Slide 1: Telefónica Results Jan-Dec 2022
*3° Telefonica RESULTS JAN | DEC 2022
Slide 2: Disclaimer
Disclaimer This document and any related conference call or webcast (including any related Q&A session) may contain forward-looking statements and information (hereinafter, the “Statements”) relating to the Telefónica Group (hereinafter, the "Company" or "Telefónica"). These Statements may include f
Slide 3: Key takeaways
Key takeaways Mr. José María Álvarez-Pallete Chairman & CEO
Slide 4: Our strategic framework
Our strategic framework 2019 plan based on 5 key decisions; aiming at long term impact and value creation 1 Spain, 2 Brazil, Operational Germany spin-off of the businesses • Cutting-edge operators and the UK: Key markets in HispAm • Units at the forefront of Technology • All options open in T. Hispa
Slide 5: Resilience, execution, delivery
Resilience, execution, delivery Delivering on commitments Progressing on regulatory priorities Back on growth track at revenue, OIBDA & FCF level Sector bringing back rationality (spectrum auctions) Consistent and predictable financial performance Pursuing fairer regulatory environments (guidance fu
Slide 6: Focus on executing our strategy
Focus on executing our strategy Coverage Total FTTH (PPs) Legacy switch off 5G (% pop) 85% >80% (m) 2G -53% since 2017 Since 2021 3G 2025 E x1.6 +11 p.p. 2,236 64.5 Coverage 90% 39.8 4G (% pop) >25% 79% 487 COs Dec-19 Dec-22 Dec-19 Dec-22 Dec-19 Dec-22 Digitalised processes (%) Traffic growth/custom
Slide 7: Advancing in the transformation of our company
Advancing in the transformation of our company Customer growth Improved revenue mix Accelerated profitable growth Accesses (m; y-o-y) BB & SoC o/total Voice & Access o/total Revenue (organic y-o-y) service revenue service revenue +11% 73% 64% 383.1 344.3 34% 3.2% 4.0% 27% Dec-19 Dec-22 FY 19 FY 22 F
Slide 8: 2022: Strategy execution adds quality growth
2022: Strategy execution adds quality growth Steady progress through 2022 Strengthened competitive position Looking ahead Revenue, OIBDA & OIBDA-CapEx growth Delivered 2022 updated guidance • Spain; improved commercial momentum; 7 straight • T. Tech; built new capabilities to sustain growth Mitigati
Slide 9: Resilient performance in a challenging year
Resilient performance in a challenging year FY 22 Revenue FY 22 OIBDA Net debt FCF FY 22 y-o-y organic y-o-y organic +4.0% +3.0% €26.7bn €4,566m Growth across the board Stable underlying OIBDA Leverage reduction YTD to 2.54x +72.5% y-o-y 2022 reported revenue growth (+1.8% y-o-y), 1st time since 201
Slide 10: Delivering on our commitments; we are predictable
Delivering on our commitments; we are predictable 2022 guidance organic including 50% of VMO2 Targets Initial 2022 guidance Updated 2022 guidance FY 22 Revenue “Low single digit growth” “High-end of low single digit growth” 4.0% “Mid-to-high-end of low single digit OIBDA “Low single digit growth” gr
Slide 11: Pressing ahead with ESG priorities, getting recognition
Pressing ahead with ESG priorities, getting recognition Environmental Social Governance 1 Net-zero by 2040 (SBTi validated) >90% MBB rural coverage by 2024 Zero-tolerance of corruption Key 100% renewables by 2030 33% women directors by 2024 30-35% sustainability linked financing by 2024 3 targets Ze
Slide 12: Q4 22 Results
Q4 22 Results Mr. Ángel Vilá COO
Slide 13: Sequential acceleration in Revenue, OIBDA & OIBDA-CapEx
Sequential acceleration in Revenue, OIBDA & OIBDA-CapEx Q4 22 Revenue Q4 22 OIBDA Net debt FCF Q4 222 y-o-y organic y-o-y organic Dec-22 +3.9% +3.5% €26.7bn €2,093m Growth across the board Stable OIBDA margin y-o-y Reduction of €2bn in Q4 22 +77.7% y-o-y Reported: 3rd straight Q of rev. growth, 2nd
Slide 14: Structurally positioned to offset inflationary pressures
Structurally positioned to offset inflationary pressures Structural advantage; operating in high-inflation LatAm markets for decades Managing OpEx Managing top line through pricing power and inflation pass through Lower weight of personnel expenses than peers (13% o/Group revenues) Improving custome
Slide 15: Spain
Spain KPIs Revenue & OIBDA growth (y-o-y organic) Conv. ARPU (€) NPS (%) Conv churn (%) FY 21 FY 22 Reinforced leading position 89.2 90.4 0.6% in a more rational market 0.1% 1.4% (1.0%) (0.6%) 1.2% 42 Business turnaround 36 (3.3%) Superior value, leading NPS & churn (5.3%) Defended revenue share FY
Slide 16: Spain
