Analyst Presentation

1
Foro Europeo de Empresas Latinoamericanas
November 16th, 2001
2
1
Terra Lycos LATAM Franchise
2
Our Strategy
3
Financial Results
3
Leading Global Footprint
Terra Lycos Franchise

• Presence in 43 countries - 20 languages
• EUR 2.3 billion in cash, no debt
• More than 109 million unique visitors
• 4.3 million access subscribers - 1.3 pay
• Over 481 million page views per day
• Leverage on Telefonica Groups strengths

As of September 2001
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Terra Lycos LATAM Franchise
Leading Global Footprint
5
Terra Lycos LATAM Franchise
LATAM
Fonte Media Metrix (Feb.01)
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Terra Lycos LATAM Franchise
Global LATAM Presence
ISP PORTAL
PORTAL
Country
MA
Country
MA
ARGENTINA
Gaucho,Donde
ZAZ
BRASIL
COLOMBIA
La Ciudad
VENEZUELA
Chévere
Infosel
MEXICO
CTC Chile
COSTA RICA
CHILE
EL SALVADOR
Ole
ESPAÑA
HONDURAS
Infovía
GUATEMALA
ORGANIC
NICARAGUA
PERU
Tef.Servicios I.
PANAMA
R.DOMINICANA
URUGUAY
US HISPANIC
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Terra Lycos LATAM Franchise
Brasil
176,3 millones habitantes
15,9 millones usuarios online
9 Penetración online
11,3 millones PCs
17 Penetración PCs
Fonte Media Metrix (Feb.01)
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Terra Lycos LATAM Franchise
Mexico
Sonora
Chihuahua
Baja California
Coahuila
Nuevo Leon
Sinaloa
Durango
Tamaulipas
Zacatecas
San Luis Potosi
DF Morelos Tlaxcala Querétaro Aguascalientes
1 2 3 4 5
5
Nayarit
Veracruz
Yucatán
Guanajuato
4
Hidalgo
Jalisco
Quintana Roo
México
3
1 2
Michoacan
Colima
Campeche
Puebla
Tabasco
Guerrero
Oaxaca
Chiapas
Fuente Select-IDC
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A True Global Company
Terra Lycos LATAM Franchise

• Dominant ISP/portal in Spain
• - 64 reach (1) (1)
• Leading Latin American ISP/portal
• - 1 Pan-Regional portal with presence in
  15 countries
• Leading global portal franchise
• - Lycos 4 ranked site reach in USA
  (41 reach) (1)
• - Leading site for US Hispanics (29
  reach) (2)
• - Lycos Europe ranked 1 in European
  sites reach (16
• million users) (3)
• - Important presence in major Asian countries

Sources (1) MMXI , (2) Roslow, (3) Nielsen,,
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1
Terra Lycos LATAM Franchise
2
Our Strategy
3
Financial Results
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Two Fold Strategy
Audience
Traditional Internet
Internet as a Channel
Customers
WIRELESS
FINANCE
From just advertising to Integrated Marketing
Solutions
From access (IAP) focus to full Communication
Services provider (CSP)
MOTOR
AUCTIONS
E-BIZ
CONVENIENCE

• Migration from free to pay model (regs., subs.,
  PPV, PPU). Leverage ADSL and Broadband
• Expand and improve product portfolio and
  applications to consolidate and penetrate new
  segments (CRM)
• Leverage on continue increase in users and usage
  to drive ad up
• Global and local balance, revenues-cost-profitabil
  ity

TRAVEL
E-LEARNING
CUSTOMER
E-RECRUTING
FOODS
REAL ESTATE
-

Buying frequency
Focus on profitability through quality services
Leverage TL users base and strategic partners
know-how and infrastructure
Strategy focused on profitability increase
through services content monetization
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Internet EvolutionBusiness Model Enhancement
from users and Bricks Mortars
E-commerce
New E-commerce
from integrated marketing services (BM?,
dot.com?) and users (subsc, PPV, regist.)
from advertisers (BM? Dot.com?) users free
New Media (Integrated marketing services)
from advertisers (Dot.com?, BM?)
Media
Media
Portal / Media
Advertising
eCom
eCom
Portal
CSP
Free Services high cost
CSP
CSP
from users at GMgt0 (basic and premium services)
through subscription minimum free of charge
services
Starting CSP /user and Gross Margin gt 0
minimum free at high cost
CSP
Internet
Access Comm. Services
ISP
from users at Gross Margin lt 0
IAP
IAP
IAP
Subscription
Traditional
Organization (Strategic Business Unit)
Tomorrow
Today
From a free lunch approach to 3 real profitable
businesses
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The OBP Model
One offering strategy
-

Open
Basic
Premium
Free Trial
Subscription-based
Subscription upgrade
Pay-per-use or Pay-per-view or more
subscriptionor registration across offering

• The content/service is opened to every single
  user
• Goal is to facilitate trial to generate traffic
  and get ad e-com revenue

• The content/service is only for TL customers who
  have signed-up
• Goal is to generate a subscription-based business

• The content/service is only for TL users who have
  signed-up and pay
• The goal is to generate a profitable user
  relationship (leverage on CRM) and a higher ARPU

Customer Relationship Management
Every component will be designed to respond to
different levels of service and profitability
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1
Terra Lycos LATAM Franchise
2
Our Strategy
3
Financial Results
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Strong Operation Track Record
5.3 CAGR
4.5
4.3
4.3
16 CAGR
4.1
481
460
432
3.5
350
269

• Closing of free service in Brazil
• Record pay subs growth

4Q00
1Q01
2Q01
3Q00
4Q00
1Q01
2Q01
3Q01
3Q00
3Q01
Proforma figures
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Solid Geographic and Product Business Mix
Revenues by Segment ( EUR million)
Revenues by Geography ( EUR million)
527
527
5
383
383
46
1
65
36
77
49
63
35
23
9m 00
9m 01
9m 00
9m 01
Access
Media
38 Growth achieved in a difficult market
Proforma figures
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EBITDA Margin
3Q 00
4Q 00
1Q 01
2Q 01
3Q 01

• 42pp improvement on Q3 00
• 59 improvement in EBITDA margin on Q3 00
• Continuing effort both in terms of growth and
  cost management aimed at improving profitability

-29
-36
-43
-54
-71
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... We Have Clear Strategic Priorities

• Customer oriented
• Evolve offering from free to paid
• Focus on broadband, OBP leverage
• CRM and deployment of integrated marketing
  services
• Exploit Terra Lycos users base to maximize
  revenue
• Enter new market segments SME and corps

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A Global Powerhouse