Slide 1: Results January-September 2011
Results January-September 2011
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 re
Slide 3: 9M 11 Highlights: Steady revenue growth and solid margin
TELEFÓNICA 9M 11 Highlights: Steady revenue growth and solid margin Strong customer growth, good contract mobile net adds, booming MBB adoption Solid top line expansion: +5.4% driven by T. Latam (+18%) and mobile data (+18%) Robust profitability amid increased commercial activity: 36% OIBDA margin L
Slide 4: Financial Summary
TELEFÓNICA Financial Summary Jan-Sep Jan-Sep Jan-Sep Underly ing Underlying Reported 2011 2011 2010 Change Change y-o-y Change € in millions Reported Underlying Underlying y-o-y ex-MTRs y-o-y Revenues 46,672 46,672 44,280 +5.4% +6.8% +5.4% OIBDA 14,251 16,739 16,719 +0.1% +1.0% -30.0% OIBDA Margin 3
Slide 5: Capitalizing our highly diversified portfolio of operations
TELEFÓNICA Capitalizing our highly diversified portfolio of operations Revenue OIBDA1 OpCF1 25% 46% 19% 46% 18% 44% (-1 p.p.) (flat) (+2p.p.) (+5 p.p.) (+4 p.p.) (+4 p.p.) 28% 35% 40% (-4 p.p.) (-5p.p.) (-5p.p.) (y-o-y change) T. Latam T. España T. Europe Steady revenue T. Latam contributed with 7.4
Slide 6: Financial Summary: Organic performance
TELEFÓNICA Financial Summary: Organic performance Jan-Sep Jan-Sep Jan-Sep Organic Organic Guidance 2011 2011 2010 Change Change y-o-y fulfillment € in millions Reported Organic Organic y-o-y ex-MTRs Revenues 46,672 46,850 46,729 +0.3% +1.6% OIBDA 14,251 16,791 17,598 -4.6% -3.7% OIBDA Margin 30.5% 3
Slide 7: Debt reduction in the quarter, with financial effective cost lower than last year
TELEFÓNICA Debt reduction in the quarter, with financial effective cost lower than last year € in millions Net Financial Debt Evolution Total Net Debt + Total Net Debt + Commitments 2.56x OIBDA1 € 5.7 Bn FCF in Commitments 2.55x OIBDA2 9M 11: +11.6% 56,420 -2,567 y-o-y 55,430 +755 +315 +324 +183 FCF
Slide 8: Limited FX impact despite recent volatility
TELEFÓNICA Limited FX impact despite recent volatility Net Debt/OIBDA (T. UK & T. CR) Net Debt/OpCF T. LatAm ex-Venezuela € in millions € in millions Net Debt/OIBDA1 Net Debt/Op CF2 1.82x 9,210 2.06x FX debt for 5,136 solvency protection 4,478 2,815 Net Financial Debt OIBDA OpCF T. Latam Net Financi
Slide 9: Comfortable refinancing, solid liquidity position
TELEFÓNICA Comfortable refinancing, solid liquidity position 2012 Net Maturities (Sep-11) € in billions Undrawn lines maturing beyond 7.1 2.0 2012 exceeding this amount 2.4 Recent € 1bn bond issuance exceeding this amount 1.8 1.0 2012 Latam maturities ExtendablePreferred Banking DebtDecember Ex-Lata
Slide 10: Very intense targeted commercial activity
TELEFÓNICA Very intense targeted commercial activity Mobile contract base Accesses (Sep-11 y-o-y ) Over total base (Sep-11) Double digit growth Over total 9M net adds >100% 95% +76% +12% 69% 49% 50% 75 m 40% 34 m 32% 21% TEF T. España T. Europe T. Latam Mobile MBB Contract Data penetration (Sep-11)
Slide 11: Accelerating data revenue growth
TELEFÓNICA Accelerating data revenue growth 9M 11 mobile data revenue growth (organic y-o-y) Mobile data Non-P2P SMS P2P SMS Telefónica 52.2% 38.1% 38.8% 36.5% 34.3% 31.7% 19.6% 23.9% 18.6% 19.0% 11.4% 12.3% 4.8% 4.4% 3.8% Q1 11 T. España T. Europe T. Latam H1 11 9M 11 Mobile data/MSR Non-P2P SMS/Mo
Slide 12: Latam: strong commercial activity across businesses
T. LATAM Latam: strong commercial activity across businesses Q3 11 Net adds1 x3 83k +60% +59% Increased volumes y-o-y and +44% Historical record Fixed x5 q-o-q across businesses -20% in Q3 net adds +18% +17% +12% TV +2% Total Mobile MBB FBB -47k Q3 11/ Q2 11 Q3 11/ Q3 10 y-o-y Q3 11 Mobile gross add
Slide 13: Latam: solid top line, healthy profitability
T. LATAM Latam: solid top line, healthy profitability Regional contributions Key drivers Ex-Mexico H1 11 (organic y-o-y) 9M 11 (organic y-o-y) +4.9% organic revenue y-o-y +20.7% +31.7% +16.2% +17.5p.p. +1.3p.p. +0.0p.p. +16.1% +30.6% -0.7p.p. +18.1% Strong revenue +5.1% +4.9% 24% of total performanc
Slide 14: Brazil: good momentum, strengthened leadership
T. LATAM Brazil: good momentum, strengthened leadership Net adds (‘000) Mobile market share (Sep-11) (1) 2,983 2,989 43.0% 1,448 36.8% 398 29.5% 75% 3G Record net adds, 1,889 1,737 +5.0p.p. coverage, well 165 consistent lead +1.5p.p. above 81 23% in -0.7p.p. competitors 11 contract Total FBB -3TV Mo
Slide 15: Brazil: higher value creation through upgraded synergies
Brazil: higher value creation through upgraded synergies NPV. € Bn Oct-2010 Current 2011 Upgraded! Upgraded! 4.4/4.8 Upgraded! 3.3/4.2 2.7/3.1 2.3/2.7 1.7 1.0/1.5 Operating synergies Financial & tax sinergies Total Increased synergies targets driven by higher value from integration Conservative appr
