Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — IPO Roadshow (June 2007)
32 slides from Telefonica Sa's IPO roadshow presentation, Jun 19, 2007
Slide 1: Telefonica's US$ Bond Issuance: Benchmark 2007
Telefonica S.A. June 2007 Telefonica's US$ Bond Issuance: Benchmark 2007 Disclaimer Index Consistently delivering on operational targets Debt highlights Cash Flow allocation for shareholder remuneration Rapid deleverage progress Prudent liquidity management Facing comfortable debt maturities in comi
Slide 2: Disclaimer
Disclaimer The information in this presentation is not complete and may be changed. This presentation and the accompanying preliminary prospectus supplement and prospectus are not an offer to sell nor do they seek an offer to buy these securities in any jurisdiction where the offer or sale is not pe
Slide 3: Index
01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed issue 06 Conclusion Index
Slide 4: Consistently delivering on operational targets
(1) According to guidance criteria GUIDANCE 2003 2004 2005 Revenues 12% / 15% 17.2% OIBDA 10% / 13% 12.3% OI 12% / 18 % 16.1% Revenues 7% / 10% 8.6% EBITDA 5% / 7% 6.0% EBIT 15% / 18 % 15.5% Revenues 5% / 8% 6.0% EBITDA 6% / 9% 12.5% EBIT 18% / 21 % 29.7% ? 2006 Revenues 34% / 37% 38.8% OIBDA 26% /
Slide 5: ...outperforming on financial commitments
Financial Refinancing strategy: €26bn (1st phase €18bn bonds in 18-24 months) Net debt + commitments below 2.5x OIBDA in the medium term BBB+/Baa1 as rating floor (starting with negative outlook) Reinforced by €1.5bn net financial investments 2006-2007 01 ....outperforming on financial commitments..
Slide 6: Index
Index 01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed issue 06 Conclusion
Slide 7: Telefonica is a multiservice and global reach operator
Telefonica is currently a multiservice and global reach operator... 02 (#2) (#3) (#2) (#2) (#2) (#2) (#2) (#2) (#2) (#2) (#2) (#3) (#1) (#1) (#1) (#1) (#1) (#1) (#1) Leading (# 1 or 2) position in markets operated, enhanced by recent Cesky (Jul.05), O2 (Feb.06) and ColTel (May.06) acquisitions Note:
Slide 8: Offering integrated services to the largest international customer base
.... offering integrated services to the largest international customer base BUSINESS LINES MARCH 2007 (Millions) 43.2 * 148.9 TOTAL 206.5 13.3 ** 1.1 Accesses Evolution (Millions) 206.5 154 98 68 2000 2003 2005 1Q07 X3.0 * Includes unbundled loops ** Includes wholesale accesses except unbundled loo
Slide 9: Telefonica: worldwide leading operator in the telco sector
CF generation Profitability Growth Clients Telefonica: worldwide leading operator in the telco sector... Telco operator in the World by customers in 2006 (just behind China Telecom and China Mobile) 3rd Listed Telco service provider in the World by net income in 2006 (following closely China Mobile)
Slide 10: Index
01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed issue 06 Conclusion Index
Slide 11: Sustaining top financial performance in 2006 and 1Q07
Sustaining top financial performance in 2006 and 1Q07... 03 Note: TPI has been discontinued in 2006 following Telefonica's acceptance of Yell's offer on July 4th 2006. Assuming constant exchange rates as of 2005. Incorporating Telefonica O2 Czech Republic and O2 from January and February 1st 2005, r
Slide 12: ...outperforming most major telco companies
(1) OIBDA: OI + D&A (2) OIBDA: OI + D&A. Results adjusted for special purposes. (3) OIBDA: EBITDA adjusted for special factors as defined by company (4) OIBDA: EBITDA as defined by company (5) OIBDA: Gross Operating Margin as defined by company (6) OIBDA: EBITDA as defined by company . Year ended Ma
Slide 13: Leveraged our diversification, with a solid position in each business
....as we leveraged our diversification, with a solid position in each business... Assuming constant exchange rates as of 1Q06. Incorporating O2 (consolidated since Feb 2006), Telefonica Telecom in Colombia (consolidated since May 2006 in Telefonica Latinoamerica), and Iberbanda (consolidated since
Slide 14: Continuous focus on cost management to keep profitability
....and a continuous focus on cost management to keep profitability (1) Assuming constant exchange rates as of 1Q06. Incorporating O2 (consolidated since Feb 2006), Telefonica Telecom in Colombia (consolidated since May 2006), and Iberbanda (consolidated since July 2006) from January 1st 2006. Exclu
Slide 15: Telefonica Espana: high commercial activity focused on value customers
Telefonica Espana: high commercial activity focused on value customers Total accesses1 (in thousands) 44,756.6 44,152.6 +604.0 Dec06 Mar07 +5.5% Fixed Telephony Accesses (in thousands) 15,920.3 15,949.9 - -29.6 Dec06 Mar07 - -1.2% +7.6% Retail Internet Broadband Accesses (in thousands) 3,992.7 3,742
Slide 16: Telefonica Espana: strong quarter on growth & profitability
