Good morning, everyone. Good afternoon, everyone in Europe. It's a pleasure to welcome back Telefonica Management to Communicopia. Today, we have Chairman and CEO, Jose Maria Alvarez Baiete and Chief Financial and Control Officer, Laura Abasolo. Welcome back, and thanks again for coming.
Our pleasure. Thanks for having us.
Great. Just as a quick reminder for those in the audience, there is the ability to register questions online, which I can try and weave into the Q and A and also potentially get to at the end if we have time. But firstly, I'd love just to pass over to you for a short introduction.
Well, thank you. The first message I would like to send is that as a sector and namely us as a company, we think we have been having a very resilient performance during the COVID situation. It has of course impacted us in different levels, but we have been having a very, very strong operational focus during the pandemic, namely in our 4 core markets. And thanks to that, we have been able to deliver year on year growth in both the second quarter and the first half of the year in operating cash flow and operating cash flow margin. We have been having a significant commercial improvement throughout the quarter, in particular during the month of June and especially in the high end value accesses layer of the market.
We have been able to do that with declining churn. It is true that churn was kind of frozen during the pandemic, but when markets were reopened and stores were reopened, very good performance in terms of churn. And therefore, we have all of these have resulted in an increased customer lifetime value. We have been able to do that because of our infrastructure, the infrastructure that we have been building. Another important message out of the pandemic is that digitalization has accelerated.
In our case, online sales have been up to 39%, which is 11 percentage point more than a year ago. And digital channels are up 17% versus the Q1. Strong free cash flow generation, almost EUR 1,000,000,000 free cash flow in the second quarter. That should accelerate during the 2nd part of the year and a significant liquidity position. So in spite of COVID affecting us in terms of weaker revenues in some layers like roaming or others of handset sales, pretty strong or pretty resilient performance.
That has allowed us to confirm our dividend. It is true that we have been giving up guidance as we have structured before, but we have been guiding towards or indicating towards OIB minus CapEx outlook maintained at slightly negative to flat at the end of this year. And basically, we have reiterated the long term guidance of 2022 organic revenue growth and expansion of 2 percentage point of OIBDA minus CapEx. In terms of strategy execution, we have been basically sticking to the 5 messages that we gave back in November last year, our core markets, trying to strengthen our position in our core markets and that explains the transaction that was announced in the U. K.
With Liberty Global that also explain why we are trying to improve our position in Brazil through this potential with the offer that we have done for OIMobile Assets jointly with America Movilis and TIM. And again, pretty strong performance operationally speaking in the 4 core markets with OIBDA minus CapEx basically growing almost 2% year on year. We are trying to reduce our exposure to Latin America. We have not been able to try to reduce the volatility of the euro return generated in the region. And you should expect from us to keep going into that direction, both in terms of leverage of data assignment, but also in terms of inorganic moves.
In the meantime, we are improving our organic performance in the region. And in organic terms, OIBDA minus CapEx has increased 10% in local currency in Latin America. In Telefonica Tech, we keep evolving. We have been working very hard in the segregation of the assets, the spinning of our assets, people and products and services. And cybersecurity is almost complete.
Cloud, we are significantly advanced. So we have started to report pro form a revenues and you should expect from us to keep reporting the overall financial estimates of that unit as we work in order to put that in value. In terms of Telefonica Infra, we have been transferring 10,000 towers from Telefonica Germany into Telxius in a complex transaction. And now Telxius is one of the largest towers companies in Europe. And we have been building optionality through fiber projects both in Brazil and in Germany.
And then finally, in terms of operating model, we committed with the market that we will be expanding 2 percentage point of our operating cash flow margin going forward. We have significantly that during the first half of this year. So we have now proof points that we are heading to the right direction. So overall, a resilient performance during the crisis. We reaffirm what are strategic pillars and if something, we are going to try to accelerate execution in the second half of the year.
I propose to stop there and give Ram for Q and A.
Perfect. Thank you very much. And I'd love to pick up on pretty much all of those topics actually. And perhaps just starting with the impact of COVID, which you highlighted was quite material in the Q2. Could you give us an indication of how some of the temporary COVID impacts might be starting to come back in the second half and things like the trends on roaming, but also sports in Spain?
Sure. First, let me try to summarize how we have reacted as a group to COVID. The first thing when the confinement was declared in the different countries, we immediately act on the offer. And therefore, we put more content in most of the places. We increased data allowances.
