Slide 1: Telefónica Latam: Are you missing this growth potential?
Telefónica Latam: Are you missing this growth potential? Jose María Alvarez-Pallete General Manager London, June 7th-8th, 2007
Slide 2: Disclaimer
Disclaimer This document 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 intent, b
Slide 3: Index
Index 01 T. Latam as the main growth driver in the Group 1. Our presence 2. Group growth lever fully diversified 3. Solid fundamentals in BB and mobile flowing to high growth revenue & OIBDA 02 T. Latam is uniquely positioned to strengthen its growth profile + High growth in mobile + High growth in
Slide 4: New TLatam geographically managed, with operations in 5 countries
01 “New TLatam” geographically managed, with operations in 15 countries #2 #2 #2 #1 •2.3 MM Fixed •9.1 MM Mobile •9.3 MM Mobile •0.1 MM Broadband •7.5 MM Mobile Sound competitive environment with #2 promising macro •4.0 MM Mobile prospects •0.1 MM Fixed •0.02MM Broadband #2 #1 #2 •12.0 MM Fixed •2.5
Slide 5: TLatam is the main growth lever of the group, fully diversified across countries
01 TLatam is the main growth lever of the group and it is fully diversified across countries… 1Q07 TLatam weight in TEF BRAZIL 40% 44% ARGENTINA 12% 12% 34% 35% VENEZUELA 11% 14% CHILE 9% 10% Revenues OIBDA PERU 8% 9% COLOMBIA 8% 6% Revenue growth by region MEXICO 7% 2% (Organic1) +12.3% OTHERS 5% 5
Slide 6: ...with solid fundamentals driven by mobile and broadband
01 …with solid fundamentals driven by mobile and broadband… Total Accesses (in thousands) +14.1% 116,970 102,498 Mar06 Mar07 Retail Internet BB connections1 Pay TV clients Wireless clients2 (in thousands) (in thousands) (in thousands) +38.1% 4,045.6 2,928.7 +43.1% 700.1 +15.6% 85,637 489.3 74,060 Ma
Slide 7: ...fully flowing to sound top line growth and margin expansion
01 … fully flowing to sound top line growth and margin expansion in € Revenues OIBDA (€ in millions) (€ in millions) +8.5% +12.1% 4,685 1,713 4,317 1,528 Healthy profitability across countries 1Q06 1Q07 1Q06 1Q07 Maintenance of mobile OIBDA Margin Operating CF (%) (€ in millions) momentum in maj
Slide 8: Index
Index 01 T. Latam as the main growth driver in the Group 1. Our presence 2. Group growth lever fully diversified 3. Solid fundamentals in BB and mobile flowing to high growth revenue & OIBDA 02 T. Latam is uniquely positioned to strengthen its growth profile + High growth in mobile + High growth in
Slide 9: T Latam is well positioned to continue its growth profile
02 T Latam´s is well positioned to continue its growth profile What makes us unique? Well positioned to capture growth: #1/#2 position in all markets Integrated organization per country and region to maximize synergies STRONG GROWTH PROSPECT IN OUR MOBILE OPERATIONS, BROADBAND AND Group presen
Slide 10: High growth potential in mobile
02 High growth potential in mobile… Penetration2 (%) Strong penetration growth of Italy mobile market (in T.Latam areas of 120% Czech UK Sweden operations)1 Germany Austria Russia Spain 100% Switzerland Netherlands Turkey Korea 80% Japan France +38.1 M Argentina Venezuela Thailand 60% Brazil Méxic
Slide 11: ...and high growth in BB & PayTV
02 …and high growth in BB & PayTV Strong growth of broadband1 and PAY TV2 +1.7 M +1.2 M STRONG GROWTH PROSPECTS 2006 2007E 2006 2007E Targeting a strong share of net adds in 2007 by: STRENGTHEN OUR POSITION IN 9 Pushing Fixed/Mobile integration and collaboration to capture BROADBAND growth poten
Slide 12: To achieve our goals, we have structured our operations
02 To achieve our goals, we have structured our operations … NEW COMPETITIVE NEW ORGANIZATIONAL ENVIRONMENT MODEL • Operations in markets with different growth A regional model 9 Capture growth rates and competitive opportunity and pressures ...with an integrated drive mobile business focus, clearly
Slide 13: ...on an integrated basis per country to add value and differentiate us
02 …on an integrated basis per country to add value and to differentiate us from our competitors Main identified opportunities… …actions taken 9 Capture value of a regional brand 9 Movistar & Speedy P&S P&S 9 Value of an integrated vision of 9 Sales force collaboration in SMEs & Large Corps client b
Slide 14: A sound macro environment supports our operations
02 A sound macro environment supports our operations… 2007E Highest GDP growth in 04-06 since 5.5% 4.7% the early 80´s Favourable 5.4% 4.9% macro Lowest inflation in 2006 since 1980 context 1.5% 0.9% Current account still positive Lower external debt/exports halved in 04-06 Peru and Brazil
Slide 15: ...with stable outlook expected across all countries
02 …with stable outlook expected across all countries GDP Growth Inflation Growth 2006 2007E 2006 2007E Brazil 3.7% 4.2% 3.1% 3.6% Argentina 8.5% 7.6% 9.8% 9.1% Chile 4.0% 5.7% 2.6% 3.0% Peru 8.0% 7.0% 1.1% 1.8% Colombia 6.8% 5.7% 4.5% 4.9% Venezuela 10.3% 7.0% 17.0% 18.9% Mexico 4.8%
Slide 16: Index
Index 01 T. Latam as the main growth driver in the Group 1. Our presence 2. Group growth lever fully diversified 3. Solid fundamentals in BB and mobile flowing to high growth revenue & OIBDA 02 T. Latam is uniquely positioned to strengthen its growth profile + High growth in mobile + High growth in
Slide 17: Our financial profile in 1Q07 has already shown tangible progress
03 Our financial profile in 1Q07 has already shown tangible progress Revenues OIBDA 1Q07 % 1Q07 % (€ in millions) change1 (€ in millions) change1 Integrated Brazil 2 1,801 +2.8% 749 +2.8% Argentina 561 +21.0% 217 +29.7% Chile 423 +10.0% 164 +22.5% Peru 370 +9.7% 144 +0.3% Colombia 352 n.m.
