Telefonica Sa · BME:TEF

Telefonica Sa — FY2009 Earnings Presentation

30 slides from Telefonica Sa's earnings presentation, Feb 26, 2010

  1. Slide 1: Investor Relations February 26th, 2010

    Investor Relations February 26th, 2010 TELEFONICA 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: 2009: Top quality performance in a very challenging environment

    GROUP FINANCIALS 2009: Top quality performance in a very challenging environment STRONG DIVERSIFICATION INTEGRATED MANAGEMENT MODEL Setting the base for future growth: Boost in customer growth DISCIPLINED EXECUTION   Underlying top line recovery in Q4 09  Focused CapEx Best in class efficiency &

  4. Slide 4: Robust set of financials in 2009

    GROUP FINANCIALS Robust set of financials in 2009 Jan-Dec(1) Change(1) Change organic(2) € in millions 2009 FY 09/FY 08 FY 09/FY 08 Revenues 56,731 -2.1% +0.2% Operating Income before D&A 22,603 -1.4% +0.9% Contribution by regions (FY 09) (OIBDA) % Group Revenues OIBDA OIBDA Margin 39.8% +0.3p.p. +0

  5. Slide 5: Further growth in net income and EPS

    GROUP FINANCIALS Further growth in net income and EPS FY 09 € in millions (% change y-o-y) € 630 m derived from negative impacts in Venezuela 22,603  € 591 m goodwill tax -1.4% benefit in 2009 13,647  Recurrent € 140 m/year from 2010 -8,956 -1.6% 47 (-1.0%) (c.s.) -3,307 7,776 (+18.2%) -2,450 -161

  6. Slide 6: Strong commercial momentum, setting the base for future growth

    GROUP FINANCIALS Strong commercial momentum, setting the base for future growth Group Total Net adds (1) (´000) Telefónica Group Accesses (2) (in millions) Like-for-like growth(2) +63.7% vs. 14,443 MBB >15 m +1.9% in 264.6 2008 6,782 202.3 40.6 4,144 +5.1% 2,134 13.5 1,383 2.5 +7.4% -5.4% +8.2% +9.8

  7. Slide 7: Sustained strong cash generation led by improved profitability

    GROUP FINANCIALS Sustained strong cash generation led by improved profitability Telefónica Group Efficiency ratio(2) FY 09 Organic growth(1) (y-o-y) OIBDA margin reported -1.4 p.p. IMPROVED! +8.0% 75.5% +7.8 p.p. 74.1% +0.9% +0.2% 39.8% (+0.3 p.p.) Revenues OIBDA OpCF(3) Dec-08 Dec-09 Efficiency gai

  8. Slide 8: Delivering our year-end targets for 7 years in a row

    GROUP FINANCIALS Delivering our year-end targets for 7 years in a row Revenue Growth(1) OIBDA Growth(1) 2009 GUIDANCE 2009 GUIDANCE +0.3% Revenue growth +1.1% +1%/+3% Change FY 09/FY 08 Change FY 09/FY 08 CapEx(1) OpCF(1) +8.4% 2009 GUIDANCE 2009 GUIDANCE €7,459 m < €7,500 m +8%/+11% FY 09 Change FY

  9. Slide 9: Sustained top-line improvement and strong OpCF

    TELEFÓNICA ESPAÑA Sustained top-line improvement and strong OpCF REVENUE EFFICIENCY (Underlying(1) y-o-y change) OIBDA OIBDA margin T. ESPAÑA -4.5% 48.0% -5.7% -6.2% -5.9% -6.6% -1.1p.p. 45.8% FY 09 Q4 -1.5p.p. FY 09 Q4 T. ESPAÑA -7.5% WIRELINE -2.9% (comparable(2) ; -8.0% -3.7% -3.0% -4.2% -4.0% y-

  10. Slide 10: Intensifying commercial activity, building foundations for 2010

    TELEFÓNICA ESPAÑA WIRELESS Intensifying commercial activity, building foundations for 2010 Wireless contract customers (´000) Mobile traffic (y-o-y change) 15,334 y-o-y change FY 09 Q1 Q2 Q3 Q4 314.8 324.9 141.4 -2.2% +5.3% -105% +60% +194% -3.5% -3.6% -3.8% -14.9 -55% -4.5% Dec-09 Q1 Q2 Q3 Q4 -4.1%

  11. Slide 11: Sustaining wireline leadership with limited BB ARPU erosion

    TELEFÓNICA ESPAÑA WIRELINE Sustaining wireline leadership with limited BB ARPU erosion 2009 Fixed telephony lines losses (‘000) 2009 FBB net adds (´000) 66% of lines lost in 2009 H1 09 H2 09 Market Q1 Q2 Q3 Q4 -78% y-o-y -40% y-o-y offset by share wholesale line ≈56%E net adds 92 -209 -282 45 40 53

  12. Slide 12: Evidence of top line recovery

    TELEFÓNICA ESPAÑA Evidence of top line recovery Q2 09 Q3 09 Q4 09 FY 09 HIGHLIGHTS  Healthy IT revenue growth +4.8% +11.1% +19.5% +14.7%  Robust wireless data connectivity revenues +56.6% +46.9% +55.1% +52.2%  Growth of wireline data revenues +7.1% +12.7% +11.3% +8.7% From  Wireline voice servic

  13. Slide 13: T.Latam: A story of profitable growth

    TELEFÓNICA LATAM T.Latam: A story of profitable growth 29.8% 29.1% 10.1% Financial 8.3%  Healthy organic top line growth: performance 5.3%  Double digit growth in mobile service (FY 09 y-o-y change) 3.7% and Internet & Pay TV revenue  Enhanced profitability on OpEx and € terms Organic(1) Revenues

  14. Slide 14: Wireless business: improving trends in Q4 09

    TELEFÓNICA LATAM Wireless business: improving trends in Q4 09 H2 09: 3.3x H1 09 11.4  Strong commercial momentum: 5.5  Ramp up in net adds along the year Net Adds 3.3 -40%  Q-o-q churn reduction across markets: 2.3% in (in millions) 19% +8% Q4 09 (-0.3 p.p. vs. Q4 08) 1.3 1.4 +2.8 p.p. -32% % YoY

  15. Slide 15: Wireline business: stabilizing revenue drivers

    TELEFÓNICA LATAM Wireline business: stabilizing revenue drivers Accesses (m) Net adds (‘000) 6.4 Latam Q1 09 Q2 09 Q3 09 Q4 09(1) Retail  Recovering BB growth: BB 142 143 147  April-Sept. 09 net adds impacted by y-o-y growth(1) Anatel’s decision in Brazil +6.3% -29% -50% n.s. -23%  Q4 09, the bes

  16. Slide 16: Quality improvements in Telesp starting to pay off

    TELEFÓNICA LATAM Quality improvements in Telesp starting to pay off Q1 09 Q2 09 Q3 09 Q4 09 OIBDA margin (%) 37.6% 40.7% 37.0% 38.0% Stabilization  Stabilizing OIBDA margins sequentially: Quality  Despite transformation initiatives & Anatel more resources on quality claims (y-o-y -51% evolution) -

  17. Slide 17: Sustained performance in most markets

    TELEFÓNICA LATAM Sustained performance in most markets FY 09 Mobile Total Total BB & TV Total Mobile Wireline y-o-y growth service Wireline (in local currency) revenue revenue OIBDA OIBDA OIBDA revenue revenue Brazil(1) +0.9% +7.7%(2) -1.8% +10.3% -3.1% +16.4%(2) -8.9% Argentina +15.3% +18.1% +13.9%

  18. Slide 18: T. Europe: improving revenue trends and increasing profitability

    TELEFÓNICA EUROPE T. Europe: improving revenue trends and increasing profitability in key markets Net additions 2009 accesses (in millions)(1) (y-o-y change) 2.9 +12.4% Mobile  Underlying revenue growth acceleration driven 80% Customer +6.5% by customer growth and stabilization in ARPU growth trend

