Telefonica Sa · BME:TEF

Telefonica Sa — Q1 2010 Earnings Presentation

27 slides from Telefonica Sa's earnings presentation, April 2010

  1. Slide 1: Telefónica, S.A Investor Relations

    Telefónica, S.A Investor Relations

  2. 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 which refer to the intent, belief or current prospects of

  3. Slide 3: Delivering on our 2010 priorities

    GROUP FINANCIALS Delivering on our 2010 priorities #1  Revenue growth acceleration vs. FY 09 Capturing top line growth prospects  Significant ramp up in commercial activity vs. Q1 09; setting the basis for revenue stimulation  Healthy OIBDA margin and high OpCF  Strong financial position  2010

  4. Slide 4: Highlights Q1 10

    GROUP FINANCIALS Highlights Q1 10 Jan-March Chg Organic chg € in millions 2010 Q1 10/Q1 09 Q1 10/Q1 09 Revenues 13,932 +1.7% +0.9% Operating Income Group Contribution by before D&A 5,114 -4.1% -3.4% regions (Q1 10) (OIBDA) Rev OIBDA OpCF OIBDA Margin 36.7% -2.2 p.p. -1.6 p.p. T. España 33% 42% 46% O

  5. Slide 5: Top line fully flowing to EPS

    GROUP FINANCIALS Top line fully flowing to EPS January-March 2010 € in millions Good management of (% change y-o-y) non-operating results 5,114 +9.2 p.p. -4.1% 2,930 -2,184 -7.2% 36 (+0.4%) (n.m.) -573 (-26.0%) 1,656 -714 -23 +2.0% (-2.8%) (-23.9%) OIBDA D&A OI Associates Financial Taxes Minorities

  6. Slide 6: Distinctive top line performance

    GROUP FINANCIALS Distinctive top line performance Revenue growth acceleration for Q1 10 Revenue by region the 2nd quarter in a row (contribution to organic growth y-o-y) Organic y-o-y growth ex MTRs +3.7% Organic y-o-y +2.8% +2.5% +2.1 p.p. +0.2 p.p. +0.9% +2.4% growth +1.5% +1.4% +1.4% +0.4 p.p. T.

  7. Slide 7: Enhanced commercial activity, setting the basis for additional top line growth

    GROUP FINANCIALS Enhanced commercial activity, setting the basis for additional top line growth… Total organic gross adds (million) Total organic net adds (million) Avg 09 19.2 22.4 quarterly 4.3 Avg 09 quarterly 21.0 3.7 1.6 x2.6 Q1 09 Q1 10 Q1 09 Q1 10 Total Churn Avg 09 2.3% 2.2% quarterly 2.3% 

  8. Slide 8: …with focus on broadband

    GROUP FINANCIALS …with focus on broadband Growth accesses (y-o-y organic growth) Total Accesses: +97.5% 273 m (+6.1% y-o-y +70.3% organic growth) +12.3% +9.8% +9.3% +8.7% +9.6% +8.2%+8.7% +7.4% Fixed accesses Mobile Contract MBB FBB Pay TV Dec-09 y-o-y organic growth Mar-10 y-o-y organic growth -5.4

  9. Slide 9: Reinvesting efficiency gains to foster revenue expansion

    GROUP FINANCIALS Reinvesting efficiency gains to foster revenue expansion Q1 10 OpEx (organic y-o-y growth) +9.6% +6.7%  Lower interconnection expenses (-3.3% y-o-y +3.1% organic) on MTRs cuts Supplies Bad debt Taxes  Higher commercial costs (+5.5% y-o-y organic) on provision increased volumes, ad

  10. Slide 10: On track to meet 2010 guidance

    GROUP FINANCIALS On track to meet 2010 guidance Revenue OIBDA +1.7% 2010 GUIDANCE +1%/+4%  Q1 10/Q1 09 2009 GUIDANCE +1%/+3%  Q1 10/Q1 09 -3.0% 2010 EPS target confirmed (€ 2.1) CapEx OIBDA €1,208 m 2010 GUIDANCE €7,450/7,650 m  Q1 10 -3.0% H1 10E 9M 10E FY 10E • Restructuring in T. Europe (H1 10

  11. Slide 11: T. España: continued top line recovery

    TELEFÓNICA ESPAÑA T. España: continued top line recovery Q1 09 Q2 09 Q3 09 Q4 09 Q1 10  Top line gradual recovery, lowest Revenues revenue decline for the last five (comparable y-o-y -3.9% -4.5% quarters change) -5.7% -6.6% FY 09 -6.9% -5.9% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10  OIBDA eroded by the macro

  12. Slide 12: Strong push on commercial activity

    TELEFÓNICA ESPAÑA Strong push on commercial activity Wireless service revenues Wireless contract customers 15.5 m Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Avg 09 197 quarterly +6.7% +5.3% 192 -7.1% -7.3% -7.7% -15 -8.1% -8.0% FY 09 -8.0% Dec-09 Mar-10 Q1 09 Q1 10 Customer y-o-y growth Net adds (000) Comparable

  13. Slide 13: Stepping up commercial momentum

    TELEFÓNICA ESPAÑA Stepping up commercial momentum Improvement Comparable wireline revenue FBB net adds (000) Market in Broadband share Data Voice & Internet 102 ~55%E Q4 09 & IT Access & BB Subsidiaries Q1 10 x2.2 Avg 09 Peak Peak quarterly 45 since sinceQ4 Q408 08 58 + 0.3 p. p. -2.9% - 0.8 p. p. Q

  14. Slide 14: T.Latam: Solid top line growth and robust profitability

    TELEFÓNICA LATAM T.Latam: Solid top line growth and robust profitability +8.1% Accesses +6.9% +6.5%  Strong commercial momentum: growth  Accesses growth acceleration to 172.3 m (y-o-y growth) Sep-09 Dec-09 Mar-10  Churn contention across businesses  Sustained organic top line growth: +5.8% +5.4%

  15. Slide 15: Wireless business: Strong commercial activity

    TELEFÓNICA LATAM Wireless business: Strong commercial activity Net adds (in millions)  Commercial ramp up for the third quarter in a row: +24.2% 3.7 Avg 09 y-o-y growth in gross adds quarterly  Churn improvement: 2.4% in Q1 10 (-0.2 p.p. y-o-y) 2.8 1.3  Acceleration in customer growth (+1.8 p.p.

  16. Slide 16: Wireline business: stabilizing revenue drivers

    TELEFÓNICA LATAM Wireline business: stabilizing revenue drivers Accesses (m) Net adds (‘000)  Strong BB growth: 6.6  Significant ramp up in net adds: 2x Latam 2009 quarterly average 215 Retail BB 142 Avg 09  Record performance in Telesp quarterly +96  BB/fixed lines: +3 p.p. y-o-y to 27% -29% +5

  17. Slide 17: Telesp gradual recovery

    TELEFÓNICA LATAM Telesp gradual recovery Best Q1 in history for FBB +61%  Gaining commercial momentum: 163  Total accesses growth for the 1st time 101 since Q3 08 FBB 69 59  Limited activity in Jan-10 on heavy rains Net adds (000)  Positive fixed line net adds in March & April Wireline y-o-y gro

  18. Slide 18: Colombia: Operating results improved, financials should follow

    TELEFÓNICA LATAM Colombia: Operating results improved, financials should follow Wireline net adds (000) Commercial Wireless KPIs repositioning 323 y-o-y growth +79% 154 +5.2% Drastic churn 40 reduction (-1.2 p.p. y-o-y) 22 ARPU -2.2% FBB -18.9% 12 12 (chg lc) 5 -14.5% -4.1% -157 -12 -217 Wireline Wi

  19. Slide 19: Good performance across key operations

    TELEFÓNICA LATAM Good performance across key operations Mexico Venezuela Vivo  Steady market share  Solid financials despite  Record net adds: x3 vs. Q1 09 expansion to 21%, +1.5 p.p. devaluation  Increase in market share to y-o-y  Focus on value customers 30.1%; 71.5% share in contract  +33.7

  20. Slide 20: T. Europe: continued momentum, leveraging mobile internet

    TELEFÓNICA EUROPE T. Europe: continued momentum, leveraging mobile internet +15.5% +11.7% Incl HanseNet  Strengthened business portfolio: Accesses • Quality base improvement: 86% of Q1 mobile +6.7% net adds in contract (Mar-10; y-o-y 21.4 m +6.6% growth) • Strong MBB expansion to over 7 m accesses

  21. Slide 21: T.O2 UK: leading financials, growing quality base

    TELEFÓNICA EUROPE T.O2 UK: leading financials, growing quality base Customers Churn +12.1%  Smartphones and lowest contract churn driving 1.2% 1.1% customer growth: Mobile KPIs +4.6%  Rational customer acquisition strategy (Mar-10: y-o-y  Increasing quality of the base: 195k contract net change)

  22. Slide 22: T.O2 Germany: Strong trading momentum and broader portfolio

    TELEFÓNICA EUROPE T.O2 Germany: Strong trading momentum and broader portfolio Q1 10 Mobile net adds Breakdown 16.0 m 21.6 m 357k FBB &  Enhanced challenger approach through Others expanded integrated portfolio Customer 154k +16.2% 91%  Better positioned to address new segments 73% (HanseNet, “O2o”

  23. Slide 23: Effective interest rate contained at 5%

    GROUP FINANCIAL EXPENSES AND DEBT Effective interest rate contained at 5% € in millions 1.9x Net Financial Debt Evolution 2.2x OIBDA OIBDA +1,053 45,281 43,551 +1,213 +243 +446 -1,225 Net Fin. Debt FCF Commitments Shareholder Net Financial FX, accruals Net Fin. Debt Dec-09 Post-Minorities cancellati

  24. Slide 24: A full value offer for PT’s 50% stake in Brasilcel

    OFFER FOR 50% BRASILCEL A full value offer for PT’s 50% stake in Brasicel Key  € 5.7 bn all cash transaction for 50% of Brasilcel owned by PT terms  Unconditional, binding, fully financed offer with no execution risk Value of PT’s indirect stake in 5.7 VIVO (€ bn) +145% +119% +104% +84% 3.6 +58% 3

  25. Slide 25: PT obtaining more than its pro-rata share of the synergies

    OFFER FOR 50% BRASILCEL … with PT obtaining more than its pro-rata share of the synergies of a potential subsequent Vivo-TSP combination Revenue  Improved churn  Cross selling/Bundle offer Synergy allocation references € in billions 2.8 PT’s share Network  Network management integration & IT  IT

  26. Slide 26: Closing remarks

    GROUP FINANCIALS Closing remarks  Boosting top line growth, leveraging a well diversified portfolio  Sharp increase in commercial activity across regions, setting the base for additional revenue growth  Retaining top quality profitability and high OpCF Strong results, delivering our  Robust fina

  27. Slide 27: Telefónica, S.A Investor Relations

    Telefónica, S.A Investor Relations

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