UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of July, 2022

Commission File Number: 001-09531

Telefónica, S.A.
(Translation of registrant's name into English)

Distrito Telefónica, Ronda de la Comunicación s/n,
28050 Madrid, Spain
3491-482 87 00
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F
X
Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes
No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes
No X







Telefónica, S.A.


TABLE OF CONTENTS


Item Sequential Page Number
1. Telefónica - Half yearly financial Report January June 2022 2





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Condensed Consolidated Interim Financial Statements 2022
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Index



Condensed Consolidated Interim Financial Statements 2022
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Telefónica Group
Consolidated statements of financial position
Millions of euros Notes
06/30/2022
12/31/2021
ASSETS
A) NON-CURRENT ASSETS 89,033  84,284 
Intangible assets 12,458  11,725 
Goodwill 18,725  16,519 
Property, plant and equipment 23,723  22,725 
Rights of use 8,172  7,579 
Investments accounted for by the equity method 12,661  12,773 
Financial assets and other non-current assets 7,881  7,347 
Deferred tax assets 5,413  5,616 
B) CURRENT ASSETS 22,108  24,929 
Inventories 1,565  1,749 
Receivables and other current assets 9,240  8,287 
Tax receivables 2,210  2,120 
Other current financial assets 2,669  3,835 
Cash and cash equivalents 6,385  8,580 
Non-current assets and disposal groups held for sale 39  358 
TOTAL ASSETS (A+B) 111,141  109,213 
Notes 06/30/2022 12/31/2021
EQUITY AND LIABILITIES
A) EQUITY 31,685  28,684 
Equity attributable to equity holders of the parent and other holders of equity instruments 24,909  22,207 
Equity attributable to non-controlling interests 6,776  6,477 
B) NON-CURRENT LIABILITIES 55,317  55,034 
Non-current financial liabilities 34,914  35,290 
Non-current lease liabilities 6,754  6,391 
Payables and other non-current liabilities 3,628  3,089 
Deferred tax liabilities 3,080  2,602 
Non-current provisions 6,941  7,662 
C) CURRENT LIABILITIES 24,139  25,495 
Current financial liabilities 5,387  7,005 
Current lease liabilities 1,964  1,679 
Payables and other current liabilities 13,537  13,210 
Current tax payables 1,740  2,026 
Current provisions 1,511  1,441 
Liabilities associated with non-current assets and disposal groups held for sale —  134 
TOTAL EQUITY AND LIABILITIES (A+B+C) 111,141  109,213 
Unaudited data at June 30, 2022. The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.
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Telefónica Group
Consolidated income statements
Millions of euros Notes
January- June 2022
January- June 2021
Revenues 19,450  20,305 
Other income 1,069  10,875 
Supplies (6,200) (6,217)
Personnel expenses (2,673) (2,744)
Other expenses (5,301) (5,333)
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (OIBDA) 6,345  16,886 
Depreciation and amortization (Notes 4, 6, 8 and 21) (4,336) (4,139)
OPERATING INCOME 2,009  12,747 
Share of income (loss) of investments accounted for by the equity method 105  (68)
Finance income 680  901 
Exchange gains 2,964  1,513 
Finance costs (1,266) (1,430)
Exchange losses (3,038) (1,536)
Net financial expense (660) (552)
PROFIT BEFORE TAX 1,454  12,127 
Corporate income tax (312) (1,200)
PROFIT FOR THE PERIOD 1,142  10,927 
Attributable to equity holders of the Parent 1,026  8,629 
Attributable to non-controlling interests 116  2,298 
Basic and diluted earnings per share attributable to equity holders of the parent (euros) 0.16  1.44 
Unaudited data. The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.

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Telefónica Group
Consolidated statements of comprehensive income
Millions of euros January - June
2022
January - June
2021
Profit for the period 1,142  10,927 
Other comprehensive (loss) income 2,761  4,411 
(Losses) gains from financial assets measured at Fair value through comprehensive income
(3)
Income tax impact — 
(2) 1 
 Gains (losses) on hedges 1,110  509 
Income tax impact (286) (121)
Reclassification of (gains) losses included in the income statement (900) (1,353)
Income tax impact 224  337 
148  (628)
(Losses) gains on hedges costs (46) 105 
Income tax impact 11  (26)
Reclassification of (gains) losses included in the income statement (5) (5)
Income tax impact
(39) 75 
Share of gains (losses) recognized directly in equity of associates and others 51 
Income tax impact —  — 
51  5 
Translation differences 2,422  4,465 
Total other comprehensive income (loss) recognized in the period (Items that may be reclassified subsequently to profit or loss) 2,580  3,918 
Actuarial gains (losses) and impact of limit on assets for defined benefit pension plans 220  58 
Income tax impact (70) (15)
Reclassification to reserve actuarial losses (gains) and impact of limit on assets for defined benefit pension plans (Note 2)
—  392 
150  435 
(Losses) gains from financial assets measured at Fair value through comprehensive income (30) 60 
Income tax impact —  (2)
Reclassification to reserve of gains (losses) from financial assets measured at Fair value through comprehensive income 71  — 
41  58 
Share of gains (losses) recognized directly in equity of associates (10) — 
(10)  
Total other comprehensive income (loss) recognized in the period (Items that will not be reclassified subsequently to profit or loss) 181  493 
Total comprehensive income (loss) recognized in the period 3,903  15,338 
Attributable to:  
Equity holders of the parent and other holders of equity instruments 3,217  12,830 
Non-controlling interests 686  2,508 
3,903  15,338 
Unaudited data. The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.
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Telefónica Group
Consolidated statements of changes in equity
Attributable to equity holders of the parent and other holders of equity instruments Non-controlling interests Total equity
Millions of euros Share capital Share premium Treasury Shares Other equity instruments Legal reserve Retained earnings Fair value financial assets Hedges Equity of associates and others Translation differences Total
Financial position at December 31, 2021
5,779  4,233  (547) 7,550  1,038  26,091  (547) 438  64  (21,892) 22,207  6,477  28,684 
Profit for the year —  —  —  —  —  1,026  —  —  —  —  1,026  116  1,142 
Other comprehensive income (loss) for the year —  —  —  —  —  104  39  161  1,884  2,191  570  2,761 
Total comprehensive income (loss) for the year           1,130  39  161  3  1,884  3,217  686  3,903 
Dividends and distribution of profit (Note 11) 135  —  —  —  21  (369) —  —  —  —  (213) (309) (522)
Capital reduction (139) (409) 548  —  —  —  —  —  —  —  —  —  — 
Net movement in treasury shares —  —  (108) —  —  (12) —  —  —  —  (120) —  (120)
Acquisitions and disposals of non-controlling interests and business combinations (Note 2) —  —  —  —  —  (64) —  —  —  —  (64) (78) (142)
Undated deeply subordinated securities (Note 11) —  —  —  —  —  (132) —  —  —  —  (132) —  (132)
Other movements —  —  —  —  —  14  —  —  —  —  14  —  14 
Financial position at June 30, 2022
5,775  3,824  (107) 7,550  1,059  26,658  (508) 599  67  (20,008) 24,909  6,776  31,685 
Unaudited data.
The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.










