Telefonica Sa · BME:TEF
Telefonica Sa — H1 2004 Earnings Presentation
23 slides from Telefonica Sa's earnings presentation, Jul 29, 2004
Slide 1: Quarterly Results January – June 2004
Quarterly Results January – June 2004 July 29th, 2004 Telefónica, S.A. Investor Relations This presentation is being broadcasted live on the Internet
Slide 2: 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 in a number of places in this document and include statements regarding the inten
Slide 3: Financial highlights: combining top line growth, profitability and cash generation
Financial highlights: combining top line growth, profitability and cash generation (€ in Millions) % Change Jan-Jun 04 Jan-Jun 03 1H04/1H03 Quartely Results Operating Rev. 14,324.5 13,563.3 +5.6% January – June 2004 Operating Costs (8,093.5) (7,700.6) +5.1% EBITDA 6,367.3 5,956.0 +6.9% EBITDA Margin
Slide 4: Net Income is affected by the full provision of 2004 Pre-retirements
Net Income is affected by the full provision of 2004 Pre-retirements (€ in Millions) +21.4% -80.3% -0.3% c.s. Quartely Results 3,421.0 26.2 211. 6 January – June 2004 726.2 +64.2% -11.1% -21.9% 486.9 +15.9% 559.0 +108.4% 1,970.1 -12.0% 398.0 1,652.2 156.9 1,254.2 EBIT Associates Goodwill Extraordina
Slide 5: Operating highlights: sustaining commercial focus to grow the client base
Operating highlights: sustaining commercial focus to grow the client base Jun 04/Jun 03 commercial 1H04 ADSL net adds (‘000) expenses growth (local currency) 1.1x ~1.2x 383.3 FIXED ~1.2x 2.4x Quartely Results January – June 2004 TELEPHONY 121.2 3.5x 1.3x 2.2x 38.9 39.3 44.2 TdE Telesp TdE Telesp TAS
Slide 6: Major business lines are keeping their sound contribution to growth
Major business lines are keeping their sound contribution to growth Revenue contribution to growth EBITDA contribution to growth +5.0 p.p. -1.3 p.p. +1.5 p.p. +6.9 % +5.6 % +2.3 p.p. +0.7 p.p. Quartely Results +1.0 p.p. +2.4 p.p. January – June 2004 +0.9 p.p. TdE T. Latam Cellular Others & Total TdE
Slide 7: Although slightly accelerating, FOREX is not significantly diluting organic growth…
Although slightly accelerating, FOREX is not significantly diluting organic growth… Yearly comparison of main currencies Forex impact in 2004 P&L Fx P&L Fx % CHANGE % CHANGE Revenues EBITDA 1H03 1H04 1H04/1H03 1Q04/1Q03 (Average) (Average) -0.1p.p. Quartely Results BRAZIL/€ 3.549 3.641 -2.5% +3.3% J
Slide 8: … which remains solid and in line with year-end guidance
… which remains solid and in line with year-end guidance Revenues EBITDA (€ in Millions) (€ in Millions) +9.4% 14,832.2 2004 target* 6,443.5 2004 target* +8.2% +7%/+10% Quartely Results +7%/+10% January – June 2004 13,563.3 5,956.0 1H03 1H04 1H03 1H04 (constant terms *) (constant terms *) EBIT (€ in
Slide 9: Reinforcing cash generation in all businesses
Reinforcing cash generation in all businesses CapEx breakdown (€ in Millions) Group % Change Total 1H04/1H03 TdE Group 527.6 -19.4% Quartely Results January – June 2004 Cell. Business 515.2 -3.4% T. LATAM 237.2 -12.1% TOTAL 1,350.4 -11.9% OpCF (EBITDA-CapEx) breakdown (€ in Millions) +6.3% c.s +13.4
Slide 10: Telefónica de España Group: Deeper commercial efforts are leading to accelerate top line growth…
Telefónica de España Group: Deeper commercial efforts are leading to accelerate top line growth… Operating revenues (*) Contribution to revenue growth (*) (€ in Millions) Internet, BB & Data more than compensate 2004 target Traditional revenues decline +2.2% 5,399.4 Quartely Results +0.5%/+2.5% +0.8
Slide 11: … which is amplified at the EBITDA level through higher efficiencies
… which is amplified at the EBITDA level through higher efficiencies TdE Group OpEx breakdown (*) TdE Parent OpEx evolution (*) (€ in Millions) Annual growth rate Total Opex Opex-Interconnection +14.2% -0.4% -0.4% +2.6% Supported by 578.0 88.6 2,971.3 -2.3% TdE parent Quartely Results -9.8% 1,243.0
Slide 12: Telefónica de España parent: traditional services
Telefónica de España parent: traditional services Access lines net losses Pre-selected lines net adds (PSTN + B.A. ISDN; thousands) (Thousands) -31.8% Full ULL 97.0 102.4 98.6 197.6 69.9 122.7 Quartely Results 36.3 90.7 90.0 51.9 January – June 2004 28.6 7.7 17.0 2Q04 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 1
Slide 13: Telefónica de España parent: ADSL, a profitable story
Telefónica de España parent: ADSL, a profitable story ADSL Connections Evolution of operative VAS (Net adds, thousands) (‘000) ADSL Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 CONNECTIONS 1,136.1 1,293.6 1,420.5 1,660.5 1,847.3 2,043.7 +41.9% 714.3 +24.7% +20.4% 503.3 240.0 196.4 Quartely Results 186.
