Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Q1 2010 Earnings Presentation
27 slides from Telefonica Sa's earnings presentation, May 13, 2010
Slide 1: Results January – March 2010
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 which refer to the intent, belief or current prospects of
Slide 3: Delivering on our 2010 priorities
Delivering on our 2010 priorities GROUP FINANCIALS Revenue growth acceleration vs. FY 09 Significant ramp up in commercial activity vs. Q1 09; setting the basis for revenue stimulation #1 Capturing top line growth prospects Healthy OIBDA margin and high OpCF Strong financial position 2010 and mid-te
Slide 4: Highlights Q1
Highlights Q1 10 GROUP FINANCIALS Organic growth assumes constant exchange rates as of Q1 09 (average fx) and excludes the consolidation of HanseNet (since mid February) and Jajah (January-March) in 2010. Telyco Morocco results are excluded in January-March 2009. It excludes hyperinflationary accoun
Slide 5: Top line fully flowing to EPS
Top line fully flowing to EPS GROUP FINANCIALS Q1 10 EPS: € 0.36 (+2.6% y-o-y) January-March 2010 € in millions (% change y-o-y) 36 (n.m.) - -573 (-26.0%) - -714 (-2.8%) - -23 (-23.9%) 2,930 1,656 OI Associates Financial results Taxes Minorities Net Income 5,114 - -2,184 (+0.4%) D&A OIBDA - -4.1% -
Slide 6: Distinctive top line performance
Distinctive top line performance GROUP FINANCIALS H1 09 9M 09 Q1 09 FY 09 Q1 10 +3.7% +2.5% +1.4% +1.5% +2.4% +2.8% +1.4% +0.1% +0.2% +0.9% Revenue growth acceleration for the 2nd quarter in a row Organic y-o-y growth ex MTRs Total accesses (y-o-y organic growth) +9.5% +5.2% +5.8% +5.1% +6.1% Q1 10
Slide 7: Enhanced commercial activity, setting the basis for additional top line growth
Enhanced commercial activity, setting the basis for additional top line growth... GROUP FINANCIALS Organic gross adds and net adds exclude Medi Telecom customers in 2009 and HanseNet in 2010. 2009 quarterly average excludes December 2009 disconnections. Q1 10 net adds: Mobile: 2.5x Q1 09 Contract/Mo
Slide 8: ....with focus on broadband
....with focus on broadband GROUP FINANCIALS Growth accesses (y-o-y organic growth) Organic growth accesses excludes Medi Telecom customers in 2009 and HanseNet in 2010. MBB FBB Pay TV Fixed accesses - -5.3% 207 m 62 m 16 m 16 m 42 m 3 m 89% of our retail customer base have a BB connection +9.6% Mob
Slide 9: Reinvesting efficiency gains to foster revenue expansion
- -0.2 p.p. +2.6 p.p. +1.3 p.p. - -0.5 p.p. - -0.1 p.p. GROUP FINANCIALS Reinvesting efficiency gains to foster revenue expansion Organic growth assumes constant exchange rates as of Q1 09 (average fx) and excludes the consolidation of HanseNet (since mid February) and Jajah (January-March) in 2010.
Slide 10: On track to meet 2010 guidance
On track to meet 2010 guidance GROUP FINANCIALS OIBDA CapEx €1,208 m Q1 10 Revenue Q1 10/Q1 09 - -3.0% Q1 10/Q1 09 2009 GUIDANCE +1%/+3% 2010 GUIDANCE €7,450/7,650 m 2010 GUIDANCE +1%/+4% +1.7% ? ? 2010 EPS target confirmed (€ 2.1) H1 10E 9M 10E Q1 10 FY 10E - -3.0% Restructuring in T. Europe (H1 10
Slide 11: T. Espana: continued top line recovery
T. Espana: continued top line recovery TELEFONICA ESPANA Comparable terms for Q1 10 y-o-y change exclude the following effects: USO in Q1 09, real estate capital gains in Q1 09, Telyco Morocco in Q1 09 and TV Tax in Q1 10. Previous quarters year-on-year comparable changes published in Company^s pres
Slide 12: Strong push on commercial activity
Strong push on commercial activity TELEFONICA ESPANA Comparable Mobile ARPU (y-o-y) Wireless service revenues 9.3 Mobile Broadband accesses (m) Wireless contract customers - -9.6% - -10.4% - -9.4% - -7.5% - -7.9% - -7.2% Q1 09 Q2 09 Q3 09 Q4 09 - -10.2% - -7.1% - -6.7% Q1 10 - -10.2% - -7.7% - - 8.1
Slide 13: Stepping up commercial momentum
Stepping up commercial momentum TELEFONICA ESPANA Positive data revenues and solid IT performance despite seasonality Strong acceleration in Q1 commercial activity: first quarter with positive net adds in total fixed accesses since Q4 08 Fixed market on recovery path: stabilization of retail line lo
Slide 14: T.Latam: Solid top line growth and robust profitability
TELEFONICA LATAM T.Latam: Solid top line growth and robust profitability Organic assumes constant exchange rates and excludes hyperinflation accounting in Venezuela in both years. OIBDA Margin +3.4% organic y-o-y growth in OIBDA despite 12.0% increase in commercial costs Stable OpCF in euros (€1.6 b