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Condensed Consolidated Interim Financial Statements 2022
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Telefónica Group
Consolidated statements of changes in equity
Attributable to equity holders of the parent and other holders of equity instruments Non-controlling interests Total equity
Millions of euros Share capital Share premium Treasury Shares Other equity instruments Legal reserve Retained earnings Available-for-sale investments Hedges Equity of associates and others Translation differences Total
Financial position at December 31, 2020
5,526  4,538  (476) 7,550  1,038  19,046  (597) 647  (57) (25,980) 11,235  7,025  18,260 
Profit for the year —  —  —  —  —  8,629  —  —  —  —  8,629  2,298  10,927 
Other comprehensive income (loss) for the year —  —  —  —  —  426  59  (641) 80  4,277  4,201  210  4,411 
Total comprehensive income (loss) for the year           9,055  59  (641) 80  4,277  12,830  2,508  15,338 
Dividends and distribution of profit (Note 11) 195  —  —  —  —  (503) —  —  —  —  (308) (282) (590)
Capital reduction (83) (305) 388  —  —  —  —  —  —  —  —  —  — 
Net movement in treasury shares —  —  (79) —  —  (11) —  —  —  —  (90) —  (90)
Acquisitions and disposals of non-controlling interests and business combinations (Note 2) —  —  —  —  —  (382) —  —  —  —  (382) (15) (397)
Undated deeply subordinated securities —  —  —  242  —  (164) —  —  —  —  78  —  78 
Other movements —  —  —  —  —  (1) —  —  —  —  (1) — 
Financial position at June 30, 2021
5,638  4,233  (167) 7,792  1,038  27,040  (538) 6  23  (21,703) 23,362  9,237  32,599 
Unaudited data.
The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.


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Telefónica Group
Consolidated statements of cash flows
Millions of euros January - June
2022
January - June
2021
Cash received from operations 23,208  24,368 
Cash paid from operations (17,463) (18,238)
Net payments of interest and other financial expenses net of dividends received (738) (777)
Taxes (paid)/proceeds (268) (241)
Net cash flow provided by operating activities 4,739  5,112 
(Payments on investments)/proceeds from the sale in property, plant and equipment and intangible assets, net (2,632) (3,550)
Proceeds on disposals of companies, net of cash and cash equivalents disposed 135  13,514 
Payments on investments in companies, net of cash and cash equivalents acquired (1,511) (328)
Proceeds on financial investments not included under cash equivalents 1,513  607 
Payments on financial investments not included under cash equivalents (771) (1,026)
Proceeds/(payments) on placements of cash surpluses not included under cash equivalents 1,638  (607)
Net cash flow used in investing activities (1,628) 8,610 
Dividends paid (388) (498)
(Payments)/proceeds of treasury shares and other operations with shareholders and with minority interests (226) (112)
Operations with other equity holders (175) 19 
Proceeds on issuance of debentures and bonds, and other debts 1,100  152 
Proceeds on loans, borrowings and promissory notes 300  2,028 
Repayments of debentures and bonds, and other debts (1,993) (3,353)
Repayments of loans, borrowings and promissory notes (2,656) (1,907)
Lease principal payments (Note 21) (1,011) (916)
Financed operating payments and investments in property, plant and equipment and intangible assets payments (Note 16) (490) (124)
Net cash used in financing activities (5,539) (4,711)
Effect of changes in exchange rates 235  (74)
Cash reclassified to assets held for sale   (7)
Effect of changes in consolidation methods and others (2) (12)
Net increase (decrease) in cash and cash equivalents during the period (2,195) 8,918 
CASH AND CASH EQUIVALENTS AT JANUARY 1 8,580  5,604 
CASH AND CASH EQUIVALENTS AT JUNE 30 6,385  14,522 
RECONCILIATION OF CASH AND CASH EQUIVALENTS WITH THE STATEMENT OF FINANCIAL POSITION
BALANCE AT JANUARY 1 8,580  5,604 
Cash on hand and at banks 7,353  4,600 
Other cash equivalents 1,227  1,004 
BALANCE AT JUNE 30 6,385  14,522 
Cash on hand and at banks 5,559  12,953 
Other cash equivalents 826  1,569 
Unaudited data.
The accompanying notes and appendices are an integral part of these condensed consolidated interim financial statements.






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Telefónica, S.A. and subsidiaries composing the Telefónica Group
Notes to the condensed consolidated interim financial statements for the six-months ended June 30, 2022



























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Note 1. Background and general information
Telefónica, S.A. and its subsidiaries and investees (hereinafter “Telefónica”, “the Company”, the “Telefónica Group” or "the Group”) make up an integrated and diversified telecommunications group operating mainly in Europe and Latin America. The Group’s activity is centered around services of wireline and wireless telephony, broadband, internet, data traffic, Pay TV and other digital services.
The parent company of the Group is Telefónica, S.A., a public limited company incorporated on April 19, 1924 for an indefinite period. Its registered office is at calle Gran Vía 28, Madrid (Spain).
As a multinational telecommunications company which operates in regulated markets, the Group is subject to different laws and regulations in each of the jurisdictions in which it operates, pursuant to which permits, concessions or licenses must be obtained in certain circumstances to provide the various services.
In addition, certain wireline and wireless telephony services are provided under regulated rate and price systems.




