Slide 1: Form 6-K Telefónica, S.A.
Table of Contents FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of October, 2016 Commission File Number: 001-09531 Telefónica, S.A. (Translation of registrant’
Slide 2: Table of Contents
Table of Contents Telefónica, S.A. TABLE OF CONTENTS Sequential Page Item Number 1. Telefónica Group: Presentation on quarterly results January-September 2016 3
Slide 3: January – September 2016 Results
Table of Contents January – September 2016 Results_
Slide 4: Disclaimer
Table of Contents Disclaimer “Company” different and The These the information Except Company’s This be Neither or Investor exchange considered final other Statements document Statements as this Relations developments matters, aspects required business document filed or ofas“Telefónica”) any and can
Slide 5: Q3 16 Highlights
Table of Contents 01 Q3 Mr. Investor José 16Relations María Highlights Álvarez-Pallete Telefónica, S.A. Chairman & CEO
Slide 6: Q3: Sustainable improvements, back to growth on all fronts
Table of Contents Strategy Q3: Sustainable is working: improvements back to growth on all fronts Q3Deleverage & Operating Sustainable Investor Transformation voice Next Service Pick-up OpCF External €2.6Bn Strong Spain: +37.9% UK: Dividend 1Portfolio proof Better steps, has +10.8% Sustaining cash ne
Slide 7: Revised shareholder remuneration
Table of Contents New DPS 0.75 Revised 0.40 Pay-out •>90% ~50% Old Consistent 2Objective Allows 2017 Sustainable Investor New ofinancial €0.40/sh. Remuneration assuming 2016 for Relations organic recurrent pay-out, remuneration objectives toFCF be deleverage Telefónica, paid excess with ofto€4Bn/yr
Slide 8: 2016 Guidance
Table of Contents 2016 Guidance (Constant Service +4.4% 3CapEx/Sales Investor Outlook Guidance OIBDA Revenue 2016E FX Relations Around 2015; margin 9M >4%ex-VZ; Telefónica, 16 17% +3.0% Stabilising 15.3% ex-UK) Revenues S.A. vs. 2015 +0.4 p.p.
Slide 9: Financials: Q3 in a nutshell
Table of Contents 9M Financials 16 Q3 in 16 a nutshell Reported Revenue p.p. Net 9M (€ in16: Financial OpCFNegative 38,315 Organic (ex-spectrum) FXDebt (6.7%) FX Reported 49,984 effect to0.8% 6,256 0.7% in Organic 13,080 OIBDA +(1.4%) €(5.9%) neutralised in5.7% millions (0.2%) 2,144Reported at8.6% F
Slide 10: Robust FCF generation; improving trends
Table of Contents Robust FCF generation; improving 2016 Enhancing •1,500 746 69 FCFS 0.01 On EPS 50.10 +€1,109m Investor •the 1,206 +€754m (€) 0.15 0.13 FCF 2,315 (€) right FY16 0.31 0.19 oRelations (€ performance y-o-y Lower path in q-o-q FCF 0.25 0.54 millions) toinon spectrum, >€4Bn 0.47 0.41 del
Slide 11: FX impact easing in Q4
Table of Contents ease Strong 2016 FX Q1 Q2 negative OIBDA No +230 +135 FX +34 y-o-y Reported recovery Q3(2)comps •(y-o-y) perimeter impact +90 +9 y-o-ySequential impact OIBDA ininreported effect trends to Q4 (€dramatically fromimprovement (y-o-y) 16Q3 in (7.1%) OIBDA million) 16 ease of FX in H2 y-
