Slide 1: Results January-September 2010
Results January-September / 2010
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefonica Group (going forward, "the Company" or Telefonica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which re
Slide 3: Solid execution, delivering on 2010 priorities
Solid execution, delivering on 2010 priorities GROUP FINANCIALS Sustained acceleration of organic revenue growth vs. H1 10 driven by: Strong commercial push Continued strength in mobile data revenue growth Strong profitability: Contained margin erosion despite higher commercial costs on rapid custom
Slide 4: Sustained earnings momentum fuelled by diversification
25% 18% 15% 42% 41% 42% 46% 40% Sustained earnings momentum fuelled by diversification Organic growth assumes constant exchange rates as of 9M 09 (average fx) and excludes changes in the perimeter of consolidation. Therefore, it excludes the consolidation of HanseNet (since mid February 2010), Jajah
Slide 5: Robust bottom line
Robust bottom line 4 GROUP FINANCIALS Revaluation of stake in Vivo (IFRS 3 Revised): € 3.8 Bn Restructuring costs in Germany: € 202 m 9M 10 EPS €1.95 vs. €1.17 in 9M 09 January-September 2010 € in millions (% change y-o-y) € -321 m tax effect related to the revaluation of stake in Vivo 20,368 - -6,7
Slide 6: Sound commercial performance across the board
Sound commercial performance across the board Organic figures and growth: exclude Medi Telecom customers in 2009, HanseNet in 2010 and Manx Telecom both in 2009 and 2010. Cumulative net adds also exclude the disconnection of inactive customers made in the second quarter of 2010. 5 GROUP FINANCIALS H
Slide 7: Strong sales, ramp up in growth rates
Strong sales, ramp up in growth rates 6 Organic revenue (y-o-y growth) Reported revenue (y-o-y growth) Reported revenue (y-o-y growth) Contribution to organic revenue growth (9M 10) FY 09 Q1 10 9M 09 H1 10 9M 10 1.4% 1.5% 2.4% 3.3% 0.1% 0.2% 0.9% 2.0% 2.5% 3.7% Ex-MTRs +2.7 p.p. +0.9 p.p. - -1.4 p.p
Slide 8: Booming mobile data revenue on increased MBB adoption
Booming mobile data revenue on increased MBB adoption 7 Rapid adoption of MBB, boosted by growing penetration of smartphones and high-end devices Strong commercial push across markets Attractive commercial offers to monetize the growth opportunity through segmentation/tiered pricing based on offers
Slide 9: Healthy profitability driven by costs discipline & scale benefits
Healthy profitability driven by costs discipline & scale benefits 8 37.4% - -1.9 p.p. y-o-y organic OIBDA margin OpEx Organic y-o-y growth OIBDA 9M 10 +6.1% 9M 10 - -1.8% ex MTRs ~2/3 of OpEx growth driven by commercial and network costs - -2.3% Regulatory and non recurrent effects drag 2.8 p.p. 9M
Slide 10: High cash flow generation despite increased CapEx
High cash flow generation despite increased CapEx 9 Organic growth assumes constant exchange rates as of 9M 09 (average fx) and excludes changes in the perimeter of consolidation. Therefore, it excludes the consolidation of HanseNet (since mid February 2010), Jajah (January-September 2010), Telyco M
Slide 11: 2010 guidance confirmed
2010 guidance confirmed OIBDA CapEx €4,646 m 9M 10 Revenue 9M 10/9M 09 - -0.2% 9M 10/9M 09 2010 GUIDANCE +1%/+3% 2010 GUIDANCE €7,450/7,650 m 2010 GUIDANCE +1%/+4% +3.9% ? ? 2009 adjusted figures for guidance exclude Telyco Marruecos results in T. Espana, Medi Telecom capital gain and write-offs. 20
Slide 12: T. Espana: Gradual improvement continues y-o-y
T. Espana: Gradual improvement continues y-o-y TELEFONICA ESPANA Comparable terms for 9M 10 y-o-y change include Tuenti in the period Aug-Sept 2009 and exclude the following effects: USO in Q1 09 and Q3 10, real estate capital gains in Q1 09 and Q3 09, Telyco Morocco in Q1 09 , Q2 09 and Q3 09, TV T
Slide 13: Continued strength in contract and MBB
Continued strength in contract and MBB Leading the market with the highest gap between access and revenue share: Net adds boosted by contract gross adds (+29.5% y-o-y) and benchmark churn rate in the market (q-o-q reduction) Contract accounting for 67% of total base with stable churn at 1.4% Difficu
Slide 14: Enhanced commercial activity across portfolio
Enhanced commercial activity across portfolio Comparable terms exclude the following effects: USO in Q1 09 and Q3 10, application sales in Q3 10 and Telyco Morocco in Q1 09, Q2 09 and Q3 09. Total fixed accesses include: Retail wireline telephony accesses, wholesale line rental, fully unbundled loop
Slide 15: T.Latam: Revenue and OIBDA growth acceleration
TELEFONICA LATAM T.Latam: Revenue and OIBDA growth acceleration Organic growth assumes constant exchange rates as of 9M 09 (average fx) and excludes hyperinflation accounting in Venezuela in both years. OIBDA and OIBDA margin excludes the positive impact in Q3 10 exclude the capital gain from the re
Slide 16: Wireless: growth in voice & data fuel double digit top line
Wireless: growth in voice & data fuel double digit top line y-o-y change Contract net adds/total TELEFONICA LATAM 15 Organic growth assume constant exchange rates and excludes hyperinflation accounting in both years. Gross adds up 20.6% y-o-y in 9M 10 (+34.5% in contract) Flat churn at 2.5% in 9M 10
Slide 17: Wireline: Strong commercial performance
Wireline: Strong commercial performance Latam Retail FBB y-o-y growth Strong growth ramp up in FBB (+5 p.p. vs. Jun-10 growth rate): Q3 10 net adds, exceeding 9M 09 volume Lower churn across countries BB/fixed lines: +4 p.p. y-o-y to 29% Increased contribution from Internet & Pay TV revenue: 2P&3P/B
Slide 18: Brazil: Gaining momentum across businesses
Brazil: Gaining momentum across businesses 17 Sustained commercial activity... ....gradually flowing into financials Similar levels of fixed line and FBB net adds on Q2, positive traditional net adds for 7 month in a row OIBDA Revenue FBB Traditional lines - -69 - -61 - -147 +59 +163 - -149 +173 +64
Slide 19: Good performance in key operations
Good performance in key operations Mexico Robust customer growth (+13.6% y-o-y) driven by contract segment (+53.0% y-o-y) MSR grew 6.4% y-o-y in 9M 10 on strong contract performance and despite a weaker evolution in prepay Strengthened position in MBB after recent acquisition of spectrum Venezuela L
Slide 20: T.Europe: Sound financials driven by commercial momentum
T.Europe: Sound financials driven by commercial momentum TELEFONICA EUROPE Sound organic revenue growth, delivered from our diversified portfolio: Robust non-P2P SMS revenues, up 28.4% y-o-y in 9M 10 in organic terms on increased smartphone and dongle adoption Handsets sales up 21.0% y-o-y organic i
Slide 21: T.O2 UK: Mobile Internet boosting customer lifetime value
T.O2 UK: Mobile Internet boosting customer lifetime value Profitability (local currency; y-o-y comparable growth) Targeted investment in high value base: Increased upgrading activity in Q3 10 (+19.3% y-o-y) Market leading contract churn at 1.1% in 9M 10 20% of mobile base in 9M 10 on MBB Total reven
Slide 22: T.O2 Germany: Solid financials, acceleration of HanseNet integration
T.O2 Germany: Solid financials, acceleration of HanseNet integration Enhanced commercial activity: Solid positioning in MBB 48% of customer base on contract, stable y-o-y Q3 10 prepay mobile net adds (+5.8% y-o-y) Strong push in FBB net adds y-o-y (+68.3% in Q3) Customer Base (y-o-y growth) Profitab
Slide 23: Leverage ratio within target range after Brasilcel acquisition
Leverage ratio within target range after Brasilcel acquisition GROUP FINANCIAL EXPENSES AND DEBT Financing activity YTD Net Financial Debt Evolution Leverage target, including commitments, within target range (2.4x OIBDA) Good access to market: € 5 bn facility on Brasilcel acquisition & € 3 bn refin
Slide 24: Summary
Summary 23 Sound financial performance across the P&L leveraging our differentiated profile Continued strength in revenue growth capitalizing on our diversification Strong commercial push with profitability showing sequential stabilization Driving MBB adoption and investing in growth projects to fur
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: November 11 th , 2010 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernánd