Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Q1 2008 Earnings Presentation
22 slides from Telefonica Sa's earnings presentation, May 14, 2008
Slide 1: Quarterly Results January–March 2008
Quarterly Results January —- March 2008 TELEFONICA S.A, May 14th, 2008 TELEFONICASA. Investor Relations
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about the Company including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations. These statements appear in a number of places in this doc
Slide 3: Q1 08 Results Highlights
GROUP HIGHLIGHTS Q1 08 Results Highlights = Solid performance across regions, on track to deliver 2008 guidance = Continued fast customer growth, driven by mobile, broadband and TV = Strong growth rates, crystallizing value from our diversification and integrated management model: = 17 consecutive q
Slide 4: Robust growth profile from top to bottom
Robust growth profile from top to bottom Jan-Mar Change Change ex-forex!®) € in millions 2008 Q1 08/0107 Q1 08/0107 Revenues 13,896 +11% > 43.4% | Operating Income : before D&A 5,376 53%) mp [45.6%] (o1BDa) OIBDA Margin 38.7% -1.5p.p| lm Operating Income e % (on) 3,099 +14.4%! mm Net income 1,538 [1
Slide 5: Net income up by more than 20%
GROUP FINANCIALS Net income up by more than 20% € in millions (% change y-o-y) +14.4% +22.4% (0.1%) -736 “57 (12.2%) 612.7%) Q108 OIBDA D&A Q108al Associates Financial results Taxes Minorities Q1.08 Net Income 25.8% ANNUAL GROWTH IN EPS TO 0.328 € INQ1 08 Investor Relations TELEFONICASA. Telefinica
Slide 6: Fast customer growth, capturing bundling potential
GROUP FINANCIALS Fast customer growth, capturing bundling potential Accesses (Mar-08/Mar-07) T.Espafia T.Europe —‘T, Latarn Total Mobile BB PayTV Fixed = 4.7m net adds in Q1 08: +41.8% y-o-y = 36% of total accesses with bundles: +7 p.p. vs. Mar-O7 TELEFONICAS.A. Jelefiinica Investor Relations
Slide 7: Distinctive top line performance
Distinctive top line performance Q1 08 Revenue growth by regions (Organic? y-o-y growth) +12.6% 47.0% 46.4% +2.6% TEF T.Espafia. = T.Europe —T. Latarn Group Contribution toGroup growth Q1 08 Revenue breakdown GROUP FINANCIALS Others & eliminations T. Europe: 25% (€3.472 m) = Strong growth in Broadba
Slide 8: Retaining benchmark profitability
GROUP FINANCIALS Retaining benchmark profitability Q1 08 OIBDA growth by regions Q1 08 OIBDA breakdown (Organic? y-o-y growth) #8.2% +11.8% 46.4% +5.3% T. Europe: 17% T. Latam: 35% (912m (€1,877m) TEF T.Espafia T.Europe —‘T. Latam Group Contrtbution T. Espafia: 48% toGroup growth (€ 2,597 m) = Enhan
Slide 9: Telefónica España: Solid performance in Q1
TELEFONICA ESPANA Telefonica Espaiia: Solid performance in Q1 = Sustained revenue growth in wireline: © +9.8% growth in Internet & BB revenues = Healthy trends in access and traditional voice services twang purfect = 2% y-o-y growth in mobile service revenue: = +3.4% advance in customer revenue driv
Slide 10: Wireline Business: Expanding access base by upselling and getting new customers
Telefonica Retail BB Fixed Telephony 253.1 ex 233.1 a2u8 Quoz 35.6 Quoz si nell Q407 42.0 Q407 includes a> Full ULL TOTAL I Telefonica y Sher ULL ed Shared] Quos 43.0 Qucs TELEFONICA ESPANA Wireline Business: Expanding access base by upselling and getting new customers = Sustain expansion of fixed l
Slide 11: Wireless Business: Steady customer growth and continued push in data usage
TELEFONICA ESPANA Wireless Business: Steady customer growth and continued push in data usage = Sound leadership despite new entrants, leveraging market leading churn rate: = 23.0 maccesses in a 112% penetration market © 305.2K contract net adds in Q1; 181.8K in total © Stable blended churn rate at 1