Note 2. Basis of presentation of the consolidated financial statements
The condensed consolidated interim financial statements for the six-month period ended June 30, 2022 (hereinafter, the “interim financial statements”) have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting and Article 12 of Royal Decree 1362/2007, of October 19. Therefore, they do not contain all the information and disclosures required in complete annual consolidated financial statements and, for adequate interpretation, should be read in conjunction with the consolidated financial statements (Consolidated annual accounts) for the year ended December 31, 2021.
The accompanying interim financial statements were approved by the Company’s Board of Directors at its meeting of July 27, 2022.
The figures in these interim financial statements are expressed in millions of euros, unless otherwise indicated, and may therefore be rounded.
Comparison of information
Comparisons in the accompanying interim financial statements refer to the six-month periods ended June 30, 2022 and 2021, except in the consolidated
statement of financial position, which compares information at June 30, 2022 and at December 31, 2021.
The main changes in the consolidation scope are described in Appendix I.
With respect to seasonality, the historical performance of consolidated results does not indicate that the operations of the Group, taken as a whole, are subject to significant variations between the first and second halves of the year.
Agreement between Telefónica and Liberty Global plc to combine their operating businesses in the UK
On May 7, 2020, Telefónica reached an agreement with Liberty Global plc to combine into a 50-50 joint venture their operating businesses in the UK (O2 Holdings Ltd. and Virgin Media UK, respectively). On June 1, 2021 after obtaining the relevant regulatory approvals, consummation of the necessary recapitalisations and satisfaction of other closing conditions, the closing of the transaction was carried out, resulting in the combination of both businesses into the joint venture called VMED O2 UK Ltd. (VMO2).
Telefonica United Kingdom, which was fully consolidated within the Group, was excluded from the






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scope of consolidation from June 1, 2021 (see Note 4). From that date, VMO2 is registered under the equity method (see notes 4 and 9).
The constitution of the joint venture provided Telefónica with 5,439 million pounds sterling of funds in the first half of 2021 (equivalent to 6,307 million euros at the transaction day), of which 2,686 million pounds corresponded to the cash payment to Telefónica to equalise ownership in the joint venture (before post-completion adjustments in the second half of 2021) and 2,754 million pounds corresponded to proceeds from recapitalisation.
As a consequence of this transaction, the Group recognized a gain amounting to 4,434 million euros in “Other income” (see Note 23) of the consolidated income statement for the first half of 2021.
In addition, in the first half of 2021 the accumulated actuarial losses of Telefonica United Kingdom amounting to 392 million euros were reclassified to retained earnings, with no effect in equity.
Agreement between Telxius Telecom and American Tower Corporation for the sale of its telecommunications towers divisions in Europe and Latin America
On January 13, 2021 Telxius Telecom, S.A. (a company of the Telefónica Group minority-owned, directly or indirectly, by KKR and Pontegadea), signed an agreement with American Tower Corporation ("ATC") for the sale of its telecommunications towers divisions in Europe (Spain and Germany) and in Latin America (Brazil, Peru, Chile and Argentina).
The agreement established the sale of approximately 30,722 telecommunication tower sites and comprised two separate and independent transactions (on one hand, the Europe business and, on the other hand, the Latin American business). The agreement included the transfer to ATC of the towers that Telxius agreed to acquire from Telefónica Germany GmbH & Co. under the agreement signed on June 8, 2020, both the towers acquired in the first phase on September 1, 2020 as well as the towers that were acquired in the second phase in August 2021 (4,080 sites sold to ATC in the second half of 2021).
The closing of the transactions took place in June 2021 following regulatory approvals.
These transactions generated a gain of 5,761 million euros registered in "Other income" (see Note 23) of the consolidated income statement for the first half of 2021. The result of this transaction attributed to non-controlling interests of Telxius amounted to 2,166 million euros (see Note 11).
Acquisition of mobile assets of Oi Group
On April 20, 2022, the closing of the transaction related to the Purchase Agreement for Acquisition of Unidade Produtiva Isolada (UPI) Mobile Assets of Oi Group took place, and Telefónica Brasil acquired, on such date, all the shares of the company Garliava RJ Infraestrutura e Redes de Telecomunicações S.A. (Garliava), to which the mobile assets of Oi Group assigned to Telefónica Brasil had been contributed, in accordance with the segregation plan stated in the Oi Agreement (see Note 26).
Telefónica Brasil thus acquired its share of mobile assets of the Oi Group for an approximate amount of 5,373 million Brazilian reais, having paid, on such day, the amount of 4,885 million Brazilian reais. The remaining amount, equivalent to 10% of the payment made on that date, is withheld subject to certain price adjustments and potential indemnification obligations contained in the Oi Agreement. The total consideration also includes 110 million Brazilian reais subject to the fulfilment of certain targets. Thus, the total consideration transferred amounted to 5,483 million Brazilian reais (1,091 million euros at the date of the closing of the transaction).
At the date of preparation of these consolidated financial statements, the purchase price allocation is provisional. The fair value assigned to Oi's licenses amounts to 506 million euros. The preliminary goodwill amounts to 696 million euros (see Note 5).
Exchange rates evolution
Variation of average exchange rate versus euro
First half (2021 vs 2020)
First half (2022 vs 2021)
Brazilian real (17.5  %) 17.4  %
Pound sterling 0.7  % 3.1  %
New peruvian sol (16.2  %) 8.9  %
Chilean peso 3.1  % (3.8  %)
Colombian peso (7.3  %) 2.2  %
Mexican peso (2.8  %) 9.8  %

Variation of closing exchange rate versus euro
06/30/21 vs 12/31/20 06/30/22 vs 12/31/21
Brazilian real 7.2  % 16.1  %
Pound sterling 4.7  % (2.1  %)
New peruvian sol (3.2  %) 13.6  %
Chilean peso 0.8  % (1.2  %)
Colombian peso (5.5  %) 4.5  %
Mexican peso 3.2  % 10.8  %

In the first half of 2022, there was a positive impact on Equity attributable to equity holders of the Parent






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Company for translation differences amounting to 1,884 million euros (see Note 11), mainly due to the appreciation of the Brazilian real.
Alternative measures not defined in IFRS
The Management of the Group uses a series of measures in its decision-making, in addition to those expressly defined in the IFRS, because they provide additional information useful to assess the Group’s performance, solvency and liquidity. These measures should not be viewed in isolation or as a substitute for the measures presented according to the IFRS.
Operating income before depreciation and amortization (OIBDA)
Operating income before depreciation and amortization (OIBDA) is calculated by excluding solely depreciation and amortization from operating income. OIBDA is used to track the performance of the business and to establish operating and strategic targets of the Telefónica Group companies. OIBDA is a commonly reported measure and is widely used among analysts, investors and other interested parties in the telecommunications industry, although not a measure explicitly defined in IFRS, and therefore, may not be comparable to similar indicators used by other companies. OIBDA should not be considered as a substitute for operating income.
Furthermore, the Group management uses the measure OIBDA margin, which is the result of dividing the OIBDA by the revenues.
After the implementation of IFRS 16 Leases in 2019, most of the lease expenses that affected OIBDA until 2018 affect instead depreciation and amortization and net financial expenses, resulting in higher reported OIBDA under IFRS 16, which is therefore not directly comparable with OIBDA for the years before 2019.
The following table presents the reconciliation of OIBDA to operating income for the Telefónica Group for the six-months periods ended June 30, 2022 and 2021:
Millions of euros
January - June 2022
January - June 2021
Operating Income Before Depreciation and Amortization (OIBDA) 6,345  16,886 
Depreciation and amortization (4,336) (4,139)
Operating income 2,009  12,747 
The OIBDA of "Other companies" for the first half of 2021 includes the gains from the sale of the tower divisions of Telxius, amounting to 5,761 million euros and from the establishment of VMED O2 UK Ltd, amounting to 4,434 million euros explained above.
The following table presents the reconciliation of OIBDA to operating income for each business segment for the six-months periods ended June 30, 2022 and 2021:
January - June 2022
Millions of euros Telefónica Spain Telefónica Germany Telefónica Brazil Telefónica Hispam Other companies Elimina-tions Total Group
Operating Income Before Depreciation and Amortization (OIBDA) 2,254  1,247  1,714  1,094  78  (42) 6,345 
Depreciation and amortization (1,075) (1,131) (1,133) (922) (94) 19  (4,336)
Operating income 1,179  116  581  172  (16) (23) 2,009 
January - June 2021
Millions of euros Telefónica Spain Telefónica United Kingdom Telefónica Germany Telefónica Brazil Telefónica Hispam Other companies Elimina-tions Total Group
Operating Income Before Depreciation and Amortization (OIBDA) 2,352  919  1,172  1,479  769  10,382  (187) 16,886 
Depreciation and amortization (1,071) —  (1,192) (927) (984) (128) 163  (4,139)
Operating income 1,281  919  (20) 552  (215) 10,254  (24) 12,747 






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OIBDA-CapEx and OIBDA-CapEx excluding spectrum acquisitions
OIBDA-CapEx is defined as operating income before depreciation and amortization, reduced by accrued capital expenditures, and OIBDA-CapEx excluding spectrum acquisitions is defined as operating income before depreciation and amortization, reduced by accrued capital expenditures excluding those related to spectrum acquisitions.
We believe that it is important to consider capital expenditures, and capital expenditures excluding spectrum acquisitions, together with OIBDA in order to have a more complete measure of the performance of our telecommunications businesses. We use these measures internally to track the performance of our business, to establish operating and strategic targets of the businesses of the Group and in our internal budgeting process.
Neither OIBDA-CapEx nor OIBDA-CapEx excluding spectrum acquisitions are measures expressly defined in IFRS, and therefore they may not be comparable to similar indicators used by other companies. In addition, neither OIBDA-CapEx nor OIBDA-CapEx excluding spectrum acquisitions should be considered substitutes for operating income, the most comparable financial measure calculated in accordance with IFRS, or any measure of liquidity calculated in accordance with IFRS.
Furthermore, the Group management uses the measures OIBDA-CapEx margin and OIBDA-CapEx excluding spectrum acquisitions margin, which is the result of dividing these measures by the revenues.
In the table below we provide a reconciliation of our OIBDA-CapEx and OIBDA-CapEx excluding spectrum acquisitions to operating income for the periods indicated:
Millions of euros
January-June 2022
January-June 2021
Operating income 2,009  12,747 
Depreciation and amortization (4,336) (4,139)
OIBDA 6,345  16,886 
Capital expenditures in intangibles assets (Note 6) (716) (1,271)
Capital expenditures in property, plant and equipment (Note 8) (1,766) (2,129)
CapEx (2,482) (3,400)
OIBDA-CapEx 3,863  13,486 
Spectrum acquisitions (Note 6) 132  674 
OIBDA-CapEx excluding spectrum acquisitions 3,995  14,160
Debt indicators
As calculated by us, net financial debt includes:
(A) adding the following liabilities:
i. current and non-current financial liabilities in our consolidated statement of financial position (which includes the negative mark-to-market value of derivatives),
ii. other liabilities included in "Payables and other non-current liabilities" and "Payables and other current liabilities" (mainly corresponding to payables for deferred payment of radio spectrum that have an explicit financial component), and
iii. financial liabilities included in "Liabilities associated with non-current assets held for sale".
(B) subtracting the following amounts from the resulting amount of the preceding step:
i. cash and cash equivalents,
ii. other current financial assets (which include short-term derivatives),
iii. cash and other financial assets included in "Non-current assets and disposal groups classified as held for sale",
iv. the positive mark-to-market value of derivatives with a maturity beyond one year,
v. other interest-bearing assets (included in "Financial assets and other non-current assets", "Receivables and other current assets" and "Tax receivables" in our consolidated statement of financial position), and
vi. mark-to-market adjustment by cash flow hedging activities related to debt.
With respect to step (B)(v), "Financial assets and other non-current assets" includes derivatives, installments for the long-term sales of terminals to customers and other long-term financial assets, and "Receivables and other current assets" includes the customer financing of terminal sales classified as short-term.
The indicator net financial debt plus leases is calculated by adding lease liabilities calculated under IFRS 16 (including those corresponding to companies held for sale) to net financial debt and deducting assets from subleases.
We calculate net financial debt plus commitments by adding gross commitments related to employee benefits to net financial debt and deducting the value of long-term assets associated with those






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commitments related to employee benefits and the tax benefits arising from the future payments of those commitments related to employee benefits. Gross commitments related to employee benefits are current and non-current provisions recorded for certain employee benefits such as termination plans, post-employment defined benefit plans and other benefits.
We believe that net financial debt, net financial debt plus leases, net financial debt plus commitments and net financial debt plus leases plus commitments are meaningful for investors and analysts because they provide an analysis of our solvency using the same measures used by our management. We use them to
calculate internally certain solvency and leverage ratios. Nevertheless, none of them as calculated by us should be considered as a substitute for gross financial debt as presented in the consolidated statement of financial position.
The following table presents a reconciliation of net financial debt, net financial debt plus leases, net financial debt plus commitments and net financial debt plus leases plus commitments as of June 30, 2022 and December 31, 2021 to the Telefónica Group’s gross financial debt as indicated in the consolidated statement of financial position:
Millions of euros
06/30/2022
12/31/2021
Non-current financial liabilities 34,914  35,290 
Current financial liabilities 5,387  7,005 
Gross financial debt (Note 16)
40,301  42,295 
Cash and cash equivalents (6,385) (8,580)
Other assets included in "Other current financial assets" (2,659) (3,823)
Cash and other financial assets included in "Non-current assets and disposal groups classified as held for sale" —  (7)
Positive mark-to-market value of long-term derivative instruments (notes 12 and 17) (2,780) (2,772)
Other liabilities included in "Payables and other non-current liabilities" 1,397  933 
Other liabilities included in "Payables and other current liabilities" 183  455 
Other assets included in "Financial assets and other non-current assets" (1,799) (1,808)
Other assets included in "Receivables and other current assets" (352) (468)
Other current assets included in "Tax receivables" (120) (250)
Financial liabilities included in "Liabilities associated with non-current assets held for sale" —  35 
Mark-to-market adjustment by cash flow hedging activities related to debt 1,031  22 
Net financial debt 28,817  26,032 
Lease liabilities 8,683  8,080 
Net financial debt plus leases 37,500  34,112 
Gross commitments related to employee benefits 5,441  6,337 
Value of associated long-term assets (95) (94)
Tax benefits (1,395) (1,626)
Net commitments related to employee benefits 3,951  4,617 
Net financial debt plus commitments 32,768  30,649 
Net financial debt plus leases plus commitments (*)
41,451  38,729 
(*) Includes assets and liabilities considered to be "net financial debt plus leases plus commitments" for companies classified as held for sale (see Note 27).
As explained above, Telefonica United Kingdom, which was fully consolidated within the Group, is excluded from the scope of consolidation from June 1, 2021. From that date, VMED O2 UK Ltd is registered under the equity method. As a consequence, the net financial debt of VMED O2 UK Ltd is not consolidated in the Group's net financial debt. Note 9 to these financial statements provides a breakdown of the main items in the statement of financial position of VMED O2 UK Ltd as at June 30, 2022 and December 31, 2021.







