1st Aug 2005 07:01
Telefonica SA29 July 2005 RESULTS BY BUSINESS LINES Other businesses DIRECTORIES BUSINESS During the first half of 2005 the TPI Group's revenues increased by10.0% to 236.1 million euros. The Group's operating income before depreciationand amortization (OIBDA) amounted to 62.5 million euros, 7.1% higher than thefigure for the same period of 2004. Net income rose by 3.5% to 30.7 millioneuros. These results are explained by: • The good performance of both the domestic advertising revenues, whichrose by 7.2% to 151.1 million euros, and the telephone traffic revenues, whichregistered an increase of 30.4% up to 26.9 million euros. • The good behaviour of Publiguias total revenues, which increased by 6.0%in local currency. • The strong revenue performance of TPI Peru, which soared by 9.2% inlocal currency after the publication of the Lima and Sur directories. • TPI Brazil advertising revenues, which rose by 4.9% in local currency,after the publication of Guia Mais in Sao Paolo capital. 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 Spain, maintains its contribution of 79% of total Group's revenuesand increased its OIBDA contribution from 93% in the first half 2004 to 97% inthe first half 2005. Revenues from TPI Spain rose by 9.4% to 186.2 millioneuros, mainly due to three factors: • An organic growth, like for like, of 3.7% and 4.3% in the publication ofYellow Pages (50 books in the first half 2005 vs. 41 books in the first half2004) and White Pages books (28 books in the first half 2005 vs. 26 books in thefirst half 2004) respectively, • The variations in the publication calendar of guides and, • The strong increase experienced in the telephone traffic businessrelated to telephone information services (11888 platform), with a year-on-yearincrease in revenues of 30.4% up to 26.9 million euros. TPI has obtained two licenses to operate in the Italian (which is in the processof being liberalized) and French telephone information services markets. Latin America contributed with the remaining 21% of Group revenues and 3% ofGroup OIBDA, with TPI Peru being the biggest Latin American contributor to bothrevenues and OIBDA in the region thanks to the publication of the Limadirectory. • At the end of the first half 2005, TPI Peru obtained revenues of 28.9million euros and contributed with 9.4 million euros to Group's OIBDA. • TPI Brazil has published during the second quarter its fifth edition ofGuia Mais in Sao Paolo capital. Despite the 4.9% growth experienced inadvertising revenues, total revenues declined by 4.0%. OIBDA figure has improvedby 18.8% to -3.9 million euros. • Publiguias, which showed an increase of 6.0% in its total revenues inlocal currency, posted a decrease of 95.0% in its OIBDA. However, this OIBDAperformance should not be extrapolated to year-end as the Santiago Directory,that accounts for a big part of the annual revenue and OIBDA figures, isexpected to be published during the third quarter. As we already mentioned inour previous Q1 results presentation, the acquisition of our competitor Chilnetby two local groups should negatively impact our future performance in Santiago. With these results and the positive evolution of the company, TPI maintains itsinitial 2005 year-end guidance announced during the first quarter of growth atconstant exchange rates in revenues (+3/+5%) and OIBDA (+7/+9%). In turn, the directories business of the Telefonica Group, which includes theArgentinean company Telinver, recorded during the first half of 2005 an increasein revenues of 9.1% compared with the first half of 2004 up to 239.1 millioneuros. OIBDA reached 62.5 million euros, registering a year-on-year increase of8.4%. TPI - PAGINAS AMARILLAS GROUP SELECTED OPERATING DATA IN SPAIN Unaudited figures January - June 2005 2004 % Chg Books Published Yellow Pages* 50 41 White Pages 28 26 (Euros in millions) Revenue Breakdown (1) 186,2 170,2 9,4 Advertising 151,1 140,9 7,2 Publishing 130,8 123,6 5,8 Yellow Pages 99,0 95,2 4,1 White Pages 29,8 27,2 9,9 Others paper revenues 1,9 1,3 51,8 Internet 15,9 14,0 13,2 Operator Assisted Yellow Pages 2,3 2,0 15,7 Others 2,0 1,3 61,4 Telephony Traffic 26,9 20,6 30,4 Operator 7,6 7,3 3,9 Others 0,7 1,4 (51,1) &nbs p; *Includes a breakdown by residential/business services and pocket guides. (1) TPI Espana includes Telefonica Publicidad e Informacion S.A. , TPI Edita, 11888 Servicio de Consulta Telefonica S.A.U., TPI Direct and Edinet Europa results. TPI - PAGINAS AMARILLAS GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - June April - June 2005 2004 % Chg 2005 2004 % Chg Revenues 236,1 214,6 10,0 140,3 135,4 3,6 Internal expenditure 0,0 0,0 n.s. 0,0 0,0 n.s. capitalized in fixed assets (1) Operating expenses (163,4) (145,8) 12,1 (96,4) (89,0) 8,3 Other net operating income (10,1) (9,8) 3,1 (5,7) (7,0) (18,6) (expense) Gain (loss) on sale of fixed 0,0 (0,5) c.s. 0,0 (0,5) c.s. assets Impairment of goodwill and 0,0 0,0 n.s. 0,0 0,0 n.s. other assets Operating income before D&A 62,5 58,4 7,1 38,2 38,9 (1,8) (OIBDA) Depreciation and (11,8) (10,5) 11,7 (6,1) (5,5) 10,5 amortization Operating income (OI) 50,8 47,9 6,1 32,1 33,4 (3,8) Profit from associated (0,1) (0,2) (62,3) 0,0 (0,0) c.s. companies Net financial income (2,2) (1,6) 38,1 (1,6) (1,4) 20,6 (expense) Income before taxes 48,5 46,1 5,2 30,5 32,0 (4,7) Income taxes (17,8) (17,0) 4,8 (11,7) (12,1) (3,7) Income from continuing 30,7 29,1 5,4 18,8 19,9 (5,3) operations Income (Loss) from 0,0 0,0 n.s. 0,0 0,0 n.s. discontinued operations Minority interest 0,0 0,5 n.s. 0,0 0,1 n.s. Net income 30,7 29,7 3,5 18,8 19,9 (5,6) (1) Including work in process. DIRECTORIES BUSINESS CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - June April - June 2005 2004 % Chg 2005 2004 % Chg Revenues 239,1 219,1 9,1 142,9 139,4 2,5 Internal expenditure 0,0 0,0 n.s. 0,0 0,0 n.s. capitalized in fixed assets (1) Operating expenses (166,4) (150,3) 10,7 (98,6) (92,8) 6,3 Other net operating income (10,2) (10,5) (3,2) (5,7) (7,4) (22,7) (expense) Gain (loss) on sale of fixed 0,0 (0,5) c.s. 0,0 (0,5) c.s. assets Impairment of goodwill and 0,0 0,0 n.s. 0,0 0,0 n.s. other assets Operating income before D&A 62,5 57,7 8,4 38,6 38,7 (0,3) (OIBDA) Depreciation and (12,0) (10,8) 10,7 (6,2) (5,6) 9,6 amortization Operating income (OI) 50,5 46,8 7,8 32,4 33,1 (2,0) Profit from associated (0,1) (0,2) (62,3) 0,0 (0,0) c.s. companies Net financial income (3,2) (3,4) (4,5) (1,9) (3,1) (36,4) (expense) Income before taxes 47,2 43,3 9,0 30,5 30,0 1,6 Income taxes (17,8) (17,0) 4,8 (11,7) (12,1) (3,7) Income from continuing 29,4 26,3 11,7 18,8 17,8 5,3 operations Income (Loss) from 0,0 0,0 n.s. 0,0 0,0 n.s. discontinued operations Minority interest 0,0 0,6 n.s. 0,0 0,1 (99,0) Net income 29,5 26,9 9,4 18,8 17,9 4,7 (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses ATENTO GROUP During the first half of 2005, Atento Group's revenues amounted to 388.2million euros, 38.5% more than in the same period of the previous year andshowed an improvement quarter-over-quarter of 32.9%. This increase is explainedby the acceleration of the revenues growth at Atento Espana (+30.1% year-on-yearas of June 2005 vs. +27.1% as of March 2005), Atento Brazil (+39.0% year-on-yearas of June 2005 vs. +31.3% as of March 2005) and Atento Mexico (+71.3%year-on-year as of June 2005 vs. +70.7% as of March 2005). The contribution of clients outside the Telefonica Group reached 44.1% of totalrevenues in the first half of 2005, highlighting: • In Brazil, the higher activity in Microsoft, Bradesco, Banco IBI andVIVO. • In Spain, on one hand the agreement with BBVA and the new services withGas Natural and, on the other hand, the new services with some SpanishGovernment Agencies (Tesoreria General de la Seguridad Social and AgenciaTributaria). • In Mexico, the higher activity with BBVA, Infonavit, GE Seguros, Pfizer,Microsoft and US Airways. • In Puerto Rico, the higher activity with SunCom, Transcore and Citibank. • In Colombia, the higher activity with BBVA and the higher traffic in theMicrosoft campaign. • In Venezuela, the new services with Movilnet, Electricity of Caracas andProcter & Gamble. • In Argentina, the higher activity with YPF, GM and Nokia. By geographical areas, Spain and Brazil both accounted for 70.6% of the totalgroup revenues, 2.4 percentage points less than twelve months ago, offset by thehigher contribution of Mexico (8.0% vs. 6.5% one year ago), Chile (5.7% vs. 5.3%one year ago) and Argentina (3.2% vs. 2.5% one year ago) in the total grouprevenues. Operating expenses registered a year-on-year increase of 38.0% to 338.1 millioneuros in the first half of the year, due to higher personnel expenses (+39.7%)as a result of greater activity and higher supplies (+45.6%). Operating income before depreciation and amortization (OIBDA) amounted to 51.5million euros at the end of the first half of 2005, 38.7% up on January-June ofthe previous year. In terms of profitability, the OIBDA margin amounted to13.3%, 0.7 percentage points higher and improving the 17.8% growth obtained asof March 2005 than twelve months ago. Operating income (OI) at June 2005 amounted to 37.9 million euros, 98.7% 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 six months of the year amounted to 19.6 millioneuros compared with 15.9 million euros registered in the same period of 2004. CapEx totaled 19.8 million euros at the end of the first half, showing ayear-on-year increase of 142.4%. This increase was mainly due, on one hand, toinvestments in new businesses in Spain, Brazil, Puerto Rico, Mexico andVenezuela and, on the other hand, to technological replacement. Operating free cash flow (OIBDA-CapEx) reached 31.7 million euros in June,compared with the 28.7 million euros generated in January-June 2004. Finally, at operating level, the Atento Group had 35,845 positions in place asof June 30th 2005, 8,265 more than one year ago and 4,060 more than in March2005. The average number of occupied positions for the first six months was28,598, representing an occupation level of 84.7%. ATENTO GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - June April - June 2005 2004 % Chg 2005 2004 % Chg Revenues 388,2 280,3 38,5 209,5 145,9 43,6 Internal expenditure 0,0 0,0 n.s. 0,0 0,0 n.s. capitalized in fixed assets (1) Operating expenses (338,1) (245,0) 38,0 (181,3) (129,7) 39,9 Other net operating income 1,5 2,2 (33,0) 0,8 1,8 (54,2) (expense) Gain (loss) on sale of fixed (0,0) (0,4) c.s. (0,0) 0,0 c.s. assets Impairment of goodwill and 0,0 0,0 n.s. 0,0 0,0 n.s. other assets Operating income before D&A 51,5 37,1 38,7 28,9 18,0 60,9 (OIBDA) Depreciation and (13,7) (18,1) (24,5) (6,6) (8,8) (24,5) amortization Operating income (OI) 37,9 19,1 98,7 22,3 9,2 142,4 Profit from associated 0,0 0,0 n.s. 0,0 0,0 n.s. companies Net financial income (7,8) (0,2) n.s. (4,4) (3,5) 24,0 (expense) Income before taxes 30,1 18,9 59,4 18,0 5,7 n.s. Income taxes (9,0) (2,2) n.s. (5,4) (0,1) n.s. Income from continuing 21,1 16,7 26,2 12,6 5,6 123,4 operations Income (Loss) from 0,0 (0,1) n.s. 0,0 0,0 n.s. discontinued operations Minority interest (1,4) (0,7) 106,2 (0,8) (0,3) 135,7 Net income 19,6 15,9 23,6 11,8 5,3 122,7 (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses CONTENT AND MEDIA BUSINESS The Content and Media Business obtained revenues of 601.9 million euros at theend of the first six months of 2005, up 5.4% from the same period of 2004,mainly due to the good behaviour of the content producer Endemol in the secondquarter, partially compensating the deconsolidation in 2004 of the film contentproducer Lola Films. The consolidated operating income before depreciation and amortization (OIBDA)amounted to 114.1 million euros in the first half of 2005, compared with 70.6million euros registered in the same period of last year. ENDEMOL The Endemol Group generated revenues of 508.9 million euros at the end of thefirst half of 2005, a 4.2% increase year-on-year. Endemol subsidiaries in UK,Germany and Italy have been the main contributors to the Group'sincrease in revenues. In OIBDA terms, Endemol obtained 106.0 million euros, which compares with the82.9 million euros registered in the first half of 2004. ATCO During the first six 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 25%, which compares with the one registered in the firsthalf of 2004 (+54%), reflecting the recovery of the above-mentioned marketthroughout 2004. Within this favourable market context, Telefe maintains its leadership, reaching38.6% share of audience on total population and showing a year-on-year reductionof 0.2 percentage points, followed by its main competitor, Canal 13, with anaverage share of 24.8% in the first half of 2005. The cumulative advertisingmarket share as of June 2005 is 42.1%, down 3.8 percentage points from June2004, again followed by Canal 13 (30.7%). The company obtained revenues of 151.9 million pesos at the end of the firsthalf of the year, showing an increase of 7.3% over the same period of last year,due to the advertising market growth already mentioned. OIBDA reached 49.7million pesos in the first half of the year, which compares with the 27.4million pesos registered in the first half of 2004, and primarily due to thecapital gains registered after the sale of Radio Continental and Radio Estereo. CONTENT AND MEDIA BUSINESS CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - June April - June 2005 2004 % Chg 2005 2004 % Chg Revenues 601,9 570,9 5,4 335,3 297,2 12,8 Internal expenditure 0,0 0,2 n.s. 0,0 0,1 n.s. capitalized in fixed assets (1) Operating expenses (497,1) (485,0) 2,5 (268,2) (254,6) 5,4 Other net operating income 2,1 (15,5) c.s. 1,3 (15,3) c.s. (expense) Gain (loss) on sale of fixed 7,3 (0,1) c.s. 0,2 (0,0) c.s. assets Impairment of goodwill and (0,1) 0,1 c.s. (0,1) (0,4) (86,9) other assets Operating income before D&A 114,1 70,6 61,6 68,7 26,9 155,2 (OIBDA) Depreciation and (14,1) (13,1) 7,8 (6,8) (6,7) 1,2 amortization Operating income (OI) 100,0 57,5 73,8 61,9 20,2 n.s. Profit from associated (7,6) (17,9) (57,8) 1,2 (7,2) c.s. companies Net financial income 3,2 (10,8) c.s. 0,4 (7,8) c.s. (expense) Income before taxes 95,6 28,8 n.s. 63,4 5,3 n.s. Income taxes (35,2) (33,2) 5,9 (22,2) (3,8) n.s. Income from continuing 60,5 (4,4) c.s. 41,3 1,5 n.s. operations Income (Loss) from 0,0 0,0 n.s. 0,0 0,0 n.s. discontinued operations Minority interest (2,6) (2,0) 28,1 (2,3) (2,1) 10,5 Net income 57,9 (6,4) c.s. 39,0 (0,6) c.s. (1) Including work in process. RESULTS BY BUSINESS LINES Other businesses TELEFONICA DEUTSCHLAND GROUP Telefonica Deutschland obtained revenues of 139.7 million euros in the first sixmonths of 2005, showing a year-on-year reduction of 9.4%, due primarly to thereduction in revenues from narrowband services which has not yet been offset bythe increase in broadband business. With respect to the broadband business, it is worth to highlight the strongincrease in the number of connections resold on a retail basis by te company toits main clients. With it, the total number of equivalent ADSL lines in servicein the german market exceeds the figure of 505 thousands at the end of the firsthalf of 2005, which compares with the more than 350 thousands achieved in thefirst half of 2004, providing services to four of the five top main ISPs inGermany. It is also important to highlight that the company has reach to animportant agreement with AOL to provide wholesale broadband access servicesbased on the unbundled local loop technique, just providing this service in morethan 100 cities. As a consequence of the aforementioned narrowband to broadband Internet accessmigration process, Telefonica Deutschland has registered a positive operatingincome before depreciation and amortization (OIBDA) of 4.9 million euros at theend of the first half, which compares with the 7.4 million euros obtained in thesame period of the previous year. TELEFONICA DEUTSCHLAND GROUP SELECTED FINANCIAL DATA Unaudited figures (Euros in millions) January - June 2005 2004 % Chg Revenues 139,7 154,2 (9,4) Operating income before D&A (OIBDA) 4,9 7,4 (33,6) OIBDA margin 3,5% 4,8% (1,3 p.p.) RESULTS BY BUSINESS LINES Other businesses TERRA NETWORKS GROUP The merger between Telefonica, S.A. and Terra Networks, S.A has currentlymaterialized. For information purposes, we are presenting Terra Networks GroupFirst Half Consolidated Financial Statements, jointly with Terra Networks, S.A.Individual Financial Statements. TERRA NETWORKS GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - June April - June 2005 2004 % Chg 2005 2004 % Chg Revenues 240,8 219,3 9,8 127,8 113,9 12,2 Internal expenditure 0,3 0,5 (51,1) 0,1 0,3 (56,7) capitalized in fixed assets (1) Operating expenses (215,6) (229,9) (6,2) (113,2) (126,6) (10,6) Other net operating income 17,6 0,1 n.s. 14,1 1,8 n.s. (expense) Gain (loss) on sale of fixed 3,3 10,0 (67,2) 3,1 9,2 (66,5) assets Impairment of goodwill and 0,0 0,0 n.s. 0,0 0,0 n.s. other assets Operating income before D&A 46,3 (0,0) c.s. 32,0 (1,5) c.s. (OIBDA) Depreciation and (39,0) (47,8) (18,4) (19,3) (23,4) (17,7) amortization Operating income (OI) 7,3 (47,8) c.s. 12,8 (24,9) c.s. Profit from associated (2,7) (7,7) (64,9) (0,4) (2,9) (84,9) companies Net financial income 12,6 15,8 (20,2) 9,7 8,7 11,1 (expense) Income before taxes 17,2 (39,7) c.s. 22,0 (19,0) c.s. Income taxes 16,6 18,7 (11,4) 13,4 8,1 64,3 Income from continuing 33,8 (21,1) c.s. 35,4 (10,9) c.s. operations Income (Loss) from 0,0 (41,7) c.s. 0,0 (12,0) n.s. discontinued operations Minority interest (0,0) 2,4 c.s. (0,0) 0,3 c.s. Net income 33,8 (60,4) c.s. 35,4 (22,5) c.s. (1) Including work in process. TERRA NETWORKS GROUP CONSOLIDATED BALANCE SHEET Unaudited figures (Euros in millions) June 2005 2004 % Chg Non-current assets 552,6 721,2 (23,4) Intangible assets 188,1 253,1 (25,7) Goodwill 84,8 135,0 (37,1) Property, plant and equipment and Investment 12,5 34,1 (63,3) property Long-term financial assets and other non-current 244,2 275,2 (11,3) assets Deferred tax assets 23,0 23,7 (3,0) Current assets 1.021,8 1.745,9 (41,5) Inventories 4,6 1,3 n.s. Trade and other receivables 135,1 109,3 23,6 Current tax receivable 12,7 19,0 (33,2) Short-term financial investments 863,6 1.519,4 (43,2) Cash and cash equivalents 5,8 96,9 (94,0) Non-current assets classified as held for sale 0,0 0,0 n.s. Total Assets = Total Equity and Liabilities 1.574,4 2.467,1 (36,2) Equity 1.366,2 2.190,0 (37,6) Equity attributable to equity holders of the 1.366,2 2.189,4 (37,6) parent Minority interest 0,0 0,6 n.s. Non-current liabilities 40,0 99,4 (59,8) Long-term financial debt 0,0 30,0 n.s. Long-term debt with Group and associated 22,6 22,4 1,0 companies Deferred tax liabilities 10,7 2,7 n.s. Long-term provisions 3,8 41,9 (90,9) Other long-term liabilities 2,8 2,4 18,5 Current liabilities 168,3 177,6 (5,3) Short-term financial debt 14,0 2,0 n.s. Short-term debt with Group and associated 30,7 23,7 29,8 companies Trade and other payables 69,2 95,7 (27,7) Current tax payable 18,0 10,3 75,5 Short-term provisions and other liabilities 36,3 45,9 (21,0) Liabilities associated with non-current assets 0,0 0,0 n.s. classified as held for sale TERRA NETWORKS, S.A. INCOME STATEMENT Unaudited figures (Euros in millions) January - June DATA UNDER SPANISH GAAP 2005 2004 % Chg Revenues 6,1 15,0 (59,2) Other operating income 1,1 0,0 n.s. Operating expenses (19,2) (20,1) (4,3) Supplies (0,0) (0,0) (82,5) Personnel expenses (6,3) (9,1) (31,2) Subcontracts (12,9) (10,9) 18,6 Taxes (0,0) (0,0) (61,9) Other operating expenses (0,0) 0,0 n.s. EBITDA (12,0) (5,0) 138,9 Depreciation and amortization (23,1) (3,9) n.s. Operating profit (35,1) (9,0) n.s. Financial net income (expense) 16,1 24,9 (35,5) Extraordinary net income (expense) 63,8 (83,8) c.s. Income before taxes 44,7 (67,8) c.s. Income taxes 16,4 10,2 60,4 Net income 61,1 (57,6) c.s. TERRA NETWORKS S.A. BALANCE SHEET Unaudited figures (Euros in millions) june DATA UNDER SPANISH GAAP 2005 2004 % Chg Fixed and other incurrent assets 1.276,8 1.673,7 (23,7) Intangible net assets 114,6 10,2 n.s. Fixed net assets 0,0 2,4 n.s. Long-term investments 423,5 887,8 (52,3) Loans to Group and associated companies 436,6 476,0 (8,3) Long-term treasury stock 15,1 0,0 n.s. Taxes receivable 287,0 297,3 (3,5) Current assets 963,1 1.598,7 (39,8) Accounts receivable 28,6 15,3 87,2 Receivable from Group and associated 357,3 81,0 341,1 companies Loans to Group and associated companies 571,1 1.493,5 (61,8) Cash and banks 0,0 0,0 n.s. Others 6,1 8,9 (31,7) Total Assets = Total Liabilities 2.239,9 3.272,5 (31,6) Shareholders equities 1.695,5 2.507,6 (32,4) Defered income 8,6 28,9 (70,3) Provisions for risks and expenses 438,5 419,5 4,5 Payable to Group and associated companies l 26,2 26,2 0,0 /t Payable to Group and associated companies s 44,4 243,1 (81,7) /t Trade accounts payable 15,9 34,5 (54,0) Other creditors s/t 10,9 12,6 (13,6) 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 EndemolEntertainment Holding, N.V., which has been included in Telefonica de ContenidosGroup. The results from the Sogecable stake have been also assigned toTelefonica de Contenidos Group, even though a part of the investment is legallydependent upon Telefonica, S.A. • Telefonica Holding Argentina, S.A. holds 4.706% of Atlantida deComunicaciones, S.A. (ATCO) and 26.82% of AC Inversora, S.A. which, for thosepurposes, 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 byTelefonica Latinoamerica, sold Telefonica Moviles Chile to Telefonica MovilesGroup in the third quarter of fiscal year 2004, although the results of thiscompany have been assigned to the cellular business from the beginning of theyear 2004. • The participation of Telefonica Group in IPSE 2000 SpA is assigned tothe cellular business, also including the investment legally dependent uponTelefonica DataCorp, S.A. • In the case of Telefonica de Argentina (TASA), participated byTelefonica Latinoamerica Group, Telinver has been assigned to the directoriesbusiness, in line with our vision for the total Telefonica's directoriesbusiness. • 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. Thestakes not included in neither of the previous geographic areas will beconsolidated directly by Telefonica S.A. In this sense, the stakes in TelefonicaData Espana, S.A.U. and Soluciones Group have been sold to Telefonica de EspanaS.A.U. in the third quarter of 2004, although the results of both companies hadbeen assigned to the fixed line business in Spain from the beginning of the year2004. • Telefonica International Wholesale Services Group (TIWS) financialresults has been assigned to Telefonica Latinoamerica Group during 2004 and thefirst half of 2005, even though is legally dependent upon Telefonica, S.A.(92.5%) and Telefonica Data Corp (7.5%) respectively. ADDENDA Key Holdings of the Telefonica Group and its Subsidiaries detailed by businesslines TELEFONICA GROUP % Part Telefonica de 100,00% Espana Telefonica 92,46% Moviles (1) Telefonica 100,00% Latinoamerica TPI Group 59,90% Terra 75,87% Networks Group (2) Telefonica de 100,00% Contenidos Atento Group 91,35% Cesky Telecom 51,10% (1) Effective participation: 92.91%. Includes Telefonica Moviles S.A.' Stock Options Program ("Programa MOS"). (2) Effective participation: 77.69%. Includes Terra's shares in treasury stock and Terra Networks S.A.'s Stock Options Program. TELEFONICA DE ESPANA GROUP % Part Telyco 100,00% Telefonica 100,00% Telecomunic. Publicas Telefonica Soluciones 100,00% Sectoriales Telefonica Empresas 100,00% Espana T. Soluciones de 100,00% Informatica y Comunicaciones de Espana TELEFONICA MOVILES GROUP % Part Telefonica Moviles Espana 100,00% Brasilcel (1) 50,00% TCP Argentina 97,93% TEM Peru 98,03% T. Moviles Mexico 92,00% TM Chile 100,00% TEM El Salvador 96,16% TEM Guatemala 100,00% Telcel (Venezuela) 100,00% TEM Colombia 100,00% TEM Guatemala y Cia 100,00% Otecel (Ecuador) 100,00% TEM Panama 99,95% Abiatar (Uruguay) 100,00% Telefonia Celular Nicaragua 100,00% Radiocomunicac. Moviles SA 100,00% (Arg) Telefonica Moviles 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 100,00% Interacciona Mobipay Espana 13,36% Mobipay Internacional 50,00% T. Moviles Soluciones y 100,00% Aplicac. (Chile) Tempos 21 (3) 38,50% (1) Joint Venture which fully consolidates TeleSudeste Celular Participacoes, Celular CRT Participacoes, TeleLeste Celular Participacoes and Telesp Celular Participacoes. Telesp Celular Participacoes fully consolidates Global Telecom Participacoes and, as from May 2003, TeleCentro Oeste Participacoes. The states that Brasilcel consolidated in its subsidiaries in June 2005 are the following: TeleSudeste Celular Participacoes 91.1%; Telesp Celular Participacoes 65.7%; Global Telecom Participacoes 65.7%; Celular CRT Participacoes 65.9%; TeleLeste Celular Participacoes 50.6% and TeleCentro Oeste Participacoes 33.3%. (2) Aditionally, Telefonica Group holds a 4.08% of IPSE 2000 through Telefonica DataCorp. (3) In June 2005, Tempos 21 is consolidated by the equity method with a retroactive effect as from January 1st 2005. 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. Intern. Wholesale Serv. (TIWS) (1) 100,00% (1) Telefonica, S.A. owns 92.51% and Telefonica DataCorp owns 7.49%. 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 100,00% Servicios de Musica Telefonica 100,00% Servicios Audiovisuales Hispasat 13,23% OTHER PARTICIPATIONS % Part Sogecable (1) 23,83% Portugal Telecom (2) 9,85% BBVA 1,07% Amper 6,10% Telepizza 4,89% China Netcom Group 2,99% (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 9.96% if we exclude the minority interests. TPI - PAGINAS AMARILLAS GROUP % Part TPI Edita 100,00% Publiguias 100,00% (Chile) TPI Brasil 100,00% TPI Peru 100,00% 11888 100,00% Servicios de Consulta Services 100,00% de Renseig. T.(France) 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% ADDENDA Significant Events • On July 28, 2005, Telefonica S.A. treasury stock position was 23,594,967shares representing 0.479% of its current share capital. • On July 11, 2005, Medi Telecom, Telefonica Moviles' operatingcompany in Morocco, won a fixed-line telephone license in the bidding held byMoroccan authorities. • On June 30, 2005, Telefonica, S.A. acquired 2.99% of the equity of theChinese telecommunications company, China Netcom Group Corporation (Hong Kong)Limited (CNC), at a price of 11.45 Hong Kong Dollars per share (quoted shareprice at June 27, 2005) representing a total amount of 240 million euros.Telefonica intends to reach up to 5% stake in CNC and will have the right toappoint one representative to the Board of Directors. • On June 29, 2005, the Board of Directors of the Company accepted theresignation of Mr. Jose Fonollosa Garcia from his position on the Board. • On June 16, 2005, after having obtained the required authorisation ofthe European Commission on June 10, 2005, Telefonica, S.A. and the NationalProperty Fund, the Czech Republic's privatisation entity, closed thesale of 51.1% of the telecommunications operator Cesky Telecom. The price forthe acquisition of 51.1% of the operator's capital stood at EUR 2,747million, as expected. In accordance with Czech legislation, Telefonica will launch a tender offer forthe remaining share of the capital stock, i.e. for up to 48.9%. The priceproposed by Telefonica, as set forth in the draft bid document approved by theCzech Securities Commission, amounts to CZK 456.00 for each share in CeskyTelecom, to be paid in cash. • On June 15, 2005, Telefonica Moviles, S.A. paid a dividend of 836million euros be paid, against 2004 results, pursuant to the resolution adoptedby the Annual General Shareholders' Meeting of Telefonica Moviles, S.A.held on May 6, 2005. The fixed gross dividend per share was 0.193 euros, markingan increase of 5% over the dividend paid last year. • On June 10, 2005, pursuant to the resolution adopted by the AnnualGeneral Shareholders' Meeting of Telefonica, S.A. held on May 31, 2005,the Company agreed the extraordinary non-cash distribution of additional paid-incapital by means of delivery to Telefonica, S.A. shareholders of sharesrepresenting the capital stock held as treasury stock in the proportion of one(1) share to every twenty five (25) shares they hold entitled to participated inthe distribution. • On June 2, 2005, and after the approval by the Annual GeneralShareholders' Meeting of Telefonica, S.A of the same Plan of Merger byAbsorption, the Annual General Shareholders' Meeting of Terra Networks,S.A. approved the merger between Terra Networks and Telefonica, S.A. In order to satisfy the merger exchange, Telefonica delivered shares of treasurystock to the shareholders of Terra Networks pursuant to the exchange ratio fixedin the Merger Plan of two (2) shares of Telefonica, each having a par value ofone (€1) Euro, for every nine (9) shares of Terra Networks, each having apar value of two (€2) Euros, with no supplemental cash compensation.Telefonica did not issue new shares for such purpose, for which reason therewill be no increase in its capital stock as a result of the merger. Friday, July 15th, 2005, was the last day of trading for shares of TerraNetworks, which were cancelled as a result of the merger. • On May 31, 2005, the Board of Directors of Telefonica, S.A., resolved toexecute the resolution adopted by the company's shareholders in theirAnnual General Meeting held this same date (May 31, 2005) regarding a capitalreduction by the cancellation of own shares corresponding to the "TIESProgram", the compensation system tied to the market price ofTelefonica, S.A. share and targeted at the non- executive employees of theTelefonica Group. Therefore, 34,760,964 of the own shares of Telefonica, S.A were cancelled,reducing the company's share capital by the sum of 34,760,964 euros.This also meant rewording Article 5 of the By-laws, relative to share capital,which now stands at 4,921,130,397 euros, made up of an equal number of ordinaryshares, all of a single series and with a nominal value of one (1) euro pershare, totally paid in. ADDENDA Changes to the Perimeter and Accounting Criteria of Consolidation In the period January-June of 2005, the main changes have occurred inthe 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. inFebruary this year. The company, which was consolidated within Telefonica Group's financial statements by full integration method, has been removedfrom the consolidation perimeter. • On April 19th, Telefonica Wholesale Services, S.L.(TIWS), the Spanishsubsidiary of Telefonica Datacorp, S.A., carried out a capital increase of212.68 million Euros, that was both fully subscribed and paid by Telefonica,S.A. by means of a non-monetary contribution from the Uruguayan company,Telefonica International Wholesale Services America, S.A. Following thisoperation, Telefonica, S.A. owns 92.513% of the capital of the Spanish companyTIWS, which continues to be consolidated within Telefonica Group'sfinancial statements by the full integration method; Telefonica Group owns 100%of the company's shares. • On June 10th, the European Commission authorized the takeover of theCzech telecommunications company Cesky Telecom a.s. by means of the acquisitionof 51.1% of the company's share capital. The deal was closed on June16th, offering a price of 502 Czech Crowns per share, which represented a totalpurchase price of 2.747 billion Euros. Later, Telefonica launched a compulsorytakeover bid for the remaining 48.9% of outstanding shares still controlled byminority shareholders, offering 456 Czech Crowns for each share. The company hasbeen included within Telefonica Group's financial statements by the fullintegration method. • In June, Telefonica, S.A. has sold 4,300,000 shares of its subsidiaryTelefonica Publicidad e Informacion, S.A. This capital gain has been recordedwithin Telefonica Group's financial statements under the item "Gains on disposals of consolidated companies". Following this transaction, Telefonica Group owns 59.9% of TPI. The company continues to be consolidated within Telefonica Group's financial statement by the full integration method. 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 TelefonicaGroup 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 millioneuros. The company was recorded within the "Other investments" item of the Telefonica Group's consolidated balance sheet. • In May, Telefonica Soluciones Sectoriales, S.A. is not anymore ashareholder of the Spanish company IT7 (formerly Incatel), Instituto Canario deTelecomunicaciones S.A.. It has returned the 31% stake they owned at December31st, 2004 to its partners. The company has been removed from Telefonica Group's consolidation perimeter, where it was included by the equity method. • In June, the Spanish company Segurvirtual MVS, S.A., in which TelefonicaData Espana, S.A. owned 49% of the shares, was liquidated. The company has beenremoved from Telefonica Group's consolidation perimeter, where it usedto be included by the equity method. • Also in June, the Salvadoran company Telefonica Sistemas el Salvador,S.A. de C.V., a company in which Telefonica Soluciones Informaticas yComunicaciones de Espana, S.A.U. owns 99.5 % of the shares, has started itsliquidation; it has been removed from Telefonica Group's consolidationperimeter, where it was consolidated by the full integration method. 