Slide 12: Telefónica Latinoamérica: Solid results in a high growth region
TELEFONICA LATAM Telefonica Latinoamérica: Solid results in a high growth region Mar-08 Accesses (in millions) Mobile Eterms Organic Ven Fixed BB 3.5p.p SPR, ‘Mex, Brazil Arg, Others? Eterms Organic Ven Mex. Chile Col, Others? = Accelerated customer expansion led by mobile businesses & fixed-line tr
Slide 13: Wireless Business: Fast customer growth & sound outgoing
ARPU 343 43.8 133 Mar-08 mobile customers Brazil Arg. Mex. Ven. Col, Pert Chile Other? 437.4% 426.4% 20.0 pp Grossadds © Chum = Net adds 20.6% Outgoing F4.5% LH MoU & MoU ARPUEx-forex TELEFONICA LATAM Wireless Business: Fast customer growth & sound outgoing = Solid gross adds in most markets: © Stro
Slide 14: Wireline business: Further advance in business transformation
TELEFONICA LATAM Wireline business: Further advance in business transformation Brazil Argentina Chile Peru? Colambia Quo7 22% Bundles weight ‘Mar-08 Mar-07 ‘© Local & Control bundles+2F&aP/Fixed Accesses Local bundles+2PR3P/Fixed Accesses mm 2PRPIDSL Accesses TELEFONICASA. Investor Relations 6) stin
Slide 15: Sum-up: Capturing growth opportunities in our markets
TELEFONICA LATAM Sum-up: Capturing growth opportunities in our markets 108 y-o-y growth Ja BBTV Mobile Mobilsent peine, fin locsl earency) Ree revenue sou. service revenue Brazil? . +32. 432.7% Argentina Chile +37.2% +28.8% Pert 419.7% 448.4% Colombia +119,8% +22.5% 425.2% 425.6% México | +38.9% Ecu
Slide 16: Telefónica Europe: Building scale across markets
TELEFONICA EUROPE Telefonica Europe: Building scale across markets #12,6% +11,3% = Good customer growth to 42.8 m (+8.8% y-o-y) = Focus on quality growth: 89% of 564K mobile net adds in contract (2x Q1 07) © 130K retail BB net adds (2.4x Q1 07) to reach > 2.4% 800k customers (+58.4% y-0-y) Be forex
Slide 17: O2 UK: Continued momentum, managing growth/margin
TELEFONICA EUROPE O2 UK: Continued momentum, managing growth/margin 206 x = Focus on contract: 38.1% weight (+2.6 p.p.) 80 ®= Robust contract net adds = Contract churn down to 1.5% from 2.0% Q1o7 Q108 = Mature prepay market: wen = Prepay to contract migrations (Simplicity) © Retaining value: ARPU up
Slide 18: O2 Germany: First signs of turnaround
TELEFONICA EUROPE O2 Germany: First signs of turnaround 536 = Wireless customer growth increased to 16.3% y- s08 leveraging enlarged distribution & partners: = 13.0 m mobile customers = DM for Fonic; new Debitel contract; Tchibo, Hansenet = Segmented positioning: iconic = Best Value for Money in the
Slide 19: Group financial expenses and debt
GROUP FINANCIAL EXPENSES AND DEBT De-leverage continuing with a comfortable liquidity position €in millions 08 Net Financial Debt Evolution NetFin.Debt FCF © Commitments Share buy-back NetFinancial Changein Net Fin. Debt Dec-07 Post- cancellation Investments consolidation, Mar-08 Minorities FX and o
Slide 20: Returning value to shareholders
Returning value to shareholders DPS (in euros) 1.0 0.75 20078 20082 + ‘© Initial program announced in February 2008: SHARE = 2008- H109: 100 m shares BUYBACKS © New framework: = 2008: 100 m shares ‘= Sensitive to cash flow generation and share price Cash Yield? ¢ so 2007 2008E Accelerated Oe executi
Slide 21: Conclusions
CONCLUSIONS Conclusions Solid performance across the P&L, on track to meet 2008 guidance Leveraging our diversification to consistently deliver sound organic growth: = High single digit both in revenues and OIBDA «= Double digit in Ol Double digit growth in EPS Continue focus on extract value throug
Slide 22: 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: May 14 th , 2008 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernández Va