Slide 16: Solid performance in other key operations
T. LATAM Solid performance in other key operations Contribution to Revenue 9M TEF 9M Revenue y-o-y organic South Region North Region Argentina Venezuela Solid double digit top line growth Acceleration in top line growth boosted by outgoing revenues (+14.9% organic y-o-y) 4.9% Steady accesses growth
Slide 17: Spain: enhanced commercial offer and no further deterioration
Spain: enhanced commercial offer and no further T. EUROPE deterioration Fixed BB: € 24.9+mobile contract · Inflection point in net adds Launched in September Positive signals • Not applicable to customers enjoying Attracting new customers Setting new other promotions from enhanced price points comme
Slide 18: Spain: a new FBB offer capitalising on our integrated position
Spain: a new FBB offer capitalising on our integrated T. EUROPE position Retail FBB. Net adds (‘000) Pay TV. Net adds (‘000) Modest promotional activity in July/Aug. +20 Net adds trend improved by new Ramp-up in pay TV gross adds in Sep. Jul. Aug. Sep. H1 11 leveraging new content (best football -2
Slide 19: Spain: a new mobile offer to foster growth in data
T. EUROPE Spain: a new mobile offer to foster growth in data Data ARPU (y-o-y) Non P2P SMS/Data +22.1% +23.5% MBB base 6.4 m (+48% vs. Sep-10) +18.3% 73% 75% Sustained ramp-up in data ARPU Strong data +11.1% growth Data is 25% of MSR (+5 p.p. y-o-y) +10.7% 73% of total contract activations are +7.6%
Slide 20: UK: Re-gaining momentum, mobile data strength
T. EUROPE UK: Re-gaining momentum, mobile data strength Mobile net adds (‘000) Total Contract New tariffs 3.3x 61 Improved New smartphone tariffs from 22 end-Aug driving gross adds 71 91 8 commercial 25 activity Contract churn stable at 1.1% Jul. Aug. Sep. -144 Q2 11 Q3 11 Smartphone penetration1 Mo
Slide 21: Germany: delivering operating and financial growth
T. EUROPE Germany: delivering operating and financial growth Mobile net adds (‘000) O2 Blue 250 tariff net adds (‘000) Total Contract Most satisfied1 mobile customer base 391 398 57 308 47 Solid commercial 252 252 momentum 206 25 New O2 Blue tariffs & < € 100 devices through exclusive partners (e.g.
Slide 22: Czech Republic: lead market positioning, robust improvement across the board
C. Republic: lead market positioning, robust improvementT. EUROPE across the board Fixed net adds 2011(‘000) Mobile customer mix (Sep-11) VDSL launch helps manage FBB ARPU 15 11 Solid ADSL 11 61% and reduces churn (-2 p.p. y-o-y) FBB share 38% +2 p.p. y-o-y performance in Contract base up 6% y-o-y 1
Slide 23: New organizational structure for new development phase
TELEFÓNICA New organizational structure for new development phase Bolster Telefónica’s place in the digital world, Telefónica Digital capturing growth opportunities Configuration of 2 large regions to streamline and Telefónica Latam Telefónica Europe balance the geographical mix #1 or #2 in most mar
Slide 24: T. Digital: The power to outperform in the digital world
TELEFÓNICA T. Digital: The power to outperform in the digital world Leading Telefónica’s strategy in the The new Telefónica Digital Digital world: · Exploiting new digital services, creating the capability for T. Europe and T.Latam to Existing digital + Developing digital + Direct benefits forTelefo
Slide 25: T. Global Resources: Increase efficiency by leveraging our global scale
T. Global Resources: Increase efficiency by levering ourTELEFÓNICA global scale We are already making significant We have set clear priorities for the progresses to capture benefits from short term to fully exploit our scale our scale Network & IT (Infrastructures & operations): Increase standardiza
Slide 26: Key management priorities in the short term
TELEFÓNICA Key management priorities in the short term Drive growth and profitability & improve financial flexibility to deliver our commitments Maintain operating and financial leadership in Brazil LATAM Integrate fixed and mobile operations in Colombia to fully exploit synergies Complete operation
Slide 27: Conclusions: Management priorities focused on shareholder value
TELEFÓNICA Conclusions: Management priorities focused on shareholder value Strong customer growth, building the foundations for future revenue growth On track to meet 2011 guidance, leveraging our diversification and strong growth in mobile data Sound FCF generation, strong liquidity position New or
Slide 28: Organic growth definitions
Organic growth: In financial terms, it assumes constant average exchange rates as of January-September 2010, and excludes changes in the perimeter of consolidation and hyperinflation accounting in Venezuela. Therefore, in January-September 2010 the consolidation of Vivo, HanseNet, Tuenti and Acens a