Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Third Telefónica Investor Conference 2003
36 slides from Telefonica Sa's conference presentation, Oct 14, 2003
Slide 1: Telefónica Empresas - Third Investor Conference
Eduardo Caride Executive Chairman Telefonica Empresas THIRD INVESTOR CONFERENCE | maprip 2 O O 3 Telefonica
Slide 2: Safe harbor
Safe harbor “This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the int
Slide 3: Key messages
* We have placed special emphasis on strengthening our operations efficiency in 2002-03 + We havea clear set of priorities moving forward to capture the growth opportunity * We have ambitious though realistic targets for 2002-06
Slide 4: Commercially oriented business model
Commercial oriented compan! Households ee business model Telefonica Empresas efficient Individuals i Differentiatea soiutions for each customer need, (1) Source: Quarterly results January-June 2003 Leaner, more The role of Telefonica Empresas is to handle the needs of corporate customers (large comp
Slide 5: 2002 Revenues
2002 Revenues (**) Information Management Handle large amounts of information and make it available to third parties Integrated and customized solutions (¢*) Before Eliminations & Other Revenues; Atlanet not included (*)Do not consolidate in Telefénica Empresas’ financials, Voice Voice communication
Slide 6: Prepared to lead evolution of corporate customers' requirements
We are prepared to lead the evolution of corporate customers’ requirements with a solid value proposition » Telefonica offers corporate services through a specific unit to capture the maximum growth potential from the segment » We count with 5,000 employees worldwide to assure: » Particular focus on
Slide 7: Telefónica Empresas business lines
Telefonica Empresas Corporate Customers / Carriers + Housing and Hosting + Content Delivery + Applications 5 ene + Security + IP access and connectivity + Voice + International connectivity + Internet access services Telefénica Data International Wholesale Services (TIWS) Nationsl and Data and voice
Slide 8: We have a strong brand name
Telefonica Empresas We have a strong brand name... Tele Gelefinica .. and we benefit from its credibility, image, leadership position and financial strength 7
Slide 9: End-to-end services through deep local presence
We can offer end-to-end services through our deep local presence and networks.... » Local networks in ten countries with more than 1,500 POPs* » Spain ~ America » Brazil » Argentina » Chile » Peru » Colombia » Mexico » USA+ Puerto Rico + Europe + Germany » UK » 21,000 clients with more than * Points
Slide 10: Strong international presence and connectivity
..and a strong international presence and connectivity More than 9 billion voice High capacity fiber optic network minutes handled yearly (45,000 km) that carries all the international IP traffic generated by Telefonica International backbone with more than 200 peering agreements International data
Slide 11: Leading regional player
ae Allowing us to become the leading regional player Deep local coverage ... Leading and most reliable regional player in the Spanish and Portuguese speaking markets 10
Slide 12: Content
Content * We have reinforced our strategy of addressing corporate customers needs offering a solid value proposition * We have a clear set of priorities moving forward to capture the growth opportunity * We have ambitious though realistic targets for 2002-06 11
Slide 13: Strategic priorities announced in Sevilla
Strategic priorities announced in Sevilla * Serve Corporate Customers offering customized solutions through specialized sales force in our domestic markets ee © Turn profitable the businesses in new markets by achieving necessary scale, offering packaged solutions to targeted segments We have implem
Slide 14: Revenues will have grown by 7-10% during 2001-03
Revenues will have grown by 7-10% during 2001-03 €Mi i ‘Actual Terms Constant 2003 Operating revenues acta sal 1,867 as of 2002 1,857-1,957 1,778-4,869 2001-03 CAGR 1758, 4724 2001 2002 2003 (E) * Despite pricing pressure, increase in volume and the penetration of new services have driven the growth
Slide 15: T.Data Spain revenues grew at a stable pace
T.Data Spain revenues grew at a stable pace over the course of 2002 and 2003 € Millions GD custterm: Operating revenues in T.Data Spain CHD 200103 0408 2001 2002 2003 * Operating revenues will grow in T.Data Spain at 6/9% CAGR during 2001-2003 ° The number of total connections will grow by 24% (CAGR
Slide 16: Revenues in local currency grew significantly in America
Revenues in local currency have experienced a significant growth in America GH 2 CAGR Local currency in Millions T.Empresas Argentina T.Empresas Brasil {Argentinian pesos) {Brazilian reales) 193 208-218 402 150 a 2001 2002 2003 {E) 2001 2002 2003 (E) T.Data Mexico T.Data USA {Mexican pesos} (Us Doll
Slide 17: Refocused the company towards profitable growth
We have refocused the company towards profitable growth a € Millions || Constant 2003 forte and EBITDA 254-267 258-272 Geauga on ____ of 2002 C% > 2002-03 —— Growth 2003 (E) 65 perp -3,5% 7,3% 14,3% Revenues * EBITDA improvements beat by far the projections presented in Sevilla* for 2001-05 (over 90
Slide 18: Dramatic CapEx reduction
Reorientation of the business has resulted in a dramatic CapEx reduction € Millions CapEx Divested sctul Terms companies Emergia’s submarine system 149-157 =e 2001 2002 2003 (E) 33% 11% 8% % Capex / Revenues * CapEx reduction exceeds Sevilla’s target* * CapEx reduction has been driven by: Reassessme
Slide 19: Operating cash flow improvement
.. and operating cash flow improvement € Millions Operating Cash Flow* Actual Terms. 105-110 -689 + Positive operating cash flow by 2003 as a result of the EBITDA improvement and the CapEx reduction * Operating Cash Flow = EBITDA - CapEx 18
Slide 20: Content
Content * We have reinforced our strategy of addressing corporate customers needs offering a solid value proposition * We have placed special emphasis on strengthening our operations efficiency in 2002-03 * We have ambitious though realistic targets for 2002-06 19
Slide 21: Strategic priorities moving forward
Telefonica Empresas Our strategic priorities moving forward are: emphasis on clients, innovation and continuous efficiency improvements @ Efficiency and profitability * Improve current businesses and assets profital @rocus on corporate clients / Revenue growth + Broader responsibility on corporate c
Slide 22: Corporate customers' needs force us to evolve
forcing us to evolve » End-to-end customized solutions to deal with convergence of technologies * Voice -Data » Fixed - Mobile * IT-Communications » Coordinated and homogeneus management of their different locations ¥ Scalability — avoid high up-front investments » Outsourcing to focus on their core
Slide 23: Revenue growth from increasing share of wallet
* By adding value added services —Managed wireline & wireless VPNs Outsourcing (40% CAGR in Personalized Network Operating Centers) Our revenue growth will mainly come from increasing g ) our share of wallet > Increase share of wallet in current customer base + By capturing the growth opportunity of
Slide 24: Leading customers in migration to broadband
We want to lead our customers in their migration it?) i process to broadband : Financial institution case study Si aa : ib PCs yz. Serve : Ce inter. Essie \ “printer? Broadband HAN! WAN ~~" WAN/LAN (2-10 Mbps) , © Large data processing centers * Data processing centers as part High IT, ici F : P ete
Slide 25: eBA integrated broadband solution
Telefonica Empresas Server consolidation (LAN/mail) Intranet / corporate applications (ERPs, eprocurement,...) Teleworking Multivideoconference Advanced voice systems High-speed access at every location Broadband services Mobile services -Solt . se ee e B A debandaancha is Telefonica’s integrated we
Slide 26: Broadband access and hosting as drivers of eBA strategy
Broadband access and hosting will be major drivers for it?) i our eBA strategy i VPN access connections” Number of servers hosted in our datacenters IP VPNs ATM VPNs FRVPNs X.25 VPNs 2002-2006 ¢e) 2002 2006 (e) IP VPNs will increase their share relative to The number of hosted servers more tradition
Slide 27: Positioning in the outsourcing business
Telefonica has defined its positioning in the outsourcipa’ s i business ; Telefonica’s focus ‘a Outsourcing Solution LAN Desktop Telecommunication Telecom and IT Value added services infrastructures infrastructures management management management * Telefonica is already providing outsourcing servic
Slide 28: Increase market share of International Services
We will increase our market share of International hoe 5) Services in the Region i Key strategic actions under execution * Position ourselves as: «The specialist in the Spanish and Portuguese speaking markets The best carrier for multinationals in the region * Service provider for other carriers (wh
Slide 29: New services increase contribution to total revenues
ere New services will increase their contribution to toe ) total revenues ‘ Constant exchange rates, as of 2002 Expected evolution of revenue mix* » New services increase their share from 30% to 41% New Services * Solutions * Hosting & ASP * Intl Services » Hosting/ ASP expect a 40% CAGR, promoted b
Slide 30: Evolution of revenue mix per region
Evolution of the revenue mix per region "e Actual Terms Expected evolution of revenue mix per region * » All the regions will grow » Our international unit will double its Tiws America relative share Europe Spain 2002 2006 (E) (1) Before adjustments 29
Slide 31: Presence in Europe is a growth opportunity
Our presence in Europe represents a substantial me > growth opportunity i Constant exchange rates, as of 2002 Revenue Composition in Europe (Germany and UK) » Weare present in 2 of the largest European markets (Germany is 3 times Spain) » Revenues in hard currency Other » Evolution towards broadband
Slide 32: T.Data Spain efficiency measures
€ Millions T.Data Spain has implemented several measures to increase efficiency We will keep our current commitment of continuous efficiency improvement - Case Study: T.Data Spain That have resulted in significant EBITDA improvement in 2002-03 REVENUES » Approach change from (p x q) to (nx ARPU*) +
Slide 33: Strict control over investments
And strict control over investments [ C gQ Key strategic actions under execution » Leverage existing Telefonica’s assets in the region * Investment closely related to revenue generation (CPEs) * Strict investment management, based on profitability analysis CapEx * Distribution Incumbent Other Networ
Slide 34: Content
Content * Wehave reinforced our strategy of addressing corporate customers needs offering a solid value proposition * We have placed special emphasis on strengthening our operations efficiency in 2002-03 * We have a clear set of priorities moving forward to capture the growth opportunity
Slide 35: Ambitious though realistic targets moving forward
Telefonica Empresas has ambitious though realistic targets moving forward Constant exchange rates, as of 2002 2002 Targets for 2002-06 Proforma Solid revenue 1,758 ME 10-14% CAGR* growth... .. While keeping our current focus on 129 ME 46-52% CAGR continuous efficiency 1% 22-23% by 2006 and profitabi
Slide 36: 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: October 13 th , 2003 By: /s/ Antonio Alonso Ureba Name: Antonio Alonso Ureba Tit
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