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    Telefónica (BME:TEF) Expands Connectivity Partnerships, Is The 15% Undervaluation Story Convincing?

    Simply Wall St·11/01/2026 02:24:21
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    Telefónica (BME:TEF) has moved into the spotlight after two fresh partnerships, one focused on satellite connectivity in Europe and another on branded call identification for mobile users in Spain.

    These connectivity deals land at a time when Telefónica’s share price has been soft over the year, with a 1-year total shareholder return down 17.9%. This contrasts with a positive 3-year total shareholder return of 7.7% and 5-year total shareholder return of 21.3%, suggesting longer term holders have still seen gains overall.

    Scan the telecom space for other carriers pursuing similar connectivity and customer experience initiatives with our curated list of list of solid balance sheet and fundamentals (199 results)

    Telefónica’s fresh deals could be read as recognition of a stronger underlying telecom platform, or as sentiment chasing a weak share price. Which story does the current valuation really tell?

    Most Popular Narrative: 15% Undervalued

    Analysts following Telefónica currently frame the shares as trading below their narrative fair value of €3.96, compared with the last close at €3.37. This puts the recent connectivity partnerships in the context of a stock already priced at a discount in those models.

    The completion of large-scale portfolio optimization and monetization of non-core assets (sale of Argentina, Peru, Colombia, Uruguay, Ecuador, etc.) is reducing geographic risk and freeing up significant capital (€3 billion+). The strategy to focus on core markets (Spain, Brazil, Germany, UK) enables redeployment of resources to higher-return areas, improving free cash flow and ROCE.

    See why 52 investors see Telefónica as 15% undervalued.

    Result: Fair Value of €3.96 (UNDERVALUED)

    Still, high leverage and pressure in mature markets such as Spain and Germany could quickly reverse the Telefónica undervaluation story if cash generation disappoints.

    Find out about the key risks to this Telefónica narrative.

    Next Steps

    Mixed signals around Telefónica’s valuation are a reminder to review the full picture for yourself and decide how to act while sentiment is still split. To weigh that balance of concern and optimism directly, take a closer look at the 3 key rewards and 2 important warning signs.

    Looking for more investment ideas beyond Telefónica?

    If Telefónica has sharpened your focus on value and resilience, do not stop here. Broaden your watchlist now so you are not late to the next opportunity.