January-December 05 Results
Telefonica SA
02 March 2006
PART 2
RESULTS BY BUSINESS LINES
Other businesses
TELEFONICA DEUTSCHLAND GROUP
Telefonica Deutschland obtained revenues of 281.2 million euros in 2005, showing
a year-on-year reduction of 3.3%, due primarily to the reduction in revenues
from narrowband services which has not yet been offset by the increase in
broadband business.
With respect to the broadband business, it is worth to highlight the increase in
the number of connections resold on a retail basis by the company to its main
clients. With it, the total number of equivalent ADSL lines in service in the
German market exceeds the figure of 535 thousands at the end of 2005, which
compares with the more than 481 thousands achieved in December 2004, providing
services to four of the five top main ISPs in Germany.
Telefonica Deutschland has registered a negative operating income before
depreciation and amortization (OIBDA) of 3.1 million euros at the end of the
year, which compares with the negative figure of 151.7 million euros obtained in
2004, mainly due to the anticipated cancellation of Telefonica's UK goodwill.
TELEFONICA DEUTSCHLAND GROUP
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - December
2005 2004 % Chg
Revenues 281.2 290.8 (3.3)
Operating income before D&A (OIBDA) (3.1) (151.7) (98.0)
OIBDA margin (1.1%) n.m. 51.1 p.p.
ADDENDA
Companies included in each Financial Statement
Based on what was indicated at the start of this report, the results breakdown
of Telefonica Group are detailed according to the business in which the Group
has a presence. The main differences between this view and the one that would
apply attending to the legal structure, are the following:
• Telefonica, S.A. directly participates in the share capital of Endemol
Entertainment Holding, N.V., which has been included in Content and Media
Business. The results from the Sogecable S.A. stake have been also assigned
to Content and Media Business, even though a part of the investment is
legally dependent upon Telefonica, S.A.
• Telefonica Holding Argentina, S.A. holds 6.98% of Atlantida de
Comunicaciones, S.A. (ATCO) which, for those purposes, is considered to be
part of Content and Media Business, consolidating 100% share capital of
ATCO.
• Compania de Telecomunicaciones de Chile, S.A. (CTC), participated by
Telefonica Latinoamerica, sold Telefonica Moviles Chile to Telefonica
Moviles Group in the third quarter of fiscal year 2004, although the results
of this company have been assigned to the cellular business from the
beginning of the year 2004.
• The participation of Telefonica Group in IPSE 2000 SpA is assigned to the
cellular business, also including the investment legally dependent upon
Telefonica DataCorp, S.A.
• Telefonica de Argentina (TASA), participated by Telefonica Latinoamerica
Group, sold in November 2005 its 100% stake in Telinver, S.A. share capital
to TPI Group. Nevertheless, the results from this company has been assigned
to the directories business through 2004 and2005 in line with our vision for
the total Telefonica's directories business.
• Telefonica Data Group (denominated 'Telefonica Empresas'), legally
dependent upon Telefonica S.A., has been segregated and subsequently
integrated into the fixed line activities both in Latin America and Spain
for presentation purposes, and according to geographic criteria. The stakes
not included in neither of the previous geographic areas will be
consolidated directly by Telefonica S.A. In this sense, the stakes in
Telefonica Data Espana, S.A.U. and Soluciones Group have been sold to
Telefonica de Espana S.A.U. in the third quarter of 2004, although the
results of both companies had been assigned to the fixed line business in
Spain from the beginning of the year 2004.
• Telefonica International Wholesale Services Group (TIWS) financial results
has been assigned to Telefonica Latinoamerica Group during 2004 and 2005,
even though is legally dependent upon Telefonica, S.A. (92.5%) and
Telefonica Data Corp (7.5%).
• The activities of Terra Networks Espana S.A., Maptel Networks, S.A.U. and
Azeler Automocion, S.A. have been included in Telefonica de Espana Group as
of July 1st 2005; at the same time, Terra Networks Chile has been included
in Telefonica Latinoamerica Group together with the rest of Latin American
companies of Terra. As of December 31st 2005, Terra Networks Espana is
directly held by Telefonica S.A., while Maptel Networks and Azeler
Automocion are directly held by Terra Networks Asociadas, S.L. Terra
Networks Chile was legally included in Telefonica Latinoamerica Group in the
fourth quarter of 2005.
