Telefonica Sa · BME:TEF
Telefonica Sa — Telefonica S A — FY2016 Earnings Presentation
38 slides from Telefonica Sa's earnings presentation, Feb 23, 2017
Slide 1: Form 6-K Telefónica, S.A.
Table of Contents FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of February, 2017 Commission File Number: 001-09531 Telefónica, S.A. (Translation of registrant
Slide 2: Table of Contents
Table of Contents Telefónica, S.A. TABLE OF CONTENTS Sequential Page Item Number 1. Telefónica Group: Presentation on quarterly results January-December 2016 1
Slide 3: January – December 2016 Results
Table of Contents January – December 2016 Results Telefonica
Slide 4: Disclaimer
Table of Contents Disclaimer (hereinafter, expectations divestitures The “aspiration”, their by of Except including This should contain In July invited Neither to Investor Telefónica, T 1 elefonica purchase, the October such Statements 3, document own securities therefore 2016. as to more this State
Slide 5: 2016 Overview and 2017 Outlook
Table of Contents 01 2016 2017 Mr. IChairman 2 Telefónica, Telefonica nvestor >José Overview Outlook Relations María &S.A. CEOÁlvarez-Pallete
Slide 6: 2016 highlights
Table of Contents 2016 A Co. Strengthening Consistent Building Improved OIBDA Mid-single Strong Recovery CapEx Customer FCF FX LT Strategically Sustainable €0.40/share Investor T 3 elefonica year financing: drag transformation improvement highlights; of FCF: peak growth Relations easing sustainable
Slide 7: Driving FCF growth
Table of Contents Consolidation (Organic Service Revenue 4.7% Revenues & 0.2% OIBDA 5.6% CapEx (12.7%) OpCF 16.2% (Reported Driving FY €4.4bn (29.2%) FCF I(7.9%) 4 Telefónica, Telefonica nvestor Margin 141.3% 3.2% FY 16.2% (ex-spectrum)/ 1.9% FCF Relations growth expansion 15 growth S.A. growth FY 2
Slide 8: Key financials
Table of Contents Organic Service 1.3% 52,036 Revenues 48,005 15,118 29.1% 6,535 FCF Q4 48,595 FY € 16,519 OIBDA OpCF 31.7% Net 7,937 EPS Investor T 5 elefonica innon-cash 16: 16 Financial Income millions 0.42 0.75 4,370 5.6% (ex-spectrum) 1.0 4.7% 2.6% Key revenues Margin €Relations +5.1% in p.p. f
Slide 9: Guidance and dividends 2016
Table of Contents Performance Guidance FY OIBDA +2.6% >4% Revenues Stabilising +0.9 CapEx Around Service 17.0% Focus +4.0% (handset 2016 •Dividends Investor T 6 elefonica Voluntary Cash 16p.p. Guidance Dividend on dividend ex-spectrum/Sales Revenues 17% margin Relations sales service 2016E paid vs.
Slide 10: Superior customer growth and mobile data
Table of Contents Superior High Penetration Smartphones FTTx/Cable LTE +6% +17% +24% +77% +10 40% 57% 43% 25% +8 +2 Average (organic 4.4% 5.2% 2.8% FY 1.6% Accesses Upgrading Double 9.0m Mobile Focus Q4 Enhancing Omnichannel Investor T 7 elefonica p.p. mobile churn 16 p.p. value LTE +2.8 2.7% on Q1
Slide 11: Revenue trends
Table of Contents Revenues Transitioning Q3 Q2 Q1 (18.0%) (16.6%) (5.1%) (9.0%) (0.2%) 2.7% 2.8% 1.4% 1.5% 3.9% Service Total Continued Q4 MSR Germany Spain Brazil UK Hispam TEF (3.1%) 1.9% 2.1% 2.4% 3.7% 9.9% 2016 (0.9%) regulation Services Access & Broadband Other Var. 12% 35% 43% 10% Connectivity
Slide 12: Data monetisation
Table of Contents Higher Avg. (million) 1.2 66.3 +44% +77% 0.8 37.4 Dec- Leading (Q4 ARPU Usage >2 FTTx +11% +65% LTE >€10 Solid FY 19.2% 12.3% Non-SMS 52%/MSR Capturing “More Value o Roaming Data NGN Q4 Strong Investor Telefónica, T 9 elefonica ~15-20% (vs 15 16 LTE FBB GB 16) accesses buckets shar
Slide 13: Structural advantage: network
Table of Contents Extensive Premises FTTx/Cable 15m European E2E 87% 59% p.p. +28 coverage 1 x6 Full (Countries IT +8 -12 -13% -14% (2014-2016) Physical Applications Data Big Virtualisation 4 x6.7 27 New BB 43% 47% 2016 61% 38% 2014 Access STRUCTURAL Investor Telefonica 106Simplification PB PB p.p.
Slide 14: Network transformation
Table of Contents TGR: Accelerating Access Core FTTx/Cable 17 5 Transport Legacy Advanced LTE Virtualisation (62 87% 53% Fostering Network Global countries VoLTE VoIP Innovation E2E migrated Accesses 45m 59% •Customers o Investor Telefonica 11Home Efficiency Network Big 5G: Full Security Boosting mm
Slide 15: Digital services
Table of Contents Digital y-o-y +17.6% +12.7% +16.2% +28.9% +12.3% Fin.Serv. 1,843 +21.9% 2,271 +22.7% +24.5% 2,577 +17.3% +14.1% +12.4% 4,090 4,792 FY 2016 6% 7% Security M2M Financial Cloud Video Driving 13% Others Virtuous Cutting Adapting Pragmatic Growing CLOUD: SECURITY: M2M: BIG Telefónica In
Slide 16: 2017 guidance and dividend
Table of Contents Operating Guidance (in Stable Revenues -1.2 OIBDA Expansion CapEx Around Growing 2017 To Interim Final €0.20/sh. Dividends Cash MAINTAINING Investor Telefonica 13 be spite p.p.) outlook Dividend dividend Q2 paid ex-spectrum/Sales Q4 16% margin of Relations 18 profitability Cash 201
Slide 17: 2017 priorities
Table of Contents 2017 Focusing P&L Focused A Company Managing Solid Attractive Investor Telefonica 14platform +priorities Investment CF Relations investment on transformation and all growth and revenue, situations sustainable set data-driven Grade; on Telefónica, inmilestones OIBDA, UBB/4G, inBalan
Slide 18: Q4 Results & Highlights
Table of Contents 02Results Q4 & Mr. Investor CSFO Telefonica 15 >16 Ángel Highlights Relations Vilá Telefónica, S.A.
Slide 19: Q4 16 summary
Table of Contents Q4 for Business Fit Strong Pick-up Significant +2.0 FX Hispam Materialisation UK +11.6% Differential Best Data Enhanced Sale Organic Underlying Investor Telefónica, Telefonica 16 summary: negative ramp-up of quality p.p. monetisation: growth FCF Telefé CapEx & in deleverage: Relati
Slide 20: Financials in a nutshell
Table of Contents Financials Organic Revenues Service FCF FY € y-o-y OIBDA OpCF Net EPS Underlying •Reported Investor Telefónica, Telefonica 17FX Q4 Other in16 Financial Income millions 0.42 0.75 4,370 16 drag (ex-spectrum) Q4 factors revenues restructuring 15,118 16,519 Margin y-o-y Relations resul
Slide 21: Reported vs underlying OIBDA and net income
Table of Contents Reported +6.0% 4,464 (228) 1,290 3,187 OIBDA Q4 2.5x 1,233 (171) 94 215 950 145 Restructuring Capital PPA Impairments Net •Non-cash Investor Telefónica, Telefonica 18Restructuring Capital Goodwill factors Income Gains Reported Underlying Relations gains: Q4 effects; impacting impai
Slide 22: Strong FCF growth
Table of Contents Strong 2,055 1,500 746 69 +24.4% (€ FY 4,370 3,514 3,817 5,391 6,951 14.2% •Delivering o FCF FCFS Investor Telefónica, Telefonica 19Growing +€857m Growth Savings Lesser in12 15acceleration 2016 & millions) FY FY 14.3% and CapEx Relations WC in 16: on FCF 16 13 FCF on healthy S.A. a
Slide 23: Outstanding OIBDA efficiency
Table of Contents Outstanding 2016 4.7% +6.3 OIBDA 9.4% TEF Efficiency Strengthening Main Simplification Synergies FY Q4 Investor Telefónica, Telefonica 20 OIBDA OpEx y-o-y 16Hispam p.p. OIBDA 5.5% 11.5% contributors Q1margin Relations Q4 in -2.3% (BZ Q2 across 0.8% S.A. (y-o-y growth Brazil 4.1% or
Slide 24: Accelerating OIBDA and FX impact
Table of Contents Accelerating OIBDA: Q1 +230 Net (€ (1,175) OIBDA Organic €+394m FX Q4: 2016 2017 Investor Telefónica, Telefonica 21 iny-o-y impact Impact €-94m BRL millions) Negative FX (553) 795 CapEx Growth acceleration; OIBDA Relations in Organic impact: Q2 appreciation; in (Q3: Q4 S.A. -323m +
Slide 25: Growing OpCF and CapEx
Table of Contents Growing y-o-y 8,928 Total 2016 +13.6% GER +0.3% BRAZIL SPAIN HISPAM UK OpCF Consistently 79% Network Boosting Building Driving Investor Telefónica, Telefonica 22 10% of CapEx OpCF 10% Spectrum organic (345) +5.6% y-o-y 44% CapEx competitive y-o-y Relations leadership CapEx the OpCF
Slide 26: Spain: commercial performance
Table of Contents Spain: Net Q3 159 15 (71) (44) Traditional Accesses High-value “Fusión” +8 37% UBB/Fusión Q4 •Best-placed o Investor Telefónica, Telefonica 23Accretive Ahead Ongoing “More TV: +81% Lower 58% More FTTH: LTE: Constructive Promotions 22 p.p. 16 trading adds 132 (63) (54) 68% exclusive
Slide 27: Spain: financials
Table of Contents Spain: Steady OIBDA 2.0% 1.0% Q1 Back y-o-y FY Service 1.1% (2.2%) 41.1% Q4 •Cash o Investor Telefónica, Telefonica 24Sequential Margin Strong Redundancy FY Additional “Consumer: “Business”: “Other” Substantial Higher Expected Q2 revenues 15CapEx: conversion to 2.6%1.8% 1.1% 2.2% o
Slide 28: Germany
Table of Contents Germany: MSR (1.0%) (1.1%) (1.7%) 2016 3.8% 6.2% FY 1.8% 3.6% 23.9% Maintaining Better •o Investor Telefónica, Telefonica 251.3m Solid Focus MSR Successful 2016 54% Signs Data LTE +41% +62% Synergy 16OIBDA MSR 3.9% OIBDA cust. Q1 +2.1 of guidance contract traffic metrics ex-regulat
Slide 29: UK
Table of Contents UK: Blended 421 FY 0.4% 2016 MSR Q1 (4.0%) 1.1% 1.5% (0.2%) 1.6% 2.6% 4.1% 5.7% OIBDA Roaming (0.4 Solid Sustained Q4 •o Investor Telefónica, Telefonica 26Mobile Q4 FY Contract Market-leading 47% Solid Data MSR Handset Q2 total Q1 76 p.p.) consistently ARPU OIBDA CapEx/Sales contra
Slide 30: Brazil: commercial performance
Table of Contents Brazil: 35.7% 1% Mobile Data Total Fixed Q4 Market 37.8% FBB +7.7% •Selective o Investor Telefónica, Telefonica 27Target Mobile: Fixed: 38% +13.2% Successful 17.3m Selective ARPU 7% ARPU >34 Contract accesses 30.2% 28.1% of +9.3% focus ARPU share accesses 25% YE upgrading Relations
Slide 31: Brazil: financials
Table of Contents Brazil: 8.2% 1.1% Q1 2016 Margin +2.2 Service 2.0% 8.1% 26.2% Gaining •Expanding o Investor Telefónica, Telefonica 28Capturing Q4 Regulation Continued CapEx Successful Data/MSR: 18.8% Enlarging Fully Q2 p.p. MSR (y-o-y 5.8% 1.7% Q3 robust secured y-o-y Revenues revenue Relations be
Slide 32: HispAm: commercial performance
Table of Contents HispAm: Mobile 2% Total 22% Q4 Accesses ARPU +12.2% FBB Sustainable Steady ARGENTINA: CHILE: PERU: LTE COLOMBIA: Solid MEXICO: Better Easing Investor Telefónica, Telefonica 29 Mobile 3% coverage 41% & FTTx/Cable Contract ARPU sequential Q4 increase aggressiveness Solid accesses 15%
Slide 33: HispAm: financials
Table of Contents HispAm: 7.5% 2016 3.9% FY Sound Strong Double-digit OIBDA OpCF ARGENTINA: CHILE: PERU: COLOMBIA: MEXICO: Investor Telefonica 30 Q1OIBDA Revenues 11.3% 0.8% stable financials Q4 Q2 Q4 margin Q4 Relations revenues MSR Q3 Better Revenue 6.3% top 3.6% in growth (organic Solid Q4 2016 G
Slide 34: Further deleverage
Table of Contents Further € Net 52,193 Jun-16 3,530 Offseting Adjusted Investor Telefónica, Telefonica 31in Financial millions 1,795 FCF (3,555) deleverage Relations OpCF -€1.4bn S.A. (766) Shareholder Debt Debt/OIBDA 682 Working WC (422) on 406stronger in(1,000) (582) remuneration H1 capital 3.18x
Slide 35: Strengthening balance sheet and liquidity
Table of Contents Strengthening Interest 1.02 0.07% 4.96% Dec-15 (1.09%) Liquidity 23.8 14.6 92% Cash 6.6 Sources 3.3 Equity 0.6 1.0 Hybrids Net € Avg. 7.2 2017E Investor Telefónica, Telefonica 32in6.4 debt billions billions; p.p. incl. 21.3 LT maturity debt position 3.94% 2018E Linked-bond 4.9 Euro
Slide 36: Closing remarks
Table of Contents Closing Solid Delivered Best-placed Enhancing 2017 A Investor Telefónica, Telefonica 33solid outlook: year platform remarks Relations promising of Balance S.A. structurally growth further forSheet sustainable Q4 flowing growth; operating into consistent growth FCF; momentum strong
Slide 37: Investor Relations contact
Table of Contents For further Telefonica Investor Tel. www.telefonica.com/investors ir@telefonica.com +34 Relations 94 information: 482 87 00
Slide 38: Signatures
Table of Contents 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: February 23, 2017 By: /s/ Laura Abasolo García de Baquedano Na