Telefonica Sa · BME:TEF
Telefonica Sa — FY2020 Earnings Presentation
29 slides from Telefonica Sa's earnings presentation, Feb 25, 2021
Slide 1: Results January - December 2020
Results January - December 2020
Slide 2: Disclaimer
Disclaimer This document and any related conference call or webcast (including any related Q&A session) may contain forward-looking statements and information (hereinafter, the “Statements”) relating to the Telefónica Group (hereinafter, the "Company" or "Telefónica"). These Statements may include f
Slide 3: 2020 Highlights
2020 Highlights Mr. José María Álvarez-Pallete Chairman & CEO
Slide 4: Material progress against strategic objectives
Material progress against strategic objectives Improving our value proposition across core markets: ✓ FTTH network; 25.2m premises passed in Spain and 15.7m in Brazil 1 Focus on 4 core markets ✓ 78% 5G coverage in Spain; live in Germany, UK and Brazil. German network ranked “Very Good” ✓ JV with O2
Slide 5: 2020 performance highlights
2020 performance highlights OIBDA-CapEx Revenues OIBDA-CapEx Free cash flow Net debt y-o-y org y-o-y org Margin org y-o-y y-o-y y-o-y org down 3.3% to down 0.9% to up 0.5 p.p. to Q4 €2.0bn (+13.2%) down €2.5bn to €43.1bn €7.6bn 20.4% €4.8bn €35.2bn • Good momentum in Q4 20; accelerating organic tren
Slide 6: Robust financial performance in a challenging year
Robust financial performance in a challenging year Revenue 2020 y-o-y Free cash flow per share Perimeter & Reported Fx Others Organic 0.88 (1.3 p.p.) 0.37 (6.5 p.p.) (3.3%) COVID-19 -3.9 p.p. Q4 20 FY 20 (11.0%) Q4 20 (12.0%) (8.1 p.p.) (1.9 p.p.) (2.0%) OIBDA 2020 y-o-y Strong organic debt reductio
Slide 7: Financial summary
Financial summary FY 2020 Q4 2020 Organic Organic y-o-y y-o-y Reported Organic aggregated Reported Organic aggregated € in millions Reported Reported y-o-y y-o-y 4 core y-o-y y-o-y 4 core markets markets Revenues 43,076 (11.0%) (3.3%) (2.4%) 10,909 (12.0%) (2.0%) (1.9%) OIBDA 13,498 (10.7%) (5.7%) (
Slide 8: Accelerated recovery in Q4 20
Accelerated recovery in Q4 20 Revenue OIBDA y-o-y organic Group 4 core y-o-y organic Group 4 core markets markets (1.3%) (2.0%) (1.9%) (3.3%) (2.8%) (4.3%) (3.9%) +2.2 p.p. +5.4 p.p. (8.3%) Q3 20 Q4 20 Q3 20 Q4 20 Improvement in Revenue and OIBDA trends across all segments in Q4 20 (OIBDA-CapEx)/Rev
Slide 9: 2020 financial outlook delivered
2020 financial outlook delivered Management of operations to preserve Operating Cash Flow Financial targets 2020E FY 20 (organic ex-contribution to growth from ARG) OIBDA-CapEx Slightly negative to flat (0.9%) More than covered by strong FCF generation 2020 dividend €0.40/share December Higher flexi
Slide 10: ESG at the heart of our strategy throughout the pandemic
ESG at the heart of our strategy throughout the pandemic HELPING SOCIETY TO THRIVE BUILDING A GREENER FUTURE LEADING BY EXAMPLE Supporting customers and communities Digital innovation; lower carbon economy Running an inclusive, fair and ethical business 0.5% -61% 27% Contribution to GDP GHG emission
Slide 11: FY & Q4 20 Results
FY & Q4 20 Results Mr. Ángel Vilá COO
Slide 12: Spain | Strategy proven right, preserved value
Spain | Strategy proven right, preserved value Growth in value Performance Accesses (m; y-o-y) ✓ Market cooled down to preserve value • Tariff upgrade (more for more) announced in Q4 +7% +1% (3%) ✓ Polarisation remains, enhanced offering and innovative VAS 15.4 • Fibre UBB +9% y-o-y; O2 base doublin
Slide 13: Spain | Strong execution, recurrent and solid cash generation
Spain | Strong execution, recurrent and solid cash generation Key financials 2020 Performance y-o-y organic Q3 Q4 ✓ Continued improvement in financials in Q4 ✓ Revenue trend better across the board • Solid convergent ARPU, record IT sales 0.7% • “Wholesale & others” back to y-o-y growth ✓ Benchmark
Slide 14: Germany | Delivery of targets
Germany | Delivery of targets Operational KPIs Key milestones Q4 Net additions (k) ARPU y-o-y Q3 Q4 ✓ Delivery on FY 20 guidance, revenues, OIBDA and Capex/Sales ✓ Strong trading; O2 Free tariffs remained highly popular 435 ✓ Network quality equalisation; LTE coverage completed O2 churn at historica
Slide 15: UK | #1 network in the UK
UK | #1 network in the UK 2020 operational KPIs Customer leadership Accesses, m (y-o-y) +5% ✓ Rated #1 MNO for NPS and satisfaction by Ofcom1 36.2 ✓ Industry leading low level of customer loyalty +1% ✓ 5G available in over 150 towns and cities 12.4 Contract churn 0.9% in Q4 Total mobile Mobile Contr
