Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Fifth Investor Conference 2006
38 slides from Telefonica Sa's conference presentation, May 25, 2006
Slide 1: Fifth Investor Conference
FIFTH INVESTOR CONFERENCE Valencia. May 25 th - 26 th. Ciudad de las Artes y las Ciencias Peefinica
Slide 2: The best combination of growth and returns in the industry
The best combination of growth and returns in the industry César Alierta Chairman and CEO, Telefonica SVAVAWava na NS FIFTH INVESTOR CONFERENCE ci las Artes yas Ciencias Valencia - May 25, 2006 Telefonica, S.A
Slide 3: Disclaimer
Disclaimer ‘This presentation 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 ina number of places in this document and include statements regarding the inte
Slide 4: Index
Index O1 — Telefénica: a new and better company in a growth market 02 Our unique profile 03 Ourstrategic guidelines to lead the sector's evolution Tolefinica S.A
Slide 5: Contents
Contents O1 — Telefénica: a new and better company in a growth market 02 Our unique profile 03 Ourstrategic guidelines to lead the sector's evolution Tolefinica S.A
Slide 6: Since we met one year ago, Telefónica has become a new Company
Since we met one year ago, Telefénica has become a new Company We have been proactive to acquire the best available growth platforms to achieve the right balance by businesses and geographies and to benefit from the full potential for economies of scale. V tne integration of Bellsouth Latam assets a
Slide 7: A new Company that will take the best from the growth opportunities of the ICT industry
== Anew Company that will take the best from the very promising growth opportunities of the ICT frm nvesron industry Total ICT Spending 2005 Global ICT Market (2004-2009) {US$ Bn) {US$ Bn) 43% oe cacr 5% ao 5.1% / 59% 23% mComputing Software BIT Services mTelecom 2004 2005 2006 2007E_ 2008E°—2009E T
Slide 8: Telecoms, which are key to fuel the ICT expansion, will lead this growth
oa Telecoms, which are key to fuel the ICT expansion, will lead this growth to boost its revenues... Information Technologies + jeté@ommuication industry enfers in usiness through Broadband y lutions and vice versa Key sector: Telecommunications + Mobilehandsets + Set-topboxe: + Domoticsand|Home ser
Slide 9: Offering a large potential in the coming years
.. offering a large potential in the coming years ‘Mobile communications Fixed Broadband communications CREEREGEGM estimated mobilerevernisinWestemturope Estnnated revenues inEurope (2006-20108) (2005-200%) <€Bn €Bn cAGR cage 20% / 183 ad 50 354 24 ene 010 2005 20096 Opportunities inemerging markets
Slide 10: Only those companies adapted to sector trends will fully exploit these opportunities
But only those companies adapted to sector trends will fully exploit these opportunities Major industry trends Winners will be companies having... Regional scale Global communities of clients Regional leadership Global brands Globalization Local commercial strength Close to customers Differentiated
Slide 11: Contents
Contents O1 — Telefénica: a new and better company in a growth market ©2 Our unique profile 03 Ourstrategic guidelines to lead the sector's evolution an Tolefinica S.A
Slide 12: Differentiated results thanks to a unique profile in our industry
We have achieved differentiated results thanks to a unique profile in our industry [DIFFERENTIAL | UNIQUE RESULTS PROFILE . MORE GROWTH 1. REGIONAL SCALE 2. STRONG LOCAL TREES IED COMMERCIAL » MORE PROFITABILITY (4s a AGEMENT ane TO DELIVERON . MORE CASH FLOW SHAREHOLDER 3. OPERATING GENERATION VALU
Slide 13: Our results top the best performances in the sector in terms of growth
O2 Our results top the best performances in the BC sector in terms of growth at the operating level, = Revenuié growth® = OIBDA growth = Olgrowth(®) 2005 vs.2004 2005 vs.2004 2005 vs.2004 25.0% 12.9% -0.2% Total Growth MM organic Growth [Rent forthe wave mann Yo" ach on jm Broan art Jelefiniasa, ——(
