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Telefónica's Profile Presentation

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Telefónica’s Profile
Telefónica, S.A. November 2009
2
Telefónica, S.A.
... that has consistently shown strong growth,
which has accelerated in the last years ...
... which is reflected in its track record of solid financial
results …
... consolidating its outstanding position in the global
enterprise rankings
Telefónica has a rich heritage spanning 85 years...
Telefónica is today one of the world’s leading companies
3
Telefónica, S.A.
Telefónica has a history of 85 years of innovation and
transformation …
CTNE set up in 1924, as
the Spanish subsidiary of
ITT, an American
corporation
Spanish government
takes 79.6% of CTNE shares,
owned by ITT (1945)
CTNE was the top Spanish
enterprise in 1960 (100,000
shareholders, 32,000
employees)
1924 - 1965
Satellite communications
were initiated (1967)
Telefónica began
operating the first European
Data Transmission Special
Network. (1971)
The 10 millionth phone
was installed (1978)
Telefónica began trading
on the New York Stock
Exchange (1987)
1965 – 1990
Veronica's tender offers:
Telefónica de Argentina,
Telefónica del Perú, Telesp
and Tele Sudeste in Brazil
(2000)
New strategic focus on
profitable growth (2002)
Joint venture of
Telefónica and Portugal
Telecom in Brazil: Vivo
(2003)
Internet boom. Infovía
was launched (1995)
First partial sale of
Spanish government’s stake
(1995)
New corporate identity
(1998)
Telefónica won the tender
to acquire Telesp (1998)
Telefónica becomes fully
public again (1999)
Fixed Broadband service is
launched. ADSL (1999)
MoviLine launched in
1990, the analogue mobile
service. Coverage of 98% in
three years.
Acquires stake and
control of CTC and Entel, in
Chile, and the Argentinian
operator (1990)
Participation in trans-
European networks
(Hispasat)
Began operations in Perú
(1994)
Launch of digital mobile
telephony: Movistar (1994)
2005-092000 - 20051995 - 20001990 - 1995
Strategic alliance with China Unicom, with a
mutual investment agreement: Telefónica
increases its stake in China Unicom up to 8.37%
while China Unicom takes 0.88% of Telefónica
capital
Stake in Telefónica CTC Chile increased to
97.89%
5.38% participation in China Unicom
after merger with China Netcom
Industrial alliance with Telecom Italia
(indirect participation of 10.49% of the
voting rights)
Acquisition of 53,9% the voting shares
and 4,27% of preference shares of Telemig
in Brazil
5% stake taken in China Netcom
Acquisition of Cesky Telecom
Global launch of the new Movistar brand
and identity
Acquisition of O2 assets in the UK,
Germany and Ireland
51% stake taken in Colombia Telecom
Mobile license awarded in Slovakia
20092007-20082005 -2006
4
Telefónica, S.A.
About 71,000
professionals
About 257,000
professionals
Staff
Services
Finances
Revenues: 4,273 M€
EPS(1): 0.45 €
Integrated ICT
solutions for all
customer segments
Clients About 12 million
subscribers
About 260
million
customers
Basic telephone
and data services
1989
Spain
Operations in
25 countries
Geographies
Revenues: 57,946 M€
EPS: 1.63 €
2000 2008
About 149,000
professionals
About 68 million
customers
Wireline and mobile voice,
data and Internet services
(1) EPS: Earnings per share
Revenues: 28,485 M€
EPS(1): 0.67 €
Operations in
16 countries
… which have granted to it a consistent growth at an
accelerated rate since the beginning of the 21st century
5
Telefónica, S.A.
Revenues (2008): € 57.9 bn
(+2.7% vs 2007)
Adjusted Net Income (2008): € 7.6 bn
(+38.0% vs 2007)(4)
Among the 40largest
companies in the world by
market cap
Among the 100 largest
companies in the world by
revenues
International integrated Telco
operator by customer base
1st
European Telco operator
by market capitalisation
1st
258.9 million accesses (as of Dic ‘08)
• 93.2 million in Europe
• 158.3 million in Latin America
• 7.4 million in other markets
So, Telefónica is now a benchmark for the global Telco
sector …
(1) Plus Morocco
(2) Plus U.S.A. and Puerto Rico
(3) China, Italy and Portugal
(4) Net Income in 2008 before adjustments (without stripping out the impact of capital gains in
2007 and Telco impairment) decreased -14.8% vs. 2007
Operations in 25 countries
• 6 in Europe(1)
• 13 in Latin America(2)
• 3 through strategic and industrial alliances(3)
About 257,000 professionals
• 31.9% in Europe
• 67.3% in Latin America
• 0.8% in others countries
Telco in Dow Jones
Sustainability Index
1st
6
Telefónica, S.A.
Wireline Data &
Internet 5.6%
Wireline 15.4%
Pay TV 0.9%Wholesale 1.4%
Mobile 76.7%
* Total of America Movil + Telmex + Telmex international
Total accesses (as reported by companies) =
Fixed lines + Mobile subscribers + Narrow and Broad Band Internet + Pay TV.
Total accesses worldwide Top 10
… as it enjoys an unique diversified portfolio among the
largest operators worldwide
Million accesses as of September ‘09
DIVERSIFICATION PROFILE 9M09
T-Spain
35.1%
T-Latam
39.8%
T-Europe
24.1%
Others &
Eliminations 1.0%
T-Latam
39.9%
T-Europe
17.3%
T-Spain
43.5%
Others &
Eliminations -0.7%
Accesses by Businesses
OIBDARevenues
Accesses by Regions
Others
3.4%
T-Latam
60.9% T-Europe
18.1%
>85% OpCF*
from “Investment Grade” countries
* OpCF: OIBDA-CapEx. Investment Grade Countries in foreign currency by Standard & Poor´s FY2008
T-Spain
17.6%
143.9
153.5
189.1
216.8
239.9
268.6
287.4
292.6
328.4
508.4China Mobile
Vodafone
China Telecom
China Unicom
Telefónica
AMX+Telmex+TII*
Deutsche
Telekom
France Telecom
at&t
TeliaSonera
7
Telefónica, S.A.
Telefónica is a leader in the Latin American Telco market …
Argentina: 21.4 million
Brazil: 64.2 million
Central America: 6.1 million
Colombia: 11.5 million
Chile: 10.4 million
Ecuador: 3.5 million
Mexico: 16.8 million
Peru: 15.7 million
Uruguay: 1.6 million
Venezuela: 11.9 million
Wireline market rank
Mobile market rank
21
12
21
11
2
2
11
1
2
2
Notes:
- Central America includes Guatemala, Panama, El Salvador and Nicaragua
- Total accesses figure includes Narrowband Internet accesses of Terra Brasil and Terra Colombia, and Broadband
Internet accesses of Terra Brasil, Telefónica de Argentina, Terra Guatemala and Terra México.
Data as of September ‘09
Total Accesses (as of Sep ‘09)
163.7 million
8
Telefónica, S.A.
... enjoys a significant footprint in Europe …
Spain: 47.3 million
UK: 21.5 million
Germany: 17.0 million
Ireland: 1.7 million
Czech Republic: 7.8 million
Slovakia: 0.5 million
Total Accesses (as of Sep ‘09)
95.9 million
1
21
11
4
2
Wireline market rank
Mobile market rank
3
Data as of September ‘09
9
Telefónica, S.A.
… and it is widening its horizons for growth through
strategic, industrial and business alliances
Strategic & Industrial alliances
Business alliances
•Largest Telecom alliance in Europe, with ~17%
market share(1)
•Combined presence in 8 European countries
•Combined accesses in Europe as of September ‘09
(millions of customers):
•Telefónica ………………………………………. 95.9
•Telecom Italia ………………………………… 65.6
•Total industrial alliance …………… 161.5
(1) Market share in Europe as of Dec ‘08 market size (IDATE)
•The largest worldwide strategic alliance in the industry.
Combined accesses up to 556 million (September ‘09),
which is about 10% of world’s population
•2nd integrated operator in China with a countrywide 3G
licence (European standard)
•Mutual investment agreement
•Telefónica: from 5.38% to 8.37% in China Unicom
•China Unicom: 0.88% in Telefónica
•Joint cooperation in different areas such as service
provisioning, equipment & devices acquisition, R&D+i,
sharing of best practices…
10
Telefónica, S.A.
So, Telefónica’s profitable growth potential is second to
none among its peers …
FCF / Revenues (FY2008)
Source: Bank of America Merrill Lynch. For Telefónica, internal data. FCF for Telefónica reflects the amount of cash-flow available to remunerate Telefónica’s shareholders, to protect
solvency levels (financial debt and commitments) and to accommodate strategic flexibility.
Source: Morgan Stanley based on
public company filings.
%OIBDAmarginH109
% Organic Revenue growth H1 09
15.8%14.6%13.5%13.1%
10.8%10.7%10.5%10.1%
TI DT at&t AMX VZ VOD FT TEF
11
Telefónica, S.A.
… which it is been preserved even through the current
global economic turmoil
9M09 Results (Million €) % Organic Change vs 9M08
Revenues 41,721 +0.1%
OIBDA 16,647 +1.8%
Operating Income 10,024 +2.1%
Operating Free Cash Flow 12,270 +10.1%
9M09 Results % Change vs 9M08
Net Income (Million €) 5,610 +0.3%
EPS (€) 1.23 +2.7%
12
Telefónica, S.A.
Telco sector worldwide ranking by market cap (US$ bn)
This makes Telefónica a leader by market capitalisation
at a worldwide level …
62.6
63.6
65.7
68.7
78.2
86.2
116.8
133.7
156.0
195.3China Mobile
at&t
Telefónica
Vodafone
Verizon
América Móvil
France Telecom
NTT
NTT DoCoMo
Deutsche Telekom
Source: Bloomberg, 11/11/09
13
Telefónica, S.A.
