Slide 1: Results January-March 2012
Results January-March / 2012
Slide 2: Disclaimer
Disclaimer This document contains statements that constitute forward looking statements about Telefonica Group (going forward, "the Company" or Telefonica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which ma
Slide 3: Q1 Overview: Delivering on our 2012 strategy
Q1 Overview: Delivering on our 2012 strategy TELEFONICA Solid revenue growth despite regulatory impacts and drag from Spain Robust mobile data sales Further revenue acceleration along the year 3 Outstanding performance in Latin America, our key growth engine 2012 refinancing completed, over 40% of 2
Slide 4: Financial summary
Exceptional items OIBDA 0 +89 OI -262 -236 Net Income -536 -125 TELEFONICA Financial summary Underlying growth: Reported figures excluding major exceptional items and spectrum acquisition. Organic growth: Constant exchange rates, excludes changes in the perimeter of consolidation and hyperinflation
Slide 5: Solid commercial start for 2012
Smartphones represent 81% of commercial activity in Europe 17% y-o-y increase in mobile gross adds coupled with churn control 2x mobile net adds in Latin America vs. Q1 11 TELEFONICA Solid commercial start for 2012 FBB Mobile Pay TV MBB Total: 309 m Mobile contract Accesses growth (y-o-y) 7% 6% Q1 1
Slide 6: Revenue growth driven by key strategic areas
TELEFONICA Revenue growth driven by key strategic areas 6 Top line acceleration driven by T. Latam Successful data monetisation Non-SMS Data Mobile Data 15.4% 33% of MSR (+4 p.p.) 55% of Mobile Data (+5 p.p.) 27.3% Mobile data sales (Q1 y-o-y) Data penetration Smartphone MBB Traffic Non-SMS data rev
Slide 7: Strong mobile net adds fuelled access expansion
Strong mobile net adds fuelled access expansion Sustained top line ramp up driven by MSR Increasing exposure to growth markets Q1 12 Q1 11 (0.21) (0.06) 0.17 0.19 Net Adds (in millions) y-o-y change x2 n.s. x2 x2 -10% Q2 11 Q1 12 10% Mobile 13% Total 8% 11% Accesses growth (organic y-o-y) Total Mobi
Slide 8: Increased customer investment impacting profitability
TELEFONICA Increased customer investment impacting profitability Savings from headcount reduction in Spain already flowing New restructuring programs in Brazil, Czech R. and Ireland. Savings to flow in coming quarters Interconnection costs down on lower MTRs Higher costs driven by strong commercial
Slide 9: Latam: Robust growth acceleration across regions
1 Excludes MTRs cuts in Mexico, Brazil, Venezuela and Peru, changes on F-M retail tariffs in Brazil and Peru, and other regulatory changes in Peru. Profitability impacted by commercial costs T. LATAM Latam: Robust growth acceleration across regions 2.1 p.p. 1.9 p.p. 3.6 p.p. 0.2 p.p. +7.8% +0.2% Ex-
Slide 10: Brazil: Widening leadership
Sources: Anatel for market shares, Teleco for 3G coverage. 29.8% Total Contract 36.5% Data 43.8% Mobile market share (Mar-12) +0.9p.p. +0.3p.p. +2.2p.p. y-o-y T. LATAM Brazil: Widening leadership Mobile accesses (y-o-y) Strengthened leadership Best-ever Q1 in mobile net adds: 3.2 m vs. 1.8 m in Q1 1
Slide 11: Brazil: Commercial momentum flowing to financials
Limited margin erosion driven by higher commercial activity Contained impact from regulation (-0.8 p.p.) Integration process on track: ~10% headcount reduction, structure simplified, rebranding from mid-April Positive OIBDA y-o-y growth T. LATAM Brazil: Commercial momentum flowing to financials, syn
Slide 12: Latam: Widespread growth acceleration (i)
T. LATAM Latam: Widespread growth acceleration (i) Contribution to TEF Q1 Revenue ARGENTINA: Solid double digit top line growth and high single digit OIBDA growth (+8.2% y-o-y) CHILE: Strong commercial activity penalising OIBDA margin (38.9%) PERU: Solid commercial momentum and OIBDA expansion (+0.3
Slide 13: Latam: Widespread growth acceleration (ii)
T. LATAM Latam: Widespread growth acceleration (ii) Contribution to TEF Q1 Revenue VENEZUELA: Impressive operational performance, benchmark OIBDA margin (43.3%) MEXICO: Visible results from turnaround actions: improved revenue trend Outgoing ARPU +10.4% y-o-y (vs. +0.3% in Q4 11) CENTRAL AMERICA: St
Slide 14: T. Europe: Building momentum on commercial refresh