Spain Convergent KPIs Revenue & OIBDA growth (y-o-y organic) ARPU (€) Churn (%) Revenue OIBDA Service revenue back to growth after 3 years 0.9% 1.3% 90.4 91.1 90.1 90.1 90.3 0.5% 0.2% 0.2% Improving KPIs in a rational market (2.8%) (2.1%) (leading NPS 42%; 1.4% (3.4%) (3.4%) 1.3% (4.9%) lowest churn
Slide 17: Germany
Germany Postpay net adds (k) Revenue & OIBDA organic growth 518 Revenue OIBDA Solid commercial traction 374 & sustained financial momentum 7.0% 6.6% 6.6% 287 304 6.0% 264 5.8% 5.2% 3.1% 4.2% Successful completion of 3-yr ‘Investment for 1.6% Growth’ programme, 5G pop coverage >80% Q4 21 Q1 22 Q2 22
Slide 18: Virgin Media O2
Virgin Media O2 Fixed network build (k PPs) Revenue & OIBDA growth (y-o-y organic) 188 Revenue OIBDA 9.9% Improved growth and 114 115 8.1% operational progress 101 93 4.8% 2.6% Strong customer growth 0.2% 0.4% 1.3m Volt converged customers (0.7%)(1.1%) (0.1%) (0.6%) 16.1m PPs; 5G in >1.6k towns & ci
Slide 19: Brazil
Brazil Accesses growth (y-o-y) Revenue & OIBDA growth (y-o-y organic) Contract FTTH Revenue OIBDA Double digit growth in Q4 revenue & total accesses 36% 29% 11.1% 12.3% 10.6% 10.1% 25% 21% 8.5% Strengthened leadership in FTTH & contract 20% 18% 18%19% 4.6% 6.6% 8% 7% 2.8% 1.7% 1.6% Revenue +31% / OI
Slide 20: Tech, strong growth on resilient demand of next generation IT
Tech, strong growth on resilient demand of next generation IT T. Tech Revenue (€m) Our people, our asset y-o-y +33.6% +57.1% Headcount evolution (k) Talent Source Constant ~80% in x2.1 x2.4 Europe M&A Telefónica Perimeter 6.0 28% 1,482 ~+27% 4.0 37% 944 706 2.5 35% Hired FY 20 FY 21 FY 22 Dec-20 Dec
Slide 21: Infra, leading portfolio of FibreCos and critical infrastructure
Infra, leading portfolio of FibreCos and critical infrastructure Continued progress in roll-out expansion Combining profitability and growth Total FTTH Premises Passed1 (m) 13 25 10 • Growing financials2 (y-o-y organic): 2026E Q4 22 FY 22 30.6% 17.2% Dec-21 Dec-22 7.8% 2.8% • 3.9m PPs as of Dec-22 •
Slide 22: Q4 22 Results
Q4 22 Results Mrs. Laura Abasolo CFCO & Head of T. Hispam
Slide 23: T. Hispam, value growth & improved returns
T. Hispam, value growth & improved returns Accesses Growth (y-o-y) Revenue & OIBDA growth (y-o-y organic) Contract FTTH & Cable Revenue OIBDA KPIs and OIBDA-CapEx growth 25% 22% 19% 10.2% 19% 18% 1m contract & 0.8m FTTH net adds in FY 22 8% 6.0% 6% 4.0% 4.3% 4.2% 3.8% 5% 5% 2.3% 2.8% 4% 1.2% Focus o
Slide 24: Deleverage trend confirmed, contained cost and sound liquidity
Deleverage trend confirmed, contained cost and sound liquidity Deleverage trend confirmed Contained interest payment cost Net Debt/OIBDAaL Total interest payment cost ex leases ND ND ND ND €35.3bn €26.1bn €26.7bn €26.4bn +100 bps in short- >80% term rate = +€34m in 2.80x Deleveraging Total fixed deb
Slide 25: Conclusions
Conclusions Mr. José María Álvarez-Pallete Chairman & CEO
Slide 26: 2023 guidance
2023 guidance 2023 guidance organic and including 50% of VMO2 Targets 2023 Revenue “Low single digit growth” Boost profitable growth Double down on simplicity OIBDA “Low single digit growth” Decreasing Capex/Sales ratio CapEx/Sales ~14% (ex spectrum) Shareholder remuneration 2023 calendar payments 2
Slide 27: Evolving our framework and boosting ambitions for 2023
Evolving our framework and boosting ambitions for 2023 1 2 3 4 5 Core Strategic Markets Value-Adding T. Hispam pillars Group Drive profitable growth, Sustain Growth & Unlock value from TEF Sustainable regional Scaled group, focusing from leading players in crystallise value, by digital infrastructur
Slide 28: Summary
Summary • We delivered on updated 2022 guidance despite a challenging context • Executing on strategy; strong performance sustaining organic growth and smart capital allocation • Sound FCF generation proves the effectiveness from more flexible operations and a right financial strategy • Solid sustai
Slide 29: Results presentation and Q&A Session
Results presentation and Q&A Session Telefónica’s management will host a webcast on 23 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 30: For further information, please contact: Investor Relations
A List Bloomberg Member of DJSI 1st in sector 1st company worldwide in 2021 2022 GEI 2023 Europe 2022 Digital Inclusion Benchmark For further information, please contact: Investor Relations FOLLOW US: Adrián Zunzunegui (adrian.zunzunegui@telefonica.com) Isabel Beltrán (i.beltran@telefonica.com) Tors