Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — Investor Presentation (October 2009)
31 slides from Telefonica Sa's investor presentation, Oct 9, 2009
Slide 1: Finance 2012: A safety net and a springboard
Finance 2012: A safety net and a springboard Santiago Fernandez Valbuena Chief Financial Officer 9 October 2009 Telefonica
Slide 2: Disclaimer
Disclaimer ‘ie preertaion onsine statements tht conse forward otng statements abot the Company within the general meaning of he term and within the meaning of sppliable scutes law incuing franca projections and estimates and ther underyingsssumptlons statements regarding pans cbetves and expectation
Slide 3: Index
o1 02 03 04 INDEX Riding the Macro wave Leverage: Suitable for creditors and shareholders alike Financial efficiency and risk reduction: FX & Interest rate management Conclusions Fi Feehinica
Slide 4: A changing environment ...
01. A changing environment ... Private Consumption in Telefonica’ countries a 985 055 5,059 2000 2001 2002 2003 2004 ©2005 2006 ©2007 «2008 «2009E 2010E 20NE 2012 Teese cane ngns on namic Yi Veeinie
Slide 5: ... with laggards pointing north in the medium term...
01. ... with laggards pointing north in the medium term... 2000 2001 2002 2003 2004 2005 2006 «2007-2008 «2009E 2010E 201 2012 Fi Felefinica
Slide 6: ... with laggards pointing north in the medium term...
01. ... with laggards pointing north in the medium term... UK=Private|Consumptiony (Index: 2007=100) 2000 2001 2002 2003 2004 «2005 2006 ©2007-2008 «2009E 2010E 201 2012 Fi Felefinica
Slide 7: ... with laggards pointing north in the medium term...
01. ... with laggards pointing north in the medium term... "”ARGENTINA:PrivaterConsumption (Index: 2007=100) 2000 2001 2002 2003-2004 «2005 2006-2007 «2008 «2009E 2010E 201 2012 Fi Felefinica
Slide 8: ... and leaders almost intact in growth prospects...
01. ... and leaders almost intact in growth prospects... BRAZIL=PrivaterGonsumption (Index: 2007=100) 2000 2001 2002 20032004 2005 2006 «2007 «2008 «2009E 2010E 20M 2012 Fi Felefinica
Slide 9: ... and leaders almost intact in growth prospects
01. ... and leaders almost intact in growth prospects 2000 2001 2002 2003 2004 «2005 2006 «2007 «2008 «2009E 2010E 20NE 2012 Fi Felefinica
Slide 10: Green shoots even in Spain
01. Green shoots even in Spain Economic Sentiment Indicator KS. GDP y-o-y (2m lagged) aed 4.0 Oct-88 Oct-go Oct-92 Oct-94 Oct-96 Oct-98 Oct-oo Oct-o2 Oct-04 Oct-06 Oct-08 Oct-10 E ————— J Fini
Slide 11: Green shoots even in Spain
01. Green shoots even in Spain Consumer confidence hy-o-y Household consumption y-o-y (6m lagged) ne Oct-95 Oct-97 Oct-99 Oct-or-—« Oct-03.» Oct-0s. «Oct-07 Oct-ogE
Slide 12: UK economy turning around?
01. UK economy turning around? Economic Sentiment Indicator UK GDP y-o-y Jan-85 Jan-89 Jan-93 Jan-97 Jan-or Jan-05
Slide 13: UK economy turning around?
01. UK economy turning around? GFK Consumer confidence Household consumption (% y-o-y, 6m lagged) 0.0 Jangs Jan-g7—Jan-g9 = Jan-o1~—Jan-03,——Jan-05 © Jan-o7-—‘Jan-09
Slide 14: Expecting elasticity to work on the upside
01. Expecting elasticity to work on the upside EB Pevate consumption growth GE span wiretess Market, Sates growth
Slide 15: Out of recession in Latam
01. Out of recession in Latam Boom ce Avc 05-07 Today e@ e @ @z @ aos ya a Ms 8 © Clear pace of recovery in Brazil, Colombia, Chile and Peru © the rds (Mexico, Argentina and Venezuela) pointing to positive growth as well Fi Felefinica
Slide 16: Latam shift is structural
01. Latam shift is structural ‘97 million of new 40 million out of poverty urban population Increase of more than US $780bn of Private Consumption’ 72 million of jobs created T million out of illiteracy
Slide 17: Brazil: the unstoppable ascent of the middle-class
01. Brazil: the unstoppable ascent of the middle-class 67.0% ee (3) 68.2% +17 millions +1 million 53.2% QO Middle-Upper Class 46.8% (3) Lower Class -B millions -1 million lati Laem ) aaa (15-1 terebyeer old) 33.0% Dec-03 Pré crisis (Wul-08) Today Fi Veefinica
Slide 18: Debt ratios well positioned in absolute and relative terms...
