Telefonica Sa · BME:TEF
Telefonica Sa — European Investor Conference (December 2003)
17 slides from Telefonica Sa's conference presentation, Dec 4, 2003
Slide 1: European Investor Conference
European Investor Conference Santiago Fernández Valbuena CFO Telefónica Group December 4th, 2003
Slide 2: Safe harbor
Safe harbor "This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the int
Slide 3: Since early 2002, we have successfully managed the company through a tough environment
Since early 2002, we have successfully managed the company through a tough environment... I Strengthened position in our core markets to capture customer growth • In Spanish wireline, we are managing top-line pressure and over- performing on cash generation • Our Spanish wireless operation is perfor
Slide 4: Telefónica de España Group: Managing top line pressure and outperforming on cash generation
Telefónica de España Group: Managing top line pressure and outperforming on cash generation 2003 target OPERATING REVENUES 2003 target EBITDA range (€ in Million) range (€ in Million) 0.0% -0.5% 0.0% -0.7% +0.0% -1.6% -1.9% -1.3% -1.2% -1.0% -1.5% -2.0% 2,538.4 1,132.3 1,105.9 2,486.5 1,109.4 2,568.
Slide 5: Telefónica Móviles España: high operating standards providing growth and profitability
Telefónica Móviles España: high operating standards are providing for growth and profitability CONSISTENT MOU GROWTH REVERSING ARPU TREND 10.6% +4.3% 10.3% +2.2% 10.1% -0.3% 9.6% -4.7% -5.3% -6.6% 1Q03/1Q02 2Q03/2Q02 3Q03/3Q02 9M03/9M02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 ACCELERATING SERVICE REVENUES A S
Slide 6: Telefónica Latinoamérica: organic growth and cash flow generation
Telefónica Latinoamérica: organic growth and cash flow generation... REVENUE GROWTH (Ex-Fx) 2003 target EBITDA GROWTH (Ex-Fx) 2003 target range range 9% 2003 8% 8.4% 9.1% 6.8% 7.0% 6% 2003 8.0% 7% 7.0% 2002 2.8% 2002 3.1% -1.4% 0.7% 0.6% -3.4% -5.1% -0.4% 1Q 1H 9M FY 1Q 1H 9M FY CASH FLOW BREAKDOWN
Slide 7: ...while actively addressing Latin American risk
...while actively addressing Latin American risk DEBT REDUCTION DUE TO FX SINCE 2001 3.6 bn Managing debt exposure 1.7 bn 1.9 bn A balanced mix of currencies (€, $US, Latam) Total Debt in Debt savings Latam currencies in USD TOTAL REPATRIATED FUNDS (M USD) Accessing Cash Flow 1,458 Flexible instrume
Slide 8: Improving Opex efficiency and sustaining CapEx rationalization across business lines
We remain focus on improving Opex efficiency and sustaining CapEx rationalization across business lines Adj. revenues WIDENING THE GAP BETWEEN COSTS AND growth rate * Adj. Costs REVENUES GROWTH RATES (y-o-y) growth rate * 2.6p.p. 5.2% 3.9p.p. 5.5% 4.8p.p. 4.9% A leaner Cost Structure 2.3% 1.3% 0.7%
Slide 9: This active management of operations is leading...
This active management of operations is leading... +28.3% +12.2% +21% +8% +9% +5.5% +18% ...to beat 2003 guidance +5% +6% (y-o-y real annual growth rates*) 9M03 Revenues* 9M03 EBITDA* 9M03 EBIT* 2003 year-end target * 51% 51% +8% 6,937.2 44% 44% ...to drive strong CF generation 6,425.2 (9M03 EBITDA-
Slide 10: Looking ahead, a clear strategy to grow cash flows and improve returns
Looking ahead, we have a clear strategy to grow cash flows and improve returns... Objectives Sustainable cash Improved returns flow growth on capital Lines of Customer orientation action Growth Transformation IV V I II III Leaner, more Commercial LatAm efficient Broadband Wireless oriented Wireline
Slide 11: ...On which we based our ambitious but achievable financial projections
...On which we based our ambitious but achievable financial projections... REVENUES EBITDA EBIT €m €m €m CAGR* CAGR* 7-10% 9-12% CAGR* 20-23% 28,411 11,724 5,032 2002 2003E 2006E 2002 2003E 2006E 2002 2003E 2006E * Constant exchange rates as of 2002 * Constant exchange rates as of 2002 * Constant ex
Slide 12: ...and strong Cash Flow generation for the period
...and strong Cash Flow generation for the period • Client focus & commercial excellence FREE CASH FLOW GENERATION to drive top line growth 2003-2006 ** (€ Bn., 2002 constant exchange rates) OPERATING • Build-up of a cost FREE CASH FLOW* efficient model • Optimizing Capex for >39 7 lower capital int
Slide 13: Our Rationale For 2003-2006 Cash-flows Distribution
Our Rationale For 2003-2006 Cash-flows Distribution TWO BASIC PRINCIPLES... ...TO ACHIEVE OUR FOUR PRIORITIES TO FULLY 1. SHAREHOLDER REMUNERATION DELIVER ON OUR FIRM 2. SOLVENCY PROTECTION FOR A COMMITMENTS “SINGLE A” RATING ON-GOING RECIRCULATION TO KEEP STRATEGIC 3. BUSINESS LONG TERM EXPANSION F
Slide 14: Our Approach To The Destination Of 03-06 Cash-flows (I)
Our Approach To The Destination Of 03-06 Cash-flows (I) WE HAVE FIRM COMMITMENTS IN EXCESS OF € 19 Bn SOLVENCY SHAREHOLDER PROTECTION FOR REMUNERATION SINGLE A RATING * ≅ 11.4 Bn.€ ≅ 7.9 Bn.€ • Cash dividends. • We have cash commitments for 7.9 Billion€: • Share buy-backs. 9Gross NPV 98 Redundancy P
Slide 15: Our Approach To The Destination Of 03-06 Cash-flows (II)
Our Approach To The Destination Of 03-06 Cash-flows (II) KEEPING STRATEGIC FLEXIBILITY ABOVE 7.5 Bn.€ TO ACCOMMODATE SELECTIVE BUSINESS FINANCIAL FLEXIBILITY COULD AND EXPANSION BASED ON PROVIDE ROOM FOR eg: • Complementarity to core businesses. • A 50% value loss of Latam currencies • Target select
Slide 16: In summary, execution of Growth and Transformation
In summary, execution of Growth and Transformation to offer a unique combination in the Telco industry... STRONG AND LONG-TERM SHAREHOLDER REMUNERATION Sustainable FREE cash flow >11.4 bn Euros 03-06, close to 21% current market cap dividend yield of 3.6% + 7.4% share buy back at current prices* gen
Slide 17: Slide 17
Telefónica — European Investor Conference (December 2003) on 6ix