Telefonica Sa · BME:TEF

Telefonica Sa — Q1 2003 Earnings Presentation

22 slides from Telefonica Sa's earnings presentation, April 2003

  1. Slide 1: January - March 2003 Results

    January - March 2003 Results This presentation is being broadcast live on the Internet

  2. Slide 2: Disclaimer

    DISCLAIMER This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the inten

  3. Slide 3: Financial Highlights

    FINANCIAL HIGHLIGHTS % Change % Change Jan-Mar 03 Jan-Mar 03/ Jan-Mar 02 FY 02/ FY 01 Operating Revenues 6,458.9 -12.9% -8.5% Operating Costs 3,822.4 -16.0% -9.0% EBITDA 2,819.1 -7.4% -8.4% EBIT * 1,258.1 +4.1% -7.3% Adj. EBIT ** 1,073.2 +50.5% c.s. Net Income 543.4 +348.9% c.s. „ Highest expected n

  4. Slide 4: Improving the bottom line at all levels across the P&L

    IMPROVING THE BOTTOM LINE AT ALL LEVELS ACROSS THE P&L GOODWILL EXTRAORDINARIES & ASSOCIATES AMORTIZATION FINANCIAL EXPENSES „ Real Estate divestitures „ Sale of ETI & Azul TV „ 2002 write-downs: „ Reversal of treasury stock „ Closing of IPSE operations Terra Lycos provision „ Management of Vía Digi

  5. Slide 5: Latam forex negative impact is reaching its peak

    LATAM FOREX NEGATIVE IMPACT IS REACHING ITS PEAK FX IMPACT ON REVENUES AND EBITDA GROWTH 1Q02 1H02 9M02 FY 2002 1Q03 Revenues EBITDA -7.5 p.p. -8.0 p.p. -10.0 p.p. -12.5 p.p. -12.4 p.p. -14.6 p.p. -17.2 p.p. -18.4 p.p. QUARTERLY GROWTH RATES CONTRIBUTION TO EBITDA GROWTH EXCLUDING FOREX (EXCLUDING F

  6. Slide 6: Contribution by business line

    CONTRIBUTION BY BUSINESS LINE COMPONENTS OF CONTRIBUTION TO REVENUES EVOLUTION (€ in Mill.) GROWTH* 7,418.6 32.2 148.9 733.3 Cell. Bus.: - 1.4 p.p. 154.5 99.0 6,458.9 55.8 TdE: - 0.6 p.p. 45.0 T.Latam: - 9.9 p.p. Rev. TdE Mobile T. T. Terra Media Others & Rev. 1Q02 Latam Data Lycos Eliminations 1Q03

  7. Slide 7: Keeping a focus on efficiency...

    KEEPING A FOCUS ON EFFICIENCY... COST CONTROL ACROSS THE GROUP * OPEX EVOLUTION EXCLUDING FX % Change % Change FY02/FY01 1Q03/1Q02 TdE Group 12.4% +0.9% -2.1% Cell. Business +4.7% -15.4% 4.9% T. LATAM -29.2% -33.6% 1.1% T. Data Global -16.3% -24.2% 2001 2002 1Q03 TEF Group -9.0% -16.0% * Operating &

  8. Slide 8: ...benefiting the Group's margins

    ... BENEFITING THE GROUP´S MARGINS GROUP EBITDA MARGIN +2.3 p.p. 43.6% 41.2% 41.3% 2001 2002 1Q03 +6.1p.p. -1.0p.p. -0.1p.p. 1Q02 48.7% 47.7% 44.7% 44.6% 46.2% 1Q03 40.1% +13.8p.p. +4.9p.p. +4.5p.p. +6.7p.p. 14.2% 15.1% 10.2% 11.1% 9.9% 0.4% 6.6% Terra Lycos 3.1% TdE Cellular T. Latam T. Data Direct

  9. Slide 9: Consolidated capex affected by seasonality

    CONSOLIDATED CAPEX AFFECTED BY SEASONALITY GROUP CAPEX CAPEX BREAKDOWN 951.6 Total % Change -36.9% € in Million 1Q03/1Q02 600.9 TdE Group 285.0 -31.1% Cell. Business 178.7 -16.8% T. LATAM 107.6 -55.5% T. Data Global 22.5 -56.5% 1Q02 1Q03 „ CAPEX EFFORT TRADITIONALLY BIASED TOWARDS SECOND HALF OF THE

  10. Slide 10: Telefónica de España Parent: Traditional business

    TELEFONICA DE ESPAÑA PARENT: TRADITIONAL BUSINESS TRADITIONAL REVENUES BREAKDOWN TRAFFIC (estimated) (Million Euros) % Change (million minutes) 1Q03 1Q02 1Q03/1Q02 23.8 78.8 OUTGOING 23,038 25,048 -8.0% Voice 14,821 15,871 -6.6% 1,930.0 Local 8,106 9,087 -10.8% -2.6% Provincial 2,108 2,166 -2.7% DLD

  11. Slide 11: Telefónica de España Parent: Operating expenses

    TELEFONICA DE ESPAÑA PARENT: OPERATING EXPENSES OPERATING EXPENSES BREAKDOWN (Million Euros) -6.5% 0.2% -1.8% -3.0% 234.9 1,321.9 498.8 42.3 6.8% 545.9 Personnel Supplies Taxes External Service 1Q03 & Others EXTERNAL SERVICES & PERSONNEL EXPENSES SUPPLIES EXPENSES OTHERS 545.9 -5.0% 498.8 95.8% -11.

