Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — 9M 2008 Earnings Presentation
27 slides from Telefonica Sa's earnings presentation, Nov 14, 2008
Slide 1: Quarterly Results January-September 2008
Quarterly Results January-September 2008 TELEFONICA, S.A. November 14th, 2008
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about the Company including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations. These statements appear in a number of places in this doc
Slide 3: Benchmark results in the industry
Benchmark results in the industry Unmatched organic(1) growth rates, above peers, leveraging a strategically diversified portfolio and strong competitive position in most markets: Top line growth acceleration vs. H1 08 driven by robust performance in Latin America Solid conversion rate of top line g
Slide 4: Delivering a superior combination of growth and strong CF generation
Delivering a superior combination of growth and strong CF generation Constant exchange rate as of 9M 07. Assuming constant exchange rates and including the consolidation of TVA in January-September 2007 and Telemig in April-September 2007. Excluding the consolidation of Airwave in January-March 2007
Slide 5: Underlying EPS up by more than 26%
Underlying EPS up by more than 26% GROUP FINANCIALS NET INCOME EPS 9M 08 € 5,596 m +23.5% Underlying(1) y-o-y growth Underlying(1) y-o-y growth 9M 08 € 1.2 +26.4% Excluding the impacts from asset disposals (Airwave, Endemol and Sogecable).
Slide 6: Capitalising on our highly diversified operations
Sep-08 (millions) Balance portfolio of assets 153.1 47. 2 44.9 T. Espana T. Europe T. Latam 2.2 188.9 12.0 Mobile BB Pay TV 252.0 Total +3.3% +9.9% +21.1% +15.2% y-o-y growth +19.0% +24.5% +54.0% - -0.6% 43.2 Fixed 9M 08 Revenue T. Europe: 25% (€10,691 m) Others & eliminations 1% T. Espana: 36% (€15
Slide 7: Capturing the potential growth in each market
Capturing the potential growth in each market 9M 08 OIBDA(2) 9M 08 Revenue (1) 9M 08 OIBDA(2) 9M 08 Revenue(1) Contribution to organic revenue and OIBDA growth Organic growth by regions Assuming constant exchange rates as of 9M 07 and including the consolidation of TVA in January-September 2007, Tel
Slide 8: Outperforming our peers
Outperforming our peers 9M 08 y-o-y organic revenue growth GROUP FINANCIALS TOTAL Telefonica(1) Peers(2 ) +7.0% +0.4% EUROPE EMERGING MARKETS Telefonica(1) Peers(3 ) +3.8% - -1.6% +4.7% Peers(4) +11.9% Telefonica(1) Assuming constant exchange rates as of 9M 07 and including the consolidation of TVA
Slide 9: Solid conversion rate of top line growth into cash-flow
Solid conversion rate of top line growth into cash-flow 9M 08 OpCF (OIBDA- CapEx) Assuming constant exchange rates and including the consolidation of TVA in January-September 2007 and Telemig in April-September 2007. Excluding the consolidation of Airwave in January-March 2007 and Endemol in January
Slide 10: Strengthening our organization to further reinforce cash-flow generation levers
Strengthening our organization to further reinforce cash- flow generation levers GROUP FINANCIALS GLOBAL INNOVATION UNIT Developing new growth dynamics to be in the forefront of the ICT sector development to continue recording differential revenue growth in the medium term GLOBAL TRANSFORMATI ON UNI
Slide 11: 9M performance in-line with year-end targets
9M 08 performance in-line with year-end targets GROUP FINANCIALS Guidance criteria: 2007 adjusted figures exclude Airwave and Endemol, include 3 months of consolidation of TVA. 2007 T. Espana revenues are adjusted for new public voice telephone services business model. Group revenues are also adjust
Slide 12: On track to meet 2008 regional and Group guidance
On track to meet 2008 regional and Group guidance Guidance criteria: 2007 adjusted figures exclude Airwave and Endemol, include 3 months of consolidation of TVA. 2007 T. Espana revenues are adjusted for new public voice telephone services business model. 2008 figures Includes TVA, Deltax and Telemig
Slide 13: Telefonica Espana: preserving strong margins and high CF generation
Telefonica Espana: preserving strong margins and high CF generation TELEFONICA ESPANA Preserving OpCF, growing above 8% Top line expansion Sustaining solid margins across businesses: Leveraging cost efficiency measures to expand margins by 2.3 p.p. vs. 9M 07 Sequential improvement in wireless margin
Slide 14: Revenue growth in a more difficult environment
Revenue growth in a more difficult environment TELEFONICA ESPANA 3.9%(1) revenue growth at wireline in 9M 08 vs. +2.2%(1) in H1 08: € 182.8 m revenues in Q3 08 related to USO(2) Flat wireless service revenues in 9M 08: Customer revenue up 1.7% driven by robust wireless data growth (+15.3%) Lower int
