Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — H1 2015 Earnings Presentation
25 slides from Telefonica Sa's earnings presentation, Jul 30, 2015
Slide 1: Telefónica Results January – June 2015
Telefonica Results January – June 2015 Telefónica, S.A. Investor Relations
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefónica Group (going forward, “the Company” or Telefónica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which ma
Slide 3: Highlights; Q2 accelerating the new growth cycle
Highlights; Q2 accelerating the new growth cycle 1 Robust performance improving; Reinforcing trends Solid growth in main metrics (Q2 y-o-y): Revenues (+12.4%), OIBDA (+6.8%), Net Income (+70.4%) Accelerating organic revenue growth to +4.4% in Q2 (from +3.3% in Q1) Ramping-up organic OIBDA growth to
Slide 4: Financial summary
Financial summary H1 15 Q2 15 € in millions Reported Reported Organic Reported Reported Organic y-o-y y-o-y y-o-y y-o-y Revenues 23,419 12.5% 3.9% 11,876 12.4% 4.4% OIBDA 7,320 7.2% 2.9% 3,702 6.8% 3.3% OIBDA Margin 31.3% (1.5 p.p.) (0.3 p.p.) 31.2% (1.6 p.p.) (0.3 p.p.) OpCF (ex-spectrum) 3,815 (3.
Slide 5: Upgrading year-end guidance
Upgrading year-end guidance Original Guidance 2015 (Feb-15) UPGRADED GUIDANCE 2015 (Jul-15) H1 15 (Feb-15 criteria) Revenues Growth >7% Growth >9.5% 9.4% OIBDA margin Limited erosion of around 1 p.p. y-o-y (to allow for commercial flexibility if needed) Limited erosion of around 1.2 p.p. y-o-y (to a
Slide 6: Perimeter and organic performance accelerating in Q2
Perimeter and organic performance accelerating in Q2 H1 Revenue € in millions Negative in Q2 20,817 1,678 876 47 23,419 o/w 64% in Q2 o/w 59% in Q2 H1 14 Perimeter Organic FX H1 15 +12.5% H1 OIBDA € in millions Negative in Q2 6,825 333 202 (41) 7,320 o/w 70% in Q2 o/w 60% in Q2 H1 14 Perimeter Organ
Slide 7: Improved revenue trends on higher quality customers
Improved revenue trends on higher quality customers Accesses growth (June organic y-o-y; except LTE) x4.7 38% 30% 25% 6% LTE FTTx Smartphones Pay TV Mobile Contract Accesses base (m) 18.6 5.4 99.2 8.0 87.0 Q2 Revenue (organic growth y-o-y) 10.3% 5.2% 4.4% 1.3% (-1.1%) Hispam Brazil TEF Group Germany
Slide 8: Mobile data monetisation fostering growth
Mobile data monetisation fostering growth Smartphone penetration Contract Prepay LTE LTE traffic/Total mobile traffic LTE penetration Blended LTE Customers 65% 61% 55% 20% 28% 31% 4% 11% 13% 2% 6% 8% Jun-14 Mar-15 Jun-15 Jun-14 Mar-15 Jun-15 30% 38% 41% 4.0m 14.1m 18.6m Mobile data revenue (y-o-y or
Slide 9: Positive and solid growth in OIBDA; margin stabilising
Positive and solid growth in OIBDA; margin stabilising Q2 OIBDA (organic y-o-y) 12.5% 9.1% 3.3% 0.4% Germany Hispam TEF Group Brazil Spain (-1.3%) Change q-o-q (p.p.) 3.5 (5.4) 0.9 (0.5) 7.1 Ex VZ: (3.8) Q2 OIBDA Margin Q1 15 Q2 15 44.5% 44.4% 30.1% 31.2% 31.3% 31.2% 30.8% 29.6% 21.5% 23.6% Spain Br
Slide 10: Digital services: Solid growth with Video at the core
Digital services: Solid growth with Video at the core Video: Enhanced scale and know-how with DTS Digital Services Revenue € in millions 682 938 Q1 15 Q2 15 +33.7% +27.0% organic y-o-y Other Digital Services: Increasing the value of connectivity and growth potential Video Revenue € in millions 321 5
Slide 11: TGR: More technological and leaner Digital Telco
TGR: More technological and leaner Digital Telco Differential network experience leveraged on new technologies UBB (Jun-15) Premises passed with fiber FTTH FTTx 12.5m 16.1m LTE Coverage (%PoP) 67% 35% LTE sites >25k Spreading 4G Capturing benefits from integration GVT: 11.6m FTTx premises passed Ger
Slide 12: Spain: Q2 atypical trading; normalised from June
Spain: Q2 atypical trading; normalised from June revenue 25% of Group Mobile contract net adds (’000) 31 -6 -9 Apr May Jun Gross adds q-o-q (15%) 79 16 Q1 Q2 QoQ churn -0.1 (p.p.) Q2 churn 1.4% FTTH net adds (’000) 71 52 37 Apr May Jun (23%) 244 160 Q1 Q2 +0.3 1.1% Pay TV net adds (’000) 25 40 25 Ap
Slide 13: Spain: Revenues stable from May
Spain: Revenues stable from May 25% of Group revenue Revenue Total Revenue (y-o-y) Ex-handset sales (y-o-y) +€88m Q Revenue (m) €3,000 €2,878 €2,966 Q2 14 Q1 15 Q2 15 (0.9%) (3.5%) (10.4%) May +0.1% June +0.2% OIBDA (organic y-o-y) Q2 14 Q1 15 Q2 15 (1.3%) (8.4%) (16.5%) (2.7%) Ex-real estate sale O
