Telefonica Sa · BME:TEF

Telefonica Sa — Non-Deal Roadshow (May 2010)

41 slides from Telefonica Sa's roadshow presentation, May 27, 2010

  1. Slide 1: Telefónica: Delivering sustainable growth

    Telefónica: Delivering sustainable growth Frankfurt, May 27th, 2010 1 Telefónica Servicios Telefonica, S.A. Audiovisuales S.A. / Telefónica España S.A. Título de la ponencia / Otros datos de interés / 26-01-2010 Área: Lorem ipsum 1 Razón Social: Telefónica

  2. Slide 2: Disclaimer

    Disclaimer This document does not constitute or form part of any offer for sale or solicitation of any offer to buy any securities in the United States or elsewhere nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment to purchase shares. Secu

  3. Slide 3: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  4. Slide 4: In the new digital world, advanced global operators are key to build new value proposals

    01 In the new digital world, advanced global operators are key to build new value proposals Global Telco Advanced data distribution & services platform Operators User equipment Software & App manufacturers providers $ Internet content access platforms Network equipment providers Content creators Age

  5. Slide 5: Service platforms enable a new wave of revenues

    01 Service platforms enable a new wave of revenues TELEFONICA S.A. Investor Relations 5

  6. Slide 6: Our scale and value chain positioning places us as the partner choice

    01 Our scale and value chain positioning places us as the partner choice in the new digital ecosystem to build high potential intersectorial alliances with every sector TELEFONICA S.A. Investor Relations 6

  7. Slide 7: Communication demand will keep growing

    01 Communication demand will keep growing TELEFONICA S.A. Source: Ericsson, LTE Webinar October 2009 & Vision 2020 December 2009. Investor Relations 7

  8. Slide 8: New digital applications and services will accelerate this trend

    01 New digital applications and services will accelerate this trend, increasing ICT share in consumer’s wallet TELEFONICA S.A. Source: Worldwide. Euromonitor international. Bain Analysis. Investor Relations 8

  9. Slide 9: We see a larger business with a change of mix in Telefónica

    01 We see a larger business with a change of mix in Telefónica Access and Voice (1) BB (2) Applications (3) Others (4) 2008 81% 13% 4% 2% Voice 2009(5) 79% 15% 5% 1% 2012 E(5) 72% 21% 6% 1% Data % Revenues (1) Access & Voice: Fixed and mobile access and voice (SMS included), fixed and mobile equipme

  10. Slide 10: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  11. Slide 11: We have maintained our superior performance despite a very challenging environment

    02 We have maintained our superior performance despite a very challenging environment 2009 Revenue Organic Growth(1) +3.9 p.p. gap +0.2%  Despite the adverse economic environment in Spain, we have maintained our growth gap vs. the sector… -1.9% -2.6%  … while maintaining our benchmark cash flow Av

  12. Slide 12: Distinctive top line performance

    02 Distinctive top line performance Revenue growth acceleration for the Q1 10 Revenue by region 2nd quarter in a row (contribution to organic growth y-o-y) Organic y-o-y growth ex MTRs +3.7% Organic y-o-y +2.8% +2.5% +2.1 p.p. +0.2 p.p. +0.9% +2.4% growth +1.5% +1.4% +1.4% +0.4 p.p. T. España +0.9%

  13. Slide 13: We have already set the bases for future growth

    02 We have already set the bases for future growth  Geographical & Business DIVERSIFICATION  Strong GROWTH POTENTIAL in our markets CAGR 08 – 12 E number of Telefónica markets (1) accesses and traffic FBB(2) Fixed Fixed +10% ++0% 0% Traffic +46% MBB(3) Mobile +70% +4% Broadband everywhere Access t

  14. Slide 14: Growing our customer base & improving its quality

    02 Growing our customer base & improving its quality Total accesses (1) Mobile Retail Accesses (1,2) millions millions +41 m >+68 m >320 ≈228 273 207 252 187 Dec-08 Mar-10 Dec-12E Dec-08 Mar-10 Dec-12E Contract Mobile Accesses (1) MBB (1,3) millions millions Enlarging Enlargingcustomer customer Smar

  15. Slide 15: Massive MBB development (i)

    02 Massive MBB development (i) MBB (2) penetration MBB accesses (2) MBB connectivity revenues (3) % Big and Small screen accesses over mobile millions € in billions accesses ~67 5/5.7 27% +40%/+45% +65% 8% 9 16 1.3 5% Dec-08 Mar-10 Dec-12E Dec-08 Mar-10 Dec-12E FY 2008 FY 2012E CAGR 08-12 E CAGR 08-

