Telefonica Sa · BME:TEF

Telefonica Sa — 9M 2003 Earnings Presentation

21 slides from Telefonica Sa's earnings presentation, November 2003

  1. Slide 1: January - September 2003 Results

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

  2. Slide 2: Disclaimer

    2 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 int

  3. Slide 3: Financial Highlights

    3 FINANCIAL HIGHLIGHTS % Change % Change Jul-Sep 03 Jul-Sep 03/ Jul-Sep 02 Jan-Sep 03 Jan-Sep 03/ Jan-Sep 02 Operating Rev. 7,269.9 +6.4% 20,833.2 -3.0% EBITDA 3,338.1 +17.0% 9,294.1 +4.1% EBIT * 1,773.4 +37.4% 4,591.4 +20.7% Net Income 588.7 +9.4% 2,014.4 c.s „ 3Q03 revenues: +6% y-o-y in nominal t

  4. Slide 4: Operating results improving sequentially on a quarterly basis in 2003

    4 OPERATING RESULTS ARE IMPROVING SEQUENTIALLY ON A QUARTERLY BASIS IN 2003... QUARTERLY GROUP REVENUE QUARTERLY GROUP EBITDA PERFORMANCE (y-o-y growth in € terms) PERFORMANCE (y-o-y growth in € terms) 6.4% 17.0% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3.5% 3Q03 1Q02 2Q02 3Q02 4Q02 1Q03 -1.6% -2.4% 2Q03 3Q03

  5. Slide 5: Foreign exchange rates negative impact continues to diminish

    5 ...AND FOREIGN EXCHANGE RATES NEGATIVE IMPACT CONTINUES TO DIMINISH... FX IMPACT ON REVENUES AND EBITDA GROWTH 1Q02 1H02 9M02 FY 2002 1Q03 1H03 9M03 Revenues EBITDA -7.5 p.p. -8.0 p.p. -9.0 p.p. -10.0 p.p. -9.1 p.p. -12.4 p.p. -12.5 p.p. -13.5 p.p. -14.6 p.p. -13.7 p.p. -17.2 p.p. -18.4 p.p. JAN-S

  6. Slide 6: For the outperformance of 2003 guidance

    6 ...FOR THE OUTPERFORMANCE OF 2003 GUIDANCE REVENUES* EBITDA* +12.2% +8% +10.9% +10.7% +5.5% +9% +4.9% +5.2% +5% +6% 1Q03 1H03 9M03 2003 target 1Q03 1H03 9M03 2003 target range range EBIT* +28.3% +21.7% +22.8% +21% +18% 1Q03 1H03 9M03 2003 target (*) Excluding Fx and changes in consolidation range

  7. Slide 7: Top line growth is fully flowing into net income

    7 TOP LINE GROWTH IS FULLY FLOWING INTO NET INCOME € in Millions Compared to a 5 Billion € +4.1% -8.2% Annual growth rate net loss in 9M02 9,294.1 4,702.7 +20.7% -61.1% -35.2% -99.2% -62.7% c.s. c.s. 4,591.4 161.4 326.0 c.s. 52.3 750.6 3,301.1 1,286.7 2,014.4 EBITDA Depreciation EBIT Associates Good

  8. Slide 8: Managing the cost structure across business lines

    8 MANAGING THE COST STRUCTURE ACROSS BUSINESS LINES A LEANER COST STRUCTURE COSTS VS REVENUES GROWTH RATES (cumulative % change) 4.1% Adj. revenues growth rate * 2.3% 1.3% 0.7% Adj. Costs growth rate * FY 2002 1Q03 1H03 9M03 2.6p.p. 5.2% 3.9p.p. 5.5% 4.8p.p. 4.9% 2.3% -8.0% -9.0% 1.3% Nominal 0.7% -

  9. Slide 9: Consolidated Group Capex

    9 CONSOLIDATED GROUP CAPEX CAPEX EVOLUTION 9M03 CAPEX BREAKDOWN (€ in Million) (€ in Million) 11.3% 2,503.7 +11.5% -5.9% 310.5 2,356.9 -15.4% 738.1 2,356.9 -18.3% 371.7 936.6 9M02 9M03 TdE T.Latam Cellular Rest of Total Business businesses Capex over Revenues Annual growth rate „ Increasing pace of

  10. Slide 10: Strong cash flow generation and improved returns

    10 STRONG CASH FLOW GENERATION AND IMPROVED RETURNS 9M03 CASH FLOW BREAKDOWN * (€ in Million) ROCE EVOLUTION Annual growth rate -15.3% +8.0% +1.6 p.p. 9.0% 1,859.6 -46.7 6,937.2 7.4% +20.9% +8.4% 2,713.2 2,411.1 TdE Cellular T.Latam Rest of Total 2002 9M03 Business businesses „ Quarterly Cash Flow r

  11. Slide 11: Telefónica de España Group: improving through 2003

    11 TELEFONICA DE ESPAÑA GROUP: IMPROVING THROUGH 2003 2003 target 4Q03 vs. 4Q02 OPERATING REVENUES (€ in Million) range ADDITIONAL EFFECTS 0.0% -0.5% -1.3% -1.2% -1.0% -1.5% „2003 PRICE-CAP LESS 2,538.4 DEMANDING THAN 2002 2,486.5 2,568.5 (CPI-4%) vs. (CPI-8%) -1.3% -1.7% -0.6% „ PSTN MONTHLY FEE IN

  12. Slide 12: Telefónica de España Parent: traditional services operating performance

    12 TELEFONICA DE ESPAÑA PARENT: TRADITIONAL SERVICES OPERATING PERFORMANCE ACCESS LINES NET LOSSES PRESELECTED LINES NET ADDS (PSTN + B.A. ISDN; Thousands) (Thousands) 492.8 435.2 2003 102.4 2003 2002 2002 97.0 98.6 QUARTERLY QUARTERLY 197.6 QUARTERLY QUARTERLY AVERAGE AVERAGE AVERAGE AVERAGE 99.3 1

  13. Slide 13: Telefónica de España: ADSL, a profitable story

    13 TELEFONICA DE ESPAÑA: ADSL, A PROFITABLE STORY ADSL CONNECTIONS (NET ADDS; thousands) ADSL Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 VAS CONTRIBUTION CONNECTIONS 747.0 957.2 1,136.1 1,293.6 1,420.5 RETAIL ARPU (€) TO ARPU (€) 210.2 178.9 157.4 151.8 6.3% 6.1% 133.3 126.9 45.5 5.3% 42.8 42.9 2.0% 86.2 17

  14. Slide 14: Telefónica Latinoamérica results

    14 TELEFONICA LATINOAMERICA RESULTS... REVENUE GROWTH (Ex-Fx) 2003 target EBITDA GROWTH (Ex-Fx) 2003 target range range 9% 2003 8% 8.4% 9.1% 6.8% 7.0% 6% 2003 8.0% 7% 7.0% 2002 2.8% 2002 3.1% -1.4% 0.7% 0.6% -3.4% -0.4% -5.1% 1Q 1H 9M FY 1Q 1H 9M FY Contributing by close to 2.5 p.p. to Telefónica´s

  15. Slide 15: Telesp posting a solid underlying performance

    15 ...WITH TELESP POSTING A SOLID UNDERLYING PERFORMANCE LOCAL REVENUES LONG DISTANCE REVENUES (BRL in millions) (BRL in millions) 5,710 1,691 +12.0% +66.9% 5,097 1,013 9M02 9M03 9M02 9M03 „ Around 50 % DLD (interstate) estimated „ Tariff increases in 2003: +12.5% monthly fee, market share as of Sep

  16. Slide 16: Telefónica Móviles: improving top line and operating results

    16 TELEFONICA MOVILES: IMPROVING TOP LINE AND OPERATING RESULTS 1H03 vs 1H02 REVENUES BREAKDOWN (€ in millions) 9M03 vs 9M02 +2.6% „ Spain: +5.4% in subs vs 3Q02, combined with a -15.7% +7.0% 4.3% annual ARPU growth, leading to a 12% +7.8% increase in service revenues +3.1% 482.5 7,303.8 380.8 „ Bra

  17. Slide 17: Net Financial Expenses

    17 NET FINANCIAL EXPENSES (*) Euros in millions Sep03 Sep02 % Change Debt financial expense (1,442.4) (1,430.9) 0.8% Other financial expenses (32.2) (32.6) (1.2%) Financial Income 286.1 251.6 13.7% Financial provisions and net forex (1) 438.0 (799.0) (c.s.) Net financial results (750.6) (2,010.9) (6

  18. Slide 18: Successful management of liabilities and balance sheet risks

    18 SUCCESSFUL MANAGEMENT OF LIABILITIES AND BALANCE SHEET RISKS 9M03 DEBT REDUCTION BREAKDOWN (€ in Million) NET DEBT as of Sep 03 -9% =1.65 22,533 4,409 1,936 168 20,463 4/3 *EBITDA Jan-Sep 03 587 821 NET DEBT + COMMITMENTS(1) = 2.00 4/3 *EBITDA Jan-Sep 03 (1) As of September 03, including financia

  19. Slide 19: Jan-Sep 2003 Cash Flow Statement

    19 JAN-SEP 2003 CASH FLOW STATEMENT (Euros in millions) Jan-Sep 2003 I Cash flows from operations 8,853.2 II Other payment related to operating activities (697.4) III Net interest payment (1,314.3) IV Payment for income tax (167.8) A= I+II+III+IV Net cash provided by operating activities 6,673.7 B N

  20. Slide 20: Conclusions

    20 CONCLUSIONS „ OPERATING RESULTS ARE IMPROVING SEQUENTIALLY, WITH ALL THREE MAJOR METRICS (REVENUES, EBITDA AND EBIT) GROWING SOLIDLY IN NOMINAL TERMS IN 3Q03 „ REVENUES CONTINUE TO TREND UP, LED BY SOLID SPANISH OPERATIONS, LATAM POSITIVE UNDERLYING PERFORMANCE, AND A DILUTED EFFECT OF FOREX „ TH

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