Slide 1: Results January-December 2012
Results January-December / 2012
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefonica Group (going forward, "the Company" or Telefonica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which ma
Slide 3: 2012 Highlights
2012 Highlights A year of Operational Transformation and continuing to build positions of power in Digital Services TELEFONICA FURTHER SEQUENTIAL COST CONTAINMENT AND MARGIN EXPANSION GROUP WIDE CONTINUED EXPANSION OF UNDERLYING EPS & FCFS WHICH ARE TWICE THE ANNOUNCED DPS FINANCIAL FLEXIBILITY REGA
Slide 4: 2012 operational transformation for a sustainable model
Towards Sustainable Revenue growth Transforming Commercial Model Simplification across the board CapEx Optimisation Regained Financial Flexibility 2012 operational transformation for a sustainable model LatAm >50% of revenues in Q4 growing at 7.5% y-o-y organic Quality offer based on differential in
Slide 5: Transformation is already delivering results (I)
Transformation is already delivering results (I) 4 Further advancing towards revenue growth OIBDA margin progression Sustained CapEx efforts and improving OpCF (CHART) (CHART) (CHART) TELEFONICA FY 12 Underlying OpCF: € 12.9 bn (1.5%)
Slide 6: Transformation is already delivering results (II)
Transformation is already delivering results (II) 5 Financial flexibility regained Outstanding improvement in EPS along the year (CHART) (CHART) 15.2 21.0 FCFS: € 1.55 (CHART) 2.65x Net debt/OIBDA 2.36x Cash position excluding Venezuela Undrawn credit lines & syndicated RCF TELEFONICA
Slide 7: Continued sequential OIBDA growth and margin expansion
(CHART) (CHART) (CHART) (CHART) (CHART) (CHART) (CHART) (CHART) Continued sequential OIBDA growth and margin expansion TELEFONICA 2012 Underlying OIBDA and OIBDA Margin OIBDA (€ in millions) (CHART) OIBDA Margin OIBDA margin y-o-y TELEFONICA Consistent improvement in y-o-y trends OIBDA margin postin
Slide 8: Transformation for a brighter future
Transformation for a brighter future ARPU Churn OpEx New Commercial Model in Spain Selective Quality Growth in LatAm Capturing best clients & increasing their loyalty are compatible with a more rational commercial approach Increasing quality gap Leveraging on integrated infrastructure 22% contract T
Slide 9: Telefonica Digital to accelerate growth
Telefonica Digital to accelerate growth Protecting the core through comms innovation Developing new revenue streams in the digital space Maximise our customer base value Global deals / Fleet Management / Insurance telematics Operator billing Telefonica Dynamic Insights Instant servers eWallets / Wan
Slide 10: MBB & FBB driving growth across the footprint
MBB & FBB driving growth across the footprint TELEFONICA Record quarterly smartphones net adds in 2012: Q4 net adds: 1.7x Q3 boosted by T. Europe Net adds in Latam grew 51% y-o-y in Q4 Smartphones represents 80% of handsets sales in T. Europe Increasing weight of Mobile Contract over Mobile Base to
Slide 11: Solid revenue growth of Latam and mobile data
(CHART) (CHART) Solid revenue growth of Latam and mobile data TELEFONICA Improved y-o-y organic trends in Q4, across the board Top line growth of 0.7% y-o-y up to December ex- regulation Accelerating non-SMS data organic sales (+22.3% y-o-y in Q4) Right strategic approach to consumer pricing and bun
Slide 12: Further efficiencies on continued execution
Further efficiencies on continued execution TELEFONICA Excluding Workforce Reduction Plan provision in T.Espana in Q3 11 (€ -2,671 m). 11 (CHART) Very sound cost containment in Q4 despite record smartphone sales: Significant decline of commercial costs (-11.9% y-o-y) mainly driven by new commercial
Slide 13: CapEx reallocation into growth operations and services
CapEx reallocation into growth operations and services CapEx oriented to growth (y-o-y organic) Spectrum acquisition in FY 12: € 586 m mainly Brazil (€ 420 m) and Ireland (€ 127 m) LTE already acquired in core countries (Spain, Brazil, Germany, UK) Completed spectrum needs Executing further investme
Slide 14: T. Global Resources achieving significant results
T. Global Resources achieving significant results Accomplishments TELEFONICA 15% Application Simplification Delivered New World Class Data Centres in Brazil, Mexico & Spain Material IT Savings leading a reduction in IT OpEx+CapEx Increased leverage on joint purchases; +4 p.p. in last 12 months to >
Slide 15: Financial Summary: OpCF growth in Q4
TELEFONICA 2012 Chg y-o-y Financial Summary: OpCF growth in Q4 Underlying growth: Reported figures excluding major exceptional items, spectrum acquisition and changes in consolidation. Organic growth: Constant exchange rates, excludes changes in the perimeter of consolidation and hyperinflation in V
Slide 16: Latam: Quality growth amid enhanced profitability
(CHART) (CHART) T. LATAM FY 11 FY 12 Mobile Business (CHART) (CHART) More selective commercial approach Fixed Business (CHART) 33% 35% 9% 10% FBB/Fixed Pay TV/Fixed Consistent acceleration in revenue growth 7.8% 5.1% 6.4% 7.5% Revenue growth (organic y-o-y) Q1 12 Q2 12 Q3 12 Q4 12 0.8% 2.1% 4.8% 1.6
Slide 17: Brazil: Focus on quality delivering results