So we put more value, so the customers could feel that we care about them. In terms of phone policies, we immediately started remote working. At the office, 95% of more than 120,000 people were working from home. That has never been done before in the history of Telefonica and it worked. I mean, we have the tools in place to have all the processes to make it efficient.
So we have been able to preserve the activity of the company, because our employees have been working from home. In terms of suppliers, we try to protect their weakest part of the supply chain by extending by shortening payment terms to our suppliers and therefore also to try to contribute to our customers to SMEs customers in order to improve their working capital. In terms of society, we created a fund in which we have been buying medical equipment in the different countries. And in terms of our shareholders, we have been preserving our dividend. The impact of COVID on us in the first half of this year has been pretty significant, I would say.
€730,000,000 in revenues in the Q2 and €340,000,000 of OIBDA. So it has not been that we are immune, but we have been pretty resilient. We have been able through OpEx contention. OpEx has been down 4.9% and CapEx has been down 23%. And therefore, that's why we have been able to preserve at the group level operating cash flow with basically a stable performance of minus 0.7%.
So we think that immediately after the lockdown was lifted, we saw a significant pickup in mobility. We opened our stores and we have different performance in the different countries. So I would try to summarize different the 4 core markets so to say. In the case of Spain, June July were robust. August was weaker because we have not been having roaming revenues coming from tourists because in order to give you an idea, visitors from the U.
K. Or from Italy are down 80% to 90%, so significant impact in roaming. But the reality is that we have been stronger on B2C because the football season has been extended. And therefore, the period of time, the seasonality of time in which churn increased because there is no football for 2 months has been reduced to 15 days. So, further trends in terms of commercial activity and net adds because of churn of lower churn.
And also in terms of second lines, the residential markets. So Spain is evolving according to the guidance that Angel Villar, our Chief Operating Officer, shared with you at the time of our Q2 results. So heading towards the second half of the year that should be stronger both in KPIs and in financial terms at the first half of the year. In terms of Germany, GDP recovery in Germany is stronger than in Spain and we feel that. And we feel that in commercial activity in all layers, I mean, in prepaid, in postpaid and also in the wholesale segment in Germany that you know is very, very important.
So Germany heading towards a stronger, I would say, performance compared with previous quarters. In the case of the U. K, different elements. I mean, in terms of roaming, similar impact to the case of Spain, in terms of handset revenues as well and those are important features. But also in the case of the U.
K, the SMIP, this is the Internet of Things, big contract that we have for gas meter, water meters installment in the U. K. Is taking time to retake the traction that we had before. So it's improving, but it's going to be taking a little bit more of time to have the run rate that we used to have in terms of growth going forward. So commercially speaking, strong, but not as strong as Germany.
In the case of Brazil, I would say a strong recovery, a strong recovery in prepaid, which is important. Nice recovery in terms of postpaid, I mean, and strong recovery in terms of fiber adds according to expectations in terms of DTH disconnections and the voice wirelines evolution. So overall, to make a long story short, in the case of our 4 core markets, we are a little bit above our own expectation when we were running our simulation for the second half of the year. So it should be a quarter according to our expectation or a little bit above and waiting for the Q4 to see how it looks like by overall according to expectation or slightly above.
Perfect. That's really helpful in terms of running through the markets. And I'd love to just come back to Spain. There's a lot of focus as ever in Spain on the current competitive situation. It sounds like what you're saying is that you're pretty happy with the performance in the mid and the high end segments.
But I'd love to get a bit more color on that and also addressing how you see low end competition in Spain as well.
Sure. Before COVID in Spain, we were heading towards revenue stabilization. It took us a while to head towards that because of the structure of the market and the intensity of promotions and discounts on the market. COVID has altered because of these roaming effects and all that that we have shared. So in the case of Spain, you know Spain is roughly 50 something, 6%, 58% B2C, roughly 20 something B2B and 19 wholesale.
In the case of B2C, high end of the market, basically it's a 2 player scenario, Orange and Orange shops. Intensative, commercially speaking, is a more rational market overall. We have some tactical promotion as we speak now in the month of September because there is the over the top that used to have the football rights is no longer having them and therefore there is roughly 80 1000, 90,000 customers that are available for being converted, so to say. So it's a fight between Orange and ourselves, but it's very tactical and very centered around this group of customers. So low churn on the high end is relatively low and value is being preserved as we speak and this tactical fight for this segment of customers.
In the mid end, a mid end for us accounts for part of our Fusion tariffs with Movistar brand and also Orange, but also the Mass Mobile, the Huskartel and the Vodafone brands, the Vodafone brand itself. On that regard, intensity is high, but we see some signs of rationality and that's because of 2 major facts. The first one is the tender offer on mass mobile. According to the numbers of the simulation we have been running, the returns that are going to be required for this new capital structure means that there is less room for doing aggressive promotions because of the wholesale retail pricing. And something similar happens with Uskaltel.
So we think that at the mid end rationality or aggressiveness should be mitigated going forward. I mean, at the low end, very, very active, very intensive. I mean, with different brands, Low E, in the case of Vodafone, A MENA, Yastel itself, Digi, I mean a lot of so the low end, very, very dynamic, very, very competitive. And we don't see any signs on that regard going forward. A lot of rumors around potential consolidation derived from some of the transaction that are being under place, but no facts, so to say.
I think that if consolidation was to be proposed, it would be welcome. And whatever we can do to facilitate that in terms of wholesale agreements, long term wholesale agreements at regional pricing, we'll try to be supportive if that was to be the case. But for the time being, those are just rumors, not facts.
No, great. That was actually my next question was consolidation. And perhaps I could just ask on top of that, because that's a really clear view from your perspective. Do you see a change in stamps from the European Commission potentially following the legal case in the U. K.
Around the O2 merger, potentially sort of helping this consolidation theme?
Well, let me try to answer in separate buckets, so to say. I will try to focus first on the UK approval process and then an overall answer to the, I would say, mood in Europe towards consolidation or potential regulatory changes. In the case of the JV, very, very aligned with Liberty in trying to have the approval process in an expedite manner. Not clear for us if this is going to be decided in the European Union or at the U. K, because the Brexit is in the middle.
So if this is the European Union, that's good news because that means that it's in Phase 1 without significant remedies. But we are working with in parallel with both the European Commission and with CMA because it's not clear for us who's going to be the decision maker. We think all the merits of the transaction means that under the theory of harm analysis, there is no impact on the vertical businesses in terms of the MVNO market or the mobile or the wireline broadband market, but neither horizontally. So I think that it has all the merits to be approved in an expedite manner, whatever that's decided in the U. K.
Or in the European Union. In the meantime, we have been working very intensively on through clean teams to solidify the synergy that we have been sharing with the market, this £6,300,000,000 of synergies in the different chapters. And now we have much more comfort through these clean teams that are executable and realistic synergies. The 3rd pillar on that thing is there were 2 conditions precedent, one of them being the regulatory approval, the other one was the financing of the transaction. We executed the financing of the transaction last week to the 3 different tranches in 3 different currencies.
So very successful financing effort. So the transaction is just now subject to regulatory approval. And then finally, the management team is being discussed as we speak with Liberty. So very advanced in order to be prepared for whenever. Having said that, we think it should be approved in an expedite manner and without significant remedies either in the UK or in the European Commission.
Now in overall because we think it's an easy transaction to approve, it's fixed to mobile, no vertically or horizontal integration in different markets, so no concentration. So it's an easy one. I think it should be an easy one. Overall mood on consolidation in Europe. If the pandemic has proven something is that networks are essential.
The only country in Europe in which the video signal has not been degraded was Spain because we have the fiber network. So ultra broadband network are essential going forward. And 5 gs is going to be an essential part of the recovery program all around Europe, namely in Spain, but all around Europe. And that means that this pandemic has been accelerating some digital changes that were supposed to occur in the next three to 5 year, cloud adoption, video streaming, education, remote working. So every single thing that we were scheduling or projecting to happen in 3 years' time is happening now.
And some of those effects are here to stay. I mean, the cloud effect or the education or the remote working, some of them are going to be preserved over time. And that cannot happen without strong networks. And that means that in most of the countries, I would say in all of the countries, competition authorities and telecommunications constituencies are starting to realize that the networks have become obsolete. The definition of relevant market is no longer valid.
I'm no longer just competing with Vodafone or with Orange or with Mass Mobile or with Digi here in Spain. I'm competing with WhatsApp for voice, I'm competing with Netflix for video. But they are not even recognized in terms of relevant definition of market shares. So this is changing. A proof point of that is that last week in Spain, WhatsApp and Facebook has been declared telecommunication operators for the purpose of telecom tax.
So the definition of the relevant market is going to change and that's going to be altering the concentration parameters going forward. So I do think this is a game changer. I don't know how much time this is going to take, but I think it is irreversible.
