Telefonica S.A. — Investor Presentation 2024

Feb 22, 2024

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

Disclaimer

This document and any related conference call or webcast (including any related Q&A session) has been prepared by Telefónica, S.A. (hereinafter "Telefónica" or "the Company", and in conjunction with its subsidiaries the "Telefónica Group") exclusively for been used during the presentation of financial results. The Company does not assume any liability for the content of this document if used for any purposes different from the one outlined above.

The present document may contain forward-looking statements, opinions and information (hereinafter, the "Statements") relating to the Telefónica Group (hereinafter, the "Company" or "Telefónica"). These Statements may include financial forecasts and estimates or statements regarding plans, objectives and expectations regarding matters, such as the customer base and its evolution, growth of the different business lines and of the global business, market share, possible acquisitions, divestitures or other transactions, the outcome of recently completed transactions, the Company's results and its operations, including its environmental, social and governance commitments and targets. The Statements can be identified, in certain cases, through the use of words such as "forecast", "expectation", "anticipation", "aspiration", "purpose", "belief" "may", "will", "would", "could", "plan", "project" or similar expressions or variations of such expressions.

In any case, these Statements do not intend to be exhaustive, nor have been verified by third parties or audited, therefore, Telefónica's opinions and aspirations with respect to future events should be considered indicative, provisional and only for illustrative purposes. For this reason, these Statements do not represent, by their own nature, any guarantee of future fulfilment or profitability, and are subject to risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such Statements. These risks and uncertainties include those identified in the documents containing more comprehensive information filed by Telefónica with the different supervisory authorities of the securities markets in which its shares are listed and, in particular, the Spanish National Securities Market Commission (CNMV) and the U.S. Securities and Exchange Commission (SEC).

Except as required by applicable law, Telefónica does not assume any obligation to publicly update the Statements to adapt them to events or circumstances taking place after the date hereof, including changes in the Telefónica's Group business, changes in its business developmentstrategy or any other circumstances.

This document and any related conference call or webcast (including any related Q&A session) may contain summarised, non-audited or non-IFRS financial information (including information referred to as "organic" and "underlying"). Such information may not be prepared in accordance with the financial reporting requirements established by the SEC, is presented for supplemental informational purposes only and should not be considered a substitute for audited financial information presented in accordance with IFRS. The Company's non-IFRS financial measures may differ from similarly titled measures used by other companies. In addition, there are material limitations associated with the use of non-IFRS financial measures since they exclude significant expenses and income that are recorded in the Company's financial statements. Information related to Alternative Performance Measures (APM) used in this presentation are included in Telefónica's consolidated financial statements and consolidated management report for 2023, submitted to the CNMV, in Note 2, page 14 of the .pdf filed. Recipients of this document are invited to read it.

Neither this document nor any related conference call or webcast (including any related Q&A session) nor any of their contents constitute an offer to purchase, sale or exchange any security, a solicitation of any offer to purchase, sale or exchange any security, or a recommendation or advice regarding any security, or a solicitation for any vote or approval in any other jurisdiction.

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Q4 23 & 2023 Summary

Mr. José María Álvarez-Pallete Chairman & CEO

Transform, Deliver and Commit

WE TRANSFORM

Continued streamlining Building a stronger TEF

WE DELIVER

2023 guidance delivered, FCF beat

WE COMMIT

On track for GPS ambition, FCF 24 >10%

Stronger Telefónica

Next Generation NETWORKS

Enhanced CUSTOMER experience focus

Leaner OPERATIONS

• More fibre, +10m FTTH PPs to 74m
• More 5G, 62% coverage in core markets (Germany 94%, Spain 87%)
• More APIs
• More customers, +5m to 388m
• More satisfied, 31 NPS score
• AI driven customer engagement
• More digitised, +3pp of revenue from BB & SoC to 76%
• Operating leverage +1 p.p. to 19%, OpEx+CapEx efficiencies
• 3,420 employees joining Spain's redundancy program
• Legacy shut-down (1.9k Spain COs)

Guidance delivered

	Initial 2023 guidance	Upgraded 2023 guidance	FY 23
Revenue y-o-y organic	"Low single digit growth"	~4%	3.7%
OIBDA y-o-y organic	"Low single digit growth"	~3%	3.1%
CapEx/Sales	~14%	~14%	14.0%
	Former definition	~€4bn ex-spectrum	€4.2bn
FCF New definition	~€2.1bn	€2.3bn
Dividend		€0.3/sh. (cash)	Dec-23 €0.15/sh. Jun-24 €0.15/sh.

1.4% treasury stock to be canceled in the next AGM

We delivered and we commit

Reported FY 23; FCF ex-spectrum; EBITDA adjusted and EBITDAaL adjusted

Q4 23 Results: Core Markets

Mr. Ángel Vilá COO

Telefónica Group: strong Q4 results with exceptional FCF

Revenue €10.2bn

+4.1% y-o-y organic

Service revenue €9.0bn

+4.2% y-o-y organic

B2B revenue €2.2bn

+4.9% y-o-y organic

OIBDA €3.5bn

+4.5% y-o-y organic

OIBDA - CapEx €1.9bn

+18.7% y-o-y organic

FCF €1,562m +€432m q-o-q

Spain: continuing to improve and execute

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

7

• Accelerated retail revenue growth: strong trading momentum and record IT
• Net adds in all accesses for 2nd straight Q on record-low churn since 2013
• Pay-TV turnaround completed; deregulation gives us back flexibility
• Stabilised OIBDA leveraged on top line growth and efficiencies
• Tariff upgrade in Jan-24
• Redundancy program in 2024 and collective agreement until 2026

Brazil: keeping up the strong momentum

FTTH Premises passed (m)

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

Margins (organic)

8

• Growing above inflation on differential value proposition
• Highest mobile ARPU & lowest churn in 4 years on rational market environment
• Fixed revenue grew for the 10th consecutive Q
• Record OIBDA-CapEx margin ever, supported by operating efficiencies
• Growing sales and improved operating leverage supercharge future cash growth
• Leader of ISE-B3 Corporate Sustainability Index

Germany: healthy trends in a growing market

Fixed BB net adds (k)

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

9

• Sustained financial momentum on robust commercial traction; >1.3m 2023 postpaid net adds
• O2 postpaid ARPU +1.9% vs. Q4 22
• 5G pop coverage ~95% at YE 23 (>80% Dec-22), on track with expectations
• "Very good' rating in Connect test; improve in network quality

• 1 telco worldwide on 'Sustainalytics ESG Risk Score'

Virgin Media O2: increasing customers, fibre and 5G reach

Mobile contract churn (%)

• Solid commercial traction
• Record fixed network expansion; +833k PPs in 2023, contributing to net adds
• Realised ~2/3 of annualised £540m runrate synergies, ahead of plan and on track to fulfil by mid-2026
• O2 owned stores now National Digital Inclusion Hubs (free services to communities in need)

T. Tech: keeping above industry momentum, cornerstone of strong B2B

T. Tech Revenue Reported (€m) 706 944 1,482 1,878 FY 20 FY 21 FY 22 FY 23 +26.7% Constant Perimeter +21.7% vs FY 22

• Solid double-digit revenue growth in constant perimeter
• Well-balanced revenue mix
• Strong commercial activity, large revenue visibility

Operational Highlights

New operating model delivering value

• Key driver to increase share of wallet

Highly skilled and diversified team

• 6.3k professionals; >60 nationalities; 80% in Europe; ~4k certifications

Partners awards

"Best Computing Partner 2023" "To infinity and beyond"

T. Infra: strengthening Telefónica's infrastructure to support growth and efficiency

Accelerating FTTH deployment Telxius >110k km international network by 2026

Providing three redundant routes to connect US, Brazil and Argentina

12

Q4 23 Results & Capital Allocation

Mrs. Laura Abasolo CFCO & Head of T. Hispam

T. Hispam: progressing in "asset-light" model

Dec-23

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

Dec-22 Mar-23 Jun-23 Sep-23

2.8% 1.6% (0.4%) (2.7%) 1.7% (1.5%) (3.9%) (5.0%) (17.1%) 8.8% Revenue OIBDA 22% 20% 20% 18% 24% 4% 15% 12% 9% 7% Margins (organic) OIBDA OIBDA-CapEx Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23

• FiberCo model allows FTTH accesses +8% while reducing CapEx
• COL: 5G Spectrum acquired jointly with Millicom
• Cooling down competition in a tough environment
• CapEx/Sales FY 23: 9.4% (-1 p.p. y-o-y)

Double-digit growth of underlying EPS

(*) net of taxes

Solid balance sheet to face any market environment

Net Financial Debt

Comfortable liquidity position

15

Contained interest payment cost

Capital allocation: investing in our business whilst maximizing shareholder value

CapEx over Revenue

Capital allocation priorities

• Investing in networks; i.e fiber and 5G
• Paying DPS with a floor of €0.3/sh
• Reducing leverage to our target
• Starting share repurchases
• Considering other strategic opportunities

2024 and Beyond

Mr. José María Álvarez-Pallete Chairman & CEO

ESG: We keep transforming

Net-zero by 2040 100% renewables by 2030 Zero-waste by 2030

> 90% MBB rural coverage by 2024¹ 37% women executives by 2027 Zero adjusted gender pay gap²

Parity³ in top governing bodies by 2030 Zero-tolerance of corruption ~40% sustainable financing by 2026⁴

On track for net zero: -51% in total carbon emissions in last 8 years

Leading actor in climate: CDP Climate A-List for 10th consecutive year

Decarbonising the economy: enabling customers to avoid 86.1m tCO2 emissions Aligned with SDGs: >€100bn contribution to society via connectivity

On track for gender diversity: 33% women executives. 0.7% adj. pay gap

Customer centric: 31 NPS +1 pp. y-o-y

Balanced and diverse Board: 40% women and 67% independents Directors

Zero corruption: 0 confirmed cases FY 23

Leaders in sustainable financing: €18.8bn as of Dec-23; 33.6% o/total

¹ Core markets.

²Adjusted pay gap: equal pay for jobs of equal value. Achieved in 2022. Objective is to maintain zero pay gap.

1. Parity defined as not less than 40% of each gender represented

2. Financing linked to sustainability criteria includes balance sheet debt, hybrids and undrawn committed credit lines based on ICMA sustainable bond principles, LMA Sustainability Linked Loan Principles and other ESG criteria. Not necessarily linked to EU Taxonomy aligned activities

Going forward, we keep transforming

Next generation NETWORKS

Enhanced CUSTOMER Experience focus

Leaner OPERATIONS

• More fibre, FTTH PPs to ~106m in 2026 (74m 2023)
• More 5G, 70% 5G coverage in core markets by 2026 (62% 2023):
  • ~90% Spain, ~60% Brazil, ~99% Germany, UK ~70%
• Increasing Return on Invested Capital, programmable networks monetisation
• >60% convergent customers 2026 (>50% 2023)
• ~50% IT/B2B Service rev in 2026 (~40% 2023)
• Personalised Digital Supermarket
• AI driven customer engagement
• Legacy Switch off
  • Spain retail copper in 2024
  • 2G and 3G before YE 26
• Free up spectrum to more efficient 4G/5G
• Continue right-sizing
• Network sharing

We keep commiting

	2023 Actuals	2024 Guidance	2023-26 CAGR
Revenue y-o-y reported	1.6%	~1%	~1% B2C ~1.5%; B2B ~5%
EBITDA y-o-y reported	1.4%	1% to 2%	~2%
EBITDAaL - CapEx y-o-y reported	5.7%	1% to 2%	5%
CapEx/ Sales	13.3%	Up to 13%	<12%
FCF y-o-y reported	€2.3bn	>10%	>10%
Cash Dividend	€0.3/share	€0.3/share 2 tranches €0.15;Dec-24, Jun-25	€0.3/share floor
Leverage	2.66x post-closing	Reduced	2.2-2.5x (2026)

Key Takeaways

Delivered solid Q4 results to close out 2023, meeting our upgraded FY guidance and exceeding FCF target

Positioned well for 2024 and on track with the GPS plan to achieve our 23-26 FCF CAGR target of >10%

Good momentum across our business units; Spain growing and continued strength in Brazil and Germany

Building best-in-class next-gen networks while streamlining our operations for the best customer experience

Disciplined balance sheet management with focus on lowering CapEx intensity, deleveraging, and paying dividend

Results presentation and Q&A Session

Telefónica's management will host a webcast on 22 February at 10:00 AM (CET), 9:00 AM (GMT), 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.

Climate A List 2023

Bloomberg GEI 2023

Member of DJSI Europe

1 st in sector 2022

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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