Slide 14: ... in terms of earnings momentum
QO2 ... in terms of earnings momentum ... BC Adjusted EPS Growth 2005/2004 24% Ey Felefiniea 3% Bre orracyrerute before goal adjurtirg defered ter. Fults 7 as Tolefinica S.A
Slide 15: ... and in terms of cash generation
oa ..and in terms of Cash Generation, as the BC basis of our shareholder remuneration policy Free: Cash Flow* as % of revenues 2005A, 18% 18%** 16% 15% 15% TK Kine ep & Te FCF* Growth 2005/2004 0.9% Hae “36% 4.8% —-4.9% 12.7%" Telefonica Tolefinica S.A
Slide 16: We consistently deliver on our commitments
We consistently deliver on our BC commitments Revenue growth v OIBDA growth* A 17.2% cunence 74% 935% 42% 2238 once (Uifted in 3005) P| 103% Commited Change0si08 Commit Changeosio4 cacRogoe (quidancecriteria) cacRogoe (euidance criteria) Ol growth* v 164% a3-19% cua sas Commit Changeosiog Gofny Gicr
Slide 17: Our unique profile: benefiting from regional scale
Our unique profile: Benefiting from D@ ; regional scale... . GEOGRAPHYCALLY DIVERSIFIED Top 10 p30 Op. cF* Total Accesses (Millions - 2005) Rest of China Mobile 2477 a2! China Telecorn a3 Telefonica 181, Vodafone 179 Deutsche Telekom 150 . Psusessevesreo | France Telecom 143 Accesses Op. cF* China U
Slide 18: ... that we actively manage
Se O2 ... that we actively manage D@ The value of (Hastrative) Net DSL Tot. DSL being part of Telefonica OIBDA growth(%) accesses? _accessas+ 2005 vs. 2004, 2005 4 ('000) 2005 4 (000) = Tlatam sa 742 2165 = Telmex ee esa J1.4c0 = Tlatam (TelesP)!?) 95 380 ju.207 = Telemar (Group) 36 309 gos, = Brasi
Slide 19: Our unique profile: Local commercial strength
Se Our unique profile: Local commercial Dea Nee Leadership and control of customer interface: = Connectivity ~ High knowledge of our customers’ profile = Customer care and Billing ~ 5 Mdaily contacts (globally) = Commercial network and branding ~ Strong brand recognition and consistent leadership in
Slide 20: Our unique profile: Operating efficiency
fefonica Our unique profile: Operating efficiency D@ Best inclass Fixed ... ..and Mobile Telecom : > 4 Tatam a,072 js fe |Telmext ‘Mobile 382 42 ‘Tae @) 624 aa jerance) 3,485, 37 : er 29 a7 5 hzss 30 bste ba m- We have begun the chase for efficiency before our competitors that still have to Tolefini
Slide 21: Our unique profile: Innovation for a distinctive competitive position
O2. ourunique profile: Innovation for a D@ distinctive competitive position imagenio” fa O, Genion = Launch in 2003 asa pioneering IPTV service in Europe = First replicated in early 2006. Still unique VoD feature in ADSL market = >200,000 customers in Dec’05, Tolefinica S.A = First in Europe, launch
Slide 22: Our unique profile: Adaptability
Our unique profile: Adaptability We've done the major restructuring this industry needs D@ Transforming our asset base Transforming our cost structure IStrengthening our commercial focus Focusing on investments for growth Tolefinica S.A Fixed assets" / Total accesses (€) Fixed Costss. Total Costs Ca
Slide 23: In summary, differential results thanks to a unique profile
Fllefonica B . Highest organic growth . swith earnings well . wallowing us to In summary, we have achieved differential results thanks to a unique profile in our industry DIFFERENTIAL RESULTS in the European industry... above tha market, cash flow generation of 18% over ravenuas with positive growth
Slide 24: Contents
Contents O1 — Telefénica: a new and better company in a growth market 02 Our unique profile ©3 Ourstrategic guidelines to lead the sector's evolution 2 Telefonica S.A a
Slide 25: Telefónica: the most competitive, customer oriented, integrated IP company
“Telofini Telefonica: the most competitive, customer oriented, solutions driven, integrated IP Company, with a clear goa:
Slide 26: Our strategic focus will be developed through four major objectives