Slide 16: Brazil | Growth in value and efficiencies driving profitability
Brazil | Growth in value and efficiencies driving profitability Improving mix and monetisation Second to none quality of service Net adds (‘000) ✓ Reinforced mobile leadership (33.6% MS; +0.6 p.p. y-o-y) Postpaid FTTH ✓ Strong net adds in core segments 729 • Historical low contract churn levels at 1
Slide 17: Infra | Telxius: delivering growth, unlocking value
Infra | Telxius: delivering growth, unlocking value Sites 3rd Party Tenants # # Q4 Organic BTS 176 Q4 Organic Tenants 142 7,960 457 26,765 524 466 7,553 6,563 18,348 +45.9% +15.1% y-o-y y-o-y Dec-19 Acquired Organic Dec-20 Dec-19 Acquired Organic Dec-20 Revenues, OIBDA & Profitability: Telxius Reven
Slide 18: Developing fibre opportunity across our markets
Developing fibre opportunity across our markets Deployment boost driving connection growth ✓ Unsere Grüne Glasfaser (UGG)1 ✓ Penetration stable at 21% ✓ JV 40% T. Infra / 10% T. Deutschland / 50% Allianz ✓ Strongest technological transformation in the sector provides • Neutral wholesale operator ben
Slide 19: Tech | Resilient and fast growing business
Tech | Resilient and fast growing business Solid growth Tech services revenue* (M€; y-o-y organic) Outperfoming the market +13.6% Initial carve out c. 50% of revenues to Tech COs 1,504 ✓ COVID-19 increasing companies’ need for digital transformation 389 368 391 ✓ Corporate B2B back to growth in Q4 (
Slide 20: FY & Q4 20 Results
FY & Q4 20 Results Ms. Laura Abasolo CFCO
Slide 21: Hispam | Maximising value; reduced exposure
Hispam | Maximising value; reduced exposure Improving growth trajectory Reduced average capital employed by c. 20% ✓ Focus on value growth ✓ Asset light model • Contract net adds +56% q-o-q; churn -0.6 p.p. y-o-y to 2.2% in Q4 • Co-investments deals with ATC & ATP / Chile InfraCo • FTTH net adds x3
Slide 22: Mitigated FX impact on FCF
Mitigated FX impact on FCF FX impact structurally neutralised; Natural hedge FX negative factor in Q4 20 and FY 20 FY 20 currency impact y-o-y €m WC + ✓ Revenue: Q4 -8.1 p.p.; FY -6.5 p.p. OIBDA CapEx Taxes Interest FCF Net debt ✓ OIBDA: Q4 -10.9 p.p.; FY -8.0 p.p. + Others ✓ -€1,205m in OIBDA, down
Slide 23: Debt | Strong FCF and inorganic initiatives
Debt | Strong FCF and inorganic initiatives Net Financial Debt €m (2,516) ND/OIBDAaL ND/OIBDAaL 2.52x 2.79x 37,744 Additional €9bn net 35,228 debt reduction from inorganic initiatives1 963 18 (449) (4,794) 723 1,022 €26Bn Dec-19 FCF Hybrids Shareholder Pre-retirement Net financial FX & Dec-20 remun.
Slide 24: De-risked balance sheet
De-risked balance sheet Sources of long-term financing (2020 & YTD) Flatter maturity profile (€bn) Net debt maturities at Dec-20 | €bn; not considering Including Including £4bn Includes €2.8bn bond hybrid NC dates inorganic syndicated loan to financing & €3.5bn Climate Bonds Initiative back O2 – VME
Slide 25: Conclusion
Conclusion Mr. José María Álvarez-Pallete Chairman &CEO
Slide 26: 2021 guidance | Recovery more evident from Q2
2021 guidance | Recovery more evident from Q2 2021 guidance CRYSTALLISING VALUE FOR THE BENEFIT OF SHAREHOLDERS Financial Targets 2021 A digital company (organic y-o-y) Best networks (base for future growth) Revenues “Stabilisation” Disciplined execution Best-in class efficiency and high cash-flow g
Slide 27: Key takeaways
Key takeaways • Proven resilience in challenging times; delivering for all stakeholders ‒ Strong improvement across four core markets ‒ Leveraging best-in-class network infrastructure to maintain and grow high-value customer base ‒ Prioritising network investments to further strengthen quality gap ‒
Slide 28: Results presentation and Q&A Session
Results presentation and Q&A Session The management will host a webcast to discuss the results on 25th February at 10:00am (CET), 9:00am (GMT), 04:00am (EST) Participants from Telefónica: José María Álvarez-Pallete (Chairman & CEO), Ángel Vilá (COO), Laura Abasolo (CFCO), and Pablo Eguirón (Global D
Slide 29: For further information, please contact: Investor Relations
For further information, please contact: Investor Relations Pablo Eguirón (pablo.eguiron@telefonica.com) Isabel Beltrán (i.beltran@telefonica.com) Adrián Zunzunegui (adrian.zunzunegui@telefonica.com) Tel. +34 91 482 87 00 FOLLOW US: ir@telefonica.com www.telefonica.com/investors