Telefonica Sa · BME:TEF

Telefonica Sa — H1 2002 Earnings Presentation

23 slides from Telefonica Sa's earnings presentation, July 2002

  1. Slide 1: January - June 2002 Results

    January - June 2002 Results This presentation is being broadcast live on the internet

  2. Slide 2: Safe Harbour

    SAFE HARBOUR This presentation to analysts contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent. belief

  3. Slide 3: A Step Forward in Our Seville Strategy

    A STEP FORWARD IN OUR SEVILLE STRATEGY STRATEGIC BUSINESS INITIATIVES INITIATIVES Maximize FCF through tight Accelerate performance of control of Opex & Capex core businesses Focus on shareholder returns Capture natural growth potential Unlock value from non-core assets Turn around non-performing An

  4. Slide 4: Working Towards Improving Cash Flow

    WORKING TOWARDS IMPROVING CASH FLOW BUILD CASH FLOW GENERATION Restructure non-performing Focus on core Focus on natural Financial businesses businesses markets discipline ¹ Soft launch in Germany ¹ Freezing operations in Germany UMTS IN ¹ Financial cap 2002-2003 A STEP ¹ Write-down UMTS assets for

  5. Slide 5: Financial Impact of Write-downs

    FINANCIAL IMPACT OF WRITE-DOWNS PROFIT AND LOSS ACCOUNT IMPACT Provision for Estimated € in Million Write-down Restructuring Costs Telefónica records a net loss UMTS ASSETS 4,550.3 287.2 of 5,574.2 Million € in 1H02. Excluding write-downs, net MEDIAWAYS 530.0 - loss would have been 206.7 Million € T

  6. Slide 6: 1H02 Net Income Penalized by Extraordinaries

    1H02 NET INCOME PENALIZED BY EXTRAORDINARIES 1.5 Bn. Euros of external net 1.57% of share UMTS & debt in $US (*) Azul Tv & ETI capital valued Mediaways From 1.70 to 3.80 Peso/$US at 8.5 € Reported Net Argentina Non core Treasury stock Other Write-downs * 978.2 Loss Exchange asset sales * extraordina

  7. Slide 7: Working Towards Optimizing Cash Flow Uses

    WORKING TOWARDS OPTIMIZING CASH FLOW USES PROGRESS ON DEBT REDUCTION CAPEX COMPATIBLE WITHOUT DIVESTING. TREASURY M&A WITH PROFITABLE COMMITMENT TO SINGLE A STOCK ACTIVITY ORGANIC GROWTH RATING ≈ -30% 28,942 1.57% 1.0% capital 7,922.8 No targets -52.3% 25,789 capital 76.4 have fulfilled 45.4 our M&A

  8. Slide 8: Cash Dividend Payment: We Have the Capacity

    CASH DIVIDEND PAYMENT: WE HAVE THE CAPACITY 2Q02: DELIVERING ON FCF TO TELEFÓNICA S.A.: DISTRIBUTABLE RESERVES SHAREHOLDERS IN EXCESS OF 9.6 Bn.€ AS OF JUNE 2002 6,075.8 1,815.5 652.6 17,962.4 9,567.2 845.1 1,420.2 1,995.0 2,881.9 4,860.7 EBITDA CAPEX Interests Taxes,Working FCF Capital Revaluation

  9. Slide 9: Setting a Solid Base for Building Value

    SETTING A SOLID BASE FOR BUILDING VALUE ¹ We have decided to freeze our European mobile operations. ¹ We are downsizing data business in new markets and bringing operations closer to fixed where incumbents. ¹ We are actively restructuring our Media assets to unlock its value. ¹ We have restated asse

  10. Slide 10: Financial Highlights (I)

    FINANCIAL HIGHLIGHTS (I) REVENUES EBITDA EBIT (€ in millions) (€ in millions) (€ in millions) 15.302.7 -4.4% -8.1% -4.4% 6.356.6 2.515.0 14.635.5 6.075.8 2,737.9 1H01 1H02 1H01 1H02 1H01 1H02 RESULTS AFFECTED BY ARGENTINA & Fx 1H2002 KEY DRIVERS GROWTH RATES EXCLUDING ARGENTINA & FOREX ¹ ARGENTINA T

  11. Slide 11: Financial Highlights (II)

    FINANCIAL HIGHLIGHTS (II) CONSOLIDATED OPEX * CONSOLIDATED CAPEX 1Q02 vs 1Q01 1H02 vs 1H01 € in Million % Change 5.1% 1H02 1H02/1H01 4.5% TdE 748.3 -13.9% Cell. Business 462.8 -42.7% T. LATAM 405.7 -75.0% -1.9% TOTAL GROUP 1,815.5 -52.3% Nominal -5.1% Ex-Fx OPERATING CASH FLOW GENERATION (Million Eu

  12. Slide 12: Contribution by Business Line

    CONTRIBUTION BY BUSINESS LINE REVENUES CONTRIBUTION TO (€ in millions) GROWTH* 581.6 1,204.0 15,302.7 28.6 Cell. Bus.:+ 3.3 p.p. TdE: + 0.1 p.p. 11.3 36.1 205.0 236.2 14,635.5 T.Latam: - 7.2 p.p. Revenues TdE Cell. Bus. T.Latam T.Data Terra Admira Others & Revenues 1H01 Lycos Eliminations 1H02 EBITD