Slide 12: Consistent growth of service revenues
Table of Contents Consistent Steady 2016 Revenues growth performance of(y-o-y service organic) ofrevenues service revs q-o-q Total •1.5% (0.2%) Strong Q2 Outstanding Q3Q3Service 5.5% Q3 total Handset 1.4% demand (0.2%) revenue BRAZIL •Revenues diversified Brazil sales •forQ3stable mobile & Service B
Slide 13: Accelerating organic OIBDA growth
Table of Contents 2.4 Accelerating 2016 9M 3.1% 5.5% OpEx •0.8% Q1 OIBDA 0.3 0.6 0.7 +240 Extracting 11% Q2 p.p. organic OIBDA discipline bps Q3 OIBDA BRAZIL 3.1% (y-o-y (redundancy ramped-up OIBDA savings organic GER (y-o-y organic) (9M continues 22% growth from organic) 16) OIBDA inprograms; (0.5
Slide 14: Outstanding OpCF growth and CapEx efficiencies
Table of Contents GER Outstanding •2016 10.8% 4.9% 1.4% 9MCost Brazil OpCF OpCF +5.7% o&Brazil &CapEx Spain margin (ex-spectrum; OpCF o (21% Spain efficiencies main 16.3% upturn o/total) (43% contributors OpCF on y-o-y o/total) +37.9% and higher ex-spectrum organic) optimisation +7.1% toy-o-y OIBDA
Slide 15: Positive customer progression and loyalty
Table of Contents Positive High-value Delivering Sep-16 LTE Smartphone Strong Pay •High-end Rewarding Differential TV/FBB penetration progression (y-o-y) customer pricing the loyalty: strategy FTTX+VDSL/FBB customer goods Excelling •power Seizing lifetime in Churn across Pay experience (further inth
Slide 16: Sustained data consumption growth
Table of Contents Sustained Significant MBB 65% 52% 47% Q1 Average CAGR 2.33 •2.15 1.38 High Evidence 1517.5 22.5 24.9 56% 53% 47% FBB Q2 o•data demand 15-18 dataupside 55% 52% 45% 15 traffic suggest Fiber: FTTH MBB Q3 (%) 55% 50% from explosion consumption requires 15 data consumption key data MBB
Slide 17: Data monetisation and disruptive offers
Table of Contents Disruptive MBB Q2 Smartphone 20.0% 12.0% Prepaid New +40% “O2 “Roaming Key Usage •LTE Avg. FTTx Q3 12 Reaping Developing Q3Investor Avg. 16 FBB Free”: engines x2.5 & 63% LTE prepaid Usage accesses >1Q3 uplift oUBB: data x2 GB usage/smartphone traffic 16.0% traffic ~10% prepaid 16 l
Slide 18: Digital services and holistic offering
Table of Contents Digital Holistic 16% Others Cloud 11% 62% 4% M2M 7% Security Q3 •“Magic 1.8 1.2 13Telefónica SECURITY: Digital Contribution p.p. Video • •VIDEO: o Services Total Latam: Video Services: CLOUD: Quadrant 1.5 oview oUK Investor 8th Services Q3: p.p. revs. Open beyond Security governmen
Slide 19: Network transformation and deployments
Table of Contents TGR: Enlarging Network FTTH LTE (+9 58% 86% LatAm Further 48% Big VoIP 66.1m •(x4 14 Advancing Full countries Investor y-o-y) p.p. Data Coverage accesses deployments Stack Continued oE2E progress y-o-y) New Quality platforms UBB ••Relations Germany: on-going Digitalisation in Spain
Slide 20: Q3 16 Results
Table of Contents 02 Q3 Mr. Investor Angel 16Relations Results Vilá CSFOTelefónica, S.A.
