17th May 2005 10:41
Telefonica SA17 May 2005 PART 2 RESULTS BY BUSINESS LINES Other businesses DIRECTORIES BUSINESS During the first quarter of 2005 the TPI Group's revenues increased by 21.0% to95.8 million euros. The Group's OIBDA amounted to 24.3 million euros, 24.7%higher than the figure for the same period of 2004. Net income rose by 22.2% to11.9 million euros. These results are explained by: • The good performance of TPI Espana, whose advertising revenues rose by 28.0% to 46.3 million euros, mainly thanks to the behaviour of the publishing business in Spain. • The 7.8% increase of revenues in local currency in TPI Peru, after having been published the Lima directory. Once again we would like to emphasize that the TPI Group's interim results arenot comparable on a yearly basis and cannot be extrapolated to year-end. This ismainly due to the higher concentration of directory publications in the secondhalf of the year and changes in directory publication schedules. TPI business in Spain contributed 65% of the Group's revenues, versus the 61%figure as of last year. This increase in revenues' contribution is explained bythe strong growth of TPI Espana revenues, positively affected by changes in thefirst quarter publication schedule and the launch of new directories. Takinginto account also the year-on-year reduction in TPI Peru's OIBDA, Spain'seffective contribution to total OIBDA has increased from 48% in 2004 to 65% in2005. Revenues from Spain rose by 28.1% to 62.1 million euros, triggered mainly bythree main factors: 1) the organic growth of 5.4% and 6.4% experienced by the 15Yellow Pages and 9 White Pages directories published, respectively, 2)variations in the publication calendar of guides and, 3) strong increaseexperienced in the telephone traffic business related with telephone informationservices, with a year-on-year related increase in revenues of 34.1%. Latin America made the remaining 35% contribution to total revenues and OIBDA,with TPI Peru being the biggest Latin American contributor to both revenues andOIBDA in the region, thanks to the publication of the Lima directory, which isits main activity throughout the year. In the first quarter of 2005, TPI Peruobtained revenues of 25.6 million euros, representing a 7.8% growth in localcurrency. TPI Peru recorded OIBDA of Euros 9.6 million, a decrease of 9.3% inlocal currency on the year-ago figure. This fall is primarily due to higherpercentage of bad debt provisions over revenues compared to 1Q04. Thispercentage, increased gradually over the course of 2004. The provision made in1Q05 is similar to that made in 2004. Low activity registered both in the Chilean and Brazilian subsidiaries becauseof their guides publishing calendar make their contribution to Group's resultsnegligible. In turn, the directories business of the Telefonica Group, which includes theArgentinean company Telinver, recorded during the first quarter of 2004 anincrease in revenues of 20.7% compared with the first quarter of 2004 to reach96.2 million euros. OIBDA reached 23.9 million euros, representing ayear-on-year increase of 26.0%. TPI - PAGINAS AMARILLAS GROUP SELECTED OPERATING DATA IN SPAIN Unaudited figures January - March 2005 2004 % Chg Books Published Yellow Pages* 15 12 White Pages 9 8 (Euros in millions) Revenue Breakdown (1) 62.1 48.5 28.1 Advertising 46.4 36.2 28.0 Publishing 36.9 27.8 32.7 Yellow Pages 27.8 20.8 33.9 White Pages 8.4 6.5 28.9 Others paper revenues 0.7 0.5 33.9 Internet 7.5 7.0 6.4 Operator Assisted Yellow Pages 1.2 1.0 14.8 Others 0.9 0.4 110.9 Telephony Traffic 13.2 9.8 34.1 Operator 2.1 1.6 36.4 Others 0.5 0.9 (46.5) *Includes a breakdown by residential/business services and pocket guides. (1) TPI Espana includes Telefonica Publicidad e Informacion S.A. and 11888 Servicio de Consulta Telefonica S.A.U. results. TPI Edita (former Goodman Business Press) is not included. TPI - PAGINAS AMARILLAS GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 95.8 79.1 21.0 Internal expenditure capitalized in fixed assets (1) 0.0 0.0 n.s. Operating expenses (67.0) (56.7) 18.0 Other net operating income (expense) (4.5) (2.9) 55.6 Gain (loss) on sale of fixed assets 0.0 (0.0) c.s. Impairment of goodwill and other assets 0.0 0.0 n.s. Operating income before D&A (OIBDA) 24.3 19.5 24.7 Depreciation and amortization (5.7) (5.1) 13.0 Operating income (OI) 18.6 14.5 28.8 Profit from associated companies (0.1) (0.1) (38.2) Net financial income (expense) (0.6) (0.2) 135.5 Income before taxes 18.0 14.1 27.6 Income taxes (6.1) (4.8) 26.2 Income from continuing operations 11.9 9.3 28.3 Income (Loss) from discontinued operations 0.0 0.0 n.s. Minority interest 0.0 0.5 n.s. Net income 11.9 9.7 22.2 (1) Including work in process. DIRECTORIES BUSINESS CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 96.2 79.7 20.7 Internal expenditure capitalized in fixed assets (1) 0.0 0.0 n.s. Operating expenses (67.8) (57.6) 17.8 Other net operating income (expense) (4.5) (3.1) 42.6 Gain (loss) on sale of fixed assets 0.0 (0.0) c.s. Impairment of goodwill and other assets 0.0 0.0 n.s. Operating income before D&A (OIBDA) 23.9 19.0 26.0 Depreciation and amortization (5.8) (5.2) 12.0 Operating income (OI) 18.1 13.8 31.3 Profit from associated companies (0.1) (0.1) (38.2) Net financial income (expense) (1.3) (0.3) n.s. Income before taxes 16.7 13.3 25.6 Income taxes (6.1) (4.8) 26.2 Income from continuing operations 10.6 8.5 25.2 Income (Loss) from discontinued operations 0.0 0.0 n.s. Minority interest 0.0 0.5 (94.6) Net income 10.7 9.0 18.8 (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses TERRA NETWORKS GROUP Terra Networks ended the January-March 2005 period with operating revenuesamounting to 113.0 million euros, representing a 7.2% annual growth rate.Excluding changes in foreign exchange rates, revenue growth would have reached5.9%. It is important to mention that Lycos first quarter 2005 performance hasbeen reclassified into results from discontinued operations, once its salebecame effective in October last year. In addition, One travel has also beenreclassified under discontinued operations in both 2004 and 2005 first quarters,as its divestiture was completed in April this year. The Strategic Alliance with the Telefonica Group has contributed to total TerraNetworks revenues with 22.2 million euros for the first quarter 2005, a figurethat compares with the 27 million euros this same concept added in theJanuary-March 2004 period. With regard to revenue breakdown by business lines, revenues from Value added &Content services were acting as the major growth lever of the Group's sales inthe first quarter 2005, posting a 43.5% annual growth rate for the period toincrease their weight over consolidated revenues by 7 percentage points to just29%. Access revenues (representing 49% of total revenues), Advertising andOnline revenues (representing 10% of total), and Corporate Services and otherrevenues (representing 12% of total) were declining by 4.0%, 0.7% and 0.7%,respectively, in the last twelve months. Turning to revenue breakdown by geographies, Spain continues to stand as thebiggest contributor to the company's consolidated revenue profile, accountingfor 52% of total revenues, just ahead of Brazil whose weight over total salesreached 35% for the first three months of the year (32% in 1Q04). Thecontribution to Group 's sales of Chile (5% of total) and Mexico (4% of total)stand out among the remaining operating units, which combined equaled to 13% ofconsolidated revenues. Terra Networks revenues in Spain totaled 59 million euros in the first quarterof 2005 experiencing a year on year growth rate of 5.8%. Higher domesticrevenues were driven by the expansion in Value added & Content services, withVAS & Content subscribers up by close to 62% year on year to just exceed 2.38million Value Added Services subscribers at the end of March. In addition, TerraEspana ended the first three months of the year with 317,902 paying accesssubscribers, of which 132,631 were using narrowband connections and 185,271 wereconnected through ADSL. As part of Terra Networks commitment to enhance itsvalue proposition, the company has launched a new series of services thatinclude antivirus and firewall applications, on top of cutting monthly rentalfees. With this renewed commercial actions, the company complements previousinitiatives, among which the doubling of speed at no extra cost is to behighlighted. In Brazil, first quarter 2005 revenues stood at 40 million euros, registering a19% increase when compared to the same period in 2004 (+15% in local currency).Terra Brazil reached 1.3 million pay access subscribers at the end of March2005, out of which 786,482 were broadband clients. The 17% growth rate postedthis quarter for pay access subscribers contributed to consolidate the company'sleadership in the Internet pay access market, in particular for broadbandservices where market share stood at 43%. In terms of provisioning of newservices, it is worth mentioning the launch of e-mail plus, a pioneering servicein the Brazilian market offering 1Gb capacity. With respect to Operating Income before D&A (OIBDA), first quarter 2005 OIBDAamounted to 14.3 million euros, significantly above the 1.5 million euros postedduring January-March 2004. This positive performance was driven by thecombination of better revenues across major operations and sustained costcontrol, particularly in personnel expenses that were cut by 16% year on year.The company ended the first three months of the year with an OIBDA margin of12.7%. The Strategic Alliance with Telefonica generated a value of 17.9 million eurosin the 1Q05, in line with the minimum commitment expected for the period. Ending with an overview of the company's client base, Terra Networks total paysubscribers (access and VAS) reached 6.8 million as of March 31st 2005, growingat a 28% rate in annual terms. Total pay access subscribers achieved the 1.8million clients mark, 5% above last year comparable figure. It is worth tohighlight the positive evolution of broadband clients, basically on ADSL, thatgrew by 58% on an annual basis to remain just below 1.15 million subscribers atthe end of March 2005 (68% in Brazil, 16% in Spain and 12% in Chile).Finally, total pay customers signing up for VAS & Content products were up by40% in the last twelve months to end the first quarter 2005 at 4.9 millionclients, of which 3.6 million were coming from the Strategic Alliance withTelefonica. TERRA NETWORKS GROUP SELECTED OPERATING DATA Unaudited figures (Thousands) March 2005 2004 % Chg Total Pay Subscribers 6,767.1 5,273.5 28.3 Access 1,836.6 1,745.5 5.2 Narrowband 687.7 1,019.8 (32.6) Broadband 1,148.9 725.7 58.3 VAS & Content 4,930.5 3,527.9 39.8 Broadband Access Subscribers by Country 1,148.9 725.7 58.3 Spain 185.3 183.8 0.8 Latin America 963.6 542.0 77.8 TERRA NETWORKS GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 113.0 105.4 7.2 Internal expenditure capitalized in fixed assets (1) 0.1 0.2 (40.7) Operating expenses (102.4) (103.3) (0.8) Other net operating income (expense) 3.5 (1.7) c.s. Gain (loss) on sale of fixed assets 0.2 0.9 (75.0) Impairment of goodwill and other assets 0.0 0.0 n.s. Operating income before D&A (OIBDA) 14.3 1.5 n.s. Depreciation and amortization (19.8) (24.4) (19.1) Operating income (OI) (5.4) (22.9) (76.3) Profit from associated companies (2.3) (4.9) (53.0) Net financial income (expense) 2.9 7.1 (58.8) Income before taxes (4.8) (20.7) (76.8) Income taxes 3.2 10.5 (69.8) Income from continuing operations (1.6) (10.2) (84.1) Income (Loss) from discontinued operations 0.0 (29.8) c.s. Minority interest 0.0 2.0 n.s. Net income (1.6) (37.9) (95.9) (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses ATENTO GROUP During the first quarter of 2005, revenues for the Atento Group amounted to178.7 million euros, 32.9% more than in the same period of the previous year,primarily explained by the revenue growth of Atento Espana (+27.1%year-on-year), Atento Brazil (+31.3% year-on-year) and Atento Mexico (+70.7%year-on-year). The contribution of clients outside the Telefonica Group increased itsweighting, reaching 49% of revenues in March 2005, compared with 44% in December2004. The clients with greatest contributions, by countries, were as follows: • In Brazil, operations with VIVO, Redecard, Creditcard and Microsoft. • In Spain, the agreement with BBVA and services with Gas Natural, Repsol and the new services with some Spanish Government Agencies (Tesoreria General de la Seguridad Social and Agencia Tributaria). • In Mexico, increased activity with BBVA and remaining clients, such as Sony and Infonavit. • In Puerto Rico, the agreement with AT&T and growth with SunCom, Transcore, Citibank and Grupo Santander. • In Colombia, increased traffic in the Microsoft campaign. Regarding to the geographic distribution of revenues, Spain and Brazil bothaccounts for 71% of the total, 2 percentage points less than twelve months ago,offset by the higher contribution of Atento Mexico (8% vs. 6% one year ago),Chile (6% vs. 5% one year ago) and Argentina (3% vs. 2% one year ago). Operating expenses grew 35.9% year-on-year to 156.8 million euros in the firstquarter of the year, due to increased personnel expenses (+39.3%) as a result ofgreater activity and supplies (+37.1%). Operating income before depreciation and amortization (OIBDA) amounted to 22.6million euros at the end of the first quarter of 2005, 17.8% up on January-Marchof the previous year. In terms of profitability, the OIBDA margin amounted to12.6%, 1.6 percentage points lower than twelve months ago. Operating income (OI) at March 2005 amounted to 15.5 million euros, 57.8% morethan that recorded in the same period of 2004, mainly due to the 24.5% decreasein amortization explained by the degree of maturity achieved in operations. Net income obtained in the first three months of the year amounted to 7.8million euros compared with 10.6 million euros registered in 2004. CapEx totaled 4.4 million euros at the end of the first quarter, showing ayear-on-year increase of 51.5%. This increase was mainly due to the investmentsmade by Atento Brazil to attend new services and clients in the extension andrestructuring of the Contact Center in Sao Bento, the opening of new platformsin Spain to attend to new services and the implementation of the new contactcenter in Puerto Rico (Trujillo). Hence, operating free cash flow (OIBDA-CapEx)reached 18.1 million euros in March, compared with the 16.2 million eurosgenerated in January-March 2004. Finally, at operating level, the Atento Group had 31,785 positions in place atMarch 31st 2005, 4,899 more than one year ago. The average number of occupiedpositions for the quarter was 27,159, representing a level of occupation of 90%(82% in March 2004). ATENTO GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 178.7 134.4 32.9 Internal expenditure capitalized in fixed assets (1) 0.0 0.0 n.s. Operating expenses (156.8) (115.3) 35.9 Other net operating income (expense) 0.7 0.4 54.8 Gain (loss) on sale of fixed assets 0.0 (0.4) c.s. Impairment of goodwill and other assets 0.0 0.0 n.s. Operating income before D&A (OIBDA) 22.6 19.2 17.8 Depreciation and amortization (7.0) (9.3) (24.5) Operating income (OI) 15.5 9.8 57.8 Profit from associated companies 0.0 0.0 n.s. Net financial income (expense) (3.4) 3.3 c.s. Income before taxes 12.1 13.2 (8.0) Income taxes (3.6) (2.1) 71.5 Income from continuing operations 8.5 11.1 (23.1) Income (Loss) from discontinued operations 0.0 (0.1) n.s. Minority interest (0.7) (0.4) 80.3 Net income 7.8 10.6 (26.0) (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses CONTENT AND MEDIA BUSINESS The Content and Media Business obtained revenues of 266.5 million euros at theend of the first quarter of 2005, low in 7.3 million euros to the registered onein the same period of 2004, mainly due to the deconsolidation in 2004 of thefilm content producer Lola Films and also because of the lower activity ofEndemol due to temporary programming lags. The consolidated operating income before depreciation and amortization (OIBDA)amounted to 45.4 million euros in the first quarter of 2005, compared with 43.7million euros registered in the same period of last year. Here it is importantto highlight the capital gains of 7 million euros, the majority of them comingfrom the completion of the selling process of the radio stations previouslyowned by ATCO, which was already announced during the last quarter of 2004. ENDEMOL The Endemol Group generated revenues of 224.8 million euros, a 3.8% reductionover last year's published figure. This decrease in revenues has been primarilydue to temporary programming lags and less activity in Italy and USA, though theNorth American subsidiary, which represents 10.5% of the whole business, has oneof the highest margins amongst Endemol Group's subsidiaries, continuing the sametrend seen in previous quarters. Due to the above-mentioned programming lags andthe typical seasonality inherent to this kind of business, the results of thefirst quarter cannot be extrapolated to the rest of the fiscal year. In OIBDA terms, Endemol obtained 41.9 million euros, which compares with the38.1 million euros registered in the first quarter of 2004. ATCO During the first three months of the year, the advertising market in Argentina(mainly in the Capital and Gran Buenos Aires areas) has registered year-on-yeargrowth of approximately 6%, which compares with the one registered in the firstquarter of 2004 (61%), reflecting the recovery of the above-mentioned marketthroughout 2004. Within this favorable market context, Telefe maintains its leadership, reaching36.7% share of audience on total population and showing a year-on-year reductionof 3.6 p.p., followed by its main competitor, Canal 13, with an average share of25.9% in the first quarter of 2005. The cumulative advertising market share asof March 2005 is 42.1%, having been reduced in 3,4 p.p. with respect to the oneachieved in March 2004, again followed by Canal 13 (31.2%). The company obtained revenues of 57.4 million pesos at the end of the firstquarter of 2005, showing a decrease of 6.4% over the same period of last year,as a result of the higher competitive pressure in the advertising market alreadymentioned. OIBDA has been positive in 28.5 million pesos, which compares withthe 17.1 million pesos registered in the first quarter of 2004, and primarilydue to the capital gains registered after the sale of Radio Continental andRadio Estereo. CONTENT AND MEDIA BUSINESS CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 266.5 273.8 (2.6) Internal expenditure capitalized in fixed assets (1) 0.0 0.1 n.s. Operating expenses (228.9) (230.4) (0.7) Other