Telefonica Sa · BME:TEF
Telefonica Sa — Non-Deal Roadshow (March 2010)
31 slides from Telefonica Sa's roadshow presentation, Mar 15, 2010
Slide 1: Telefónica: Delivering sustainable growth
Telefónica: Delivering sustainable growth TELEFÓNICA, S.A. London, March 15th-16th, 2010 TELEFONICA S.A.
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, b
Slide 3: Index
Index 1 Telecoms: a steady growth industry 2 Telefónica will maintain its differential profile in the future 3 Top quality performance in 2009, setting the base for future growth 4 Conclusions 4 TELEFONICA S.A. Investor Relations 3
Slide 4: In the new digital world, advanced global operators are key to build new proposals
01 Invalue the new digital world, advanced global operators are key to build new proposals Global Telco Advanced data distribution & services platform Operators $ Software & App User equipment providers manufacturers Internet $ content access platforms Network equipment providers Content creators Bi
Slide 5: Service platforms enable a new wave of revenues
01 Service platforms enable a new wave of revenues TELEFONICA S.A. Investor Relations 5
Slide 6: Our scale and value chain positioning places us as the partner choice
01 Our scale and value chain positioning places us as the partner choice in the new digital ecosystem to build high potential intersectorial alliances with every sector TELEFONICA S.A. Investor Relations 6
Slide 7: New digital applications and services will accelerate this trend
01 New digital applications and services will accelerate this trend, increasing ICT share in consumer’s wallet TELEFONICA S.A. Source: Worlwide. Euromonitor international. Bain Analysis Investor Relations 7
Slide 8: Turning into a sustainable revenue growth
01 Turning into a sustainable revenue growth TELEFONICA S.A. Investor Relations 8
Slide 9: We see a larger business size with a change of mix in the sector
01 We see the a larger business size with a change of mix in the sector Access & Voice BB Applications 2010E 80% 15% 5% Voice Voice Access & BB Applications 2020E 30% 60% 10% Data % Revenues TELEFONICA S.A. Source: OVUM report (Telecoms in 2020 published on 24/12/09)& Telefónica Analysis. Investor R
Slide 10: Index
Index 1 Telecoms: a steady growth industry 2 Telefónica will maintain its differential profile in the future 3 Top quality performance in 2009, setting the base for future growth 4 Conclusions 4 TELEFONICA S.A. Investor Relations 10
Slide 11: We will fully capture revenue growth potential in our markets
02 We will fully capture revenue growth potential in our markets 1 Customer focus & consistency Revenue Mix(1) Outperforming the industry in market share Improved churn (-0.3p.p. var 08-12E) FY 2008 2 Development of applications & new business 81% 13% 4% Apps.&New business revenue: +12%/+15% C
Slide 12: Transformation will reinforce profitable and sustainable growth
02 Transformation will reinforce profitable and sustainable growth •Efficiency ratio ~-4p.p. var. 08-12E •OpEx(1) per access -6%/-3% CAGR 08-12E A new operating model 1 One Multiaccess network to enable Operational Commercial growth and efficiency activity activity 2 IT strategy as a key transformat
Slide 13: Medium term guidance will lead to sustainable growth and lower risk profile
02 Medium term guidance will lead to a sustainable growth and an even lower risk profile 2008 CAGR 08-12E(2) Adjusted(2) Accesses(1) 252 >320 (millions) Revenues 57,946 +1%/+4% € in millions OIBDA € in millions 22,602 +2%/+4% OI +4%/+7% € in millions 13,556 > € 40 Bn OpCF +5%/+7.5% Cumulative FCF(3)
Slide 14: We have clear priorities for 2010
02 We have clear priorities for 2010 Reinvesting efficiency 2009 Adjusted(1) 2010 Guidance(1) gains to foster revenue expansion #1 Capturing top Revenue 56,407 +1%/+4% line growth prospects Higher CapEx to OIBDA 22,344 +1%/+3% support growth in CapEx (€ in millions) 7,262 7,450/7,650 customers &
Slide 15: We offer sector leading cash returns
02 We offer sector leading cash returns #1 on Dividend Yield among top 50 companies worldwide by Mkt Cap 1.75 1.40 1.15 DPS (€) FY 2009 FY 2010E(1) FY 2012(1) minimum target(2) DPS targets reiterated Dividend is well covered No dependence on cash repatriation from any particular country in Lat
Slide 16: We maintain our selective M&A approach
02 We maintain our selective M&A approach M&A Priorities Spectrum auctions in current markets to foster growth: Germany & Mexico in H1 2010 Potential awarding process in Spain along 2010 In-market consolidation: Hansenet acquisition closed on February 16th Increase shareholding in China
Slide 17: Index
Index Telecoms: a steady growth industry 1 Telefónica will maintain its differential profile in the future 2 3 Top quality performance in 2009, setting the base for future growth 4 Conclusions TELEFONICA S.A. Investor Relations 17
Slide 18: Robust set of financials in 2009
03 Robust set of financials in 2009 Jan-Dec(1) Change(1) Change organic(2) Contribution by regions (FY 09) € in millions 2009 FY 09/FY 08 FY 09/FY 08 % Group Revenues OIBDA Revenues 56,731 -2.1% +0.2% T. España 35% 43% Operating Income T. Latam 41% 40% before D&A 22,603 -1.4% +0.9% T. Europe 24% 17%
Slide 19: Strong commercial momentum, setting the base for future growth
03 Strong commercial momentum, setting the base for future growth Group Total Net adds (1) (´000) Telefónica Group Accesses (2) (in millions) Like-for-like growth(2) 14,443 MBB >15 m +63.7% vs. 264.6 +1.9% in 2008 6,782 202.3 40.6 4,144 +5.1% 2,134 13.5 1,383 2.5 +7.4% -5.4% +8.2% +9.8% Q1 09 Q2 09
Slide 20: Solid cash generation led by improved profitability
03 Solid cash generation led by improved profitability Telefónica Group Efficiency ratio(2) FY 09 Organic growth(1) (y-o-y) OIBDA margin reported -1.4 p.p. IMPROVED! +8.0% 75.5% +7.8 p.p. 74.1% +0.9% +0.2% 39.8% (+0.3 p.p.) Revenues OIBDA OpCF(3) Dec-08 Dec-09 Focused CapEx 78% of total CapEx for
Slide 21: Strong balance sheet
03 Strong balance sheet Steady financial profile Net financial debt/OIBDA 2.3x Leverage target, 1.9x including commitments, kept in the low part of our range (2.1x OIBDA) Dec-07 Dec-09 Increasing average debt life Net financial debt maturity Dec-09 (€ in billions) 8.9 6.6y 6.7y adjusted with €1.4Bn
Slide 22: T. España: Sustained top-line improvement and strong OpCF
03 T. España: Sustained top-line improvement and strong OpCF REVENUE EFFICIENCY (Underlying(1) y-o-y change) OIBDA OIBDA margin T. ESPAÑA -4.5% 48.0% -5.7% -6.2% -5.9% -6.6% -1.1p.p. 45.8% FY 09 Q4 -1.5p.p. FY 09 Q4 T. ESPAÑA -7.5% WIRELINE -2.9% (comparable(2) ; -8.0% -3.7% -3.0% -4.2% -4.0% y-o-y
Slide 23: T. España: Intensifying commercial activity, with rational pricing
03 T. España: Intensifying commercial activity, with rational pricing Wireless contract FBB net adds Pay TV net adds Fixed lines losses net adds (‘000) (´000) (´000) (‘000) 640 127 145 H1 09 H2 09 85 93 -79% +108% -78% -40% +160% +155% +43% y-o-y y-o-y y-o-y y-o-y -3 y-o-y y-o-y y-o-y H1 09 H2 09 H1
Slide 24: T. Latam: A story of profitable growth
03 T.Latam: A story of profitable growth 29.8% 29.1% 10.1% Financial 8.3% Healthy organic top line growth: performance 5.3% Double digit growth in mobile service on (FY 09 y-o-y change) 3.7% strong customer growth (+9.2% y-o-y) and Internet & Pay TV revenue € terms Enhanced profitability on Op
Slide 25: T. LatAm: Improving trends in Q4 in wireless, while stabilizing wireline
03 T. LatAm: Improving trends in Q4 09 in wireless, while stabilizing revenue in wireline Wireless business Wireline business Strong commercial momentum and sound Recovering BB growth: leadership: BB Net adds (‘000) % YoY change Contract net adds/total Q1 09 Q2 09 Q3 09 Q4 09(3) 142 143 147 Net
Slide 26: Quality improvements in Telesp starting to pay off
03 Quality improvements in Telesp starting to pay off Q1 09 Q2 09 Q3 09 Q4 09 OIBDA margin (%) 37.6% 40.7% 37.0% 38.0% Stabilization Stabilizing OIBDA margins sequentially: Despite transformation initiatives & Quality more resources on quality Anatel claims (y-o-y -51% Improving quality standa
Slide 27: T. Europe: improving revenue trends and increasing profitability
03 T. Europe: improving revenue trends and increasing profitability Net additions 2009 accesses (in millions)(1) (y-o-y change) 2.9 +12.4% Mobile Underlying revenue growth acceleration driven by Customer 80% +6.5% customer growth and stabilization in ARPU trends: growth Gaining market share over
Slide 28: T. Europe: solid foundations to keep outperformance in key markets
03 T. Europe: solid foundations to keep outperformance in key markets UK GERMANY Customer insight: High quality network leading to solid #3 Customer experience leadership position in MBB New revenue streams (O2 Money, O2 More…) Improved distribution: 215 new shops in Market leading contr
Slide 29: Index
Index 1 Telecoms: a steady growth industry 2 Telefónica will maintain its differential profile in the future 3 Top quality performance in 2009, setting the base for future growth 4 Conclusions TELEFONICA S.A. Investor Relations 29
Slide 30: Conclusions
04 Conclusions One of the best positioned players to take advantage of the growth industry Top quality performance in 2009 in a very challenging environment Clear priorities and positive outlook for 2010 Lower risk investment case supported by recent events in Venezuela (FX) Very attractiv
Slide 31: TELEFONICA S.A. Investor Relations
TELEFONICA S.A. Investor Relations 31