Thanks. That's really interesting. And it actually brings me just about to my last question on Spain, which was often I think for investors looking at the Spanish market, the fiber to the home landscape is often seen as quite complex, partly because you have some overbuild, but often because you've got lots of different wholesale agreements between the different parties. So could you just update us on how you see this evolving? And also how you think about the impact on Telefonica when you think about your wholesale business in Spain and maintaining or even growing your own network utilization?
Sure. I think that a very important message upfront is that the wholesale market on fiber is radically different from the wholesale market of traditional copper or mixed networks, so to say. Why am I saying that? In the case of Spain, the price at which you unbundle a copper line is a theoretical cost calculated by the regulator and is around €9 The NEBA, the access to our fiber network is €70 but that doesn't mean that we cannot sell below €70 It means that whoever requires a NEBA from us needs to be at must at €70 And because of those are brand new networks, there is an incentive not to overbuild. Because if you have a dynamic bilateral commercially agreement and focus market means that you reach agreement with 3rd parties.
Initially, it was Vodafone with Orange, but then we jump on board on that. And now you have 4 different players that are exchanging coverage of the deployments with others. And that means that for us in the case of Telefonica namely, it is accretive because the more we shift one copper wholesale access from 1 fiber wholesale access is accretive in terms of revenues. And for the first time in our history, we have more customers with fiber wholesale access than with copper and that's why wholesale revenues are starting to grow. So it increases or accelerates the return of your recently deployed fiber network and it creates a market in which the regulator has no incentive to play because you have a very active and dynamic commercial market.
So I think that in the case of Spain, the overbuilt is mostly numerical because some of the accesses that Orange says they have or Vodafone they say they have or Masimo will say they have are indirect access to us and vice versa. It's like myself in Germany, I have access indirect access to Deutsche Telekonetwo network or to Vodafone cable network. So I think that it doesn't need to be derived from an overlap of networks because then you have a sunk cost and you are not incentivized to realize the value of that network. In the case of Spain, it's a very dynamic fiber wholesale market with a cap put by the regulator, but with enough commercial flexibility for you to build on your tariffs. So I think and that's why wholesale has become a source of growth for our revenues in Spain.
And remember that wholesale is 19% of our revenues in Spain.
Great. And perhaps you already touched on, I think, the U. K. Deal, and that's very clear in terms of the financing, your work on the synergies and the competitive approval process. Could you just update us on how you're seeing the U.
K. Competitive landscape? I think in recent weeks, we've seen some moves from BT that a number of investors were seeing as reasonably supportive in terms of their change as the market leader.
Well, I think that our proposed transaction is an accelerator of some of the trends of the UK market. Let me put it that way. I think that it would be a challenger to UK to be the position in terms of converged leader on the U. K. Market, but it's going to have other implications.
And I'm going to try to evolve on that. There is already a very active wholesale MVNO market in the UK, I mean, with significant amount of alternatives. And that's why in terms of concentration out of this transaction, the MVNO for Virgin is important, but it's not going to be a game changer of the overall wholesale dynamics of the MVNO market in the U. K. On the other side, on the wireline side, on the broadband side, you have Openreach access, but you don't have a strong ultra broadband network yet.
And I think this is going to be corrected. I think this is going to be accelerated in the short term. We are going to be accelerating jointly with Liberty Global. Liberty already had the time to accelerate, but now it's going to be accelerated. So there is the potential to create another wholesale market on that regard with 2 different networks being accessed.
And I think regulation on that regard is going to be very important. And then finally the convergence, I mean, convergence in the U. K. Is probably not going to happen the same way it happened here in Spain. Because here in Spain we were the leader and we forced convergence because our copper network was in a very poor situation.
I don't think that's the case in the U. K. So I think that convergence in the U. K. Is going to be done in a way that is going to be less eroded, eroding in terms of ARPUs of the individual components of the bundle.
So I think that this transaction is going to mean an acceleration of some of those strengths. It's going to create alternatives. And I think it's going to also force others to take decisions. I mean, if they want to have indirect access or they want to have a bigger scale. So I think that the composition of the U.
K. Market has already changed before transaction is approved. But I think that that change is going to imply other changes going forward. So and I think that those changes should be aimed to build strong networks without the need of diluting ARPUs out of this buildup of the network. So, of course, there is always the potential among the impact of Brexit in all those equations, but it would delay the process somehow, but I don't think it's going to change the fundamentals.