net operating income (expense) 0.8 (0.1) c.s. Gain (loss) on sale of fixed assets 7.0 (0.1) c.s. Impairment of goodwill and other assets (0.0) 0.5 c.s. Operating income before D&A (OIBDA) 45.4 43.7 3.9 Depreciation and amortization (7.4) (6.4) 14.6 Operating income (OI) 38.1 37.3 2.1 Profit from associated companies (8.7) (10.7) (18.5) Net financial income (expense) 2.9 (3.0) c.s. Income before taxes 32.2 23.6 36.8 Income taxes (13.0) (29.4) (55.7) Income from continuing operations 19.2 (5.9) c.s. Income (Loss) from discontinued operations 0.0 0.0 n.s. Minority interest (0.3) 0.0 c.s. Net income 18.9 (5.8) c.s. (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses TELEFONICA DEUTSCHLAND GROUP Telefonica Deutschland obtained revenues of 71.6 million euros in the firstthree months of 2005, showing a year-on-year reduction of 12.3%, due primarilyto the reduction in revenues from narrowband services which has not yet beenoffset by the increase in broadband business, which nearly accounted for 18 % ofthe total revenues. With respect to the broadband business, it is worth to highlight the strongincrease in the number of connections resold on a retail basis by the company toits main clients. With it, the total number of equivalent ADSL lines in servicein the German market exceeds the figure of 529 thousands at the end of the firstquarter of 2005, which compares with the more than 275 thousands achieved in thefirst quarter of 2004, providing services to four of the five top main ISPs inthis market. As a consequence of the aforementioned narrowband to broadband Internet accessmigration process, Telefonica Deutschland has registered a negative operatingincome before depreciation and amortization (OIBDA) of 52 thousand euros at theend of the first quarter, which compares with the positive figure of 4.3 millioneuros obtained in the same period of the previous year. TELEFONICA DEUTSCHLAND GROUP SELECTED FINANCIAL DATA Unaudited figures (Euros in millions) January - March 2005 2004 % Chg Revenues 71.6 81.7 (12.3) Operating income before D&A (OIBDA) (0.1) 4.3 c.s. OIBDA margin (0.1%) 5.3% (5.3 p.p.) ADDENDA Companies included in each Financial Statement Based on what was indicated at the start of this report, the results breakdownof Telefonica Group are detailed according to the business in which the Grouphas a presence. The main differences between this view and the one that wouldapply attending to the legal structure, are the following: • Telefonica, S.A. directly participates in the share capital of Endemol Entertainment Holding, N.V., which has been included in Telefonica de Contenidos Group. The results from the Sogecable stake have been also assigned to Telefonica de Contenidos Group, even though a part of the investment is legally dependent upon Telefonica, S.A. • Telefonica Holding Argentina, S.A. holds 4.706% of Atlantida de Comunicaciones, S.A. (ATCO) and 26.82% of AC Inversora, S.A. which, for those purposes, are considered to be part of Telefonica de Contenidos Group, consolidating 100% share capital of both companies. • Compania de Telecomunicaciones de Chile, S.A. (CTC), participated by Telefonica Latinoamerica, sold Telefonica Moviles Chile to Telefonica Moviles Group in the third quarter of fiscal year 2004, although the results of this company have been assigned to the cellular business from the beginning of the year 2004. • The participation of Telefonica Group in IPSE 2000 SpA is assigned to the cellular business, also including the investment legally dependent upon Telefonica DataCorp, S.A. • In the case of Telefonica de Argentina (TASA), participated by Telefonica Latinoamerica Group, Telinver has been assigned to the directories business, in line with our vision for the total Telefonica's directories business. • Telefonica Data Group (denominated "Telefonica Empresas"), legally dependent upon Telefonica S.A., has been segregated and subsequentally integrated into the fixed line activities both in Spain and Latin America for presentation purposes, and according to geographic criteria. The stakes not included in neither of the previous geographic areas will be consolidated directly by Telefonica S.A. In this sense, the stakes in Telefonica Data Espana, S.A.U. and Soluciones Group have been sold to Telefonica de Espana S.A.U. in the third quarter of 2004, although the results of both companies had been assigned to the fixed line business in Spain from the beginning of the year 2004. • Telefonica International Wholesale Services America, S.A. (Uruguay), directly participated by Telefonica S.A., has been consolidated within the Telefonica Latinoamerica Group. ADDENDA Key Holdings of the Telefonica Group and its Subsidiaries detailed by businesslines TELEFONICA GROUP % Part Telefonica de Espana 100.00% Telefonica Moviles (1) 92.46% Telefonica Latinoamerica 100.00% Grupo TPI (2) 59.90% Grupo Terra Networks (3) 75.87% Telefonica de Contenidos 100.00% Grupo Atento 91.35% (1) Effective participation: 92.91%. Includes Telefonica Moviles S.A.' Stock Options Program ("Programa MOS"). (2) Effective participation: 61.10%. Includes TPI's shares in treasury stock. (3) Effective participation: 77.71%. Includes Terra's shares in treasury stock and Terra's Stock Options Program. TELEFONICA DE ESPANA GROUP % Part Telyco 100.00% Telefonica Telecomunic. Publicas 100.00% Telefonica Soluciones Sectoriales 100.00% Telefonica Empresas Espana 100.00% T. Soluciones de Informatica y 100.00% Comunicaciones de Espana TELEFONICA LATINOAMERICA GROUP % Part Telesp 87.49% Telefonica del Peru 98.19% Telefonica de Argentina 98.03% TLD Puerto Rico 98.00% CTC Chile 44.89% Telefonica Data Colombia 65.00% Telefonica Empresas Brasil 93.98% Telefonica Empresas Peru 97.07% Telefonica Data Argentina 97.92% Telefonica Data USA 100.00% T. Internacional Wholesale Serv. (TIWS) 100.00% TELEFONICA MOVILES GROUP % Part Telefonica Moviles Espana 100.00% Brasilcel (1) 50.00% TCP Argentina 97.93% TEM Peru 97.97% T. Moviles Mexico 92.00% TEM El Salvador 91.75% TEM Guatemala 100.00% Telefonica Movil Chile 100.00% Telcel (Venezuela) 100.00% TEM Colombia 100.00% Comunicaciones Moviles del Peru 99.85% TEM Guatemala y Cia 100.00% Otecel (Ecuador) 100.00% TEM Panama 99.57% Abiatar (Uruguay) 100.00% Telefonia Celular Nicaragua 100.00% Radiocomunicac. Moviles SA (Arg) 100.00% Bell South Chile 100.00% Group 3G (Germany) 57.20% IPSE 2000 (Italy) (2) 45.59% 3G Mobile AG (Switzerland) 100.00% Medi Telecom 32.18% Telefonica Moviles Interacciona 100.00% Mobipay Espana 13.36% Mobipay Internacional 50.00% T. Moviles Soluciones y Aplicac. (Chile) 100.00% (1) Joint Venture which fully consolidates TeleSudeste Celular Participacoes,Celular CRT Participacoes, TeleLeste Celular Participacoes and Telesp CelularParticipacoes. Telesp Celular Participacoes fully consolidates Global Telecom Participacoes and, from May 2003, TeleCentro Oeste Participacoes. The participation that consolidate of Brasilcel in their subsidiaries in March2005 are the following: TeleSudeste Celular Participacoes 90.9%; TelespCelular Participacoes 65.7%; Global Telecom Participacoes 65.7%; Celular CRT Participacoes 65.9%; TeleLeste Celular Participacoes 50.6% and TeleCentro OesteParticipacoes 33.3%. (2) Aditionally, Telefonica Group has a 4.08% of IPSE 2000 through TelefonicaDataCorp. TPI - PAGINAS AMARILLAS GROUP % Part TPI Edita 100.00% Publiguias (Chile) 100.00% TPI Brasil 100.00% TPI Peru 100.00% 11888 Servicios de Consulta Telefonica 100.00% TERRA NETWORKS GROUP % Part Lycos Europe 32.10% Terra Networks Peru 99.99% Terra Networks Mexico 99.99% Terra Networks USA 100.00% Terra Networks Guatemala 100.00% Terra Networks Venezuela 100.00% Terra Networks Brasil 100.00% Terra Networks Argentina 99.99% Terra Networks Espana 100.00% Terra Networks Chile 100.00% Terra Networks Colombia 99.99% EducaTerra 100.00% Azeler Automocion 100.00% R.U.M.B.O. 50.00% Uno-E Bank 33.00% ATENTO GROUP % Part Atento Teleservicios Espana, S.A. 100.00% Atento Brasil, S.A. 100.00% Atento Argentina, S.A. 100.00% Atento de Guatemala, S.A. 100.00% Atento Mexicana, S.A. de C.V. 100.00% Atento Peru, S.A.C. 99.46% Atento Chile, S.A. 77.60% Atento Maroc, S.A. 100.00% Atento El Salvador, S.A. de C.V. 100.00% TELEFONICA DE CONTENIDOS GROUP % Part Telefe 100.00% Endemol 99.70% Telefonica Servicios de Musica 100.00% Telefonica Servicios Audiovisuales 100.00% Hispasat 13.23% OTHER PARTICIPATIONS % Part Sogecable (1) 23.83% Portugal Telecom (2) 9.56% BBVA 1.07% Amper 6.10% Telepizza 4.89% (1) Telefonica de Contenidos, S.A. holds 22.23% and Telefonica, S.A. holds 1.60%. (2) Telefonica Group's effective participation. Telefonica Group participation would be 9.68% if we exclude the minority interests. ADDENDA Significant Events • On May 13, 2005, Telefonica paid an interim dividend from 2004 net income of a fix gross amount of 0.23 euros for each Company share issued, in circulation and carrying entitlement to this dividend. • The Telefonica Moviles General Shareholders' Meeting held on May 6th, approved all the Agreements Proposals, including the payment of a gross dividend of 0.193 euros per share. The dividend will be paid on 15 June. • On April 26, 2005, Telefonica communicated its decision to execute a renewed and extended 6 billion euros share buyback program until 2007. This 6 billion euros includes the pending execution of the 2003-2006 Program. The execution schedule of these share buy-backs will be conditioned to both the pace of cash-flow generation and to the share price level, all subject to any applicable limitations established by law, regulation and by the Company's Bylaws. • According to the information published by Telefonica on April 25th 2004, the proposed merger between Telefonica, S.A. and Terra Networks, S.A. will be subject to approval by the Company's General Meeting of Shareholders called firstly for May 30th and secondly for May 31st 2005. This proposed merger will also be subjected to the approval of the Terra Networks, S.A. General Meeting of Shareholders convoked for June 2nd 2005. • On April 20, 2005, Telefonica Moviles, via its wholly-owned subsidiary, TEM Puerto Rico Inc., carried out the conversion of the promissory notes representing 49.9% of the shareholder equity of the Puerto Rican operator, Newcomm Wireless Services Inc., once it had obtained the appropriate regulatory approvals. • On April 12, 2005, Telefonica signed the acquisition of a 51.1% stake in Cesky Telecom, six days after the Czech Government unanimously approved the sale of Cesky Telecom to Telefonica, following the recommendation of the Czech Privatisation Committee. The acquisition of the 51.1% of Cesky Telecom amounted to 2,746 million euros(exchange rate of CZK 30.09 per euro). The price per share (CZK 502) was 20.8%higher than the company's trading price at closing on the day preceding thesubmission of bids and only 4.3% higher than the second highest bid. After closing the acquisition of the 51.1% stake, and in compliance with theCzech Republic legislation, Telefonica will launch a tender offer on theremaining Cesky Telecom shares. The tender offer process is expected to befinalized in the last quarter of 2005. The price of the tender offer, to be decided in due course, will be set as thehighest of the following: 85% of the price paid for the 51.1% stake; the averageprice of Cesky Telecom shares during the six months prior to closing; or avaluation prepared by an independent expert. • In April, a tender offer was launched for the outstanding minority shareholdings in the Peruvian operator Comunicaciones Moviles del Peru, S.A. acquired from Bellsouth, where Telefonica Moviles, S.A holds a 99.85% stake. ADDENDA Changes to the Perimeter and Accounting Criteria of Consolidation In the period January-March of 2005, the main changes have occurred in the consolidation perimeter were the following: TELEFONICA GROUP • The Spanish company Telefonica Procesos y Tecnologia de la Informacion, S.A. was taken over by Telefonica Gestion de Servicios Compartidos, S.A. in February this year. The company, which was consolidated within Telefonica Group's financial statements by full integration method, has been removed from the consolidation perimeter. TELEFONICA DE ESPANA GROUP • The Spanish company Soluciones Tecnologicas para la alimentacion, S.L., in which Telefonica Soluciones de Informatica y Comunicaciones de Espana, S.A.U. had a 45% stake, was sold in February and has been removed from the Telefonica Group consolidation perimeter where it was consolidated by equity method. • In March, Telefonica de Espana S.A.U.'s sold its stake of 0.73% in INTELSAT for 17.77 million euros, obtaining a capital gain of 17.58 million euros. The company was recorded within the "Other investments" item of the Telefonica Group's consolidated balance sheet. TELEFONICA LATINOAMERICA GROUP • In March, the Dutch company Telefonica International Holding, B.V., wholly owned by Telefonica Internacional, S.A., sold its 14.41% stake in the US company Infonet Services Corporation, Inc. TELEFONICA MOVILES Group • On January 7th and January 11th 2005, respectively, 100% of the shares in the BellSouth Chile and Argentina operators were purchased, thus concluding the acquisition of BellSouth operators in Latin America. The total acquisition price for Telefonica Moviles, adjusted by the net debt of these companies, totaled 510.86 million euros for BellSouth Argentina and 307.43 million euros for BellSouth Chile. • On October 8th 2004, Telesp Celular Participacoes, S.A. approved a capital increase of approximately 2,054 million reaies. This increase was completed on January 4th 2005 and was completely subscribed. Following this increase, Brasilcel, N.V.'s 65.12% stake rose to 65.70%. TPI GROUP • The Spanish company 11888 Servicio Consulta Telefonica, S.A., wholly owned by Telefonica Publicidad e Informacion, S.A. (TPI), constituted, subscribed and fully paid all of the share capital of the French company Services de Renseignements Telephoniques, S.A.S. by the 0.04 million euros. The company is now incorporated