Transcript Investor Conference

Safe Harbour
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.
Strategic focus
• Capture the Data Services/VAS
growth opportunity leveraging on
massive client base in domestic
markets
• Strengthen position from selective
expansion in new markets:
attractive customer bases and
focus on Corporates and NEPs
• Leverage infrastructure/presence
to serve multinational customers
Investor Conference
March 2001, Rio de Janeiro.
Messages
A ROBUST BUSINESS MODEL BUILT AROUND CUSTOMERS
Growing operating and financial results
A reality today; a plan for future growth
Investor Conference
March 2001, Rio de Janeiro.
The key points of T-DataCorp business model


Data Services, Internet access and
Value Added Services
Own infrastructure
of data/ IP network
equipment and
“hosting” centers
(T-DataCorp Internet
Centers)

Services

Infrastructure

Selective deployment
of basic
infrastructure, mainly
international network
through Emergia
Geographical
areas

March 2001, Rio de Janeiro.
Customers


Investor Conference
T-DataCorp
Domestic markets: Spain and LatAm
Selective expansion: Europe and LatAm

Corporates and NEPs
directly in domestic and
new markets
Other corporate
customers through
Telefónica WLOs in
domestic markets and
through third parties in
new markets
Telefónica Group
companies
Leverage
infrastructure/presence
to serve MNCs
T-DataCorp customer model in domestic markets
DEMANDED
SERVICES
Corporations -
Large
Companies
Personal solutions
for their
requirements.
COMMERCIAL
TREATMENT
Dedicated and direct
from T-DataCorp
CUSTOMERS
2000
5,200
Basic
communication
Non-direct: WLO and
services and Internet other channels
24,500
SMEs
Internet access and
presence
Non direct: WLO and
other channels
Direct Sales Force
Non-direct Sales Force
The largest direct sales force for data services in Spain and Latin America
(more than 400 people)
* ISPs, Portals, ASPs B2Bs, B2Cs...
Investor Conference
March 2001, Rio de Janeiro.
Strengthening position in new markets: Latin América
Today, Brazil and México represent within Latin América 60% of data market and
81% of Internet homes

Brazil out of Sao Paulo: Total market 2000 (E): 1 Bill-1.3 Bill €; 2004 (E): 3 Bill-4 Bill €

Starting operations in January 2002

National offer to current Sao Paulo corporate customers

Selective expansion to the principal Brazilian cities to capture local and national
corporate and NEPs

México: Total market 2000 (E): 1 Bill-1.5 Bill €; 2004 (E): 4 Bill-5 Bill €

Leveraging on existing operating company Optel

Building on the local presence of the global T-DataCorp customers

Expanding the total market through the development of public data networks,
capturing additional corporate and NEPs

Other countries: Filling the gaps to complete the offer to local and regional/multinational
customers
Investor Conference
March 2001, Rio de Janeiro.
Strengthening position in new markets: Atlanet

Merge between Acea-Telefónica and Telexis (Fiat Group telecom company).

Atlanet’s current customer base: more than 300 large companies and corporations from
Fiat/Ifil and Acea Groups.

Focus on becoming the second integrated data service provider to corporate customers
and NEPs in Italy:
–
Main provider of value added services for the NEPs.
–
More than 20,000 customers expected by 2004 ranging from large corporations to
SMEs companies.
–
Revenues CAGR 2001-2004: 70%-80%
Investor Conference
March 2001, Rio de Janeiro.
Strengthening position in new markets: mediaWays

Second IP-based network services provider in Germany

Extensive capillary IP network in Germany (270 POPs, more than 200,000 IP ports
and 2.6 Bill. minutes of internet access traffic per month)

Extensive value-added product offering (switched access to internet, Webhosting/ASP, VPNs, Broadband and value added services).

Solid customer base (e.g. AOL, Lycos-Europe, RTL, Deutsche Bank, Bertelsmann,
Bosch, Xerox, Novell and Daimler Chrysler)

Strong, industry knowledgeable management. Staff of less than 200 employees;
revenues 2000 above 300 M€.

