Slide 1: Telefonica Results January - September 2014
Telefonica Results January - September 2014 Investor Relations Telefónica, S.A.
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefónica Group (going forward, “the Company” or Telefónica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which ma
Slide 3: Key points for the third quarter
Key points for the third quarter Strong operating momentum gaining traction Boost in strategic areas (fiber, Pay TV, mobile contract -smartphones & LTE-), increasing customer value and reinforcing leading position amid sustained competitive pressures Best ever quarterly net adds of smartphones and f
Slide 4: Financial highlights
Financial highlights € in millions Revenue OIBDA OIBDA Margin OpCF (ex-spectrum) Net Income EPS FCF Net financial debt Reported 37,978 12,325 32.5% 6,779 2,849 0.61 2,839 41,200 9M 14 Reported y-o-y (10.9%) (12.6%) (0.6 p.p.) (25.3%) (9.4%) (12.9%) (16.5%) (10.6%) Organic y-o-y 1.9% 0.2% (0.5 p.p.)
Slide 5: Stepping-up investments already fostering high value growth
Stepping-up investments already fostering high value growth Smartphone penetration Sep-13 Jun-14 Sep-14 FTTH premises passed (m) 6.6 +6m 10.5 12.5 Q3 Net adds 265k (1.3x q-o-q; 1.8x y-o-y) Sep-13 Jun-14 Sep-14 Growing demand for fiber, LTE, Pay TV and smartphones Further ramp-up in fiber net adds mo
Slide 6: Q3 improvement across the board
Q3 improvement across the board (% and absolute) Revenue (organic y-o-y) Ex-Reg Ex-VZ 37,978 1.9% 9M +3.6% +0.4% 1.5% 12,232 Q1 14 +3.4% -0.1% 1.3% 12,725 Q2 14 +3.7% +0.3% 2.8% 13,021 Q3 14 +3.6% +0.8% OIBDA (organic y-o-y) Ex-Reg Ex-VZ 12,325 0.2% 9M +1.5% -1.9% 0.5% 3,929 Q1 14 +1.9% -1.4% 4,126
Slide 7: TGR: Strengthening differentiation
TGR: Strengthening differentiation Network: UBB developments FTTH Sep-14 (premises passed) LTE Sep-14 12.5m; ~x2 y-o-y 4G Coverage 50% 59% 49% New LTE launches 8.8m %Pop outdoor 36% 60% 0.3m 3.4m UBB Backhaul >80% 3G/4G sites 4G sites >16,500 ~2.5x y-o-y IT: continued progress towards Brilliant IT &
Slide 8: Digital Services: Enriching our digital solutions portfolio
Digital Services: Enriching our digital solutions portfolio Consumer: Differential customer propositions Video Security Financial Services Strategic Partnerships Global Device Management Revenue 9M Mobile security Users Smartphones: (organic y-o-y) €717m (Sep-14) +24% Safe devices for shipments 72%
Slide 9: Spain: Gaining momentum on differential quality
Spain: Gaining momentum on differential quality 23% of Group revenue Net adds (‘000) Q3 13 Q2 14 Q3 14 Q churn +6% +30% 3.2% 348 370 208 160 2.3% 63 1.0% 1.0% 0.9% 0.8% (23) (145) Pay TV FTTH x3.4 1.9% 1.7% 1.5% 28 95 Mobile Contract High value in “Fusión” Fusión Fiber 100 Mb Fusión IPTV 37% 27% 12%
Slide 10: Spain: Top line improvement acceleration
Spain: Top line improvement acceleration 23% of Group revenue Revenue y-o-y (€ in millions) Revenue y-o-y (%) 2013 2014 9M Q3 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 (212) (6.6%) (442) (778) (8.2%) (9.1%) (1,607) (12.1%) (11.9%) last Q +2.5 p.p. last 3Qs +5.3 p.p. OIBDA margin y-o-y 46.9% 44.7% 46.0% -4.2 p.p
Slide 11: UK: Outperforming the market & improving trends
UK: Outperforming the market & improving trends 14% of Group revenue Mobile contract net adds (‘000) 199 209 135 Mobile base of 24m Q1 14 Q2 14 Q3 14 Mobile Service Revenues (y-o-y) MSR MSR ex-“O2 Refresh” Q1 14 Q2 14 Q3 14 (2.7%) (0.1%) 1.1% (7.9%) (6.7%) (5.5%) OIBDA margin 24.6% 23.6% 26.7% +1.2
Slide 12: Germany: Keeping momentum; E-Plus deal closed
Germany: Keeping momentum; E-Plus deal closed 9% of Group revenue Contract net adds (‘000) 78 152 143 ~3x y-o-y Q1 14 Q2 14 Q3 14 Contract gross adds (y-o-y) 30% 21% 5% Q1 14 Q2 14 Q3 14 Revenue (y-o-y) Revenues MSR ex-MTR Q1 14 Q2 14 Q3 14 (3.4%) (2.5%) (0.5%) (1.3%) (4.4%) (8.8%) 4.4 p.p. 3.9 p.p.
