29th Feb 2008 07:00
Telefonica SA28 February 2008 PART 2. RESULTS BY REGIONAL BUSINESS UNITS Telefonica Europe At the end of December 2007, Telefonica Europe's customer base reached 41.9million accesses, compared with 38.6 million accesses at year end 2006 (+8.7%year-on-year). In 2007, Telefonica Europe revenue was 14,458 million euros, (+9.9%year-on-year), while in the quarter declined 1.1% year-on-year, mainly due to aweaker sterling/euro exchange rate and the exit of Airwave from the perimeter.Operating income before depreciation and amortization (OIBDA) reached 4,977million euros, 34.2% above 2006 figures1. 2007 OIBDA included personnelreorganization and other non-recurring charges totaling 338 million eurosrelated to the UK, Ireland and German businesses, as well as the capital gainfrom the sale of Airwave (1,296 million euros), booked in the second quarter.Operating Income (OI) was 1,591 million euros in the January-December period,mainly affected by the impact of higher assets amortizations derived from thePurchasing Price Allocation (PPA) process, which also impacted negatively the2006 OI figure (309 million euros).-------------------------------------------------------------------------------- 1 Telefonica Europe includes in 2006 Telefonica O2 Czech Republic(January-December), T.Deutschland (January-December) and O2 Group(February-December). Telefonica Europe CapEx for the full year 2007 amounted to 2,125 million euros(2,552 million euros in 2006 February-December period). The year-on-year declinewas largely due to O2 Germany (30.6% lower year-on-year) bringing forwardcapital investment from 2007 into 2006 as part of the 3G network build.Operating Cash Flow (OIBDA-CapEx) for the year amounted to 2,852 million euros(1,156 million euros in 2006 February-December period). Telefonica Europe 2007 financial targets2 have been achieved: • 11.7% year-on-year growth in revenues (vs. guidance of 11% - 14%) • 10.1% year-on-year growth in OIBDA (vs. guidance of 7% - 10%) • CapEx of 2,095 million euros (vs. guidance of less than 2,200 million euros) -------------------------------------------------------------------------------- 2 2006 base reported figures include eleven months of O2 Group (consolidatedsince Feb.06), three months of start-up losses in Slovakia, and exclude Airwaveresults. 2007 guidance assumes constant exchange rates as of 2006, and excludechanges in consolidation. OIBDA excludes other exceptional revenues/expenses notforeseeable in 2007. Personnel reorganization and Real Estate Programs areincluded as operating revenues/expenses, except for those decided after guidancewas set at the beginning of the year (redundancies in O2 Group and Real EstateProgram in TEF O2 CR). For comparison, the equivalent other exceptional revenues/expenses registered in 2006 are also deducted from reported figures. Strategic and operational highlights: • iPhone success. The iPhone is the fastest-ever selling product for O2 UK. The ARPU of an iPhone customer is 30% higher than an average contract user and it has helped O2 UK to gain high value customers in the market, as approximately 60% of iPhone customers have migrated from other networks. Customer satisfaction levels are the highest of any device that O2 UK has sold, with the lowest ever rate of return. From 1 February 2008, the three iPhone tariffs were upgraded as part of O2 UK's new and improved contract tariff structure. • iPhone to launch in Ireland. O2 Ireland will be the exclusive network partner for the iPhone in Ireland. The iPhone will be available from March 14th. • O2 Germany builds foundations for further growth. As part of the 3.5 billion euros investment program for 2007-2010 announced in October 2007, O2 Germany has already selected vendors to expand both its GSM and UMTS network coverage. This will provide the business with a strong platform to capture the significant growth opportunities in Germany, including the business segment, leveraging the global reach of Telefonica to offer new propositions to multinational corporations as well as in the areas of the country not currently covered by the O2 network. In conjunction, the national roaming agreement which allowed for roaming by O2 customers in Germany on the T-Mobile 2G and 3G mobile networks was cancelled. Roaming minutes available as part of the agreement can be used until the end of 2009. O2 Germany will also double its store network to 1,000 over the next 2 years. • Accolades for O2 Broadband in the UK. Since launch, O2 UK's broadband service was rated above the major ISPs in the monthly "thinkbroadband.com" ISP comparison in November and December 2007, just two months after service launch. O2 Broadband scored the highest out of all its main competitors in all key satisfaction areas for customers, including speed, reliability and customer service. • New bundles launched in the Czech Republic. Telefonica O2 Czech Republic launched new TRIO bundle, including DSL, calls and O2 TV. • New data roaming tariffs announced. The O2 businesses and Telefonica mobile business in Spain will launch a range of new data roaming tariffs before summer 2008 (Telefonica in Spain already from February), aimed at customers travelling within Europe, with important savings for customers. O2 UK Total revenues in the last quarter of 2007 were 1,877 million euros, an increaseof 7.8% year-on-year in local currency compared to the same period of last year.For the full year, total revenues were 7,403 million euros, an increase of 18.7%year-on-year in local currency compared to the 11 month period to 31 December2006. On a like for like basis total revenue growth was 9.5% year-on-year.Service revenue for the quarter was 1,702 million euros, an increase of 9.7%year-on-year in local currency compared to the same period last year, driven bycontinued strong customer and ARPU growth, while for the full year, servicerevenue amounted to 6,790 million euros (+10.3% year-on-year in local currencyon a comparable basis). Operating income before depreciation and amortization (OIBDA) for the quarterwas 503 million euros, a decrease of 4.9% year-on-year in local currencycompared to the same period of 2006. OIBDA included additional personnelreorganization and other non recurring charges in the quarter of 20.5 millioneuros, mostly related to the UK IT and Technology function to captureefficiencies in the future. Excluding this charge in the quarter, OIBDA wouldhave been flat in local currency. OIBDA for the full year totalled 1,923 millioneuros, an increase of 8.7% year-on-year in local currency compared to the 11month period to 31 December 2006. On a like for like basis, OIBDA grew 1.0%year-on-year in local currency. Excluding all personnel reorganization chargesfor the year OIBDA was 10.7% ahead in local currency compared to the 11 monthperiod to 31 December 2006; on a like for like basis it was 2.8% ahead in localcurrency. In the UK, guidance3 for the full year 2007 has been accomplished, with growthof 18.6% year-on-year in revenues (vs. guidance of 15% - 18%) and 10.6%year-on-year growth in OIBDA (vs. guidance of 9% - 12%).