Slide 1: Results January-December 2019
RESULTS JANUARY | DECEMBER 2019
Slide 2: Disclaimer
Disclaimer This document and the Q&A session may contain forward-looking statements and information (hereinafter, the “Statements”) relating to the Telefónica Group (hereinafter, the "Company" or "Telefónica") or otherwise. These Statements may include financial forecasts and estimates based on assu
Slide 3: 2019 Highlights
2019 Highlights Mr. José María Álvarez-Pallete Chairman & CEO
Slide 4: 2019 Highlights
2019 Highlights Strong starting position & attractive ... within a changing world that opportunities… requires foresight Key Messages from 2019 • Core markets outperformance (back to OIBDA growth in SP, BRA highest mobile share since 2006, UK: 14 Qs growing in revs., strong trading momentum in GER)
Slide 5: New Telefónica: New Plan/Strategy
New Telefónica New Plan/Strategy Mr. José María Álvarez-Pallete Chairman & CEO
Slide 6: New plan based on key decisions; aiming at long term impact and value creation
New plan based on 5 key decisions; aiming at long term impact and value creation 1 Spain, 2 Operational Brazil, spin-off of Germany the businesses and the UK: in HispAm Key markets • Cutting-edge operators • Units at the forefront of Technology 3 4 Creation • All options open in Hispam Telefónica Te
Slide 7: Sustainable model
Sustainable model TRUST EFFICIENCY GROWTH Sustainability Efficiency Revenues 4
Slide 8: Long-term integrated stakeholder approach
Long-term integrated stakeholder approach Positive contribution in our footprint 0.5% €8.7bn >1.1M GDP Total tax Jobs contributions Make our world more human The most admired telco connecting in Europe & 4th worlwide people’s lives Climate Change Diversity ESG Global ✓ 1st ever green bond Leading ES
Slide 9: Delivering long-term stakeholder value
Delivering long-term stakeholder value Growth; digitalisation; lever for social progress & decarbonisation Avoid • A key enabler for digital & climate transition 3.2m tCO2 • Avoiding 3.2m tCO2 through our P&S: 10 tons of CO2 for every ton by 2025 128m • Inclusive network deployment, including remote
Slide 10: 2019 Highlights
2019 Highlights Mr. José María Álvarez-Pallete Chairman & CEO
Slide 11: Consistent growth profile; strengthening balance sheet
Consistent growth profile; strengthening balance sheet FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 3.5% 3.4% 3.2% Revenues 2.6% 1.3% 2.4% y-o-y org 4.7% 5.3% 3.5% 3.2% 1.9% OIBDA 0.2% y-o-y org 5,912 4,947 4,904 4,378 FCF 3,817 (€ in millions) 3,514 52.2 48.6 44.2 Net 41.1 37.7 financial debt (bn€) Jun-16 D
Slide 12: 2019 global reach and growth
2019 global reach and growth 344m Accesses +3.2% +1.9% +0.1% y-o-y org. y-o-y org. y-o-y org. €15.1bn €7.8bn €48.4bn OIBDA OIBDA- Revenues (€17.0bn CapEx underlying) (ex-spectrum) +20.6% y-o-y €5.9bn FCF 8
Slide 13: 2019 proof points of business sustainability
2019 proof points of business sustainability Enlarging customer lifetime +8% 69% FTTx/Cable UBB/FBB 14.3m accesses +8 p.p. y-o-y 8 years mobile contract 6 years O2 Free +18% 58% LTE LTE penetration 5 years convergent 138.1m accesses +11 p.p. y-o-y 5 years mobile contract 4.3% Churn Improving custome
Slide 14: 2019 guidance achieved
2019 guidance achieved | Above in revenues 2019 guidance (organic) Guidance 2019E FY 19 Revenues Around +2% 3.2% OIBDA Around +2% 1.9% CapEx/Sales Around 15% 15.0% ex-spectrum Sustainable & attractive dividend 2019 DIVIDEND €0.4/SHARE € Interim Dec-19 €0.20/sh. 6.4% 1.15 Dividend Yield* Final Jun-20
Slide 15: FY & Q4 Results
FY & Q4 19 Results Mr. Ángel Vilá COO
Slide 16: 2019 financial highlights
2019 financial highlights +3.2% +1.9% €3,574 Revenues y-o-y org. OIBDA y-o-y org. Underlying €48,422m €15,119m Net Income Exceeding +2% 2019 target Underlying €16,982m EPS Underlying €0.65 €5,912m €37,744m 15.0% FCF Net Debt CapEx/Revenues +20.6% y-o-y -8.1% y-o-y Ex-spectrum 11
Slide 17: Financials in a nutshell
