Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — 9M 2009 Earnings Presentation
25 slides from Telefonica Sa's earnings presentation, Nov 12, 2009
Slide 1: Investor Relations November 12th, 2009
Investor Relations November 12th, 2009
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 which refer to the intent, belief or current prospects of
Slide 3: 9M 09 results highlights
9M 09 results highlights GROUP FINANCIALS Fundamental business trends consistent with H1 09 Significant ramp up in commercial activity in Q3; strong wireless net adds (~5 million), in line with total H1 09 figure Positive organic revenue growth despite continued cyclical impacts and substantial MTRs
Slide 4: A solid set of results in 9M
A solid set of results in 9M 09 GROUP FINANCIALS Organic growth: Assumes constant exchange rates and includes the consolidation of Telemig in January-March 2008. OIBDA and OI figures do not include the impact of capital gains derived from Airwave and Sogecable disposals registered in Q2 08. Jan-Sep
Slide 5: High single digit underlying growth in EPS
GROUP FINANCIALS High single digit underlying growth in EPS Excludes the impact derived from Airwave and Sogecable disposals registered in 2008. 9M 09 € in millions (% change y-o-y) OI Associates Financial results Taxes Minorities Net Income D&A OIBDA 47 140.7% - -2,058 (-2.0%) - -2,291 (-3.5%) - -1
Slide 6: Good commercial momentum, driven by mobile
Good commercial momentum, driven by mobile GROUP FINANCIALS Strong net adds on higher gross adds and churn contention Q3 mobile net adds in line with total customer gain in H1 09 Robust acceleration in MBB net adds Q1 09 4,718 2,559 2,251 Q2 09 Q3 09 Telefonica Group Accesses (in millions) Y-o-y gro
Slide 7: Disciplined OpEx and CapEx to sustain benchmark profitability
+0.8 p.p. Disciplined OpEx and CapEx to sustain benchmark profitability GROUP FINANCIALS 6 OIBDA Margin 39.1% 39.7% Q1 09 H1 09 39.9% 9M 09 Efficiency ratio(2) - -1.4 p.p. 75.3% Mar-09 Jun-09 Sep-09 74.4% 73.9% +0.7p.p. y-o-y organic1 change +0.6p.p. - -0.1p.p. - -2.2p.p. y-o-y change - -1.7p.p. - -
Slide 8: Healthy OpCF across the board, with superior conversion rate of revenues into cash
Healthy OpCF across the board, with superior conversion rate of revenues into cash generation GROUP FINANCIALS Organic growth: Assumes constant exchange rates and includes the consolidation of Telemig in January-March 2008. OIBDA figure does not include the impact of capital gains registered in the
Slide 9: On track to meet 2009 guidance
On track to meet 2009 guidance GROUP FINANCIALS Full year 2008 adjusted figures for guidance exclude Sogecable capital gain (€ 143 m), the application of provisions made in T. Europe in respect of potential contingencies deriving from the past disposal of shareholdings, once these risks had dissipat
Slide 10: Enhanced commercial activity while maximizing OpCF (Telefonica Espana)
Margins over revenues; (comparable(2)) OIBDA and OIBDA margin (comparable (2) y-o-y change) Enhanced commercial activity while maximizing OpCF TELEFONICA ESPANA Excluding USO (Q1 09 and Q3 08), seasonality in Q2 09 and Application Sale in Q3 09. Excludes impact of USO in Q1 09 on revenues (Wireline:
Slide 11: Commercial activity improves for second quarter in a row
Commercial activity improves for second quarter in a row TELEFONICA ESPANA Estimated market shares. Monthly flat rates. Q3 09 vs. Q2 09 joint net adds for Vodafone, Orange, Yoigo (companies' press releases) and MVNOs (Telefonica's estimates) Contract net adds Total net adds 10 Q1 09 Q2 09 Q3 09 45.4
Slide 12: Stable declines in usage and rational pricing competition
Stable declines in usage and rational pricing competition TELEFONICA ESPANA 11 Mobile traffic - -3.6% - -4.5% - -3.8% Q1 09 Q2 09 Q3 09 y-o-y growth Outgoing mobile voice ARPU - -10.5% - -10.7% - -9.8% Q1 09 Q2 09 Q3 09 - -4.2% - -3.8% - -3.3% Outgoing ARPM y-o-y growth Retail BB connectivity ARPU -
Slide 13: Trends in revenues similar to previous quarter
Trends in revenues similar to previous quarter TELEFONICA ESPANA Ex USO. Based on historical data and Telefonica's estimates. 12 HIGHLIGHTS Lower PSTN access revenue, in line with accesses evolution -5.9% -7.6%(1) -6.3%(1) Decline in retail wireline BB revenues on lower -2.2% -3.2% -1.4% accesses gr
Slide 14: T.Latam: A story of profitable growth
TELEFONICA LATAM T.Latam: A story of profitable growth Sustained organic top line growth: Double digit growth in mobile and Internet & Pay TV Increased commercial activity across markets in Q3 09: total net adds up 2.4x q-o-q Robust OIBDA growth: OpEx discipline and further synergies, leveraging sca
Slide 15: Wireless business: growing ahead of the market
Wireless business: growing ahead of the market TELEFONICA LATAM Assumes constant exchange rates and includes Telemig in Jan-Mar 2008. On a comparable basis. Mobile revenue growth (9M y-o-y organic(1)) Data +36.8% Data Rev. Growth (%) 9M 09 y-o-y +29 - -2 +61 +36 +35 +36 +28 Enhanced net adds q-o-q,
Slide 16: Sustained BB accesses growth leveraging increased bundles penetration
TELEFONICA LATAM Sustained BB accesses growth leveraging increased bundles penetration BB/fixed lines: +2.3 p.p. y-o-y 2P&3P/BB: +8.8 p.p. y-o-y Total bundles/fixed lines: +2.3 p.p. y- o-y 3P offer launched in Argentina, increasing customer value Q3 09 net adds impacted by Anatel decision in Brazil
Slide 17: Sustained performance in most markets
Sustained performance in most markets TELEFONICA LATAM Includes 50% of Vivo. Includes Telemig in January-March 2008. Excludes Medianetworks in 2008. Total revenu e BB & TV revenue Mobile service revenue Total OIBDA Mobile OIBDA 9M 09 y-o-y growth (in local currency) Total Wireline revenue Wireline O
Slide 18: Initiatives to turn around operations in Telesp and Colombia mobile
TELEFONICA LATAM Initiatives to turn around operations in Telesp and Colombia mobile start to pay off Telesp FBB 17 Progressive resume of Speedy sales across distribution channels from September Absence of commercial campaigns until November Focus on good quality adds Improved quality and customer s
Slide 19: T. Europe: consistent approach showing a distinctive performance in key markets
T. Europe: consistent approach showing a distinctive performance in key markets TELEFONICA EUROPE Customer growth drives revenue outperformance in key markets Commercial activity ramped up in Q3 09 Churn reduction in key segments & geographies (-0.2 p.p. to 1.4% y-o-y contract churn in Q3 09) Sustai
Slide 20: Ramp up in mobile service revenue growth in the quarter
TELEFONICA EUROPE Ramp up in mobile service revenue growth in the quarter, ex MTR cuts Contract churn at 1.2%, sustaining over 312k contract net adds in Q3 09 No further deterioration of usage optimization behavior among customers Further efficiency measures, setting the basis for future growth Incr
Slide 21: Gaining scale in the mobile market, leveraging our challenger strategy
TELEFONICA EUROPE Gaining scale in the mobile market, leveraging our challenger strategy Improved customer oriented product portfolio: "O2o" gaining traction Q3 contract net adds increasing 47.2% y-o-y Network quality, already tested and recognized(1) Robust growth in non-P2P SMS data revenues: +33.
Slide 22: Largest ADSL market in Europe with significant growth potential
TELEFONICA EUROPE Largest ADSL market in Europe with significant growth potential 21.8 m ADSL accesses in 2008, +5.6% CAGR 08-12E, +14 p.p. penetration in 4 years(1) Rising number of integrated households in Germany, an untapped opportunity Increase revenue/household through bundling & churn reducti
Slide 23: Benefiting from a prudent financial policy
GROUP FINANCIAL EXPENSES AND DEBT Benefiting from a prudent financial policy Calculation based on 9M 09 OIBDA figure annualized excluding results on the sale of fixed assets. Leverage target, including commitments, kept in the low part of our target range (2.0x OIBDA) Contained financial expenses be
Slide 24: Conclusions
Conclusions GROUP FINANCIALS Fundamental business trends consistent with H1 09 Significant ramp up in commercial activity in Q3; strong wireless net adds (~5 million), in line with total H1 09 figure Positive organic revenue growth despite continued cyclical impacts and substantial MTRs cuts OIBDA m
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 12 th , 2009 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernánd