Telefonica Sa · BME:TEF

Telefonica Sa — Telefonica S A — H1 2017 Earnings Presentation

31 slides from Telefonica Sa's earnings presentation, Jul 27, 2017

  1. Slide 1: Form 6-K Report of Foreign Private Issuer

    SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of July, 2017 Commission File Number: 001-09531 Telefónica, S.A. (Translation of registrant’s name into English)

  2. Slide 2: Table of Contents

    Telefónica, S.A. TABLE OF CONTENTS Sequential Page Item Number 1. Telefónica Group: Presentation on quarterly results January-June 2017 2

  3. Slide 3: Results January–June 2017

    Results January —June 2017 Telefonica

  4. Slide 4: Disclaimer

    Disclaimer Telefónica objectives possible through current developments comprehensive Market the Q&A with Securities disclosure consolidated session) advice date all session) regarding views Commission. the hereof, nor acquisitions, Markets and related Group This public use any interim of and may exp

  5. Slide 5: H1 17 Highlights

    H1 17 Highlights 01 Mr. José María Álvarez-Pallete Chairman & CEO Investor Relations Telefónica, S.A.

  6. Slide 6: Q2: Executing churn efficiency

    Q2: Executing churn efficiency E2E €-5.0Bn confirmed digitalisation -0.2 y-o-y driving 2p.p. Investor Stronger on q-o-q strategy; Q2 andacross Relations margin Cognitive Balance structural the expansion Telefónica, board? Sheet + Digital quality ?Accelerating to Robust Agenda) 32.1% S.A. ? Demand FC

  7. Slide 7: Financial Summary

    Financial 3.7% spectrum) growth2.3% in Summary Revs., 4,676 12,03713.7% OIBDA, 1.8% H1 13.0% 17 2.9% OpCF Q2 17 OIBDA 2,273 inReported Q2 15.5% 8,179 • OIBDA Organic 17.5% 5.5% margin 4.3% Net Reported Income expansion 4,158Organic 6.1% 1,600 y-o-y 7.2% 28.9% € in• OIBDA millions Doubling 821 18.4%

  8. Slide 8: Upgrading 2017 guidance

    Upgrading ~-1.2 2017/18 Jun-18p.p.) €0.20/sh. Dividends (regulation full year Cash to guidance be -1.0 MAINTAINING paid p.p.) 2017E in OIBDA 2017Guidance calendar Amargin SOLIDOriginal year Expansion INVESTMENT amount Guidance up to to €0.40/sh.: 12017 GRADE p.p. Expansion UPGRADED ? Cash RATING div

  9. Slide 9: OIBDA to net income

    OIBDA (1,197) VZ/$ devaluation (710 (520) growth VZ/$ 5 1,600 Investor flowing in Q1) (56) Relations •to OIBDA H1netVZ income Telefónica, weight D&AH1OI over 2017 Associates S.A. total (€m) Group +5.5% Net reduced Financial reported toTaxes 0.3% +28.9% Minorities in Revs; +9.3%0.2% Net Reported in I

  10. Slide 10: Robust H1 FCF generation

    Robust H1 decrease 16 H1 FCF in17Q2 generation; OpCF 17 despite WC improvement Interest seasonality Taxes& y-o-y FCF -7.1% growth and52.2 q-o-q payments 2,094 FCFdividend (€m) & Others Growing payment growth FCF 49.6 •(y-o-y) FCF 48.6to 48.8 2016 accelerate 48.5 2017(279) y-o-y in H2 Q2+804 17 16Q2

  11. Slide 11: Accelerating organic OIBDA growth

    Accelerating organic +477m €70m) Telefónica, mainly •and FXS.A. FX impact OIBDA onadded BRLreverting growth €477m o FX effect OIBDA: positive to OIBDA limited trend Organic • Organic atinFCF Q1 growth level growth OIBDA &FX FX o impact trends -€51m impact ramping-up in in(€m) H1 Q2 FCF vs. Q1+191m 1