Telefónica, S.A. 14

Condensed Consolidated Interim Financial Statements 2022
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Free Cash Flow
The Group’s free cash flow is calculated starting from “Net cash flow provided by operating activities” as indicated in the consolidated statement of cash flows; deducting (Payments on investments)/Proceeds from the sale of investments in property, plant and equipment and intangible assets, net, adding the cash received from government grants and deducting dividends paid to non-controlling interests and payments of financed spectrum without explicit interest. The cash used to cancel commitments related to employee benefits (originally included in the Net cash flow provided by operating activities) is added as it represents the payments of principal of the debt incurred with those employees.
We believe that free cash flow is a meaningful measure for investors and analysts because it provides an
analysis of the cash flow available to protect solvency levels and to remunerate the parent company’s shareholders and other equity holders. The same measure is used internally by our management. Nevertheless, free cash flow as calculated by us should not be considered as a substitute for the various flows of cash as presented in the consolidated statements of cash flows.
The following table presents the reconciliation between Telefónica Group’s Net cash flow provided by operating activities as indicated in the consolidated statement of cash flows (see Note 25) and the free cash flow for the six-months periods ended June 30, 2022 and 2021:
Millions of euros January - June 2022 January - June 2021
Net cash flow provided by operating activities (Note 25)
4,739  5,112 
(Payments on investments)/Proceeds from the sale of property, plant and equipment and intangible assets, net (Note 25) (2,632) (3,550)
Dividends paid to minority shareholders (Note 25) (170) (181)
Payments related to cancellation of commitments related to employee benefits (Note 25) 443  466 
Payments of financed spectrum without explicit interest (Note 25) (21) (21)
Free cash flow excluding lease principal payments 2,359  1,826 
Lease principal payments (notes 21 and 25) (1,011) (916)
Free cash flow 1,348  910 






Telefónica, S.A. 15

Condensed Consolidated Interim Financial Statements 2022
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Note 3. Accounting policies
The accounting policies applied in the preparation of the interim financial statements for the six-month period ended June 30, 2022 are consistent with those used in the preparation of the Group’s consolidated annual financial statements for the year ended December 31, 2021, except for the following new standards and amendments to standards published by the International Accounting Standards Board (IASB) and endorsed by the EU for use in Europe, which are effective for annual periods beginning on or after January 1, 2022.
The application of these amendments for the current reporting period did not have a significant impact on the interim condensed consolidated financial statements of the Group. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments.
Onerous Contracts: Costs of Fulfilling a Contract - Amendments to IAS 37
The amendments to IAS 37 clarify that when assessing whether a contract is onerous, an entity needs to include all unavoidable costs that relate directly to a contract, including both incremental costs and an allocation of costs directly related to fulfilling contract activities. The Group applied the amendments to the contracts for which it had not fulfilled all of its obligations at the beginning of the reporting period.
Reference to the Conceptual Framework – Amendments to IFRS 3
Minor amendments were made to update the references to the Conceptual Framework for Financial Reporting and to add an exception to the recognition principle in IFRS 3 Business Combinations regarding liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and Interpretation 21 Levies. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. The amendments to IFRS 3 also clarify that contingent assets do not qualify for recognition at the acquisition date.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while the entity is preparing the asset for its intended use (including while assessing technical and physical performance of the asset). Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
Annual improvements to IFRS Standards 2018-2020
As part of the annual improvements finalised in May 2020, IFRS 9 Financial Instruments was amended to clarify which fees should an entity include when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf.







Telefónica, S.A. 16

Condensed Consolidated Interim Financial Statements 2022
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New standards and amendments to standards issued but not effective as of June 30, 2022
At the date of preparation of the interim consolidated financial statements, the following IFRSs and amendments had been published by the IASB, but their application was not mandatory:
Standards and amendments Mandatory application: annual periods beginning on or after
Amendments to IAS 1 Classification of Liabilities as Current and Non-Current 1 January 2023
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 1 Disclosure of Accounting Policies 1 January 2023
Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023
Amendments to IAS 12 Deferred Taxes related to Assets and Liabilities arising from a Single Transaction 1 January 2023
Based on the analyses conducted to date, the Group estimates that the adoption of these new pronouncements will not have a significant impact on the consolidated financial statements in the initial period of application, although the Group is currently assessing whether there are any contracts that meet the definition of insurance contracts and therefore could be affected by the future adoption of IFRS 17 Insurance Contracts.






Telefónica, S.A. 17

Condensed Consolidated Interim Financial Statements 2022
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Note 4. Segment information
In 2022 the Telefónica Group is reporting financial information, both internally and externally, according to the following segments: Telefónica Spain, VMO2 (accounted for under the equity method), Telefónica Germany, Telefónica Brazil and Telefónica Hispam (formed by the Group's operators in Colombia, Mexico, Venezuela, Ecuador, Argentina, Chile, Peru and Uruguay).
During 2021, the Telefónica Group changed its reporting segments as follows:
(i) On June 1, 2021, upon the establishment of the 50:50 joint venture with Liberty Global (whose results are accounted for under the equity method), the former Telefónica United Kingdom segment was replaced by the VMO2 segment (see notes 2 and 9). The results of the first half of 2021 include the consolidation of Telefónica United Kingdom from January 1 to June 1, and the equity accounting of 50% of the net result of VMO2 from June 1 to June 30 (see Note 9). The gain registered on the establishment of the VMED O2 UK Ltd, amounting to 4,434 million euros (see notes 2 and 23), are recorded in "Other companies".
(ii) The Telxius Group ceased to be a reporting segment in 2021 as a result of the sale of the telecommunications towers divisions in Europe and Latin America (see Note 2). The Telxius Group’s results are included in "Other companies" as well as the gain obtained for the sale of the telecommunications towers divisions, amounting to 5,761 million euros (see notes 2 and 23).
The segments referred to above include the information related to the fixed, wireless, cable, data, internet and television businesses and other digital services provided in each country. Inter-segment transactions are carried out at market prices.
Information relating to other Group companies not specifically included in these segments is reported under "Other companies", which includes Telefónica, S.A. and other holding companies, as well as companies whose main purpose is to provide cross-sectional services to Group companies and other operations not included in the segments. The Incremental and BE-Terna groups, acquired by Telefónica Tech in the first half of 2022 (see Note 5), are reported within "Other companies".

The Group centrally manages borrowing activities, mainly through Telefónica, S.A. and other companies included in "Other companies", so most of the Group's financial assets and liabilities are reported under "Other
companies". In addition, Telefónica, S.A. is the head of the Telefónica tax group in Spain. Therefore, a significant part of the deferred tax assets and liabilities is included under "Other companies". For these reasons, the results of the segments are disclosed up to operating income.
Revenues and expenses arising from intra-group invoicing for the use of the trademark and management services were eliminated from the operating results of each Group segment. The results of the holding companies also exclude dividends from Group companies and impairments of investments in Group companies. These adjustments have no impact on the Group’s consolidated results. In addition, segment reporting considers the impact of the purchase price allocation to the assets acquired and the liabilities assumed by the companies included in each segment. The assets and liabilities presented in each segment are those managed by the heads of each segment, regardless of their legal structure.







Telefónica, S.A. 18

Condensed Consolidated Interim Financial Statements 2022    
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The following table presents income, CapEx information (capital expenditures in intangible assets and property, plant and equipment, see
Notes 6 and 8) and acquisitions of rights of use (see Note 21) of the fully consolidated reportable segments:
January - June 2022
Millions of euros Telefónica
Spain
VMO2 Telefónica Germany Telefónica
 Brazil
Telefónica Hispam Other companies Eliminations Total Group
Revenues 6,164  —  3,949  4,199  4,526  1,499  (887) 19,450 
External revenues 6,053  —  3,938  4,191  4,471  799  (2) 19,450 
Inter-segment revenues 111  —  11  55  700  (885) — 
Other operating income and expenses (3,910) —  (2,702) (2,485) (3,432) (1,421) 845  (13,105)
OIBDA 2,254    1,247  1,714  1,094  78  (42) 6,345 
Depreciation and amortization (1,075) —  (1,131) (1,133) (922) (94) 19  (4,336)
Operating income 1,179    116  581  172  (16) (23) 2,009 
Share of (loss) income of investments accounted for by the equity method   138      (4) (29)   105 
Capital expenditures (CapEx) 642    556  809  429  45  1  2,482 
Acquisitions of rights of use 187    340  321  264  7  7  1,126 
January - June 2021
Millions of euros Telefónica
Spain
Telefónica United Kingdom (1)
VMO2 Telefónica Germany Telefónica
 Brazil
Telefónica Hispam Other companies Eliminations Total Group
Revenues 6,095  2,628  —  3,743  3,318  3,945  1,547  (971) 20,305 
External revenues 5,968  2,609  —  3,731  3,310  3,895  798  (6) 20,305 
Inter-segment revenues 127  19  —  12  50  749  (965) — 
Other operating income and expenses (3,743) (1,709) —  (2,571) (1,839) (3,176) 8,835  784  (3,419)
OIBDA 2,352  919    1,172  1,479  769  10,382  (187) 16,886 
Depreciation and amortization (1,071) —  —  (1,192) (927) (984) (128) 163  (4,139)
Operating income 1,281  919    (20) 552  (215) 10,254  (24) 12,747 
Share of (loss) income of investments accounted for by the equity method     (65)     (1) (2)   (68)
Capital expenditures (CapEx) 720  933    508  647  501  107  (16) 3,400 
Acquisitions of rights of use 283  389    532  260  122  93  (251) 1,428 
(1) On June 1, 2021 Telefónica United Kingdom was excluded from the scope of consolidation (see Note 2).
Telefónica, S.A. 19

Condensed Consolidated Interim Financial Statements 2022    
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The table below shows the income, CapEx and acquisitions of rights of use of VMED O2 UK Ltd since its constitution on June 1, 2021 (see Note 2) until June 30, 2022. VMED O2 UK Ltd is a joint venture 50% owned by Telefónica and Liberty Group and is recorded under the equity method (see Note 9). The tables below show the information of the joint venture at 100%.
VMO2
Millions of euros January-June, 2022 June 1 to June 30, 2021
Revenues 5,996  993 
Other operating income and expenses (3,771) (640)
OIBDA 2,225  353 
Depreciation and amortization (2,065) (345)
Operating income 160  8 
Share of income (loss) of investments accounted for by the equity method 1   
Financial income
Financial expenses (457) (66)
Exchange rate differences and change in fair value of derivatives 523  (84)
Net financial expense 75  (148)
Result before taxation 236  (140)
Taxes (41)
Result for the period (100% VMO2) 195  (131)
50% attributable to Telefónica Group 97  (65)
Share-based compensation — 
Other adjustments 33  — 
Share of income (loss) of investments accounted for by the equity method 138  (65)
Capital expenditures (CapEx) (100% VMO2) 1,270  188 
Acquisitions of rights of use (100% VMO2)
64   

Telefónica, S.A. 20

Condensed Consolidated Interim Financial Statements 2022    
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The segmentation of assets and liabilities of the reportable segments is as follows:
June 2022
Millions of euros Telefónica
Spain
VMO2(1)
Telefónica Germany Telefónica
 Brazil
Telefónica Hispam Other companies Eliminations Total Group
Fixed assets 14,246  —  11,762  18,580  8,120  2,207  (9) 54,906 
Rights of use 1,419  —  3,360  2,140  1,196  105  (48) 8,172 
Investments accounted for by the equity method 263  11,874  —  —  164  360  —  12,661 
Financial assets and other non-currents assets 701  —  861  1,113  1,532  7,079  (3,405) 7,881 
Deferred tax assets 2,151  —  415  539  660  1,648  —  5,413 
Other current financial assets 40  —  53  57  565  7,059  (5,105) 2,669 
Non-current assets and disposal groups classified as held for sale —  —  —  —  39  —  —  39 
Total allocated assets 24,958  11,874  18,965  25,677  16,902  26,344  (13,579) 111,141 
Non-current financial liabilities 736  —  1,552  207  2,820  30,620  (1,021) 34,914 
Non-current lease liabilities 1,050  —  2,703  1,692  1,278  55  (24) 6,754 
Deferred tax liabilities 103  —  272  1,143  750  812  —  3,080 
Current financial liabilities 2,150  —  133  139  4,053  7,693  (8,781) 5,387 
Current lease liabilities 382  —  563  605  413  19  (18) 1,964 
Liabilities associated with non-current assets held for sale —  —  —  —  —  —  —  — 
Total allocated liabilities 16,065    10,149  9,939  14,148  42,494  (13,339) 79,456 
(1) The detail of assets and liabilities of VMO2 is detailed in a later table in this note.
Telefónica, S.A. 21

Condensed Consolidated Interim Financial Statements 2022    
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December 2021
Millions of euros Telefónica
Spain
VMO2 Telefónica Germany Telefónica
 Brazil
Telefónica Hispam Other companies Eliminations Total Group
Fixed assets 14,499  —  12,124  15,056  7,637  1,667  (14) 50,969 
Rights of use 1,433  —  3,349  1,701  1,064  99  (67) 7,579 
Investments accounted for by the equity method 263  12,129  —  —  128  253  —  12,773 
Financial assets and other non-currents assets 549  —  883  888  1,001  7,428  (3,402) 7,347 
Deferred tax assets 2,345  —  433  454  713  1,671  —  5,616 
Other current financial assets 40  —  70  56  838  8,379  (5,548) 3,835 
Non-current assets and disposal groups held for sale —  —  —  —  102  256  —  358 
Total allocated assets 24,971  12,129  19,953  21,461  15,628  29,544  (14,473) 109,213 
Non-current financial liabilities 2,140  —  1,627  11  2,778  31,288  (2,554) 35,290 
Non-current lease liabilities 1,082  —  2,781  1,317  1,192  55  (36) 6,391 
Deferred tax liabilities 119  —  291  1,040  594  558  —  2,602 
Current financial liabilities 1,019  —  89  199  4,620  9,669  (8,591) 7,005 
Current lease liabilities 378  —  548  460  295  14  (16) 1,679 
Liabilities associated with non-current assets and disposal groups held for sale —  —  —  —  —  134  —  134 
Total allocated liabilities 17,042    10,819  7,600  14,306  45,129  (14,367) 80,529 














Telefónica, S.A. 22

Condensed Consolidated Interim Financial Statements 2022    
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The detail of assets and liabilities of VMED O2 UK Ltd as of June 30, 2021 is as follows (amounts corresponding to 100% of the company, see Note 9):




VMO2
Millions of euros 06/30/2022 12/31/2021
Fixed assets 44,671  46,258 
Rights of use 968  1,058 
Financial assets and other non-currents assets 2,489  1,348 
Deferred tax assets 67  115 
Other current financial assets 287  214 
Total assets 51,939  52,333 
Non-current financial liabilities 19,658  19,185 
Non-current lease liabilities 774  885 
Deferred tax liabilities
Current financial liabilities 2,963  2,841 
Current lease liabilities 230  219 
Total liabilities 28,315  28,198 



Telefónica, S.A. 23

Condensed Consolidated Interim Financial Statements 2022    
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The detail of revenues of the fully consolidated reportable segments is as follows:

Millions of euros January - June 2022 January - June 2021
Segments Fixed Mobile Other and elims. Total Fixed Mobile Other and elims. Total
T. Spain (1)
6,164  6,095 
T. United Kingdom (2)
—  —  —    95  2,533  —  2,628 
T. Germany 399  3,540  10  3,949  400  3,342  3,743 
T. Brazil 1,357  2,842  —  4,199  1,136  2,182  —  3,318 
T. Hispam 1,582  2,944  —  4,526  1,363  2,574  3,945 
Other and inter-segment eliminations 612  612  576  576 
Total Group 19,450  20,305 
(1) The detail of revenues for Telefónica Spain is shown in the table below.
(2) On June 1, 2021 Telefónica United Kingdom is excluded from the scope of consolidation (see Note 2).

Given the convergence reached at Telefónica Spain due to the high penetration of the convergent offers, the revenue breakdown by fixed and mobile is less relevant in this segment. For this reason, the following revenue breakdown is shown, which Management believes is more meaningful.
Millions of euros
Telefónica Spain January - June 2022 January - June 2021
Mobile handset sale
283  154 
Ex-Mobile handset sale
5,881  5,941 
 Retailers
4,772  4,827 
    Wholesalers and others
1,109  1,114 
Total 6,164  6,095 

Telefónica, S.A. 24

Condensed Consolidated Interim Financial Statements 2022
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Note 5. Business combinations
Acquisition of mobile assets of Oi Group
On April 20, 2022, the closing of the transaction related to the Purchase Agreement for Acquisition of UPI Mobile Assets of Oi Group took place, and Telefónica Brasil acquired, on such date, all the shares of the company Garliava RJ Infraestrutura e Redes de Telecomunicações S.A. (Garliava), to which the mobile assets of Oi Group assigned to Telefónica Brasil had been contributed, in accordance with the segregation plan stated in the Oi Agreement (see Note 26).
The mobile assets of Oi Group finally assigned to Telefónica Brasil were the following:
Customers: approximately 12.5 million (equivalent to 30% of the total customer base of the mobile assets of Oi Group) – according to ANATEL’s February 2022 data;
Spectrum: 43MHz as national population-weighted average (46% of the radiofrequency of the mobile assets of Oi Group); and
Infrastructure: contracts for the use of approximately 2.7 thousand sites of mobile access (corresponding to 19% of the sites of the mobile assets of Oi Group).
This transaction brings benefits to the Brazilian telecommunications sector, expanding the capacity to make investments and create technological innovations in a sustainable and rational manner, contributing to the digitalization of the country through the construction and expansion of networks in cutting-edge technologies, such as 5G and fiber, which translates into services with better coverage and quality to users. In addition, the transaction has the potential to generate synergies for the Company, through the optimization of operating costs and efficient allocation of investments due to the integration of the incorporated assets.
At the date of preparation of these consolidated financial statements, the purchase price allocation is provisional. The following table presents the consideration, the fair value of assets and liabilities identified at the acquisition date and the preliminary goodwill (which once the adjustment and review process is completed could be used for tax purposes):
Millions of euros
Consideration 1,091 
Intangible assets
Licenses 506 
Customer relationships 22 
Property, plant and equipment 29 
Rights of use 129 
Deferred tax assets 53 
Trade receivables 79 
Other assets 30 
Cash and cash equivalents 13 
Lease liabilities (142)
Trade payables (24)
Provisions (245)
Other liabilities (55)
Fair value of net assets 395 
Preliminary goodwill (Note 7) 696 
The fair value of the licenses has been determined using the discounted cash flow method of the Income Approach, which considers the earning capacity of the asset. The amortization period of the licenses ranges from 5 to 15 years (average period of 10.04 years).
The fair value of trade receivables amounts to 79 million euros, which does not differ from the book value consisting of a gross amount of 81 million euros, net of estimated impairment losses of 2 million euros.
At the acquisition date, contingent liabilities have been recognized at fair value in the amount of 90 million euros.
The contribution of Garliava since its inclusion in the scope of consolidation and until June 30, 2022 was 68 million euros in revenues and 3 million euros in profit for the period.
Acquisition of Incremental
On March 21, 2022, Telefónica Tech completed the acquisition of 100% of the shares of the British group Incremental, one of Microsoft's fastest-growing business partners in the UK, for a 104 million euros consideration (including potential contingent payments linked to its future performance). In addition, at the closing of the transaction a payment was made in the amount of 91 million euros to cancel payment obligations of the acquired companies.
Telefónica, S.A. 25

