Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — H1 2008 Earnings Presentation
25 slides from Telefonica Sa's earnings presentation, Jul 31, 2008
Slide 1: Quarterly Results January-June 2008
Quarterly Results January-June 2008 TELEFONICA, S.A. July 31 st, 2008
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. These statements appear in a number of places in this doc
Slide 3: H1 08 Results Highlights
H1 08 Results Highlights Strong earnings, leveraging execution, unmatched diversification and integrated business model: Healthy organic1 growth rates, ramping from revenue to OI Solid results in Europe, outperforming competitors in key markets Robust growth in Latin America Enhanced margins and hig
Slide 4: Robust set of financials in H1 08, ahead of the pack
Robust set of financials in H108, ahead of the pack... Constant exchange rate as of H1 07. GROUP FINANCIALS Jan-Jun 2008 Revenues 28,149 11,123 Operating Income (OI) 6,602 Change H1 08/H1 07 Net income 3,593 +1.2% - -1.3% +0.7% - -6.2% € in millions Operating Income before D&A (OIBDA) OpCF (OIBDA-Ca
Slide 5: Strong underlying bottom line growth
- -4 (c.s.) - -1,388 (-3.4%) - -1,520 (+20.9%) - -97 (-14.3%) 6,602 3,593 H1 08 OI Associates Financial results Taxes Minorities H1 08 Net Income 11,123 - -4,521 (-4.1%) D&A H1 08 OIBDA € 351 m (T. Europe^s PPA) € 87 m (T. O2 CR^s PPA) ....with a strong underlying bottom line growth... € in millions
Slide 6: High diversification across markets & businesses
Jun-08/Jun-07 High diversification across markets & businesses +21.4% +3.9% +9.8% T. Espana T. Europe T. Latam +57.4% +19.0% +25.1% Mobile BB Pay TV +15.2% Total 47.0 43.8 147.9 245.1 millions 182.7 11.5 2.0 43.4 - -0.1% Fixed H1 08 Revenue T. Europe: 25% (€7,006 m) Others & eliminations 1% T. Espan
Slide 7: Superior organic growth driven by Latin America
.... translating into a superior organic growth driven by Latin America ... H1 08 OIBDA2 +4.3 p.p. +1.6 p.p. +0.5 p.p. T. Espana T. Europe T. Latam +6.7% TEF Group +5.5 p.p. +4.6 p.p. T. Espana T. Europe T. Latam +12.0% TEF Group +2.2 p.p. H1 08 Revenue 1 H1 08 OIBDA2 H1 08 Revenue1 +12.2% +6.2% +2.
Slide 8: Benchmark profitability and high OpCF generation
.... with benchmark profitability and high OpCF generation (€ in millions) 1,177 - -42 7,673 2,332 4,122 T. Espana T. Latam Others & Eliminations Total T. Europe +12.9% Organic1 y-o-y growth rate Europ e 5,299 H1 08 38.2% H1 07 36.4% +1.8 p.p. Preserving CF generation +7.7% +15.1% Organic1 OIBDA Mar
Slide 9: Fully on track to meet 2008 Group guidance
We are fully on track to meet 2008 Group guidance... GROUP FINANCIALS ? OIBDA Growth1 Revenue Growth1 ? % Change H1 08/H1 07 GUIDANCE 6%/8% +7.1% ? OI Growth1 +17.2% % Change H1 08/H1 07 GUIDANCE 13%/19% +8.7% % Change H1 08/H1 07 GUIDANCE 7.5%/11% CapEx1 € 3,513 m H1 08 GUIDANCE ~ € 8,600 m ? Guida
Slide 10: All regions delivering 2008 commitments
.... with all our regions delivering 2008 commitments T. Espana T. Latinoamerica T. Europe +6.2% Revenue Growth (1) +2.1% +13.2% +6.2% +15.4% +4.0% OIBDA Growth1 ? ? ? % Change H1 08/H1 07 % Change H1 08/H1 07 % Change H1 08/H1 07 Guidance criteria: 2007 adjusted figures exclude Airwave and Endemol,
Slide 11: Telefónica España: Solid results
Telefonica Espana: Solid results ... TELEFONICA ESPANA *Including PUT effect Improved revenue growth in wireline (+2.2%1 vs. H1 07): Sustained growth rate in Internet & BB revenues ^10% (Q1 08 and Q2 08) +1.2% H1 08 y-o-y growth in mobile service revenue: Customer revenue up 3.0% driven by robust wi
Slide 12: Leveraging our integrated management model
....leveraging our integrated management model TELEFONICA ESPANA T. ESPANA Wireline Wireless 50.1% 49.0% 44.6% 49.2% 47.6% OIBDA growth (H1 08 y-o-y change) OIBDA margin (H1 08) OIBDA growth ahead of revenue growth both in wireline and wireless in Q2 08 Solid margins across businesses and healthy ex
Slide 13: Wireline Business: Sustained commercial activity
Wireline Business: Sustained commercial activity fostering 2P & 3P adoption TELEFONICA ESPANA Limited line losses in a growing market: +1.9%E y-o-y fixed line market growth High quality BB offering to sustain leadership: +18.3% y-o-y in retail BB accesses to over 5 m Enhanced market share to >57% as
Slide 14: Wireless Business: Further customer growth while fostering usage
Wireless Business: Further customer growth while fostering usage TELEFONICA ESPANA Sound leadership despite new entrants, leveraging market leading churn rate: 23.2 m mobile customers in a 113% penetration market 311K contract net adds in Q2; 217k in total Stable blended churn rate at 1.8% & contrac
Slide 15: Telefónica Latinoamérica: Very robust results
Telefonica Latinoamerica: Very robust results in a fast growth region TELEFONICA LATAM Includes Telemig in June 2007. Assuming constant exchange rates and including the consolidation of TVA in January-June2007 and Telemig in April-June 2007. Includes Central America, Colombia, Peru, Ecuador, Chile,
Slide 16: Wireless business: Strong commercial push & increased usage
Wireless business: Strong commercial push & increased usage TELEFONICA LATAM Double digit customer growth in most markets: Mobile penetration up 13 p.p. y-o-y to 75% in Jun-08 14.4 m gross adds in Q2 08 (+23.2%2 vs. Q207) leveraging successful "Mother Campaigns" + 41.2% in Brazil2 ; + 61.8% in Colom
Slide 17: Wireline business: Transformation to capture BB opportunity
Wireline business: Transformation to capture the BB opportunity TELEFONICA LATAM 2P&3P/DSL Accesses H1 07 134 190 Sound BB accesses growth (+26.1% y-o-y) to 5.5 m Robust bundling offering uptake Higher BB speeds (Brazil & Chile) and expanded coverage in Colombia Top line y-o-y growth acceleration in
Slide 18: Main operations review
Main operations review TELEFONICA LATAM H1 08 y-o-y growth (in local currency) Vivo T. Mexico +19.7% OIBDA1 +12.9% Outgoing Ss. revenue1 16.5% 25.8% Margin Churn1 Gross Adds1 +46.8% Customers2 +0.1 p.p. 87% in GSM 56% in GSM +38.0% OIBDA X3.2 Outgoing Ss. revenue +53.3% 22.4% Margin Churn Gross Adds
Slide 19: Sum-up: Strong growth profile in the region
Sum-up: Strong growth profile in the region capitalizing our unique integrated approach TELEFONICA LATAM Includes 50% of Vivo. Includes Telemig since April 1st, 2007. Guatemala, El Salvador, Panama and Nicaragua. Total revenue BB & TV revenue Mobile service revenue Total OIBDA Mobile OIBDA Mobile In
Slide 20: Telefónica Europe: Sound results, strong commercial activity
Telefonica Europe: Sound results, strong commercial activity TELEFONICA EUROPE Revenue growth (H1 08 y-o-y change) OIBDA growth (H1 08 y-o-y change) OIBDA margin (H1 08) T. EUROPE UK GER IRE CR Ex- forex & Airwave Ex- forex Like for Like1 29.0% 25.2% 19.5% 32.0% 47.0% Flat (0.6p.p.) (1.4.p.p.) (2.3p
Slide 21: O2 UK: Continued healthy customer growth
O2 UK: Continued healthy customer growth TELEFONICA EUROPE Mobile contract net adds (^000) ARPU (y-o-y change in local currency) Mobile service revenue (y-o-y change in l.currency) H1 08 +3.7% +10.8% H1 08 Q2 08 +10.0% Contract 38.3% of mobile base (+2.5 p.p. vs. Jun-07) Very strong net adds on cont
Slide 22: O2 Germany: on track with turnaround strategy
H1 08 mobile net adds (^000) Revenue growth & OIBDA margin (y-o-y change) O2 Germany: on track with execution of our turnaround strategy TELEFONICA EUROPE Jun-08 Jun-07 Total Contract 1,104 498 +75% +107% Q1 08 +1.5% 19.0% - - 1.9% 13.3% 20072 y-o-y change Wireless customer growth increased to 17.5%
Slide 23: Group financial expenses and debt
23 GROUP FINANCIAL EXPENSES AND DEBT Improving leverage, financial cost and maturity profile Calculated based on H1 08 OIBDA figure annualized excluding results on the sale of fixed assets. Leverage target, including commitments, in the lower range (2.15x OIBDA) 5.96% effective interest rate (in lin
Slide 24: Conclusions
Conclusions Strong results, ahead of the pack Fully exploiting our differentiated profile (execution, diversification and integrated management) to post robust organic growth: Strong results in Latin America, the major growth engine Sound delivery in Europe, outperforming competitors in key markets
Slide 25: 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: July 31 st , 2008 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernández V