Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — 9M 2017 Earnings Presentation
36 slides from Telefonica Sa's earnings presentation, Oct 26, 2017
Slide 1: Form 6-K Telefónica, S.A.
Table of Contents FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of October, 2017 Commission File Number: 001-09531 Telefónica, S.A. (Translation of registrant’
Slide 2: Table of Contents
Table of Contents Telefónica, S.A. TABLE OF CONTENTS Sequential Page Item Number 1. Telefónica Group: Presentation on quarterly results January-September 2017 3
Slide 3: Results January – September 2017
Table of Contents Results January – September 2017_
Slide 4: Disclaimer
Table of Contents Disclaimer (hereinafter, reference Company “aspiration”, guarantee uncertainties and, circumstances (including all Authority presentation Spanish securities, the inpublic particular, National to of (ESMA) results athe This solicitation different the are future “purpose”, include in
Slide 5: Q3 Highlights
Table of Contents Q3 17 Highlights 01 Mr. Ángel Vilá COO Investor Relations Telefónica, S.A.
Slide 6: Q3 Highlights
Table of Contents Q3:digitalisation; LTE y); on €47.2Bn inSolid supporting spite (Sep-17) execution of RLAH customer improving o Incl. on dragging keysale lifetime priorities operating of-1.7 40% value p.p. Consistent Telxius: leverage 9M o Ramping-up EPS€45.9Bn; &and €0.44; differentiation profitab
Slide 7: Guidance and dividends
Table of Contents On track to ex-spectrum/Sales €0.20/sh. Cash deliver CashAround FYdividend outlook 16%14th 2017E 14.1% Dec-17; Guidance 2017€0.20/sh. Dividend Guidance Final To be 2017E Jun-18 paid in 9M €0.20/sh. 2017/18 17 (Organic) Cash Dividends MAINTAINING >1.5% to be 2.9% paid Revenues inA20
Slide 8: Financial summary
Table of Contents Summary: 11,746 8.9% OIBDA9.2% (3.3%) ex-regulation Financials 2,138 3.3% (0.3%) Q39M maintaining OIBDA 2.0% 17 Q3Net OIBDA 17trends Income Reported 12,274 vs.2,439 H1 Organic 2.9% • 9.6% 9M Reported OIBDA 3.8% 839 (14.7%) 4,095 margin Organic (1.9%) EPS expansion €0.44 2.8% in mil
Slide 9: Bottom line: net income and EPS
Table of Contents Bottom Net Mediaset Financial line Premium increased OIBDAandby D&A CU; 10%, impairment OI with Associates EPSin€0.44 Taxes Prisa9M and Minorities 2017 net effect (€m) Net+2.9% ofIncome VZ devaluation. reported Expenses 12,274 Q3: Q2 &+7.1% Contingency Q3: -€130m (6.6%)in+9.6% Q3 A
Slide 10: Free cash flow and net debt
Table of Contents Progressive 397 (€) +38.1% 603 747y-o-y improvement 69 OpCF Net Debt WCinInterest (€Bn) FCF FCF -4.8% Taxes (€m) -7.4% FCFStrong Q1 0.63Q2 FCF 1.6x Q3growth DPS 9M 16 49.6 (y-o-y) 9M48.6 17 2016 growth 48.8 0.32 2017 payments 48.5 y-o-y0.20 9M & 47.2 Others 17 FCF 45.9 growth compo
Slide 11: Organic growth and FX impact
Table of Contents (51) • UpGrowth Growth headwind fuelled to in September, H2by Growth 17organic at current organic • Negative contribution spot performance rates FX effect OIBDA: in • 9M added in OIBDA Q3 Organic y-o-y €457m FXgrowth (-5.4 (+€119m dragp.p.) was & FXTotal in offset impact Q3)+243m a
Slide 12: Revenue trends
Table of Contents Revenue segments, 2.7% Q3 TEF9M T.o Hispam o trends Continued exceptBrazil ramped-up improved Germany growth UK60 Spain Revenues oon bps Better high Germany to +14.3% performance value (y-o-y base Contribution y-o-y organic) o in “M4M” service Spain; +4.0% +3.4 and revs explains Ex
Slide 13: Data monetisation and ARPU
Table of Contents Revenue uplift improve with 3,804 reward ARPU (+5 oprogramme Being value growth p.p.) uprapidly for potential 1.7 based money GB/ o BRA: deployed: on month y-o-y Base successful Community organic 75% Avg. 12 countries •usage data Prepaid o data Video monetisation Traffic sharing, o