Condensed Consolidated Interim Financial Statements 2022
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With this new acquisition, Telefónica Tech significantly increases its scale and competencies in Microsoft technologies, making it one of Microsoft's largest business partners in the UK.
At the date of preparation of these consolidated financial statements, the purchase price allocation is provisional. The following table presents the consideration, the fair value of assets and liabilities identified at the acquisition date and the preliminary goodwill:
Millions of euros
Share purchase price 104 
Payment obligations cancelled 91 
Total 195 
Intangible assets
Customer relationships 23 
Other intangible assets
Property, plant and equipment
Rights of use
Accounts receivable 11 
Other assets
Cash and cash equivalents
Lease liabilities (2)
Accounts payable (3)
Deferred tax liabilities (6)
Other liabilities (10)
Fair value of net assets 26 
Preliminary goodwill (Note 7) 169 
Acquisition of BE-Terna
On June 9, 2022, Telefónica Tech completed the acquisition of 100% of the shares of the German group BE-Terna, for a 191 million euros consideration (including potential contingent payments linked to its future performance). In addition, at the closing of the transaction a payment was made in the amount of 162 million euros to cancel payment obligations of the acquired companies.
BE-Terna currently has a highly qualified team of more than 1,000 employees in 28 locations in Germany, Austria, Switzerland, the Adriatic region and the Nordic countries, among other markets. With this new acquisition, Telefónica Tech significantly enriches its geographic scale and its professional and managed services capabilities across Europe.
At the date of preparation of these consolidated financial statements, the purchase price allocation is in the process of being determined. The analysis is expected to be completed in the next few months, within the twelve-month period from the date of acquisition established in the standard. The following table presents the consideration, the preliminary book
values of assets and liabilities at the date of entry in the scope of consolidation and the preliminary goodwill recorded in the consolidated statement of financial position as of June 30, 2022:
Millions of euros
Share purchase price 191 
Payment obligations cancelled 162 
Total 353 
Property, plant and equipment
Rights of use
Accounts receivable 15 
Other assets 12 
Cash and cash equivalents 18 
Lease liabilities (4)
Trade payables (12)
Deferred tax liabilities (3)
Current tax payables (6)
Other liabilities (14)
Accounting value of net assets 16 
Preliminary goodwill (Note 7) 337 
Telefónica, S.A. 26

Condensed Consolidated Interim Financial Statements 2022
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Note 6. Intangible assets
The composition and movements in "intangible assets" in the first half of 2022 and 2021 are as follows:

January-June 2022
Millions of euros
Balance at 12/31/2021
Additions Amortization Transfers and others Translation differences and
hyperinflation adjustments
Business
acquisitions
Balance at 06/30/2022
Service concession
arrangements and
licenses
7,328  132  (414) —  497  506  8,049 
Software 2,494  189  (664) 481  149  —  2,649 
Customer base 971  —  (175) 45  848 
Trademarks 276  —  (17) 21  282 
Other intangible
assets
42  13  (12) —  45 
Intangible assets in
process
614  382  —  (434) 23  —  585 
Total intangible
assets
11,725  716  (1,282) 51  696  552  12,458 
January-June 2021
Millions of euros
Balance at 12/31/2020
Additions (1)
Amortization Disposals Transfers and others Translation differences and hyperinflation adjustments
Balance at 06/30/2021
Service concession arrangements and licenses 6,573  159  (359) —  228  149  6,750 
Software 2,380  243  (610) (1) 407  55  2,474 
Customer base 1,238  —  (183) —  —  1,060 
Trademarks 512  —  (23) (207) —  17  299 
Other intangible assets 51  (8) —  (3) —  47 
Intangible assets in process 734  294  —  (4) (544) 485 
Total intangible assets 11,488  703  (1,183) (212) 88  231  11,115 
(1) Total additions of intangible assets until 06/30/2021, amounted to 1,271 million euros, including the additions corresponding to companies held for sale and sold companies during the first half of 2021 (see Note 2).


Telefónica, S.A. 27

Condensed Consolidated Interim Financial Statements 2022
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The gross cost, accumulated amortization and impairment losses of intangible assets in the first half of 2022 and December 31, 2021 are as follows:
Balance at 06/30/2022
Millions of euros Gross cost Accumulated
amortization
Impairment
losses
Intangible
assets
Service concession arrangements and licenses 16,182  (7,986) (147) 8,049 
Software 16,674  (14,013) (12) 2,649 
Customer base 5,055  (4,207) —  848 
Trademarks 951  (669) —  282 
Other intangible assets 869  (824) —  45 
Intangible assets in process 585  —  —  585 
Total intangible assets 40,316  (27,699) (159) 12,458 
Balance at December 31, 2021
Millions of euros Gross cost Accumulated
amortization
Impairment
losses
Intangible
assets
Service concession arrangements and licenses 14,456  (7,007) (121) 7,328 
Software 15,442  (12,938) (10) 2,494 
Customer base 4,888  (3,917) —  971 
Trademarks 901  (625) —  276 
Other intangible assets 910  (868) —  42 
Intangible assets in process 614  —  —  614 
Total intangible assets 37,211  (25,355) (131) 11,725