Telefonica (TELFY) is facing fresh investor scrutiny in Germany as minority shareholders question cash-pooling arrangements at Telefonica Deutschland Holding AG involving hundreds of millions of euros. The German subsidiary placed 221 million, or roughly 95% of its year-end cash balance, into a liquidity pool with its Madrid-based parent group, according to filings cited in the source article. The issue could become more sensitive for investors because Telefonica delisted the German company in 2024 after lifting its long-held majority stake to 97%.
During a more than seven-hour online annual meeting, shareholders pressed executives on whether the cash pooling was conducted on arm's-length terms and whether the structure properly protected minority investors. Attendees also asked whether guarantees or collateral backed the funds, and whether the company would support an audit of related-party transactions. German shareholder association SdK had also written to the company's management and supervisory boards on June 30, arguing that the ownership structure, remaining minority stake, and close group integration created a greater need for transparency.
Telefonica said all intragroup transactions are audited by EY and carried out on market terms, including cash-pooling arrangements remunerated at market rates. Still, SdK director Marc Liebscher said the association has questioned the arrangement for three years without receiving really clear answers, while Mainberg Asset Management previously urged the company to provide more detail on internal financial transactions. For investors, the key issue could be whether related-party financing remains transparent enough after the delisting, especially as cash pooling can involve upstream lending between a subsidiary and its parent.