O3 our strategic focus will be developed through four major objectives ¢ Better Results + NEW INTEGRATED + Growing MANAGEMENT EPS
Slide 27: Our differentiated top line growth well ahead of peers
O3 Our differentiated top line growth well @ ahead of peers is driven by ® Unique high growth Latam businesses ™ O2 differential growth momentum in Europe ™ Superior revenue growth of Spanish assets within the European market ®™ Cesky Telecom full integration as a new opportunity ™ Ongoing revenue u
Slide 28: Increasing our customer base and share of wallet
a 03 Increasing our customer base and our @ Tolefinica S.A Growing number of customers and accesses + Leadership posi Increasing the share of wallet revenues per customer will be the key Net drivers of revenue growth + High growth penetration potential nin covered + Leveraging the growth in covered
Slide 29: Managing a growing number of customers and services in a larger potential market
Tae Leading us to manage a growing number of @ : = customers and services in a larger eve nvestor potential market... High Growth Penetration potential penetation | = -yan | amam Number of Accesses (™) Inc. 05-09E* me eee mE Mobile feed Spain +22pp | +41pp Feed 88 255 a Rest of 7 " europe | *24PP +1
Slide 30: ... and to increase total revenues per customer
.. and to increase total Revenues per customer... Increasing revenue per customer while strongly accelerating the growth of our access base Delighting our customers with innovative proposals of integrated solutions for communication, information and entertainment Tolefinica S.A 1
Slide 31: Multi business customer insight and integrated channel management
“Telofini @ Multi business customer insight Integrated channel management Refreshed and segmented brand strategy Convergent Services, New Internet Personal TV servi Top-notch content offer
Slide 32: ... while evolving the revenue business model
oo .. while evolving the revenue @ business model... REVENUE MIX EVOLUTION ) ay 2005 2009E [Bo Data, Broadband and other Revenues, including bundled minutes I Outgoing Traditional Voice traffic Revenues 2 Telefonica S.A 3
Slide 33: ... and keep on transforming our cost and capex structure
.. and keep on transforming our cost and 25 capex structure PRODUCTIVITY INCREASE Economic benefits from 3 ve work operating cost per Acces an integrated £ PR broadband all-IP- to — + based network and = NGA... c o . a 2005 PF 2009E . reinforced by a © common vision and 5 CAPEX CONTROL evolution of
Slide 34: Financial discipline is a key element of our management strategy
Financial discipline is a key element of our management strategy COMMITMENTS BBB+/Baa1 as rating floor De-leveraging to re-build Net debt + commitments financial below 2.5x OIBDA in the strength medium term, as of 106 is 2.8x OIBDA Tolefinica S.A By
Slide 35: New integrated management of our businesses
New integrated management of our businesses @ will allow us to extract additional value
Slide 36: Telefónica delivers results through focused individual businesses and integrated relationships
Telefonica delivers results through focused u individual businesses and integrated relationships Conrenence MANAGEMENT PROGRAM TdE T-latam TEM 0, Luis LNA Antonio Peter Lada Pallete Viana Erskine “Leadinga “astoryof | | “crowth | |"Buildingon worldofee | fransformatio ith cash | Momentum” ssuaste |
Slide 37: Telefónica as a new and better company
O3 Telefonica as a new and better Company: anew and unique profile to capture the very promising growth opportunities = Enhanced growth prospects, well ahead of peers = Well-balanced by business and geographies = Enormous potential to extract value from scale and diversity through a new integrated m
Slide 38: 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: May 25 th , 2006 By: /s/ Ramiro Sánchez de Lerín García- Ovies Name: Ramiro Sánc