ADDENDA
Key Holdings of the Telefonica Group and its Subsidiaries detailed by business
lines
TELEFONICA GROUP TELEFONICA MOVILES GROUP
% Part % Part
Telefonica de Espana 100.00% Telefonica Moviles Espana 100.00%
Telefonica Moviles (1) 92.46% Brasilcel (1) 50.00%
Telefonica Latinoamerica 100.00% TCP Argentina 100.00%
Grupo TPI 59.90% TEM Peru 98.03%
Telefonica de Contenidos 100.00% T. Moviles Mexico 100.00%
Atento Group 91.35% TM Chile 100.00%
Cesky Telecom 69.41% TEM El Salvador 99.02%
TEM Guatemala 100.00%
Telcel (Venezuela) 100.00%
(1) Effective participation: 92.91%. Includes TEM Colombia 100.00%
Telefonica Moviles S.A.' Stock Options Program
('Programa MOS').
TEM Guatemala y Cia 100.00%
TELEFONICA LATINOAMERICA GROUP Otecel (Ecuador) 100.00%
% Part TEM Panama 99.98%
Abiatar (Uruguay) 100.00%
Telefonia Celular Nicaragua 100.00%
Telesp 87.49% Radiocomunicac. Moviles SA (Arg) 100.00%
Telefonica del Peru 98.19% Telefonica Moviles Chile 100.00%
Telefonica de Argentina 98.03% Group 3G (Germany) 57.20%
TLD Puerto Rico 98.00% IPSE 2000 (Italy) (2) 45.59%
CTC Chile 44.89% 3G Mobile AG (Switzerland) 100.00%
Terra Networks Peru 99.99% Medi Telecom 32.18%
Terra Networks Mexico 99.99% Telefonica Moviles Interacciona 100.00%
Terra Networks USA 100.00% Mobipay Espana 13.36%
Terra Networks Guatemala 100.00% Mobipay Internacional 50.00%
Terra Networks Venezuela 100.00% T. Moviles Soluciones y Aplicac.
(Chile) 100.00%
Terra Networks Brasil 100.00% Tempos 21 (3) 38.50%
Terra Networks Argentina 99.99%
Terra Networks Chile 100.00%
Terra Networks Colombia 99.99% (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 TeleCentro Oeste Participacoes. The
states that Brasilcel consolidated in its subsidiaries are
the following: TeleSudeste Celular Participacoes 91.0%;
Telesp Celular Participacoes 66.1%; Global Telecom
Participacoes 66.1%; Celular CRT Participacoes 66.4%;
TeleLeste Celular Participacoes 50.7% and TeleCentro Oeste
Participacoes 34.7%.
Telefonica Data Colombia 100.00% (2) Aditionally, Telefonica Group holds a 4.08% of IPSE 2000
through Telefonica DataCorp.
Telefonica Empresas Brasil 93.98% (3) In June 2005, Tempos 21 is consolidated by the equity
method with a retroactive effect as from January 1st 2005.
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% y Telefonica DataCorp
owns 7.49%.
TELEFONICA DE ESPANA TELEFONICA DE CONTENIDOS GROUP
GROUP
% Part % Part
Telyco 100.00% Telefe 100.00%
Telefonica Telecomunic. 100.00% Endemol (1) 99.70%
Publicas
Telefonica Soluciones 100.00% Telefonica Servicios de Musica 100.00%
Sectoriales
Telefonica Empresas Espana 100.00% Telefonica Servicios Audiovisuales 100.00%
Terra Networks Espana (1) 100.00% Hispasat 13.23%
T. Soluciones de 100.00%
Informatica y
Comunicaciones de Espana
(1) Ownership held by Telefonica S.A.
(1) Telefonica S.A. owns 100%.
OTHER PARTICIPATIONS
TPI - PAGINAS AMARILLAS
% Part % Part
GROUP
Lycos Europe 32.10%
TPI Edita 100.00% Sogecable (1) 23.83%
Publiguias (Chile) 100.00% Portugal Telecom (2) 9.84%
TPI Brasil 100.00% China Netcom Group (3) 5.00%
TPI Peru 100.00% BBVA 1.07%
Teleinver (Argentina) 100.00% Amper 6.10%
11888 Servicios de 100.00% Telepizza 4.13%
Consulta Telefonica
Services de Renseig. T. 100.00%
(France)
Servizio di Consultazione 100.00%
Telefonica,
S.R.L. (Italy) (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.
(3) Ownership held by Telefonica Latinoamerica
ATENTO GROUP
% Part
Atento Teleservicios 100.00%
Espana, S.A.
