Transcript Investor Conference

Safe Harbor
This presentation contains statements that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in
a number of places in this presentation and include statements regarding the intent, belief or
current expectations of the customer base, estimates regarding future growth in the different
business lines and the global business, market share, financial results and other aspects of the
activities and situation relating to the Company .
Such forward looking statements are not guarantees of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward looking
statements as a result of various factors.
Analysts are cautioned not to place undue reliance on those forward looking statements,
which speak only as of the date of this presentation. 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 Telefónica´s business or acquisition strategy or to reflect the
occurrence of unanticipated events. Analysts and investors are encouraged to consult the
Company´s Annual Report on Form 20-F as well as periodic filings made on Form 6-K,
which are on file with the United States Securities and Exchange Commission.
Investor Conference
March 2001, Rio de Janeiro.
THE SPECIALIST IN THE AMERICAS
“The Virtuous Cycle”
Growth Strategy
Commercial Performance
Financial Performance
Conclusion
Investor Conference
March 2001, Rio de Janeiro.
MISSION
The specialist in the Americas

We are a broadband infrastructure services provider

We offer services to international carriers, Internet
service providers, and other communications-intensive
businesses

We coordinate demand and offer from Telefónica´s
Group.
Investor Conference
March 2001, Rio de Janeiro.
CLIENT AND PRODUCT CHAIN
Telefónica
Media
Terra / Lycos
B2B
TPI
Emergia:
- Specialization
- Broad spectrum of
potential customers
Telefónica:
- Data
- Mobile
- Wireline
Competitors
Voice/Data
Services
Bandwidth
Services
Investor Conference
March 2001, Rio de Janeiro.
Competitors
ISP/Portal
Competitors
Content
NETWORK

€ 1.3 bn capex

1.92 Tbps capacity

25,000 km network

10 cities in 7
countries

Ready for Service in
March, 2001
Investor Conference
March 2001, Rio de Janeiro.
PRODUCTS & SERVICES
Services
Attributes
City-express
Building Blocks
Bandwidth cap.
Wavelength exp.
Ring capacity
Service type
Restore easy
Wavelength
Configuration
Private networks
Backhaul
Sales type
Basic co-location
Investor Conference
March 2001, Rio de Janeiro.
EMERGIA´S COMPETITIVE ADVANTAGES
The specialist in the Americas

Telefónica´s leading position

Early mover advantage: Marginal cost of duplicating
capacity

Technologically advanced high-capacity network

City-to-city connectivity

Commercial partner
Investor Conference
March 2001, Rio de Janeiro.
BENEFITS FOR TELEFONICA
The specialist in the Americas

Builds up Telefónica´s competitive platform

Secure first-class end-to-end communication

Optimize demand and offer of broadband capacity from
Telefónica
Investor Conference
March 2001, Rio de Janeiro.
The specialist in the Americas
“THE VIRTUOUS CYCLE”
Growth Strategy
Commercial Performance
Financial Performance
Conclusion
Investor Conference
March 2001, Rio de Janeiro.
MODEL
 Tele-office:
e-mail; Intranet;
The Virtuous Cycle
etc.
 E-commerce:
B2B; B2C; E-
money
 Leisure & Entertainment:
V.O.D.; Games
 Last-mile
broadband services network:
DSL; cable TV
 Third-generation mobile phones
 Prominent increase of Internet
use/access equipment: PC; TV
ACCESS
CONTENT
TRANSPORTATION
Geographic concentration of content
 International alliance: media/telecommunications

Investor Conference
March 2001, Rio de Janeiro.
MODEL
TPI
The Virtuous Cycle
 Terra
 Telefónica Media
 B2B
Telefónica Móviles
 Telefónica Data
 ISPs
 Wireline operators


ACCESS
CONTENT
TRANSPORTATION
EMERGIA
 Telefónica Data
 Wireline operators

Investor Conference
March 2001, Rio de Janeiro.
BROADBAND APPLICATIONS
Bandwidth
Full-motion
TV-quality Video
4mbps
Streaming Video
Palm Pilots™, Web TV™, PCS cellular devices
1.5 mbps
Dynamic Web Browsing
Still image download
56 kbps
28.8 kbps
Static Web-browsing
Email
9.6 kbps
1980’s
…
Early-1990’s
Investor Conference
March 2001, Rio de Janeiro.
…
Late 1990’s
…
2000+
LATAM DEMAND FORECAST
Year when target is reached
Capacity
SOURCE
Gb/sec.
Merrill
OVUM
Yankee
Lynch
50
500
1000
Period
Differentiation
Group
05/1999
06/1999
04/2000
2001
2007
2001
2005
2008
2000
2004
2006
Yankee
Group
1.000
500
Merrill
Lynch
Latam Demand
2000 = 20 Gb/sec
Investor Conference
March 2001, Rio de Janeiro.
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
1992
G t/sec.
OVUM
BROADBAND DEMAND – ADSL FORECAST
Company/´000
Telesp
TASA
CTC
Telefónica del Perú
Total
Source: companies´ forecasts
Investor Conference
March 2001, Rio de Janeiro.
2004E
950
474
71
48
1,543
The specialist in the Americas
“The Virtuous Cycle”
GROWTH STRATEGY
Commercial Performance
Financial Performance
Conclusion
Investor Conference
March 2001, Rio de Janeiro.
ALTERNATIVES
Growth Strategy
Capillarity
Submarine
Geography
Services
Backhaul
Terrestrial
America
Global
Bandwidth Mgmt. IP Transm.
Investor Conference
March 2001, Rio de Janeiro.
Value added
CAPILLARITY
Network Layers:
Bo ca Ra to n
San Juan
South
F lor ida
Gua tem a la City
F or tale za
N ew Yor k
Salv ado r
La H aba na
Ve ra cruz
Ca ra ca s
Mex ico
Re cife
Bar ra nquilla
H ondura s
Mede llin
Po rto A leg re
Bo go ta
San Sa lv ado r
Ca li
Bra silia
Ube rlandia
F lor iano po lis
Belo Ho riz o nte
Buena ve ntura
La Pa z
Ar equipa
Ca llao
Rio Janeir o
Curitiba
Mo nt ev ideo
Camp inas
Sao Paulo
Lim a
Trujillo
Tac na
Anto fa ga sta Co nce pcio n
Mendo za Co rdo ba
Rosario
Santo s
Ar ica
Va lpara iso
Investor Conference
March 2001, Rio de Janeiro.
Santia go
Bueno s Air es
LAST-MILE CONNECTIVITY
Sao Paulo
Investor Conference
March 2001, Rio de Janeiro.
LAST-MILE CONNECTIVITY
Buenos Aires
Investor Conference
March 2001, Rio de Janeiro.
LAST-MILE CONNECTIVITY
Santiago de Chile
Investor Conference
March 2001, Rio de Janeiro.
GEOGRAPHY
Emergia´s capacity will be the main source of funding to expand our network


America
–
Colombia
–
México
–
Uruguay
–
Venezuela
Global

Marginal new capex
Emergia
as swap currency
Emergia
as single broadband
capacity manager for Telefónica
Group
–
Southern Europe
–
Transatlantic
Investor Conference
March 2001, Rio de Janeiro.
SERVICES
E-Commerce
Applications Hosting
Web Hosting
V
A
L
U
E
IP VPN
VOIP
Managed Co-location
Internet Access
IP Transit
V
A
L
U
E
ATM
A
D
D
E
D
Co-location
A
D
D
E
D
Managed Bandwidth Services
Colors/Lambdas
Dark/Dim Fibers
Carrier / ISP
Wholesale
Investor Conference
March 2001, Rio de Janeiro.
Global Accounts
SME
Retail
The specialist in the Americas
“The Virtuous Cycle”
Growth Strategy
COMMERCIAL PERFORMANCE
Financial Performance
Conclusion
Investor Conference
March 2001, Rio de Janeiro.
LATEST AGREEMENTS
Commercial Transactions
€ 938 MM
Commited Capacity to be
Activated during First
Year - 28 stm-1
50%
92%
50%
8%
Telefónica
Group
Other customers
Investor Conference
March 2001, Rio de Janeiro.
Telefónica
Group
Other customers
The specialist in the Americas
“The Virtuous Cycle”
Growth Strategy
Commercial Performance
FINANCIAL PERFORMANCE
Conclusion
Investor Conference
March 2001, Rio de Janeiro.
MARKET
2001-04
Market Growth - % p.a.
60-130
Market Share - %
25-30
Capacity Sold annual growth rate - %
30-110
Investor Conference
March 2001, Rio de Janeiro.
FINANCE
Forecast – € MM
2004
GAAP Revenues
250 / 300
GAAP EBITDA Margin - %
Free Cash Flow
Investor Conference
March 2001, Rio de Janeiro.
60 / 70
150 / 200
FINANCE
Capex & Cost per Unit
1,550
6
1,500
5
4
1,400
1,350
3
1,300
2
1,250
1
1,200
1,150
0
2001
2002
Cumulative Capex
Investor Conference
March 2001, Rio de Janeiro.
2003
2004
Capex per unit-stm-1-
Euros MM
Euros MM
1,450
The specialist in the Americas
“The Virtuous Cycle”
Growth Strategy
Commercial Performance
Financial Performance
CONCLUSION
Investor Conference
March 2001, Rio de Janeiro.
KEY SUCCESS FACTORS
Emergia
Network provider as partner
Strong regional presence
Capillarity
Our goal
Yes
Leader
Resilient structural network
Yes
High-volume transmission
Yes
Investor Conference
March 2001, Rio de Janeiro.