  16. Slide 16: Massive MBB development (ii)

    02 Massive MBB development (ii)  A reality even in a difficult environment: T. España 364 Wireless data 2.3 monthly data flat rates net adds 168 Avg 09 rates in Mar-10 (000’s) (1) 271 >x2 vs. Mar-09 Q1 09 Q1 10 Data +52% revenue growth connectivity +50% +68% in 2009 revenues (y-o-y change)  Tiered

  17. Slide 17: Further FBB expansion through DSL upgrade and selective FO deployment

    02 Further FBB expansion through DSL upgrade and selective FO deployment FBB (1) penetration FBB retail accesses (1) FBB connectivity revenues (2) % FBB penetration: FBB accesses over fixed millions € in billions accesses >19 52% +5%/+8% +11% 38% 29% 12.5 16.0 6.3 Dec-08 Mar-10 Dec-12E Dec-08 Mar-10

  18. Slide 18: Development of applications and new business

    02 Development of applications and new business Apps. & New business revenue (1) € in billions +12%/+15% Mobile Apps. Market 2.3 from €6 bn to €17.5 bn in 2009-12(3) FY2008 FY 2012E CAGR 08-12 E(2)  Mobile applications: >120m Mobile applications downloaded in 2012E  Pay TV: >4.5m Customers by 2012

  19. Slide 19: Defense and growth of traditional business

    02 Defense and growth of traditional business Retail accesses (1) Access & voice revenue (4) millions € in billions ~3.5% -2%/+1% +5 p.p 47.1 ~265 232 243 +1%/+4% 75% Mobile 67% Mobile (2) 83% 81% 86% Fixed 33% -9%/-6% Fixed (3) 19% 17% 14% 25% Dec-08 Mar-10 Dec-12E FY 2008 FY 2012E CAGR 08-12 E Mob

  20. Slide 20: We will fully capture revenue growth potential in our markets

    02 We will fully capture revenue growth potential in our markets CAGR 08-12E(1) Revenue Mix(1) FY 2008 MBB +40%/+45% 81% 13% 4% 2% Applications +12%/+15% & new business FY 2012E FBB +5%/+8% 72% 21% 6% 1% Accesses & Voice(2) Traditional -2%/+1% BB connectivity(3) Applications & new business(4) Others

  21. Slide 21: Medium term guidance will lead to sustainable growth and an even lower risk profile

    02 Medium term guidance will lead to a sustainable growth and an even lower risk profile 2008 CAGR 08-12E (2) Adjusted (2) Accesses (1) 252 (millions) >320 Revenues +1%/+4% € in millions 57,946 OIBDA € in millions 22,602 +2%/+4% OI +4%/+7% € in millions 13,556 > € 40 bn Cumulative FCF (3) OpCF +5%/+

  22. Slide 22: We have clear priorities for 2010

    02 We have clear priorities for 2010  Reinvesting efficiency (€ in millions) 2009 Adjusted(1) 2010 Guidance(1) gains to foster revenue #1 Capturing top expansion line growth Revenue 56,407 +1%/+4% prospects  Higher CapEx to OIBDA 22,344 +1%/+3% support growth in CapEx 7,262 7,450/7,650 customers &

  23. Slide 23: On track to meet 2010 guidance

    02 On track to meet 2010 guidance Revenue OIBDA +1.7% 2010 GUIDANCE +1%/+4%  Q1 10/Q1 09 2009 GUIDANCE +1%/+3%  Q1 10/Q1 09 -3.0% 2010 EPS target confirmed (€ 2.1) CapEx OIBDA €1,208 m 2010 GUIDANCE €7,450/7,650 m  Q1 10 -3.0% H1 10E 9M 10E FY 10E • Restructuring in T. Europe (H1 10) • Easier y-o

  24. Slide 24: We maintain our selective M&A approach

    02 We maintain our selective M&A approach Continue capturing synergies M&A Priorities from our Strategic Alliances  Spectrum auctions in current markets to foster growth: €740 m cash  Germany & Mexico in H1 2010 synergies(1) since Mar-08  Potential awarding process in Spain along 2010  In-market

  25. Slide 25: Dividend commitments are supported by our FCF generation

    02 Dividend commitments are supported by our FCF generation 1.75 1.40 1.15 #1 on Dividend Yield DPS (€) among top 50 companies worldwide by Mkt Cap FY 2009 FY 2010E(1) FY 2012(1) minimum target(2)  DPS targets reiterated  Dividend is well covered  No dependence on cash repatriation from any parti

  26. Slide 26: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  27. Slide 27: Macroeconomic situation

    03 Macroeconomic situation yoy 8 6 4 2 Consumption 0 growth (%) Spain: consumption -2 -4 -6 growth far from -8 fundamentals Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Actual consumption Consumption based on fundamentals 3.1% 3.3% Household 2.7% 3.0% 2.9% 2.2% Below

  28. Slide 28: T. España: continued top line recovery

    03 T. España: continued top line recovery Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Revenues (comparable y-o-y -3.9% change) -5.7% -4.5% -6.6% FY 09 -6.9% -5.9% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Top line gradual recovery, Wireless lowest revenue decline for -7.1% (Service revenues) the last five quarters -7.3% -7.7

  29. Slide 29: Competitive environment: is there a price war in Spain?

    03 Competitive environment: is there a price war in Spain? 55% 54% 57% 56% 46% 46% Telefónica Strong leadership in Market 14% 17% the market Shares (1) 2008 2009 Dec-08 Dec-09 Dec-08 Dec-09 Dec-08 Dec-09 Total market Wireless Fixed BB Pay TV revenues Contract Rational pricing environment Q1 10 Q1 10

  30. Slide 30: Strong commercial activity across businesses

    03 Strong commercial activity across businesses Building foundations for future revenue growth 197 Net adds 45 102 30 (000’s) Q1 09 -8 Q1 09 Q1 10 Q1 10 Q1 09 Q1 10 Q1 09 Q1 10 -15 -278 -321 Wireless Fixed BB Pay TV Fixed Lines Contract TELEFONICA S.A. Investor Relations 30

  31. Slide 31: Are you under investing?

    03 Are you under investing? y-o-y CapEx +56% +4% evolution (1) (2009; % change) Weighted market -19.5 % -15.6% -12.1% average (ex-TEF) -22.6% Weight in -41.2% market 57% 19% 13% 7% 2% 2% CapEx (1) (2009 %) 96% 4% total CapEx total CapEx TEF ACHIEVING HIGHER EFFICIENCIES BASED ON  Lower economic act

  32. Slide 32: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  33. Slide 33: Is LatAm growth potential exhausted?

    04 Is LatAm growth potential exhausted?  Macroeconomic strength:  >5% annual GDP growth in 2004-08, but –2.3% in 2009E 28% of population in  >3.7% GDP growth in 2010E & 2011E the region < 14 years Population (million inhabitants)  Structural social improvements in the growth period:  Unemployme

  34. Slide 34: What are the growth opportunities in the region?

    04 What are the growth opportunities in the region? FURTHER PENETRATION POSTPAY MIGRATION: MBB: NEXT KEY INCREASE UP & CROSS SELLING WAVE OF GROWTH Mobile penetration Customer mix % postpay MBB accesses(2) + 130-140 m ARPU accesses: ~65% Tiered pricing improvement voice accesses(1) WIRELESS >100% 25

  35. Slide 35: ARPU upside through up & cross selling in a more mature market

    04 ARPU upside through up & cross selling in a more mature market EXAMPLE (1) Outgoing ARPU evolution in Chile, Jul-09 (Index) Customer mix (% Postpay)  106% penetration ~35%  Strong customer growth in the market 28%  Lowest churn in the region Dec-08 Dec-12E Prepay +Usage Prepay 100 143 Upsellin

  36. Slide 36: Telesp gradual recovery

    TELEFÓNICA LATAM 04 Telesp gradual recovery Best Q1 in history for FBB +61%  Gaining commercial momentum: 163  Total accesses growth for the 1st time since 101 Q3 08 FBB 69 59  Limited activity in Jan-10 on heavy rains Net adds (000)  Positive fixed line net adds in March & April Wireline  Stro

  37. Slide 37: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  38. Slide 38: How are you going to deliver growth in UK and Germany?

    05 How are you going to deliver growth in UK and Germany? Q1 10 Mobile Service Revenue Growth  Base expansion & Mobile internet driving growth (y-o-y ; local currency)  Quality base improvement: 86% of Q1 mobile net adds in contract  “Home of Smartphones”: over 7 m MBB in Q1, positively UK +9.4%

  39. Slide 39: Index

    Index 01 Industry: Is there growth in the Telecoms sector? 02 Telefónica Group: i. Will Telefónica maintain its differential growth profile? ii. Is your dividend policy sustainable? iii. What are your M&A ambitions? 03 T. España: i. Macroeconomic situation ii. Revenue performance: is the worst over?

  40. Slide 40: Conclusions

    6 Conclusions  One of the best positioned players to take advantage of the growth industry  Top quality performance in 2009 in a very challenging environment  On track to meet 2010 positive guidance  Very attractive medium term guidance reiterated  Sector leading cash return. DPS targets confir

  41. Slide 41: TELEFONICA S.A. Investor Relations

    TELEFONICA S.A. Investor Relations 41

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