Telefonica Sa · BME:TEF

Telefonica Sa — FY2005 Earnings Presentation

32 slides from Telefonica Sa's earnings presentation, Mar 1, 2006

  1. Slide 1: Quarterly Results January – December 2005

    Quarterly Results January – December 2005 March 1st, 2006 Telefónica, S.A. Investor Relations This presentation is being broadcast live on the Internet

  2. Slide 2: Disclaimer

    Disclaimer This document 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 intent, b

  3. Slide 3: We have a consistent and clear framework to manage our operations

    We have a consistent and clear framework to manage our operations Full Year Results Management Jan – Dec 2005 Focus To generate sustainable top-line growth, REVENUES ahead of our peers To provide the best combination of To achieve operating excellence, OIBDA growth and cash maximizing profitability

  4. Slide 4: FY05 Financial Highlights: Building an Attractive Growth Profile

    FY05 Financial Highlights: Building an Attractive Growth Profile… € in Millions Full Year Results (% change y-o-y) % Change Jan – Dec 2005 Management Jan-Dec Jan-Dec % Change FY05/FY04 Focus 2005 2004 FY05/FY04 Organic (1) Top-line Revenues 37,882.1 30,280.9 +25.1% +9.3% growth Operating Income +9.9

  5. Slide 5: …from top to bottom…

    …from top to bottom… € in Millions (% change y-o-y) Full Year Results +15 p.p. Jan – Dec 2005 +25.0% +30.5% +40.0% 15,276.4 8,558.8 -6,717.7 -128.2 (+18.6%) (+153.9) -1,634.3 (-0.3%) 4,445.8 -1,969.2 -381.2 (+30.2%) (+23.0%) FY05 D&A FY05 Associates Financial Taxes Minorities FY05 OIBDA Operating re

  6. Slide 6: Our revenue growth is underpinned by the strong performance of all our businesses

    Our revenue growth is underpin by the strong performance of all our businesses… Group Organic Revenue Growth (1) Forex Impact on revenues in 2005 Full Year Results 10.1% 9.9% +3.0p.p. +4.7p.p. 9.2% 9.3% Jan – Dec 2005 +1.2p.p. FY04 1Q05 1H05 9M05 FY05 -0.6p.p. 1Q05 1H05 9M05 FY05 -2.4p.p. Organic Re

  7. Slide 7: …based on the expansion of the portfolio of services we are selling

    …based on the expansion of the portfolio of services we are selling for the benefit of total ARPU… Telefónica de España total ARPU Telefónica Latinoamérica total ARPU 1 Full Year Results (€) (€) Jan – Dec 2005 55.5 31 +6% +19% 52.5 26 2004 2005 2004 2005 Telefónica Móviles España total ARPU Telefóni

  8. Slide 8: …and the increase of our client base

    …and the increase of our client base, as we have successfully exploited the industry’s growth levers GROUP FIXED CLIENTS MOBILE COMMUNICATIONS Full Year Results CLIENTS Jan – Dec 2005 (in thousands) 40,859 (in thousands) 37,769 +8.2% 99,124 +33.2% 74,441 24,723 Other 21,434 Other +15.3% Spain 79,234

  9. Slide 9: We have kept a strong hold on costs across the year

    We have kept a strong hold on costs across the year to retain benchmark profitability Group Organic OIBDA Growth (1) Forex Impact on OIBDA in 2005 Full Year Results 9.9% +4.5p.p. Jan – Dec 2005 9.5% +3.0p.p. 6.6% 6.7% +1.4p.p. FY04 1Q05 1H05 9M05 FY05 -0.2p.p. 1Q05 1H05 9M05 FY05 -1.7p.p. Group OIBD

  10. Slide 10: We are generating healthy cash flow while investing for future growth

    We are generating healthy cash flow while investing for future growth Group CapEx 2005 Group CapEx breakdown (€ in Millions) (€ in Millions) Full Year Results 27% Jan – Dec 2005 5,358.7 +25.4%4,725.9 36% 3,767.1 +42.3% GUIDANCE Aprox. 4,600 FY2004 FY2005 FY 2005 5% 32% (guidance Fixed BB & transform

  11. Slide 11: A performance that meets guidance by far, at the Group level

    A performance that meets guidance by far, even after an upgrade, at the Group level… Revenue Growth (1) OIBDA Growth (1) (guidance criteria) (guidance criteria) Full Year Results Jan – Dec 2005 17.2% 9 9 12.3% GUIDANCE GUIDANCE >15% 10% / 13% (Lifted in 3Q05) % Change FY05/FY04 % Change FY05/FY04 OI

