Slide 1: Results January–September 2019
RESULTS JANUARY | SEPTEMBER 2019
Slide 2: Disclaimer
Disclaimer This document and the Q&A session may contain forward-looking statements and information (hereinafter, the “Statements”) relating to the Telefónica Group (hereinafter, the "Company" or "Telefónica") or otherwise. These Statements may include financial forecasts and estimates based on assu
Slide 3: Q3 19 Highlights
Q3 19 Highlights Mr. Ángel Vilá COO
Slide 4: Q3 overview | Advancing on strategy execution
Q3 overview | Advancing on strategy execution Relevance Larger footprint, technologically more advanced UBB leaders in Europe & LatAm, 123m premises passed (54m own network, +11% y-o-y) #1 Virtualisation (~100m customers in “Full Stack”, +6pp) and AI Better and more loyal customers 346m accesses: Mo
Slide 5: Accelerating strategic actions in Q3
Accelerating strategic actions in Q3 Further efficiencies Spain: Redundancy program 2019 (run rate of direct savings ~€210m from 2020; accretive in FCF since year 1) Digitalisation savings (80% achieved in 9M) Continued CO’s switch off in Spain (157 in Q3; >400 in the past years; ~2k in 2021) Legacy
Slide 6: Key operating metrics
Key operating metrics +11% 67% FTTx/Cable Penetration o/FBB 14.2m accesses +8 p.p. y-o-y +16% 54% > Avg.lifetime value LTE LTE penetration Improving sustainablity 129.8m accesses +10 p.p. y-o-y UK: >8 yrs mobile contract Fusion Spain: >5yrs 4.3% -0.2 p.p. Avg. Rev./Access Churn Q3 y-o-y Q3 y-o-y Bet
Slide 7: Key financial metrics
Key financial metrics 9M 19 Q3 19 Reported Reported Organic Reported Reported Organic € in millions IFRS 16 y-o-y y-o-y IFRS 16 y-o-y y-o-y Revenues 36,023 0.7% 3.6% 11,902 1.7% 3.4% OIBDA underlying 12,611 4.243 OIBDA 11,450 (4.9%) 1.1% 2,748 (31.9%) 0.8% €1.7Bn restructuring provision in Spain OIB
Slide 8: Right on track for 2019 guidance | 9M in line with expectations
Right on track for 2019 guidance | 9M in line with expectations Operating 2019 guidance Guidance 2019E 9M 19 (organic) Revenues Around +2% 3.6% Expect solid Q4 OIBDA to deliver full-year OIBDA Around +2% 1.1% guidance CapEx/Sales Around 15% 14.4% ex-spectrum 2019 DIVIDEND €0.4/SH. CASH Dividends to
Slide 9: Solid fundamentals
Solid fundamentals Revenues y-o-y organic y-o-y reported +6.3% LATAM Delivering consistent growth trends +3.8% +3.4% GROUP +3.7% +3.0% BB & SoC 55% of total revenues; +2 p.p. y-o-y +2.7% +2.0% EUROPE Q3 Digital revenues +17.4% y-o-y Strong momentum in B2B (+3.7% y-o-y) Q3 18 Q4 18 Q1 19 Q2 19
Slide 10: B2B | Growth momentum
B2B | Growth momentum Business Scale Digitalisation opportunity 20% B2B Q3 y-o-y org. revenue Q3 y-o-y org. revenue % o/total group revs B2B Digital Services 6.5% 38.4% 9M 3.7% 30.7% €1.6Bn 1.3% 23.9% +29.3% y-o-y Total Europe Latam €2,263m €1,270m €993m Cloud Security IoT Cloud IoT Tailor-made so
Slide 11: B2C | Data-centric value proposals
B2C| Data-centric value proposals Maximising monetisation Integrated Devices • Data and handset flexible offer (GER) (following UK) +High-end devices +Financing Q3 Handset +17% • Unlimited data launch in UK (entry level >blended ARPU) Revenue ARPU +Renewals • Flexible data (roaming and data-sharing)
Slide 12: Leading-edge technological platforms
Leading-edge technological platforms 1st Platform & 2nd Platform Network Sharing & Wholesale agreements 123m UBB premises passed VDSL; Cable (24m homes passed) 54m own (+11% y-o-y) 67% Digitalised 5G 79% LTE Coverage processes 4G/2G (95% Europe) 33% Full Stack customers migrated Switching off Legacy
Slide 13: Digital Transformation at the core
Digital Transformation at the core 80% achieved (o/FY 19E) Gross savings • >75% personalized offers (SP) Digital Sales +27% y-o-y Experience Online • >60% FTTH sales y-o-y (BRA) >€1Bn (45% o/savings) operations • >27% y-o-y (UK) >€340m -13% y-o-y • Cognitive Contact Centers (>34M Digital Customer ca
Slide 14: Q3 19 Results
Q3 19 Results Ms. Laura Abasolo CFCO
Slide 15: Spain | Solid value strategy
Spain | Solid value strategy Convergent accesses Convergent ARPU Sep-19 y-o-y €/month; y-o-y +1.7% 21.2% 90.6 7.4% 5.0% 4.8% 88.5 Total TV Mobile UBB Q2 Q3 22.9 million accesses (+5% y-o-y) More services per bundle 4.9 accesses/convergent customer (+0.1 y-o-y) M4M in Q3 Q3 churn 1.6% Mor
Slide 16: Spain | Strong improvement in Revenue and OIBDA trends
