Slide 1: Results January - September 2020
Results January - September 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: Highlights
Highlights Mr. Ángel Vilá COO
Slide 4: Q3 2020 in a nutshell
Q3 2020 in a nutshell • Improving trends from Q2 ‒ Very strong commercial activity across the board ‒ Spain shows significantly improved commercial trading, and ARPU, Revenue and OIBDA recovery ‒ Germany outperforms its market, once the quality gap is being closed ‒ Progressing on the regulatory app
Slide 5: Progress against our strategic pillars during Q3 2020
Progress against our 5 strategic pillars during Q3 2020 Main developments ✓ Strong recovery of operating trends; reinforcing market position ✓ SPAIN: Launch of 5G with ambition to reach 75% nationwide coverage by year-end; sound recovery in Focus on our four commercial activity with controlled churn
Slide 6: Revenue performance
Revenue performance 9M 2020 y-o-y Perimeter & Reported Fx Others Organic ✓ -3.9 p.p. impact of COVID-19 (1.0 p.p.) (5.9 p.p.) ✓ -2.5% organic in our 4 core markets (3.7%) (10.7%) Q3 2020 y-o-y Perimeter & Reported Fx Others Organic ✓ Improving from -5.6% organic in Q2. 0.2 p.p. ✓ -4.9 p.p. impact of
Slide 7: OIBDA performance
OIBDA performance 9M 2020 y-o-y Perimeter & Reported Fx Others Organic ✓ -5.2 p.p. impact of COVID-19 ✓ -3.1% organic in our 4 core markets (1.1 p.p.) (7.0 p.p.) (6.7%) Focus on incremental cost efficiencies OpEx down 3.0% organic in Q3 (14.9%) Q3 2020 y-o-y Perimeter & Reported Fx Others * Organic
Slide 8: Strong cash flow generation; robust operating leverage
Strong cash flow generation; robust operating leverage OIBDA-CapEx (reported) €bn 5.7 4.8 ✓ +18.5% y-o-y reported (incl. spectrum) ✓ -1.8% organic ✓ +3.4% organic in our 4 core markets 9M 19 9M 20 Incl. spectrum Prioritising investments 50% CapEx (core 4 markets) in NGN (FTTH+LTE/5G) FCFS € 0.53 FCF
Slide 9: Financial update
Financial update 9M 2020 Q3 2020 Organic Organic Reported Organic y-o-y Reported Organic y-o-y € in millions Reported aggregated 4 Reported aggregated 4 y-o-y y-o-y core markets y-o-y y-o-y core markets Revenues 32,167 (10.7%) (3.7%) (2.5%) 10,461 (12.1%) (4.3%) (3.9%) OIBDA 9,747 (14.9%) (6.7%) (3.
Slide 10: Improved revenue trends in Q3
Improved revenue trends in Q3 Revenue y-o-y organic Q2 Q3 Contribution to the 1.4 p.p. q-o-q improvement ✓ Service revenue +0.7 p.p. (Germany & Hispam) ✓ Handset revenues +0.6 p.p. (Hispam, BZ and SP) 1.4 p.p. ✓ Hispam largest contributor (4.3%) (5.6%) Mix transformation T. Tech Revenues 68% BB&SoC
Slide 11: Solid sequential improvement in OIBDA and OIBDA-CapEx
Solid sequential improvement in OIBDA and OIBDA-CapEx 4 core markets OIBDA y-o-y organic Q2 Q3 Contribution to the 3.3 p.p. q-o-q improvement ✓ Spain +1.6 p.p. 3.3 p.p. ✓ Germany +1.0 p.p. ✓ UK +0.6 p.p. (3.3%) ✓ Brazil +0.1 p.p. (6.6%) 4 core markets OIBDA-CapEx y-o-y organic Contribution to the 3.
