Telefonica Sa · BME:TEF

Telefonica Sa — Q1 2006 Earnings Presentation

23 slides from Telefonica Sa's earnings presentation, May 12, 2006

  1. Slide 1: Quarterly Results January – March 2006

    Quarterly Results January – March 2006 May 12th, 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 Quarterly Results number of places in this document and include statements regar

  3. Slide 3: 1Q06 financial highlights: an attractive growth profile

    1Q06 financial highlights: an attractive growth profile… € in Millions Quarterly Results (% change y-o-y) % Change % Change January – March 2006 Jan-March Jan-March % Change 1Q06/1Q05 1Q06/1Q05 2006 2005 1Q06/1Q05 ex-forex 1 Organic 2 Revenues 12,036.4 8,278.8 +45.4% +36.4% +8.9% Operating Income be

  4. Slide 4: …from top to bottom

    …from top to bottom € in Millions (% change y-o-y) +2.3 p.p. Quarterly Results January – March 2006 +37.3% +34.2% +39.6% 4,686.7 2,534.1 -2,152.7 21.8 (+41.0%) (c.s.) -523.7 (+64.8%) 1,273.5 -666.2 -92.4 (+14.9%) (+33.0%) 1Q06 D&A 1Q06 Associates Financial Taxes Minorities 1Q06 OIBDA Operating resul

  5. Slide 5: The new dimension of Telefónica gives birth to a much more diversified group

    The new dimension of Telefónica gives birth to a much more diversified group… OIBDA 1Q05 OIBDA 1Q06 Quarterly Results January – March 2006 Others Others 1% Convergent 5% 5% Mobile 39% Fixed Business 48% Diversification Fixed Mobile 60% 42% OIBDA 1Q05 OIBDA 1Q06 Europe ROW ROW 3% 1% 3% Europe 17% Lat

  6. Slide 6: …to consistently deliver sound organic revenue and OIBDA growth

    …to consistently deliver sound organic revenue and OIBDA growth Contribution to organic +1.2 p.p. +8.9% Quarterly Results revenue growth January – March 2006 +2.1 p.p. +3.8 p.p. +1.0 p.p. +0.8 p.p. TdE T. Latam Group Group TEM T. O2 Others & Total Group Europe Eliminations The value of being Contrib

  7. Slide 7: A continuous effort on cost contention

    A continuous effort on cost contention OpEx1 Organic Growth 1Q06 Organic OpEx breakdown Quarterly Results 2/3 of Opex Growth +2.2p.p. +11.9% January – March 2006 +52.0% +15.5% nominal +14.0% +4.5 p.p. +12.2% +3.7 p.p. +11.9% +1.0 p.p. +0.5 p.p. 1H05 9M05 FY05 1Q06 TdE T. Latam TEM T. O2 Others & Tot

  8. Slide 8: Solid cash flow generation across all businesses

    Solid cash flow generation across all businesses 1Q06 CapEx Evolution 1Q06 CapEx breakdown (€ in Million) (€ in Million) +76.4% -16.0% +76.4% (2) Quarterly Results January – March 2006 +2.1% 1,307.2 1,307.2 -5.4% 405.6 1,222.0 1,247.5 +36.5% 293.2 +25.5% 173.9 741.1 314.6 1Q05 1Q05 1Q06 1Q06 organic

  9. Slide 9: 1Q06 performance is in-line with year-end targets

    1Q06 performance is in-line with year-end targets Group Revenues 2006 target (€ in Millions) +34%/+37% +36.4% Quarterly Results 12,036.4 January – March 2006 8,278.8 8,214,0 11,201.4 -835.0 -64.8 1Q05 Adjustments 1Q05 1Q06 Adjustments 1Q06 reported for guidance adjusted reported for guidance adjuste

  10. Slide 10: Telefónica de España Group: sound revenues and OIBDA growth

    Telefónica de España Group: sound revenues and OIBDA growth… Contribution to Telefónica de España Group y-o-y growth Revenue Growth +3.6% 2006 target Quarterly Results January – March 2006 +3.4p.p. -0.1p.p +3.3% +0.5%/+2% +4.2p.p. +0.2p.p. +0.7p.p. -0.4p.p. -1.2p.p. Traditional Traditional Internet

  11. Slide 11: …in a scenario where the pressure on the traditional business…

    …in a scenario where the pressure on the traditional business… Accesses Evolution Pre-selected Lines Net Adds Quarterly Results (in thousands) 1Q06 (in thousands) January – March 2006 Fixed Telephony Access net losses 27.1 23.9 Full ULL net adds 70.6 3.8 2Q05 4Q05 1Q06 1Q05 3Q05 Shared ULL net adds

  12. Slide 12: …is being offset by the drive to develop broadband penetration

    …is being offset by the drive to develop broadband penetration Quarterly Results „ Spanish market reaches 5.5 Million Internet BB accesses January – March 2006 „ +1.0 Mill. IBB accesses during last 6 months: one of HIGHEST GROWTH RATES IN EUROPE „ Effort by Telefónica de España is driving BB penetra

  13. Slide 13: Telefónica Latinoamérica: positive top-line performance in all countries

    Telefónica Latinoamérica: combining a positive top-line performance in all countries… 1Q06 Revenues 1Q06 contribution to revenue growth by company (€ in Millions) (in €, constant currency) Quarterly Results +0.3 p.p. +6.1% +0.4 p.p. January – March 2006 +6.1% 2006 target(*) +0.4 p.p. +4%/+6% +0.9 p.

  14. Slide 14: …with broadband becoming a distinctive catalyst for growth

    …with broadband becoming a distinctive catalyst for growth… Retail Internet BB Connections 2,359 Broadband revenue growth +53.4% (Thousands) 1Q05 (1Q06/1Q05, local currency) Quarterly Results January – March 2006 1Q06 49.5% 1,537.5 +47.5% 1,307 44.7% 40.5% 39.9% 886 +68.4% +53.0% +64.1% 37.0% 345 36

  15. Slide 15: …with a focus on efficiency through local and regional management

    …with a focus on efficiency through local and regional management Evolution of revenues & costs 1 Adjusted OIBDA 2 Quarterly Results (Local currency, 1Q06/1Q05) (€ in Millions) January – March 2006 +27.4% 2006 target(2) y-o-y growth +3.9% rate +3%/+5% +6.1% 994.2 +6.0% 810.7 +183.5 1Q06 Forex 1Q06 R

  16. Slide 16: O2 UK: revenue growth underpinned by solid operating metrics

    O2 UK: revenue growth underpinned by solid operating metrics Evolution of client base Quarterly Results (in thousands) January – March 2006 16,340 14,384 +13.6% ƒ 359,000 net new customers in 1Q06, 51% on contract Service Revenues +12.5% 10.654 (£ in Millions) 9.472 ƒ +29% in total gross adds y-o-y

  17. Slide 17: O2 Germany: top quality client growth in an increasingly competitive environment

    O2 Germany: top quality client growth in an increasingly competitive environment Evolution of client base Quarterly Results (in thousands) January – March 2006 10,099 7,976 +26.6% ƒ 330,000 net new customers in 4,987 1Q06 Service Revenues 3,620 +37.8% (€ in Millions) 730 ƒ 51% of total base on contr

  18. Slide 18: Cesky Telecom: a focus on broadband and mobile to grow top-line

    Cesky Telecom: a focus on broadband and mobile to grow top-line % Change € in Millions Jan-March Jan-March % Change 1Q06/1Q05 (% change y-o-y) 2005 2006 1Q06/1Q05 Organic 1 Quarterly Results January – March 2006 Revenues 490 515 +5.0% +0.1% OIBDA 237 252 +5.9% +0.9% OIBDA Margin 48.5% 48.9% +0.4 p.p

  19. Slide 19: Progressing with O2 integration as planned

    Progressing with O2 integration as planned, with key business initiatives already in execution mode Alignment of „ Centralization of cash pooling Functional Quarterly Results Initiatives processes & „ Single Brussels Office „ Full agreement on brands for O2’s markets January – March 2006 systems „ J

  20. Slide 20: Actively managing liabilities to limit the impact of higher gearing

    Actively managing liabilities to limit the impact of higher gearing Quarterly Results 1Q06 1Q05 January – March 2006 Net Interest Expenses (519.0) (380.5) +36.4% FX Results (4.7) 62.8 Reported Financial Expenses (523.7) (317.7) +64.8% Average Total Net Debt Evolution of Average Effective (€ in Milli

  21. Slide 21: Cash Flow & Debt Reconciliation

    Cash Flow & Debt Reconciliation Net Financial Debt Evolution in 1Q06 (€ in Millions) 1.9x 2.8x Quarterly Results OIBDA 1 OIBDA 2 January – March 2006 1,063.8 53,509.9 22,855.7 62% of FCF post minorities devoted to dividends and 30,067.0 1,126.3 211.1 share buyback 1,814.1 Net Fin. FCF Commitments TS

  22. Slide 22: Conclusions

    Conclusions „ We are posting a solid financial performance across the P&L, with organic top-line growth remaining robust in the high single digit Quarterly Results January – March 2006 range „ Our 1Q06 key financial metrics fall comfortably within year-end guidance for all our businesses „ We have b

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