and the evolution of the company permit us to find savings in a lot of activities. For example, I had to highlight the savings that we expect for the procurement and purchase processes that we are working now in a group level, but of course, in Spain too.
Juan Azcue Vich: Thank you, Andrew, I will take your second question on free cash flow '26 generation and commitments. So as we pointed out, we upgraded our '26 free cash flow to approximately EUR 3 billion at the upper range of our range given at the CMD. This is underpinned by a positive operational performance and the efficient management of all lines below. The operational performance, we are seeing it already in Q4, and that's the reason why we're guiding to over 2% constant growth in '26 for adjusted operating cash flow. On the parts below, we do see a risk free cash flow with a free cash flow profile that has changed meaningfully and is more predictable and less volatile. Below operating cash flow, there are different lines that compensate into one with others. But overall, my answer will be that the reason for us to increase and see -- and be more positive on the EUR 3 billion is related to operational performance. Now your second question was on commitments. We guided to $1 billion commitment in '25. '26 will be a year of transition. And although the amounts are not fully finalized because there might be changes between which part goes as one-off pay and severance and how much is deferred, you should think about a figure around EUR 1.2 billion as the peak. That would be the peak of the commitments and then they will go downwards and fade away over time. You had mentioned -- you mentioned the dividend and the impact on the dividend on '26. But as you know, the dividend on '26, it's a fixed amount of EUR 0.15 that will be paid in June '27. So this increase in [indiscernible] should not affect it.
Andrew Lee: Okay. Can I just have 2 clarifications. So you're still expecting the positives and negatives below the EUR 3 billion, i.e., employee commitments and U.K. dividends, et cetera, to balance out and then just on Spain, thanks for your help on that. Just am I right in saying that your expectation is that the EBITDA growth ex the EUR 250 million saving won't be accelerating given the headwinds you measured, including wholesale declines and the low margin growth or weaker revenue growth mix at the moment?
Juan Azcue Vich: Okay. I will take the first part of the question. So yes, the guide I gave you on commitments -- on peak commitments of '26 is EUR 1.2 billion, on U.K. dividend, you should compute what was guided by the VMO2, which was free cash flow distribution for its shareholders of around GBP 200 million, if I recall correctly, that was the guidance.
Emilio Rodríguez: In the case of Spain, again, we are expecting to accelerate EBITDA. This is a mix of the different measures, both in revenues and in cost savings.
Operator: We will now take the next question from the line of Keval Khiroya from Deutsche Bank.
Keval Khiroya: I have 2, please. So firstly, your free cash flow margin in Germany is less than 10% and approximately half the level of Spain. How do you expect the German free cash flow margin to evolve? And I appreciate you've talked about return to growth, but can you detail a little bit more what's key to get there across the revenue, OpEx and CapEx levers? And then secondly, you've been quite vocal on the desire for consolidation across your core markets. What do you think are the main barriers to striking deals? And do you think we now have enough regulatory clarity for you to present deals to the regulators should they arise?
Marc Murtra Millar: Okay. Thanks for your question. I'll start with the second -- your second question. So with regards to consolidation, the main barriers that have existed to date is the mergers and acquisitions guideline managed by the European Commission. I think we can hear good messages in this line, and I'm happy to discuss them further and some mixed messages, but what will matter is exactly how the specifics advance, and we are still we are still not there. So I would say that is the main -- excuse me, that is the main limitation that we've had as a European market. And then there is, of course, the usual difficulties of reaching large and complex agreements that have to do with getting the right price and getting the right synergies.
Emilio Rodríguez: Keval, regarding the Germany question, as I mentioned in the -- during the presentation, our expectation is to grow in 2027. During this year, we expect to improve around the year while we are leaving behind the comps with the revenues that we leave.
Unknown Executive: Keval, I don't know if you can hear the last answer about the margin in Spain, just to say that we are expecting the operating cash flow after leases margin improve more than -- improve due to this operating cash flow after leases grow, it will be above revenues and EBITDA growth.
Operator: We will now take the next question from the line from of Joshua Mills of BNP Paribas.
Joshua Mills: Hopefully, you can hear me. So my first question was on the difference between the EBITDA and EBITDA growth number. If I look at Spain, you actually saw it slowdown in EBITDA growth this year, and this is the metric most of us are focused on. So you went from having plus 0.9% to plus 0.4% in the quarter. And I understand your commentary on the acceleration in reported EBITDA pre-leases. But how should we think about Spanish EBITDA after lease growth developing in 2026? And what should we assume for lease costs increasing? Maybe if I can add a second part to that. On the Germany EBITDA after lease development, you saw a minus 22% declines in Q4. I understand you want to grow this in 2027 but it would be great to get a steer on how the 2026 number will shake out, whether that's down 10%, down 20%, down more than that, given that there's so many moving parts and limited visibility. And then finally, second-ish question. But on the free cash flow guidance, I see that you raised the starting point for 2025. So the starting point for the base has gone from EUR 2.8 billion to EUR 2.9 billion. If I take your 3% to 5% midterm free cash flow CAGR, that would imply some upside to midterm free cash flow. Are you implicitly raising the midterm free cash flow guidance as well today? Or is it still within the range you initially expected?
Juan Azcue Vich: So leases growth were driven mainly by 5G rollout and fiber expansion in core markets and inflation impact. The lease figure was higher in '25 by 2% due to seasonability mostly in the fourth quarter. As the outlook for the guidance, you should expect leases to continue to moderate upward trend mainly driven by 5G deployment in those core markets. CPI updates apply to both new and renewed contracts from mobile sites rollout for 5G as well as new sites required for such expansion. We remain very focused on driving efficiencies in all lines as a top priority, and leases will be one of our focus for sure. On your second question regarding the free cash flow base. Yes, we reported EUR 2.8 billion of free cash flow base versus the EUR 2.7 billion reference we had in the Capital Market Day, plus once the consolidated in Chile. That figure, that base goes to EUR 2.9 billion. On your question on whether we're implicitly increasing guidance? We are increasing guidance for 2026, explicitly, EUR 3 billion. And then on the long term, we feel is still too short time since the Capital Market Day to change the range. So we keep the 3% to 5% range. But obviously, mathematically, we increase the base. We are implicitly giving a message which is the -- what we see, which is we expect 2028 free cash flow to be higher than the initial guidance given at the CMD. So that will be the message. We keep the 3.5. And then we'll see where we see us within that range. But definitely, we do see a higher 2023 free cash flow.
Joshua Mills: Great. Maybe just to simplify the first question a bit. Do you expect to grow Spanish EBITDA after lease in 2026?
Unknown Executive: Yes. We are expecting growth acceleration, both in EBITDA, EBITDA after leases. And in Spain, we are expecting leasees very stable.
Operator: We will now take the next question from the line of Nick Lyall from Berenberg.
Nicholas Lyall: First question was on German mobile ARPU. It looks like the contract Telefonica ARPU. So ex the one-on-one subs is down quite sharply, so down about 14% year-on-year, but maybe it's flattened out sequentially. Could you give us a bit of an idea what the outlook is for '26, please. Just given your comments, particularly about the promotional activity being quite heavy in Germany? And then secondly, can I just come back to Keval's question on the merger guidelines. I think on the merger guidelines, you said were the biggest barrier to consolidation. Could you just clarify for us exactly what that means in terms of timing? Does that mean you have to wait for a resolution to Teresa Ribera's merger guidelines in that 2027 investigation first? Or are you prepared to do something before the merger guidelines are clarified, please?
Unknown Executive: As we have explained, [indiscernible] family offers, and it has an impact in the ARPU. We expect the market to stay promotional, but more rational. Family plans naturally result in a higher share of second and third SIM cards [indiscernible] will usually lower ARPUs. But at the same time, we are expecting to have a similar ARPU or ARPU moving in line with market levels for established players..
Juan Azcue Vich: Regarding the merger guidelines. Unfortunately, my answer has to be ambiguous, we understand that within the current framework of merger guidelines, large operations can happen, if the interpretation applied wishes that to happen. We understand that in the review that will be made public shortly, we can either hear of a review of the guidelines or we can either read of a new interpretation or a modernization of the interpretation of the merger and acquisition guidelines. From our point of view, we're going to work on that on a case-by-case basis and have nothing else to add at this stage.
Operator: We will now take the next question from the line of James Ratzer from New Street Research.