OIBDA primarily hit by strong commercial costs T. EUROPE T. Europe: Building momentum on commercial refresh Focused commercial activity towards a data centric model Mobile customer base expansion leveraging new propositions: Smartphone were 81% of handset sales in Q1 Contract segment at 58% of total
Slide 15: Spain: Executing our transformation plan (i)
T. EUROPE Fast take-up of new tariff portfolio driving churn reduction Old portfolio New portfolio -0.7 p.p. Limited impact in mobile ARPU from new tariffs FBB ARPU (-9.0% y-o-y in Q1) affected by active migration of customers to new tariffs to further reduce churn FBB. Base 100 Q1 Mobile contract c
Slide 16: Spain: Executing our transformation plan (ii)
T. EUROPE A new industrial model to enhance market dynamics 16 Spain: Executing our transformation plan (ii) Handset subsidy elimination for new mobile customers from March will lead to: Lower portability volumes: portability was around 10% of the market in 2011 Significant decline in commercial cos
Slide 17: Spain: Further efficiency gains across the board
Mainly affected by new tariffs T. EUROPE Limited OIBDA deterioration q-o-q on strong cost reductions to offset top line pressure Q4 11 data in comparable terms. Revenues, OIBDA (y-o-y) 40.9% 42.8% OIBDA margin Spain: Further efficiency gains across the board Top line performance impacted by a challe
Slide 18: UK: Regaining momentum
Recovering commercial momentum Margin erosion driven by higher volumes of retention and acquisition Commercial expenses to moderate going forward: Best contract churn in more than 2 years Percentage of out of contract customers down 3.4 p.p. q-o-q Increased volume & value in a very competitive marke
Slide 19: Germany: Successful strategy driving growth
Data monetisation driving revenue growth MSR acceleration leveraging: Successful data monetisation Contract ARPU growth MTR cuts annualisation in Q1 Better revenue mix, mobile data is 44% of MSR (+5 p.p. y-o-y) Profitable improvement as revenue growth flows to OIBDA, market investment offset by effi
Slide 20: Czech R.: Further improvement in financial performance
Robust OIBDA margin Revenue trends continue to improve 3rd consecutive quarter of improved trends on: Mobile residential spend stabilisation Better mobile data revenues Solid growth in Slovakia (MSR ex-MTRs up 34% y-o-y) Fixed revenues hit by price pressure, ICT phasing Limited y-o-y erosion (-0.8 p
Slide 21: Balanced access to credit markets, 2012 refinancing completed
2012 maturities as of Dec-11 TELEFONICA Net financial debt prefinanced Balanced access to credit markets, 2012 refinancing completed Undrawn credit lines & syndicated RCF1 (Dec-11) Undrawn credit Lines & syndicated RCF1 (Mar-12) 76% LT 75% LT Cash & increased available credit lines Cash & cash equiv
Slide 22: Implementing measures to reduce our debt
Net Financial Debt evolution OIBDA 12 months rolling ex-Redundancy Program in Spain in 2011. Net Financial Debt ex-Redundancy Program in Spain and adjusted by Post Closing events. Post Closing events include Colombia restructuring and other minority stakes disposals (Hispasat, PT and Zon). TELEFONIC
Slide 23: Further actions to enhance financial flexibility
Further actions to enhance financial flexibility Objectives: Net financial debt / OIBDA < 2.35x Preserve rating Improve liquidity Enhance flexibility Optimise capital allocation Already achieved: €1.6bn Colombia restructuring, Hispasat, non- strategic towers, Zon In progress: ^€1.5bn PT, Rumbo, non-
Slide 24: Concluding remarks: Delivering on our 2012 strategy
Concluding remarks: Delivering on our 2012 strategy TELEFONICA Solid commercial start for 2012 Significant top line improvement Outstanding performance in Latin America Setting the new paradigm in the sector Balanced access to credit markets 2012 outlook reiterated, progressive improvement along the
Slide 25: Notes on organic and underlying growth
Organic growth: In financial terms, it assumes constant average exchange rates as of January- March 2011 and excludes hyperinflation accounting in Venezuela. In addition, the positive impact from the partial reduction of our economic exposure to Portugal Telecom is excluded in OIBDA and OI in Q1 11