Telefonica Sa · BME:TEF

Telefonica Sa — H1 2008 Earnings Presentation

25 slides from Telefonica Sa's earnings presentation, Jul 31, 2008

  1. Slide 1: Quarterly Results January-June 2008

    Quarterly Results January-June 2008 TELEFONICA, S.A. July 31 st, 2008 TELEFONICA S.A. 1 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. These statements appear in a number of places in this doc

  3. Slide 3: H1 08 Results Highlights

    GROUP HIGHLIGHTS H1 08 Results Highlights „ Strong earnings, leveraging execution, unmatched diversification and integrated business model: „ Healthy organic1 growth rates, ramping from revenue to OI „ Solid results in Europe, outperforming competitors in key markets „ Robust growth in Latin America

  4. Slide 4: Robust set of financials in H108, ahead of the pack…

    GROUP FINANCIALS Robust set of financials in H108, ahead of the pack… Jan-Jun Change Change ex-forex(1) Change organic(2) € in millions 2008 H1 08/H1 07 H1 08/H1 07 H1 08/H1 07 Revenues 28,149 +1.2% +3.9% +6.7% Operating Income before D&A 11,123 -1.3% +0.5% +12.0% (OIBDA) OIBDA Margin 39.5% -1.0 p.p

  5. Slide 5: …with a strong underlying bottom line growth…

    GROUP FINANCIALS …with a strong underlying bottom line growth… € in millions (% change y-o-y) +29.0% excluding impacts from assets disposals1 „ € 351 m (T. Europe´s PPA) „ € 87 m (T. O2 CR´s PPA) 11,123 6,602 -1.3% -4,521 -4 (-4.1%) +0.7% (c.s.) -1,388 3,593 (-3.4%) -1,520 -97 (+20.9%) (-14.3%) -6.2

  6. Slide 6: …as we leverage our distinctive portfolio…

    …as we leverage our distinctive portfolio… High diversification across markets & businesses Accesses Jun-08/Jun-07 Bundles: 38% of total accesses (+7 p.p. vs. Jun-07) millions +57.4% +21.4% +9.8% +15.2% +25.1% 2.0 147.9 245.1 +3.9% +19.0% 11.5 43.8 47.0 182.7 43.4 -0.1% T. España T. Europe T. Latam

  7. Slide 7: … translating into a superior organic growth driven by Latin America …

    … translating into a superior organic growth driven by Latin America … Contribution to organic revenue and OIBDA growth by region H1 08 Revenue1 H1 08 OIBDA2 +5.5 p.p. +12.0% +4.3 p.p. +6.7% +2.2 p.p. +1.6 p.p. +4.6 p.p. +0.5 p.p. TEF T. España T. Europe T. Latam TEF T. España T. Europe T. Latam Gro

  8. Slide 8: … with benchmark profitability and high OpCF generation

    … with benchmark profitability and high OpCF generation Organic1 OIBDA Margin +1.8 p.p. 38.2% „ Solid H1 08 OIBDA margins across regions: 36.4% „ T.España: 50.1% „ T. Latam: 36.4% „ T. Europe: 29.0% H1 07 H1 08 H1 08 OpCF (OIBDA-CapEx) (€ in millions) +12.9% Organic1 y-o-y growth rate +7.7% 7,673 +1

  9. Slide 9: We are fully on track to meet 2008 Group guidance…

    GROUP FINANCIALS We are fully on track to meet 2008 Group guidance… Revenue Growth1 OIBDA Growth1 +7.1% +8.7% 9 9 GUIDANCE GUIDANCE 7.5%/11% 6%/8% % Change H1 08/H1 07 % Change H1 08/H1 07 OI Growth1 CapEx1 +17.2% 9 € 3,513 m 9 GUIDANCE 13%/19% GUIDANCE ~ € 8,600 m % Change H1 08/H1 07 H1 08 (1) Gui

  10. Slide 10: … with all our regions delivering 2008 commitments

    GROUP FINANCIALS … with all our regions delivering 2008 commitments T. España 9 T. Latinoamérica +13.2% 9 T. Europe 9 GUIDANCE +6.2% +2.1% 11%/14% GUIDANCE Revenue 4%/7% GUIDANCE Revenue Growth 1 2%/3.5% Growth (1) +15.4% GUIDANCE +6.2% 12%/16% GUIDANCE +4.0% OIBDA 6%/8% Growth1 GUIDANCE 2%/6% % Cha

  11. Slide 11: Telefónica España: Solid results …

    TELEFÓNICA ESPAÑA Telefónica España: Solid results … +2.6% +2.5% +2.7% „ Improved revenue growth in wireline +1.5% +2.0% (+2.2%1 vs. H1 07): Revenue +0.2% growth „ Sustained growth rate in Internet & BB T. ESPAÑA* Wireline* Wireless revenues ≈10% (Q1 08 and Q2 08) „ +1.2% H1 08 y-o-y growth in mobil

  12. Slide 12: …leveraging our integrated management model

    TELEFÓNICA ESPAÑA …leveraging our integrated management model +15.9% OIBDA +9.5% growth (H1 08 y-o-y +2.4% +3.3% change) +1.6% +1.2% „ OIBDA growth ahead of revenue T. ESPAÑA Wireline Wireless growth both in wireline and wireless Excluding Real Estate program, Bad Debt in Q2 08 Recovery, EU Fine and

  13. Slide 13: Wireline Business: Sustained commercial activity fostering 2P & 3P adoption

    TELEFÓNICA ESPAÑA Wireline Business: Sustained commercial activity fostering 2P & 3P adoption 15,919 -249 15, 670 Fixed 272 -1.6% Telephony „ Limited line losses in a growing market: Lines Dec-07 H1 Jun-08 H1 08 (´000) „ +1.9%E y-o-y fixed line market growth TELEFÓNICA FULL ULL NET ADDS „ High quali

  14. Slide 14: Wireless Business: Further customer growth while fostering usage

    TELEFÓNICA ESPAÑA Wireless Business: Further customer growth while fostering usage „ Sound leadership despite new entrants, leveraging +10.4% market leading churn rate: Customer 61.4% of „ 23.2 m mobile customers in a 113% penetration growth +5.1% total market (Jun-08 y-o-y customer base change) „ 3

  15. Slide 15: Telefónica Latinoamérica: Very robust results in a fast growth region

    TELEFÓNICA LATAM Telefónica Latinoamérica: Very robust results in a fast growth region 113.5 „ Strong customer expansion across markets 25.8 and businesses: 5.5 Jun-08 +27.1% +69.3% „ 147.9 m accesses, 21.4% up y-o-y (+18.0% org1) Accesses +26.1% (in millions) +22.3%1 +1.9% 1.4 „ Robust organic5 mob

  16. Slide 16: Wireless business: Strong commercial push & increased usage

    TELEFÓNICA LATAM Wireless business: Strong commercial push & increased usage 40.4 14.1 14.1 „ Double digit customer growth in most markets: Jun-08 +15% 9.8 9.4 9.3 9.7 „ Mobile penetration up 13 p.p. y-o-y to 75% in Jun-08 mobile +34% +38% +12% 6.6 +23% customers +20% +23% +48% „ 14.4 m gross adds i

  17. Slide 17: Wireline business: Transformation to capture the BB opportunity

    TELEFÓNICA LATAM Wireline business: Transformation to capture the BB opportunity 2,297 „ Sound BB accesses growth (+26.1% y-o-y) to 5.5 m 966 Jun-08 680 627 „ Robust bundling offering uptake Retail +26.7% +46.7% +18.4% +18.8% „ Higher BB speeds (Brazil & Chile) and expanded 294 BB accesses coverage

  18. Slide 18: Main operations review

    TELEFÓNICA LATAM Main operations review Telesp y-o-y growth TASA y-o-y growth Revenues (in local currency) OIBDA Margin Revenues (in local currency) OIBDA Margin3 +1.4 p.p. +3.2 p.p. +1.9 p.p. +12.3% +2.1 p.p. +5.4% 39.1% 42.4% +10.4% 35.7% 33.6% +4.0% Q1 08 Q2 08 Q1 08 Q2 08 Q1 08 Q2 08 Q1 08 Q2 08

  19. Slide 19: Strong growth profile in the region capitalizing our unique integrated approach

    TELEFÓNICA LATAM Sum-up: Strong growth profile in the region capitalizing our unique integrated approach Mobile Mobile Total BB & TV Total Mobile H1 08 y-o-y growth service outgoing revenue revenue OIBDA OIBDA (in local currency) revenue service revenue Brazil1 +8.8% +40.6% +14.2%2 +16.5%2 +2.0% +12

  20. Slide 20: Telefónica Europe: Sound results, strong commercial activity

    TELEFÓNICA EUROPE Telefónica Europe: Sound results, strong commercial activity +12.9% +11.8% Revenue „ Total customer base 43.8 m, 9.8% growth y-o-y growth +6.2% „ Mobile net adds in Q2 +44.0% y-o-y (H1 08 y-o-y +2.7% change) +1.1% „ Net adds: total +13.5% vs. H1 07; contract +51.0% vs. H1 07 Ex- fo

  21. Slide 21: O2 UK: Continued healthy customer growth

    TELEFÓNICA EUROPE O2 UK: Continued healthy customer growth 344 „ Contract 38.3% of mobile base (+2.5 p.p. vs. Jun-07) +121% Mobile „ Very strong net adds on contract contract 138 „ Contract churn down to 1.4% in Q2 vs. 1.8% in Q2 07: net adds +81% #1 in the market (´000) „ Mature prepay market: Q2 0

  22. Slide 22: O2 Germany: on track with execution of our turnaround strategy

    TELEFÓNICA EUROPE O2 Germany: on track with execution of our turnaround strategy 1,104 „ Wireless customer growth increased to 17.5% y-o-y reaching 13.6m, leveraging enlarged distribution & H1 08 +107% partners: mobile 498 „ 0.6 m customers added in Q2 (+52.0% y-o-y) net adds +75% „ Partners1 added

  23. Slide 23: Improving leverage, financial cost and maturity profile

    GROUP FINANCIAL EXPENSES AND DEBT Improving leverage, financial cost and maturity profile € in millions H1 08 Net Financial Debt Evolution 2.3x OIBDA1 45,284 +2,993 2.0x +372 OIBDA1 43,973 -3,422 -493 -761 Net Fin. Debt FCF Commitments Share buy-back Net Financial FX, accruals Net Fin. Debt Dec-07 P

  24. Slide 24: Conclusions

    CONCLUSIONS Conclusions „ Strong results, ahead of the pack „ Fully exploiting our differentiated profile (execution, diversification and integrated management) to post robust organic growth: „ Strong results in Latin America, the major growth engine „ Sound delivery in Europe, outperforming competi

  25. Slide 25: TELEFONICA S.A. Investor Relations

    TELEFONICA S.A. Investor Relations 25

Telefónica — H1 2008 Earnings Presentation on 6ix