James Ratzer: Yes. So I have 2 questions. The first one was just regarding the U.K. and Virgin Media O2 where I see you've taken a write-down on the asset. But the new valuation you're putting on VMO2 still looks as if it's around 9.5x EBITDA. So I was wondering if you could just run through what forecast you are using for that impairment review, please, to justify that value? And does that include the impact of the new Netomnia transaction. And secondly, there was a press after call a month or so ago, where Mr. Domemut in Germany suggested that he might be interested in potentially acquiring Telefonica Deutschland. So could you see a scenario where you might actually be a seller in that market.
Juan Azcue Vich: James, I will take your first question on the impairment. So VMO2 impairment, we carry a book value that we have to every year with a goodwill included that every year through our audit process, we'll have to attest to see if there's an impairment. The impairment that we have that would have registered this '25 has to do with more negative view or projections at the end of the year based on the changes in the Openreach Equinox studies that took place in fall, okay? So that took the team to do a sensitivity around their business plan, so it's a sensitivity and that sensitivity was the one that KPMG took as a base for their valuation. To your question, does that include the Netomnia deal? No -- sadly, no, because that valuation is done as of 31st of December. We do believe that the Netomnia transaction will enhance the financial and operational performance of the asset. And therefore, that's not included in the impairment test. And we think that the outcome of it might have been different if that has been the case. So that's for the VMO2.
Unknown Executive: Regarding your Germany question, James, by the way, good morning, to you and everybody, and we can hear you all loud and clear. As you know, we have defined 4 core markets that include Germany, the U.K., Brazil and Spain. And whilst we are always a rational operator and we manage our assets very rationally, we also take all media comments as such as media comments. So what we can say is that we are committed to Germany. We are committed to the German market in the short term, in the medium term and in the long term as an industrial operator. And up and above this, we don't really have any other comments. Operator, we have time for one last question, please.
Operator: Our last question comes from the line of Emmet Kelly from Morgan Stanley.
Emmet Kelly: Yes. I have 2 questions, please. Firstly, Marc, can we just come back to some of the comments you made earlier on consolidation and antitrust. You said that you had received some good messages and also some mixed messages. Can you just say a few words more about those comments, please? And secondly, just on your home market in Spain, can you talk a little bit about the competition you're seeing in Spain in particular, what you're seeing from Vodafone, Zegona and from Digi at the bottom end of the market and whether your premium positioning is keeping you reasonably sheltered from, let's say, the competitive intensity at the bottom end?
Marc Murtra Millar: Thanks for your question. I'll answer the first one. So I'm only referring to public messages. I always keep any communication with -- private communications private. But we have heard Antonio Costa defending a European telecom's consolidation that will -- would allow more scale and more capacity to invest profitably. And then we've read public messages with regards to mergers and acquisitions that follow a fine line of ambiguity that we think we understand is deliberate. Those are -- that is what I was referring to. With regards to Antonio Costa, if you haven't seen the message, we'd be happy to forward it to you. I think it was something like 10 or 15 days ago. With regards to competition, I'll hand over to Emilio.
Emilio Rodríguez: Okay. Regarding the competition in Spain first of all to remind that in Spain, we see clearly 2 segments of clients. First of all, the high-end clients and where we have a very strong position based on our superior proposal [indiscernible] our consistent general ecosystem and network and brand and commercial approach, but needs to be very optimistic [indiscernible] in this segment, even taking into account the effort of our competitors to gain market share. The fact is that we are winning market share and we are maintaining the lowest churn in this segment. In the low-end segment, we have to say that we are competing very well. That's true, that is a more competitive segment where Vodafone and Digi clearly are trying to push the fact if you see the portability numbers is that Telefonica Spain clearly maintains a very good performance comparing with this competitor. Again, we think that our superior network within our superior proposal in terms of ecosystem, even in the low end and the approach that we have in terms of customer service that at the end is the more sustainable competitive advantage permit to be again a positive in the trends with our competitors. The efforts of these 2 competitors in the low end, and at least we don't see that it affects too much to Telefonica Spain.
Operator: Thank you. At this time, no further questions will be taken.
Marc Murtra Millar: Okay. Well, thank you, everybody, for your quality time. You heard what our analysis of the data is and what our commitments are in a qualitative and quantitative way for 2026 and moving forward. You have channels of communication with us that are ongoing and open. So if there's any questions, that remain to be answered, we'll be delighted to address them and share with you our analysis. Have a great day, everybody.