  12. Slide 12: Telefónica de España: Improving ADSL metrics in 1Q03

    TELEFONICA DE ESPAÑA: IMPROVING ADSL METRICS IN 1Q03 145.5 73.8 -46.2% GROSS INCREMENTAL 71.7 CAPEX per new -12.6% MARGIN connection (€) (euros in millions) (12 month rolling) Revenues Direct Gross Incremental 2001 2002 1Q03 Costs (1) Margin RETAIL ARPU ADSL CONNECTIONS RETAIL SAC per (€) (thousands

  13. Slide 13: T. Latinoamerica results...

    T. LATINOAMERICA RESULTS... REVENUES BREAKDOWN EBITDA BREAKDOWN (€ in Millions) (€ in Millions) Annual growth in Local currency +5.2% +6.8% -1.0% +6.8% +2.6% -0.6% 291.8 4.2 1,433.8 -2.2% 127.6 1.6 678.9 +15.7% +14.3% 221.5 97.1 +7.8% 105.8 178.1 726.2 349.7 Telesp TASA CTC * TdP Others & T.Latam Te

  14. Slide 14: ...with the solid underlying performance of Telesp

    ...WITH THE SOLID UNDERLYING PERFORMANCE OF TELESP LOCAL REVENUES LONG DISTANCE REVENUES ($R in millions) ($R in millions) 1,787 508 +7.8 +70.8% 1,658 297 1Q02 1Q03 1Q02 1Q03 „ Monthly fee: +6% yoy driven by a 13% tariff increase in 02 „ 42% DLD(interstate) market share as of „ Usage revenues: +9.5%

  15. Slide 15: Telefónica Cellular Business

    TELEFONICA CELLULAR BUSINESS TELEFONICA MOVILES ESPAÑA BRAZIL* (€ in millions) (€ in millions) +1.9% % YoY local currency 1,574.0 1,603.9 +18.3% % YoY euros Handset 364.3 Rev. -34.0% +12.8% +5.3 p.p. +20.0% +0.5 p.p. 884.2 240.6 Usage +5.7% 784.1 49.8% 55.1% -33.1% Rev. 39.8% 1,500.0 143.1 39.3% 1,4

  16. Slide 16: Telefónica Data Group

    TELEFONICA DATA GROUP 1Q03 GROUP REVENUES INCUMBENT MARKETS REMAIN ROBUST (Annual % Change) (EBITDA MARGIN) 1Q02 SPAIN LATAM 1Q03 +13% 28% 20% Ex-Changes in 28% 16% 17% 16% Reported consolidations 21% 14% Ex-Fx & Changes -1% 6% in consolidation -11.5% -0% 1Q02 1Q03 Argentina Brazil Chile Peru CASH F

  17. Slide 17: Net financial expenses

    NET FINANCIAL EXPENSES (*) Euros in millions Mar03 Mar02 % Change Debt financial expense (486.3) (483.7) 0.5% Other financial expenses (15.9) (10.4) 52.6% Financial Income 96.4 91.6 5.3% Financial provisions and net forex (1) 159.6 (453.6) (n.m.) Net financial results (246.2) (856.1) (71.2%) Net fin

  18. Slide 18: We continue strengthening our credit profile

    WE CONTINUE STRENGTHENING OUR CREDIT PROFILE CONSOLIDATED DEBT EVOLUTION COMPONENTS OF 1Q2003 (€ IN MM) DEBT REDUCTION -25.7% 22,533 1,458 28,942 387 21,502 25,789 423 463 22,533 21,502 FY2001 2Q02 FY2002 1Q03 2002 Operating Forex Financial Changes in 1Q 2003 FCF Investments Consolidation EXTENDING

  19. Slide 19: Jan-Mar 2003 cash flow statement

    JAN-MAR 2003 CASH FLOW STATEMENT (Euros in millions) Jan-Mar 2003 I Cash flows from operations 2,833.0 II Other payment related to operating activities (189.0) III Net interest payment (394.0) IV Payment for income tax (34.6) A= I+II+III+IV Net cash provided by operating activities 2,215.4 V Net pay

  20. Slide 20: Conclusions

    CONCLUSIONS „ THE COMPANY IS SUBSTANTIALLY IMPROVING ITS BOTTOM LINE ACROSS THE P&L „ THE GROUP REMAINS FOCUS ON EFFICIENCY, KEEPING STRONG MARGINS AND SOLID CASH FLOW GENERATION „ FOREX, WHICH HAS CONTINUED TO HEAVILY AFFECT THE GROUP RESULTS, IS EXPECTED TO GRADUALLY EASE AS THE YEAR PROGRESSES „

  21. Slide 21: Slide 21

  22. Slide 22: Telefónica de España: 2002 Operating Revenues

    ADDENDUM ADDENDUM TELEFÓNICA DE ESPAÑA: 2002 Operating Revenues (Euros in Millions) Jan-Mar Jan-Jun Jan-Sept Jan-Dec Traditional Services 1.930,0 3.919,1 5.825,3 7.791,4 Client network access 716,2 1.436,6 2.155,5 2.873,9 Voice usage (Net total) 933,7 1.882,4 2.775,6 3.682,6 Local 233,1 469,2 667,0

Telefónica — Q1 2003 Earnings Presentation on 6ix