02. Debt ratios well positioned in absolute and relative terms... 2008 Leverage ratio: Net financial debt/O1BDA 236 220 9230 1a9 1962.00 170 130 I | AMX Vz TF eens Fi Felefinica
Slide 19: Jelefinica
A Jelefinica
Slide 20: ... for top-of-the class shareholder remuneration...
02. ... for top-of-the class shareholder remuneration... ‘Total shareholder remuneration 7 Revenues 2009
Slide 21: ...while reducing risks, to support valuation
02. ...while reducing risks, to support valuation Risk reduction through high solvency has several positive impact for shareholders Highest coupon in Eurobonds by Telcos: Teletonica at the low end (%) Unconstrained strategy : | Ik KONTOY VODSY | NY TEF30Y Sustainable dividend flow: Value protection
Slide 22: So we have continued to take care of our financial profile
02. So we have continued to take care of our financial profile Net financial debt & committments to be kept in the 2.0-2.5x OIBDA range Debt average life Unused committed credit facilities €inbillions ‘© Significant financing activity in 2009: © €4.bn syndicated loan extended from 2011 to 2012 and 2
Slide 23: Close to € 1.5 bn debt reduction coming from non-euro debt
03. Close to € 1.5 bn debt reduction coming from non-euro debt in the last 2 years €07bn_€415bn €-0.9 bn uss +Latam Us $+
Slide 24: Solvency protected from FX depreciations...
03. Solvency protected from FX depreciations... Debt/OIBDA ratio fairly stable Net financial debt / O1BDA Ratio PoundSterling Venezuelan Bolivar ae Currencies losing 25% of their values vs. euro Fi Felchinica B
Slide 25: ...though overall risk is smaller than many think...
03. ...though overall risk is smaller than many think... Latam operating cash flow trendline growth around 13% with limited deviations 5— 3 Dec-os Apr-o6 Aug-o6 Dec-06 Apr-o7 Augo7 DEC-07Aprio8 Aug-o8 © Dec-08 —Apr-og Fi Felefinica
Slide 26: ...and keeping financial expenses under control
03. ...and keeping financial expenses under control Benefiting from floating exposure both in Europe & America Tnterestexpenses Below 6% interest expenses ~4.6% 4 target in the medium term Jun-09 US$+Latam Lower fixed debt proportion: 50.2% Telefénica vs. 69%
Slide 27: High tax efficiency
03. High tax efficiency ‘Accriied tax/Revenues 2008 @ Accrued taxes represent a lower percentage of revenues than peers operating in countries with similar nominal tax rates 5.8% 5.1% 5.2% 4.8% ase 36% 28% 3.1% 21% 22% na. | oT Ve KPN TEP x Fi Telefinica 2%
Slide 28: Tax expenses around 27.5% of profits in the coming years
03. Tax expenses around 27.5% of profits in the coming years Effective cash tax rate to be kept below average nominal rate © Effective cash tax rate will fluctuate below ae accrued tax rate, among other reasons due 228% to business concentrations in certain Jurisdictions 27% 128% @ Looking for tax m
Slide 29: EPS & DPS targets
04. EPS & DPS targets ‘© 2010 original London guidance depressed by a weaker economy, less favourable exchange rates and a higher sensitivity of revenues to the business cycle, especially in mobile © € 2.10 €PS' stress scenario confirmed for 2010 on the back of the embedded operating guidance and co
Slide 30: Disciplined use of FCF
04. Disciplined use of FCF ™>€ 40 bn cumulative FCF! — FY2009 - 2012E Priorities (© €1.40+ DPS in FY 2O10E (421.7% yo-y) i 1 + (© € 17515 DPS minimum target for FY 2012 a 2 @ Net Debt + Cash Commitments/O18DA in the o 20-25x range © Spectrum auctions in current markets to foster growth © In-market c
Slide 31: 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: October 9 th , 2009 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernández
Telefonica S A — Investor Presentation (October 2009) on 6ix