Slide 14: OIBDA and OpCF
Table of Contents Generating operational 9M transformation OIBDAprofitability excellence growth; 12.9%margin 11.1% Q1 andQ2cash expanding 9.2% Q3 OIBDA 9M 3.5% • +0.3 Q3 (0.9%) (y-o-y y-o-y p.p.TEF organic) y-o-y OIBDA T.• Hispam 9M Margin maintaining OpCF Germany 7.2% +9.2% trends Ex-reg Brazil y-o
Slide 15: Customer experience and loyalty
Table of Contents Upselling Speed Enriched premium from Smartphone 3rd & ARPU parties customer vs. existing insurance DSLuplift powered ~€15 customer experience: AURA included; inby TVrelationships our launch bundles ARPU Sky FTTXin cooperation “Fusion (customer the >~€8-10 Cognitive next#0”: 6M pre
Slide 16: Digital services and video
Table of Contents Digital+11% IPTV Sustained Brazil Energy Cybersecurity Services: & growth Retail y-o-y•differentiated in Top • New B2B Solutions 2 player: series (+17.8%offering •produced Gartner’s Movistar y-o-y) 58% by €3,864m Magic “Fusión” Movistar+ o/9MQuadrant Dig. •Cloud Sequential premiere
Slide 17: Network transformation
Table of Contents TGR: (+53%) p.p. customers) Critical VoIP progressing Incidents Total 19% Sep-16 Europe Full-7% on Sep-17 Stack UBB Latam y-o-y 12% VoWiFi &13 Enabling digitalisation (% customers) +84% digital 3590% 19 capabilities 8mCommercial 69% customers 18.6m Network (+31% FTTH launchtransfor
Slide 18: Digitalisation and AURA
Table of Contents At the forefront Engagement customer Lifecycle improving functionalities Security Data processes and customer Digital profile) Sharing Self-Organized of digitalisation to services Network leveraging increase Bundles over perception improve E2E Smart DRIVER AURA connectivity network
Slide 19: E2E digitalisation programme
Table of Contents E2E digitalisation channels Increasing TRANSFORM deployments • Reducing theoReducing Network OURprogramme assisted NETWORK capacity Reducing channels underway planning •unique All-IP interactions LEVER users oNetworks E2Einteractions service TO Back-office Network TRANSFORM quality
Slide 20: Digitalisation efficiency benefits
Table of Contents Digitalisation efficiency efficiency) Increase equipment: 17E) Network Platforms FTTH and Points Reduction bearing business &take (28%) Operations of Calls sale clear Organisation of: process (63%) FTTH tobenefits call Varenhancement --- vs. 12-17 center/access Improved 9M in Coppe
Slide 21: Digital channels and self-management
Table of Contents Digitalisation digital and FY customer Network 16 new FY …payment remote view Initiatives 17Ebeing FY assisted diagnosis methods 18E gradually promoting FY channels and 16 -24%FY adopted resolution, the incidents +36% 17E useFY group-wide of …digital self- 18E Online Initiatives …
Slide 22: Q3 Results
Table of Contents Q3 17 Results 02 Ms. Laura Abasolo CFCO
Slide 23: Spain: commercial momentum
Table of Contents Spain: orecovery: 2017 market-leadership Consistent (€) Recovered Clear “Fusión” ARPU focus momentum; in(+16% growth, network on convergence y-o-y), accelerating &focus service FBB on upselling (+13%) value quality in Q3Net Aug. Low 29% (2)adds oMid +4k oBest LTE: 2017 High UBB con
Slide 24: Spain: financials
Table of Contents Spain: p.p. 2017 (0.4%) 2,634 Q3 CapEx q-o-q) Service oImproved (1.3%) (-) 11.7% (0.6%) Handsets, Revenues 27% revenue 10.9% (2.4%) (2.0%) roaming-out, by 11.8% trends; (2.1%) segment 19%12.3% (5.1%) strong • Business content (y-o-y /sales OpCF (7.3%) organic) cost revs. (-1.8 2017
Slide 25: Germany
Table of Contents Germany: Q3 Contract 55%) MRS incremental 16)ex-reg: 2017 (0.4%) (+4% Data OIBDA OIBDA continued oy-o-y); monetisation Commercial (y-o-y synergies 183k gradual organic) net opportunity activities (~€115m improvement adds2017 (2.7 OinOpCF ahead Free p.p.) 9M)1.7% 15 o(0.1%) (€m) MSR
Slide 26: UK
Table of Contents UK: Sustained expanding: smartphone organic OIBDA y-o-y impacted 63% +55% organic top o/total by vs. line RLAH (0.9%) Q3growth (+1 16;p.p.) effect •2.1 Total in 2.0% GB spite (€48m) revenue per of 2.1% month RLAH 242 (3.1 growth • Q3 CapEx MSR p.p.) 16 658 oex-regulation Q4 +0.6% S
Slide 27: Brazil: commercial
Table of Contents Brazil: covered Growing +54%; net addsARPU Enhancing (700 share in strategic net 1.2x in Jan-Q1 adds best-in-class vsaccesses DTH in last Q281 Q3 7(higher Qs 29 value Q1 28 MHz Q2opositioning ARPU) New Q3 spectrum Aug contract o Contract o Contract in Fixed: 199 portfolio cities) +
Slide 28: Brazil: financials
Table of Contents Brazil: 9M: Healthy dragging -1.1%; execution Delivering MSR 1.9 of-0.8%) operational p.p. performance on growth; on Q3efficiency revenue synergies expanding (Q3: +3.8% y-o-y measures (OpCF profitability 2017 y-o-y) 9M; o OIBDA 7 on consecutive €392m; data 2017 (y-o-y revs. €939m S
Slide 29: HispAm
Table of Contents HispAm: for mobile; commercial Sound (y-o-y LTEorganic) contract +41% (2.8m; Improved portfolio fixed) (+15%) 9M 6.2m) commercial •driving CHILE: and<E LTE signs Back traction (+55%) FTTx/Cable oftorecovery positive Accesses accesses Pay innet mobile (y-o-y) growth TV adds FTTx/c
Slide 30: HispAm: Mexico, Chile, Colombia, Argentina
Table of Contents oHispAm: (inflation (Q3 revs 9MMobile •Revs. &MEXICO: OIBDA data Solid driven + 30.6% revs. revenues performance Consolidating costs, & acceleration OIBDA higher & OIBDA; amid Q1 +37.8%; positive Q3: Q2 continued +38.2%; OpCF Q3rev. 9M 9M+26.8% OpCF growth €2.7Bn 9M +3.5 commercial
Slide 31: Telxius
Table of Contents Telxius: OIBDA: Tenants the construction 2 new(#) Solid €261m cables oas Tenancy operational planned o(to OpCF: beratio active Q1€126m momentum Q2 improved inQ3 2018) Q3 Q19M +0.03x Revenue Q2 o MAREA Q3 Q39M vs. Tenancy (y-o-y •Dec. (connecting Robust 16 organic) ratio inOIBDA Q3
Slide 32: Deleverage
Table of Contents Deleverage 1,321 3,226 (1,275) OpCF on ex- €45,947 strong Working organic 2.72x NetDec-16 FCF interest and FCF Tax disposals Shareholder Dividend NettoFinancial Pre- FCF FX spectrum Debt MTM(€m) capital & Sep-17 ColTel payment Post-closing Dealminorities, closed:remuneration ND/OIB
Slide 33: Stronger balance sheet and maturities profile
Table of Contents Stronger balance maturities Undrawn credit USD Liquidity Bonds sheet and € Bonds position creditLatam profile Dec-16 Total Sources Europe 2017E ofLatam 2018E long-term Sep-17 2019E financing ex-VZ Financing lines (YTD)Liquidity & Net syndicated Debt position maturities credit (Sep-
Slide 34: Summary
Table of Contents •Summary: started Growing consistent Best technology with OIBDA, strategy: executing simplification platforms, solid growth on FCF fundamentals and and IT generation E2E digitalisation systems task• Delivering and integration, someinorganic yearsprofitable ago development actions o
Slide 35: Investor Relations contact
Table of Contents For further information: Investor Relations Tel. +34 94 482 87 00 ir@telefonica.com www.telefonica.com/investors
Slide 36: Signatures
Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Telefónica, S.A. Date: October 26, 2017 By: /s/ Laura Abasolo García de Baquedano Nam