Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Q1 2013 Earnings Presentation
23 slides from Telefonica Sa's earnings presentation, May 8, 2013
Slide 1: Results January - March 2013
Results Telefonica, S.A. Investor Relations January - March 2013
Slide 2: Forward-looking statements 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 may refer, am
Slide 3: Q1 13 Results highlights
Q1 13 Results highlights TELEFONICA Executing our transformation strategy for a sustainable growth model Stabilising the business Revenues -1.6% y-o-y in organic terms (-0.1% ex-regulation) Organic OIBDA stabilisation (-0.1% y-o-y) on improving margin High single digit organic growth in OpCF (+9.6%
Slide 4: Key financials
Key financials Quarterly performance consistent with Company's expectations Full year guidance reiterated Reported Q1 13 € in millions Reported y-o-y Organic y-o-y Revenues OIBDA OIBDA Margin Net income EPS OpCF (ex-spectrum) 14,141 4,567 32.3% 902 0.20 3,321 (8.8%) (10.1%) (0.5 p.p.) 20.6% 22.2% (1
Slide 5: Commercial progress; towards higher value & more sustainable customer base
Commercial progress; towards higher value & more sustainable customer base Smartphone penetration (CHART) +5 p.p. +6 p.p. y-o-y Continued focus on high quality clients Mobile contract base up 8% (+1 p.p. q-o-q) Contract mix improved to 33% (+2 p.p. y-o-y) Mobile contract net adds surpass 1.4 m in Q1
Slide 6: Stable revenue performance ex-seasonality
6 Stable revenue performance ex-seasonality Q1 13 organic revenues -0.1% y-o-y ex-regulation Main growth drivers: T. Latam (51% of revenues) and mobile data (37% of MSR) Brazil becomes the largest market by revenues Organic growth slowed down sequentially mainly due to T. Europe on the back of calen
Slide 7: Focus on efficiencies lead to sustained savings
(CHART) Focus on efficiencies lead to sustained savings Delivering on cost control execution Third consecutive quarter of OpEx y-o-y decline New commercial model progressively reducing subsidies Cost cutting efforts in Q1 more than offset weaker revenues Commercial costs: -11.1% y-o-y organic mainly
Slide 8: Global Resources: Delivering OpEx & CapEx savings
Global Resources: Delivering OpEx & CapEx savings Network and Operations: Going forward to ensure smooth implementation of Network Sharing agreements in Europe and extend the scope to Latam (e.g. MoU with AMX in Brazil) Deployment of a standardised technical support model for all Group operations IT
Slide 9: Accomplishments in Q1
Accomplishments in Q1 13 Firefox Firefox handsets to be launched in Q3 1st devices in Spain, Colombia and Venezuela in Q3. 5 additional countries in Q4 including Brazil Vendors to launch will be ZTE and Alcatel followed by LG, Huawei and Sony Content partnerships with Facebook, Twitter, Nokia HERE,
Slide 10: T. Latam: Healthy growth on sound basis
T. Latam: Healthy growth on sound basis 10 Sound contract net adds momentum, with historical record in contract gross adds in a Q1 and progressive churn reduction Smartphones uptake (+78% y-o-y); key lever of our differential growth strategy. Smartphone penetration of 14% (+6 p.p. y-o-y) provides a
Slide 11: Brazil: Widening mobile competitive advantage
(CHART) Brazil: Widening mobile competitive advantage 11 Mobile contract +17% y-o-y to 26% of mobile accesses (+3 p.p.) Smartphones with data plan +88% y-o-y to 14% of mobile accesses (+7 p.p.) New innovative multi-device plans launched in April to keep strengthening our position Contract net adds s
Slide 12: Improved profitability y-o-y driven by synergies
12 Improved profitability y-o-y driven by synergies Strong contract net adds (Q1 13: +42% y-o-; Q4 12:+12% y-o- y), main impact behind y-o-y margin deceleration Ongoing integration efforts to continue improving efficiency and customer satisfaction Leading OIBDA market share, reinforced leadership in