Brazil: Focus on quality delivering results T. LATAM Organic growth: Local currency and excludes the positive impact of the partial sale of our stake in PT in Q2 11. Strengthening position on value segments Accelerating sales growth (CHART) (CHART) Mobile accesses (Dec-12 y-o-y) Market Share (Dec-12
Slide 18: Brazil: Increased profitability
(CHART) (CHART) Brazil: Increased profitability T. LATAM (CHART) Integration benefits flowing to cash generation Q4 12 Q4 11 Lower Commercial /Network & Systems Costs Tower Sales Efficiency Gains Gradual OIBDA improvement Operational improvement along with integration benefits results in strong OpCF
Slide 19: Latam: Key Metrics (I)
Latam: Key Metrics (I) T. LATAM 18 (CHART) (CHART) Mexico Venezuela Colombia Operational turnaround process in due course Sequential revenue and margin improvement on the back of higher commercial efficiency, Iusacell agreement (from Q3) and non-strategic tower sales Net Adds ('000) Prepay Contract
Slide 20: Latam: Key Metrics (II)
(CHART) (CHART) (CHART) T. LATAM Latam: Key Metrics (II) Peru Argentina Chile FY 11 FY 12 (CHART) Sustained commercial momentum across services Healthy growth and improved profitability Solid commercial momentum remained in 2012 Strong revenue performance and better margin evolution throughout the y
Slide 21: T. Europe: A year of strategic change
Net adds: excluding disconnections in Spain in Q1 12. OIBDA and OIBDA margin exclude the impairment in T. Ireland in Q4 12. Financials year-on-year change are organic. T. Europe: A year of strategic change T. EUROPE Contract mobile AMPU sequential improvement (right balance between customer growth a
Slide 22: Spain: Progressive OIBDA stabilization
Savings in commercial costs (more than € 500 m in FY 12), mainly from new subsidies policy Large scale organizational restructuring (€ 257 m savings in 2012) Portfolio and processes simplification driving IT and service savings Churn efficiencies along with improved quality (customer claims -56% y-o
Slide 23: Spain: Movistar Fusion leading the Spanish market
Spain: Movistar Fusion leading the Spanish market T. EUROPE Movistar Fusion enhancing customer value in a lower price environment Margin break-even in December Fusion net adds On track for revenue breakeven in Fusion customer base in 2013 Impact on Revenues improving Increasing new revenue stream (f
Slide 24: UK: Commercial traction flowing through to financials
T. EUROPE UK : Commercial traction flowing through to financials (CHART) Total Revenue Q3 12 Q1 12 Q2 12 MSR ex-regulation(1) Further progress towards revenue growth Q4 12 Balancing profitability Excluding MTR cuts and new roaming regulation. Y-o-y in local currency OIBDA margin: Customer base expan
Slide 25: Germany: Market benchmark performance
(CHART) (CHART) T. EUROPE Outperforming competition Germany: Market benchmark performance Top-line expansion and efficiencies driving margins OIBDA margin growth on further efficiencies Fourth consecutive quarter of OIBDA margin expansion (+1.1 p.p. y-o-y in Q4; +1.7 p.p. in FY 12) OpCF increased 12
Slide 26: Net Financial Debt evolution
Reported 2011 OIBDA ex-Redundancy Program in Spain. (CHART) € in millions FCF Post Minorities Net Fin. Debt Dec-12 Net Fin. Debt Dec-11 FX, Commitments Cancellation & Other Dividend & Share repurchase Net Financial Debt/OIBDA 2.36x Net Financial Investments Net Financial Debt evolution Substantial d
Slide 27: €18.8bn long term diversified financing
(CHART) €18.8bn long term diversified financing (2012 & YTD 2013) TELEFONICA € in billions Strong financing exercise & improved liquidity while contained interest expense Bonds at Holding Syndicated Loans Other Spanish Retail Bonds at LatAm Other Loans ECA Record year, absent M&A financing Average d
Slide 28: 2013: recovering our growth DNA while reducing leverage
2013: recovering our growth DNA while reducing leverage 2013 GUIDANCE OPERATING GUIDANCE (in organic terms)(1): Revenue growth Lower margin erosion than in 2012 Similar Capex/revenues than in 2012 FINANCIAL GUIDANCE: Net Debt < €47bn Recovering growth DNA Further progress on deleverage Customer inte
Slide 29: 2013 Operating Businesses Priorities
2013 Operating Businesses Priorities In Spain, accelerate the transformation process through quality and simplification along with the new commercial model leading to lower OpEx & CapEx In UK, maintain commercial traction with market leading propositions while delivering cost effective 4G network ex
Slide 30: Conclusions
Conclusions 29 Reinforcing our growth model, solid execution of transformational initiatives: Progressive margin recovery driving OIBDA stabilization; improvement of underlying EPS along 2012 Benefits from best-in class diversification Outstanding growth in mobile data and T. Latam Improved commerci
Slide 31: Underlying growth: Reported figures, excluding exceptional impacts and spectrum acquisition and excluding the impact
Underlying growth: Reported figures, excluding exceptional impacts and spectrum acquisition and excluding the impact from changes in the perimeter of consolidation. The results of the Atento Group are included up to 30 November 2011 and those of Rumbo are included up to 31 October 2011. 2012 figures