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Investor Conference March 2001, Rio de Janeiro. This presentation contains statements that constitute forward-looking statements within the meaning of.

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Presentation on theme: "Investor Conference March 2001, Rio de Janeiro. This presentation contains statements that constitute forward-looking statements within the meaning of."— Presentation transcript:

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2 Investor Conference March 2001, Rio de Janeiro. This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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. Safe Harbor

3 Investor Conference March 2001, Rio de Janeiro. THE SPECIALIST IN THE AMERICAS The Virtuous Cycle Growth Strategy Commercial Performance Financial Performance Conclusion

4 Investor Conference March 2001, Rio de Janeiro. MISSION The specialist in the Americas We are a broadband infrastructure services provider We offer services to international carriers, Internet service providers, and other communications-intensive businesses We coordinate demand and offer from Telefónica´s Group.

5 Investor Conference March 2001, Rio de Janeiro. CLIENT AND PRODUCT CHAIN Emergia: - Specialization - Broad spectrum of potential customers Competitors Telefónica Media Telefónica: - Data - Mobile - Wireline Bandwidth Services Voice/Data Services ISP/Portal Content Competitors Client and product Chain Terra / Lycos B2B TPI

6 Investor Conference March 2001, Rio de Janeiro. NETWORK 1.3 bn capex 1.92 Tbps capacity 25,000 km network 10 cities in 7 countries Ready for Service in March, 2001

7 Investor Conference March 2001, Rio de Janeiro. PRODUCTS & SERVICES Ring capacity Bandwidth cap. City-express Wavelength Service type Wavelength exp. Backhaul Configuration Restore easy Basic co-location Sales type Private networks Building Blocks Attributes Services

8 Investor Conference March 2001, Rio de Janeiro. EMERGIA´S COMPETITIVE ADVANTAGES Telefónica´s leading position Early mover advantage: Marginal cost of duplicating capacity Technologically advanced high-capacity network City-to-city connectivity Commercial partner The specialist in the Americas

9 Investor Conference March 2001, Rio de Janeiro. BENEFITS FOR TELEFONICA Builds up Telefónica´s competitive platform Secure first-class end-to-end communication Optimize demand and offer of broadband capacity from Telefónica The specialist in the Americas

10 Investor Conference March 2001, Rio de Janeiro. The specialist in the Americas THE VIRTUOUS CYCLE Growth Strategy Commercial Performance Financial Performance Conclusion

11 Investor Conference March 2001, Rio de Janeiro. MODEL The Virtuous Cycle TRANSPORTATION CONTENT ACCESS Tele-office: ; Intranet; etc. E-commerce: B2B; B2C; E- money Leisure & Entertainment: V.O.D.; Games Last-mile broadband services network: DSL; cable TV Third-generation mobile phones Prominent increase of Internet use/access equipment: PC; TV Geographic concentration of content International alliance: media/telecommunications

12 Investor Conference March 2001, Rio de Janeiro. MODEL The Virtuous Cycle TRANSPORTATION CONTENT ACCESS TPI Terra Telefónica Media B2B Telefónica Móviles Telefónica Data ISPs Wireline operators EMERGIA Telefónica Data Wireline operators

13 Investor Conference March 2001, Rio de Janeiro. BROADBAND APPLICATIONS 9.6 kbps 28.8 kbps 56 kbps 1.5 mbps 4mbps 1980s … Early-1990s … Late 1990s … Bandwidth Static Web-browsing Still image download Streaming Video Full-motion TV-quality Video Dynamic Web Browsing Palm Pilots, Web TV, PCS cellular devices

14 Investor Conference March 2001, Rio de Janeiro. LATAM DEMAND FORECAST Capacity Gb/sec. Merrill Lynch OVUMYankee Group Year when target is reached G t/sec. Period Differentiation OVUM Merrill Lynch Yankee Group SOURCE Latam Demand 2000 = 20 Gb/sec 05/199906/199904/2000

15 Investor Conference March 2001, Rio de Janeiro. BROADBAND DEMAND – ADSL FORECAST Source: companies´ forecasts Company/´ E Telesp950 TASA474 CTC71 Telefónica del Perú48 Total1,543

16 Investor Conference March 2001, Rio de Janeiro. The specialist in the Americas The Virtuous Cycle GROWTH STRATEGY Commercial Performance Financial Performance Conclusion

17 Investor Conference March 2001, Rio de Janeiro. ALTERNATIVES Growth Strategy Capillarity Geography Services SubmarineBackhaulTerrestrial AmericaGlobal Bandwidth Mgmt. IP Transm.Value added

18 Investor Conference March 2001, Rio de Janeiro. CAPILLARITY Network Layers:

19 Investor Conference March 2001, Rio de Janeiro. LAST-MILE CONNECTIVITY Sao Paulo

20 Investor Conference March 2001, Rio de Janeiro. LAST-MILE CONNECTIVITY Buenos Aires

21 Investor Conference March 2001, Rio de Janeiro. LAST-MILE CONNECTIVITY Santiago de Chile

22 Investor Conference March 2001, Rio de Janeiro. GEOGRAPHY America – Colombia – México – Uruguay – Venezuela Global – Southern Europe – Transatlantic Emergia´s capacity will be the main source of funding to expand our network Marginal new capex Emergia as swap currency Emergia as single broadband capacity manager for Telefónica Group

23 Investor Conference March 2001, Rio de Janeiro. SERVICES E-Commerce Applications Hosting Web Hosting IP VPN VOIP IP Transit ATM Managed Bandwidth Services Colors/Lambdas Internet Access Dark/Dim Fibers Co-location Managed Co-location VALUEADDED Carrier / ISP Global Accounts SME Wholesale Retail VALUEADDED

24 Investor Conference March 2001, Rio de Janeiro. The specialist in the Americas The Virtuous Cycle Growth Strategy COMMERCIAL PERFORMANCE Financial Performance Conclusion

25 Investor Conference March 2001, Rio de Janeiro. LATEST AGREEMENTS Commercial Transactions 938 MM 92% 8% Group Telefónica Other customers Group Telefónica Other customers Commited Capacity to be Activated during First Year - 28 stm-1 50%

26 Investor Conference March 2001, Rio de Janeiro. The specialist in the Americas The Virtuous Cycle Growth Strategy Commercial Performance FINANCIAL PERFORMANCE Conclusion

27 Investor Conference March 2001, Rio de Janeiro. MARKET Market Growth - % p.a. Market Share - % Capacity Sold annual growth rate - %

28 Investor Conference March 2001, Rio de Janeiro. FINANCE GAAP Revenues GAAP EBITDA Margin - % / / 70 Free Cash Flow Forecast – MM 150 / 200

29 Investor Conference March 2001, Rio de Janeiro. FINANCE Capex & Cost per Unit 1,150 1,200 1,250 1,300 1,350 1,400 1,450 1,500 1, Cumulative Capex Capex per unit-stm-1- Euros MM

30 Investor Conference March 2001, Rio de Janeiro. The specialist in the Americas The Virtuous Cycle Growth Strategy Commercial Performance Financial Performance CONCLUSION

31 Investor Conference March 2001, Rio de Janeiro. KEY SUCCESS FACTORS Strong regional presence Capillarity Resilient structural network Emergia Yes Leader Yes High-volume transmission Network provider as partner Yes Our goal

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