Financials in a nutshell FY 19 Q4 19 Reported Reported Organic Reported Reported Organic € in millions IFRS 16 y-o-y y-o-y IFRS 16 y-o-y y-o-y Revenues 48,422 (0.6%) 3.2% 12,400 (4.0%) 2.0% OIBDA underlying 16,982 4.370 €2.2bn restructuring OIBDA 15,119 (2.9%) 1.9% 3,669 3.8% 4.0% provisions in FY;
Slide 18: Well invested platforms
Well invested platforms 1st Platform & 2nd Platform New models & efficiency levers 128m UBB premises passed, 56m owned Network 24m HP (cable) 5G Sharing Full Stack customers & Last mile 35% 79% LTE Coverage (96% Europe) migrated Wholesale wholesale 4G/3G Better starting point for 5G 69% Digitalised
Slide 19: Becoming 100% Digital while reaping savings
Becoming 100% Digital while reaping savings Exceeding savings path Outstanding execution in 2019 >€1bn -12% y-o-y calls to Contact C. (B2C) >€420m Process Automation +28% y-o-y >€300m Target 340 Digital Sales Online (30% o/savings) Experience operations (40% o/savings) Digital Customer Service FY 18
Slide 20: B2B | A distinctive growth engine
B2B | A distinctive growth engine Scaled-up on superior capabilities Capturing digitalisation value 26% B2B FY y-o-y org. revenue 2019 y-o-y org. revenue % o/total group revs Q4 Total B2B Digital Services Rev. Q4 +3.6% +3.8% +3.4% 44.4% 29.3% 7.2% 17.9% €2.2bn 4.4% 1.9% +26.2% Cloud IoT Security y-o
Slide 21: Spain | Back to FY OIBDA growth
Spain | Back to FY OIBDA growth Growing convergent base and ARPU Increasing value and returns Accesses (Dec y-o-y) (%) Dec-18 Dec-19 23.7% 66% ARPU 89€ 54% 23.1m FTTH (+0.3% y-o-y) premises passed 5.4% 26% 28% (+1.8m in 2019) 3.2% 2.4% Total TV Mobile UBB Fiber o/FBB FTTH Uptake & Wholesale Converge
Slide 22: Germany | Accelerating commercial momentum
Germany | Accelerating commercial momentum Strong operational trends Improving customer loyalty Accesses (m, y-o-y) 2018 2019 y-o-y Q4 18 Q4 19 (0.3 p.p.) +2% +7% +15% 42.8 43.8 22.3 23.7 1.8% 1.5% 1.4 1.7 Total mobile Mobile contract VDSL Mobile contract churn Growing revenues Enhanced network qual
Slide 23: UK | 14th consecutive quarter of top-line growth
UK | 14th consecutive quarter of top-line growth Market leader & favourite network Sector leading loyalty Accesses (m; y-o-y) 2018 2019 y-o-y Q4 FY +6% +6% +8% flat -0.1 p.p. 32.6 34.5 26.5 25.0 7.6 8.2 1.0% 1.0% Total mobile* Retail mobile MVNO & Mobile contract churn Partners Healthy FY growth Str
Slide 24: Brazil | Investing for growth bears fruit
Brazil | Investing for growth bears fruit Strengthened market leadership Growing in most valuable segments Market Share (Dec-19) Accesses (m; y-o-y) 2018 2019 +7% +23% +31% Highest since 2006 39.4% 23.4% 40.4 43.2 1.9 2.5 32.9% 21.6% 0.6 0.7 Mobile Contract FBB FBB>12 Mbps Mobile Contract IPTV FTTH
Slide 25: Hispam | Growth in value; focus on efficiencies
Hispam | Growth in value; focus on efficiencies Hispam South Hispam North Growing in value despite competition Sound commercial performance Accesses (m) Accesses (m) 37.8 +17.2% FTTx/Cable +8.4% FTTx y-o-y 59.6 y-o-y 16.9 13.1 4.3 9.7 4.7 2.2 1.3 0.9 Total Total Contract Fixed FBB Pay TV Contract Fi
Slide 26: Telxius | Sustained growth delivery
Telxius | Sustained growth delivery Revenues OIBDA € in millions CAGR reported € in millions CAGR reported +7.4% 842 504 7.5% 104 792 IFRS 16 370 730 345 FY 17 FY 18 FY 19 FY 17 FY 18 FY 19 Sites Evolution 3rd Party Tenants # # +28% 20,257 +48% 6,563 1,909 15,870 4,443 Dec-16 Dec-19 Dec-16 Dec-19 (T
Slide 27: FY & Q4 Results
FY & Q4 19 Results Ms. Laura Abasolo CFCO
Slide 28: OIBDA & Net income | Non-recurrent factors
OIBDA & Net income | Non-recurrent factors Q4 OIBDA -€701m Q4 Net Income -€1,188m (239) (266) (206) 10 (701) (729) (193) T. Mex (206) (60) (1,188) (operating T. Mex (operating Restructuring Goodwill Capital Gains TOTAL model Restructuring Goodwill Capital Gains TOTAL model transformation; Provisions
Slide 29: FX impact structurally neutralised