Slide 13: T. Latam: Key Metrics (I)
(CHART) (CHART) T. Latam: Key Metrics (I) 13 (CHART) (CHART) (CHART) Mobile net adds record in Q1 13 Strong revenue performance Lower margin due to higher commercial activity and higher weight of revenues with lower margin (contents) Reduced churn in contract amid a very competitive environment Reve
Slide 14: T. Latam: Key Metrics (II)
(CHART) (CHART) (CHART) (CHART) (CHART) (CHART) (CHART) Commercial repositioning on track: accesses growing after 4 quarters of y-o-y decline OIBDA y-o-y decline impacted by higher commercial activity Telecom market reform to improve competitive landscape Commercial activity improved with the highes
Slide 15: T. Europe financials
(CHART) Financials y-o-y change are organic Q4 12 margin y-o-y in organic terms and excluding positive impact of the change of scheme in the UK pension plan Revenues (ex-regulation y-o-y) Revenue evolution impacted by calendar effects, handsets sales and regulation Further efficiency gains and restr
Slide 16: Fusion maintains market momentum; keeps improving customer mix
16 Fusion maintains market momentum; keeps improving customer mix Convergence has become the key market trend Revenue break-even in Q1 due to new revenue stream from new customers & upselling Increased mobile add-ons Improved customer satisfaction Increased Fiber uptake Fixed telephony losses (-136
Slide 17: Spain: Further progress towards business stabilisation
Spain: Further progress towards business stabilisation 17 (CHART) Revenue ex-handset sales stabilises its y-o-y trend in Q1 13 Positive impact of lower upgrades (loyalty program) on MSR Mobile handset sales -67% y-o-y (subsidies removal in Mar-12) Sustained high OIBDA margin: visible benefits of tra
Slide 18: UK: Sustained performance in contract net adds
(CHART) (CHART) Sustained performance in contract net adds ('000) MSR (ex-regulation y-o-y) OIBDA (y-o-y) (CHART) 18 OIBDA reflects revenue trends and efficiency efforts Strong traction in the contract segment drives mobile growth Maintained momentum leads to revenue performance Record low contract
Slide 19: Germany: Delivering on clear strategic priorities
(CHART) 19 (CHART) Mobile business (Q1 13) Delivering on clear strategic priorities Contract growth leads to mix improvement of 2 p.p. to 53% Accelerating smartphone penetration to 28% (+7 p.p. y-o-y) New "O2 Blue all in" portfolio: Encouraging trends in terms of mix, best value for money propositio
Slide 20: Net Financial Debt evolution
Net Financial Debt/OIBDA 2.44x € in millions Net Financial Debt/OIBDA 2.36x Net Financial Debt evolution Debt reduction absorbing bolivar devaluation and seasonal effects (CHART) € in millions FCF Post- Spectrum Net Fin. Debt Mar-13 Net Fin. Debt Dec-12 FX, Commitments Cancellation & Others Treasury
Slide 21: Strengthening liquidity and reducing financial expenses
(CHART) 21 Strengthening liquidity and reducing financial expenses € in billions € Bonds at Holding (8&10yrs) Syndicated Loans (4&5yrs) ECA Loans & Latam €7bn long term diversified financing 2013 YTD Average debt life 6.75 years Ample geographic split by bank financing: Europe 48%, Asia 18%, Spain 1
Slide 22: Conclusion
Conclusion 22 Executing our transformation strategy for a sustainable growth model Solid start to year, in line with Company expectations Commercial push focus on quality an innovation Stable organic OIBDA with margin improvement, and solid OpCF increase Strong EPS growth Decisive actions taken to f
Slide 23: Organic growth / 2013 guidance notes
Organic growth / 2013 guidance: Assumes constant exchange rates as of 2012 (average Fx in 2012), excludes hyperinflationary accounting in Venezuela and considers constant perimeter of consolidation. In OIBDA and OI terms excludes write-downs, capital gains/losses from companies' disposals, tower sal