  19. Slide 19: T. O2 UK: continued outperformance

    TELEFÓNICA EUROPE T. O2 UK: continued outperformance 2009 accesses (y-o-y change) Contract churn Mobile +13.6% 1.3% customer 1.1%  Continued strong market momentum in Q4, growth +5.1% fuelling top line growth:  Mobile contract net adds up 5.6% y-o-y in Q4 09 Contract Total FY 08 FY 09  Market lea

  20. Slide 20: T. O2 Germany: the fastest growing operator in the market

    TELEFÓNICA EUROPE T. O2 Germany: the fastest growing operator in the market Contract mobile net adds 2009 accesses (‘000) (y-o-y change) 260 216 +10.5%  Gaining market share on strong momentum Mobile +9.2% from Q3: customer 139 O2o My Handy 118  Challenger: O2o (tariff), My Handy (hardware) growth

  21. Slide 21: Debt: same quantity, improved quality

    GROUP FINANCIAL EXPENSES AND DEBT Debt: same quantity, improved quality Net Financial Debt Evolution € in millions 1.9x OIBDA(1) 42,733 +2,429 43,551 +5,516 +1,178 +793 -9,097 Net Fin. Debt FCF Commitments Shareholder Net Financial FX, accruals Net Fin. Debt Dec-08 Post- cancellation remuneration In

  22. Slide 22: 2010 priorities and outlook

    GROUP FINANCIALS 2010 priorities and outlook  Reinvesting efficiency 2009 Adjusted(1) 2010 Guidance(1) gains to foster revenue expansion #1 Capturing Revenue 56,407 +1%/+4% top line growth prospects  Higher CapEx to OIBDA 22,344 +1%/+3% support growth in CapEx (€ in millions) 7,262 7,450/7,650 cus

  23. Slide 23: 2010 key priorities by region

    GROUP FINANCIALS 2010 key priorities by region  Maintain a strong commercial momentum (FBB & MBB) and market leadership to capture market recovery T. España  Reinvest efficiency gains in the short term to ensure business growth prospects  Deliver a strong cash-flow generation  Capture growth pot

  24. Slide 24: Sector leading cash returns

    GROUP FINANCIALS Sector leading cash returns Current Dividend Yield: 8.3%(3) 1.75 1.40 1.15 DPS (€) FY 2009 FY 2010E(1) FY 2012(1) minimum target(2)  DPS targets reiterated  Dividend is well covered  No dependence on cash repatriation from any particular country in Latin America  0.6% of capital

  25. Slide 25: We reiterate our selective M&A approach

    GROUP FINANCIALS We reiterate our selective M&A approach M&A Priorities  Spectrum auctions in current markets to foster growth:  Germany & Mexico in H1 2010  Potential awarding process in Spain along 2010  In-market consolidation:  Hansenet acquisition closed on February 16th  Increase shareho

  26. Slide 26: Conclusions

    GROUP FINANCIALS Conclusions  Top quality performance in 2009 in a very challenging environment  Clear priorities and positive outlook for 2010  Lower risk investment case supported by recent events in Venezuela (FX)  Very attractive medium term guidance reiterated  Sector leading cash return.

  27. Slide 27: ANNEX

    ANNEX TELEFONICA S.A. Investor Relations

  28. Slide 28: Impacts on Telefónica Group derived from its investments in Venezuela

    GROUP FINANCIALS Impacts on Telefónica Group derived from its investments in Venezuela € in millions FY 09 Q1 09 Q2 09 Q3 09 Q4 09 Revenues 267 (5) (18) 57 233 OIBDA 64 (20) (18) 16 86 2009 P&L OI (1) (32) (25) (5) 61 Financial Expenses (630) (44) (71) (101) (414) Taxes 83 9 (4) (3) 81 Net Income (5

  29. Slide 29: Impacts from the Venezuelan devaluation

    GROUP FINANCIALS Impacts from the Venezuelan devaluation P&L Impact:  Results and cash flows from Venezuela will be translated at the new devaluated FX (4.3 Venezuelan bolivar fuerte per US dollar) FY 2010 Statement of financial position:  Decrease in the Telefónica Group´s net assets in Venezuela

  30. Slide 30: TELEFONICA S.A. Investor Relations

    TELEFONICA S.A. Investor Relations

Telefónica — FY2009 Earnings Presentation on 6ix