Telefonica S.A. — Investor Presentation 2021

May 13, 2021

RESULTS January - March 2021

Disclaimer

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Q1 21 Results

Mr. Ángel Vilá COO

A strong start to 2021; improving growth outlook

Q1 21 highlights

Revenues	OIBDA	EPS	Cash conversion	Customer experience
y-o-y org	y-o-y org	y-o-y org	y-o-y org	y-o-y
Declined 1.3% +0.7 p.p. vs. Q4 20	Up +0.3% +3.1 p.p. vs. Q4 20	€886m net income, +118% €0.15 EPS +158%	OIBDA – Capex margin +0.3 p.p. FCF x3.0 y-o-y	Churn declined 0.3 p.p. NPS +9 p.p. in core markets
B2B revenues+2.8 p.p. vs. Q4	Improvement across the board	Strong earnings,	(ex spectrum payments)	Digital sales +37% in 4 core
Robust customer metrics	OIBDA margin +0.6 p.p.	greater value	Smart capital allocation	markets

✓ 3 rd consecutive quarter of sequential improvement in revenue and OIBDA trends; OIBDA and OIBDA-CapEx already growing y-o-y

✓ March was the strongest month in Q1, showing y-o-y organic growth in revenues, OIBDA and OIBDA-CapEx

✓ Q1 faced the toughest y-o-y comparison

Progress on strategy

• ✓ Advancing towards completion of UK JV (preliminary CMA approval) + Telxius Towers; ~€9bn net debt reduction, >€6bn capital gains to be booked in Q2 21E
• ✓ Hispam: further improvements to operating model, +2.6 p.p. y-o-y in OIBDA-CapEx margin; Chilean InfraCo operational in H2 21
• ✓ Strong growth across T. Tech companies; revenues +25.1% y-o-y
• ✓ T. Infra: regulatory approval of towers sale to ATC most likely in Q2 21; launch of FiBrasil underway; UGG rollout & commercialisation initiated
• ✓ Streamlined operations: 79% of processes and 35% of sales digitised in Q1; implementation of Open RAN solutions progressing to plan
• ✓ Strong ESG focus recognised by S&P Global Rating (72 out of 100) and Bloomberg Gender Equality; founding member of European Green Digital Coalition

Financial performance

	Q1 21

€ in millions	Reported	Reported y-o-y	Organic y-o-y	4 core markets y-o-y org.
Revenues	10,340	(9.0%)	(1.3%)	(2.0%)
OIBDA	3,417	(9.1%)	0.3%	0.3%
OIBDA margin	33.0%	(0.0 p.p.)	0.6.p.p.	0.9 p.p.
OIBDA-CapEx (ex-spectrum)	2,079	(8.6%)	0.1%	(2.9%)
(OIBDA-CapEx)/Revenues (ex-spectrum)	20.1%	0.1 p.p.	0.3.p.p.	(0.2 p.p.)
Net Income	886	118.3%
EPS	0.15	157.8%
FCF (incl. leases principal payments)	33	(85.8%)
FCF (ex-spectrum paid)	727	201.4%
Net Financial Debt (ex- leases)	35,796	(6.4%)

FX and C-19 impacts on reported figures less pronounced than in Q4 20

Organic margin expansion on accelerating digitalisation

CapEx stable y-o-y org.; ~ 50% on NGN

Neutralised FX impact at FCF level

Spain | Continued recovery in revenue and OIBDA

Key financials

y-o-y organic

• Moving towards a more rational market
• Q1 trading affected by tariff upgrade and end of promotions
• New Fusion portfolio to bolster recovery
• B2B "Fusión Empresas" enhanced with new IT services
• Record customer satisfaction, high value base
• Superior convergent ARPU €89.7; ARPU GAP increased y-o-y
• New digital businesses (alarms x4 gross adds y-o-y)
• Convergent churn under control (1.5%; -0.1 p.p. q-o-q)
• Improved top line (+2.0 p.p.) and OIBDA (+0.1 p.p.) trends q-o-q
• Record growth in IT sales: +7 p.p. q-o-q
• Solid wholesale revenues underpinned by LT fibre agreements
• Superior network: 25.7m FTTH premises passed; 80% 5G coverage

Profitability and cash generation

Organic margin

Germany | Solid operational and financial performance

Q4 20 Q1 21

220 Q1 Net additions (k) ARPU y-o-y Operational KPIs Mobile contract +17% y-o-y O² ARPU (ex-roaming) O2 churn at historic lows Q1: 1.0% +0.4% +0.5% Q4 20 Q1 21

Key milestones

• Full lockdown during quarter impacted commercial activity and roaming; underlying trends remained fully intact
• Strong trading momentum; good traction of O² Free
• 'Good' rating in 'CHIP' magazine fixed network test
• 5G network active in >30 cities
• Responsible Business Plan 2025 launched

Key financials

y-o-y organic Margin

Good financial performance

• Revenue reflects COVID headwinds (-€24m negative impact)
• Continued positive momentum in handset revenue growth (+2.3% y-o-y in Q1), driven by strong demand for high value handsets
• OIBDA growth accelerated (Q1 +5.7% y-o-y); effective COVID-19 cost management
• CapEx up 1.8% y-o-y in Q1; with back-end loaded phasing
• OIBDA-CapEx/Revenues +1.4 p.p. y-o-y

4

UK | Record Q1 OIBDA, successful spectrum acquisition

Accesses, m (y-o-y)

Operational KPIs Operational highlights

• Successful auction outcome, paid considerably lower than European benchmarks for 40Mhz of 3.6GHz and 20MHz of 700 MHz FDD, plus agreed a trade to create contiguous bock of 80MHz in the 3.4 GHz- 3.8 GHz band
• Market leading NPS and customer loyalty
• 5G coverage expanded; now in 180 towns and cities
• Preliminary CMA approval for JV with Virgin Media received
• Commercial and revenue trends impacted by lockdown retail closures

Financial highlights

• Record Q1 OIBDA, accelerated growth q-o-q; continued cost control and focus on direct trading
• OIBDA margin expansion (+5.6 p.p. y-o-y)
• Q1 CapEx up 17.0% y-o-y; increased network investment
• Improved cash profitability; OIBDA-CapEx margin +1.9 p.p. y-o-y

5

Key financials

Brazil | Outstanding value growth led improvement on financials

Key financials

y-o-y organic

• Reinforced mobile leadership (33.1% MS; +0.1 p.p. y-o-y)
• Record low contract churn levels (1.1%, -0.5 p.p.)
• Digital prepaid top-ups +28.8% y-o-y
• Increasing demand for high-quality connectivity
• Incremental R\$32 FTTH ARPU vs. VDSL
• Building a digital ecosystem: Vivo Money, Vivo Pay, CDF, Dotz

Good financial performance

• Resuming revenue growth
• Core businesses (88% of total) +4.7% y-o-y
• Fixed revenues +6.3 p.p. q-o-q to -1.4%
• Digitalisation & simplification continue to drive savings
• Optimised capital allocation
• Growth CapEx 69% of total (> fibre; < legacy)
• Q1 21 COVID impacts y-o-y: Revenues -1.2 p.p.; OIBDA -0.3 p.p.
• Vivo's ESG initiatives proved to be essential to accomplish their purpose to "Digitalise to bring closer"

Tech | Growth acceleration for trusted digitalisation partner

Q1 (y-o-y) T. Tech accelerated revenue growth

T. Cloud & Cyber Tech

Q1 (y-o-y)

• Focus on Managed, Professional and Platforms services (high value services)
• Relevant deals in Public Admin and banking sectors
• High value Cloud & Cyber Rev.
• Reinforced proposition
• Next Defense, Cloud Garden 2.0

"Very Strong Player in Unified Cloud Communications" "Very Strong Player in Managed Security" GLOBALDATA

• Key assets and partner ecosystem
• Cloud Hub in Spain, Intelligent SOC with multiple locations
• Global IoT, in-house AI/Big data

• 300 partners & agreements with global hyperscalers

• Experienced and trusted digitalisation partner
• E2E portfolio (consultancy, integration, management)
• Global reach & cross selling, increased demand
• Targeting >5.5m B2B customers at T. Group
• Digital transformation, a MUST for B2B

T. IoT & Big Data Tech

• Revenue growth at IoT connectivity
• Recovey in Industry 4.0, Sustainability, Utilities, Transport & Logistic
• Key role for Corporate and Public Admin digitalisation
• Unique "AI of Things" proposition

"A Leader in MQ Managed IoT Connectivity Services" (for 7th time)

Infra | Top infrastructure portfolio manager

✓T. Group's FTTH network

• 49.3m owned PPs; +20% y-o-y
• 13.3m connections¹ ; +22% y-o-y
• 27% up-take¹ ; +0.5 p.p. y-o-y
• ✓UGG (JV 40% T. Infra / 10% T.DE/ 50% Allianz)
• €1.65bn financing (Mar-21); covers liquidity needs for 3yrs
• Rollout & Commercialisation initiated in Mar-21
• c.50,000 km; >2m PPs 6yrs
• ✓ FiBrasil (25% T. Infra / 25% T.BR/ 50% CDPQ)
• c.5.5m PPs 4yrs (1.6m brownfield PPs from T.BR); EV/OIBDA PF 16.5x
• ✓ InfraCo² (60% KKR/ 40% T.CHL)
• 3.5m PPs 22E (c.2m brownfield PPs from T. CHL); EV/OIBDA 18.4x
• ✓ Further fibre optionality (Europe & Hispam)

Fibre Subsea Cables Towers

✓Optionality

✓Attractive market

• Mission critical digital assets
• Exponential traffic growth
• ✓Premium infrastructure
• State-of-the-art cable portfolio: c.94k Km of subsea fibre
• Unique value proposition: 6 key new systems deployed since 2018
• Best-in-class Tier-1 IP network

✓High top-line and cash-flow visibility

• Renewed MCAs contracts with TEF OBs
• Large contracted backlog
• c.65% revenues with 3rd parties
• ✓Scalable growth platform

✓Further optionality 8

✓Crystallising value, strategic &

Data Centres/Edge

• 20% stake in Nabiax after

contributing 4 DCs (2 Spain+2 Chile)

operational flexibility

✓Sale of towers to ATC

• Record multiple of 30.5x OIBDAaL;

€7.7bn; €4.6bn net debt reduction

• Most likely approval in Q2 21

✓ CTIL provides optionality in UK

(1) Includes retail and wholesale accesses connected to the FTTH network (2) T. Infra doesn't have a stake in InfraCo

Q1 21 Results

Ms. Laura Abasolo

CFCDO & Head of T. Hispam

Hispam | Reducing exposure without jeopardising growth

Operational KPIs Key milestones

Net adds ('000)

Key financials

y-o-y organic

• Contract net adds +54% q-o-q
• FTTH net adds x3 y-o-y
• 10.4m premises passed with FTTH (+1.4m in LTM)
• Improving customer experience: churn reduced across services
• Contract churn: -0.6 p.p. y-o-y to 2.0%
• FTTH churn: -0.7 p.p. y-o-y to 1.7%

Good financial performance

• Improved capital structure
• Aligning local leverage with T. Group levels
• Asset light model
• Co-investments deals with ATC & ATP / Chile InfraCo
• 35% of traffic in Mexico already in ATT's network
• Wholesale satellite business sold
• Reduced capital employed
• CapEx/Sales: 11%, -4 p.p. vs. Q1 20
• Q1 COVID impacts y-o-y: Revenues -0.4 p.p.; OIBDA -0.8 p.p.

Continued balance sheet optimisation

Net Financial Debt

€m

10

1. includes net proceeds for Telefónica from the sale of Telxius Towers EU and second tranche of TEF DE towers

2. Includes proceeds from the JV in the UK, the sale of Telxius Towers, the disposal of Costa Rica, the sale of stakes in InfraCo Chile and Fibrasil and reduced by payment for the acquisition of Oi assets

Achieved significant endorsement of ESG commitments

Alignment with UN Sustainable Development Goals, targeting Net Zero Emissions in our four main markets by 2025

LEADING BY EXAMPLE (SDG 5 & 16)

Building trust capital with our customers, employees, suppliers and shareholders

• Non-financial objectives for short-term remuneration refined; weight of Climate Change up to 25% (from 5%) in our overall ESG goals. Maintaining our goals on gender equality, society and customers
• Long-Term Incentive Plan 2021-2026; new ESG objective relating to CO2 emissions, weighted at 10% of the total threshold
• Promotion of gender equality; Bloomberg Gender Equality Index
• S&P Global Ratings; Telefónica's sound management of environmental, social and governance risks
• Top global telco in the Ranking Digital Rights 2020

HELPING SOCIETY TO THRIVE (SDG 4 & 8 & 9)

Economic and social development based on digitalisation

• Issued first sustainability hybrid bond of the sector valued at €1bn, including green and social projects to deploy broadband in rural and remote regions and promoting employability.
• Wayra initiative has driven the creation of more than 10,000 skilled jobs in Europe and Latam

BUILDING A GREENER FUTURE (SDG 13)

Through digitalisation, we continue to contribute to a more sustainable, circular and decarbonised world

• Founding member of the European Green Digital Coalition; green digital solutions for an innovative, sustainable and resilient economy
• Became one of the first 100 companies to join The Climate Pledge, an initiative to commit to achieving net-zero carbon by 2040
• Certifying our ECO-Smart seal which guarantees environmental benefits from our digital solutions

Conclusion

Mr. Ángel Vilá COO

2021 guidance

Financial Targets	2021 guidance	Q1 21
Revenues (y-o-y organic)	"Stabilisation"	(1.3%)
OIBDA (y-o-y organic)	"Stabilisation"	0.3%
CapEx/Sales (ex spectrum)	Back to normalised level up to 15%	13%

Shareholder remuneration

2021 Dividend	€0.30/Share	2021 calendar payments
Interim Dec-21	€0.15/sh. (Voluntary Scrip)	Jun/21 €0.20/sh. (Voluntary Scrip)	1.5% treasury stock cancelled
Final Jun-22	€0.15/sh. (Voluntary Scrip)	Dec/21 €0.15/sh. (Voluntary Scrip)

Good progress against all our strategic priorities

• Establishing the path to sustainable, profitable growth
• Laying the right foundations to generate top line growth with greater capital efficiency
• Further progress on ESG objectives, increasing our sustainable finance portfolio with a new sustainable hybrid bond

Strong start to the year, despite toughest comps and ongoing COVID-19 impact

• Positive quarter-on-quarter momentum in revenues and OIBDA
• Return to growth in key metrics in March (y-o-y organic); Revenues, OIBDA, OIBDA-CapEx
• Trends in FCF and net debt reflect spectrum payments. FCF ex spectrum payments up 201.4% y-o-y
• EPS up 157.8% vs Q1 20

Smart capital allocation

• UK spectrum auction completed at 40% below benchmark prices
• 50% CapEx ex spectrum in the core 4 markets allocated to NGN; CapEx (ex spectrum)/Sales at 13% in Q1 21

Further reduction in net debt underway

• FCF accretive transformational M&A (to reduce net debt by a further c. €9bn in 2021)

Firmly on track to meet 2021 financial guidance

Telefónica's management will host a webcast on 13th May at 9:30 am (CET), 8:30am (BST), 03:30am (EST)

Participants from Telefónica: Ángel Vilá (COO), Laura Abasolo (CFCDO & Head of T. Hispam), and Adrián Zunzunegui (Global Director of Investor Relations)

• To access the webcast: click here
• The webcast replay will be available on Telefónica IR's website after the event

Webcast Q&A Session

• To participate in the Q&A session, please register using the following link to receive the dial in and PIN details. click here.

For further information, please contact: Investor Relations Adrián Zunzunegui (adrian.zunzunegui@telefonica.com) Isabel Beltrán (i.beltran@telefonica.com) Torsten Achtmann (torsten.achtmann@telefonica.com) Tel. +34 91 482 87 00 ir@telefonica.com www.telefonica.com/investors

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