Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Investor Day (April 2011)
42 slides from Telefonica Sa's investor day presentation, Apr 13, 2011
Slide 1: Anticipating the future to transform the present
Anticipating the future to transform the present César Alierta Chairman and Chief Executive Officer, Telefónica
Slide 2: Forward-looking statements disclaimer
This presentation contains statements that constitute forward-looking statements about the Company, within the general meaning of the term and within the meaning of applicable securities laws, including financial projections and estimates and their underlying assumptions, statements regarding plans,
Slide 3: Agenda
01 Progress made in the last 18 months 02 Improved outlook for a dynamic and growth industry 03 Telefónica’s strategy and long term guidance
Slide 4: Progress made in the last 18 months
Progress made in the last 18 months
Slide 5: Significant progress since our last Investor Conference
Significant progress since our last Investor Conference We are delivering on our commitments We continue transforming our company We have outperformed the market We have reinforced our scale We have strengthened our growth capabilities We are better positioned to continue leading this growth industr
Slide 6: Fully capturing revenue growth potential
Fully capturing revenue growth potential ... Revenue mix 1 evolving in the right direction 81% FY 2008 13% 4% Access & Voice BB connectivity Total Accesses 2 75% 18% Services beyond (million) FY 2010 5% Connectivity CAGR 288 More customer focus 7% 252 CSI Improvement to over 7 Positive evolution of
Slide 7: Transforming to continue growing profitably
...while transforming to continue growing profitably Advancing in a more efficient and growth enabling operating model Network: Multiaccess 08/10 Selective deployment of high speed FBB access x 4 Expansion of MBB capacity and coverage x 1.6 Increase integrated backbone capacity x 2.2 IT enabler TTM
Slide 8: A highly predictable and reliable company
Telefónica: A highly predictable and reliable company Outperforming the market Delivering on our commitments 45% Meeting our annual targets for 8 years in a row 40% (from 2003 to 2010) Robust financial position : leverage ratio within target 35% range OIBDA margin FY 2010 € 1.40 DPS in 2010 30% 25%
Slide 9: Reinforced asset base where scale and spectrum are key
We have reinforced our asset base in an industry where scale and spectrum are key... 28 m new organic accesses in the last 18 months Through organic growth... #5 on worldwide accesses ranking (Dec-10) Increase In-market Spectrum shareholding consolidation auctions in CU ... selective M&A .... Recent
Slide 10: Strengthened capabilities for the new digital world
...and we have strengthened our capabilities to capture the new digital world opportunities P&S Global Units Financial services eHealth M2M Cloud Video & DH Apps Security OTT companies The leading digital media The most innovative IP The most engaging social company in Latin America communication co
Slide 11: Most diversified integrated company in the world
We are the most diversified integrated company in the world... % outside country of origin (Dec-10) Accesses Revenues OIBDA 95% 89% 92% 83% 68% 64% 68% 59% 46% 66% 49% 39% 1 60% 60% 51% 45% 27% 18% Source: Companies Press Releases 1 DT excluding US assets: 52% Accesses, 46% Revenues and 37% OIBDA
Slide 12: A unique global profile
...with a unique global profile Latin American Footprint European Footprint Population: 526 m people Population: 164 m people ICT market value: US$227 bn ICT market value: €307 bn TEF accesses: 184 m TEF accesses: 56 m TEF Revenue share 1 : 29% TEF MSR share: 25% Spanish Footprint Population: 46 m p
Slide 13: Leading DJSI in our industry
We are leading DJSI in our industry for the second year in a row DJSI : “ Corporate Sustainability is a business approach that fosters value creation in the long term for shareholders taking advantage of the opportunities and the effective risk management, related to social, economic and environment
Slide 14: Committed with the societies where we operate
We are committed with the societies where we operateFundación Telefónica’s social activitiesFY 2009 US Cash Donation Ranking1€ 400 million committed to finance short (US$ m) % and medium term activities o/Revenues Wal-Mart 288 0.1%Mainly to fund “Proniño” programBoAM 209 0.1% Well Fargo 202 0.2% Exx
Slide 15: Improved outlook for a dynamic and growth industry
Improved outlook for a dynamic and growth industry
Slide 16: Steady global growth ahead
Steady global growth ahead Real GDP Growth Source: IMF (Jan2011)
Slide 17: ICT global growth
ICT Global growth ICT Market CAGR 10E-13E North America 3.6% Europe 2.6% Asia-Pacific 6.6% Latin America 7.7% MEA 7.2% Worldwide 4.6% Source: IDC (2011)
Slide 18: A journey towards a total digital life
People have embraced a fascinating journey towards a total digital life 08:05 AM News e-Banking e-Government e-Health Mobile shopping 01:20 AM PM PM Geolocation 09:15 AM Social 05:30 AM Augmented PM Networks PM reality Ask an Expert TDT HD Music Even more — the world will be truly connected
Slide 19: Growth fostered by digitalisation of the real economy
Industry growth will be fostered by the digitalisation of the real economy that is already happening Communication expenditure/Total Consumer expenditure Source:. Euromonitor International. Bain Analysis (2011)
Slide 20: Industry trends are already anticipating this growth
Industry trends are already anticipating this growth
Slide 21: Customers will continue growing
Customers will continue growing Worldwide data FY 2010 Total Accesses 6.6 bn 6% Mobile Accesses FBB Accesses MBB Accesses 5.0 bn 0.5 bn 0.7 bn 8% 9% 46% Internet Users Social Networking Users 2.0 bn 767 m 13% 14% CAGR 10-13E_____Source: IDC (2011), Yankee Group (2011) Pyramid (2011) and The Radicati
Slide 22: Device demand driven by smartphones
Device explosive demand driven by Smartphones... Personal Devices evolution Annual Global Sales - Million Units CAGR Rapid growth in Smartphones & 10E-13E Tablets CAGR 10E-13E 1,150 19.7% Smartphones are increasing Tablets 71.0% customer average lifetime value 670 Smartphones 29.4% Total installed 4
Slide 23: M2M devices will grow exponentially
...while M2M devices will grow exponentially Smart meters M2M Devices explosion Automotive Single Family Utility Office Automotive Home Fleet management Smart cities Communication Device on Utility Pole Smart meters Smart cities Consumer Electronics Consumer electronics eHealth, eFinance, security,
Slide 24: New services and applications support new opportunities
New services and applications will support new business opportunities Services beyond Connectivity — Worldwide Revenues US$ bn_____Source: IDC (2011) and Analysis Mason (2010)
Slide 25: Data traffic is booming
Data traffic is booming and new technological developments will allow this growth Global Data Traffic Technology evolution Exabytes per month CAGR 10E-13E TODAY 49.9 CAGR10E-13E /user 33% 111% FTTH capacity 31% NG-GPON 38.2 FTTH GPON Mobile Data Broadband IMT Managed IP VDSL 28.5 Advanced Internet A
Slide 26: ICT, one of the industries with best growth prospects
ICT, one of the industries with the best growth prospects More Customers More Traffic More Devices More Apps & Services A great opportunity to be monetised
Slide 27: Enlarged and growing scope for Telcos
Enlarged and growing scope for Telcos 2010 Global Revenue Breakdown Worldwide — US$ bn
Slide 28: Active cooperation among ICT players
Active cooperation among ICT players key to address industry challenges A more stable & predictable regulatory outlook New services Telco operator Wholesale Applications Community (WAC) Rich Communication Suite NFC Payments and M2M Mobile advertising Communications and Services beyond Connectivity N
Slide 29: Telefónica's strategy and long term guidance
Telefónica’s strategy and long term guidance
Slide 30: A clear strategy for the new Digital World
We have a clear strategy to capture the opportunities of the new Digital World
Slide 31: The customer is the centre of our strategy
The customer continues to be the centre of our strategy Telefónica quality main initiatives Customer Satisfaction Value Customer Satisfaction Churn Rate proposition Index (%) (%) 2.3 Offer Business 7.1 simplification Intelligence FY 2010 FY 2013E FY 2010 FY 2013E Emotional Multichannel Maximizing cu
Slide 32: Increasingly capturing growth opportunities
We are increasingly capturing growth opportunities Telefónica’s Revenues 1 Profitable mobile data growth monetisation CAGR 10-13E 1 Continue to enhance Fixed +1/4% 2 Broadband portfolio 3 Development of applications and new services FY2010 FY2013E 4 Capturing remaining mobile and fixed voice opportu
Slide 33: Main strategic pillars to lead growth
Our main strategic pillars to lead growth ... 1 Profitable mobile data growth 3 Development of applications monetisation and new services Tiered pricing Broaden our portfolio of apps Serv. MBB and new services beyond ARPU management Connectivity Revenues CAGR 10-13E 1 : Leverage P&S global units Rev
Slide 34: Further evolving our revenue mix
... and further evolve our revenue mix 1. Figures for guidance assume constant FX (average FY 2010), excludes hyperinflationary accounting in Venezuela in both years and changes in the perimeter of consolidation Access & Voice : Include fixed/mobile access & voice (SMS included), narrowband and mobi
Slide 35: Transformation strategy to enable growth and maximize efficiency
Our transformation strategy to enable growth and maximize efficiency 1 Best in class networks Leveraging fixed and mobile technologies to meet customer demands Managing efficiently coverage and traffic growth 2 IT as a key transformation accelerator Continuous focus on Highly resilient 6 Global Data
Slide 36: Leveraging strategic and industrial alliances
... and further leveraging on our strategic and industrial alliances Execution of Industrial Partnership: Strategic cooperation: Technological alignment Services to multinationals Procurement Combined scale and volumes Technology and new services New customer proposition Growth value: Over 600 milli
Slide 37: Strategic priorities by regions
Our strategic priorities by regions Telefónica Telefónica Telefónica Latinoamérica España Europe Capturing growth through a Defend our OIBDA and our Outperform the market by full offer value leadership focusing on #˜ Driving voice to the limit of its #˜ A differential Customer #˜ Revenue share growt
Slide 38: The best committed and motivated team in the industry
We have the best committed and motivated team in the industry A committed Highly committed management with vast experience in our business management Telefónica Executive Committee and Board of Directors exposure to team Telefónica share (> 7.8 m shares) Committed and PSP linked to stock performance
Slide 39: Long term guidance
Long term guidance CAGR 10/13E Revenues +1/4% 2011E-2013E Upper OIBDA margin 30s limited erosion from 2010 Cumulative 2011E-2013E CapEx < €27 bn Note: 2010 adjusted figures for guidance include full consolidation of Vivo, Hansenet and Tuenti in the whole year (12 months) and excludes Manx Telecom’s
Slide 40: Financial policy centred in cash-flow allocation
Financial policy centred in Cash-flow allocation €1.60 DPS for FY 2011E (14.3% y-o-y) Shareholder €1.75 DPS minimum target for FY 2012E remuneration €1.75 minimum annual shareholder remuneration beyond 2012 Solvency Net debt + cash commitments within the range 2.0 to 2.5x Protection OIBDA Predictabl
Slide 41: In summary
In summary We are better positioned to lead our growing industry: the right scale, capabilities and strategy We are focused on value growth and on capturing new services opportunities We continue transforming our company to enable growth and maximize efficiency We maintain a solid financial position
Slide 42: 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: April 13 th , 2011 By: /s/ Ramiro Sánchez de Lerín García-Ovies Name: Ramiro Sán