-------------------------------------------------------------------------------- 3 2006 base reported figures include eleven months of O2 UK (consolidated sinceFeb.06). 2007 guidance assumes constant exchange rates as of 2006, and excludechanges in consolidation. OIBDA excludes other exceptional revenues/expenses notforeseeable in 2007. Personnel reorganization and Real Estate Programs areincluded as operating revenues/expenses, except for those decided after guidancewas set at the beginning of the year (redundancies in O2 UK). For comparison,the equivalent other exceptional revenues/expenses registered in 2006 are alsodeducted from reported figures. OIBDA margin in the fourth quarter was 26.8% (27.8% excluding personnelreorganization and non recurring charges), compared to 30.3% in the same quarterin 2006. This margin dilution was due to costs associated with the launch of O2Broadband, increased retention and reduced national roaming revenues from "3".OIBDA margin for the year was 26.0%, while excluding personnel reorganizationcharges it was 26.4%. The business once again outperformed the market, with gross additions in thequarter around 22% higher than the same period in 2006. The market continues tobe competitive, especially in the prepay segment, with increasing prepay tocontract migration, where O2's "Simplicity" tariff, offering a SIM only contracttariff with a 30 day notice period has proved highly successful. O2 UK added a total of 483,000 net mobile customers in the quarter (the highestin the market), an increase of 63.8% year-on-year, and 749,000 customers in theyear (-54.7% year-on-year, reflecting the highly penetrated market), taking thebase to 18.4 million (excluding the Tesco Mobile customer base) representinggrowth of 4.2% year-on-year. A total of 276,000 net contract customers were added in the quarter, more thandouble the figure for the fourth quarter 2006 and an all time record, reflectingthe success of the iPhone in addition to a strong underlying performance intraditional handsets. For the full year 591,000 contract customers were added toreach a base of 6.8 million (+9.5% year-on-year). At the end of the periodcontract customers made up 37.0% of the total base, compared to 35.3% at thesame time last year. Quarterly monthly contract ARPU of 61.0 euros was up 1.2%in local currency compared to the fourth quarter last year, due to increased MoUand non-voice services, while the ARPU for the year was 63.2 euros (+1.1%year-on-year in local currency). Average monthly contract churn fell to 1.5% inthe quarter, from 1.9% in the fourth quarter last year. The contract churn forthe year was 1.7%, from 1.9% in 2006. The number of prepay customers increased by 207,000 during the quarter, whilefor the year the prepay base grew by 158,000 to reach 11.6 million customers.Quarterly monthly prepay ARPU of 18.0 euros was 4.1% higher in local currencythan the fourth quarter last year, while the ARPU for the year was 18.2 euros(+4.0% year-on-year in local currency). As a result, O2 UK's blended monthly ARPU of 33.9 euros was 4.4% higher than thefourth quarter last year in local currency, while the ARPU for the year was 34.4euros (+3.6% year-on-year), reflecting the increased proportion of contractcustomers in the base, customer adoption of new products and services and thecontinued growth in both data and voice ARPUs. On a customer level, elasticitycontinues to be above 1. Quarterly MoU was up 9.8% year-on-year at 197 minutes, driven by propositionssuch as "Call Freedom", while the MoU for the year was 190 minutes (+10.6%year-on-year). Quarterly data ARPU of 11.1 euros was 9.1% higher in local currency than thefourth quarter last year, driven by growth in text messaging volumes, up 21.0%in the quarter, as well as increasing usage of a range of non-SMS services. DataARPU for the year was 11.0 euros (+8.2% year-on-year in local currency). The new"unlimited" data bolt-on proved successful with 59,000 customers taking thisproduct from launch in October until the end of the year. O2 UK had rolled out ULL capabilities to 833 exchanges by the end of thequarter, giving its broadband network a population coverage of 52%, with 71,000broadband customers at the end of 2007. The base has since grown to over 100,000to date. O2 GERMANY O2 Germany includes Telefonica Deutschland and comparable 2006 figures have beenrestated on this basis. Total revenues in the fourth quarter were 929 millioneuros, a decrease of 0.3% year-on-year compared to same period of 2006. For thefull year total revenues were 3,541 million euros, an increase of 6.7% comparedto the 11 month period to 31 December 2006. On a like for like basis, revenuedeclined by 1.9%. Mobile service revenue for the quarter was 725 million euros, down 6.5% comparedto the same period last year, reflecting the continued ARPU weakness in theGerman market and the impact of the approx. 10% termination rate cut in November2007, partly offset by growth of the customer base. The termination rate cutreduced fourth quarter service revenue by 0.6%. Mobile service revenue for theyear was 2,901 million euros, and year-on-year decrease of 5.1%. Operating income before depreciation and amortization (OIBDA) for the lastquarter of 2007 was 17 million euros, a decrease of 77.9% compared to the sameperiod in 2006. This included non recurrent charges totalling 151 million euros,the majority of them reflecting the cessation of the national roaming contractwith T-Mobile, along with additional personnel reorganization charges to enablefuture efficiency savings. OIBDA for the full year totalled 473 million euros, a decline of 18.9% comparedto the 11 month period to 31 December 2006. On a like for like basis the declinewas 24.2%. Excluding all one-off charges during the year (which totalled 247million euros), OIBDA for the 2007 would be 15.4% ahead of the same period lastyear, and growth of 23.5% compared to the 11 month period to 31 December 2006. O2 Germany guidance4 for the full year 2007 has been partially met, with 6.7%year-on-year growth in revenues (vs. guidance of 7% - 10%) and 23.8%year-on-year growth in OIBDA (vs. guidance of 21% - 25%).