Slide 15: Wireline Business: Sustained commercial activity fostering 2P & 3P adoption
Wireline Business: Sustained commercial activity fostering 2P & 3P adoption TELEFONICA ESPANA Line losses driven mainly by naked shared ULL and increased competitors' activity: +1.6%E y-o-y fixed line market growth Strengthening our position in BB, leveraging our best in class offering: Best perceiv
Slide 16: Wireless Business: Stabilization in ARPU trends
Wireless Business: Stabilization in ARPU trends TELEFONICA ESPANA Strong focus in the value segment: 23.4 m mobile customers in a 115% penetration market 197k contract net adds in Q3; 211k in total i-Phone sales above expectations Stable blended churn rate at 1.8% & contract churn at 1.1% (9M 08 and
Slide 17: Telefonica Latinoamerica: Outstanding results in a growing region
Telefonica Latinoamerica: Outstanding results in a growing region TELEFONICA LATAM Includes Telemig in Sep 2007. Assuming constant exchange rates and including the consolidation of TVA in Jan-Sep 2007 and Telemig in Apr-Sep 2007. Includes Central America, Colombia, Peru, Ecuador, Chile, Uruguay and
Slide 18: Wireless business: Capturing the growth potential and fostering usage
Wireless business: Capturing the growth potential and fostering usage TELEFONICA LATAM Steady customer expansion in most markets: Mobile penetration up +13 p.p. y-o-y to 78% in Sep- 08 12.9 m gross adds in Q3 08 (+16.2%(4) vs. Q3 07) + 41.2% in Brazil(4) ; + 66.2% in Colombia Slight churn reduction
Slide 19: Wireline business: Strong advances in business transformation
Wireline business: Strong advances in business transformation TELEFONICA LATAM Bundled BB lines: 2P&3P/DSL Accesses Robust BB accesses growth (+24.9% y-o-y) to 5.9 m Further developing the bundle strategy (+5 p.p. vs. Jun-08 in 2P&3P/DSL accesses) Higher BB speeds (Brazil & Chile) and expanded cover
Slide 20: Main operations review
Main operations review TELEFONICA LATAM 9M 08 y-o-y growth (in local currency) y-o-y growth Including Telemig in Sep 2007. Includes Telemig in April-Sep 2007. Margin over revenues include fixed to mobile interconnection. 9M 08 y-o-y growth (in local currency) Vivo T. Mexico y-o-y growth Telesp OIBDA
Slide 21: Sum-up: Very robust growth across the region
Sum-up: Very robust growth across the region leveraging our integrated and diversified profile TELEFONICA LATAM Includes 50% of Vivo. Includes Telemig in April-September 2007. Guatemala, El Salvador, Panama and Nicaragua. Year-on-year variation in constant currency Total revenue BB & TV revenue Mobi
Slide 22: Telefonica Europe: robust performance across markets
Telefonica Europe: robust performance across markets TELEFONICA EUROPE Revenue growth (9M 08 y-o-y change) OIBDA growth (9M 08 y-o-y change) OIBDA margin (9M 08) T. EUROPE UK GER IRE CR Ex- forex & Airwave Ex- forex like for like(1) 28.7% 25.7% 20.0% 31.9% 45.9% (0.3 p.p.) (0.6 p.p.) (1.1 p.p.) (2.7
Slide 23: Telefonica O2 UK: Record contract growth while maintaining profitability
Telefonica O2 UK: Record contract growth while maintaining profitability TELEFONICA EUROPE Mobile contract net adds (^000) ARPU (y-o-y change in local currency) Mobile service revenue (y-o-y change in l.currency) Highest ever quarterly contract net adds (278 K) Market leading contract churn at 1.3%
Slide 24: Telefonica O2 Germany: continued customer growth & profitability
9M 08 mobile net adds (^000) Quarterly OIBDA Evolution (€ m) Telefonica O2 Germany: continued customer growth & profitability TELEFONICA EUROPE y-o-y change OIBDA Margin Partners: Hansenet, Tchibo, Fonic. Migration program to contract value customers Old tariffs New tariffs Sep-08 Sep-07 Total Contr
Slide 25: Continuing leverage improvement
25 GROUP FINANCIAL EXPENSES AND DEBT Continuing leverage improvement (1) Calculated based on 9M 08 OIBDA figure annualized excluding results on the sale of fixed assets Leverage target, including commitments, in the low range (2.05x OIBDA) € 528 m debt savings due to currencies depreciating vs. Euro
Slide 26: Closing remarks
Closing remarks Unmatched organic(1) growth rates, above peers Solid conversion rate of top line growth into cash-flow Strong financial position to face the current financial turmoil with flexibility Fully on track to fulfill 2008 guidance Prioritizing shareholders returns for the use of Free Cash F
Slide 27: 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: November 14 th , 2008 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernánd