TEF''s CMD on November 4th, the first under new CEO Marc Murtra, has the potential to redefine the company for the next decade. We still believe that consensus expectations need to be lowered, and that a significant capital raise (up to EUR 10bn) is needed to fix TEF''s balance sheet once and for all. But whilst this leaves us cautious ahead of the event next week, we do see a clearer path to making TEF ''investable'' again. This report lays out why we believe a KPN-style ''reset'' is management''s best option, with new work on potential consolidation deals in Spain/Germany, and what consensus is expecting in terms of guidance next week (and why we see risk to the downside). Painful but necessary - we argue that a significant capital raise is management''s best option Despite the recent volume of MandA-related newsflow (mainly focused on Spain/Germany consolidation), our base case is not for TEF to announce a specific deal on the day of the CMD. Instead we expect mgmt. to focus on the standalone story first and, we hope, announce a capital raise which can be underpinned by the support of key shareholders. We believe that up to EUR 10bn would be needed to bring leverage down from ~4x to ~3x on a proportionate basis - though recent discussions suggest consensus expectations are significantly lower than this. As KPN found in 2013, going all-in to fix the balance sheet may be painful initially. But it would provide mgmt. with a clean slate to pursue future telco consolidation deals, and our analysis suggests significant synergy/market repair benefits from acquiring both 1and1 and Zegona. We remain below consensus - but TEF still have some positives to focus on at the CMD We forecast +1%/+2%/+3% revenue/EBITDAaL/OpFCF CAGR for the ''core'' TEF businesses which will be the focus for the CMD (Spain/Germany/Brazil). Our 2027 FCFE estimates are -16% below consensus given weaker EBITDAaL growth (Spain/Germany) and our expectation is that the VMO2 dividend will be cut to...