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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of May, 2012
Commission File Number: 001-09531
Telefónica, S.A.
(Translation of registrant’s name into English)
Distrito C, Ronda de la Comunicación s/n,
28050 Madrid, Spain
3491-482 85 48
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
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Telefónica, S.A.
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| 1. | Telefónica – Presentation Global Telecom and media Conference, BofAML | 3 | ||||
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RAMIRO SÁNCHEZ DE LERÍN GARCÍA-OVIES
General Secretary and
Secretary to the Board of Directors
TELEFÓNICA, S.A.
TELEFÓNICA, S.A., hereby reports the following
NOTICE
The Company will participate at the annual Telecom & Media conference hosted by Bank of America Merrill Lynch to be held today in London, and the presentation enclosed will be made.
Likewise, the Company informs that the presentation will be available on the Company’s website.
Madrid, May 31st, 2012
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Telefónica Global Telecom & Media Conference BofAML . London. May 31, 2012 Angel Vilá Chief Financial and Corporate Development Officer
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This document contains statements that constitute forward looking statements about Telefónica Group (going forward, “the Company” or Telefónica) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which may refer, among others, to the intent, belief or current prospects of the customer base, estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company. The forward-looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions. Such forward-looking statements, by their nature, are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ from those expressed in our forward looking statements. These risks and uncertainties include those discussed or identified in fuller disclosure documents filed by Telefónica with the relevant Securities Markets Regulators, and in particular, with the Spanish Market Regulator. Analysts and investors, and any other person or entity that may need to take decisions, or prepare or release opinions about the securities issued by the Company, are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Except as required by applicable law, Telefónica undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telef?ica’s business or acquisition strategy or to reflect the occurrence of unanticipated events. This document may contain summarized information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Telefónica. Finally, it is stated that neither this presentation nor any of the information contained herein constitutes an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities, or any advice or recommendation with respect to such securities. Investor Relations 1 Telefónica, S.A.
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INTRODUCTION: HIGH DIVERSIFICATION, VERY DIFFERENT REALITIES 01 TURNAROUND PLAN IN SPAIN 02 PERFORMANCE IN THE UK 03 BALANCE BETWEEN GROWTH AND PROFITABILITY IN BRAZIL 04 GROUP PROFITABILITY 05 FINANCIAL FLEXIBILITY 06 Investor Relations 2 Telefónica, S.A.
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01 High diversification, our key strength to face very different realities T. LATAM T. EUROPE 48.5% revenues; 50.2% OIBDA 48.7% revenues; 49.5% OIBDA 2012E GDP growth 3.7% -0.3% Competition Rational Intense Accesses Robust growth (+11%) Stable (-1%) Outgoing mobile voice revenue Double digit growth due to higher accesses and Double digit decline driven by usage usage optimization and price competition Mobile data revenue Double digit growth; 28% of MSR Single digit growth; 40% of MSR Fixed broadband revenue Double digit growth driven by strong access Declining due to lower accesses (59% of fixed growth (33% of fixed accesses) accesses) and ARPU on aggressive ULL Total revenue growth +8.3% (+2.5% in Q4 11) -6.8% (-7.0% in Q4 11) Significant growth levers ahead Mobile Mobile voice FBB in Latin Services broadband in Latin America & beyond across America Spain connectivity footprint Data for T. Latam and T. Europe corresponding to Q1 12 GDP growth based on Focus Economics consensus forecasts, May 12 % y-o-y change Investor Relations 3 Telefónica, S.A.
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02 Turnaround plan in Spain: framework 2011 diagnosis Our action plan ?Economic crisis accelerated change in •Deep tariff refresh in FBB and Mobile customer behavior businesses: ??Remove price-premium disadvantage and Market value erosion driven by aggressive reposition customers in competitive schemes price competition: (lowering churn) •Promotion driven environment Recover ?Integrated tariffs to increase bundle penetration competitiveness vs. “pay per use” scheme existing •High investments in handset subsidies to ?Leverage convergence •High portability volumes ?Foster mobile data adoption leveraging voice + data tariffs •Increasing churn •Expand fiber (coverage & connections) Telefónica • New commercial model: ?Handset subsidy elimination for new mobile Change industrial customers from March ?Access loss and ARPU erosion, specially in high value segments model to enhance ?Focus on retention ?Top line decline efficiency and •Optimize non-commercial costs: change market ?20% headcount reduction in the fixed business: dynamics 6,500 employees in 2011-13 ?Pressure in profitability ??Focus on simplicity to increase efficiency and reduceto ”time market” Investor Relations 4 Telefónica, S.A.
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02 Turnaround plan in Spain: results so far Change industrial model to enhance efficiency and Recover competitiveness change market dynamics •A more rational mobile acquisition and Fast penetration •57% customers repositioned in FBB in April-12 portability environment: drastic reduction of new tariffs in subsidies in the market •42% in contract mobile in April-12 (consumer segment) •Lower gross adds (-21% y-o-y in Q1 12) New but strong handset upgrades (+35% y-o-y •FBB ARPU affected by active migration of commercial in Q1 12) Limited impact customers ending promotions to new portfolio model in ARPU •Positive elasticity in mobile low-end •Slowdown in retention costs y-o-y growth customers from May (other players removed subsidies) •MSR impacted by increased loyalty •-21% in FBB in Jan-April led to positive FBB efforts Churn net adds in April-May15th reduction •-39% in portability churn in Jan-April. Positive contract portability in the first half of May •Successful execution of ERE: Increased •31% smartphone penetration (+14 p.p. y-o-y ) ?68% employees of total expected in 2011-2013 already joined the plan penetration of •Minimum data plan at €15 (€10 in old portfolio) Optimize mobile data non-commercial ?€ 56 m savings in personnel costs in Q1 •Unlimited SMS to limit OTT cannibalization costs •Handset portfolio simplification on track •200 k connected households as of May 15th •Increase customer satisfaction on lower Gaining traction •1.3 m homes passed by March (x3 y-o-y) claims in fiber •3 m to be passed by year-end ?Better access evolution along the year leveraging lower churn ?Net commercial costs savings in 2012E ?ARPU erosion from new tariffs to ease from Q4 12 ?Benefits from ERE on fast execution: € 250 m in 2012E Investor Relations 5 Telefónica, S.A.
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03 Performance in the UK The environment Our action plan ????r????v? competition with unlimited data offers: “Full Monty”, “The One Plan”??¨??? on existing customers, reduce churn: ????????????r loyalty efforts in high-value customers from Q4 optimisation amid challenging economic environment 11; bulk of renewals in Q1 12 at lower price points Regain tiered data ??n??n??n? strategy: commercial Telefónica momentum ??n?r????? data allowance on higher tariffs ???n??n????n???? in April Contract churn ??¨??r entry points TEF VOD EE From a growing ??¿???????¿?¨n of MSR trends ex-MTRs leveraging churn to the 1.4% 1.5% 1.3% 1.3% 1.2% 1.2% better commercial momentum lowest rate in the 1.1% 1.1% 1.0% market …???¨??¨?n in commercial expenses driven by: ???¿¿?r churn, leading to higher efficiencies Q1 11 Q4 11 Q1 12 ??¨??rof “out contract” -3. customers: 4 p.p. q-o-q Going forward ??r??????? lowered handset subsidies in April Smartphone penetration ???r¿??r efficiencies on the back of: Improved … while 41% ??? 12 advertising expenses to phase out throughout margin along continuing the year to lead +8 p.p. 34% the year y-o-y smartphone ??????r savings in handsets leveraging global sourcing penetration TEF Main competitor ????? will drag 3 p.p. to revenue growth and 4 p.p. to OIBDA growth Investor Relations 6 Telefónica, S.A.
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04 Balancing growth and profitability in Brazil (i) Mobile accesses growth (y-o-y) BB penetration Mobile market share (Mar-12) y-o-y 43.8% 20.5% 36.5% Focused 34% 30% commercial 15.0% 29.8% efforts to +2.2p.p. 11% +0.9p.p. strengthen +0.3p.p. 5% leadership Mar-11 Mar-12 Mar-11 Mar-12 Total Contract Data MBB Mobile / Total accesses FBB accesses / Fixed Widening OIBDA lead: 3G sites 32% share •Reinforced mobile data lead: 2,727 2,516 ?????n?n? coverage gap vs. competitors 1,686 1,206 1,395 808 ????¿ quality in the market Vivo Claro+ Vivo Claro+ Vivo Claro+ Leading the TIM+Oi TIM+Oi TIM+Oi •Selective fiber roll out for a superior sector FBB experience: Dec-10 Dec-11 Mar-12 transformation ????7m homes passed with UBB; 70k fiber connections as of Mar-12 ???r¿??r push to connect homes along UBB net adds the year ??????? km of fiber (FTTH) in SP State x4 Sources: Anatel for market shares, Teleco for 3G coverage Q1 11 Q1 12 Investor Relations 7 Telefónica, S.A.
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04 Balancing growth and profitability in Brazil (ii) Revenue growth (organic y-o-y) Revenue breakdown (organic y-o-y) 15.8% 14.8% Fixed voice & access MSR 25% FBB & new services 29% Revenue 11.5% Wireless 9.6% 12% 13% +5.1% 6.5% 5.3% 5.1% 3.5% Total 74% of sales organic ex-regulation growing by 1.5% -1.6% Fixed 58% 61% +10.3% y-o-y -3.9% -3.4% Q2 11 Q3 11 Q4 11 Q1 12 Ex-regulation Q1 11 Q1 12 OIBDA Margin Breakdown 35.5% +0.7 p.p. +1.1 p.p. 34.6% •10% headcount reduction, OIBDA (1.3 p.p.) with a payback < 1 year (1.1 p.p.) +0.5% •Short term efforts on organic advertising and network and systems for future growth Q1 11 Commercial Network & Net Towers Sale + Q1 12 Activity Systems Interconnection Personal restruct. FCF Breakdown (€ in millions) +61 291 -199 +254 •Robust FCF growth 203 despite higher investments -17 -10 •Optimized FCF WC +43% management and integration synergies below OIBDA driving FCF FCF 2011 OIBDA CapEx WC Net interest Income tax FCF 2012 generation payment payment y-o-y -1% +62% -47% n.m. -29% +43% Investor Relations 8 Telefónica, S.A.
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05 Group profitability: improvement expected in H2 T. LATAM T. EUROPE Q1 y-o-y change in reported terms. € in millions Q1 y-o-y change in reported terms. € in millions 577 Commercial Network Revenues Costs & syst.costs Others OIBDA -250 21 +212 -190 -117 -434 -534 -128 Revenues Commercial Network & Others OIBDA +16 activity syst. Costs ??¿r¨n??r commercial momentum, increased focus on MBB ??¨? line pressure partially mitigated by non-commercial cost sales from Q3 11: cutting: Net adds (m) Q1 11 Q1 12 • Headcount reduction in Spain, Czech Republic and Ireland • Total net adds x2 y-o-y in Q1 12 Mobile 2.3 4.5 • Optimizing resources, TGR generating additional savings • Leading mobile net adds in the region MBB 1.1 2.3 • Lower interconnection costs on MTR cuts ???¿?¨r? & system costs driven by expanded networks: costs reductions • Further overhead • 3G base stations up 60% y-o-y in Q1 ??????r commercial activity to reduce churn and increase • +27,000 Kms of fiber for backbone in progress in Brazil smartphone adoption: ??¿??r?? • Smartphones were 81% of handset sales • Restructuring costs, partially offset by non-strategic tower sales • Focus on upgrades in UK • Further overhead costs reductions • Limited impact from new commercial model in Spain in Q1 ?Accesses growth to lead further top line acceleration along the year ?Better revenue performance in H2 ?Easier y-o-y- comparison in commercial costs from H2 ?Higher cost efficiencies from Q2 across markets ?Operating synergies in Brazil to become visible in H2 Investor Relations 9 Telefónica, S.A.
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06 Fully committed to enhance financial flexibility Early proactive Reduce leverage via Shareholder refinancing, enhanced portfolio management remuneration mix liquidity ?Already achieved: €1.6bn ?2012 total shareholder ?Balanced accesses to credit ?Colombia restructuring, Hispasat, non- strategic remuneration maintained at markets towers, Zon €1.50/share, including €1.30/share dividend: ?€7.5 bn financing in Q1 12 40/share in ?€ 0.4 bn of 2013-15 bonds ?€0. cash dividend to be ?In progress: €1.5bn repurchased YTD paid in November 2012 ?Atento, PT, Rumbo, non-strategic towers ??90/share to be €0. in scrip dividend paid in May 2013 ?All 2012 maturities refinanced ?Portfolio management next actions: ?€0.20/share buyback, to be completed by May 2013. Treasury shares ?Launching preparations for IPO of TEF acquired will be cancelled ?>40% of 2013 maturities Germany prefinanced Analyzing ? potential listing alternatives for Latin American businesses ?2013 total shareholder remuneration maintained at ?€ 6.3 bn cash position ex-VZ ?Monitoring market conditions to make selective €1.50/share: asset monetisations ?Dividend/SBB mix to be decided ?€ 11.4 bn undrawn credit lines: considering market conditions and investor preferences at that time ?+ €1.3 bn since Dec-11 ?€ 9.7 bn long term ?Net financial debt / OIBDA < 2.35x by YE Investor Relations 10 Telefónica, S.A.
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Closing remarks •We benefit from a strong diversification, with an increased exposure to the growing Latin American markets (>50% of OIBDA) •Our efforts to become more competitive and regain momentum in Spain and the UK are on track. Benefits to become more visible throughout the year •Vivo will deliver profitable growth, while continuing to lead the market •We are determined to increase financial flexibility and will accelerate portfolio management actions •2012 guidance reiterated, including shareholder remuneration commitments Investor Relations 11 Telefónica, S.A.
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Investor Relations 12 Telefónica, S.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Telefónica, S.A. | ||||||
| Date: May 31st, 2012 |
By: | /s/ Ramiro Sánchez de Lerín García -Ovies | ||||
| Name: Ramiro Sánchez de Lerín García-Ovies | ||||||
| Title: General Secretary and Secretary to the | ||||||
| Board of Directors | ||||||