FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
February 23, 2004
Commission File Number [ ]
Telefónica Móviles, S.A.
(Exact name of registrant as specified in its charter)
Telefónica Mobile, Inc.
(Translation of registrant’s name into English)
Goya, 24
28001 Madrid, Spain 3491-423-4004
(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): 82-
Enclosures: Presentation of Telefónica Móviles, S.A.
Telefónica Móviles
Q4 2003 Results presentation
Madrid, 20th February 2004
Safe harbour
This presentation 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 number of places in this document 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 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 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 and investors are cautioned not to place undue reliance on those forward looking statements which speak only as of the date of this presentation. Telefónica Móviles 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 Móviles´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 as well as periodic filings filed with the relevant Securities Markets Regulators, and in particular with the Spanish Market Regulator.
2
2003 Key Highlights
•Strong customer growth & successful Xmas campaigns: 52MM customers1
•Steady revenue growth boosted by sound service revenues: +10.2%
•High operating efficiency with increased commercial activity: 44.3% EBITDA mar
•Solid FCF generation: €2.2Bn; +21.0% y-o-y
•Growing dividend stream
3 1 Managed customers
2003 results at a glance
2003 Y-o-y 4Q03 4Q03/4Q02
MM€ change change
Managed subs.1 52.0 25.7% 52.0 25.7 %
Operating revenues 10,070.3 10.2% 2,766.5 19.7%
Service revenues 8,872 8.5% 2,280 12.6%
Handset sales 1,199 24.8% 487 70.3%
EBITDA 4,462.9 19.5% 1,094.2 22.0%
EBITDA margin 44.3% +3.4 p.p. 39.6% +0.7 p.p.
Recurrent net income2 1,607.9 14.4% 350.3 (17.9%)
Free Cash Flow3 2,184.4 21.0% 266.1 26.9%
Group Net adds (000)4 Annual growth rates Growth rates excluding forex
& TCO consolidation
27.4%
22.0%
4,202 19.6% 2003/2002
19.7%
15.4% 20.6%
11.1%
1,716 8.4% 14.1%
1,158
494 -5.8%
Operating
1Q03 2Q03 3Q03 4Q03 1Q03/1Q02 2Q03/2Q02 3Q03/3Q02 4Q03/4Q02 revenues EBITDA
Operating EBITDA Revenues
1 2003 figures include Brasilcel’s total customer base- including TCO’s customers since May 2003
2 Excludes net extraordinary provisions associated with the write-downs of assets and provision for associated restructuring costs accounted in 2002.
3 FCF= EBIT (1-t) + D&A -Capex- Capitalized opex
4 Figures including TCO, Chile & Puerto Rico.
4
TME: Increased commercial activity
Increase in Steady prepaid to contract Increased customer loyalty
Net Adds (000) migrations (000) Handset upgrades (000)
x 1.7 4,046
+63% 1,162
553
+73% 711 2,364
231 357
207
3Q03 4Q03 4Q02 4Q03 2002 2003 2002 2003
• Performance boosted by Xmas campaign:
• Increased level of net adds, record level in migrations & ongoing handset upgrades
• +7% y-o-y growth to 19.66MM customers:
• +13% y-o-y growth in Corporate, SME & SoHo lines
• Positive net adds from number portability
• 5.2 p.p. advance in contract weight to 40.3%
• Increased number of SIMs/per user in the prepaid segment
• All prepaid customers have positive cash balance
• 94% of our total customer base has made/received calls in the last 3 months
5
TME: Consolidation of growth trend in voice usage patterns
• Stable annual MOU in prepaid despite impact from migrations
• 16.2% growth in total billable traffic vs. 2002
• 22.7% annual growth in on-net traffic
6
TME: Solid ARPU growth above guidance
Blended ARPU y-o-y growth ARPU (€)
rates
6.9% 52.1 51.9 4Q02
3.7% 4Q03
4.3%
28.2 30.1
+3%
2.2%
Guidance 15.5 15.6
+1%
-0.3%
Prepaid Contract Blended
1Q03/ 2Q03/ 3Q03/ 4Q03/ 2003/2
1Q02 2Q02 3Q02 4Q02 002
ARPU components (€)
14.1%
3.8
3.3 Voice ARPU
5.9% Data ARPU
24,9 26,3
• Significant growth in
data ARPU
4Q02 4Q03
7
TME: Increased usage of data services
Data Revenues split
2002 2003
3.8% 8.3%
15.0% 0.5%
14.9%
81.2% 76.3%
Traditional SMS MMS
Content SMS Other
• Xmas season: 52% of our customers used data services
• 9,302MM SMS sent in 2003 (+10.2%). Traditional SMS revenues y-o-y increase
• Increased weight of non-SMS services: of 8%
