Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Investor Day (April 2011)
33 slides from Telefonica Sa's investor day presentation, Apr 13, 2011
Slide 1: Leading growth and profitability
Leading growth and profitability Julio Linares Chief Operating Officer, Telefónica
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute forward-looking statements about the Company, within the general meaning of the term and within the meaning of applicable securities laws, including financial projections and estimates and their underlying assumptions, statements regar
Slide 3: Content
Content Seizing the digital opportunity Accelerating transformation Recap
Slide 4: Seizing the digital opportunity
Seizing the digital opportunity
Slide 5: Capturing the digital growth leveraging on broadband and new services
Capturing the digital growth leveraging on broadband and new services Access & voice Broadband Services Beyond Connectivity Still market opportunities Mobile and fixed New market with high Market in our footprint broadband growth potential view complementary markets Capture remaining mobile Lead mob
Slide 6: Mobile broadband is the biggest market growth opportunity today
Mobile broadband is the biggest market growth opportunity today 1 Morgan Stanley 2010 2 Merril Lynch. Matrix Wireless Q4; AppsFire. January 2011; Morgan Stanley Blue Paper, February 2011 3 Cisco VNI 2010-2014. June 2010
Slide 7: Profitable mobile data monetisation is our key strategic priority
Profitable mobile data monetisation is our key strategic priority Extend smart device Lead the market away adoption with specialized from unlimited customer care data tariffs Customer innovation Tiered pricing Profitable Monetisation Yield management ARPU management Maximise customer Increase usage
Slide 8: Innovation focus on customer experience
Innovation focus on customer experience RCS : Rich Communications Suite NFC : Near Field Communications CDN : Content Delivery Networks
Slide 9: Tiered pricing is based on segmentation and customer needs
Tiered pricing is based on segmentation and customer needs Offers based on data caps Examples of execution Service specific tariffs for email, chat, social Type of service and use networks, browse... Limited volume with additional bolt-ons Limited volume tariffs for 100 MB, 500 MB, 1GB Maximum speed
Slide 10: ARPU management is increasingly important
ARPU management is increasingly important 1 Average contract (feature phone) and smartphone data attached rate customers across footprint MBB: Mobile Broadband FBB: Fixed Broadband VoD: Video on Demand RCS: Rich Communication Suite M2M: Machine to Machine
Slide 11: Yield management to reinforce customer profitability
Yield management to reinforce customer profitability Acquisition: manage tariffs, channels, handsets Customer lifetime: better understanding customer profitability and active management of profit drivers per customer High level strategies: optimization of retail activities, network development and c
Slide 12: Mobile broadband is the major growth driver for Telefónica revenues
Mobile broadband is the major growth driver for Telefónica revenues 1 Figures for guidance assume constant FX (average FY 2010), excludes hyperinflationary accounting in Venezuela and changes in consolidation perimeter MBB Penetration: MBB accesses with data attached rate/Total mobile customer base
Slide 13: We maintain our FBB strategy with a higher complementary approach
We maintain our FBB strategy with a higher complementary approach FBB Evolve our fixed offer towards full FBB proposals with increasingly higher bandwidth FBB leverages Reinforce our platforms to deliver full IP services from voice to video mobile Deliver full bundles (multiscreen, multimedia and in
Slide 14: FBB will continue to be a significant growth engine
FBB will continue to be a significant growth engine 1 Figures for guidance assume constant FX (average FY 2010), excludes hyperinflationary accounting in Venezuela and changes in consolidation perimeter FBB Retail Accesses : Include FO (Fiber Optics), DSL, cable modem and satellite FBB Penetration:
Slide 15: Beyond connectivity we are reinforcing our service ecosystem
Beyond connectivity we are reinforcing our service ecosystem
Slide 16: Our digital assets strengthen our service ecosystem
Our digital assets strengthen our service ecosystem ONE PLATFORM - ONE SERVICE - ONE ROLLOUT DH: Digital Home M2M: Machine to Machine TIS: Telefónica Ingeniería de Seguridad TLS: Telefónica Learning Services
Slide 17: Broadening our portfolio to new growth engines
Broadening our portfolio to new growth engines Video & DH IPTV, Videoclub, HD, Social features, Telepresence, CDN Apps BlueVia, Wac X.0, App Folder, eBooks, O2 Media, RCS Country focus rollout: Handset insurance, Merchant payments & NFC, Financial services Direct to bill, m-pass, Cobranded cards Ide
Slide 18: Services beyond connectivity will further foster top line growth
Services beyond connectivity will further foster top line growth Profit drivers Global approach & scale New business leverage on core assets Margin improvement from greenfield to run rate 1 Figures for guidance assume constant FX (average FY 2010), excludes hyperinflationary accounting in Venezuela
Slide 19: We are expanding our value oriented customer base
We are expanding our value oriented customer base Accesses _____ CAGR _____ ARPU uplift1 25% Dec-10 TEF. Millions 10-13 E _____ TEF. FY 2010 smartphone x1.5 VAR _____ penetration by 20132 VAR 22.2 x3.5 +17 p.p. MBB 23.7 +50% FBB 17.1 +7% Mobile Prepay _____ Contract _____ Smartphone Mobile 212.6 +5%
Slide 20: We are increasingly capturing growth opportunities
We are increasingly capturing growth opportunities Revenue Mix TEF _____ Services Access & Voice _____ BB _____ Beyond _____ Others Connectivity 75% 18% FY 2010 5% 2% CAGR -3%/-1% +12%/+16% > 20% 10-13 E1 64% 25% 9% FY 2013E 2% 1Figures for guidance assume constant FX (average FY 2010), excludes hyp
Slide 21: Accelerating transformation
Accelerating transformation
Slide 22: Our operational model is adapting to customer behaviour changes
Our operational model is adapting to customer behaviour changes Smartphone data traffic1 Quality rate 70% Smartphones may either support 3G or dual 3G / WiFi Tablets may either support dual 3G / 30% WiFi connectivity (65%2) or just WiFi WiFi 3G Before _____ From now on Fixed _____ Fixed Network ____
Slide 23: Leverage fixed and wireless technologies to meet customer demands
Leverage fixed and wireless technologies to meet customer demands Fixed access support: § Higher wireless access bandwidth (LTE/LTE Advanced) People § Closer sites to customers (Small Cells) IP + Optical + IMS _____ Apps § Customer indoor experience (WiFi) Cloud Home _____ CDN Wireless access suppor
Slide 24: Demand driven coverage expansion
Demand driven coverage expansion User speed _____ Fixed Access Coverage _____ Fixed CapEx per access4 TEF. %/Lines in service _____ TEF VAR UBB 1=25 Mbps _____ Selected urban areas 13% 26% -6%/-10% ADSL <25 Mbps _____ Nationwide coverage 98% 98% FY 2010 FY 2013E _____ FY 2010 FY 2013E Peak speed/car
Slide 25: Manage network traffic growth in an efficient way
Manage network traffic growth in an efficient way Traffic Evolution _____ Mobile access evolution TEF. Gbps in busy hour § Offload mobile data traffic to WiFi and femtocells VAR _____ x2 § Better smartphone interworking § Capacity increase (densification, sectorization, small cells Fixed _____ and t
Slide 26: Progressing our IT transformation with focus on execution
Progressing our IT transformation with focus on execution DCs and Mainframe _____ Global Applications From specific country applications... From fragmented country-based infrastructure... _____ ....to global solutions when applicable... Visionzx ...to highly resilient global DCs (for both internal _
Slide 27: Accelerate online evolution to a fully digital company
Accelerate online evolution to a fully digital company © Seamless commercial experience across channels (web, store) © Increase use of social networks: Online transactions. + For institutional communication, sales and customer care Ter relat od + To enhance professional communication ‘© Boost integr
Slide 28: One integrated company to optimise our cost structure and competitive advantage
opportunities Local and regional integration _____ Global units _____ Global companies Spain R&D P&S _____ New Telefónica I+D Integrated network, operations, distribution and commercial organization Unified customer care and online channel MNC _____ IT TGT € 1.5 bn Europe Cumulated Germany: Merger O
Slide 29: Working to maximize efficiency
Working to maximize efficiency OpEx _____ FY 2010 FY 2013E _____ CapEx _____ FY 2010 FY 2011E-13E Cum. TEF. Base 100 TEF. Base 100 CapEx < € 27 bn Interconnection1 20% Down trend due to _____ UBB MTR cuts 3% ~1/3 of cumulative (FO + VDSL) CapEx to capture Commercial _____ MBB 20% the digital world 3
Slide 30: Recap
Recap
Slide 31: Leading growth and profitability
Leading growth and profitability Seizing the _____ Profitable MBB growth monetisation as the key priority digital _____ New global services (verticals) and digital assets will be our new growth engines opportunity _____ We keep on capturing FBB and mobile business growth opportunities Best in class
Slide 32: Guidance recap
Guidance recap CAGR 10-13E Revenues +1%/+4% FY 2011E-FY 2013E Upper 30’s OIBDA margin _____ limited erosion from FY 2010 Cumulative FY 2011E — 2013E CapEx < € 27 bn FY 2010 adjusted figures for guidance include full consolidation of Vivo, Hansenet and Tuenti in the whole year (12 months) and exclude
Slide 33: 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: April 13 th , 2011 By: /s/ Ramiro Sánchez de Lerín García-Ovies Name: Ramiro Sán