Synergies with UMTS for the transport of IP traffic and value added services
Investor Conference
March 2001, Rio de Janeiro.
Leveraging infrastructure/presence to serve MNCs: AOL
Significant international footprint, IP services experience, sophisticated
services portfolio and recognized quality of services are the key factors
considered by AOL to select T-DataCorp.
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

Telefónica began conversations with AOL, as it was the number
one customer of mediaWays.
In December 2000, Telefónica&AOL entered into an agreement to
provide IP access and transmission capacity through the T-Data
international network, in Latin America and Europe. This
agreement will run for several years.
The agreement represents an additional step in the consolidation
of the NEPs customer strategy approach as well as in the
international expansion process of T-Data.
Investor Conference
March 2001, Rio de Janeiro.
First Class Customer Base
Financial Institutions
New customers
NEPs
Other
Investor
Conference
Recent
agreement
with AOL to provide IP access and transmission capacity through
March 2001, Rio
de Janeiro. international network, in Latin America and Europe.
T-Data’s
Ascending the value chain:
The benefits of broadband
Complementary revenues
IP solutions
&
Systems integration:
Data Services
and
Internet:
Hosting & Value Added
Services:

Hosting&Housing
Virtual Private
Networks (X.25, FR,
ATM, IP)
 Internet access

Value added services create loyalty
Investor Conference
March 2001, Rio de Janeiro.
•Tailored solutions
•Networks, sistems and
applications outsourcing
Global Internet Traffic
International
Internet traffic
Local Internet
traffic in Spain
Internet
backbone
International
Internet traffic
Local Internet
traffic in Brazil
International
Internet traffic
International
Internet traffic
Local Internet
traffic in Argentina
Investor Conference
March 2001, Rio de Janeiro.
T-DataCorp
concentrates
international
Internet traffic of
the entire
Telefónica Group
leveraging on
Emergia’s
broadband
infrastructure
Infrastructure model
Owned
Mainly leased
Internet
Centers
(TICs)
100% owned by T-DataCorp
Packet switching nodes
and Management Centers
(IP, X.25, FR, ATM)

Basic infrastructure
(LD transmission and access)
Mainly leased to WLO in domestic markets.
T-DataCorp will leverage on the strong
infrastructure capacity of Telefónica
Group.

Focus on infrastructure efficiency
Investor Conference
March 2001, Rio de Janeiro.
International Presence and Internet Centers
International bandwidth 2001(*) : 16,4 Gbps (3,5 Gbps in 2000)
NYC-NS
NYC
LON
AMS
4 BRU FRA
HOU
PAR
MIA_SD
MTY
TIC
ZUR
VIE
MIL
MAD
SAL
SJU
TIC
ROM
BOG
TIC
Emergia/Others
LUR

Management
Local in national networks
Centralized for international backbone
(*) Includes IPnetwork, X.25, FR and ATM
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March 2001, Rio de Janeiro.
SCL_FL
SAO
Infrastructure
TIC
TIC
SCL_PR
MON
BUE_C1
BUE_BA
TIC
TIC
Data Infrastructure
Geographical deployment of T-DataCorp
T-DataCorp’s strength in
domestic markets:
 large customer base
 wide local networks
London
México
Brussels
Paris
Colombia
Strategic expansion guidelines:
 Strategic areas
 Previous customer existence:
 Local
 Multinationals
 Focus expansion on areas
where the Telefonica Group
has other business lines
Germany
Austria
Zurich
Italy
Spain
Brazil
Perú
Sao Paulo
Chile
Uruguay
Argentina
T-DataCorp dominant player
T-DataCorp new entrant
Support to the Data business line
POP
Investor Conference
March 2001, Rio de Janeiro.
T-DataCorp positioning in domestic markets
Corporations
and
NEPS
Large
companies
and SMEs
Revenues
2000 (MM€)
Proforma
Revenues
CAGR
(01-04)
Direct
sales
force
SPAIN
2,580
18,000
860 (*)
20-25%
166
SAO PAULO (1)
1,440
2,300
65
42-48%
140
ARGENTINA
730
1,800
125
13-17%
53
PERU
450
1,350
60
30-35%
51
(*) Telefónica Sistemas (12 months) included
(1) Out of Sao Paulo not included
Investor Conference
March 2001, Rio de Janeiro.
T-DataCorp positioning in new markets
LatAm
Ownership
Present position
Colombia
50%
Second data network in the country+BBVA network.
Uruguay
100%
Data licence starting operations July 2000.
Estimated
revenues ( Mill. €)
2001
CAGR
2001-2004
35-40
35-45%
3- 5
70-80%
85-95%
México
85%
OPTEL acquisition (4th data operator in México).
20-25
30-40%
40-50
Europe
Austria
100%
Deployed a Viena fiber ring.
Germany
100%
Second IP-based network services provider with
30% market share of Internet traffic.
Italy
34%
Acquisition of Telexis (more than 1,000 customers) and
merger with ACEA-TEF.
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March 2001, Rio de Janeiro.
30-40%
550-600
70-80%
175-200
Messages
A robust business model built around customers
GROWING OPERATING AND FINANCIAL RESULTS
A reality today; a plan for future growth
Investor Conference
March 2001, Rio de Janeiro.
Deployment of Local IP Networks
Local IP Networks
1,175,000
Switched
Access
Ports
420,000
194,636
2000
2001
2004
96,000
Dedicated
Access
Ports
300
2000
Investor Conference
March 2001, Rio de Janeiro.
CAGR
(00-04)
55-60%
18,000
2001
2004
CAGR
(00-04)
315-325%
TIC’s
39,000
CAGR
(00-04)
110-120%
TICs
22,000
leased
m2
1,792
2000
Investor Conference
March 2001, Rio de Janeiro.
2001
2004
Financial Highlights
Revenue Breakdown by Region
% CAGR
(01-04)
35%-40%
1,487 Mill.€ Proforma
45-55%
20-25%
35-40%
2000
2001
Europe
2004
Spain
América
EBITDA Breakdown by Region
% CAGR
(01-04)
190-230%
59 Mill.€ Proforma
85-95%
25-35%
95-105%
120-135%
2000
Europe
2001
Spain
Investor Conference
March 2001, Rio de Janeiro.
2004
Int’l network
América
Financial Highlights
Revenue Breakdown by Service
35-40%
1,487 Mill.€ Proforma
2000
Data & Internet
%CAGR
(01-04)
30-35%
Investor Conference
March 2001, Rio de Janeiro.
2001
2004
Hosting & ASPs
IP Solutions
Other
95-105%
35-40%
0-(5)%
T-DataCorp
Financial Targets
PROFORMA
2000 (M€)
T-Data
Group
% CAGR
00-04

Revenues
1,487
35%-40%

EBITDA
59
85%-95%

% EBITDA
4.0%
4pp-5pp
(annual increase)

Cumulative Capex (Mill.€)
428
400-500
(annual average)
Investor Conference
March 2001, Rio de Janeiro.
Messages
A robust business model built around customers
Growing operating and financial results
A REALITY TODAY; A PLAN FOR FUTURE GROWTH
Investor Conference
March 2001, Rio de Janeiro.
Summary

T-DataCorp
A reality today with 920 Mill. € in sales (1,487 Mill. € proforma)
and 45 Mill.€ positive EBITDA (59 Mill. € proforma).

For the period 2001-2004 we are aiming at 35%-40% revenue
CAGR and 85%-95% EBITDA CAGR.

To get there we will focus our efforts on :
Investor Conference
March 2001, Rio de Janeiro.

Extracting the full value of our current massive customer base
in our domestic markets

Building our presence in new markets where we have
selectively invested