Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Merger or Acquisition (March 2004)
19 slides from Telefonica Sa's merger presentation, Mar 9, 2004
Slide 1: Consolidation of leadership in Latin America
Consolidation of leadership in Latin America
Slide 2: Safe harbour
Safe harbour 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: Latin America: a region with an outstanding growth potential
Latin America: a region with an outstanding growth potential Strategic fit of the transaction Key terms Back-up
Slide 4: The wireless industry in Latin America continues to show robust growth prospects
The wireless industry in Latin America continues to show robust growth prospects [Grotal wireless customers (MM)_] [fetal wireless revenues (US$Bn)] >180 35 19 2003E 20086 2003E 2008E ° Low wireless penetration in a 500+ million inhabitants area ° Healthy wireless growth * Growth in the wireless ind
Slide 5: TEM knows how to exploit growth opportunities
TEM knows how to exploit growth opportunities TEM's managed customers TEM's net adds in Latin America (MM)' in Latin America in 2003 (000)? 30.3 3,456 2000 2001 2002 2003 1003 2003 3Q03 4003 "2008 figures incudes the acqustfon of TCO. PIndudes TCO since January ¥ Managed net adds
Slide 6: A natural strategic move for TEM
Telefoni . Moviles, S.A. A “natural” strategic move for TEM Leadership & ee a eae Acquiring critical consolidation in + | pecsepanione Chile, Argentina & 4 P Bara in large markets Consolidating operations in Central America Consolidation enhances #1in Venezuela 27% share in the markets fundamentals
Slide 7: We are consolidating our leadership across the region
Telefoni pods . . Maviles, A We are consolidating our leadership across the region TEM’s assets: Bell South’s assets: 30.3 MM customers 10.5 MM customers Me: xico #2 Ga) El Sayador 40.8 MM managed customers representing 35% of the total Latin American market Telefonica Méviles
Slide 8: While reinforcing regional & local scale
While reinforcing regional & local scale Mexico: #2 Guatemala: #3 Panama: #4 El Salvador: #2 Venezuela: #1 Nicaragua: #1 Colombia: #2 Brazil: #1 Ecuador: #2 ; Uruguay: #2 Argentina:#1 e pos ey entry in relevant markets as #1 o
Slide 9: Combined portfolio at a glance
Telefonica Moviles, S.A. Combined portfolio at a glance Pop's Wireless Subs Market Market Country (Millions) Penetration (000's) Share Position Chile Argentina Peru Colombia Ecuad Panama Guatemala El Salvador Ni Brazil! B 35% 20,656 Mexico 30% 3,454 Puerto Rico 3.9 34% 175 12% | 421.0 | | 40,804| Te
Slide 10: Telefonica Moviles is the best positioned player to capture the growth potential of the region
Telefonica Moviles is the best positioned player to capture the significant growth potential of the region Single wireless player operating in all key markets * Significant economies of scale * Market knowledge & local management expertise ° Proven track record of successfully integrating companies
Slide 11: We are acquiring growing & profitable operations
We are acquiring growing & profitable operations 2003 (MMUS$) Customers (000) Revenues EBITDA a Chile 1,301 215 48 22% Argentina 1,487 315 101 32% Peru 642 146 33 23% Uruguay 146 29 8 29% Venezuela 3,307 894 356 40% Colombia 1,915 374 127 34% Ecuador 816 293 1 31% Panama 420 129 74 57% Guatemala 60
Slide 12: Favourable conditions & attractive valuation
Favourable conditions & attractive valuation Comparable multiples EV/EBITDA references 2003 Nextel Int'l! 11.0x AMX! 9.6x Transaction 6.7x + Opex & capex synergies >US$1Bn ° Acquisition of 10 assets in 10 countries in a single transaction 2 100% ofthe assets
Slide 13: Transaction key terms & financing
Price & payment consideration Approvals leeded " Subjectto minorities rights in certain assets Exchange rate USB: 1.2366. Transaction key terms & financing Acquisition of 100% of BellSouth’s properties in Latin America’ Available to buy out all minorities stakes in equal terms Total enterprise value
Slide 14: Outstanding potential to increase revenues along with operating & capex efficiency
Outstanding potential to increase revenues along with operating & capex efficiency * Market rationalization in Chile, Argentina, Peru & Guatemala © Network opex (energy, rentals...), G&A, branding & advertising, handsets purchases, reduced time to market, transfer of P&S, best practices, integrated
Slide 15: Value enhancing transaction from year 1
Value enhancing transaction from year 1 ° Even considering initial costs from integration of operations in year 1, derived from customer migration & capex needs to increase TEM’s network capacity in Argentina & Chile ° And assuming constant exchange rates and debt financing in Euros, the transaction
Slide 16: Reinforcing TEM's position within the wireless industry
Telefonica Moviles, S.A. 62.5MM managed customers Reinforcing TEM’s position within the wireless industry Acclear leading company 40.8 MM in Latin America Ecuad cis Others tam: 3% Morocco 3% Colombia 3% Peru 3% Venezuela 5% Argentina 5% Chile 6% Brazil 33% 16 2008 figures, assuming acquisition of 10
Slide 17: Summary
Summary Consolidates leadership position in Latin America Enlarges local scale in major countries (Argentina, Chile & Peru) Expands footprint in a high growth region Enhances market fund: tals due to the reduction in the number of players Substantial benefits from economies of scale and synergies th
Slide 18: Back-up: stakes, shareholders, technology and competitors by country
Other Country stake" shareholders Technology Competitors Chile - Argentina kK BGHI:13.3% Peru Free-float: 2.6% TDMA-CDMA CDMA TDMA-CDMA TEM, TIM, Smartcom TEM, CTI-AMX, T.Personal, Nextel TEM, TIM & Nextel Uruguay 46.0% Motorola:32% Curtiembre:11% Leminconx: 11% Ancel (State) : Venezuela 78.2% G.Cis
Slide 19: 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: March 9 th , 2004 By: /s/ Antonio Alonso Ureba Name: Antonio Alonso Ureba Title: