Telefonica Sa · BME:TEF

Telefonica Sa — Telefonica S A — Sixth Investor Conference (October 2007)

28 slides from Telefonica Sa's conference presentation, Oct 11, 2007

  1. Slide 1: Sixth Investor Conference

    Sixth Investor Conference ASCENDING & DESCENDING Santiago Ferndnder Valbuena london, Cetober 13% 2007 6 investor

  2. Slide 2: Telefónica

    Tilefinic

  3. Slide 3: Disclaimer

    Disclaimer ‘This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements rega

  4. Slide 4: Index

    Index (2) Meeting commitments © Cash flow and Uses @ Conclusions Tilefinic

  5. Slide 5: Active portfolio rotation to drive value creation

    (1) Active portfolio rotation to drive value creation AIRWAVE ENDEMOL Ta LYCOS USA PEARSON SATELLITES STAKES INFONET CANTY 6 inyestor 5 Feefonica

  6. Slide 6: Timing is key in any transaction

    (1) Timing is key in any transaction 47.2x Index 98 change from divestment Infrastructure index) “2.796 — FrABroadcasterIndex®) — -9.39% fugO Octo ees Febor wy nor Pug.o7 (indecent baa aut Si SUS andi (filer antena le a, Madan eens Tan 6 yest : Tilefinic

  7. Slide 7: €9bn shares bought back at nearly 50% below last month average price

    (1) €9bn shares bought back at nearly 50% below last month average price TEF share price (@) 20 Decoz Decoa Decos Decos 6 investor ’ ‘Tefinica

  8. Slide 8: Index

    Index @ Timing the execution © Cash flow and Uses @ Conclusions Tilefinic

  9. Slide 9: Meeting commitments

    (2} Meeting commitments 2a Delivering on financial guidance 22 Debt issues and debt issuance 23 Hedging policy 6 inyestor 3 Feefonica

  10. Slide 10: Delivering on Valencia's commitments

    (2} Delivering on Valencia’s commitments 2 7 > RAPIDLY PROGRESSING RATING STABILIZATION 3 NET DIVESTMENT 4 5 EARLY EXECUTION BROUGHT be AT ATTRACTIVE PRICES BA rorwarp 6 inyestor 10 Felefonica

  11. Slide 11: The absolute size of our debt is significant

    (2} The absolute size of our debt is significan' €inbn AG Jun-o7 3.0 52.2 NET FINANCIAL GUARANTEES & TOTALDEBT PV OPERATING DEBT COMMITMENTS. LEASES. = ..but we have already amortized €7bn in 2006 & H107 — €6bn dedicated to financial debt reduction — €1,2bn pre-retirernent commitments amortized inye

  12. Slide 12: Telefónica's most ambitious refinancing ever is over ahead of market expectations

    e Telefénica“s most ambitious refinancing ever is over ahead of market expectations €10bn €tibn €4bn €3bn €tbn H106 H206 H107 H106 H206 © Only 1 year to refinance 2nd largast loan to date in the corporate world history 2nd largest bond corporate issuer in 2006 with €13bn issuances * Proactive financ

  13. Slide 13: Diversifying on financing sources

    ing on financing sources © Tapping major bond markets €, $ and £ on jumbo or benchmark deals, as appropriate — Inaugurating some peripheral markets like ¥ or CZK. © Borrowing from non-commercial or non-core relationship financial institutions 6 investor » ‘Tefinica

  14. Slide 14: Comfortable maturity profile and no need to access capital markets

    e To gain comfortable maturity profile and no need to access capital markets €inbn Jul-07 rd 9.9 2010 «=< AOULE «2012-20168 2017£-20368 2007 Avge-year Avge. year = Over €9bn in unused committed credit facilities (€4bn maturing > 2008E) = Avge. debt life longer than time needed for full repayment sen

  15. Slide 15: Deleverage

    deleverage 85% TARGET ALREADY ACHIEVED EUROPEAN PEERS CAPITAL STRUCTURE COMPARISON S&P's 2.5% target Moody's Sep-o5 Decos Jun-o7 [Bi ter rnanntocr <conmienso eos Roz poem ee ‘sourcestandad ton: tuo pe out nent Telecom peso Der Fanci ok and Commi Pemutan(2259°07) ‘ious uapés mectmens cick tiene o pos

  16. Slide 16: Divestments before investments

    (2] Divestments before investments YE O7E € 5.5bn YE O7E € 3.8bn DISPOSALS ACQUISITIONS. (taitins ening complcton 6 inyestor a6 Tilefinic

  17. Slide 17: Hedging policy: FX and interest rates

    (2} Hedging policy: FX and interest rates ® Debt denominated in Latam currencies close to 2 times FCF ® Cesky acquisition price 70% funded in local currency and Q2 UK acquisition GBP funding reduced from 70% to 50% following Airwave disposal © Unhedged exposure to rising interest rates only 28% of t

  18. Slide 18: €7bn debt amortized with CF, €29bn debt extended

    © We have rescheduled maturities in €36bn out of €55bn total €7bn debt amortized with CF €29 bn debt extended Debt & Commitments reduced to From €27bn debt maturing in 2007E- 2,6x OIBDA from 3.2x (pro-forma) O8E following O2 acquisition to just €2.7bn maturing in 2008E €9bn undrawn liquidity lines K

  19. Slide 19: Index

    Index @ Timing the execution (2) Meeting commitments @ Conclusions 19 Tilefinic

  20. Slide 20: Cash Flow and Uses

    (3] Cash Flow and Uses ea Free Cash Flow generation through 2010E 2) Interests outlook does not look interesting Ba Taxon its tracks Ba Uses of Free Cash Flow 6, jestor 20 Felefinica

  21. Slide 21: Free Cash Flow generation

    (3] Free Cash Flow genera >€ 60 bn >€ 40bn curnulative Financial Expenses cumulative Op cashflow o7E-10€ © +Cashtakes Free Cash Flow o7E-106(") (01BDa-capex} (Fee camh How athe ch Pou avaiable oreruneate Tins sahaehoen 1 pct aobency nena and commitment ant accommo, 6 investor a ‘Tefinica

  22. Slide 22: Improving financing costs

    C3] Improving financing costs 2A Avge. effective debt service rate (%) 5.3 37 48 By EUR Swap curve (24) 2003 2004 2005 2006 H107 " Ongoing effective interest rate reduction up to around 5.5% in 2007E, trending towards 6% later on. — Spread differential vs. Euro rates at a minimum 6 inyestor 2 Telefo

  23. Slide 23: Cash taxes reappear on our landscape

    (3] Cash taxes reappear on our landscape = Tax rates are not expected to move significantly from current levels. Thus P&L taxes will rise in line with EBT. = Cash taxes rise as a fraction of P&L taxes as tax shields get exhausted (mid-2008E) and Latam profits rise faster than Europe's. “20% "60% 6 s

  24. Slide 24: Share buybacks to be considered

    © 20086 DPS of 1 Euro (} = Share buybacks to be considered as stated below © Net Debt + Cash Commitments over OIBDA in the 2.0 - 2.5x range © To foster growth in current markets (7) Fecalyen 056 te din Hear H209 6 inyestor ba Fiefonica

  25. Slide 25: We reiterate and even extend our commitments for 2010

    3) We reiterate and even extend our commitments for 2010 1,304 € 2.304€ 1.87€ 2.87€ CGE eee teen rca ean errant nd ores anee fen, 6 a Felefinica

  26. Slide 26: Index

    Index @ Timing the execution (2) Meeting commitments © Cash flow and Uses 26 Tilefinic

  27. Slide 27: Conclusions

    (4) Conclusions Telefonica’s debt is not an issue... .Telefénica most ambitious refinancing exercise is over Ourtarget leverage ratio to be in the 2.0x - 2.5x range Interest expense should not exceed 6% Cash taxes will rise faster than P&L taxes FCFallocation priorities are excess cash flow will be

  28. Slide 28: 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 11 th , 2007 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernánde

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