Telefonica Sa · BME:TEF

Telefonica Sa — 9M 2008 Earnings Presentation

27 slides from Telefonica Sa's earnings presentation, Nov 14, 2008

  1. Slide 1: Quarterly Results January-September 2008

    Quarterly Results January-September 2008 TELEFONICA, S.A. November 14th, 2008 TELEFONICA S.A. 1 Investor Relations

  2. Slide 2: Disclaimer

    Disclaimer This document contains statements that constitute forward looking statements about the Company including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations. These statements appear in a number of places in this doc

  3. Slide 3: Group Highlights: Benchmark results in the industry

    GROUP HIGHLIGHTS Benchmark results in the industry „ Unmatched organic(1) growth rates, above peers, leveraging a strategically diversified portfolio and strong competitive position in most markets: „ Top line growth acceleration vs. H1 08 driven by robust performance in Latin America „ Solid conver

  4. Slide 4: Delivering a superior combination of growth and strong CF generation

    GROUP FINANCIALS Delivering a superior combination of growth and strong CF generation Jan-Sep Change Change ex-forex(1) Change organic(2) € in millions 2008 9M 08/9M 07 9M 08/9M 07 9M 08/9M 07 Revenues 43,141 +2.7% +5.2% +7.0% Operating Income before D&A 17,026 -6.7% -5.2% +9.8% (OIBDA) OIBDA Margin

  5. Slide 5: Underlying EPS up by more than 26%

    GROUP FINANCIALS Underlying EPS up by more than 26% NET INCOME EPS Underlying(1) Underlying(1) € 5,596 m y-o-y growth € 1.2 y-o-y growth +23.5% +26.4% 9M 08 9M 08 TELEFONICA S.A. (1) Excluding the impacts from asset disposals (Airwave, Endemol and Sogecable). Investor Relations 5

  6. Slide 6: Capitalising on our highly diversified operations

    GROUP FINANCIALS Capitalising on our highly diversified operations Balance portfolio of assets Accesses Sep-08 (millions) 252.0 41% with voice, BB y-o-y growth 188.9 +15.2% and TV bundles 153.1 47.2 (+7 p.p. vs Sep-07) 43.2 44.9 +19.0% +21.1% 12.0 2.2 -0.6% +3.3% +9.9% +24.5% +54.0% T. España T. Eur

  7. Slide 7: Capturing the potential growth in each market

    GROUP FINANCIALS Capturing the potential growth in each market Contribution to organic revenue and OIBDA growth 9M 08 Revenue(1) 9M 08 OIBDA(2) +4.6 p.p. +7.0% +5.4 p.p. +9.8% +1.6 p.p. +1.5 p.p. +3.0 p.p. +0.6 p.p. T. España T. Europe T. Latam TEF TEF Group T. España T. Europe T. Latam Group Organi

  8. Slide 8: Outperforming our peers

    GROUP FINANCIALS Outperforming our peers 9M 08 y-o-y organic revenue growth TOTAL +7.0% +0.4% Telefónica(1) Peers(2) EUROPE EMERGING MARKETS +3.8% +11.9% +4.7% -1.6% Telefónica(1) Peers(4) (1) (3) Telefónica Peers (1) Assuming constant exchange rates as of 9M 07 and including the consolidation of TV

  9. Slide 9: Solid conversion rate of top line growth into cash-flow

    GROUP FINANCIALS Solid conversion rate of top line growth into cash-flow 9M 08 Organic(1) growth (y-o-y) Organic(1) OIBDA margin (y-o-y) +1.0 p.p. +3.1 p.p. 38.5% +10.1% 37.5% +9.8% +7.0% Revenues OIBDA OpCF 9M 07 9M 08 9M 08 OpCF (OIBDA-CapEx) (€ in millions) 87% of Group OpCF from Investment Grade