  12. Slide 12: Strengthening operating trends

    Strengthening 2.9% Handset o-y Investor organic) 1.5% Relations • OpCF 1.7% • Q2 organic sequential oOpCF Telefónica, All trends; segments growth improvement sustainable S.A. in accelerating; all segments +860 growth UK bps Q1Top stable Revenues 17line Q2• (y-o-y Outstanding 17 Margin Revenues organ

  13. Slide 13: Gaining ARPU and data usage

    Gaining ARPU Usage “O2 52% growth data (+7 Free” (+3 Data growth opportunity momentum p.p. p.p.) portfolio traffic vsoinQ1) Proven Latam: • FTTH (Germany) Increasing >€10 in data value recurrent premium (H1 monetisation accretion ARPU; 17) • Neuropricing: plans •ARPU Better higher (+5% &LTE uplift t

  14. Slide 14: New value creation opportunities

    New selling); optionality: Premium 16 “O2 wave Free”: improved TV ofBroader bundles; value Clearly conversion creation service ARPU ~€4 mobile offering opportunities accretive ratesVAS Enhanced from Building markets Cognitive partners operational FTTH loyalty and Additional UBB improved (Reducing ef

  15. Slide 15: Digital services

    Digital level platform towards 5% Services o/H1 “Fusión+”; Services: a11 •Dig. B2B 8.3m Investor Revs. H1 accesses exclusive progress Digital M2M: Relations oin Serv. content Large-scale Revs: theTelefónica, Revs. new +31.1% and ecosystem •ocontent Strong IPTV •S.A. Smart growth accesses distributio

  16. Slide 16: Global connectivity capabilities

    Global Connectivity capabilities management 5G Decision: “user-centric Resources: 14E2ED use customers (68 no-cell” cases p.) 52% Progress 5m12 7.4m 2.7m (+49%) award Investor onRoaming prepaid technology 63% is Relations essential OCS migrated Enablement evolution • Network Progressing Telefónica,

  17. Slide 17: Telxius

    Telxius: New contracts OpCF: Puerto tower Rico €123m Consolidating Revenues contracts & •USA, Developing OIBDA signed evolving solid Margin in results theas Spain, 2planned new Financials cancellation Germany cables 15,907 (to (y-o-y and & be 15,897 pass-through Brazil active organic) 31% (tenancy i

  18. Slide 18: H1 17 Results

    H1 17 Results 02 Mr. Ángel Vilá COO Investor Relations Telefónica, S.A.

  19. Slide 19: Spain: improvement base

    Spain: improvement 17 base May value 16 Q1largely Jun for 17 Improved •money: Q2 Segmentation on 17 q-o-q fiber otrading, Q2 TV, Improved (Fusión, 16 (53% exclusive Q3strengths ongoing o/FBB; 16TV, portability Q4content mobile) 16 upselling competitive +9Q1p.p.) & •17 TV 73% VAS 51 Q2 “Fusión” recov

  20. Slide 20: Spain: growth strong

    Spain: growth (+2.2 strong Q2 p.p. 15 Investor OIBDA y-o-y); p.p. potential Revenues (+1.4 q-o-q) 70.9% Relations improving p.p.&otrending q-o-q) Others OpCF/OIBDA FlatTelefónica, (-1.5% y-o-y o% upwards, Tariff o/SR iny-o-y; Q2 upgrade S.A. (+6.6 54% ex-TV solid +0.9 28% p.p.) cash and p.p. (“La 18

  21. Slide 21: Germany

    Germany: 16 in 33% 17 (+1.2 promotions Q2 Q3(+11 Q2 p.p. o17 16p.Margin Q4 sequentially; p.p.); Solid (0.9%) (4.7%) 16 cov. momentum; Q1 Handset (0.9%) 26.1% 17 80% Q2 -4.1% (2.6 (+4 12.0% sales 17realisation p.p.) oin4.0% 55% H1) • ~€20m •oPrepay of “O2 OIBDA 3.8% gross ofFree CapEx synergies •(+2%

  22. Slide 22: UK

    UK: 62% outdoor ?Margin acceleration Impact Customer o/total Q2 cov. from 17 (+1 & (+7 3.9% regulation lower focus p.p.) p.p.)•delivers 0.2% commercial MSR (1.0%) (-0.9 Regulation continued robust • p.p.) Avg. activity (8.7%) data performance to (0.7 grow: usage +0.3 p.p.) • Handset p.p. H1 per oMSR

  23. Slide 23: Brazil: commercial momentum

    Brazil: of adds high 30.6%; net MktAccelerating adds Sh. 42.3% 39% in FTTx inFTTx contract profitable andNet IPTV +4.6% adds growth o 2017 Reaching o Smartphones Contract (k) IPTV 69 Net cities Net accesses adds with adds (k)FTTH, 2017 (+33%), x2.3(k) Quality-centric 5 new x2.0 LTEcities x2.3 (+90%)

  24. Slide 24: Brazil: financials

    Brazil: postpay o-y reduction; Revenues Service Sustained growth 34.1% 6th Fixed consecutive o19.7% benchmark Data MSR/ Revenues +1.7 MSR: Q of performance p.p. 72% efficiencies +2.6 Revenues (+15 p.p.p.p. Revenues 19 and Financials vs Investor synergies Q2 16) (y-o-y Relations (y-o-y • Fixed 1.6% o

  25. Slide 25: HispAm: commercial trends

    HispAm: increase Smartphones improvement; +40%; 12.1% Cable 20 •FTTx COLOMBIA: on Investor Focus booming +18%; LTE easing onRelations Q3 value Pay data pricing 16 Sound TV Q4 driving 17% Telefónica, 16 +2%) pressure growth 10.3% Q1 ARPU amid 17in and 6.9% Q2 S.A. mobile acceleration intense solid 17

  26. Slide 26: HispAm: financials

    HispAm: +18.2%; 17 line OIBDA of Telefónica, positive Q2trend 17trends Q1: Growth •affected commercial OpCF S.A. +10.6%) impacted acceleration accelerating by commercial and trends. byfixed intense across y-o-y OpCF (Q2: intensity. competition; growth the +27.5% +5.7%; board H1 (+71.8% Q1: y-o-y Rev

  27. Slide 27: Deleverage

    Deleverage 2.78x OpCF Mar-17 ex- Working onFCF strong Shareholder Net organic Tax Dividend FCF Pre-and FXtodisposals MTM FCF spectrum &Net Jun-17 Financial capital Post-closing Interest Debt (€m) remuneration minorities ND/OIBDA payment retirement ND/OIBDA spectrum Others 2.91x &event others 2.86x (

  28. Slide 28: Solid liquidity position

    Solid >and Cash position gross Undrawn diversified maturities credit liquidity USD Liquidity Bonds Sources position € Bonds of long-term ex-VZ Latamlines financing Total & 2017E syndicated (2017 2018E YTD) Dec-16 2019E NetJun-17 Debt Financing maturities creditLiquidity facilities (Jun-17) position

  29. Slide 29: Closing remarks

    Closing remarks differentiation; upgraded; dividend network • Solid reiterated leadership acceleration Positioning &inquality organic for businesses sustainable growth; Revenues, •long-term Upfront CapEx OIBDA growthinvestments 24 andInvestor OpCF •fading Relations Sustained • Sound Telefónica, comm

  30. Slide 30: For further information: Investor Relations

    For further information: Investor Relations Tel. +34 94 482 87 00 ir@telefonica.com www.telefonica.com/investors

  31. Slide 31: Signatures

    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: July 27, 2017 By: /s/ Laura Abasolo García de Baquedano Name: Laura Abasolo Garc

Telefonica S A — H1 2017 Earnings Presentation on 6ix