Slide 21: Spain: commercial momentum
Table of Contents Spain: Net 0.0 159 217 45 FBB UBB/“Fusión” Euros +3 Q3 FTTH Fiber 17% 16.4 13.4 47% Sep-15 15 49 Investor p.p. 15 p.p. adds •o (+3 fiber 33% UBB Early customers/FBB oQ2 Q3 (premises Richer Increasing 73.8 Sep-16 +0.1 Boost Increasing p.p. (‘000) 16 take-up TV results Relations q-o-
Slide 22: Spain: financials
Table of Contents Strong Spain: 2016 Total 1.1% 0.6% 1.0% wholesale Q1 Q1 Q2Revenues Handset • Q2 0.2% Continued •7.1% (0.5%) 43.3% +0.9 16 Stable Profitability Sustained Q3 Consistent OpCF Investor 16p.p. (18.2%) 30.9% OIBDAoRelations growth +2.1 16 Step revenue costsales (y-o-y margin Q3 p.p.trend
Slide 23: Germany
Table of Contents Germany: Contract 426 339 181 Dynamic 2016 •OIBDA 6.2% 3.6% Incremental Q3 21.1% +1.8 17Stabilisation MSR Investor contract CapEx •p.p. o (-0.2 Financials oData 4G 25.0% performance Sustained MSR net +1.9 competitive p.p. customer Incremental +30.4% monetisation Relations churn: sy
Slide 24: UK
Table of Contents Ex UK: Contract Blended Continued 199 •115 Q1 1.8% 93% MSR Sustained “O2 16 134 Contract Robust LTE Roaming 2.6% 1.1% +1.6% (0.2%) 0.1% (2.0%) (0.5%) (0.8%) •(y-o-y) Continued (0.4 18 Q2 Investor p.p.) Refresh” (+5 ARPU Better o net y-o-y Q3 outdoor 16 oAvg.customer market-leading
Slide 25: Brazil: commercial
Table of Contents 27% Brazil: Mobile Q3 15% (27% Q3 10% 12% 8% FBB 55% 16 26% 16 7% 9M ARPU ARPU o•All Leader 13% 9% UBB 16 oMobile Data-centric growth (y-o-y) penetration, 9M 7% 16 9% Pay inUBB •2016 stores Pay 19% postpaid: TV Fixed +17 TV IPTVinp.p. key accesses: alreadyo strategy allow services
Slide 26: Brazil: financials
Table of Contents Brazil: Q1 Q3 5.6% 3.0% 1.7% 1.1% Ongoing Service Regulation Financials Margin 32.1% 37.9% •oCost OIBDA Successful 33.3% 20 CapEx Lower Investor 16reduction total •Service 0.4% Q2 35.3% 13.7% MSR Strong Q1 Revenues OpCf revs below commercial increased 16 (y-o-y execution drags 16 +
Slide 27: HispAm: commercial
Table of Contents HispAm: Contract 7% 14% 4% 6% y; Further Fixed FBB FBB>4Mb 19% 13% 9% HispAm (1) 21 x8.4 Investor Unique • 14% o 10% & Leadership Contract business q-o-q) Pay room ARG 7% accesses penetration Focusing 16% Pay mobile Relations TV 3% to 22% CHI ARPU oTV accesses grow; in Bundling (y-
Slide 28: HispAm: financials
Table of Contents HispAm: Contribution 4.1% 2.6 (1.0 comm. 2016 6.3% 0.8% (3.4%) CHILE: •MEXICO: Q1 (2.9 Organic 22COLOMBIA: PERU: Investor Q2 p.p. p.p.) OIBDA •3.9 o ARGENTINA: Q3 oactivity Ramping-up •2016 OIBDA p.p. OIBDA (1.4 (2.0 oRelations Revenues Challenging to (organic OIBDA p.p.) in Revenu
Slide 29: Net financial debt and deleverage
Table of Contents Net Organic € in Financial Net (€2.6 Debt/OIBDA 3.20x 52,568 (1,000) deleverage Shareholder Jun-16 302 2,144Financial (369) millions Bn) 3.05x FCF (1,500) (360) Debt based on remuneration Pre- (138) Debt/OIBDA Net 148Financial 266 49,984 strong FCF retirements generation Hybrid iss
Slide 30: Attractive financing and liquidity
Table of Contents Interest payments Attractive financing cost to Sources reinforceofliquidity long-term financing (YTD) €1.7in billions 0.7 8.8 0.40 4.31% 4.63% 4.8 1.0 p.p. (0.72incl. Sep-15 21.8 Liquidity p.p.) Europe position EUR 0.6 Latam bond (Sep-16) Sep-16 Net Equity debt maturities Hybrids B
Slide 31: Summary
Table of Contents o•Summary Organic 25 Strategy Q3 Sustainable New Accelerating All Transformation DPS Investor proof business targets 2016: deleverage execution: points Relations €0.55/sh.; operating to units OIBDA, ensure process accelerated registering Back Telefónica, improvement sustainable 201
Slide 32: Investor Relations contact
Table of Contents For further Investor Tel. +34 Relations 94 information: 482 87 00 ir@telefonica.com www.telefonica.com/investors
Slide 33: Signatures
Table of Contents 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 27, 2016 By: /s/ Miguel Escrig Meliá Name: Miguel Escr