  10. Slide 10: Strengthening our organization to further reinforce cash-flow generation levers

    GROUP FINANCIALS Strengthening our organization to further reinforce cash-flow generation levers Leverage our integrated business model to capture additional synergies derived from our market power, skills, scale and diversity Global New Services Developing new growth dynamics to be in the forefront

  11. Slide 11: 9M 08 performance in-line with year-end targets

    GROUP FINANCIALS 9M 08 performance in-line with year-end targets Revenue Growth(1) OIBDA Growth(1) +7.8% +7.4% GUIDANCE 6%/8% 9 GUIDANCE 7.5%/11% 9 % Change 9M 08/9M 07 % Change 9M 08/9M 07 OI Growth(1) CapEx(1) +14.2% € 5,497 m 9 9 GUIDANCE 13%/19% GUIDANCE ~ € 8,600 m % Change 9M 08/9M 07 9M 08 TE

  12. Slide 12: On track to meet 2008 regional and Group guidance

    GROUP FINANCIALS On track to meet 2008 regional and Group guidance T. España 9 T. Latinoamérica 9 T. Europe 9 9 +14.2% +5.9% +2.3% GUIDANCE GUIDANCE Revenue 11%/14% 4%/7% GUIDANCE Revenue Growth (1) 2%/3.5% Growth (1) Growth acceleration in Q4 08 due to Q4 07 workforce reorganisation provisions +15.

  13. Slide 13: Telefónica España: preserving strong margins and high CF generation

    TELEFÓNICA ESPAÑA Telefónica España: preserving strong margins and high CF generation +8.4% T.España 6,302 „ Preserving OpCF, growing above 8% 5,814 OpCF (OIBDA–CapEx; „ Top line expansion € in millions) „ Sustaining solid margins across 9M 07 9M 08 businesses: +3.9% „ Leveraging cost efficiency mea

  14. Slide 14: Revenue growth in a more difficult environment

    TELEFÓNICA ESPAÑA Revenue growth in a more difficult environment +8.6% +9.9% Wireline „ 3.9%(1) revenue growth at wireline in Revenue +3.0% +2.5% 9M 08 vs. +2.2%(1) in H1 08: growth (9M 08 y-o-y „ € 182.8 m revenues in Q3 08 related to -2.6% change) USO(2) *Including PUT effect „ Flat wireless servi

  15. Slide 15: Wireline Business: Sustained commercial activity fostering 2P & 3P adoption

    TELEFÓNICA ESPAÑA Wireline Business: Sustained commercial activity fostering 2P & 3P adoption >78% 15,919 -392 m.s. FULL ULL NET „ Line losses driven mainly by naked shared ULL ADDS Fixed 15, 527 +367 and increased competitors’ activity: Telephony -2.2% „ +1.6%E y-o-y fixed line market growth Lines

  16. Slide 16: Wireless Business: Stabilization in ARPU trends

    TELEFÓNICA ESPAÑA Wireless Business: Stabilization in ARPU trends „ Strong focus in the value segment: +9.0% „ 23.4 m mobile customers in a 115% penetration Customer market +4.5% 61.7% of growth total (Sep-08 y-o-y customer „ 197k contract net adds in Q3; 211k in total base change) „ i-Phone sales a

  17. Slide 17: Telefónica Latinoamérica: Outstanding results in a growing region

    TELEFÓNICA LATAM Telefónica Latinoamérica: Outstanding results in a growing region 153.1 118.3 25.8 „ Differential profile in Latam: 5.9 Sep-08 „ Strong customer growth +21.1% +26.7% +66.0% Accesses +24.9% „ Acceleration in y-o-y organic revenue growth (in millions) +17.7%(1)+22.0%(1) +1.4% 1.5 (+0.

  18. Slide 18: Wireless business: Capturing the growth potential and fostering usage

    TELEFÓNICA LATAM Wireless business: Capturing the growth potential and fostering usage 42.3 14.7 14.7 „ Steady customer expansion in most markets: Sep-08 +13% 10.3 10.0 9.7 10.0 „ Mobile penetration up +13 p.p. y-o-y to 78% in Sep-08 mobile +35% +32% +15% 6.7 „ 12.9 m gross adds in Q3 08 (+16.2%(4)

  19. Slide 19: Wireline business: Strong advances in business transformation

    TELEFÓNICA LATAM Wireline business: Strong advances in business transformation 350 „ Robust BB accesses growth (+24.9% y-o-y) to 5.9 m 289 „ Further developing the bundle strategy (+5 p.p. vs. 201 Retail BB Jun-08 in 2P&3P/DSL accesses) net adds „ Higher BB speeds (Brazil & Chile) and expanded (´000

  20. Slide 20: Main operations review

    TELEFÓNICA LATAM Main operations review Ex-charges from technical Telesp y-o-y growth problems in July 2008 TASA y-o-y growth y-o-y growth Revenues (in local currency) OIBDA Margin Revenues (in local currency) OIBDA Margin(3) +18.9% +12.8% 40.9% 40.8% +2.5 p.p. +13.8% +2.7p.p. +7.4% 40.7% 40.2% 40.6

  21. Slide 21: Sum-up: Very robust growth across the region

    TELEFÓNICA LATAM Sum-up: Very robust growth across the region leveraging our integrated and diversified profile Mobile Mobile Total BB & TV Total Mobile 9M 08 y-o-y growth service outgoing revenue revenue OIBDA OIBDA (in local currency) revenue service revenue Brazil(1) +11.0% +42.9% +13.5%(2) +14.9

  22. Slide 22: Telefónica Europe: robust performance across markets

    TELEFÓNICA EUROPE Telefónica Europe: robust performance across markets +15.8% Revenue +10.7% „ Total customer base 44.9 m, +9.9% y-o-y growth +5.9% „ 2.2 mobile net adds in 9M 08, +8.3% y-o-y (9M 08 y-o-y +2.5% +2.0% „ Mobile base +8.6% y-o-y, fostered by the strong change) growth in contract (+14.5

  23. Slide 23: Telefonica O2 UK: Record contract growth while maintaining profitability

    TELEFÓNICA EUROPE Telefonica O2 UK: Record contract growth while maintaining profitability Churn 1.3% 1.4% (y-o-y change) (-0.4 p.p) (-0.4 p.p) „ Highest ever quarterly contract net adds (278 K) 622 „ Market leading contract churn at 1.3% Mobile „ Continued migrations from prepay segment contract 27

  24. Slide 24: Telefonica O2 Germany: continued customer growth & profitability

    TELEFÓNICA EUROPE Telefonica O2 Germany: continued customer growth & profitability 1.5m „ Continued mobile customer growth (+14.9% y-o-y) 9M 08 862 +31.8% leveraged on enhanced value mix and partnerships: mobile 645 +36.6% „ 645k contract adds in 9M08 to reach 49.2% of base net adds +25.9% „ Good tr

  25. Slide 25: Continuing leverage improvement

    GROUP FINANCIAL EXPENSES AND DEBT Continuing leverage improvement 9M 08 Net Financial Debt Evolution € in millions 2.3x OIBDA(1) 1.91x OIBDA(1) 45,284 +339 +3,636 42,856 +552 -679 -6,276 Net Fin. Debt FCF Commitments Share buy-back Net Financial FX, accruals Net Fin. Debt Dec-07 Post- cancellation a

  26. Slide 26: Closing remarks: Benchmark results in the telecoms industry

    CONCLUSIONS Closing remarks Benchmark results in the telecoms industry „ Unmatched organic(1) growth rates, above peers „ Solid conversion rate of top line growth into cash-flow „ Strong financial position to face the current financial turmoil with flexibility „ Fully on track to fulfill 2008 guidan

  27. Slide 27: TELEFONICA S.A. Investor Relations

    TELEFONICA S.A. Investor Relations 27

Telefónica — 9M 2008 Earnings Presentation on 6ix