Safe Harbor This presentation contains statements that constitute
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.
Terra Lycos and the Market Our Strategy Financial Results: Path to Profitability Investor Conference March 2001, Rio de Janeiro.
First Class Partners Worldwide: Telecom, Media, Internet Investor Conference March 2001, Rio de Janeiro.
Building on a Great Foundation l More than 6. 1 million access subscribers l Over 350 million page views per day l More than 94 million unique visitors l 3 million wireless subscribers l Presence in 41 countries l $2. 4 billion in cash As of December 2000 Investor Conference March 2001, Rio de Janeiro.
Our Vision Globalization Convergence Profitability Our Goal: To be the most visited online destination in the world Investor Conference March 2001, Rio de Janeiro.
The Market is Evolving. . . And We are Well Positioned Global Footprint l Deep penetration in 41 major markets Local Market Execution l Strong local management Content Access 6. 1 million subs l Wireless platform Strong global brands l Deep content portfolio l l Revenue Growth l Industry leading growth Operating Margin l Best practices Globalisation, Convergence, Profitability Investor Conference March 2001, Rio de Janeiro.
Globalisation: The Opportunity Before Us Europe 26% North America 69% 15% 99% 31% Asia 33% 41% 56% Latin America 79% 39% 70% 43% 2000 -2003 CAGR Internet Users 2000 -2003 CAGR Online Ad. Spending Source: e. Marketer and Jupiter Communications 2000 Investor Conference March 2001, Rio de Janeiro. 2000 -2003 CAGR e-Commerce Spending
Globalisation: Extend Leadership Europe #1 Canada #1 l 2000 Revenues Lycos Europe Eur 1 33 M TRLY Spain Eur 54 M Total Eur 187 M United States Yahoo Europe Eur 123 M #4 Asia #1 #2 Japan #2 l #1 in Hispanic US l 42% Reach Korea Latin America #1 l Launched 16 countries in 14 months Consolidate markets through acquisitions l Leverage state-of-the-art global delivery platform l Exploit local expertise l 8 million unique users in Korea l Portals launched across China, India, Hong Kong, Taiwan, Singapore, Malaysia, Thailand Philippines l Investor Conference March 2001, Rio de Janeiro. Source: Media Metrix and Terra Lycos Management
Convergence: On The Leading Edge Media Communications l Bertelsmann l Telefonica Media TERRA LYCOS l Endemol l Telefonica Móviles l Mirae Corp. l Kadokawa l Singapore Telec. l Bell Canada Interactive Content l Terra Lycos Investor Conference March 2001, Rio de Janeiro.
Terra Lycos and the Market Our Strategy: Capitalising on Global Convergence Financial Results: Path to Profitability Investor Conference March 2001, Rio de Janeiro.
Strategy: Capitalising on Global Convergence Providing Access Aggregating Audience Investor Conference March 2001, Rio de Janeiro. Offering Rich Content Monetising Traffic
Strategy: Access Providing Access l Acquiring users l Fostering customer loyalty Investor Conference March 2001, Rio de Janeiro.
The Access Model Free Access USER ACQUISITION VEHICLE New User MIGRATION Paid Access Paid Services Experienced User Investor Conference March 2001, Rio de Janeiro. l l l Paid dial-up Cable Wireless Satellite XDSL Advertising E/Commerce
Our Unique Wireless Platform Mobile Operator l l User knowledge Billing relationship Technology Infrastructure Portals l Content expertise l Services offerings l E-commerce relationships Wireless Portals l Development of killer applications l Niche applications l Management focus + l 27. 9 million managed customers world-wide l 94 million unique users Investor Conference March 2001, Rio de Janeiro. = l 3 million wireless subscribers The World’s Leader in the Wireless Internet Market
Strategy: Audience Providing Access l Acquiring users l Fostering customer loyalty Aggregating Audience l Best-of-breed services attract traffic and facilitate circulation Investor Conference March 2001, Rio de Janeiro.
Multibrand Strategies Dominate Media…. . Bertelsmann/ Gruner+Jahr AOLTime. Warner Bantam Dell Random House Investor Conference March 2001, Rio de Janeiro. Disney Viacom
. . . And will Dominate the Internet Search Verticals Ifigenia PLUS Community ISP Commerce Investor Conference March 2001, Rio de Janeiro.
