Telefonica S.A.

Investor Presentation • Jul 31, 2024

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Q2 24 Summary

Mr. José María Álvarez-Pallete Chairman & CEO

Strong Q2 results confirm that our strategy is working

Strong commercial performance; accelerating growth in all main accesses in Spain and Germany; record customer levels in Brazil

Accelerated growth; revenue +1.2% y-o-y, sequential improvement driven by B2B and B2C growth

Robust operating cash flow growth; EBITDAaL-CapEx +11.5% y-o-y supported by solid CapEx/Sales of 12.1%

Driving operational efficiency; personnel savings and legacy shutdowns

NB MoU with Millicom for a potential transaction in Colombia / NB MoU with VOD Spain to create a 3.5m FTTH PP FibreCo

On track for 2024 targets; H1 performance aligns with full-year guidance; reiterating outlook

Telefónica Group: improved growth momentum in Q2

Stronger Telefónica

Next Generation NETWORKS

• More fiber: 78.9m PPs, +2.3m q-o-q
• More 5G: +3p.p. q-o-q coverage in core markets
• More Intelligent: Softwarisation, Network automation, AI & ML

Enhanced CUSTOMER experience focus

• Customers growth to 392m, +4m q-o-q
• Enriched offering, digital ecosystems
• Churn down, NPS up q-o-q
• Differentiation through digitalisation & AI

Leaner OPERATIONS

• Switching-off legacies; 4.3k Spain COs closed
• CapEx intensity down 1.3 p.p. (Q2 y-o-y)
• Full Q of personnel savings in Spain
• AI driven OpEx & CapEx reduction

Global leader in ESG

• Newly updated Climate Action Plan approved by the Board outlining our decarbonisation roadmap

• Digital inclusion: 392m accesses with conscious effort to connect people responsibly, e.g. Golden Lions at Cannes

• Updated AI principles: to reinforce responsibility across the value chain with new environmental commitment

Telefónica named one of the top 10 World's Most Sustainable Companies by TIME

Q2 24 Geographies & Units

Mr. Ángel Vilá COO

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Strong Q2 execution

In Q1 we Said

• New long-term mobile network MOU signed with DIGI

• Negotiation underway on a potential Concession to Authorisation regime migration

• Spectrum extension is expected scenario

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• UK NetCo carve-out advisors appointed, accelerating fibre build and receiving strong interest from infra investors

Where we Stand

• ✓ Announced 16-year definitive agreement with DIGI
• ✓ NB MoU signed with VOD Spain for the creation of a FibreCo
• ✓ Agreement reached with ANATEL / Ministry of Communication on fixed voice concession to authorisation model migration
• ✓ BNetzA final consultation paper; proposal to extend usage rights by 5 years
• ✓ W/S agreement with Freenet expanded
• ✓ UK NetCo operational and financial design on track, perimeter established and continued investor interest
• ✓ Mobile network sharing with VOD extended beyond 2030

Spain: continued positive trading, revenue and profitability

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Convergent KPIs

Highlights

• Continued growth in main accesses
• Striking the right balance in convergent KPIs/CLV
• Retail revenue growth accelerates; higher EBITDA
• EBITDAaL inflection, trend improving
• Premium positioning & unaltered market segmentation

Secured wholesale flow; DIGI agreement beyond 2040 NB MoU with VOD Spain to create a 3.5m PP FibreCo Increasing deregulation opportunities

Q2 24

7

EBITDA EBITDAaL-CapEx

Spain: value creation whilst co-shaping the wholesale market

• Secured wholesale flow for at least 16 years
• Visibility gained under rational conditions
• Increased network efficiency
• Revenue at least in line with current contract & traffic driven growth
• Value creation: EBITDAaL-CapEx margin similar to current contract

NB MoU with Vod Spain to create a joint FibreCo

• c.3.5m FTTH PP coverage; c.40% take-up target
• Long term MSA for both partners
• Closing expected for early 2025 (after regulatory reviews)