Telefonica Espana: strong quarter on growth & profitability Revenues (€ in millions) 1Q06 4,772 5,033 1Q07 +5.5% 1Q06 46.2% 48.5% 1Q07 +2.3p.p. OIBDA Margin (%) Sound top line growth driven by customer expansion. Robust financial performance in terms of growth and profitability, led by the strength
Slide 17: Telefonica O2 Europe: growing customer base
Telefonica O2 Europe: growing customer base 03 Accesses (in thousands) 1Q06 36,350 39,196 1Q07 +7.8% United Kingdom Mobile Mobile 1,643 Broad Band Mobile Contract 1Q07 1Q06 1Q07 1Q06 (thousands) 283 438 1,966 1.5x 1.2x Germany1 Czech Republic Note:O2 Germany consolidates Telefonica Deutschland (y-o-
Slide 18: Telefonica O2 Europe: tackling mobile pressures
Telefonica O2 Europe: proactively tackling mobile pressures & selectively exploiting BB growth opportunities 1Q06 1Q07 Revenues 1 (€ in millions) Czech Republic: stabilization of fixed through BB, and mobile growth focused on high value (1) On a comparable basis (January-March for both 1Q06 and 1Q07
Slide 19: Telefonica Latinoamerica: solid fundamentals driven by mobile and broadband
Telefonica Latinoamerica: solid fundamentals driven by mobile and broadband Revenues (€ in millions) 1Q06 4,317 4,685 1Q07 +8.5% 1Q06 35.4% 36.6% 1Q07 +1.2p.p. OIBDA Margin (%) Sound top line growth driven by mobile expansion Healthy profitability across countries with 12.1% OIBDA growth Q107 vs. Q1
Slide 20: Telefonica Latinoamerica: healthy growth in all major markets
Telefonica Latinoamerica: Healthy growth in revenues and OIBDA in all major markets Brazil 1 1,801 +2.8% 749 +2.8% Argentina 561 +21.0% 217 +29.7% Chile 423 +10.0% 164 +22.5% Peru 370 +9.7% 144 +0.3% Colombia 352 n.m 100 n.m. Venezuela 520 +25.4% 242 +39.3% Mexico 315 +66.2% 22 c.s. Central America2
Slide 21: Index
Index 01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed Issue 06 Conclusion
Slide 22: Debt highlights
04 Debt highlights Debt in Latam currencies reaches around 2 times Operating Cash Flow and 1 time OIBDA When adding USD debt hedge ratios*, debt rises to 2.3 times OpCF and 1.3 times OIBDA (*) Hedging degree varies across countries in the region Gross debt Cash + STFI Net debt 58 52 6 € Bn 1Q07 Debt
Slide 23: Cash Flow allocation for shareholder remuneration
Cash Flow allocation for shareholder remuneration ATTRACTIVE SHAREHOLDERS REMUNERATION Double 2005 dividend per share by 2009. Around EUR 3 bn of Dividends at current level Less than EUR 0.7bn pending execution on Share buy-back program in 2007 04 1st payment: €0.3/per share (May 17th 07) €744M assi
Slide 24: Limited and selective M&A
Limited and selective M&A Limited to net EUR 1.5 bn target until the end of 2007 04 Prudent payments: Completed divestures higher than investments Completed main transactions: Sale of O2 Airwave (€2.9bn) Sale of Endemol (€2.6bn) Acquisition of 10% TI (€2.3-2.7bn) [pending regulatory approval] Potent
Slide 25: Rapid deleverage progress
Rapid deleverage progress 04 BBB+/Baa1 as rating floor Net debt + cash commitments below 2.5x OIBDA in the medium term *TEF-02 pro-forma figures Net debt/EBITDA2 European Peers Capital Structure Comparison1 3.5 3.3 2.7 2.5 2.9 2.7 3.4 3.2 Moody's S&P 1 Source Standard & Poor's: Europe's Four Largest
Slide 26: Prudent liquidity management
04 Average debt maturity of 6.5y, longer than time needed for full repayment From €26bn maturities 07-08 last year down to current (below €3bn per year) accommodated figures €13 bond issuance (+750 investors) in 2006 [2nd largest bond corporate issuer] with 10 years average debt maturity. €12bn bank
Slide 27: Facing comfortable debt maturities in coming years
04 No need to access capital markets for refinancing 2007 and 2008 maturities subject to Latam refinancing, CP rollover and expected CF generation 2007 focus: smooth maturing profile by moving forward excess over €5bn in 2009 (done), 2010 and beyond 1.5 2007 2008 2009 2010 2.8 6.3 6.6 2011 9.7 € Bn
Slide 28: Index
Index 01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed Issue 06 Conclusion
Slide 29: Proposed Issue
Proposed Issue Only USD transaction in 2007 Issuer: Telefonica Emisiones, S.A.U. Guarantor: Telefonica, S.A. Rating of the Notes: BBB+ stable (Fitch/S&P) /Baa1 stable (Moody's) Issue Price: Par Security Type: Senior Unsecured Notes Form of Issuance: US Shelf Program , NYSE Listed Tranches: Long 5y F
Slide 30: Index
Index 01 Delivering Commitments 02 Telefonica Highlights 03 Business Line Performance 04 Financial Policy 05 Proposed Issue 06 Conclusion
Slide 31: Conclusion
Conclusion Telefonica has become a first class world telco operator, leader in Europe, through delivering on commitments Telefonica has the ability to de-lever being a Strong CF Generator. - - Underpinned by well balanced business and geographic diversification. - - Potential to extract value from s
Slide 32: Telefonica