  13. Slide 13: Telefónica de España: Operating Drivers

    TELEFONICA DE ESPAÑA: OPERATING DRIVERS AMID INTENSIVE COMPETIVE & REGULATORY FRAMEWORKS ADSL PERFORMANCE CARRIER PRESELECTION EVOLUTION (thousand lines) Carrier Preselection (Total) Global C.P. (includes local calls) 2Q02 1,601 1,343 Net adds (thousands) 133.3 1,193 1,082 844 Broadband market share

  14. Slide 14: Telefónica de España Group: EBITDA Analysis

    TELEFONICA DE ESPAÑA GROUP: EBITDA ANALYSIS 2ND HALF 2001 EBITDA EVOLUTION EBITDA (euros in millions) 2,440.2 2,067.9 -5.7% 2.8% 1,255.7 1,184.5 1,158.6 1,126.9 1H01 Bad debt Broadband Price Cap OIR Others* 2H01 provision (CPI-9) Aug-01 Oct-01 1Q01 2Q01 1Q02 2Q02 * Others includes the following effe

  15. Slide 15: T. Latam: Wireline Performance

    T. LATAM: WIRELINE PERFORMANCE T. LATAM REV / OPERATING REVENUES EBITDA % change Jun02 / Jun01 % change Jun02 / Jun01 EBITDA EX FOREX Local Currency Local Currency Revenues EBITDA Real Real 11.5% 12.3% 0.7% -0.4% -1.4% -2.1% Arg. Peso Ch Peso N Sol Arg. Peso Ch Peso N Sol -1.8% -5.2% -7.1% -23.3% -1

  16. Slide 16: Brazil: Country Performance

    BRAZIL: COUNTRY PERFORMANCE SELECTED FINANCIALS (€ in MM) % Change % Change ¹ Brazil: close to 23% of Group EBITDA, € in MM vs. 1H01 vs. 1H01 ex-FX AFFECTED 1 p.p. higher than in 1H01 BY CURRENCY ¹ 12% depreciation 1H02 average Revenues 3,063.8 1.7% 15.4% DEPRECIATION exchange rate vs. 1H01 average

  17. Slide 17: Argentina: Country Performance

    ARGENTINA: COUNTRY PERFORMANCE SELECTED FINANCIALS (€ in MM) % Change % Change € in MM vs. 1H01 ¹ Argentina: close to 4% of consolidated vs. 1H01 ex-FX IMPACTED BY EBITDA, a drop of 7 p.p. vs. 1H01 ECONOMIC CRISIS & PESO contribution Revenues 612.5 -68.9% -16.0% DEVALUATION ¹ 63% peso depreciation s

  18. Slide 18: T. Móviles Group Continues Its Strong Performance

    T. MÓVILES GROUP CONTINUES ITS STRONG PERFORMANCE TEM GROUP 1H01 ¹ Strong organic growth *: +12.9% in revenues and +14.8% +21.9% in EBITDA 1H02 4,516.7 ¹ Forex is dragging 7 p.p. and 5p.p. to revenues and 3,933.9 +20.2% EBITDA growth 1,864.4 ¹ Close to 2 p.p. EBITDA margin improvement to reach 1,551

  19. Slide 19: Data Business: Focusing on Operating FCF

    DATA BUSINESS: FOCUSING ON OPERATING FCF TELEFONICA DATA GROUP …. DRIVING EBITDA IN INCUMBENT OPERATIONS T. DATA SPAIN 22% 22% 6% ¹ Hosting services (5% of Revenues, 78.5 83.1 +81% yoy growth) 2.4% 4.8% ¹ OpFCF(*) y-o-y growth of 148% from 30% in 1Q02 44.1 1H 01 1H 02 99% EBITDA (mill. €) T. DATA BR

  20. Slide 20: Net Financial Expenses

    NET FINANCIAL EXPENSES (*) Euros in millions Jun02 Jun01 % Change Debt financial expense (874.8) (1,109.8) (21.2%) Other financial expenses (20.9) (28.6) (26.9%) Financial Income 185.8 235.4 (21.1%) Net interest (709.9) (903.1) (21.4%) Financial provisions and net forex (1) (899.0) (23.7) n.m. Net f

  21. Slide 21: Debt Management: Strong Credit Profile

    DEBT MANAGEMENT: STRONG CREDIT PROFILE CONSISTENT DEBT REDUCTION DEBT BREAKDOWN BY AT THE GROUP LEVEL (CONSOLIDATED DEBT. € IN MM) CURRENCY 5.5 bn Other debt r educt Latam Euro 31.244 ion 1% 29.731 28.942 17% 49% 28.684 25.789 1H01 3Q01 2001 1Q02 1H02 33% Ability to repay debt in 5 years with free f

  22. Slide 22: Senior Management Reorganization

    SENIOR MANAGEMENT REORGANIZATION ¹ Mr. Luis Lada appointed General Manager of Corporate Strategy and Regulation, including Regulation, Corporate Strategy, Corporate Development and Institutional Relations departments. ¹ Mr. Antonio Viana-Baptista will be proposed to the Telefónica Móviles Board of D

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Telefónica — H1 2002 Earnings Presentation on 6ix