• FibreCo' stakes based on customers contributed by each partner

• Brings further rationality to FBB market

• Limits overbuild risk
• Optimises network utilisation
• Aiming for full consolidation by T. España
• Value crystallisation, infrastructure sale and potential sale of a stake in FibreCo

Brazil: expanding profitable growth

Revenue & EBITDA growth (y-o-y)

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FTTH Premises passed (m)

Margins

Highlights

• Increased customer value: ARPU ↑ & churn ↓
• Improving FTTH take-up (24.0%)
• 1.8m Vivo Total (FTTH+mobile offer): >2x y-o-y
• Mobile Rev. (+4.7%): Rationality, contract churn 1.0%
• B2B Rev. (+3.0%), boosted by digital services (+16.1%)
• 15.3% EBITDAaL-CapEx margin (+1.2 p.p. y-o-y)
• € growth impacted by FX
• LC growth accelerating y-o-y
  • Revenue (+7.4%), +0.9 p.p.
  • EBITDA (+7.3%), +0.6 p.p.
  • EBITDAaL-CapEx (+17.6%) +14.1 p.p.
• Net zero emissions in 2035 (brought forward by 5y)

Concession to Authorisation process well advanced

Germany: robust trading momentum and growing profitability

31 13 3 (4) Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 FBB net adds (k)

Revenue & EBITDA growth (y-o-y) Margins

Highlights

• Strong commercial traction, contract NA +37% q-o-q
• Low O² contract churn 0.9%
• Revenue flat y-o-y: growth in handsets sales and fixed offsetting lower MSR incl. regulatory effects
• Sustained EBITDA growth showed cost efficiencies
• EBITDAaL-CapEx improved to +16.4% y-o-y
• 5G pop coverage at 96%

De-risking of business fundamentals

• Spectrum extension well advanced
• Freenet wholesale deal expanded
• Government position on Chinese vendors finalised; guidance neutral

VMO2: focus on operational progress and long-term growth

Revenue & EBITDA growth (y-o-y)

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Margins

Highlights

• Full fibre milestone of 5m PPs
• 5G coverage reaching c. 2/3 of the UK population
• Fixed ARPU returned to growth (+3.1% y-o-y)
• Combined consumer fixed and mobile revenue excluding handset stable
• EBITDA decline; B2B fixed headwinds and investment in IT and digital efficiency programmes
• Contract churn remains at low levels of 1.2%

NetCo well in progress/on track Extended mobile network sharing w/VOD and prospective spectrum agreement w/VOD-3

11

T. Tech, the B2B growth driver with top execution

Revenue

Commercial performance

Enhanced profile

• Double-digit growth in revenue to accelerate in H2
  • Since creation delivering quarterly double-digit growth
• +20% bookings growth vs. H1 23; growing faster than revenue
  • Large relevant deals closed in Q2 24 (Segittur, Children`s Health Hospital Ireland… )
  • Bookings driven by private sector (Financial, Manufacturing, Energy & Utilities, Health)
  • Commercial momentum in Cybersecurity in the UK
  • Global cybersecurity alliance with BBVA (signed in July -24)
• Strong sales funnel; growing in line with bookings
• Global services lines reinforcing operational capabilities in key markets
  • AI & Data: 10 specialised new centers in Spain, UK, Central Europe, Brazil and Hispam
  • BizApps: launched in Spain, first projects won

T. Infra, a worldwide connectivity network

Accelerating FTTH deployment

Total FTTH Premises Passed (m)

̴30% of 23-26 of TEF's FTTH rollout Driving value whilst increasing differentiation and capabilities

Global connectivity provider

Expanding colocation capabilities in Virginia Beach (USA), Derio (SP), Santos (BZ), Lurin (PER) and Barranquilla (COL)

Data Centres

Opportunity/Optionality

Q2 24 T. Hispam / Financial position

Mrs. Laura Abasolo CFCO & Head of T. Hispam

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Hispam: back to growth in financial metrics

Accesses growth (y-o-y)

Revenue & EBITDA growth (y-o-y)

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FTTH & Cable PPs (m)

Margins

Highlights

• Avoiding network overlaps in the region
  • Extension of the agreement with AT&T in MEX
  • FTTH sharing agreement with Iplan in Argentina
• Service Rev (+4.9%); ARG (+20.4%) & COL (+14.9%)
• MEX EBITDA +67%; contract growth&network efficiencies
• EBITDAaL-CapEx (+19.0%)
  • Leases (+1.0%), CapEx (-5.4%); H1 CapEx/Rev 6.6%
• Invested capital -31% vs. Dec-19
• Reduced digital gap : "Internet para todos" 3.6m pop covered

Non-binding MOU with Millicom for a potential corporate transaction in COLOMBIA Optimising capital structure

FCF on track, 2024 guidance reaffirmed

FCF phasing fully aligned through H2 24; always back-end loaded

• Like-for-like¹ FCF growth robust; > 20% y-o-y in Q2, broadly stable in H1
• Q2 FCF of €205m reflects €279m¹ Peru tax resolution payment, fully provisioned since 2022 and expected in 2024; merely a timing movement
• Confident in FCF growth trajectory; H2 performance accelerating in line with historical patterns. FCF 2024 guidance and 2023-26 reaffirmed

Solid balance sheet, contained costs and long average life

***Este documento está clasificado como PUBLICO por TELEFÓNICA. ***This document is classified as PUBLIC by TELEFÓNICA.

***Este documento está clasificado como PUBLICO por TELEFÓNICA. ***This document is classified as PUBLIC by TELEFÓNICA.

Key takeaways

Mr. José María Álvarez-Pallete Chairman & CEO

2024 guidance fully confirmed

	2024 Guidance	H1 On Track to Deliver		2023-26 CAGR
Revenue y-o-y reported	~1%	+1.1%	✓	~1%
EBITDA y-o-y reported	1% to 2%	+1.9%	✓	~2%
EBITDAaL - CapEx y-o-y reported	1% to 2%	+3.1%	✓	5%
CapEx / Sales	Up to 13%	11.3%	✓	<12%
FCF y-o-y reported	>10%	€163m	✓	>10%
Cash Dividend	€0.3/share 2 tranches €0.15;Dec-24, Jun-25	Improved coverage	✓	€0.3/share floor
Leverage	Reduced	2.78x	✓	2.2-2.5x (2026)

Pathway to industry leading <12% capex to revenues

Reduced capital allocation enables >10% FCF growth CAGR to 2026

Building on our momentum

Very solid Q2 results; consistent with 2024 guidance (reiterated) and 2023-2026 plan 1

Better sequential trends; accelerated growth in Revenue and EBITDAaL-CapEx back to growth; operating leverage increasing 2

Commercial & financial performance unabated in Spain, Brazil & Germany; sequential improvement in T. Hispam 3

Continued investment in leading networks; enhancing customer experience and driving commercial traction

Disciplined balance sheet management and strict capital allocation; deleveraging on target, focused growth CapEx, dividend covered 5

6 Continued focus on near-term catalysts in all markets; NB MoU in Colombia, NB MoU with VOD Spain, deregulation

4

Results presentation and Q&A Session

Telefónica's management will host a webcast on 31 July at 10:00 AM (CEST), 9:00 AM (BST), and 4:00 AM (EDT)

Participants from Telefónica

• José María Álvarez-Pallete l Chairman & CEO
• Ángel Vilá l COO
• Laura Abasolo l CFCO & Head T. Hispam
• Markus Haas l CEO Telefónica Deutschland
• 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

Climate A List 2023

Bloomberg GEI 2023

Member of DJSI

Europe

Ranking
Digita
Rights

st in sector 2022

1

1 st company worldwide in 2023 Digital Inclusion Benchmark

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

***Este documento está clasificado como PUBLICO por TELEFÓNICA. ***This document is classified as PUBLIC by TELEFÓNICA.

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