• 500,000 MMS active users
• 170,000 active i-mode users (250,000 at the end of January)
• 1.4MM GPRS active users
• 5.6MM game downloads
• February 04: UMTS Oficina Movistar commercial launch, after the pre-commercial launch in October 03
8
TME: Steady top line growth
Accelerating service revenues
Operating revenues (MM€)
growth rate
Guidance >10%
+10.7 +12.4%
7,495 +16.4%
6,669 % 2,028 +11.7%
1,742 +9.0%
Service +9.9%
revenue +12.4%
s
Handset +17.3% +43.3%
sales
2002 2003 4Q02 4Q03 2Q03 3Q03 4Q03
/2Q02 /3Q02 /4Q02
• Sustained service revenue growth
• Increased handset sales, driven by Christmas campaign
• +18% growth in outgoing roaming revenues in 2003 vs. 2002
9
TME: Outstanding operating efficiency
2003 y-o-y performance
EBITDA (MM€) & EBITDA
SAC+SRC/Operating revenues
margin
+12.9% 3,941
52.6%
51.6%
3,490
7.9%
7.1%
2002 2003 2002 2003 2002 2003
Quarterly analysis
EBITDA margin (%) +10%
16%
54,6 13%
52,5 4Q03 margins 11%
50,7 9%
explained by +3%
48,0 higher
commercial
activity &
higher handset
sales
3Q02 4Q02 3Q03 4Q03
3Q02 4Q02 3Q03 4Q03
10 Gross adds + Handset upgrades
Handset sales/operating revenue
Leading market growth acceleration in Brazil
Net adds1 (000) Customers1 (MM)
2,186 +23% +12%
20.7 20.7
18.5
16.8
949
571
140
1Q03 2Q03 3Q03 4Q03 4Q02 4Q03 3Q03 4Q03
• Sustained nationwide & local leadership despite increasingly competitive environment:
– >50% average share of net adds in 4Q03 (E)
– >56% average market share in areas of operations (E)
– 45% market share in Brazil (E)
11
1 All figures including TCO.
Strong data usage performance
Positive contribution from data services1
3.3%
2.9%
2.2%
2.1% 5.1
4.3
3.2
2.7
1Q03 2Q03 3Q03 4Q03
Outgoing SMS/customer/ month
% Data ARPU/Total ARPU
• Increasing penetration of data enabled handset with growing contribution to revenue, beating forecasts
• CDMA 1xRTT coverage in 101 cities. Speed of 144Kbps
• CDMA 1XRTT overlay in key TDMA areas already deployed: Porto Alegre, Brasilia, Goiânias and more than 55 municipalities of Rio Grande do Sul & Goiás.
1 All figures including TCO.
12
Growing revenue generation & short term pressure on margins due to higher than expected customer growth
Operating revenues (q-o-q change in local
EBITDA margin1
currency)
+9.4% 40%
33% 35%
4Q03 impacted
+2.1%
by non-
Service
recurring
revenue
items2
s
+50.0%
Handset
sales 3Q03 4Q03 4Q03
3Q03 4Q03 Normalised
+130%
Q-o-Q increase in net adds
1 Margins after management fees
2 The most important one being a provision at TCP for federal taxes PIS/COFINS.
13
TM Mexico: ready to capture strong growth potential
Net adds (000)
725
580
Logistic issues
Successful Xmas campaign solved
115
191 30
109
11 October November December
1Q03 2Q03 3Q03 4Q03
Share of net adds (E) (000)
11.2% total
33%
market share
25%
15%
1%
1Q03 2Q03 3Q03 4Q03
• Steady expansion of distribution network:
– >6,200 POS in 2003 vs. 5,000 forecasted & 2,000 in 2002
– +70% in POS vs. 3Q03
• Strong commercial activity has continued in January 04
14
TM Mexico: Expanded GSM coverage
Initial plans for 2003 New plans (October, ID) 2003A
• 46 cities covered by YE • Coverage in >80
• Coverage in 96
cities
• Additional coverage in cities
cities where GSM already
launched • Capex: €483MM
Customers (000)
3,454
2,419 26% of total
customer base in
GSM
2002 2003
2004-06E
• Continue to accelerate GSM build-up, improving competitive position
• Cheaper network deployment:
– 2003-06E capex guidance: €1.200MM
– 20% more cities covered than initially planned
15
TM Mexico: Enhanced revenue stream
2003 revenue performance
Monthly prepaid recharges
(in local currency) (000)
+38%
Operating revenue Service revenue
44.3%
7.6%
-1.6%
-5.7%
October November December
3Q/2Q 4Q/3Q 3Q/2Q 4Q/3Q
Q-o-q MOU & ARPU1 evolution
-4.7% -4.8%
4Q03 4Q03
/3Q03 /3Q03
MOU ARPU
• Growing contribution form prepaid recharges
• Rational MOU & ARPU dilution from new customers
• Ongoing recovery of usage patterns in January 2004
1 As a result of the homogenisation to TEM Group’s methodology of MOU & ARPU calculation, past quarters’ TMM MOU & ARPUs have been recalculated in 4Q03.
16
Group Capex
MM€ 2003 % Change
2003/2002
Spain 521 +0.3%
Brazil 153 + 7.9%
Mexico 483 n.s.
Others 57 (65.0%)
Total 1 1,214 +32.1%
• Spain:
• Increasing GSM/GPRS capacity in main cities.
• Progressive expansion in UMTS network
• Brazil:
• Increasing capacity.
• CDMA 1xRTT overlay
• Mexico:
• Deployment of GSM
1 Capex ex licences and capitalized financial costs.
17
Net debt & financial results
MM€ 2003 %Change
2003/2002
Net financial results (378) 20%
Debt financial expense (642) +53%
Financial Income 164 +32%
Net interests (478) + 62%
Financial provisions & net forex 100 c.s.
Average consolidated net debt (€Bn) +5%
2002 ex –4Q 2003 changes in consolidation
• Increase from changes in consolidation perimeter in 4Q02: +€1.6Bn net debt from consolidation of Pegaso, acquisition of 15% of TCP & Brasilcel consolidation
• Higher expenses from changes in consolidation in 4Q02: +€14MM from Pegaso; +€177MM from Brasilcel
• Capitalization of UMTS financial costs in 1H02: €59.5M. Ex-capitalized expenses on our debt in 2002, net financial results would have remained stable
• One-off items: €12.4MM derived from accrued interests on contingencies provisioned2
• Net forex gain from Argentinean peso appreciation vs. the €
Net debt 1 (€Bn)
7.708 Net Debt/EBITDA: 1.1X
6.970
24.8%
27.0% 5.779
5.087
2002 2003
Consolidated net debt
Proportionate net debt
1 Looking forward, consolidated net financial debt will increase reflecting TEM’s commitment with respect to the deferred payment of IPSE’s license in favour of the Italian Ministry of Treasury .
2 Mainly in Argentina & Brazil
18
Net income growth
MM€
4,463
-1,421 -81
-378 -102 -5
21 1,608
-890
EBITDA Depreciation Profit from Net financial Goodwill Net Taxes Minorities Net Income
associates expenses Amortization extraord.
income
2003 y-o-y
19.5% 7.9% -49.4% 19.6% 16.8% n.s. c.s. n.s. c.s.
change
Net income y-o-y growth ex-2002 UMTS provisions: 14.4%
19
Net Debt evolution
6,970
332
768 5,087
Change in Net 810 51
-1 -112
Debt 353
(MM€)
-4,084
4Q02 CF from Net interest Capex Taxes Dividends Net Others Forex 4Q03
operations paid paid Paid Paid payments impact &
for financial Others
investments
4,463
Cash Flow after
-353
dividends
(MM€) -1,214 104
1,771
-768 -51
-332 -78
EBITDA Net interest Accrued Dividends Taxes paid Working Net Others Cash Flow
paid CAPEX Paid capital payments after
for financial dividends
investments
20
Dividend policy
Recurrent net income1 (MM€) Proposed dividend (MM€)
Proposed Gross Dividend/Share Proposed dividend payment date
03/02
2003 2002
growth
1,607.9 1,405.8 14.4%
795.7 757.8 5%
0.1838 0.1750 5%
June 2004
• Strong FCF generation allows to:
• Propose dividend policy according with Company’s guidance
• Maintain flexibility to speed up organic growth if suitable & to selectively address potential growth projects
• Sustain solid balance sheet
1 Excludes net extraordinary provisions associated with the write-downs of assets and provision for associated restructuring costs accounted in 2002.
21
Conclusion
• Sound set of results derived from:
• Strong commercial activity & increased usage across markets
• Maintained leadership in major markets
• Enhanced competitive position in Mexico to capture a significant part of the potential growth of the market
• Continued commercial & technology innovation
• Robust profitability despite strong customer growth
• High cash-flow generations & solid balance sheet
22
2004 Outlook: Robust top line growth & solid operating efficiency
Group operating revenues Group EBITDA Group Capex
(MM€) (MM€) (MM€)
1,600
10.070
1.214
>13%
4.463 >7%
2003 2004E 2003 2004E 2003 2004E
• TME’s 2004 operating revenues growth above 9% while maintaining an EBITDA margin above 50%, in line with ID guidance.
• VIVO’s 2004 EBITDA margin slightly below 40% due to strong commercial activity. Reiterated medium term goal (EBITDA margin 40-45% by 2006).
• Investing in Mexico, at the expense of short term EBITDA for profitable customer growth. Cheaper GSM network deployment.
• Increased capex needs vs. 2003 due to UMTS network roll-out in Spain & GSM deployment in Argentina, with stable capex in Mexico.
Revenues and EBITDA figures assuming constant exchange rates as of 2003. All figures exclude changes in consolidation. ID: Investor’s Day (October 2003).
23
Telefonica Moviles
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 Móviles, S.A | ||||||||
| Date: February 23, 2004 |
By: | /s/ Antonio Viana Baptista | ||||||
| Name: |
Antonio Viana Baptista | |||||||
| Title: |
Chief Executive Officer | |||||||