Slide 18: Brazil: Revenue & OIBDA underpinned by BB and mobile
03 Brazil: Revenue & OIBDA underpinned by BB and mobile Growth of revenue drivers (1Q07/1Q06, local currency) +15.2% +13.2% 1Q07/1Q06 growth (change in local currency) Broadband revenues Service revenues1 (Mobile) 1Q07: 56% 2.8% 2.8% penetration3 Flat OIBDA BB connections Mobile clients Margin (in t
Slide 19: Brazil: efforts in mobile operation already showing positive signs
03 Brazil: efforts in mobile operation already showing positive signs Focus on value clients ARPU Excluding B&K effect MANAGING CURRENT (local currency) Strong reduction of fraud OPERATIONS TO +19.0% IMPROVE OUR New pricing plans drive MoU & COMPETITIVE 30.6 ARPU increases 25.7 POSITIONING H
Slide 20: Mexico wireless: strong commercial momentum leads to healthy growth
03 Mexico wireless: strong commercial momentum leads to very healthy revenue & OIBDA growth Net adds (in thousands) 1,110 MoU Evolution 2004 61 NEW COMMERCIAL OFFER DISTRIBUTION 2005 51 >2x RESHAPING 766 2Q06 66 422 392 306 578 129 191 3Q06 87 86 4Q06 104 1Q05 2Q051 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q0
Slide 21: Argentina: strong performance in BB and mobile allows margin expansion
03 Argentina: strong performance in BB and mobile allows margin expansion Growth of revenue drivers (1Q07/1Q06, local currency) +43.4% +26.5% 1Q07/1Q06 growth (change in local currency) Internet + BB Service revenues revenues (Mobile) 29.7% 21.0% 1Q07: 82% penetration BB connections Mobile clients (
Slide 22: Chile: improving margins supported by BB and mobile
03 Chile: improving margins supported by BB and mobile Growth of revenue drivers (1Q07/1Q06, local currency) +75.3% 1Q07/1Q06 growth (change in local currency) +18.0% 22.5% Internet + BB revenues Service revenues (NW+BB+PayTV) (Mobile) 10.0% +3.9 p.p. Revenues OIBDA OIBDA Mg. BB connections PayTV Mo
Slide 23: Peru: customer growth underpins top line growth
03 Peru: customer growth underpins top line growth Growth of revenue drivers 1Q07/1Q06 change (1Q07/1Q06, local currency) (change in local currency) +53.9% 9.7% Project IRIS: fixed +22.1% wireless telephony 0.3% OIBDA Mg. Internet + BB revenues Service revenues Revenues OIBDA (NW+BB+PayTV) (Mobile
Slide 24: Colombia and Venezuela: BB opportunity and customer expansion
03 Colombia: Focus on BB opportunity since T. Telecom acquisition and mobile top line growth 1Q07 BB y-o-y organic 1Q07 mobile y-o-y growth growth 4.8x 10.7% 9.7% SATELLITE TV 2.8x LAUNCHED IN 1Q07 BB connections BB Revenues Customers Service revenues (local currency) (local currency) Venezuela: Cus
Slide 25: An ambitious guidance for 2007
Chairman 03 An ambitious guidance for 2007 Revenue Growth OIBDA Growth (€ in millions) (€ in millions) +11% / +14% +12% / +16% 18,089 6,607 2006 2007 2006 2007 adjusted for guidance CapEx (€ in millions) <3,000 2,811 2006 2007 T. Latam base reported figures include eight months of Telefónica Telecom
Slide 26: Conclusions
Conclusions Sound macro outlook expected after succesful structural reforms T LatAm is the main growth driver in the Group Contribution over 60% of the group growth in 1Q07 Fully diversified operations across 15 countries in the region Strong growth potential, supported by mobile, broadban
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