Telefonica Sa · BME:TEF
Telefonica Sa — Q4 2023 Earnings Presentation
27 slides from Telefonica Sa's earnings presentation, Feb 22, 2024
Slide 1: This document is classified as PUBLIC by Telefónica
***Este documento está clasificado como PUBLICO por TELEFÓNICA. ***This document is classified as PUBLIC by TELEFÓNICA.
Slide 2: Disclaimer
Disclaimer This document and any related conference call or webcast (including any related Q&A session) has been prepared by Telefónica, S.A. (hereinafter “Telefónica” or “the Company”, and in conjunction with its subsidiaries the “Telefónica Group”) exclusively for been used during the presentation
Slide 3: Q4 23 & 2023 Summary
Q4 23 & 2023 Summary Mr. José María Álvarez-Pallete Chairman & CEO
Slide 4: Transform, Deliver and Commit
Transform, Deliver and Commit WE TRANSFORM WE DELIVER WE COMMIT Continued streamlining 2023 guidance delivered, On track for GPS Building a stronger TEF FCF beat ambition, FCF 24 >10% 2
Slide 5: Stronger Telefónica
Stronger Telefónica Enhanced Next Generation Leaner CUSTOMER NETWORKS OPERATIONS experience focus • More fibre, +10m FTTH PPs to 74m • More customers, +5m to 388m • Operating leverage +1 p.p. to 19%, • More 5G, 62% coverage in core • More satisfied, 31 NPS score OpEx+CapEx efficiencies markets (Germ
Slide 6: Guidance delivered
Guidance delivered Initial 2023 Upgraded 2023 FY 23 guidance guidance Revenue “Low single digit ~4% 3.7% y-o-y organic growth” OIBDA “Low single digit ~3% 3.1% y-o-y organic growth” CapEx/Sales ~14% ~14% 14.0% Former definition ~€4bn ex-spectrum €4.2bn FCF New definition ~€2.1bn €2.3bn Dividend Dec-
Slide 7: We delivered and we commit
We delivered and we commit Reported FY 23; FCF ex-spectrum; EBITDA adjusted and EBITDAaL adjusted 5
Slide 8: Q4 23 Results: Core Markets
Q4 23 Results: Core Markets Mr. Ángel Vilá COO
Slide 9: Telefónica Group: strong Q4 results with exceptional FCF
Telefónica Group: strong Q4 results with exceptional FCF Revenue Service revenue B2B revenue €10.2bn €9.0bn €2.2bn +4.1% y-o-y organic +4.2% y-o-y organic +4.9% y-o-y organic OIBDA OIBDA - CapEx FCF €3.5bn €1.9bn €1,562m +4.5% y-o-y organic +18.7% y-o-y organic +€432m q-o-q 6
Slide 10: Spain: continuing to improve and execute
Spain: continuing to improve and execute Convergent KPIs Revenue & OIBDA growth (y-o-y organic) ARPU (€) Churn (%) Revenue Retail Rev. OIBDA Highlights powered by 3.3%2.7% 90.3 92.6 91.5 90.6 91.2 2.4% 1.7% 1.9% 0.2% 0.9% 0.3% 0.3% 1.0% 0.1% • Accelerated retail revenue growth: strong 1.0% 0.9% 0.9%
Slide 11: Brazil: keeping up the strong momentum
Brazil: keeping up the strong momentum Accesses growth (y-o-y) Revenue & OIBDA growth (y-o-y organic) Mobile contract share Contract FTTH Revenue OIBDA Highlights powered by 43.5% 43.7% 43.6% 43.4% 41.7% 12.1% 11.6% 11.1% 10.1% 9.5% • Growing above inflation on differential 8.9% value proposition 18
Slide 12: Germany: healthy trends in a growing market
Germany: healthy trends in a growing market Postpay net adds (k) Revenue & OIBDA growth (y-o-y organic) 368 396 Revenue OIBDA Highlights powered by 302 284 8.0% 264 6.6% 6.6% • Sustained financial momentum on 4.4% 4.6% 3.6% 3.7% robust commercial traction; >1.3m 2.8% 2.2% 1.7% 2023 postpaid net adds
Slide 13: Virgin Media O2: increasing customers, fibre and 5G reach
Virgin Media O2: increasing customers, fibre and 5G reach Fixed network build (k PPs) Revenue & OIBDA growth (y-o-y organic) UBB PPs Revenue OIBDA 17.0m 299 Highlights powered by 251 188 175 9.9% 10.6% • Solid commercial traction 108 6.2% 7.1% 6.3% • Record fixed network expansion; +833k 3.9% 3.7% 3
Slide 14: T. Tech: keeping above industry momentum, cornerstone of strong B2B
T. Tech: keeping above industry momentum, cornerstone of strong B2B T. Tech Revenue Operational Highlights Reported (€m) Constant Perimeter +21.7% vs FY 22 New operating model delivering value • Key driver to increase share of wallet +26.7% 1,878 Highly skilled and diversified team 1,482 • 6.3k prof
Slide 15: T. Infra: strengthening Telefónica's infrastructure to support growth and efficiency
T. Infra: strengthening Telefónica’s infrastructure to support growth and efficiency Accelerating FTTH deployment Telxius >110k km international network by 2026 Total FTTH Premises Passed1 (m) ~60% ~30 Solid profitability 21 51.4% OIBDA margin (FY 23) 13 Dec-22 Dec-23 2026E Joining Firmina subsea ca
Slide 16: Q4 23 Results & Capital Allocation
Q4 23 Results & Capital Allocation Mrs. Laura Abasolo CFCO & Head of T. Hispam
Slide 17: T. Hispam: progressing in "asset-light" model
T. Hispam: progressing in “asset-light” model Accesses growth (y-o-y) Revenue & OIBDA growth (y-o-y organic) Contract FTTH & Cable Revenue OIBDA Highlights powered by 8.8% 19% 18% 16% 12% 2.8% 1.6% 1.7% 8% • FiberCo model allows FTTH accesses +8% 4% 4% (1.5%) (0.4%) while reducing CapEx 3% 3% (3.9%)
Slide 18: Double-digit growth of underlying EPS
Double-digit growth of underlying EPS Underlying EPS €0.37 2,369 1.8bn +18.6% +17.1% 1.2bn* (892) Net Income Spain VMO2 Others Net income reported restructuring Impairment Underlying Accounting non-cash items (*) net of taxes 14
Slide 19: Solid balance sheet to face any market environment
Solid balance sheet to face any market environment Net Financial Debt € in million ND/OIBDAaL ND/OIBDAaL ND/OIBDAaL ND/OIBDAal 2.54x 2.52x 2.60x 2.66x 26,687 (3,988) 816 27,349 28.0bn 854 (129) 788 26,533 2,320 Dec-22 FCF Shareholder Pre-retirement Net financial FX & Dec-23 ex- TD shares Dec-23 Dec-
Slide 20: Capital allocation: investing in our business whilst maximizing shareholder value
Capital allocation: investing in our business whilst maximizing shareholder value CapEx over Revenue Capital allocation priorities FCF 2024 >10% growth 17.0% • Investing in networks; i.e fiber and 5G FCF CAGR 23-26 >10% growth • Paying DPS with a floor of €0.3/sh 14.8% • Reducing leverage to our tar
Slide 21: 2024 and Beyond
2024 and Beyond Mr. José María Álvarez-Pallete Chairman & CEO
Slide 22: ESG: We keep transforming
ESG: We keep transforming Environmental Social Governance 1 3 Net-zero by 2040 > 90% MBB rural coverage by 2024 Parity in top governing bodies by 2030 Key targets 100% renewables by 2030 37% women executives by 2027 Zero-tolerance of corruption 2 4 Zero-waste by 2030 Zero adjusted gender pay gap ~40
Slide 23: Going forward, we keep transforming
Going forward, we keep transforming Enhanced Next generation Leaner CUSTOMER NETWORKS OPERATIONS Experience focus • More fibre, FTTH PPs to ~106m in 2026 • >60% convergent customers 2026 (>50% 2023) • Legacy Switch off (74m 2023) • ~50% IT/B2B Service rev in 2026 (~40% 2023) • Spain retail copper in
Slide 24: We keep commiting
We keep commiting 2023 Actuals 2024 Guidance 2023-26 CAGR Revenue 1.6% ~1% ~1% y-o-y reported B2C ~1.5%; B2B ~5% EBITDA 1.4% 1% to 2% ~2% y-o-y reported EBITDAaL - CapEx 5.7% 1% to 2% 5% y-o-y reported CapEx/ Sales 13.3% Up to 13% <12% FCF €2.3bn >10% >10% y-o-y reported Cash Dividend €0.3/share €0.
Slide 25: Key Takeaways
Key Takeaways Delivered solid Q4 results to close out 2023, meeting our upgraded FY guidance and exceeding FCF target Positioned well for 2024 and on track with the GPS plan to achieve our 23-26 FCF CAGR target of >10% Good momentum across our business units; Spain growing and continued strength in
Slide 26: Results presentation and Q&A Session
Results presentation and Q&A Session Telefónica’s management will host a webcast on 22 February at 10:00 AM (CET), 9:00 AM (GMT), and 4:00 AM (EST) Participants from Telefónica • José María Álvarez-Pallete l Chairman & CEO • Lutz Schüler l CEO Virgin Media O2 • Ángel Vilá l COO • Eduardo Navarro l C
Slide 27: Climate A List 2023
Climate A Bloomberg Member of DJSI 1st in sector 1st company worldwide in 2023 List 2023 GEI 2023 Europe 2022 Digital Inclusion Benchmark For further information, please contact: Investor Relations Adrián Zunzunegui (adrian.zunzunegui@telefonica.com) Isabel Beltrán (i.beltran@telefonica.com) FOLLOW