Telefonica Sa · BME:TEF
Telefonica Sa — Q1 2012 Earnings Presentation
25 slides from Telefonica Sa's earnings presentation, May 2012
Slide 1: Results January-March 2012
Results January-March / 2012 Investor Relations Telefónica, S.A.
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefónica Group (going forward, “the Company” or Telefónica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which ma
Slide 3: Q1 Overview: Delivering on our 2012 strategy
TELEFÓNICA Q1 Overview: Delivering on our 2012 strategy Reaping the benefits from commercial refresh since H2 11 Solid commercial start Acceleration in mobile accesses expansion for 2012 Leading MBB adoption in our markets Solid revenue growth despite regulatory impacts and drag from Spain S
Slide 4: Financial summary
TELEFÓNICA Financial summary Reported Underlying Organic € in millions Q1 12 Change y-o-y Q1 12 Change y-o-y Change y-o-y Revenues 15,511 +0.5% 15,511 +0.5% +0.1% OIBDA 5,081 -8.8% 5,081 -7.4% -7.6% OIBDA Margin 32.8% -3.4 p.p. 32.8% -2.8 p.p. -2.7 p.p. OI 2,511 -17.8% 2,773 -15.8% -15.0% Net income
Slide 5: Solid commercial start for 2012
TELEFÓNICA Solid commercial start for 2012 Accesses growth (y-o-y) Total: 309 m 55% 7% 16% 6% 8% 9% 5% Mar-11 Mar-12 FBB Mobile Pay TV MBB Mobile contract Mobile net adds (in millions) 4.3 1.5x • Smartphones represent 81% of commercial activity in Europe 2.8 • 17% y-o-y increase in mobile gross adds
Slide 6: Revenue growth driven by key strategic areas
TELEFÓNICA Revenue growth driven by key strategic areas Revenue increase (y-o-y) Q4 11 Q1 12 +1.6% 8.3% Top line ex- MTRs • Improved trends across regions 2.5% acceleration 0.5% driven by • Similar contribution from Brazil (23%) and Spain (25%) T. Latam (1.8%) (7.0%) (6.6%) Telefónica T. Latam T. Eu
Slide 7: Outstanding performance in Latam, our key growth engine
TELEFÓNICA Outstanding perfomance in Latam, our key growth engine Accesses growth (organic y-o-y) Net Adds (in millions) Q1 11 Q1 12 13% Mobile 4.7 4.5 Total Strong 2.3 2.3 2.3 0.19 0.17 1.1 mobile net 11% adds fuelled 10% access (0.06) 8% expansion (0.21) Q2 11 Q1 12 Total Mobile MBB Traditional FB
Slide 8: Increased customer investment impacting profitability
TELEFÓNICA Increased customer investment impacting profitability Underlying OIBDA margin 35.5% 0.7 p.p. 32.8% (2.4 p.p.) (1.1 p.p.) Q1 11 Commercial Costs Network Others Q1 12 & System costs • Higher costs driven by • Network expansion • Savings from strong commercial push (coverage & capacity) head
Slide 9: Latam: Robust growth acceleration across regions
T. LATAM Latam: Robust growth acceleration across regions Revenue growth breakdown (y-o-y organic) +9.2% Ex-Regulation1 0.2 p.p. +7.8% 3.6 p.p. • Growth acceleration y-o-y Top line growth in all countries 1.9 p.p. • Turnaround in Northern Region, Mexico 2.1 p.p. consolidates its positive revenue gro
Slide 10: Brazil: Widening leadership
T. LATAM Brazil: Widening leadership • Best-ever Q1 in mobile net adds: Mobile accesses (y-o-y) Mobile market share (Mar-12) y-o-y 3.2 m vs. 1.8 m in Q1 11 • Sustained mobile share gains y-o-y 20% 43.8% Strengthened and q-o-q : 36.5% leadership Leadership expansion in all segments 19% 29.8% St
Slide 11: Brazil: Commercial momentum flowing to financials
T. LATAM Brazil: Commercial momentum flowing to financials, synergies materialised below OIBDA Revenue growth (organic y-o-y) • Sustained double digit growth in mobile: Total MSR Fixed Ex-Regulation1 61% of total revenue 14.8% Mobile data revenues are 25% of MSR Robust top line 15.8% 13.7% expan
Slide 12: Latam: Widespread growth acceleration (i)
T. LATAM Latam: Widespread growth acceleration (i) Contribution to TEF Q1 Revenue Southern Region: Advances to transform the business Revenue breakdown ex-regulation1 (y-o-y organic) Q4 11 Q1 12 18.6% 12.9% 11.3% 9.4% 7.7% 8.1% 7.0% 5.7% 4.0% 1.5% Southern Region Colombia Peru Argentina Chile ARGENT
Slide 13: Latam: Widespread growth acceleration (ii)
T. LATAM Latam: Widespread growth acceleration (ii) Contribution to TEF Q1 Revenue Northern Region: Consolidating positive trends Revenue breakdown ex-regulation1 (y-o-y organic) Q4 11 Q1 12 25.5% 17.0% 17.1% 13.8% 7.5% 6.5% 5.3% 0.2% Northern Region Mexico CA Venezuela VENEZUELA: 4.3% • Impressive