Slide 14: Telefónica de España: a new ADSL strategy to foster broadband penetration
Telefónica de España: a new ADSL strategy to foster broadband penetration Upgrade of speeds (2x) already approved by Regulator (CMT) Actual Speed Kbps New Speed Kbps Retail (Downstream) (Downstream) Monthly fee (€) Off-peak flat rate 256 Off-peak flat rate 512 29.90 256 512 39.07 Quartely Results
Slide 15: Telefónica Latinoamérica: solid organic growth, well within year-end target…
Telefónica Latinoamérica (*): solid organic growth, well within year-end target… Revenues EBITDA (€ in Millions) (€ in Millions) +10.3% 2004 target** +7.8% 2004 target** +6%/+9% 1,534.5 +6%/+9% 3,456.4 Quartely Results +2.8% 1,464.0 +4.6% 3,276.1 January – June 2004 3,132.7 1,423.8 1H03 1H04 1H04 1H
Slide 16: … driven by robust top line growth for Telesp…
… driven by robust top line growth for Telesp… Operating drivers Operating drivers Quarterly Market Share ADSL Quarterly Net Adds 2.6x 54 50 51 50 DLD 45 2.1x 87,373 42 ILD 60,845 47 40 40 39 41 40,381 33,861 33,782 33 Quartely Results 16,025 January – June 2004 1Q03 1H03 9M03 FY03 1Q04 1H04 1Q03 2Q
Slide 17: … and TASA
… and TASA Operating drivers Operating drivers Traditional LIS (annual growth rate) ADSL Quarterly Net Adds +2.2% 3.2x 1Q03 2Q03 3Q03 4Q03 +0.4% 3.9x 23,474 -0.3% 1Q04 2Q04 15,410 -0.7% -0.4% 13,443 Quartely Results 10,299 January – June 2004 -2.5% 7,259 3,925 Traffic/line/day is growing at an 8.7%
Slide 18: Telefónica Latinoamérica: keeping the focus on efficiency and cash generation
Telefónica Latinoamérica: keeping the focus on efficiency and cash generation EBITDA growth rate (*) (local currency) EBITDA margin 1Q04 16.2% 2Q04 10.5% 10.3% (**) 59.8% 60.5% 9.2% 44.0% 44.6% 44.5%45.1%43.1% 44.3% Quartely Results +4.6% January – June 2004 1.6% 1Q04 2Q04 1Q04 1Q04 2Q04 1Q04 2Q04 2
Slide 19: Debt reduction and active liability management are driving net financial expenses cut
Debt reduction and active liability management are driving net financial expenses cut € in Millions 1H04 1H03 Net Financial Expenses 488.8 802.4 (39.1%) Argentinean Peso effects (1.9) (238.4) Quartely Results USD debt amortization (267.5) January – June 2004 Financial Results 486.9 296.5 SOLVENCY PR
Slide 20: Cash flow generation and debt evolution
Cash flow generation and debt evolution (Euros in millions) 1H04 1H03 A EBITDA 6,367.3 5,956.0 6.9% I CapEx accrued during the period (EoP exchange rate) (1,350.4) (1,532.9) II Extraordinary payments related to operating activities & commitments (467.1) (443.7) III Net interest payment (446.4) (759.
Slide 21: Share buy-back program progress report
Share buy-back program progress report Principles Treasury stock (nº of shares in Millions) DATE CASH OPTION-BASED TOTAL % Minimum € 4.0 bn. OF CAPITAL Up to end ‘06 30-JUN-03 17.6 -- 0.4 Quartely Results Conditioned on 30-SEP-03 25.6 -- 0.5 January – June 2004 •FCF generation 31-DEC-03 40.5 3
Slide 22: Conclusions
Conclusions We are intensifying commercial initiatives across the Group as a key lever to foster top line growth in all subsidiaries Quartely Results January – June 2004 Organic growth remains solidly within year-end targets and translates into Euro denominated financials as forex impact continu
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