Atento Brasil, S.A. 100.00%
Atento Argentina, S.A. 100.00%
Atento de Guatemala, S.A. 100.00%
Atento Mexicana, S.A. de 100.00%
C.V.
Atento Peru, S.A.C. 99.46%
Atento Chile, S.A. 77.60%
Atento Maroc, S.A. 100.00%
Atento El Salvador, S.A. 100.00%
de C.V.
ADDENDA
Significant Events
• On February 28th, 2006, the Board of Directors of Telefonica, S.A approved
to distribute an interim dividend from 2005 net income, of a fix gross
amount of 0.25 euros for each outstanding share with the right to receive
dividends of the Company. The payment of this dividend shall be executed on
May12th. Tax withholding shall be made on gross amounts as required by
applicable legislation.
Likewise, in accordance with the shareholder remuneration policy approved by
the Company's Board of Directors, it is the Board's intention to pay a
further dividend of the same amount per share in the course of this
financial year, and the appropriate resolutions for that purpose will be
passed at the relevant time.
• On February 28th, 2006, the Board of Directors of Telefonica, S.A.
resolved to explore strategic alternatives in relation to Telefonica's
holding in the share capital of Telefonica Publicidad e Informacion, S.A.
(TPI), including total or partial disinvestments in that company (sale).
Telefonica, S.A. will to that end contact persons potentially interested in
the acquisition of that holding.
• On February 22nd, 2006, approval was given at the respective Shareholders'
Meetings of Telesp Celular Participacoes S.A. ('TCP'), Tele Centro Oeste
Celular Participacoes S.A., ('TCO'), Tele Sudeste Celular Participacoes S.A.
('TSD'), Tele Leste Celular Participacoes, S.A. ('TBE') and Celular CRT
Participacoes S.A. ('CRTPart') for a corporate restructuring in order to
carry out the exchange of TCO shares for TCP shares, thereby making TCO a
100%-owned subsidiary of TCP, and for the merger and takeover of TSD, TBE
and CRT Part by TCP.
• On January 31st, 2006, the Italian government informed Ipse 2000 Spa, in
which Telefonica Group holds a 49.66% stake, of its decision to withdraw the
UMTS license granted to this company in 2000. Telefonica will analyse the
convenience of taking the appropriate legal actions against this decision.
• On February 9th, 2006, Telefonica had received acceptances in respect of a
total 7,822,149,476 O2 plc shares, representing approximately 88.45 percent
of O2's issued share capital. On the other hand, and as a result of several
purchases, Telefonica holds 747,606,107 O2 plc shares representing
approximately 8.52 percent of O2's issued share capital. Consequently,
Telefonica and its wholly owned subsidiaries owned or had received valid
acceptances in respect of a total of 8,569,755,583 O2 plc shares
representing approximately 96.9 percent of O2's issued share capital. Given
that acceptances have now been received in respect of more than 90 per cent
of O2 plc share capital to which the Offer relates, Telefonica has
implemented the procedures set out to acquire compulsorily the remaining O2
Shares for which it has not received acceptances of the Offer. As of March
7th, 2006, the stock will be delisted and cease trading in London Stock
Exchange.
• On January 2006, O2 incorporated representatives of Telefonica to its
Board, a reflection of Telefonica's status as major shareholder of the
mobile operator. Thus, O2's Board of Directors approved the appointment of
Mr. Cesar Alierta, Mr. Julio Linares, Mr. Antonio Viana-Baptista and Mr.
Jaime Smith as new Board members, and Peter Erskine the Chairman and the
company's CEO.
• On December 22, 2005, The Board of Directors of 'Telefonica, S.A.',
accepted the resignations from their positions on the Board of Mr Jose
Antonio Fernandez Rivero (member of the Audit and Control Committee) and Mr
Jesus Maria Cadenato Matia. Likewise, the Board agreed, preceded by the
relevant favourable report from the Nominating, Compensation and Corporate
Governance Committee, the appointment by cooption of the new Board members
Mr Vitalino Manuel Nafria Aznar and Mr Julio Linares Lopez. Lastly, the
Board of Directors agreed to appoint Mr Gregorio Villalabeitia Galarraga as
member of the Audit and Control Committee.
Telefonica S.A.'s Board of Directors approved the restructuring of the
Company's senior management in accordance with its new projects and targets,
with Luis Lada as the new Chairman of Telefonica de Espana, and the creation
of a new General Management for Coordination, Business Development and
Synergies, with Julio Linares.
Once the acquisition of O2 has been finalised, will include Cesky Telecom
and Telefonica Deutschland.
• On November 22nd, 2005, regarding the Initial Public Offering (IPO) of
Endemol N. V., the offer price was set at 9 euros per share. Likewise, it
was determined that the number of shares offered reached 27,901,786 ordinary
shares, representing 22.32% of the Company share capital (excluding the
green shoe granted to the Underwriters, which amounts 3,348,214 shares,
representing 2.68% of the Company share capital). That day was the first
trading day of Endemol shares on Euronext Amsterdam.Text
ADDENDA
Changes to the Perimeter and Accounting Criteria of Consolidation
In the period January-December of 2005, the main changes have occurred in the
consolidation perimeter were the following:
Telefonica Group
• The Spanish company Telefonica Procesos y Tecnologia de la Informacion,
S.A. was taken over by Telefonica Gestion de Servicios Compartidos, S.A. in
February this year. This company, which was consolidated within Telefonica
Group's financial statements by full integration method, has been removed
from the consolidation perimeter.
• On April 19th, Telefonica Wholesale Services, S.L.(TIWS), the Spanish
subsidiary of Telefonica Datacorp, S.A., carried out a capital increase of
212.68 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
this operation, Telefonica, S.A. owns 92.513% of the capital of the Spanish
company TIWS, which continues to be consolidated within Telefonica Group's
financial statements by the full integration method; Telefonica Group owns
100% of the company's shares.
• In March, the Telefonica Group purchased 50% of the shares held by Banco
Bilbao Vizcaya Argentaria, S.A. (BBVA) in the Spanish company Azeler
Automocion, S.A. Following the sale, the Telefonica Group now controls the
entire Azeler stake. The company, which was consolidated within Telefonica
Group's financial statements by equity method, has now been incorporated by
full integration method.
At the same time as the previous operation, the Telefonica Group sold the
50% it held in the Spanish company Iniciativas Residenciales en Internet,
S.A. (ATREA) to BBVA. Following this sale ATREA, which was consolidated
within Telefonica Group's financial statements by equity method, has been
removed from the consolidation perimeter.
This combined operation involved a total payment of 1.84 million euros and
generated goodwill amounting to 1.54 million euros.
• On April 14th 2005, the company Onetravel.com, Inc. was sold for 26.4
million dollars. Telefonica's stake in this company was 54.15%. The capital
gain registered in this disposal amounted 3 million euros and was recorded
under the item 'Gains on sale of fixed assets '. The company, which was
included in Telefonica Group's financial statements by the full integration
method, has been removed from the consolidation perimeter.
• On June 10th, the European Commission authorized the takeover of the Czech
telecommunications company Cesky Telecom by means of the acquisition of
51.1% of the company's share capital. The deal was closed on June 16th,
offering a price of 502 Czech Crowns per share. Telefonica launched a
compulsory takeover bid for the remaining 48.9% of outstanding shares still
controlled by minority shareholders. On September 19th, the takeover bid for
the remaining shares ended, acquiring Telefonica S.A. 58,985,703 shares at a
price of 456 Czech Crowns per share. The total amount paid by Telefonica
S.A. for the Czech company totaled 3,662.53 million euros. After this
purchase, the stake of Telefonica in the Czech company reach 69.41% of the
share capital The company has been included within Telefonica Group's
financial statements by the full integration method.
• In June, Telefonica, S.A. has sold 4,300,000 shares of its subsidiary
Telefonica Publicidad e Informacion, S.A. This capital gain has been
recorded within 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.
• In June, the Spanish company, Terra Networks Latam, S.L., and the
Dominican company, Terra Networks Caribe, S.A., were dissolved. Both
companies, which were consolidated in Terra Group's financial statements by
the full integration method, have been removed from the consolidation
perimeter.
• In July, it took place the merger by absorption of Terra Networks, S.A. by
Telefonica, S.A., with the termination of the former company, and the en
bloc transmission of all its assets to the latter company, through the
provision of Telefonica, S.A. treasury stock, in a proportion of 2
Telefonica shares for every 9 Terra shares. The company, which was included
in Telefonica Group's financial statements using the full integration
method, has been removed from the consolidation perimeter.
• Effective November 22, 2005, the shares of the Endemol N.V. Company (a
company owned by the Endemol Group, which includes all of the companies
except Endemol Holding France S.A.P and its subsidiaries) started trading on
the Amsterdam Stock Exchange. Since that day, the stock has been listed on
the AEX Euronext Amsterdam.
The price of the Endemol, N.V. public offering was 9 euros per share and the
final number of shares sold was 31,250,000 common shares, representing 25%
of the company's capital stock. This yielded total income of 55.58 million
euros , which is reported in the Telefonica Group's Income Statement under
the heading 'Gain on disposal of consolidated companies'. The full amount of
the proceeds from the share placement went to the selling shareholder,
Endemol Investment B.V., in which Telefonica S.A. has an indirect investment
of 99.7%.
The company continues to be consolidated into the Telefonica Group using the
full consolidation 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
Telefonica Group consolidation perimeter where it was consolidated by equity
method.
• In March, Telefonica de Espana S.A.U.'s sold its stake of 0.73% in
INTELSAT for 17.77 million euros, obtaining a capital gain of 17.58 million
euros. The company was recorded within the 'Other investments' item of the
Telefonica Group's consolidated balance sheet.
• In May, Telefonica Soluciones Sectoriales, S.A. is not anymore a
shareholder of the Spanish company IT7 (formerly Incatel), Instituto Canario
de Telecomunicaciones S.A.. It has returned the 31% stake they owned at
December 31st, 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 Telefonica
Data Espana, S.A. owned 49% of the shares, was liquidated. The company has
been removed from Telefonica Group's consolidation perimeter, where it used
to be included by the equity method.
• Also in June, the Salvadorian company Telefonica Sistemas el Salvador,
S.A. de C.V., a company in which Telefonica Soluciones Informaticas y
Comunicaciones de Espana, S.A.U. owns 99.5 % of the shares, was liquidated.
As a result, it has been removed from Telefonica Group's consolidation
perimeter, where it was consolidated by the full integration method.
• Telefonica Telecomunicaciones Publicas took part in the constitution of
the Spanish company Telefonica Salud, S.A., subscribing and paying up 51% of
the new company's initial share capital, a total of 0.06 million euros. The
company has been included in the consolidation perimeter of the Telefonica
Group by using the full integration method.
• Telefonica Soluciones Sectoriales, S.A. took part in the constitution of
the Spanish company Ceuta Innovacion Digital, S.L., subscribing and paying
up 40% of its initial share capital. The company has been included in the
consolidation perimeter of the Telefonica Group using the equity method.
• On September 1st, in accordance with the decisions made by the sole
shareholder, the Spanish company Agencia de Certificacion Electronica, S.A.
was taken over by its sole shareholder Telefonica Data Espana, S.A. The
company, which was included in Telefonica Group's financial statements using
the full integration method, has been removed from the consolidation
perimeter.
Telefonica Latinoamerica Group
• In March, the Dutch company Telefonica International Holding, B.V., wholly
owned by Telefonica Internacional, S.A., sold its 14.41% stake in the US
company Infonet Services Corporation, Inc.
• Telefonica Internacional, S.A.U. has acquired 2.99% of the Chinese
telecommunications company, China Netcom Group Corporation (Hong Kong)
Limited (CNC) share capital, at a price of 11.45 Hong Kong dollars per
share, which represents a total price of 240 million euros. In September, it
acquired an additional 2.01% of the share capital of the Chinese company for
184 million euros. Following this purchase, the stake of Telefonica in China
Netcom rose to 5%. The company is consolidated in Telefonica Group's
financial statements at market value.
• During July 2005, Telefonica Internacional, S.A. acquired 100%
shareholding in Terra Mexico Holding, Terra Colombia Holding, Terra
Guatemala, Terra Venezuela, Terra Argentina and Terra USA from Telefonica,
S.A. Furthermore, on that same date, Telefonica Internacional, S.A. took
over 100% of the net debt that said companies from the Terra Group held with
Telefonica, S.A.
• In August, Telefonica Internacional sold the US company Communication
Technology, Inc. (CTI), in which it was the sole shareholder, leading to a
capital loss of 3.71 million euros that appear in the Telefonica Group
profit and loss account under the heading 'Losses from the sale of
consolidated companies'. The company, which was included in the consolidated
accounts of the Telefonica Group by using the full integration method, has
been removed from the consolidation perimeter.
• The Spanish company Telefonica DataCorp, S.A. fully subscribed the capital
increase made by the Colombian company Telefonica Data Colombia, S.A. in
September. Following this contribution, the Spanish company's shareholding
in the Colombian company increased from 65% to the current 100%. The
Colombian company continues to be consolidated within Telefonica Group's
financial statements by the full integration method.
Telefonica Moviles Group
• The share placement by Telesp Celular Participacoes, S.A. on January 4,
2005 was fully subscribed, yielding approximately 2,054 billion Brazilian
reais. Brasilcel, N.V.'s ownership interest in this company rose to 66.09%.
• On January 7th and January 11th 2005, respectively, 100% of the shares in
the BellSouth Chile and Argentina operators were purchased, thus concluding
the acquisition of BellSouth operators in Latin America.
The acquisition of Chilean operators from BellSouth was on January 7th 2005.
The price agreed in the sale contract dated March 5th 2004 totaled 532
million dollars. The amount paid by Telefonica Moviles, after adjusting the
net debt, totaled 317.56 million euros.
In the case of Argentina, the acquisition of the Argentinean operators from
BellSouth was on January 11th 2005. The price agreed in the sale contract
totalled 988.35 million dollars. The amount paid by Telefonica Moviles,
after adjusting the net debt, totalled 519.39 million euros.
The amount of acquisitions of BellSouth stakes due in 2004 and 2005 includes
the cost derived from hedging the risk associated to variations in the
exchange rates. In accordance with NIIF standards, those amounts should not
be considered as acquisition cost, but reported directly as equity.
• On April 20th 2005, Telefonica Moviles through its subsidiary TEM Puerto
Rico, Inc. proceed to the conversion of bonds representing 49.9% of share
capital of the Puerto Rico company, Newcomm Wireless Inc. As a result, the
Telefonica Moviles stake amounts to 49.9% of said Company.
• Also in April 2005 Telcel, C.A. made a capital increase fully subscribed
by Telefonica Moviles, amounting 26.80 million dollars, equivalent to 21.0
million euros. As a result, Telefonica Moviles increased its stake to 91.63%
of share capital. In October of 2005, the Venezuelan companies Telcel, C.A.,
Servicios Telcel, C.A. and Telecomunicaciones BBS, C.A. merged. The
surviving company is Telcel, C.A. The company continues to be consolidated
into the Telefonica Group using the full consolidation method.
• In June 2005 ended the public tender offer launched by TES Holding, S.A.,
Salvadorian Company fully-owned by Telefonica Moviles, S.A., to acquire
Telefonica Moviles El Salvador, S.A. The transaction represented a 2.7%
increase and amounted 3.10 million dollars. Following this acquisition and
after purchases, TES Holding, S.A.'s stake increased to 99.03%. The company
continues to be consolidated in the Telefonica Group financial statements
using the full integration method
• In June 2005 was closed the acquisition of an additional 0.38% stake in
Telefonica Moviles Panama for 2.20 million euros. Following this acquisition
and others, Telefonica Moviles' stake increased to 99.98%. The company
continues to be consolidated in the Telefonica Group financial statements
using the full integration method.
• In June 2005 the merger between Comunicaciones Moviles Peru, S.A. and
Telefonica Moviles Peru, S.A.C. was carried out. Telefonica Moviles's stake
in the resulting company, Telefonica Moviles Peru, S.A., stands at 98.03%.
The company continues to be consolidated in the Telefonica Group financial
statements using the full integration method.
• In June 2005, the Spanish company Tempos 21 Innovacion en Aplicaciones
Moviles, S.A., was consolidated within Telefonica Group's financial
statments by the equity method, with a retroactive effect starting as from
January 1st 2005.
• In July of 2005, the tax credits generated by the use, for tax purposes,
of the goodwill available in the following companies were capitalized. New
shareholdings of Brasilcel N.V. are: 91.03% in TSD, 50.67% in TBE, 66.36% in
CRT, 66.09% in TCP and 34.68% in TCO.
• In September of 2005, Telefonica Moviles, the sole shareholder, approved
the merger by absorption of Telefonica Moviles Espana, S.A., the surviving
company, and Telefonica Moviles Interacciona, S.A., the merged company. The
company continues to be consolidated into the Telefonica Group using the
full consolidation method.
• In November of 2005, the remaining 2.07% of the shares of Telefonica
Moviles Argentina, S.A, were acquired for 1.99 million euros. This
transaction brought the ownership interest in Telefonica Moviles, S.A. to
100%. The company continues to be consolidated into the Telefonica Group
using the full consolidation method.
• In December of 2005, Telefonica Moviles, S.A. reached an agreement to buy
8% of Telefonica Moviles Mexico, S.A. de C.V. The acquisition was structured
as an exchange of Telefonica, S.A. shares. This transaction involved the
payment of 177.27 million euros. Following this transaction, the Telefonica
Moviles shareholding increased to 100%. The company continues to be
consolidated into the Telefonica Group using the full consolidation method.
• The merger (by absorption) of TEM Guatemala y Cia. S.L.A. also took place
in December of 2005. Telefonica Moviles Guatemala, S.A. and Tele-Escucha,
S.A. were merged into S.C.A., the surviving company. The new company was
renamed Telefonica Moviles Guatemala, S.A. The company continues to be
consolidated into the Telefonica Group using the full consolidation method.
TPI Group
• The Spanish company 11888 Servicio Consulta Telefonica, S.A., wholly owned
by Telefonica Publicidad e Informacion, S.A. (TPI), constituted, subscribed
and fully paid all of the share capital of the French company Services de
Renseignements Telephoniques, S.A.S. by the 0.04 million euros. The company
is now incorporated in the consolidated accounts of the Telefonica Group by
full integration method.
• 11888 Servicio Consulta Telefonica, S.A. also constituted the Italian
company Servizio Di Consultaziones Telefonica, S.R.L., subscribing and
paying up 0.01 million euros for all of the shares forming its share
capital.The company has been included in the consolidated financial
statements of the Telefonica Group by full integration method.
• Effective November 11, 2005, the Group companies Telefonica Publicidad e
Informacion, S.A. (the parent company) and Telefonica Publicidad e
Informacion Internacional, S.A.U. spent a total of 57.0 million euros (66.72
million U.S. dollars) to acquire 95% and 5%, respectively, of the shares of
the Argentine company, Telinver, S.A., from Telefonica de Argentina, S.A.
Telefonica de Argentina, S.A. financed the transaction through borrowings
with a maturity date in fiscal year 2008. The company continues to be
consolidated into the Telefonica Group using the full consolidation method.
Telefonica Contenidos GRoup
• During the first quarter, the Telefonica de Contenidos Group sold all of
the shares it held in LS4 Radio Continental, S.A. and Radio Estereo, S.A.,
obtaining capital gains of 7.22 and 0.20 million euros, respectively. The
companies, which were included in the financial statements of the Telefonica
Group by full integration method, have been removed from the consolidation
perimeter.
• The company Sogecable, S.A. increased its share capital during fiscal year
2005 by issuing 7,560,261 shares with a par value of 2 euros each and
additional paid-in capital of 22.47 euros. The Telefonica Group participated
in the equity issue by subscribing to 1,801,689 shares and paying out
approximately 44.1 million euros, thereby maintaining the 23.83% stake that
it already owned in this company. The company continues to be accounted for
in the financial statements of the Telefonica Group using the equity method.
Atento Group
• On July 29th, Atento Brasil, S.A. took over the entire shareholding in the
Brazilian company Beans Administradora de Cartoes de Credito, Ltda. In
August, Beans merged with its parent company Atento Brasil, S.A. The
company, which was included in the Telefonica Group's consolidated financial
statements by the full integration method, has been removed from the
consolidation perimeter.
ADDENDA
Telefonica, empowering economic, social and technological development
Throughout 2005, Telefonica has consolidated as the reference operator in each
of the countries where it is present. This is a consequence of its commitment to
the economic, social and technological development, and its willingness to adapt
to the needs and reality of each one of them.
In 2005, Telefonica performance made a significant contribution to all its
stakeholders (customers, employees, society, suppliers, environment..). The
results underpin the company's position an important driver of economic,
technological and social development in the countries where it operates.
Economic development driver
Telefonica is among the leading companies in the markets where it operates, thus
driving local economic development driver.
Throughout 2005, Telefonica has shown its commitment to the development of
national economies; contributing in average 1.7% of GDP of the main countries
where it operates. Moreover, Telefonica Group has an important revenue
redistribution effect among its stakeholders; approximately 45% to its
suppliers, 16% to public administrations and 8% in employee compensation.
Telefonica Group has more than 18,000 awarded suppliers across the world. The
percentage of purchasing volume awarded to local suppliers exceeds 85%.
Finally, it is important to emphasize the indirect impact of Telefonica Group's
services have on the economies of the main countries where it is present. For
instance, activities targeted at reducing the digital divide; a reduction in the
price of services; greater availability of broadband services and permanent
connectivity; are having a significant impact on the increase of the
productivity levels of the local economies.
