January-September 2007

Telefonica SA 12 November 2007 Quarterly results January-September 2007 TABLE OF CONTENTS TELEFONICA GROUP Market Size Financial Highlights Consolidated Results Financial Data RESULTS BY REGIONAL BUSINESS UNITS Telefonica Espana . Wireline Business . Wireless Business Telefonica Latinoamerica . Brazil . Argentina . Chile . Peru . Colombia . Mexico . Venezuela . Central America . Ecuador . TIWS Telefonica O2 Europe . O2 UK . O2 Germany . O2 Ireland . Telefonica O2 Czech Republic Other Companies . Atento Group ADDENDA Key Holdings of the Telefonica Group and its Subsidiaries Significant Events Changes to the Perimeter and Accounting Criteria of Consolidation 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. The English language translation of the consolidated financial statements originally issued in Spanish has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain omissions or approximations may subsist. Telefonica, its representatives and employees decline all responsibility in this regard. In the event of a discrepancy, the Spanish-language version prevails. TELEFONICA GROUP Market Size TELEFONICA GROUP ACCESSES Unaudited figures (thousands) January - September 2007 2006 % Chg Final Clients Accesses 216,229.8 193,759.6 11.6 Fixed telephony accesses (1) 42,087.5 42,660.1 (1.3) Internet and data accesses 12,583.5 11,774.8 6.9 Narrowband 2,805.4 4,287.5 (34.6) Broadband (2) 9,620.4 7,285.4 32.1 Other (3) 157.7 201.9 (21.9) Mobile accesses 160,157.1 138,443.3 15.7 Pay TV 1,401.7 881.4 59.0 Wholesale Accesses 2,365.3 2,102.5 12.5 Unbundled loops 1,277.5 790.6 61.6 Shared ULL 713.5 438.5 62.7 Full ULL 564.1 352.2 60.2 Wholesale ADSL (4) 591.8 1,167.4 (49.3) Other (5) 496.0 144.4 243.5 Total Accesses 218,595.1 195,862.1 11.6 (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) ADSL, satellite, optical fibre, cable modem and broadband circuits. (3) Remaining non-broadband final client circuits. (4) Includes Unbundled Lines by T. Deutschland. (5) Circuits for other operators. Note: Mobile accesses, Fixed telephony accesses and Broadband accesses include MANX customers. TELEFONICA GROUP Financial Highlights The most relevant factors of Telefonica Group results for the January-September 2007 period are the following: â€¢ Consolidated net income reached 7,848(1) million euros: â€¢ Basic earnings per share increases by 50.4% to 1.644 euros per share (1.093 euros per share in January-September 2006), the thirteenth consecutive quarter of growth. ---------------------------------------------------------------------------- (1) Includes Airwave capital gain by an amount of 1,296 million euros and Endemol capital gain by an amount of 1,368 million euros. â€¢ Revenues (+8.6%), OIBDA (+24.5%), OI (+51.0%) and net income (+51.0%) continue to show outstanding year-on-year growth rates. â€¢ Guidance(2) upgrade for fiscal year 2007, reiterated: â€¢ Revenue growth is expected to be in the range +8%/+10% versus +6%/+9% previously announced. â€¢ OIBDA growth is expected to be in the range +10%/+13% (vs. initial range of+8%/+11%). â€¢ OI growth is expected to be between +19%/+23% compared with the range previously communicated (+14%/+20%). â€¢ 2007 CapEx is expected to be below 8,100 million euros versus the initial estimation of < 7,814 million euros. ---------------------------------------------------------------------------- (2) Base 2006 reported numbers include eleven months of O2 Group (consolidated since February 2006), eight months of Telefonica Telecom (consolidated since May 2006), six months of Iberbanda (consolidated since July 2006), three months of start-up losses in Slovakia, and exclude Endemol and Airwave results. 2007 guidance assumes constant exchanges rates as of 2006 and excludes changes in the consolidation perimeter. In terms of guidance calculation, OIBDA and OI exclude other exceptional revenues/ expenses not foreseeable in 2007. Personnel Restructuring and Real Estate Programs are included as operating revenues/expenses, with the exception of the ones decided after the guidance communication. For comparison purposes the equivalent other exceptional revenues/expenses registered in 2006 are also deducted from reported figures. CapEx excludes investments related to Real Estate Efficiency Plan. â€¢ Reinforced organic growth(3) strength: top line +7.6% year-on-year: â€¢ By geographies, Telefonica Latinoamerica revenues posted an organic growth of 12.6% year-on-year, Telefonica Espana 4.9% year-on-year and Telefonica O2 Europe +4.9% year-on-year. ---------------------------------------------------------------------------- (3)Assuming constant exchange rates and including the consolidation of the O2 Group, Telefonica Telecom and Iberbanda in January-September 2006. It excludes the consolidation of Telefonica O2 Slovakia in January-September 2007, the consolidation of Airwave in April-September 2006 and the consolidation of Endemol in July-September 2006. â€¢ Intense commercial activity on customer acquisition and retention, that translates into a strong accesses expansion (+11.6% year-on-year) to 218.6 million, mainly on mobile and broadband: â€¢ Mobile accesses stood at 160.2 million, 15.7% higher than September 2006. â€¢ Retail Internet broadband accesses totalled 9.6 million as of September 2007, up 32.1% against September 2006. â€¢ Pay TV customers reached 1.4 million (+59.0% year-on-year). â€¢ Operating cash flow (OIBDA-CapEx) totalled 13,221 million euros, backed by executed synergies through the integrated management of operations, cost optimisation and improved diversification. TELEFONICA GROUP Consolidated Results Telefonica Group organizational restructuring by Regional Business Units: Telefonica Espana, Telefonica Latinoamerica and Telefonica O2 Europe, in accordance with the new regional and integrated management model, defines that the companies legal structure is not relevant for the presentation of the Telefonica Group financial information. In