0% 50% 100%
Social Dimension
0% 50% 100%
Environmental Dimension
0% 50% 100%
Economic Dimension
0% 50% 100%
Telco sector average in DJSI Telefónica Best Telco in DJSI
... and this is also being recognized by the stock indexes
which value Corporate Sustainability
Telefónica
leads the DJSI in
the worldwide
Telco sector
DJSI: “Corporate Sustainability is a business approach to
create long term shareholder value by embracing
opportunities and managing risks deriving from
economic, environmental and social developments”
Dow Jones Sustainability Index
14
Telefónica, S.A.
... and to help to overcome social divides
As an engine for economic sustainable
development and innovation…
Telefónica’s activity has a demonstrable positive impact in
the societies where it is present
15
Telefónica, S.A.
DIRECT CONTRIBUTION TO
THE ECONOMY
(PRODUCTION OF ICT)
ENABLER OF GROWTH AND
PRODUCTIVITY OF OTHER
INDUSTRIES
(USE OF ICT)
ICT industry
Double economic
impact of ICT
Worldwide ICT
market of
~€2.7 trillion in
2008(1)
ICT contribution to World GDP
growth
2008
ICT contribution to World GDP
2008
ICT contribution to
productivity growth in
Europe
00 - 04
20%
In Europe(2):
ICT companies employ 6% of working
population (2006)
Telco operators invested around €50 bn on
infrastructures (2007)
In 2008, ICT’s activities in Spain:
… created 350,000 direct jobs
… amounted €100 bn
In Latin America, in 2007:
… total expense in ICT(3) reached $170,6 bn
In UE-27, in 2006, ICT companies
contributed with:
40% of productivity growth
20% of R&D expense
In Spain, in 2008, ICT investment on
R&D was €2,5 bn
In Latin America, in 2006:
… investment on ICT(4)
generated a 20% of the
economic growth
00 0795
+100ppCommunications
Overall sectors
Gap of ICT contribution to
productivity growth in Europe
vs. overall sectors
(1) DigiWorld 2009 report
(2) European Commission, Eurostat
(3) WITSA (Digital Planet 2008). FMI WEO 2008
(4) The World Telecommunications/ICT Development Report 2006
Telefónica’s activity, as a key ICT player, is core to productivity
and economic sustainable growth in the 21st century
6.5%
4.4%
16
Telefónica, S.A.
2007 2008
4,384
4,614
R&D 668594 R&D
5.2%
12.4%
Telefónica’s total income
redistribution in 2008
Data in Mill. €
Telefónica’s global
investment in R&D+i
Data in Mill. €
Telefónica’s activity is a powerful driver for wealth redistribution
and technological innovation on a global basis …
input
output
Divestments
276
Suppliers
32,832
69,459 Employees
6,767
Public
Administrations
10,336
CapEx
7,889
Financial
Creditors (Net)
4,953
Shareholders
6,682
Customers
69,070
Other Income
113
TEF’s R&D+i investment in
2008 was equivalent to 8% of
its 2008 total revenues
17
Telefónica, S.A.
Telefónica’s activity is key to
recover from the current global economic turmoil
… and contributes to the sustainable development of the
societies where it operates …
Evolution of Telefónica’s staff
Source: AETIC
75% of Telefónica CAPEX is
devoted to growth while the
remaining 25% is to keep running
its current businesses
In the Spanish Internet market,
Telefónica is the leading operator by
quality/price ratio (2).
Employment1. Quality and Competitiveness
of its ICT services
3.Investments on
infrastructures
2.
Telefónica’s CAPEX (Mill.€)
8,401
8,087
8,218
2000 2007 2008
+4.7%
x 1.03
(1)
(1) 2000 Capex figure excludes UMTS licenses (12.17 Bill.€) and Emergia (722.5 Mill.€) investments.
(2) Spanish Internet Users Association (AI): “First report on Quality-Price ratio of Spain’s Internet operators”. Sep’09.
257,035
148,707
2000 2008
x 1.7
In 2008, Telefónica directly
employed over 257,000 people and
created more than 330,000 indirect
jobs in Europe and Latin America
Evolution of general CPI and
Communications’ prices in Spain
2002-2008
+ 22%
- 6%
CPI
Communications
18
Telefónica, S.A.
… not only in economical terms but in social ones as well
Number of people benefited by
Fundación Telefónica in 2008
Telefónica’s global investment in
Social Action
(€ Thousand)
In 2007, LBG methodology does not allow to account the contributions
from the 60,000 Telefónica’s employees collaborating with ATAM (which
aims to benefit handicapped people).
Telefónica invested about €115 million in Social and Cultural Action during 2008,
which benefited more than 40 million people worldwide
Fundación Telefónica’s resources
distribution by activities in 2008
49.1%
3.1%
1%
12.4%
1.4%
16.5% Social and Economic Development
Art and Culture
Education and Youth
Welfare
Environment care
Health and Disabilities
Others
16.5%
32,514,635
127,655
246,273
766,065
4,748,375
1,825,267
40,228,270
69,205
51,054
9,069
9,17428,988
32,4224,228
3,898
2007 2008
Fundación Telefónica ATAM Social Sponsorships O2
114,700
93,339 23%