Slide 14: T. Europe: Building momentum on commercial refresh
T. EUROPE T. Europe: Building momentum on commercial refresh Revenue (y-o-y) 21.1% -5.4% ex- • Mobile customer base expansion leveraging new MTRs 6.1% propositions: Smartphone were 81% of handset sales in Q1 (6.6%) Focused Contract segment at 58% of total base (+3 p.p. y-o-y) Total Mobile Non-SM
Slide 15: Spain: Executing our transformation plan (i)
T. EUROPE Spain: Executing our transformation plan (i) Penetration in the consumer segment 50% 75% 33% Gross adds+migrations 37% in high-end offering (1) FBB 35% 16% Mobile Q4 11 Q1 12 Fast take-up of Churn ARPU (y-o-y) new tariff portfolio Q1 Mobile contract driving consumer segment FBB. Base 100 •
Slide 16: Spain: Executing our transformation plan (ii)
T. EUROPE Spain: Executing our transformation plan (ii) Costs of subsidies in acquisition Base 100 • Handset subsidy elimination for new mobile customers from March will lead to: 100% 87% Lower portability volumes: portability was 74% around 10% of the market in 2011 29% Significant decline in c
Slide 17: Spain: Further efficiency gains across the board
T. EUROPE Spain: Further efficiency gains across the board MSR ex MTR (y-o-y) Q1 OpEx (y-o-y) • Top line performance impacted by Mainly affected by new tariffs a challenging environment SMS Loyalty Total Non- Commercial • MSR deterioration due to usage Q4 11 Premium Program Others Q1 12 OpEx Commerc
Slide 18: UK: Regaining momentum
T. EUROPE UK: Regaining momentum Contract segment Smartphone penetration • Increased volume & value in a very competitive Net adds (‘000) market: Upgrades (y-o-y) +8 p.p. 41% 223 Highest contract net adds since Q3 10 on Recovering solid gross adds (+8% y-o-y) 151 175 +40% 33% commercial Contract
Slide 19: Germany: Successful strategy driving growth
T. EUROPE Germany: Successful strategy driving growth Contract net adds (‘000) Smartphone penetration • Smartphone share leadership (95% Contract churn 294 over total shipments) 271 Best-ever • Strong business segment and partner +5 p.p. 21% quarter contract trading activity 206 16% net adds • Contr
Slide 20: Czech R.: Further improvement in financial performance
T. EUROPE Czech R.: Further improvement in financial performance CR mobile base (y-o-y) FBB base (y-o-y) • Contract mix at 62% (+2 p.p. vs Mar-11) 12% Sustained Improved contract churn (-0.2 p.p. y-o-y) 6% 9% customer growth Gaining traction on MBB, penetration 1% 2% at 16% (+3 p.p. y-o-y) • VDS
Slide 21: Balanced access to credit markets, 2012 refinancing completed
TELEFÓNICA Balanced access to credit markets, 2012 refinancing completed Net financial debt prefinanced €0.4bn of 2013-2015 bonds € in billions repurchased YTD €7.5bn financing 7.6 in Q1 12 2.5 6.3 >40% 2013 2.5 Preferred Shares prefinanced 2012 fully 1.6 4.3 refinanced 0.8 2012 maturities as Latam
Slide 22: Implementing measures to reduce our debt
TELEFÓNICA Implementing measures to reduce our debt Net Financial Debt evolution € in millions 389 57,131 1,495 312 56,304 126 55,636 Net Financial Debt/ OIBDA1 Net Financial 2.55x Debt2 / OIBDA 2.48x Net Fin. Debt FCF Net Financial FX Net Fin. Debt Post Closing Net Fin. Debt Dec-11 Post-Minorities
Slide 23: Further actions to enhance financial flexibility
TELEFÓNICA Further actions to enhance financial flexibility • Objectives: Net financial debt / OIBDA < 2.35x REDUCE LEVERAGE Preserve rating Improve liquidity Enhance flexibility Optimise capital allocation COMPELLING PORTFOLIO REMUNERATION MANAGEMENT • Already achieved: €1.6bn Colombia
Slide 24: Concluding remarks: Delivering on our 2012 strategy
TELEFÓNICA Concluding remarks: Delivering on our 2012 strategy • Solid commercial start for 2012 • Significant top line improvement • Outstanding performance in Latin America • Setting the new paradigm in the sector • Balanced access to credit markets • 2012 outlook reiterated, progressive improveme
Slide 25: Investor Relations Telefónica, S.A.
Organic growth: In financial terms, it assumes constant average exchange rates as of January- March 2011 and excludes hyperinflation accounting in Venezuela. In addition, the positive impact from the partial reduction of our economic exposure to Portugal Telecom is excluded in OIBDA and OI in Q1 11