  12. Slide 12: …with all our major business lines delivering

    …with all our major business lines delivering Full Year Results TdE Group 9 T. Latinoamérica 9 T. Móviles 37.4% 9 Jan – Dec 2005 6.2% 4.6% GUIDANCE GUIDANCE Revenue 4% / 7% 33% / 36% GUIDANCE Growth (1) >4% (guidance criteria) (Lifted in 3Q05) % Change FY05/FY04 % Change FY05/FY04 % Change FY05/FY04

  13. Slide 13: Telefónica de España Group: In line with Upgraded Revenue Guidance

    Telefónica de España Group: In line with Upgraded Revenue Guidance Defend traditional Drive broadband Lead IT & Data business growth opportunities Full Year Results Jan – Dec 2005 Traditional Services Internet & Broadband Services IT & Data Services (€ in Millions) (€ in Millions) (€ in Millions) -0

  14. Slide 14: …and at top end of OIBDA guidance despite commercial effort

    … and at top end of OIBDA guidance despite commercial effort TdE Group OpEx Breakdown (€ in Millions) TdE Group OIBDA Margin Full Year Results Annual growth rate +6.4% +5.0% +9.3% Jan – Dec 2005 196.0 7,213.7 +8.7% 1,289.9 -0.8p.p. 3,032.0 -0.1p.p. +46.5% -0.8% +45.7% 2,695.8 +40.7% +40.6% +1.3% Rem

  15. Slide 15: Telefónica de España Parent: Traditional Services

    Telefónica de España Parent: Traditional Services Accesses Evolution Pre-selected Lines Net Adds (in thousands) (in thousands) FY2005 Full Year Results 100.4 -94.9 Jan – Dec 2005 Fixed Telephony 199.2 Access net losses Full ULL net 77.3 adds 51.9 83.2 23.9 2Q04 3Q04 2Q05 3.8 4Q05 Shared ULL net 241.

  16. Slide 16: Telefónica de España: Strong Growth of Internet BB While Recovering Market Share

    Telefónica de España: Strong Growth of Internet BB While Recovering Market Share Retail Internet BB Market Share (1) „ Spanish market reaches some 5 Million Internet BB accesses Full Year Results Jan – Dec 2005 55% 55% „ 4Q05 +0.5 Mill. IBB accesses: HIGHEST GROWTH EVER during a quarter in Spain „ T

  17. Slide 17: Český Telecom: Managing a rapid turn-around since takeover

    Český Telecom: Managing a rapid turn-around since takeover FIXED MOBILE Full Year Results Fully developing Regaining leadership Jan – Dec 2005 broadband BB Net Adds 111,000 Mobile Net Adds 256,000 x1.8 x9.8 62,000 26,000 1H05 2H05 1H05 2H05 Growing ADSL market share #1 position by market to a stable

  18. Slide 18: Telefónica Latinoamérica: Growing Solidly across Regions

    Telefónica Latinoamérica: Growing Solidly across Regions... Revenues Revenue Growth Rate (€ in Millions) (% annual change, ex-Terra) Full Year Results +20.8% 17.1% 20.8% Jan – Dec 2005 y-o-y growth rate 2005 target(1) +6.2% +4%/+7% 8,154.5 Terra adds 111.0 M€ 12.5% 7,167.0 to total revenues +987.5 6

  19. Slide 19: By Leveraging on Both Traditional and Broadband Services

    ...By Leveraging on Both Traditional and Broadband Services... 2005 total accesses (in Millions) 2005 retail BB net adds Full Year Results +7.0% Jan – Dec 2005 Total 26.3 28.2 223,753 0.4 +18.8% 0.5 201,770 1.4 2.6 184,593 3.0 +86.4% 3.2 +7.5% Pay TV 116,496 Broadband Narrowband 21.3 +1.5% 21.6 Fixe

  20. Slide 20: While Keeping Profitability High

    ...While Keeping Profitability High in Our Way to Reinforce our Market Positions Adjusted OIBDA (1) Group OIBDA margin (€ in Millions) Full Year Results +1.7p.p. Jan – Dec 2005 +23.3% y-o-y growth rate -3.3p.p. 2005 target(1) +8.1% +6%/+9% 48.8% 3,625.1 45.5% 44.2% 3,180.1 +445.1 42.5% FY05 Forex FY

  21. Slide 21: An Active Management of Liabilities to Limit the Impact of Higher Gearing

    An Active Management of Liabilities to Limit the Impact of Higher Gearing FY05 FY04 Full Year Results Jan – Dec 2005 Net Interest Expenses (1,796.3) (1,462.1) 22.9% FX Results 162.0 (177.0) Reported Financial Expenses (1,634.3) (1,639.1) -0.3% „ Higher net interest expenses due to higher total debt

  22. Slide 22: Cash Flow & Debt Reconciliation

    Cash Flow & Debt Reconciliation 1.8x 3.0x Debt evolution in 2005 OIBDA (1) OIBDA (2) (€ in Millions) E 25 Bn. E 55 Bn. Full Year Results Jan – Dec 2005 2,471.9 28,802.2 1,264.8 30,067.0 4,575.1 23,694.4 4,476.1 692.8 7,108.1 Net Fin. Debt FCF Commitments TSA Net Financial Changes in Net Fin. Debt O2

  23. Slide 23: Share Buyback Program Progress Report

    Share Buyback Program Progress Report „ 2.8% of capital held in treasury Evolution of Shares in Treasury Full Year Results (in Millions) „ An additional 39 million shares currently Jan – Dec 2005 in call options, expiring in 2006 29.7 252.1 246.1 136.6 87.4 23.6 Treasury stock Acquisition Distributi

  24. Slide 24: O2: an ambitious integration/alignment process

    O2: an ambitious integration/alignment process that is running at full speed… A clear set of targets to be Executive Full Year Results achieved before the end of May Committee Jan – Dec 2005 Progress Report „ Aligning O2’s functional each fortnight processes with Telefónica’s Office of Integration o

  25. Slide 25: …with all teams working on 2006 synergies

    …with all teams working on 2006 synergies, with a primary focus on “Quick Wins” Functional Alignment of Identified & Initiatives processes/ Full Year Results „ Organisational alignment sharing of best practice Jan – Dec 2005 quantified at systems acquisition „ Devices date „ Infrastructure-Vendor ma

  26. Slide 26: We are expanding Český Telecom expected synergies

    We are expanding Český Telecom expected synergies by additionally integrating fixed and mobile within the O2 Group Full Year Results „ PRODUCT DEVELOPMENT, MARKETING AND R&D Jan – Dec 2005 IPTV, UMTS, IP based VAS, content, integrated solutions Extract full „ PROCUREMENT synergies from Substantial O

  27. Slide 27: An attractive Group guidance for 2006

    An attractive Group guidance for 2006… Group Revenues Group OIBDA (€ in Millions) (€ in Millions) +34% / +37% +26% / +29% Full Year Results 15,276.4 15,006.7 Jan – Dec 2005 37,882.1 37,313.9 14,785.8 FY2005 FY 2005 (TPI as FY2006 FY2005 FY2005 (adjusted FY2005 (adjusted FY2006 (reported) for guidanc

  28. Slide 28: …both for our long-established fixed & mobile businesses

    …both for our long-established fixed & mobile businesses… TdE Group T. Latinoamérica T. Móviles Group (includes 12 months of Terra Spain) (includes 12 months of Terra Latam) Full Year Results Jan – Dec 2005 0.5% / 2% 4.0% / 6.0% 9.0% / 12.0% Revenue 11,755.4 8,352.1 16,513.5 Growth (€ in Millions) F

  29. Slide 29: …as well as for our newly managed O2 division

    …as well as for our newly managed O2 division Český Telecom O2 Group O2 UK Service Revenue Growth OIBDA Margin Full Year Results Jan – Dec 2005 (€ in Millions) (%) We expect to stop the decline of 6.0% / 9.0% 4,965 revenues and OIBDA in 2006 and 29.3% Stable reach the same level as in 2005 FY2005 FY

  30. Slide 30: A view on Telefónica's 2005 key pro-forma metrics

    A view on Telefónica’s 2005 key pro-forma metrics Full Year Results Group Revenues Group OIBDA Jan – Dec 2005 (€ in Millions) (€ in Millions) 9,716.0 48,045.9 37,313.9 1,015.9 2,633.1 18,146.8 17,894.7 15,056.4 -252.1 457.3 FY2005 1H05 Český O2 FY2005 Adjustments FY2005 pro- FY2005 1H05 Český O2 FY2

  31. Slide 31: Conclusions

    Conclusions „ Our management of operations, centred on top-line growth, efficiency, and cash generation is proving to be successful across the Full Year Results Jan – Dec 2005 P&L, with Net Income increasing by 40% „ We have kept organic growth at unparalleled levels, backed by the strong performanc

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Telefónica — FY2005 Earnings Presentation on 6ix