Slide 15: Wireless business: Strong commercial activity
2.8 Wireless business: Strong commercial activity TELEFONICA LATAM Organic assume constant exchange rates and excludes hyperinflation accounting in both years. Mobile customers include Telemig as of January 1st, 2008. Commercial ramp up for the third quarter in a row: +24.2% y-o-y growth in gross ad
Slide 16: Wireline business: stabilizing revenue drivers
TELEFONICA LATAM Q4 09 wireline net adds and growth rates exclude the disconnection of fixed telephony accesses in Colombia. 2009 quarterly average excludes December 2009 disconnections. Wireline business: stabilizing revenue drivers Strong BB growth: Latam 21.4% Brazil 14.4% - -0.1p.p. Arg. 23.1% +
Slide 17: Telesp gradual recovery
TELEFONICA LATAM Telesp gradual recovery Total accesses growth for the 1st time since Q3 08 Limited activity in Jan-10 on heavy rains Positive fixed line net adds in March & April Strong BB churn reduction FBB net adds in Q1 10 is 2x FY 09 volume Close to 50% of Q1 10 net adds recorded in Mar-10 Rec
Slide 18: Colombia: Operating results improved, financials should follow
TELEFONICA LATAM Colombia: Operating results improved, financials should follow Q3 09 Q4 09 Q1 10 - -59.2% - -27.2% - -29.6% - -15.1% - -17.5% - -12.3% Q2 09 - -7.2% - -30.4% +0.5% - -5.1% Wireline Financials (y-o-y in local currency) Wireless KPIs Contract net adds/total 49% 32% +30.1% +3.0% - -2.2
Slide 19: Good performance across key operations
Good performance across key operations Mexico Steady market share expansion to 21%, +1.5 p.p. y-o-y +33.7% increase in contract customers vs. Mar-09 Healthy service revenue growth (+10.7% y-o-y) Robust OIBDA margin: 30.2% (+1.4 p.p. y-o-y) Venezuela Solid financials despite devaluation Focus on valu
Slide 20: T. Europe: continued momentum, leveraging mobile internet
T. Europe: continued momentum, leveraging mobile internet Revenue (y-o-y organic growth ex MTRs) Accesses (Mar-10; y-o-y growth) Q1 10 Profitability (y-o-y growth) OIBDA Strong cash flow, sustained profitability: 26.2% OIBDA margin, improving 0.5 p.p. y-o-y in comparable terms Germany & UK driving p
Slide 21: T.O2 UK: leading financials, growing quality base
T.O2 UK: leading financials, growing quality base Mobile Service Revenue (local currency, y-o-y growth) Mobile KPIs (Mar-10: y-o-y change) Smartphones and lowest contract churn driving customer growth: Rational customer acquisition strategy Increasing quality of the base: 195k contract net adds in Q
Slide 22: T.O2 Germany: Strong trading momentum and broader portfolio
T.O2 Germany: Strong trading momentum and broader portfolio Breakdown Q1 10 Profitability (organic y-o-y growth) OIBDA OIBDA margin OpCF +13.2% +0.9 p.p. >x7 € 241 m 22.4% € 128 m Enhanced challenger approach through expanded integrated portfolio Better positioned to address new segments (HanseNet,
Slide 23: Effective interest rate contained at 5%
Effective interest rate contained at 5% GROUP FINANCIAL EXPENSES AND DEBT Lower Cost of Debt Net Financial Debt Evolution Increasing Liquidity Leverage target, including commitments, up to the middle of our target range (2.3x OIBDA) Strong liquidity helped by € 4 bn issuance and €1.6 bn of other lon
Slide 24: A full value offer for PT's 50% stake in Brasilcel
A full value offer for PT's 50% stake in Brasicel € 5.7 bn all cash transaction for 50% of Brasilcel owned by PT Unconditional, binding, fully financed offer with no execution risk 23 2.4 2.6 2.8 3.1 3.6 5.7 Avg market price 1M pre offer Maximum historical market value Analysts' TP on Vivo (avg) Ana
Slide 25: PT obtaining more than its pro-rata share of the synergies
.... with PT obtaining more than its pro-rata share of the synergies of a potential subsequent Vivo- TSP combination Improved churn Cross selling/Bundle offer 24 Revenue Network management integration IT system unification Data centers Network & IT Customer care Marketing Common infrastructure const
Slide 26: Closing remarks
Closing remarks GROUP FINANCIALS Boosting top line growth, leveraging a well diversified portfolio Sharp increase in commercial activity across regions, setting the base for additional revenue growth Retaining top quality profitability and high OpCF Robust financial position 2010 and mid term guidan
Slide 27: 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 13 th , 2010 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernández Va