Spain | Strong improvement in Revenue and OIBDA trends Revenue OIBDA y-o-y organic y-o-y organic +0.7 p.p. q-o-q +1.8 p.p. q-o-q Growth for 9th Qs in a row Revenue improvement Service revenues +1.0% 0.1% Net content cost easing 1.0% (Q2: +0.3%) Increased commercial savings (E2ED) 0.3% (1.6
Slide 17: Germany | Robust commercial performance
Germany | Robust commercial performance +6% customer growth Sequential top-line improvement (+0.3 p.p.) y-o-y organic Contract net adds Revenue OIBDA My O2 app ranked “very good” in +392k the latest Connect test +1.9% +1.6% +1.0 p.p. q-o-q +301k (0.8%) (1.8%) Q2 Q3 Q2 Q3 Q2 Q3 €1,785m €1,865m €578m
Slide 18: UK | Continued strong financial and operational momentum
UK | Continued strong financial and operational momentum Reiterated market leading position Strong top and bottom line growth y-o-y organic Contract net adds Revenue OIBDA k (incl. M2M) O2 5G Launch (17 Oct 2019) Unlimited Data, Custom Plans +9.2% +496k +5.7% +392k +4.8% +4.1% Q2 Q3 Q2 Q3 Q2 Q3 €1,7
Slide 19: Brazil | Gaining customers & growing ARPU
Brazil | Gaining customers & growing ARPU Enhanced customer experience Transforming fixed business Total Mobile Market Share FTTH (premises passed; m) FTTH connected 1.7m 2.3m 32.3% 39.8% Contract 10.2 33 new cities 8.0 passed in 9M19 Market Share 31.9% (154 cities covered) 31.7% Q4 17 Q4 18 Q3 19 S
Slide 20: Brazil | Largest revenue growth in 15Qs, record-level margins
Brazil | Largest revenue growth in 15Qs, record-level margins Accelerating revenue growth despite legacy OIBDA margin expansion to 42.7% (+0.4 p.p.) Revenue 2019 OIBDA 2019 y-o-y organic y-o-y organic +2.2 p.p. q-o-q 2.6% +4.3 p.p. q-o-q 3.6% 0.4% (0.6%) Q2 Q3 Q2 Q3 €2,467m €2,507m €1,001m €1,071m
Slide 21: Hispam | Accelerating growth in value; contract and FTTx
Hispam | Accelerating growth in value; contract and FTTx Hispam South Hispam North Revenue 2019 OIBDA 2019 Revenue 2019 OIBDA 2019 y-o-y organic y-o-y organic y-o-y organic y-o-y organic 16.1% 16.3% 15.6% 13.6% (0.4%) (2.5%) (14.1%) (14.0%) Q3 9M Q3 9M Q3 9M Q3 9M Positive contract net adds in eac
Slide 22: Telxius | Accelerating tower expansion, increased cash visibility
Telxius | Accelerating tower expansion, increased cash visibility Towers Tenants Revenue / OIBDA # # 9 M y-o-y organic organic ex-one-time 2018 capacity sale +9.4% y-o-y +9.5% y-o-y 24,556 9.1% 18,130 667 580 6.1% 5.5% 796 965 4.3% 75 285 Q1 Q2 Q3 Sep-19 Q1 Q2 Q3 Sep-19 Revenue OIBDA • 9M: 1,090 tow
Slide 23: Q3 OIBDA & Net income | Non-recurrent factors
Q3 OIBDA & Net income | Non-recurrent factors OIBDA -€1,495m Net Income -€1,249m 391 267 (1,876) (10) (1,495) (1,402) (114) (1,249) Capital Gains TOTAL Restructuring TOTAL Restructuring Others Capital Gains Others factors Provisions factors Provisions Restructuring costs: enhancing profitability a
Slide 24: Currency headwinds minimised at FCF level
Currency headwinds minimised at FCF level FX negative effect dragging Revs. & OIBDA y-o-y Revenue (Q3: -2.0 p.p.; 9M: -3.7 p.p.) 9M FX impact OIBDA (Q3: -1.5 p.p.; 9M: -3.2 p.p.) FX drag softened y-o-y BRL easier comps in Q3 FX reduces OpEx FX reduces CapEx, FX increases Taxes & others NDebt
Slide 25: Steady net debt reduction
Steady net debt reduction Net Financial Debt €m € billions -2,781 ND/OIBDA ND/OIBDA ND/OIBDA 2.62x 2.49x 2.46X 41,074 (4,150) 1,529 595 (1,170) 1,101 38,293 (0.7) (686) 37.6 Dec-18 FCF Hybrids Shareholder Pre-retirement Net financial FX & Sep-19 Post-closing Sep-19 remun. (incl. commitments investme
Slide 26: Refinancing at historically low rates and longer tenors
Refinancing at historically low rates and longer tenors Sources of long-term financing Net Debt maturities 2019 YTD | €bn Sep-19 | €bn; not considering hybrid NC dates 0.5 6.9 1.0 Avg. debt life of 1.8 80.4% debt 10.7Y in fixed rates (9.0Y Dec-18) 1.5 5.1 1.1 4.6 1.0 Cash > gross maturities € Green
Slide 27: Conclusion
Conclusion Mr. Ángel Vilá COO
Slide 28: Q3 Summary
Q3 Summary Best-in class customer profile Technological advantage Increasing customer lifetime value UBB/FFTH 123m; LTE cov. 79% Continued focus on digitalisation Reliable & Solid growth Efficiencies and transforming customer relationship Revenue +3.4%; OIBDA +0.8% org. y-o-y Net debt lowered for 10
Slide 29: For further information: Investor Relations
For further information: Investor Relations Tel. +34 91 482 87 00 FOLLOW US: ir@telefonica.com www.telefonica.com/investors