Slide 12: COVID-19 impacts | Steady improvement vs. Q2 2020
COVID-19 impacts | Steady improvement vs. Q2 2020 Revenues Impact on organic growth Q1 Q2 Q3 - Lower impact vs. Q2 20 0.0 p.p. 0.0 p.p. - Significant impact of roaming (0.6 p.p.) (0.6 p.p.) (0.8 p.p.) (1.6 p.p.) (4.9 p.p.) (4.8 p.p.) (2.1 p.p.) - B2C: Discounts/Promos; new business (5.0 p.p.) (4.8 p
Slide 13: Confirming FY 2020 dividend and outlook
Confirming FY 2020 dividend and outlook Stable and sustainable dividend 2020 dividend €0.40/share Flexible dividend 1.5% treasury stock to be Interim Dec-20 €0.20/sh. (Voluntary Scrip) payments in 2020 cancelled Final Jun-21 €0.20/sh. Managing cost base and operational flexibility without jeopardisi
Slide 14: Q3 2020 Results
Q3 2020 Results Ms. Laura Abasolo CFCO
Slide 15: Spain | Sound recovery in commercial activity
Spain | Sound recovery in commercial activity Q3 Net adds Performance Accesses (k) ✓ Best FBB net adds since Q3 18; more than 100k in fibre 45 (18) ✓ Proven competitive and segmented offering, focused on value Q3 19 6 96 • Growing Premium TV; M+ Lite higher churn (due to Q2 peak adds) ✓ Resilient co
Slide 16: Spain | Sequential improvement in revenue and OIBDA
Spain | Sequential improvement in revenue and OIBDA Key financials Performance y-o-y organic Q2 Q3 ✓ Revenue trend +0.9 p.p. q-o-q, despite tougher comps • Retail price upgrade in Q3 19 1.8% • Wholesale impacted by roaming ✓ OIBDA +4.1 p.p., benefitting among others from efficiencies in content cost
Slide 17: Germany | Solid commercial performance and financials
Germany |Solid commercial performance and financials Q3 trading dynamics driven by O2 brand Key milestones Accesses (m, net adds) O2 contract churn at historic low levels ✓ Core business momentum intact; OIBDA back to growth +261k Improved to ✓ COVID impacts (-1.6 p.p. revenue; -3.9 p.p. OIBDA) on t
Slide 18: UK | #1 network in the UK
UK | #1 network in the UK Customer Base Performance Accesses (m; y-o-y) +4% ✓ Customer base growth in every segment ✓ Enhanced focus on direct distribution proving a value 35.4 accretive move +1% ✓ Revenue trend affected by roaming, handset release delay, Contract churn increase in direct trading an
Slide 19: Brazil | Significantly improved performance across the board
Brazil | Significantly improved performance across the board Growing value accesses, improved mix Reinforced leadership Accesses (y-o-y) 14.6m homes passed with FTTH (+1.5m in Q3) 3.1m FTTH connections (+267k in Q3) ✓ Record mobile market share (33.3%) 34% ✓ Strong recovery in all growth segments: 2
Slide 20: Infra | Expanding Telxius' towers portfolio
Infra| Expanding Telxius’ towers portfolio Sites | Germany acquisition first tranche Tenants # Organic BTS 134 1st tranche of the German # Organic Tenants 279 transaction completed; 2nd Acquired 6,033 tranche expected in Aug-2021 Acquired 6,356 33k 6,635 33,998 6,167 26,589 post-German 20,422 27,363
Slide 21: Tech | Essential services driving growth
Tech| Essential services driving growth Double-digit growth T. Tech revenues y-o-y organic +15.4% ✓ Digital Transformation accelerated by COVID-19 Growth above the market ✓ Corporate channel back to pre-COVID levels in Sep (60% of 9M sales) 1,113 ✓ Carve-outs progressing: Tech Companies established
Slide 22: Hispam | Marked commercial recovery
Hispam | Marked commercial recovery Above pre-COVID-19 levels Substantial q-o-q improvement in Q3 Mobile Net additions (k) Prepaid Postpaid ✓ Accelerating fibre connections 464 • Progressing in the process of creating a vehicle to deploy FTTH 255 • Progressing co-investments deal with ATC & ATP in r
Slide 23: FX headwinds | Neutralised at FCF level
FX headwinds | Neutralised at FCF level Structurally neutralised; effective hedging strategy Impacts on main metrics 9M 20 currency effect y-o-y €m -€2.1bn Net Debt+Leases ✓ FX effect increased in Q3 20 mainly due to BRL (1,221) ✓ Revenue: Q3 20 -8.1 p.p; 9M 20 -5.9 p.p. 1,2… ✓ OIBDA: Q3 20 -13.0 p.
Slide 24: Debt | Ongoing debt reduction
Debt | Ongoing debt reduction Net Financial Debt €m (1,068) ND/OIBDAaL ND/OIBDAaL 2.52x 2.77x 37,744 (2,801) 697 41 (733) 1,003 36,676 723 Dec-19 FCF Hybrids Shareholder Pre-retirement Net financial FX & Sep-20 remun. (incl. SBB & commitments investments Others hybrid coupons) €43.0bn incl. IFRS-16
Slide 25: Strong liquidity position coupled with smoother maturity profile
Strong liquidity position coupled with smoother maturity profile and lower financial payments Sources of long-term financing (2020 YTD) Net Debt Maturities (€bn) Includes €2.8bn bond Including UK Including £4bn financing & €3.5bn Sep-20 | €bn; not considering hybrid NC dates syndicated loan to syndi
Slide 26: Conclusion
Conclusion Mr. Ángel Vilá COO
Slide 27: Fully committed to ESG excellence
Fully committed to ESG excellence DIGITALISATION: Greening the economy AWARDS INDEXES through telecom networks 1. We will reduce our GHG emissions 1. Telefónica was awarded the ‘Sustainable 1. Revalidated our presence in the aligned with 1.5º scenario and Procurement Award’ at the Amazon FTSE4good s
Slide 28: Wrap-up | Sustainable long-term business strategy
Wrap-up | Sustainable long-term business strategy • Ongoing support to all stakeholders and economic recovery post COVID-19 • Proven resilience in the face of COVID-19, FX depreciation and GDP contraction ‒ Improved trading dynamics and financial trends, continuing to invest in strategic growth area
Slide 29: Results presentation and Q&A Session
Results presentation and Q&A Session The management will host a webcast to discuss the results on 29th October at 11:30am (CET), 10:30am (BST), 06:30am (EST) Participants from Telefónica: Ángel Vilá (COO), Laura Abasolo (CFCO), and Pablo Eguirón (Global Head of IR). Webcast Q&A Session • To access t
Slide 30: For further information, please contact
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