Telefonica''s premium position in Spain/Brazil, and improvements at VMO2, sees the company perform relatively well in our STAMP survey this year. But Spain/Germany remain highly competitive and the BRL continues to depreciate, and our EBITDAaL/FCF forecasts remain materially below cons. Ultimately we view TEF''s problems as more structural, with 3.5x leverage on a fully adjusted basis and 1/3 of EBITDAaL still coming from LatAm. The new CEO is conducting a strategic review, with potential plans to lead tech/telco consolidation. But TEF will need to fix the balance sheet first, with a capital increase reportedly being one of the options on the table. Spain/ Brazil are good houses in bad neighbourhoods, but Germany remains weak STAMP revealed a mixed set of results for TEF, and as in previous years management appears to be doing a good job in difficult circumstances. Spanish NPS remains best-in-class on both the Movistar and O2 brands, however market churn remains high as more customers spin down to cheaper brands (particularly Digi/VOD). TEF Brasil is also in a strong position and VMO2 has improved from a very poor performance last year (blended NPS moving from -10 to +19), but Germany remains a weak spot. Overall we slightly lower estimates (EBITDAaL -1%/-3) with better Spanish trends offset by FX depreciation - our SOTP TP remains unchanged at EUR 3.20. What comes next depends on how ambitious TEF want to be... TEF''s new CEO installed with the support of the Spanish govt/ STC/ CriteriaCaixa, has highlighted that the company plans to play a ''leading part'' in both intra market and cross-border tech/telco consolidation. There are a few potential options; 1) acquiring 1and1 in Germany (synergy potential but expensive and with regulatory risk), 2) acquiring the 50% VMO2 stake from LBTYA (increainge leverage further) or 3) look to acquire tech assets (Murtra was formerly Indra Chairman). Given TEF''s challenging debt position, despite selling towers and some...