in the consolidated accounts of the Telefonica Group by full integration method. • 11888 Servicio Consulta Telefonica, S.A. also constituted the Italian company Servizio Di Consultaziones Telefonica, S.R.L., subscribing and paying up 0.01 million euros for all of the shares forming its share capital.The company has been included in the consolidated financial statements of the Telefonica Group by full integration method. TERRA NETWORKS GROUP • In March, the Terra Group purchased 50% of the shares held by Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) in the Spanish company Azeler Automocion, S.A. Following the sale, the Terra Group now controls the entire Azeler stake. The company, which was consolidated within Telefonica Group's financial statements by equity method, has now been incorporated by full integration method. At the same time as the previous operation, the Terra Group sold the 50% itheld in the Spanish company Iniciativas Residenciales en Internet, S.A. (ATREA) to BBVA. Following this sale ATREA, which was consolidated within Telefonica Group's financial statements by equity method, has been removed from theconsolidation perimeter. This combined operation involved a total payment of 1.84 million euros and generated goodwill amounting to 1.54 million euros. TELEFONICA CONTENIDOS GROUP • During the first quarter, the Telefonica de Contenidos Group sold all of the shares it held in LS4 Radio Continental, S.A. and Radio Estereo, S.A., obtaining capital gains of 6.82 and 0.19 million euros, respectively. The companies, which were included in the financial statements of the Telefonica Group by full integration method, have been removed from the consolidation perimeter. DISCLAIMER This document contains statements that constitute forward looking statements inits general meaning and within the meaning of the Private Securities LitigationReform Act of 1995. These statements appear in a number of places in thisdocument and include statements regarding the intent, belief or currentexpectations of the customer base, estimates regarding future growth in thedifferent business lines and the global business, market share, financialresults and other aspects of the activity and situation relating to the Company.The forward-looking statements in this document can be identified, in someinstances, by the use of words such as "expects", "anticipates", "intends","believes", and similar language or the negative thereof or by forward-lookingnature of discussions of strategy, plans or intentions. Such forward-looking statements are not guarantees of future performance andinvolve risks and uncertainties and actual results may differ materially fromthose in the forward looking statements as a result of various factors. Analysts and investors are cautioned not to place undue reliance on thoseforward looking statements which speak only as of the date of this presentation.Telefonica undertakes no obligation to release publicly the results of anyrevisions to these forward looking statements which may be made to reflectevents and circumstances after the date of this presentation, including, withoutlimitation, changes in Telefonica's business or acquisition strategy or toreflect the occurrence of unanticipated events. Analysts and investors areencouraged to consult the Company's Annual Report as well as periodic filingsfiled with the relevant Securities Markets Regulators, and in particular withthe Spanish Market Regulator. This document contains financial information/data reported under IFRS. Thesedata are preliminary, as only full compliance with International FinancialReporting Standards issued at 31/12/2005 is required, unaudited, and thus, beingsubject to potential future modifications. This financial information has beenprepared based on the principles and regulations known to date, and on theassumption that IFRS principles presently in force will be the same as thosethat will be adopted to prepare the 2005 full year consolidated financialstatements and, consequently, does not represent a complete and finalinformation under these regulations. In addition, the IFRS financial informationcontained herein may not be comparable to financial information published byTelefonica that was prepared under Spanish GAAP. For additional information, please contact. Investor Relations Gran Via, 28 - 28013 Madrid (Spain) Phone number: +34 91 584 4700 Fax number: +34 91 531 9975 Email: Ezequiel Nieto - [email protected] Diego Maus - [email protected] Dolores Garcia - [email protected] [email protected] www.telefonica.es/investors This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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