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 UScompany Infonet Services Corporation, Inc. • Telefonica Internacional, S.A.U. has acquired 2.99% of the Chinesetelecommunications company, China Netcom Group Corporation (Hong Kong) Limited(CNC) share capital, at a price of 11.45 Hong Kong dollars per share, whichrepresents a total price of 240 million Euros. Telefonica aims at increasing itsstake in CNC's share capital up to 5%, which would give it the right toappoint one of the thirteen company directors of its Board of Directors. TELEFONICA MOVILES Group • On January 7th and January 11th 2005, respectively, 100% of the sharesin the BellSouth Chile and Argentina operators were purchased, thus concludingthe acquisition of BellSouth operators in Latin America. The total acquisition price for Telefonica Moviles, adjusted by the net debt ofthese companies, totaled 510.86 million euros for BellSouth Argentina and 307.43million euros for BellSouth Chile. • On October 8th 2004, Telesp Celular Participacoes, S.A. approved acapital increase of approximately 2,054 million reaies. This increase wascompleted on January 4th 2005 and was completely subscribed. Following thisincrease, Brasilcel, N.V.'s 65.12% stake rose to 65.70%. • On April 20th 2005, Telefonica Moviles El Salvador Holding, S.A. de C.V.acquired an additional 4.44% of Telefonica Moviles El Salvador, S.A., thereforeincreasing its stake in the company up to 96.19%. The company continues to beconsolidated within Telefonica Group's financial statements by the fullintegration method. • On May 23th 2005, the tender offer launched for the minority outstandingshareholdings of the Peruvian company, Comunicaciones Moviles de Peru, S.A., wasconcluded, increasing its stake in this company up to 99.89%. Later, onn June1st 2005, the merger of Comunicaciones Moviles Peru, S.A. and Telefonica MovilesPeru, S.A.C took place. Therefore, Telefonica Moviles Group has both direct andindirect stakes of 98.03% in the new company, Telefonica Moviles Peru, S.A. Thecompany is included within Telefonica Group's financial statements bythe full integration method. • In June 2005, an additional 0.38% of capital of the Panamanian company,Telefonica Moviles Panama, S.A., was purchased as a result of the takeover bidlaunched during 2004, increasing its total stake in the company up to 99.95%.The company continues to be consolidated in Telefonica Group's financialstatments by using the full integration method. • In June 2005, the Spanish company Tempos 21 Innovacion en AplicacionesMoviles, S.A., was consolidated within Telefonica Group's financialstatments by the equity method, with a retroactive effect starting as fromJanuary 1st 2005. TPI GROUP • The Spanish company 11888 Servicio Consulta Telefonica, S.A., whollyowned by Telefonica Publicidad e Informacion, S.A. (TPI), constituted,subscribed and fully paid all of the share capital of the French companyServices de Renseignements Telephoniques, S.A.S. by the 0.04 million euros. Thecompany is now incorporated in the consolidated accounts of the Telefonica Groupby full integration method. • 11888 Servicio Consulta Telefonica, S.A. also constituted the Italiancompany Servizio Di Consultaziones Telefonica, S.R.L., subscribing and paying up0.01 million euros for all of the shares forming its share capital.The companyhas been included in the consolidated financial statements of the TelefonicaGroup by full integration method. TERRA NETWORKS GROUP • In March, the Terra Group purchased 50% of the shares held by BancoBilbao 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 financialstatements by equity method, has now been incorporated by full integrationmethod. At the same time as the previous operation, the Terra Group sold the 50% it heldin the Spanish company Iniciativas Residenciales en Internet, S.A. (ATREA) toBBVA. 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 andgenerated goodwill amounting to 1.54 million euros. • On April 14th 2005, the company Onetravel.com, Inc. was sold for 26.4million dollars. Terra's stake in this company was 54.15%. The capitalgain registered in this disposal amounted 3 million Euros and was recorded underthe item "Gains on sale of fixed assets". The company, which wasincluded in Telefonica Group's financial statements by the fullintegration method, has been removed from the consolidation perimeter. • In June, the Spanish company, Terra Networks Latam, S.L., and theDominican company, Terra Networks Caribe, S.A., were dissolved. Both companies,which were consolidated in Terra Group's financial statements by thefull integration method, have been removed from the consolidation perimeter. telefonica contenidos GROUP • During the first quarter, the Telefonica de Contenidos Group sold all ofthe 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. Thecompanies, which were included in the financial statements of the TelefonicaGroup by full integration method, have been removed from the consolidationperimeter. 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. This datais preliminary as full compliance with International Financial ReportingStandards is not required until 31 December 2005, unaudited, and is thereforesubject 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:
TDE.L