FX impact structurally neutralised FX headwinds y-o-y ✓ Revenue (Q4: -3.0 p.p.; FY: -3.5 p.p.) 2019 FX effect ✓ OIBDA (Q4: -1.7 p.p.; FY: -2.9 p.p.) ✓ ARS; major drag in FY FX reduces OpEx FX reduces CapEx, FX increases Taxes & others NDebt 2019 FX impact € in millions Revenues OIBDA FCF Net Debt -€
Slide 30: Deleverage mainly driven by growing organic FCF
Deleverage mainly driven by growing organic FCF Net Financial Debt; 11 Qs in a row of reduction (-€549M in Q4) €m €bn -3,330 ND/OIBDA ND/OIBDA ND/OIBDA 2.62x 2.46x 2.43x 41,074 (5,912) 2,438 840 (1,090) 1,080 37,744 (0.7) 37.0 (686) Dec-18 FCF Hybrids Shareholder Pre-retirement Net financial FX & De
Slide 31: Robust liquidity position and attractive LT financing
Robust liquidity position and attractive LT financing Sources of long-term financing Net Debt maturities 2019 & 2020YTD | €bn Dec-19 | €bn; not considering hybrid NC dates 0.9 10.0 2.2 75% debt 1.8 in fixed rates 2.5 5.2 5.2 1.1 1.5 Cash > gross maturities € Green * USD Bonds € Bonds Hybrids Financi
Slide 32: Active hybrid management increased average life at lower cost
Active hybrid management increased average life at lower cost TEF Hybrids Average Coupon Cost vs. Outstanding Notional Avg. coupon cost 5.75% 4.70% 4.40% reduced by ~200 bps 3.74% or ~€150m in annual payments in 4 years Dec-17 Dec-18 Dec-19 Post 2020 LM and calls Total Hybrids Notional Amount (Year
Slide 33: 2020 & 2022 Guidance
2020 & 2022 Guidance Mr. José María Álvarez-Pallete Chairman & CEO
Slide 34: New Guidance criteria | Consistent with New Telefónica
New Guidance criteria|Consistent with New Telefonica Financial Performance 2019 ex-contribution 2019 (organic) to growth from ARG • Ex-contribution to growth of Argentina, consistent with New Telefonica focus Revenues +3.2% +0.8% • Improves visibility and reliability • 2019 Revenues and OIBDA growth
Slide 35: 2019-2022 Financial Guidance
2019-2022 Financial Guidance Financial Targets (organic ex-contribution to growth from 2019 Guidance 2019-2022E ARG) Revenues €47,875m Revenue growth +2 p.p. by 2022 (OIBDA-CapEx)/ Revenues 19.9% Ex Central America CRYSTALLYZING VALUE Unparalleled business transformation Second to none in future-rea
Slide 36: 2020 Guidance | We will continue to execute
2020 Guidance | We will continue to execute 2020E: Organic ex-contribution to growth from ARG Stable Revenues, OIBDA and (OIBDA-CapEx)/Revenues Ex Central America 2019 Basis for Guidance: Revenues (€47,875m); OIBDA (€16,762m); (OIBDA-CapEx)/Revenues 19.9% 2020 STABLE & SUSTAINABLE DIVIDEND 2020 DIVI
Slide 37: 2019-2022 Financial Guidance
2019-2022 Financial Guidance > €2bn Revenues 2019-2022 Cybersecurity - Automate operations and expand SoC capacity - Reinforce B2B sales, brand and product team - Enter in new P&S categories (i.e. fraud, IoT security) and capture internal business - Activate countries with high opportunity and marke
Slide 38: 2019-2022 Financial Guidance
2019-2022 Financial Guidance +2 p.p. (OIBDA-CapEx)/Revenues by 2022; achieve a new level of simplicity Operational excellence; Streamline corporate center - Refocusing key functions (focus on differential, value-adding activities for other units) - Greater simplicity and efficiency - Synergies & Eco
Slide 39: Conclusion
Conclusion Mr. José María Álvarez-Pallete Chairman & COO
Slide 40: Summary
Summary The New Telefónica; A new model begins to Leveraged on the foundations built deliver long-term value creation during transformation journey Focus on key markets UBB massification Differential value with a sustainable model Towards a 100% UBB based telco Focus on opportunities Digitalisation
Slide 41: Conference Call with Q&A Session
Conference Call with Q&A Session The conference call will be held on February 20 at 10:00 AM CET, 9:00 AM GMT, 4:00 AM ET. TEF Participants: Jose María Alvarez-Pallete (Chairman & CEO), Ángel Vilá (COO), Laura Abasolo (CFCO), Pablo Eguirón (Global Head of IR). Webcast Q&A Session • To be webcasted o
Slide 42: For further information: Investor Relations
For further information: Investor Relations Tel. +34 91 482 87 00 FOLLOW US: ir@telefonica.com www.telefonica.com/investors