-------------------------------------------------------------------------------- 4 2006 base reported figures include eleven months of O2 Germany (consolidatedsince Feb.06). 2007 guidance exclude changes in consolidation. OIBDA excludesother exceptional revenues/expenses not foreseeable in 2007. Personnelreorganization and Real Estate Programs are included as operating revenues/expenses, except for those decided after guidance was set at the beginning ofthe year (redundancies in O2 Group). For comparison, the equivalent otherexceptional revenues/expenses registered in 2006 are also deducted from reportedfigures. OIBDA margin in the fourth quarter was 1.8% and for the full year it was 13.3%,while excluding the personnel reorganization and other charges it would havebeen 18.1% and 20.3%, respectively. The business traded well in the quarter, with gross additions up 63.3%year-on-year. Net additions in the quarter reached 303,000 customers, while forthe full year they were 1.4 million, taking the mobile customer base to 12.5million, 13.1% higher than at the same time last year. The Tchibo Mobilecustomer base grew by 81,000 to 1.18 million by the end of the quarter, whilethe Fonic brand added 129,000 customers to end the year with a base of 200,000. O2 Germany added a total of 244,000 net contract customers in the quarter, with756,000 for the full year. Quarterly monthly ARPU in the fourth quarter was 32.3euros, 17.6% lower than the same quarter last year. For the year contract ARPUwas 34.1 euros, 13.7% lower than in 2006. This reflected the impact of theapprox. 10% termination rate cut in November 2007, the level of competition inthe German market and the migration of the existing customer base to newcustomer offers. The Genion S/M/L base reached 2.14 million customers at the endof the year. A total of 369,000 prepay customers were added during the quarter, while 310,000existing customers were also removed from the base after an analysis of thecontribution of prepay customers to revenue generation. This resulted in netadditions in the quarter of 59,000 customers, with 691.000 for the full year,using the market's most stringent definition of customer activity. The prepaybase at the end of the year was 6.23 million customers. Quarterly monthly prepay ARPU of 6.4 euros was 22.8% lower than the fourthquarter last year, reflecting the market factors mentioned above, while theprepay ARPU for the year was 6.7 euros, a decline of 23.5% compared to 2006. Blended quarterly monthly ARPU in the fourth quarter was 19.4 euros, 17.9% lowerthan the same quarter last year. Blended ARPU for the year was 20.4 euros, adecline of 15.7% compared to 2006. Blended quarterly MoU grew by 3.7% year-on-year to 134 minutes, driven by newpropositions such as Genion S/M/L/XL and new prepay offers. MoU for the yearwere 131 minutes, an increase of 3.0% compared to last year. Quarterly monthly data ARPU was 5.1 euros, 12.8% lower than the fourth quarterlast year due to the higher number of lower spending prepay users in the baseand a shift from SMS to voice usage with the introduction of flat rate voicetariffs. Data ARPU for the year was 5.1 euros, 10.9% lower than 2006, althoughtotal data revenues were flat year on year with a 12.8% increase in non-SMSdata. O2 DSL had acquired 75,000 customers by the end of the quarter, with a strongorder book of circa 50,000 which were not reflected in the net additions numberfor the quarter. Telefonica Deutschland reported 671,000 ULL lines in total atthe end of December, from around 187,000 lines at the end of the fourth quarterin 2006. Equivalent ADSL lines in service reached 837,000 at the end ofDecember, from 619,000 at the end of December last year. O2 IRELAND Total revenues in the fourth quarter of the year were 250 million euros, anincrease of 1.4% compared to the same period last year. Revenue for the fullyear 2007 was 991 million euros, an increase of 11.9% compared to the 11 monthperiod to 31 December 2006. On a like for like basis growth was 2.8%. Mobileservice revenue for the quarter was 231 million euros, an increase of 3.7%compared to the same period last year, reflecting the growth of the customerbase and the increase in blended ARPU. The termination rate cut reduced fourthquarter service revenue by just under 1%. Mobile service revenue for the yearwas 935 million euros, a year-on-year increase of 4.0% over the previous year ona comparable basis. Operating income before depreciation and amortization (OIBDA) for the quarterwas 63 million euros, a decrease of 15.2% compared to the same period last year.This included a charge of 13.4 million euros, related to costs to reorganize theIT and networks division in order to capture future efficiency savings, as thebusiness has entered exclusive negotiations with IBM to supply and manage O2Ireland's IT services. Excluding this charge OIBDA would have been 76 millioneuros. OIBDA for the year was 316 million euros, 2.0% higher compared to the 11month period to 31 December 2006 and 6.6% lower year-on-year on a comparablebasis, while excluding personnel reorganization charges (totalling 16.2 millioneuros), OIBDA would have been 333 million euros, a decline of 1.8% year-on-yearon a comparable basis. OIBDA margin in the fourth quarter was 25.1%; excluding the above-mentionedcharge it was 30.5%. OIBDA margin for the year was 31.9%, while excluding allpersonnel reorganization charges it was 33.6%. O2 Ireland traded well in the fourth quarter, with gross connections up 4.6%compared to the same quarter last year. Net connections totalled 14,000 in thefourth quarter. At the end of December the total customer base was 1.6 millioncustomers, 0.9% higher than at the same time last year. The number of mobilebroadband customers stood at 24,500 by the end of the year, after a successfullaunch in July 2007. O2 Ireland added a total of 22,000 net contract customers in the quarter, 26.8%higher than the fourth quarter last year, and for the year total contract netadditions were 70,000, 24.2% higher than in 2006. Quarterly monthly contractARPU of 78.8 euros was 3.3% lower than the fourth quarter last year and for theyear contract ARPU was 82.3 euros, 3.1% lower than 2006 due to the introductionof new offers and promotions. Due to the impact of increased competitor activity, the prepay customer basefell during the quarter by 8,000 customers. During the year the prepay base fellby a total of 56,000 customers, compared to a loss of 26,000 in 2006, and endedthe year at 1.1 million customers, a decline of 4.9% year-on-year. Monthlyprepay ARPU was 29.0 euros, a decrease of 1.9% on the same period a year ago,while ARPU for the year was 29.0 euros, a decline of 1.2% year-on-year. Blended monthly ARPU in the fourth quarter of 45.7 euros was 1.6% higher thanthe fourth quarter last year, mainly due to the higher proportion of contractsubscribers on the base. Blended ARPU for the year was 45.9 euros, growth of1.6% year-on-year. Blended MoU in the quarter increased by 2.5% year-on-year to 252 minutes, againdriven by the higher proportion of contract subscribers in the base. MoU for theyear were 248 minutes, with a year-on-year growth of 4.9%. Quarterly monthly data ARPU was 12.4 euros, 23.5% higher than the fourth quarterlast year, driven by increased use of non-SMS services. Data ARPU for the yearwas 11.7 euros (+19.6% year-on-year) TELEFONICA O2 CZECH REPUBLIC Total revenues for the fourth quarter amounted to 590 million euros, up 1.7%year-on-year in local currency. For the full year, revenues reached 2,257million euros, an increase of 2.9% year-on-year in local currency. In line withthe first nine months of the year, the Czech mobile business was the key driverof this growth. Business revenues in the Czech fixed line segment were flat in2007 compared to the previous year, confirming the trend seen since the firstquarter. Operating income before depreciation and amortization (OIBDA) reached 247million euros in the fourth quarter, up by 14.7% year-on-year in local currency,while OIBDA in 2007 reached 1,010 million euros, up 0.5% year-on-year in localcurrency. Telefonica O2 Czech Republic guidance5 for the full year 2007 has been met, with2.8% year-on-year growth in revenues (vs. guidance of 1% - 3%), 0.1%year-on-year decrease in OIBDA (vs. guidance of -1% - 0%) and CapEx of 274million euros (vs. guidance of approx. 310 million euros).-------------------------------------------------------------------------------- 5 2006 base reported figures include three months of start-up losses inSlovakia. 2007 guidance assumes constant exchange rates as of 2006, and excludechanges in consolidation. OIBDA excludes other exceptional revenues/expenses notforeseeable in 2007. Personnel reorganization and Real Estate Programs areincluded as operating revenues/expenses, except for those decided after guidancewas set at the beginning of the year (Real Estate Program in TEF O2 CR). Forcomparison, the equivalent other exceptional revenues/expenses registered in2006 are also deducted from reported figures. OIBDA margin was 41.9% in the fourth quarter compared to 37.1% in the fourthquarter of 2006, the difference largely due to the re-branding costs incurred in2006. OIBDA margin for the full year was 44.8% compared to 45.8% for 2006. Thedecrease in Group OIBDA margin in 2007 was mainly due to dilution by the Slovakoperation (approx. 2 percentage points). The Czech mobile business continued focusing on development of attractive voiceand data packages, along with its policy of prepay to contract migration. Totalbusiness revenues in the Czech mobile business for the full year were 1,173million euros, an increase of 4.4% year-on-year in local currency, with anincrease of 1.7% in the fourth quarter in local currency. Mobile service revenueamounted to 1,117 million euros, up 4.8% year-on-year in local currency, with anincrease of 1.9% in the fourth quarter. The total number of mobile customers in the Czech Republic increased by 5.4%year-on-year to reach 5.1 million at the end of December 2007, with netadditions for the full year up to 38.4% year-on-year. The contract customer base reached 2.2 million, representing 19.7% growthyear-on-year, with net additions of 369,000 in 2007 (+12.1% year-on year), and83,000 in the fourth quarter. Contract customers accounted for 43.8% of thetotal base at the end of 2007, up from 38.5% at the end of 2006. Contractquarterly monthly ARPU reached 34.5 euros, a year-on-year decline of 7.7% inlocal currency, mainly due to the dilution caused by customer migration from theprepay to contract segment. Contract ARPU for the year was 34.5 euros, ayear-on-year decrease of 8.3% in local currency. The number of prepay customers decreased by 3.6% year-on-year to 2.9 million atthe end of 2007, with a net decrease in the year of 108,000 customers, but a netincrease in of 75,000 in the fourth quarter, mainly due to the continuing trendof prepay to contract migrations. Prepay quarterly monthly ARPU was 9.7 euros,up 2.8% year-on-year in local currency compared to the fourth quarter of 2006.Prepay ARPU for the year was 9.4 euros, a year-on-year increase of 3.5% in localcurrency. Blended quarterly monthly ARPU reached 20.5 euros in the fourth quarter, up 2.3%year-on-year in local currency, while blended ARPU for the year was 19.9 euros,a year-on-year increase of 2.5% in local currency. Blended quarterly MoU grew by 11.9% year-on-year to 122 minutes, mainly due tothe growing number of contract customers generating higher average traffic percustomer and tariffs designed to stimulate traffic. Blended MoU for the yearstood at 117 minutes, 14.7% above 2006 levels. Due to the success of connectivity flat data services, based on GPRS/UMTS andCDMA technologies, data ARPU improved by 2.8% year-on-year to 4.4 euros in 2007.Non-SMS data ARPU represented 43% of total data ARPU in 2007 compared to 41% in2006. Activities in the Czech fixed line business continued to focus on thedevelopment of broadband services and increasingly the ICT/Business Solutionsarea. Total business revenues in the Czech fixed business for the full year fellby 0.2% year-on-year in local currency to 1,068 million euros; while in thefourth quarter, revenues fell by 1.1% year-on-year in local currency, despitethe healthy growth of revenues from broadband Internet services, value addedservices and IT services. The total number of fixed telephony accesses amounted to 2.1 million at the endof 2007, down by 13.9% year-on-year, mainly as the result of the strong fixed tomobile substitution. As a result of improving the number of gross adds and lowernumber of disconnections following the Company's effort to enhance the qualityof fixed lines via broadband and bundled offers, the decline in fixed telephonyaccesses decelerated during 2007. The net losses decreased to 65,000 in thefourth quarter, from 135,000 in the fourth quarter 2006, limiting net losses in2007 to 333,000 from 506,000 registered in 2006. Total number of customerscurrently having a bundled product amounted to close to 100,000 at the end of2007. The total number of ADSL accesses (retail and wholesale) reached 570,000 at 31December 2007, up 21.3% year-on-year. Net gain for the year was 100,000 (-49.0%year-on-year), while fourth quarter's net gain stood at 25,000 (-42.5%year-on-year). After the successful take up of bundled products, total number ofO2 TV's customers increased to 73,000 at the end of 2007, representing 20,000net adds in the fourth quarter, up from 16,000 in the previous quarter. In line with the previous quarters, during the fourth quarter Telefonica O2Slovakia successfully continued in building its footprint in the Slovak market.The key activities focused on marketing of company's prepaid and recentlyintroduced postpaid offer, customer care enhancement with the aim to furtherexpand the customer base and improve the customer mix via migration to postpaidtariffs. This will lead to higher customer activity in terms of network usagewith a positive impact on ARPU and financial performance. By the end of 2007,the total number of mobile registered customers in Slovakia amounted to 565,000,of which the majority are prepaid customers. Although a significant proportionof these customers use their O2 SIM as a second or third SIM, the market shareof active customers is more than 5%. Telefonica O2 Slovakia continued to focuson further roll-out of its own network, which will allow for the gradualmigration of the traffic from national roaming with positive impact on margins.By the end of the fourth quarter, the company had in operation around 550 BaseStations, resulting in more than 60% of traffic captured over its own network.The sales network comprised 14 own brand stores, 16 franchises and about 3,500other points of sale. TELEFONICA EUROPEACCESSESUnaudited figures (thousands) 2006 2007 December March June September December % Chg y-o-y Final Clients Accesses 38,310.9 38,866.0 39,341.4 40,136.3 41,201.2 7.5 Fixed telephony accesses 2,462.9 2,347.8 2,267.2 2,194.9 2,130.0 (13.5)(1) Internet and data accesses 607.1 627.3 637.0 648.9 734.2 20.9 Narrowband 143.7 110.9 85.6 68.4 56.6 (60.6) Broadband 451.9 505.2 540.5 572.8 670.3 48.3 Other 11.6 11.2 10.9 7.7 7.3 (36.7) Mobile accesses 35,225.2 35,865.5 36,399.7 37,239.6 38,263.8 8.6 Contract 21,143.6 21,504.0 21,643.9 21,972.2 22,419.5 6.0 Pre-Pay 14,081.7 14,361.5 14,755.8 15,267.3 15,935.8 13.2 Pay TV 15.6 25.5 37.5 53.0 73.2 n.m.Wholesale Accesses (2) 243.8 329.5 410.8 543.9 706.2 n.m.Total Accesses 38,554.7 39,195.5 39,752.2 40,680.3 41,907.3 8.7 (1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary access; 2/6 Access x30. Company's accesses for internal use included.(2) Includes Unbundled Lines by T.Deutschland.Note: Mobile accesses, Fixed telephony accesses and Broadband accesses include MANX customers. TELEFONICA EUROPECONSOLIDATED INCOME STATEMENTUnaudited figures (Euros in millions) January - December October - December 2007 2006 % Chg 2007 2006 % Chg Revenues 14,458 13,159 9.9 3,682 3,725 (1.1)Internal exp capitalized in fixed 200 219 (8.5) 44 57 (22.3)assets (1)Operating expenses (10,987) (9,662) 13.7 (2,896) (2,868) 1.0Other net operating income (expense) 14 9 52.2 2 3 (17.0)Gain (loss) on sale of fixed assets 1,292 (8) c.s. (6) 1 c.s.Impairment of goodwill and other (0) (9) (99.3) (0) (7) (93.8)assetsOperating income before D&A (OIBDA) 4,977 3,708 34.2 826 910 (9.2)(2)Depreciation and amortization (3,386) (3,399) (0.4) (820) (937) (12.4)Operating income (OI) 1,591 309 n.s. 6 (27) c.s. Note: Figures are presented considering the Purchase Price Allocation of O2 asof February 2006. Note: "Bad debt provisions" have been reclassified from "Other net operatingincome (expense)" to "Operating expenses". Note: Telefonica Europe includes in 2006 Telefonica O2 Czech Republic (January-December), T. Deutschland (January-December), O2 Group (February-December) andO2 Germany (February-December). (1) Including work in process.(2) OIBDA figures exclude brand fee. TELEFONICA EUROPEACCESSES BY COUNTRIESUnaudited figures (Thousands) 2006 2007 December March June September December % Chg y-o-y UK Final Clients Accesses 17,650.0 17,774.9 17,815.4 17,938.0 18,452.8 4.5 Internet and data 16.8 24.0 30.7 38.4 70.7 n.m.accesses Broadband 16.8 24.0 30.7 38.4 70.7 n.m. Mobile accesses 17,633.2 17,750.9 17,784.7 17,899.6 18,382.1 4.2 Pre-Pay 11,415.1 11,452.9 11,410.7 11,366.4 11,573.4 1.4 Contract 6,218.1 6,298.0 6,374.1 6,533.2 6,808.7 9.5Total Accesses 17,650.0 17,774.9 17,815.4 17,938.0 18,452.8 4.5 GERMANYFinal Clients Accesses 11,043.8 11,215.2 11,591.5 12,205.1 12,546.2 13.6 Internet and data 19.0 31.4 33.7 37.0 74.7 n.m.accesses Broadband 19.0 31.4 33.7 37.0 74.7 n.m. Mobile accesses 11,024.8 11,183.8 11,557.8 12,168.1 12,471.5 13.1 Pre-Pay 5,544.1 5,609.6 5,792.4 6,175.4 6,235.0 12.5 Contract 5,480.7 5,574.2 5,765.4 5,992.7 6,236.6 13.8 Wholesale Accesses (1) 149.3 227.4 305.1 435.9 596.0 n.m.Total Accesses 11,193.1 11,442.6 11,896.6 12,641.0 13,142.3 17.4 IRELAND Mobile accesses 1,631.7 1,632.5 1,631.5 1,632.5 1,646.1 0.9 Pre-Pay 1,146.7 1,133.6 1,118.7 1,098.8 1,090.9 (4.9) Contract 485.1 499.0 512.8 533.7 555.2 14.5Total Accesses 1,631.7 1,632.5 1,631.5 1,632.5 1,646.1 0.9 CZECH REPUBLIC Final Clients Accesses 7,842.9 7,712.3 7,698.1 7,714.6 7,841.0 (0.0) Fixed telephony 2,402.5 2,287.5 2,207.2 2,134.6 2,069.2 (13.9)accesses (2) Internet and data 560.3 559.9 559.8 559.5 573.3 2.3accesses Narrowband 143.7 110.9 85.6 68.4 56.6 (60.6) Broadband 405.1 437.9 463.3 483.5 509 25.7 Other 11.6 11.2 10.9 7.7 7.3 (36.7) Mobile accesses 4,864.5 4,839.5 4,893.7 4,967.4 5,125.4 5.4 Pre-Pay 2,989.7 2,873.2 2,816.7 2,806.6 2,881.5 (3.6) Contract 1,874.8 1,966.3 2,076.9 2,160.9 2,243.9 19.7 Pay TV 15.6 25.5 37.5 53.0 73.2 n.m. Wholesale Accesses 94.5 102.1 105.7 108.0 110.2 16.6Total Accesses 7,937.4 7,814.4 7,803.8 7,822.6 7,951.2 0.2 SLOVAKIA Mobile accesses - 386.8 455.0 495.6 565.4 n.c. Pre-Pay - 386.8 454.0 475.9 502.4 n.c. Contract - 0.0 1.0 19.7 63.0 n.c.Total Accesses - 386.8 455.0 495.6 565.4 n.c. (1) Includes Unbundled Lines by T. Deutschland.(2) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary access; 2/6 Access x30. Company's accesses for internal use included. TELEFONICA EUROPESELECTED OPERATING DATA MOBILE BUSINESS BY COUNTRIESUnaudited figures 2006 2007 4Q 1Q 2Q 3Q 4Q % Chg y-o-y Local Cur O2 UKMOU (minutes) 180 179 189 193 197 9.8ARPU (EUR) 34.1 33.3 34.5 35.7 33.9 4.4 Pre-Pay 18.2 17.0 18.2 19.3 18.0 4.1 Contract 63.5 63.2 63.9 64.8 61.0 1.2Data ARPU 10.7 11.0 11.0 11.1 11.1 9.1 %non-P2PSMS over data 12.5% 13.4% 14.2% 15.2% 15.9% 3.4 p.prevenues O2 GERMANYMOU (minutes) 129 129 133 128 134 3.7ARPU (EUR) 23.7 20.5 20.9 20.8 19.4 (17.9) Pre-Pay 8.3 6.8 6.7 6.8 6.4 (22.8) Contract 39.2 34.2 35.2 34.9 32.3 (17.6)Data ARPU 5.9 5.1 5.1 5.2 5.1 (12.8) %non-P2PSMS over data 22.6% 24.9% 25.0% 25.9% 25.7% 3.1 p.p.revenues O2 IRELANDMOU (minutes) 246 240 249 250 252 2.5ARPU (EUR) 45.0 44.2 46.7 47.0 45.7 1.6 Pre-Pay 29.6 28.0 30.0 29.2 29.0 (1.9) Contract 81.4 82.0 83.8 84.9 78.8 (3.3)Data ARPU 10.0 11.5 11.2 11.6 12.4 23.5 %non-P2PSMS over data 19.6% 19.9% 23.4% 26.5% 31.4% 11.8 p.prevenues T. O2 CZECH REPUBLIC (1)MOU (minutes) 109 109 120 117 122 11.9ARPU (EUR) 18.8 17.7 18.5 19.2 20.5 2.3 Pre-Pay 8.8 8.3 8.8 9.1 9.7 2.8 Contract 35.0 32.2 32.2 32.6 34.5 (7.7)Data ARPU 4.0 3.8 3.9 4.0 4.4 1.8 %non-P2PSMS over data 40.0% 41.0% 42.0% 45.0% 42.0% 2.0 p.prevenuesNote: MoU and ARPU calculated as monthly quarterly average.(1) KPIs for Mobile business in Czech Republic do not include Slovakia. TELEFONICA EUROPESELECTED FINANCIAL DATAUnaudited figures (Euros in millions) January - December 2007 2006 % Chg % Chg Local Cur O2 UK (1) Revenues 7,403 6,265 18.2 18.7 OIBDA 1,923 1,777 8.2 8.7 OIBDA margin 26.0% 28.4% (2.4 p.p.) CapEx 832 760 9.5 10.0 O2 GERMANY (2) Revenues 3,541 3,320 6.7 6.7 OIBDA 473 583 (18.9) (18.9) OIBDA margin 13.3% 17.6% (4.2 p.p.) CapEx 850 1,224 (30.6) (30.6) O2 IRELAND (1) Revenues 991 885 11.9 11.9 OIBDA 316 310 2.0 2.0 OIBDA margin 31.9% 35.0% (3.1 p.p.) CapEx 117 141 (17.1) (18.0) TELEFONICA O2 CZECH REPUBLIC Revenues 2,257 2,148 5.1 2.9 OIBDA 1,010 985 2.6 0.5 OIBDA margin 44.8% 45.8% (1.1 p.p.) CapEx 281 229 22.6 20.1(*) OIBDA figures exclude brand fee(1) In 2006 includes February-December period.(2) In 2006 includes February-December period for O2 Germany and Telefonica Deutschland. RESULTS BY REGIONAL BUSINESS UNITS Others Companies Atento Group The Atento Group performed well in 2007, consolidating year-on-year revenue andOIBDA margin growth. This strong earnings performance was driven by theimplementation of the Group's strategy to differentiate itself from competitors.For the fifth consecutive year Atento achieved profitable business growth,diversified its customer portfolio and added customers from a range of sectors. Revenues totalled 1,174 million euros at year-end 2007, up 14.4% from 2006.Revenues were driven by the increase in the activity of its main customers andnew accounts in almost all the countries in which it operates, primarily Brazil,Mexico, Peru, Argentina and Venezuela. The main customers driving this growthwere: • In Brazil, more business with Telefonica (Atento ao Cliente services, Speedy, Sera and Cobranzas) and growth in the financial sector (Itau, Banco IBI, Bradesco, Unibanco, Redecard). • In Mexico, expansion in tandem with BBVA, primarily mortgage, finance, collections and insurance services. • In Peru, growth in on-site sales services along with the expansion of services outsourced from the Spanish market. • In Argentina, growth in the multisector market both via current customers (Alcatel, Nokia, Microsoft, YPF) and new customers (Lexmark, SAP, P&G. Lan, Bosch), together with the expansion with Telefonica (Telefonica Moviles Argentina and Telefonica de Argentina). • In Venezuela, increase in activity with the CANTV Group and Movistar, and the addition of Banesco. These factors offset the fall in activity in Spain due to the delocalisation oftraffic from the Spanish market to Latin America and Morocco. Atento's customer portfolio diversified further in 2007, with 50.1% of revenuesderiving from multisector customers (outside the Telefonica Group) compared with47.0% in 2006. Brazil and Spain accounted for 44.2% and 12.3% of revenuesrespectively. Atento Mexico's revenues rose sharply and accounted for 20.2% ofthe total compared with 15.9% a year earlier. Operating expenses grew 15.0% year-on-year to 1,017 million euros, althoughgrowth slowed in the last quarter (+14.5% compared to. the fourth quarter of2006) as a result of the delocalisation of services from the Spanish market toLatin America (reducing personnel costs) and the change in mix arising from thereduced role of Atento's Spanish business within the Group. These factors offsetthe increase in structural costs relating to expenses booked from the leasing ofcapacity associated with the growth of the business. The Atento Group's Operating income before depreciation and amortisation (OIBDA)amounted to 161 million euros, year-on-year growth of 13.9%, driven by theincrease in activity and the reining in of structural costs. The OIBDA marginstood at 13.7%, in line with the margin posted at the end of 2006, showing animprovement in the fourth quarter (OIBDA margin of 14.5% for the fourth quarterof 2007). Operating income (OI) in 2007 amounted to 131 million euros, representingyear-on-year growth of 15.5% and an OIBDA margin of 11.2%. CapEx in 2007 amounted to 39 million euros, compared to 35 million euros in2006, as a result of the higher investment need to support the business growth,mainly in Brazil and Mexico. Operating cash flow (OIBDA-Capex) improved significantly when compared to 2006,rising by 15.1% to 122 million euros. At operating level, the Atento Group ended 2007 with 53,239 positions in place,marking a 13.6% year-on-year increase. The average number of occupied positionsfor 2007 stands at 42,971. ATENTO GROUPCONSOLIDATED INCOME STATEMENTUnaudited figures (Euros inmillions) January - December October - December 2007 2006 % Chg 2007 2006 % ChgRevenues 1,174 1,027 14.4 305 269 13.6Internal exp 0 0 n.m. 0 0 n.m.capitalized in fixedassets (1)Operating expenses (1,017) (885) 15.0 (261) (228) 14.5Other net operating 2 (0) c.s. (0) (2) n.m.income (expense)Gain (loss) on sale of 2 (0) c.s. 0 0 c.s.fixed assetsImpairment of goodwill 0 0 n.m. 0 0 n.m.and other assetsOperating income 161 142 13.9 44 39 12.1before D&A (OIBDA)Depreciation and (30) (28) 7.8 (8) (7) 12.5amortizationOperating income (OI) 131 113 15.5 36 32 12.0(1) Including work inprocess. ADDENDA Key Holdings of the Telefonica Group detailed by regional business units TELEFONICA ESPAN TELEFONICA O2 EUROPE % Part % PartTelefonica Espan 100.00 O2 UK 100.00Telefonica Moviles Espan 100.00 O2 Gemany (1) 100.00Telyco 100.00 O2 Ireland 100.00Telefonica Telecomunic. Publicas 100.00 Manx 100.00T. Soluciones de Informatica y 100.00 Be 100.00Comunicaciones de Espan Group 3G (Germany) (3) 100.00Iberbanda 51.00 Telefonica O2 Czech Republic (1) 69.41Medi Telecom 32.18 Telefonica O2 Slovakia (2) 100.00 (1) Company owned through Telefonica S.A. (2) Company owned through Telefonica O2 Czech Republic. (2) Company owned through Telefonica O2 Germany TELEFONICA LATINOAMERICA OTHER PARTICIPATIONS % Part % Part Telesp (1) 87.95 3G Mobile AG (Switzerland) 100.00Telefonica del Peru 98.18 Atento Group 100.00Telefonica de Argentina 98.04 Telefonica de Contenidos (Spain) 100.00TLD Puerto Rico 98.00 Mobipay Internacional 50.00Telefonica Chile 44.89 Telco SpA (Italy) (5) 42.30Telefonica Telecom 52.03 Tempos 21 (1) 43.69Telefonica USA 100.00 IPSE 2000 (Italy) (1) 39.92T. Intern. Wholesale Serv. (TIWS) (2) 100.00 Lycos Europe 32.10Brasilcel (3) 50.00 Sogecable (2) 16.79T. Moviles Argentina 100.00 Mobipay Espan (1) 13.36T. Moviles Peru 98.53 Hispasat 13.23T. Moviles Mexico 100.00 Portugal Telecom (3) 8.21Telefonica Moviles Chile (4) 100.00 China Netcom Group (4) 5.00T. Moviles El Salvador 99.08 BBVA 0.97T. Moviles Guatemala 100.00 Amper 6.10Telcel (Venezuela) 100.00T. Moviles Colombia 100.00Otecel (Ecuador) 100.00 (1) Ownership directly or indirectly held by Telefonica Moviles Espan.T. Moviles Panama 100.00 (2) Telefonica de Contenidos, S.A. holds 15.63% and Telefonica, S.A. holds 1.20%.T. Moviles Uruguay 100.00 (3) Telefonica's Group effective participation. Telefonica Group participation would be 9.96% if we exclude the minority interests. Taking into account the own shares held by the Portuguese company and excluding the minority interests, Telefonica's Group voting rights reached 10.96%.Telefonia Celular Nicaragua 100.00 (4) Ownership held by Telefonica Latinoamerica.T. Moviles Soluciones y Aplicac. (Chile) 100.00 (5) Telefonica holds an indirect participation of the ordinary share capital (with voting rights) of Telecom Italia through Telco of approximately 10%. If we take into account the saving shares (azioni di risparmio), which do not have voting rights, the indirect participation of Telefonica over Telecom Italia would be 6.9%.(1) Effective participation 88.01%.(2) Telefonica, S.A. owns 92.51% and TelefonicaDataCorp owns 7.49%.(3) Joint Venture which fully consolidates thesubsidiary Vivo, S.A., through participation at VivoParticipacoes, S.A. (62.94%)(4) Telefonica Moviles Chile made a capital increasein the month of May. As a result it became theunique shareholder of Telefonica Moviles de Chile,that was disolved. This operation ended the 1st ofJuly. ADDENDA Significant Events • Strengthening its commitment to shareholder value creation, the Board of Directors of the Company, at its meeting held on February 27th,2008, has announced the launching of a new share buy-back programme for a total amount of 100 million shares, representing 2.095% of the Company's share capital, which will be effective until the first half of 2009. • At the meeting held on January 23th,2008, the Board of Directors of the Company, was informed of and acknowledged the resignations tendered by Board members Mr. Manuel Pizarro Moreno and Mr. Antonio Viana-Baptista from their directorships. In view thereof, the Board of Directors has unanimously resolved, at the proposal of the Nominating, Compensation and Corporate Governance Committee, the interim appointment of Mrs. Eva Castillo Sanz and Mr. Luiz Fernando Furlan as new members of the Board of Directors, both as independent Directors. • TELEFONICA, S.A., through its subsidiary TELEFONICA INTERNACIONAL, S.A.U., reached on January 18th,2008, an agreement to acquire an additional stake equal to approximately 2.22% of the share capital of the Chinese telecommunications company CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED ("CNC"). The execution of this acquisition is subject to prior attainment of the necessary regulatory approvals. After the acquisition, the TELEFONICA group's stake in CNC would stand at approximately 7.22%. If completed, the acquisition of the aforementioned stake in the equity in CNC will involve a total investment of approximately 309 million euros (depending on the exchange rate prevailing when the transaction is closed). • At its ordinary meeting on December 19th,2007, Telefonica's board, with the approval of the Nominating, Compensation and Corporate Governance Committee, has named Julio Linares, General Manager for Coordination, Business Development and Synergies, as the company's new Chief Operating Officer. It also decided to appoint Guillermo Ansaldo as General Manager of Telefonica Espan. Mr Ansaldo will replace Antonio Viana-Baptista, who leaves the Company citing personal reasons. Meanwhile, Manuel Pizarro and Javier de Paz will replace Enrique Used and Maximino Carpio as members of Telefonica's board of directors. Both Manuel Pizarro, Javier de Paz and Alfonso Ferrari will join as well the Executive Commission of the Company's board of directors. • On November 29th, 2007 Telefonica, S.A. announced Mr. Peter Erskine step down as General Manager of Telefonica O2 Europe, retaining his position on the Board of Directors of the Company and on its Executive Commission, as nonexecutive Director. Mr. Matthew Key, former Chief Executive Officer of O2 UK plc., replaced him as General Manager of Telefonica O2 Europe and as member of the Executive Committee of Telefonica, S.A. • On November 28th, 2007, the Board of Directors of TELEFONICA, S.A., in accordance with the "Performance Share Plan 2006" authorised by the Annual General Shareholders' Meeting of the Company held on June 21st, 2006 and notified on November 13th, 2006 resolved, subject to the report of the Nominating, Compensation, and Corporate Governance Committee, to allocate the shares corresponding to the second cycle of that Plan to the Executive Directors and Executives Officers of the Company. ADDENDA Changes to the Perimeter and Accounting Criteria of Consolidation In 2007, the main changes have occurred in the consolidation perimeter were thefollowing: TELEFONICA EUROPE In December 20th, 2007, O2 Group transferred its legal ownership over itsbusiness in Germany to Telefonica S.A. through a dividend in kind of 8,500million euros. In April 2007, Telefonica O2 Europe PLC, 100%-owned by Telefonica, S.A. and itswholly owned subsidiary O2 Holdings LTD, sold for a total of 1,932 millionpounds (equivalent to 2,841 million euros in the date of the operation) 100% ofBritish firm Airwave O2 Ltd. which generated a capital gain of 1,296 millioneuros. This company, which was consolidated in the Telefonica Group financialstatements using the full integration method, has been removed from theperimeter of consolidation. OTHER COMPANIES • In December 2007 Telefonica, S.A. formed, as sole shareholder, the Spanish company Atento Holding, Inversiones y Teleservicios, S.A. with an initial share capital of 24 million euros and an additional paid-in capital reserve of 138,37 million euros. The shares were fully subscribed and reimbursed in the form of non-monetary contribution of all the shares of the Dutch company Atento, N.V., of which Telefonica, S.A. was sole shareholder. The company has been included in the consolidation scope using the full integration method. • In December 2007 Telefonica, S.A. sold 18,558,181 shares of the Portuguese company Portugal Telecom, SGPS, S.A. (PT). Following this disposal, Telefonica Group has reduced its shareholding in the capital of the Portuguese company to 8.32%, 9.16% if the treasury stock of PT is taken into consideration. This company is still included in the financial statements of Telefonica Group under the equity method. • In October 2007 a consortium formed by Telefonica, S.A. Assicurazioni Generali, S.p.A., Intesa Sanpaolo, S.p.A. and Sintonia, S.A. acquired 100% of the Olimpia, S.p.A. through the Italian company Telco, S.p.A. (in which Telefonica holds a 42.3% of equity stake), which holds approximately 23.6% of the Telecom Italia, S.p.A. voting capital. Telefonica's indirect participation with voting rights in Telecom Italia S.p.A. stands at 9.98% equivalent to 6,88% of the economic rights. This operation implied a payment of 2.314 million euros. The company is included in the financial statements of the Telefonica Group under the equity method. • In August 2007 the Telefonica Group sold its 100% stake in Spanish company Azeler Automocion, S.A. for 0.34 million euros. This company, which had been fully consolidated in the Telefonica Group, was removed from the consolidation perimeter. • In June 2007, Atento Teleservicios Espan, S.A. of Spain incorporated US company, Contact US Teleservices Inc., contributing 100% of the initial share capital of 0.1 million US dollars. This company was added to the Telefonica Group's consolidation perimeter and is fully consolidated. In August this company took out a 0.55 million US dollar capital increase, which was fully subscribed by Atento Teleservicios Espan, S.A. • In June 2007, Telefonica, S.A. sold its entire 31.75% stake in Sistemas Tecnicos de Loterias del Estado, S.A. This company, which had been accounted for by the Telefonica Group under the equity method, was removed from the perimeter of consolidation. • In May 2007, Telefonica, S.A. agreed to sell its 99.7% stake in Dutch company Endemol Investment Holding B.V. to a newly created consortium held equally by Mediacinco Cartera S.L., a newly incorporated company owned by Mediaset and its listed Spanish subsidiary Gestevision Telecinco, Cyrte Fund II B.V. and G.S. Capital Partners VI Fund, L.P. The consortium paid 2,629 million euros, reaching the capital gain 1,368 million euros. The agreement was executed on 3 July. This company, which had been fully consolidated in the Telefonica Group, was removed from the consolidation perimeter. • In April 2007, US firm Katalyx, Inc. sold its 54% stake in Brazilian company Mercador, S.A. The company had been consolidated in the financial statements of the Telefonica Group under the equity method and was thus removed from the perimeter of consolidation. • During the first quarter of 2007, the Telefonica Group sold shares in the Italian company Ipse 2000 S.p.A. reducing its direct and indirect percentage in the Italian company to 39.9%. The company continues to be incorporated in the consolidated financial statements of the Telefonica Group using the equity method. • In February 2007 the company sold 100% of its stake in Endemol France to the company Endemol, N.V., in which the Group has 75% participation, and thus reducing its stake in the company to that percentage. • The Spanish company Communicapital Gestion, S.A., has been liquidated. The company, which was included in the financial statements of Telefonica Group using the full integration method, has been removed from the perimeter of consolidation. 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 other important factors that could causeactual developments or results to differ materially from those expressed in ourforward looking statements. 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. The financial information contained in this document has been prepared underInternational Financial Reporting Standards (IFRS). This financial informationis unaudited and, therefore, is subject to potential future modifications. For additional information, please contact. Investor Relations Distrito C Ronda de la Comunicacion s/n 28050 Madrid (Spain) Phone number: +34 91 482 87 00 Fax number: +34 91 482 85 99 Email address: Maria Garcia-Legaz ([email protected]) Dolores Garcia ([email protected]) Isabel Beltran ([email protected]) [email protected] www.telefonica.es/accionistaseinversores This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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