Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — FY2009 Earnings Presentation
30 slides from Telefonica Sa's earnings presentation, Feb 26, 2010
Slide 1: Investor Relations February 26th, 2010
Investor Relations February 26th, 2010
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 which refer to the intent, belief or current prospects of
Slide 3: 2009: Top quality performance in a very challenging environment
2009: Top quality performance in a very challenging environment GROUP FINANCIALS STRONG DIVERSIFICATION INTEGRATED MANAGEMENT MODEL FINANCIAL STRENGTH Setting the base for future growth: Boost in customer growth Underlying top line recovery in Q4 09 Focused CapEx Best in class efficiency & high cash
Slide 4: Robust set of financials in 2009
Robust set of financials in 2009 GROUP FINANCIALS Includes hyperinflationary accounting in Venezuela in 2009. Organic growth: Assumes constant exchange rates as of 2008 (average fx) and includes the consolidation of Telemig in January-March 2008. Excludes hyperinflationary accounting in Venezuela in
Slide 5: Further growth in net income and EPS
Further growth in net income and EPS GROUP FINANCIALS FY 09 EPS reached € 1.71: +4.5% y-o-y FY 09 € in millions (% change y-o-y) 47 (c.s.) - -3,307 (+18.2%) - -2,450 (-20.7%) - -161 (-31.1%) 13,647 7,776 OI Associates Financial results Taxes Minorities Net Income 22,603 - -8,956 (-1.0%) D&A OIBDA -
Slide 6: Strong commercial momentum, setting the base for future growth
Strong commercial momentum, setting the base for future growth GROUP FINANCIALS Net adds sequential improvement along the year driven by higher gross adds and churn containment H2 09 net adds more than tripled H1 09's figure, on the back of mobile net adds MBB accesses gaining traction: +70.3% y-o-y
Slide 7: Sustained strong cash generation led by improved profitability
Sustained strong cash generation led by improved profitability GROUP FINANCIALS Efficiency gains and maximizing synergies: OpEx contention in FY 09 (-0.4% organic(1) y-o-y) Lower SACs across regions, driving the fall in commercial costs (-2.3% organic(1) y-o-y in FY 09) Interconnection costs down 2.
Slide 8: Delivering our year-end targets for years in a row
Delivering our year-end targets for 7 years in a row GROUP FINANCIALS Full year 2008 adjusted figures for guidance exclude Sogecable capital gain (€ 143 m), the application of provisions made in T. Europe in respect of potential contingencies deriving from the past disposal of shareholdings, once th
Slide 9: Sustained top-line improvement and strong OpCF
Sustained top-line improvement and strong OpCF TELEFONICA ESPANA Excluding USO (Q4 09, Q1 09 and Q3 08), seasonality in Q2 09 and Application Sale in Q3 09. Excludes impact of USO in Q4 09 on revenues (Wireline: € 148 m) and OIBDA (Wireline: € 91m; and Wireless: € -44 m), in Q1 09 on revenues (Wirel
Slide 10: Intensifying commercial activity, building foundations for 010
Intensifying commercial activity, building foundations for 2010 TELEFONICA ESPANA WIRELESS Monthly flat rates. ARPU excluding MTRs. Strong leadership (access & revenues share) Increasing the quality of the customer base: 65% on contract Improving traffic trends, reflected in better ARPU(2) performan
Slide 11: Sustaining wireline leadership with limited BB ARPU erosion
Sustaining wireline leadership with limited BB ARPU erosion TELEFONICA ESPANA WIRELINE Estimated market shares. 2009 Retail BB connectivity ARPU (y-o-y) - -6.6% - -5.7% - -6.8% - -5.6% Q1 Q2 Q3 Q4 - -6.3% FY 09 2009 Pay TV net adds (^000) - -7.7 4.7 Q1 Q2 44.7 48.7 Q3 Q4 Market share ^17%E H2 09 +16
Slide 12: Evidence of top line recovery
Evidence of top line recovery Ex USO. Based on historical data and Telefonica's estimates. TELEFONICA ESPANA HIGHLIGHTS Lower PSTN access revenues, in line with accesses evolution -5.9% -7.6%(1) -9.1%(1) - 7.0%(1) Wireless incoming revenues (roaming-in and -19.1% -18.8% -23.2% - 19.9% interconnectio
Slide 13: T.Latam: A story of profitable growth
TELEFONICA LATAM T.Latam: A story of profitable growth Assuming constant exchange rates, including the consolidation of Telemig in Jan-Mar 2008 and excluding hyperinflation adjustments in Venezuela. Includes Central America, Colombia, Ecuador, Chile, Peru, Uruguay and Others. Defined as last twelve
Slide 14: Wireless business: improving trends in Q4
Wireless business: improving trends in Q4 09 TELEFONICA LATAM For comparison purposes, net adds in December 2009 exclude the disconnection 116,000 inactive mobile accesses in Central America. For 2008, it includes Telemig net adds in Q1 08 and excludes the close to 4 million incorporation of Telemig
Slide 15: Wireline business: stabilizing revenue drivers