Slide 13: Brazil: Strengthening position in value segments
Brazil: Strengthening position in value segments 22% of Group revenue Contract market share (1) Net adds market share (1) 66% 61% 52% 40.6% 41.3% 41.4% Q1 14 Q2 14 Q3 14 Smartphone net adds (m) Smartphone penetration 28% 32% 40% 3.3 3.0 5.8 Q1 14 Q2 14 Q3 14 FTTH net adds (‘000) Premises passed (m)
Slide 14: Brazil: Growth acceleration in revenue and OIBDA
Brazil: Growth acceleration in revenue and OIBDA 22% of Group revenue Revenue (organic y-o-y) Q1 14 Q2 14 Q3 14 Q3 14 ex- regulation 0.2% 1.0% 1.1% 1.8% 4.8% 3.2% (3.1%) (3.0%) (6.1%) Total Mobile Fixed +4.4% +6.3% +0.7% OpEx (organic y-o-y) 0.4% 0.8% (0.2%) Q1 14 Q2 14 Q3 14 OIBDA (organic y-o-y) O
Slide 15: Hispam: OIBDA +17.8% y-o-y, ex-Venezuela
Hispam: OIBDA +17.8% y-o-y, ex-Venezuela 29% of Group revenue Mobile gross adds (m) 10.9 11.0 11.1 Flat y-o-y Q1 14 Q2 14 Q3 14 Smartphone net adds (m) 1.9 2.0 2.2 1.8x y-o-y Q1 14 Q2 14 Q3 14 Revenue (organic y-o-y) Hispam Hispam ex-Venezuela 14.8% 11.3% 14.1% 10.8% 10.0% 9.7% Q1 14 Q2 14 Q3 14 OIB
Slide 16: Mexico: Quality assets & new regulation boosting growth
Mexico: Quality assets & new regulation boosting growth 3% of Group revenue Mobile gross adds Q1 Q2 Q3 9M y-o-y +63% +45% 2.5 2.6 2.5 1.8 1.8 1.5 1.6 1.6 1.6 2012 2013 2014 Revenue (organic y-o-y) Revenue MSR 12.6% 7.9% 9.5% 5.8% (2.6%) (6.0%) Q3 13 Q2 14 Q3 14 OIBDA margin Organic y-o-y 24.6% 18.1%
Slide 17: Rest of Hispam: Steady growth across the board
Rest of Hispam: Steady growth across the board Revenue (organic y-o-y) Q2 14 Q3 14 27.4% 26.4% 23.9% 15.7% 8.6% 8.0% +5.5% Q3 14 7.2% 7.6% ex-regulation (5.1%) (4.0%) Colombia Peru Argentina Chile VZ & CA OIBDA (organic y-o-y) Q2 14 Q3 14 Q3 OIBDA margin (organic y-o-y) 42.3% 25.3% 25.3% 20.5% 17.4%
Slide 18: Net debt stable YTD despite E-plus payment & FX impact
Net debt stable YTD despite E-plus payment & FX impact Net Financial Debt € in millions Net Financial Net Financial Net Financial Debt/OIBDA Debt/OIBDA Debt/OIBDA 2.52x 2.36x 2.39x 45,381 (2,839) 3,679 44,879 1,914 (2,712) (2,912) 1,768 600 41,200 €0.4/share paid in May €1,110m Venezuela Net Fin. FC
Slide 19: Smooth maturity profile on long-term financing
Smooth maturity profile on long-term financing Long-term financing € in billions €13.9Bn long-term financing YTD (~20% equity markets) 3.0 2.6 2.1 1.75 1.5 0.75 0.9 0.8 0.5 Syndicated LatAm & Euro Bond Hybrids Mandatory Mandatory T. Private T. facility Other loans Convertible Exchangable Deutschland
Slide 20: Summary
Summary Successful strategy execution creates momentum into 2015 Delivering high-value customer growth Record quarterly net adds in smartphones and fiber; increasing 4G adoption across markets Effective management of customer loyalty Revenues growing & accelerating in Q3 Positive growth in the last
Slide 21: Telefonica - For further information: Investor Relations
Telefonica For further information: Investor Relations Tel. +34 91 482 87 00 ir@telefonica.com www.telefonica.com/investors 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, thereu