Telefonica S.A. — Investor Presentation 2022

Jul 28, 2022

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Key takeaways

Mr. José María Álvarez-Pallete Chairman & CEO

Strategic focus helps improved growth momentum

Accelerated revenue & OIBDA growth (Q2 y-o-y reported and organic)

Over-delivery in H1 Moving to mid-to-high end of guided range despite toughened context

Proactively managing macro challenges

Reaping benefits from new operating model

Good performance across markets

• Spain; progressively improving OIBDA y-o-y; miMovistar portfolio gaining traction
• Brazil; Strengthened leadership, improved financial and operational momentum
• 1 st anniversary of VMO2 integration, on track to deliver £6.2bn NPV on synergies; back to revenue growth; improved KPIs, accelerating investments
• Germany; good progress in 5G rollout (50% pop) and sustained financial performance

Opportunities

• T. Infra, sale of 45% of Bluevia, fibre wholesale provider in Spain rural areas
• T. Tech, strong operational momentum and successful acquisition integration; interest from different investment ecosystems
• T. Hispam, leaner operational model, more favourable framework, increased optionality
• Spain; in-market consolidation prospects, ERF opportunity
• Room for improving regulation in Europe
• Kernel: enabler ecosystem for the sector aiming a bigger stake of digital economy

Contribution to society via our network reach, our P&S and our social efforts to make technology more accessible

Improving trends, value accretive growth

Q2 Revenue y-o-y organic	Q2 OIBDA y-o-y organic	Q2 CapEx/Sales organic	FCF H1
+5.2%	+3.4%	13.9%	€1,348m
+2 p.p. q-o-q; back to growth in all OBs Robust Service revenues (+1.9 p.p. q-o-q)	+1.3 p.p. sequential improvement despite inflationary pressures	Q2 CapEx +2.4% y-o-y org H1 (OIBDA-CapEx)/sales +0.2 p.p.	Net debt €28.8bn +€1.4bn q-o-q reflecting Oi + BE-Terna

Ramping-up reported revenue & OIBDA growth (y-o-y)

• Back to y-o-y reported revenue growth since Q3 19; +0.8% y-o-y
• OIBDA growth (underlying) improved sequentially by 8.6 p.p.
• June y-o-y underlying: revenue +12.1%, OIBDA +4.5%
• Resilient B2B growth leveraging on competitive advantages
• Increasing contribution from digital ecosystem development

Expanding FTTH and 5G footprint; enhancing value proposition

• World leadership (ex-China): 164.7m UBB PPs (+6% y-o-y)
• 5G; population coverage in Spain at c. 83%, c. 1,500 cities covered in Germany, and over 600 (cities/towns) in UK

Strong FCF, sequential improvement (€835m in Q2 22)

• H1 22 +48.2% y-o-y

FX trends increasingly supportive

• +5.3 p.p. and +1.4 p.p. to Q2 y-o-y revenue & OIBDA

Strengthened balance sheet; guaranteed solvency

• Smoothing maturity profile; liquidity >2yrs debt coverage
• Avg. debt life 12.8yrs; fixed rates 76%
• €27.8bn net debt as of Jun-22 after post closing events

Key financial metrics

	H1 22		Q2 22
€ in millions	Reported + 50% VMO2 JV	Organic y-o-y	Reported + 50% VMO2 JV	Organic y-o-y
Revenue	22,402	4.2%	11,519	5.2%
OIBDA	7,465	2.7%	3,712	3.4%
OIBDA-CapEx (ex-spectrum)	4,480	5.3%	2,045	4.1%

	H1 22		Q2 22
€ in millions	Reported	Reported y-o-y	Reported	Reported y-o-y
Revenue	19,450	(4.2%)	10,040	0.8%
OIBDA	6,345	(62.4%)	3,146	(76.6%)
OIBDA Underlying	6,228	(7.9%)	3,157	(3.5%)
Net Income	1,026	(88.1%)	320	(95.9%)
FCF (incl. leases principal payments)	1,348	48.2%	835	(4.8%)
Net Financial Debt ex-leases	28,817	8.0%1

¹Y-o-y change with reported net debt in H1 21 adjusted for Q4 21 Telxius transaction impacts.

Positive FX impact H1 FCF €127m				Changes to the perimeter (VMO2, TLXS towers, C. Rica, El Salvador)
€ (m)	H1 22	Q2 22	€ (m)	H1 22	Q2 22
Revenue	768	526	Revenue	(2,708)	(1,115)
OIBDA	283	187	OIBDA	(999)	(411)

Accelerated momentum trends despite challenging macro

Managing inflationary pressures

Revenue growth management

Energy costs (4% of OpEX); variable, fixed and hedged contracts High energy efficiency (fibre +85% vs copper; 5G +90% vs 4G) Renewable LT agreements; 100% electricity renewable sources Moderate wage cost base (13% o/rev) Lease cost (6% o/rev); not all inflation-linked Best in class CapEx/Sales (up to 15%)

Updating 2022 guidance; dividend confirmed

2022 guidance

organic and including 50% of the JV in 2022 and 2021

	Targets	2021 Base	Initial 2022 guidance	Updated 2022 guidance	H1 22
Revenue		€42,452m	"Low single digit growth"	"High-end of low single digit growth"	4.2%
OIBDA		€14,127m	"Low single digit growth"	"Mid-to-high-end of low single digit growth"	2.7%
CapEx/Sales (ex	spectrum)	14.7%	Up to 15%	Maintained up to 15%	13.0%
Shareholder remuneration
	2022 Dividend		€0.30/share	2022 calendar payments Jun/22 €0.15/sh.; voluntary scrip	June payment 74.5% of shareholders opted for new shares
Interim Dec-22			€0.15/sh. (cash)	Dec/22 €0.15/sh.; cash
Final Jun-23			€0.15/sh. (cash)	139m treasury stock cancelled April 22	0.4% treasury stock to be cancelled
					6

Advancing towards our sustainability targets

Environmental Social Governance

• Net-zero by 2040 (scopes 1, 2 & 3)
• Zero-waste by 2030

• 50m tCO² avoided customer emissions by 2025

Reducing our carbon footprint:

• 1st in sector to receive SBTi validation of Net-zero
• 1st in sector to participate in WEF 1tn Trees initiative - pledge to enhance biodiversity

equipment internally and with suppliers

• Solar360 JV offering solar power for on-site use

Helping our customers decarbonise:

to consumers and businesses

Examples of

• 90-97% MBB rural coverage by 2024¹
• 33% female executives by 2024
• Zero gender pay gap by 2050

Connecting the unconnected:

• Internet for All connects 2.5m with 4G (Peru)

Promoting employability in society:

• ~1m people trained by T. Foundation in 2022

Retaining and attracting talent:

• +1,400 digital talent acquisition at T. Tech

Mobilising employees for social good:

• 29k employees participated in initiatives around International Volunteering day

• Zero-tolerance of corruption
• ~25% financing² linked to sustainability by 2024
• Parity³ in top governing bodies by 2030

Increasing sustainability-linked financing:

• €1bn senior sustainable bond issuance (Group)
• 1st sustainability-linked bond issued in Brazil, tied to climate and diversity targets

Highest standards of corporate governance:

• 33% female directors on Vivo's BoD, up from 25%
• ESG training launched for all employees with our Responsible Business Principles course

1 Includes Spain, Germany and Brazil ²Financing includes balance-sheet debt, hybrids and committed credit lines ³ Parity defined as not less than 40% of each gender represented

Promoting the Circular Economy: • Platform to stimulate the reuse of network our progress

Q2 22 Results

Mr. Ángel Vilá COO

Spain

Revenue & OIBDA growth (y-o-y organic)

Trading and

Strong market positioning Best ever NPS and lowest churn in 6 years Operational momentum Improved net adds q-o-q, FBB positive in Q2 Revenue y-o-y growth for 5th straight quarter Higher efficiencies amid challenging macro backdrop Positioned to benefit from in market consolidation

Germany

Mobile accesses (m)

Postpay net adds (k)

Revenue & OIBDA organic growth

Continued operational traction and strong financial performance on core business strength

Raised 5G target ~60% pop coverage at YE 22 within unchanged CapEx envelope

Steady revenue & OIBDA growth

2022 OIBDA guidance upgraded

Virgin Media O2

Lightning build (k)

Postpay net adds (k)

Revenue & OIBDA growth (y-o-y organic)

Focus on innovation, network investment and synergy realisation

Improved customer growth

5G in over 600 towns & cities

New ESG strategy: The Better Connections Plan

Revenue returns to growth OIBDA growth accelerates

2022 guidance reiterated

29.0 Accesses growth (y-o-y) FTTH Premises passed (m) 8% 9% 8% 7% 20% 41% 39% 36% 29% 25% Contract FTTH Q2 21 Q2 21 Q4 21 Q1 22 Q2 22 8%^{1 1} Excluding Oi's mobile assets acquisition

Revenue & OIBDA growth (y-o-y organic)

Tech, growing at scale ahead of the market

Strong capabilities

Strong by Global Data "Managed Hybrid Cloud Services"

T. Tech Revenue

• Leader by Global Data "Global Industrial IoT Services"

Infra, developing a leading portfolio of FibreCos

• •45% Vauban & CAA / 55% TEF (25% T. Infra / 30% T. Spain)
• •Neutral wholesale FTTH network in rural areas (T. Spain anchor client)
• •Target: 5m PPs; 1.5m in the next 2yrs (3.5m brownfield; 13% of TEF's network in Spain)
• •€1,021m gross proceeds for a 45% stake, strengthened financial flexibility (€0.7bn net debt reduction)
• •Value crystallisation at rich multiples: 27.1x OIBDA PF2022E
• •Expected closing by YE 22

UK

• Fibre JV process
• •50% Investor / 50% TEF - LG
• •Up to 7m greenfield PPs by 2027

Q2 22 Results

Mrs. Laura Abasolo CFCO & Head of T. Hispam

Hispam

FTTH & Cable premises passed (m) 8% 9% 8% 6% 5% 28% 26% 25% 22% 19% Contract FTTH & Cable Q2 21 Q3 21 Q4 21 Q1 22 Q2 22

Accesses Growth (y-o-y) Revenue & OIBDA growth (y-o-y organic)

Revenue OIBDA

Progressively improving: Growing in value and efficiencies

Revs +18.4% & OIBDA +33.4% (€)

4.6m FTTH & cable connections (+19% y-o-y) boosted by InfraCos

Revenues growing in all countries, for second consecutive quarter

Strong Balance Sheet, prudent management

1. Includes €5.5bn syndicated facility, €100m reopening of an existing Telefónica bond, USD 212.4m bilateral loan signed by T. Brazil, €1bn senior sustainable bond, BRL 3,500m SLB debentures issued by T. Brasil, and a Cornerstone credit facility by GBP 0.5bn

2. Including the net proceeds from the closing of Bluevia transaction (FiberCo in Spain), from the recovery of Telxius tax payments in advance, and including the acquisition of an additional stake in Telxius.

Conclusions

Mr. José María Álvarez-Pallete Chairman & CEO

Improved growth momentum

Accelerated growth in revenues & OIBDA (reported & organic y-o-y). Return to growth in all business (y-o-y organic) Managing inflationary & macro challenges FX supportive through Q2 y-o-y

Commercial progress drives growth (FTTH, 5G); improved customer experience and reduced churn Smart capital allocation; focus on investment, growth and returns

New infra vehicle created in Spain, capturing fibre growth opportunity and crystallising value

Proactive debt management, de-risking with long average debt life, rates highly fixed (76%)

Updating 2022 guidance, pointing to mid-to-high-end of range; dividend confirmed Common digital enablers; re-designing Telefonica for aiming a bigger stake of the digital economy Continued commitment to help society, a cornerstone of our company mission

Results presentation and Q&A Session

Telefónica's management will host a webcast on 28 July at 10:00 AM (CET), 9:00 AM (BST), and 4:00 AM (EST)

Participants from Telefónica

• José María Álvarez-Pallete l Chairman & CEO
• Ángel Vilá l COO
• Laura Abasolo l CFCO & Head T. Hispam
• Lutz Schüler l CEO Virgin Media O2
• Eduardo Navarro l Chief Corporate Affairs & Sustainability Officer

• Adrián Zunzunegui l 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

• 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