Slide 14: Germany: Good momentum; mobile data strategy
Germany: Good momentum; mobile data strategy 16% of Group revenue LTE customers (’000) LTE penetration 5,146 6,093 12% 14% Mar-15 Jun-15 LTE coverage 70% at Jun-15 75% target by YE Smartphone penetration 50% 51% Revenue structure (€ in millions) 1,901 1,949 261 282 260 303 Fixed Handsets MSR 1,354 1
Slide 15: Germany: Strong profitability; delivering on synergies
Germany: Strong profitability; delivering on synergies revenue 16% of Group OIBDA (y-o-y) Organic ex non-recurrent items Accelerating profitability Ramp-up in OIBDA growth 12.5% Solid Q2 OIBDA margin 4.4% >40% of Q2 15 OIBDA expansion on early synergy benefits Commercial approach based on retention
Slide 16: Brazil: GVT reinforces quality & value
Brazil: GVT reinforces quality & value revenue 25% of Group Mobile accesses (Jun-15 y-o-y) Capturing the value of the market Capturing almost all mobile market growth Last 12 months Net adds share MSR share New quarterly record in contract gross adds (1.9m) 97% Outgoing ARPU +4.8% y-o-y in Q2 +41% P
Slide 17: Brazil: Improving growth profile
Brazil: Improving growth profile revenue 25% of Group Revenue (organic y-o-y) Revenue composition Solid revenue & OIBDA performance Fixed Mobile Organic y-o-y Strong MSR growth +5.7% y-o-y in Q2 (+8.7% ex-regulation): 5.2% From (Pre GVT Q2 14)… To (Post GVT Q2 15) GVT Non-SMS data rev acceleration t
Slide 18: Hispam: Balanced revenue and OIBDA growth
Hispam: Balanced revenue and OIBDA growth revenue 30% of Group Accesses (Jun-15 y-o-y) Traffic (Q2 15 y-o-y) Mix of accesses & traffic increase driving ARPU growth 41% 15% 60% LTE already available in all countries except Nicaragua & El Salvador 5% 9% 3% FBB penetration at 42% of fixed accesses (+3
Slide 19: Mexico: Gaining market share; improving profitability
Mexico: Gaining market share; improving profitability 4% of Group revenue Accesses (Jun-15 y-o-y) Revenue (y-o-y organic) Strong commercial activity accelerating revenue growth x2.1 Record gross adds for a Q2 (2.8m; +8% y-o-y) 7.8% 5.8% 5.9% New contract & prepay plan “Bye Roaming” for travellers to
Slide 20: Rest of Hispam: Solid Q2 performance
Rest of Hispam: Solid Q2 performance revenue 27% of Group Revenue (organic y-o-y) Q1 15 Q2 15 34.7% 25.2% 23.4% 22.5% 5.3% 4.4% 2.8% 0.3% 0.4% (1.8%) Colombia Peru Argentina Chile VZ & CA OIBDA (organic y-o-y) Q1 15 Q2 15 40.9% 17.8% 38.3% 9.2% 7.1% 6.9% (2.2%) (2.1%) (4.1%) (6.9%) Colombia Peru Arg
Slide 21: UK: Maintaining outperformance; strong financials
UK: Maintaining outperformance; strong financials Consolidated as discontinued operation Mobile contract net adds (‘000) Strong commercial activity 199 Sustained net adds over last two and a half years 172 133 Outperforming the market: H1 total and contract net adds +4% mobile base y-o-y to 24.8m Q2
Slide 22: Leverage to improve in H2
Leverage to improve in H2 15 Net Financial Debt € in millions Net Financial Debt/OIBDA (1) Net Financial Debt/OIBDA 2.74x 2.92x Substantial deleverage towards target (post O2 UK sale)2.38x 2,329 980 417 51,238 (456) 2,687 45,087 (1,395) 1,589 Includes change to Includes Q2 15 Includes Q2 15 GVT & DT
Slide 23: Improving financial cost
Improving financial cost Effective interest cost: 15 b.p. lower y-o-y Guidance 12 month rolling Ex FX and TI divestment 6% 5.38% 0.38% 5.23% 5% (0.53%) Jun-14 Lower Higher Jun-15 European Latam rates leverage Long-term financing (€11.9bn YTD) € in billions Private Bond Placements: 0.4 Bilateral Loan
Slide 24: Summary
Summary Executing according to plan: delivering sustainable profitable growth 1 Q2 organic growth accelerated: Revenue & OIBDA 2 Strong uptake in fiber, smartphones (LTE) and Pay TV 3 Significant synergies to be unlocked on restructured portfolio 4 Focus on technology leadership and best customer ex
Slide 25: For further information: Investor Relations
Telefonica For further information: Investor Relations Tel. +34 91 482 87 00 ir@telefonica.com www.telefonica.com/investors 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, thereu