It makes no sense that as we speak, the U. K. Has a 4% fiber penetration. Spain, you have 80%. It makes no sense.
This is going to be corrected in an accelerated manner, I think, especially after Brexit. So I think that the dynamics of the U. K. Markets are going to be accelerated by our transaction probably. Yes.
And I'm keen to get through the whole portfolio. So I was keen to just move on to Germany. And I think to summarize potentially, the German mobile market seems quite rational. You mentioned that the GDP recovery has been stronger. But how do you think about Telefonica Deutschland's positioning?
And I ask that because it was very interesting on the last call where you started to potentially discuss your own fiber building Germany alongside existing wholesale agreements to essentially make Telefonica Deutschland a stronger converged competitor against the likes of Deutsche Telekom and Vodafone?
Yes. First, let me elaborate on the fundamentals of O2 Germany. It took us a while to fix our network problems in Germany. And our network problems in Germany were the result of the integration of the A plus and the O2 network, because we wanted to redensify the networks rather than to switch off one of the networks. So it took us probably 18 months more than what we anticipated.
And that's why we have been lagging behind in terms of quality in Germany for several quarters. That was solved a year ago, a year and a half ago. And now we are back on track and we have in terms of customer satisfaction, in terms quality of the network, in comparable terms with Vodafone and catching up with Deutsche Telekom. So we have a strong mobile network in urban and suburban areas in Germany. And that's helping us now to get traction on the mobile side, on the revenue side with our own brands, because we have always got traction on the wholesale market, but now with our own brands.
The O2 Free tariff is a good example out of that. So I think now we have a credible mobile B2C operator in Germany and it's growing and it's slightly growing in euros and is now accelerating some CapEx deployment to even catch up further down the road. Now we are starting to develop our effort on B2B, especially starting on SMEs, but also medium sized and some big corporate. So you should expect a robust performance of O2 Germany going forward. In the case of O2 Germany, if the market was to accelerate its convergence in Germany, we have access, 10 year granted access to Deutsche Telekom wholesale ultra broadband network with technological evolution granted, which means that if they goes from the VDSL to fiber, we have that evolution granted.
Then we were remedy takers on the Vodafone KDDG transaction. And then we have agreement with a 3rd player in Germany. So as we speak, we have our robust semi hedge converged strategy in Germany. We have decided that because it makes no sense in the case of Germany that Germany has 8% of fiber penetration, again, compared with 80% in Spain, it makes no sense. This is going to be corrected.
It makes no sense to overbuild. So we are going to stick to this indirect access of Deutsche Telekom and Vodafone on the largest cities on most of the territory of Germany. But we think there is a space to create another company, which is not going to be majority controlled by us. It's going to be able to deploy fiber as a wholesaler in rural areas of Germany. And that's why we are having conversation with investors, but also with Deutsche Telekom and Vodafone themselves as wholesale customers to be part of that fiber deployment in Germany without overbuilding.
So that's the strategy that we are following in Germany.
Perfect. That's really clear. And perhaps just moving on to Brazil and also had a question actually from the audience on Brazil. How do you think about the consolidation there that's been reported both in terms of the benefits or whether there's any potential concerns around having approval for consolidation? And also, you mentioned in your opening remarks that you were seeing a sort of pickup despite COVID in prepay and also postpaid.
So I'd love to pick up on that competitive and actual structural trends in the Brazilian market as well.
Certainly. Brazil, in spite of the depreciation of the real this year, which has been pretty severe, is a very attractive telecommunication market. Just give me as a first signal, nobody has noticed that. But in the first half of this year, in euros, in higher euros, free cash flow from Brazil of Telefonica is higher than a year ago. That's not the case in OIBDA, but just in free cash flow, bottom line free cash flow in euros.
That means that they are growing strongly, not just in terms of operating cash flow, but also in total free cash flow. So very strong unit for us. We have roughly 100,000,000 customers in Brazil. We are the leader in the Brazilian market. And the Brazilian market as we speak is 4 player market.
And we have the possibility of building a 3 player market in Brazil, which is the largest country in Latin America. This is once in a lifetime opportunity. It took us a while. And Angel was saying in all conference call about the alignment of stars, It took us a while to align all the stars in Brazil. But we started working with TIM, then America Movilas joined.
We put a strong proposal for OE in this judicial process. It was important because the creditors of Oi needed to decide who was the stocking horse for the final auction of the asset. Initially, it looks like the entire colony might be, but they didn't reach a final conclusion to the negotiation. We finally were able to be declared stocking horse last week. So now we are waiting for the auction to happen probably in the last month of this year to decide who is the buyer of that.
But being the stocking horse, you have the advantage that you have already a negotiated contract that whoever else needs to agree on. And then you have the right to match the offer with a small increase. So this is an amazing value creating opportunity to consolidate the market for 4% to 3% with enough competition because competition is being judged region by region and the weaker part will get OE customers. So I think it's a massive value creating option that is on top of the table and it has taken us a while to build that optionality. So now we have a single proposal from the 3 players with an agreed split of the asset with an agreed way to split the asset in terms of the different vehicles that needs to be created, agreed and negotiated with Oi.
So now just pending for the final stages of the process and for the auction to be declared in the last month of this year potentially. So a massive opportunity. And in terms of the trends of the market, I mean, Brazil GDP decline was half the GDP decline of Spain to give you an idea during pandemic. Our recovery is much faster in Brazil than in Spain because even though fiscal stimulus has been lower, direct fiscal stimulus to families because COVID has been much more efficient. And that has been having a boost B2C landscape, especially in the mid to low end.
As we speak, the depreciation of the real is proven to be bad for us in terms of conversion rate of FX, but very good for the country in terms of exports and in terms of the dynamics of the internal debt, because most of the debt is local debt denominated, is local currency denominated. So I think that wherever you approach it, a lot of value lies in Brazil going forward. Part of that value is being hidden because of the FX move of the real. But I think that if we are able to finish this transaction, it's a massive value creating transaction in terms of synergies and value for the market itself.
Thanks very much. I think the last two topics I'd love to just squeeze in is, firstly, whether there's any update on the HIFAM pillar of your strategic plan, again, given the COVID backdrop potentially making that slightly more challenging? And then perhaps if we could just finish up on the balance sheet and the credit rating discussions that you're having at the moment as well?
Sure, Michael. This is Laura. On ISPA, the messages are similar to the ones we did in Q2 results call. We keep on working on the organic performance. And despite COVID having affected the revenue, we did a lot of work on the OpEx and CapEx side, so we could maintain profitability.
And also our operating cash flow grew around 10% in Q2. So a lot of focus on free cash flow on the operating side, and we keep on working on the turnaround of OVs such as Peru and Chile. In the case of Colombia, they had good results. It was they even grew in service revenue in Q2 despite COVID. And in general, in the region, we keep on building a valuable customer base with a lot of focus on fiber and IPTV, which are at record levels even with the pandemia.
On the inorganic side, we keep working very thoroughly on the spin off process preparation as probably a plan B as we are also having conversations on potential M and A transactions. COVID obviously makes more difficult those M and A conversations, but they are all open and we keep on working. We are very aware that the Ispand performance and the FX volatility attached is hurting our share price and we need to decrease the equity of Telefonica around Ispand. In the meantime, we are also reducing that volatility, increasing net debt at a local level. We reissued a €500,000,000 bond in Colombia that replaced a hybrid that was quite costly.
So even from not only from a debt allocation, but also from a P and L and free cash flow perspective, it was a very good operation, and you should expect us to go further in that regard. So unfortunately, we had proof points on the U. K, we had proof points on the infra, but Spanish is still a little bit more time to go. And you want me on balance sheet, I think we need to work at different levels. We have worked very much on the net debt absolute figure reduction.
And I think we did it successfully and we did it with the right equation because it was net debt was reduced not only with disposals, it was basically reduced by a strong free cash flow. We were also having an attractive shareholder remuneration. And on top of that, there were some disposal of assets in the last 3 years that increased return on capital on top of reducing net debt. The leverage has not moved in the same direction because also the FX, and we have also been reducing the EBITDA in reported terms. We think you have to look at the leverage and ratio not in isolation.
It is very important indeed, but you also have to look at it together with the prospects of company and the CapEx requirements of the company. And in the case of Telefonica, we strongly believe the CapEx peak is behind us in all core business. So we but we definitely are not there at the leverage ratio level, so we will keep on working on that one. But as Maria said in the introduction, we need to do it in the same way that create value for our shareholders, not just with the only goal of reducing the net debt figure.
So perfect. There's so much more we could talk about around the group, but I think that's basically our time up. So it just leaves me to thank you again for attending. We really appreciate it, Yi chair. Great to have you.
Thank you very much for having us. I hope next time is going to be next year in New York physically. So thanks for having us.
Yes, exactly. Thanks.