Strategy: Content Providing Access l Acquiring users l Fostering customer loyalty Offering Rich Content Aggregating Audience l Best-of-breed services attract traffic and facilitate circulation Investor Conference March 2001, Rio de Janeiro. l Use different platforms l Verticals: user loyalty and duration
Multibrand — Appealing to a diverse Web Audience 0 10 20 30 40 Ifigenia PLUS Investor Conference March 2001, Rio de Janeiro. 50 60+
Targeted Vertical Content Terra Lycos Bertelsmann Random House Ifigenia PLUS Investor Conference March 2001, Rio de Janeiro. Telefónica Media
Strategy: Monetisation Providing Access l Acquiring users l Fostering customer loyalty Offering Rich Content Aggregating Audience l Best-of-breed services attract traffic and facilitate circulation Investor Conference March 2001, Rio de Janeiro. l Focus on verticals increases user loyalty and duration Monetising Traffic l Sell advertising and commerce to a segmented audience
World-Class Advertising and Commerce Partners Half of the Fortune 50 Investor Conference March 2001, Rio de Janeiro.
Next Generation Business Model: Globalization, Convergence and Profitability Fixed Lines Wireless Broadband Web TERRA LYCOS Telefonica Content l Media Revenue l Advertising l Commerce l Direct marketing Investor Conference March 2001, Rio de Janeiro. l Access Bertelsmann Content Revenue l Subscription fees l Value added services
Terra Lycos and the Market Our Strategy Financial Results: Path to Profitability Investor Conference March 2001, Rio de Janeiro.
2000 Results Investor Conference March 2001, Rio de Janeiro.
Long-Term Operating Model Access Revenue 100% % Gross margin 50 -55 Media 100% 85 -90 Research & development Investor Conference March 2001, Rio de Janeiro. 80 -85 30 -35 General & administrative Source: Terra Lycos Management Reports 100 8 -10 Sales & marketing Operating margin Total 5 -8 10 -15% % 35 -40% 30 -35
Accelerated Revenue Growth Advertising/Co mmerce Leverage Content Portfolio Wireless l Bertelsmann revenue commitment l Large and experienced sales force l Advertising and commerce cross-selling l Unique global platform l Integration of Bertelsmann and Telefonica content l Integrate Terra and Lycos content across network l Joint Venture with Telefonica Móviles Investor Conference March 2001, Rio de Janeiro.
Accelerated Path to Profitability Operating Leverage Avoided Investments l Process efficiency l Leverage scale to improve cost structure l Rationalisation of R&D activities l Drive traffic among branded sites l Single G&A function l Terra avoids investments in Europe, Asia and North America l Lycos avoids investments in Latin America Investor Conference March 2001, Rio de Janeiro.
Terra since the IPO Revenues (M$) EBITDA % Subscribers (M) Page Views (M) (2) Number of Countries (1) As of December 1999 (2) Million of Average Daily Page Views Investor Conference March 2001, Rio de Janeiro. nov-99 dec-00 IPO Terra TRLY 84 (1) 205 -109% (1) -192% 0. 8 10 8 4. 1 44 16 mar-01 1 Q 01 E 526 169 -178 -66% -45%/-50% 6. 1 350 41 -
M&A Priorities GEOGRAPHY STRATEGIC BUSINESS UNITS Horizontals to drive audience aggregation l Verticals selective with growth (entertainment, business&finance, commerce, news, technology) l Acquisition Criteria Management Challenge l Consolidation in very sizable markets l Strategic alliances l Selective expansion l Drive growth and profitability through accretive deals Investor Conference March 2001, Rio de Janeiro.
Integration Background and Status Background: l Follow experienced model and best practices of both former entities l Very limited geographical overlaps l Same Internet culture l ‘Think global act local’ approach l Initial steps l Focus on 4 Q 2000: Above analyst consensus estimates Revenues $164 M vs $155 M and EBITDA per share ($0. 17) vs (-$0. 20) l Finance & Administration: integrated across both former entities l Commercial teams working together: Miami, Brazil , rest of Latam l Investor Conference March 2001, Rio de Janeiro.
Integration Background and Status l In Process l New organization announced: clear accountability and measurements (matrix P&Ls) l Integration priorities defined: business driven. l Scale through technology, strategic marketing and customer service centralization l Organization development criteria based on common languages, proximity, market size and scale Investor Conference March 2001, Rio de Janeiro.
New Organization • Executive Chairman • Geographical Units • P&L • Strategic Units • P&L • USA • ISP • LATAM • Portal • E/Commerce Investor Conference March 2001, Rio de Janeiro. • Global Support • Functions Finance M&A Special Projects. Legal Audit Business Development Sales Marketing Technology Operations Human Resources Labor Relations Communications
Terra Lycos: A Winning Internet Company l #1 Global presence - in breadth and depth l #1 Mobile platform – revenues and technologies l #1 In Revenue growth – from 2 x to 5 x others l #1 Balance sheet – no debt and $2. 4 billion in cash l Unencumbered alliances with leading telecommunications and media companies l Vast content reserves at negligible cost l The most complete investment vehicle for convergence. . . all with a clear path to profitability Investor Conference March 2001, Rio de Janeiro.
A Global Powerhouse Is Born
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