Technological development driver
In 2005, Telefonica committed nearly 2,900 million euros for technological
innovation, according to OECD measurement criteria. Research and development
activities represent 530 million euro of this amount.
Telefonica Moviles is the largest investor in innovation within the Telefonica
Group as a result of its new generation networks deployment. Its activities
encompass 52% of the technological innovation of Telefonica's Group's innovation
budget, followed by Telefonica de Espana with 27% and Telefonica Latinoamerica
with 15%. By country distribution, Spain is the recipient of 45% of the total
innovation and Brazil of 23% respectively.
Social development driver
In 2005, Telefonica has developed several projects oriented to improve its
behaviour as a responsible company to all its stakeholders:
• Telefonica pursues customer satisfaction, through great customer
orientation and operational excellence. As a consequence of this effort,
customer satisfaction levels reached 83% in Spain.
• In 2005, there has been progress related to responsible service provision,
especially in adult content management norms and the publication of reports
on the impact of ICT on sustainable development.
• Telefonica has strengthened its value proposal to its employees, seeking
progress in their professional development (9.2 million training hours in
2005) and clarity in company and employees relationship. In this sense, a
group wide workplace environment studies has been carried out.
• In 2005, Fundacion Telefonica performed a strategic review of all its
projects, focusing on educational ones ('educared') and children integration
in society ('pronino'). Complementing Fundacion Telefonica's commitment, it
is important to highlight the employees' commitment to volunteering; already
60,000 employees engage with ATAM (Telefonica Association to Aid Disabled
People)
• Digital inclusion of people with the lowest income levels (over five
million prepaid or control fixed lines in Latin America) or disabled people
('Telefonica Accesible' programme kick off) are examples of programmes where
Telefonica shows its commitment to social inclusion.
• The corporate norm on environmental management, approved in 2004, has
progressed to implementation within Telefonica subsidiaries; outstanding
progress has been made in energy management, visual impact and waste
management.
• In 2005, Telefonica has - for the first time ever - completed a supplier
satisfaction assessment in their relationship with Telefonica. Satisfaction
levels achieved an average of 6.75 (out of a scale from 0 to 10)
Moreover, it is important to mention three circumstances that confirm
Telefonica's commitment to corporate responsibility:
• Code of Ethics approval by the Telefonica Group.
• Publication of corporate responsibility annual reports in Argentina,
Brazil, Chile and Peru; complementing the existing ones for Telefonica SA,
Telefonica Moviles and TPI.
• Confirmation of Telefonica presence in major Sustainability Indexes.
DISCLAIMER
This document contains statements that constitute forward looking statements in
its general meaning and within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements appear in a number of places in this
document and include statements regarding the intent, belief or current
expectations of the customer base, estimates regarding future growth in the
different business lines and the global business, market share, financial
results and other aspects of the activity and situation relating to the Company.
The forward-looking statements in this document can be identified, in some
instances, by the use of words such as 'expects', 'anticipates', 'intends',
'believes', and similar language or the negative thereof or by forward-looking
nature of discussions of strategy, plans or intentions.
Such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and other important factors that could cause
actual developments or results to differ materially from those expressed in our
forward looking statements.
Analysts and investors are cautioned not to place undue reliance on those
forward looking statements which speak only as of the date of this presentation.
Telefonica undertakes no obligation to release publicly the results of any
revisions to these forward looking statements which may be made to reflect
events and circumstances after the date of this presentation, including, without
limitation, changes in Telefonica's business or acquisition strategy or to
reflect the occurrence of unanticipated events. Analysts and investors are
encouraged to consult the Company's Annual Report as well as periodic filings
filed with the relevant Securities Markets Regulators, and in particular with
the Spanish Market Regulator.
The financial information contained in this document has been prepared under
International Financial Reporting Standards (IFRS). This financial information
is unaudited and, therefore, is subject to potential future modifications. 2004
financial results were originally prepared under Spanish GAAP and have been
translated into IFRS for comparison purposes only.
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 - ezequiel.nieto@telefonica.es
Diego Maus - dmaus@telefonica.es
Dolores Garcia - dgarcia@telefonica.es
Isabel Beltran - i.beltran@telefonica.es
ir@telefonica.es
www.telefonica.es/investors
This information is provided by RNS
The company news service from the London Stock Exchange
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