TELEFONICA LATAM For comparison purposes, Q4 09 net adds and growth rates exclude the disconnection of 24,646 inactive broadband accesses in Colombia. For comparison purposes, Q4 09 net adds and growth rates exclude the disconnection of 375,572 inactive fixed telephony accesses in Colombia. Excludin
Slide 16: Quality improvements in Telesp starting to pay off
TELEFONICA LATAM Quality improvements in Telesp starting to pay off Stabilizing OIBDA margins sequentially: Despite transformation initiatives & more resources on quality Improving quality standards: Enhanced processes & customer care Already bearing fruits on the commercial side Better commercial p
Slide 17: Sustained performance in most markets
Sustained performance in most markets TELEFONICA LATAM Includes 50% of Vivo. Includes Telemig in January-March 2008. Excludes Medianetworks in 2008. Excludes hyperinflation adjustment in Venezuela in 2009. 16 Total revenue BB & TV revenue Mobile service revenue Total OIBDA Mobile OIBDA FY 09 y-o-y g
Slide 18: T. Europe: improving revenue trends and increasing profitability in key markets
T. Europe: improving revenue trends and increasing profitability in key markets TELEFONICA EUROPE Underlying revenue growth acceleration driven by customer growth and stabilization in ARPU trends: Gaining market share overall Contract churn: -0.1 p.p. y-o-y in FY 09 Focus on value; mobile contract n
Slide 19: T. O2 UK: continued outperformance
TELEFONICA EUROPE T. O2 UK: continued outperformance Excluding restructuring charges in Q3 09. OpCF: OIBDA-CapEx. Continued strong market momentum in Q4, fuelling top line growth: Mobile contract net adds up 5.6% y-o-y in Q4 09 Market leading contract churn at 1.0% in Q4 09 Non-P2P SMS revs. +49.7%
Slide 20: T. O2 Germany: the fastest growing operator in the market
TELEFONICA EUROPE Gaining market share on strong momentum from Q3: Challenger: O2o (tariff), My Handy (hardware) Improved distribution: 215 new shops in 2009 Solid #3 position in MBB on high network quality; Non-P2P SMS revenue up 35.7% y-o- y in FY 09 Fixed BB & hardware revenues helping to the 4.2
Slide 21: Debt: same quantity, improved quality
GROUP FINANCIAL EXPENSES AND DEBT Debt: same quantity, improved quality Leverage target, including commitments, kept in the low part of our target range (2.1x OIBDA) Strong liquidity position with cash exceeding 2010 maturities € 8 bn bonds issued in 2009 and € 4 bn loan extension option up to 2012
Slide 22: 2010 priorities and outlook
GROUP FINANCIALS 2010 priorities and outlook Higher CapEx to support growth in customers & volumes Reinvesting efficiency gains to foster revenue expansion #1 Capturing top line growth prospects Revenue 56,407 +1%/+4% OIBDA 22,344 +1%/+3% CapEx (€ in millions) 7,262 7,450/7,650 2009 Adjusted(1) 2010
Slide 23: 2010 key priorities by region
2010 key priorities by region GROUP FINANCIALS T. Europe Customer insight and agility to deliver market outperformance Internet accesses driving revenue growth Improved efficiency by re-engineering business models and further utilizing Group scale T. Latam Capture growth potential in the mobile mark
Slide 24: Sector leading cash returns
Sector leading cash returns GROUP FINANCIALS Current Dividend Yield: 8.3%(3) DPS targets reiterated Dividend is well covered No dependence on cash repatriation from any particular country in Latin America Tactical share buybacks to be considered for FCF excesses It is Company^s intention to maintain
Slide 25: M&A Priorities
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 Unicom to 10% GROUP FINANCIALS We reiterate our select
Slide 26: Conclusions
Conclusions GROUP FINANCIALS 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 attractive medium term guidance reiterated Sector leading cash return. DPS target
Slide 27: ANNEX
ANNEX TELEIONICASA, Felefinica Investor Relations
Slide 28: Impacts on Telefonica Group derived from its investments in Venezuela
Impacts on Telefonica Group derived from its investments in Venezuela GROUP FINANCIALS FY 2010E Results from Venezuela will be translated using FX as of the end of the period No material impact in net income as declared dividends (FY 06-08) will minimize the impact of the year's inflation in the net
Slide 29: Impacts from the Venezuelan devaluation
Impacts from the Venezuelan devaluation GROUP FINANCIALS P&L Impact: Results and cash flows from Venezuela will be translated at the new devaluated FX (4.3 Venezuelan bolivar fuerte per US dollar) Statement of financial position: Decrease in the Telefonica Group^s net assets in Venezuela as a result
Slide 30: 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: February 26 th , 2010 By: Santiago Fernández Valbuena Name: Santiago Fernández V