this sense, operating results of each regional business units are presented independently of their legal structure. In line with this new structure, Telefonica Group has incorporated in Telefonica Espana and Telefonica Latinoamerica regional businesses units all the information corresponding to fixed, cellular, cable and Internet businesses. Likewise, Telefonica O2 Europe includes O2 Group results and Telefonica O2 Czech Republic results. In the caption Other companies and Eliminations Content and Media Business is included, where the results of Telefonica S.A. direct stake has been integrated in the share capital of Endemol Entertainment Holding, N.V. The results for the Telefonica Group for the first nine months of the year continue to prove the Company's growth profile, the high value of the diversification by business and geographies, the efficient cost structure and the generation of synergies through the integrated management of the Company. Once again, cumulative revenues (+8.6% year-on-year), OIBDA (+24.5% year-on-year), OI (+51.0% year-on-year) and net profit (+51.0% year-on-year) show significant growth rates as compared to the same period last year. The customer base grew 11.6% due to the successful campaigns to attract and retain customers, while operating cash flow (OIBDA-CapEx) rose almost 38% year-on-year to 13,221 million euros (+10.1% ex-capital gains from the Airwave and Endemol disposals). During the third quarter of 2007, the Telefonica Group maintained its high commercial activity, ending September with a total of 218.6 million accesses, 11.6% more than a year earlier. Telefonica Espana currently has 45.6 million accesses, an increase of 5.3% year-on-year. Not only have the mobile and broadband customer bases grown, but fixed line loss has been contained, with the same year-on-year loss as in June 2007. Meanwhile, the number of total accesses in Telefonica Latinoamerica continued to accelerate (+14.9% year-on-year to 126.5 million) thanks to a robust mobile market, the strong growth in broadband, and an expanding pay TV subscriber base. Telefonica O2 Europe saw the number of total accesses advance 7.8% to 40.7 million, driven by strong performance in the mobile business, notably in the contract segment. By access type, growth in mobile accesses at the Telefonica Group continues to accelerate to reach almost 160.2 million (+15.7% year-on-year). Latin America recorded 4.1 million net adds in the quarter, with Brazil, Peru, Mexico and Argentina as the main contributors. In Spain, net adds in the quarter totalled 317,038, driven by the summer campaign and reduced churn, to put the managed customer base at over 22.4 million, 6.7% higher than a year earlier. In Europe, the customer base expanded 8.3% to over 37.2 million thanks to net adds of 840,000 during the quarter, 610,000 of which came from O2 Germany. Retail internet broadband accesses at the Telefonica Group advanced 32.1% year-on-year to over 9.6 million at the end of September. ADSL, TV and voice bundles are still an important feature for Telefonica's markets in order to develop faster the broadband market and customer loyalty. In Spain, retail broadband accesses surpassed 4.3 million (up 27.3% year-on-year), in Latin America, 4.7 million (+34.4%) while in Europe, 572,000 (+53.2%). Net adds in the third quarter were 145,756 in Spain, while this figure amounted to 323,000 and 32,000 in Latin America and Europe, respectively. Pay TV accesses at the end of the quarter exceeded 1.4 million, 59.0% more than a year before, with operations up and running in Spain, the Czech Republic, Peru, Chile, Colombia and Brazil. Meanwhile in Brazil the company enriched its proprietary satellite TV offer with Globo content from 30 September. Thanks to the sound performance of the Group's customer base, revenues at the end of September totalled 42,014 million euros, a year-on-year increase of 8.6%. Negative exchange rate effect detracted just 1 percentage point from revenue growth (-1.4 percentage points to June and -2.6 percentage points to March), while changes in the consolidation perimeter contributed 1.9 percentage points to growth (vs. +4.5 percentage points in the first half of 2007 and +9.8 percentage points in the first quarter 2007). Accordingly, organic revenue growth1 was 7.6%. The main contributors to growth were Telefonica Latinoamerica which accounted for 4.2 percentage points and, to a lesser extent, Telefonica Espana, which contributed 1.9 percentage points. By business, mobile services and broadband contributed the most to organic growth, up 11.2% and 23.0% year-on-year, respectively. Third quarter revenues amounted to 14,188 million euros, up 4.8% year-on-year. -------------------------------------------------------------------------------- 1 Assuming constant exchange rates and including the O2 Group, Telefonica Telecom and Iberbanda in January-September 2006. It excludes the consolidation of Telefo O2 Slovakia in January-September 2007, the consolidation of Airwave in April-September 2006 and the consolidation of Endemol in July-September 2006. In absolute terms, Telefonica Espana contributed the most to Telefonica Group revenues, accounting for 36.8% of the total. In the period January-September 2007, Telefonica Espana generated revenues of 15,462 million euros, up 5.0% year-on- year. Telefonica Espana Wireline Business posted revenues of 9,219 million in the first nine months of the year, up 3.7% year-on-year, on the back of strong internet and broadband growth while the declines in voice revenues continued to narrow. Meanwhile, the Wireless Business generated revenues of 7,287 million euros in the first nine months of 2007, up 6.1% driven mainly by service revenue growth (+5.2%). Service revenues were in turn boosted by customer revenues (+8.8%), underpinned by the growing customer base - especially in the contract segment -, and higher usage of data. Telefonica Latinoamerica (34.9% of consolidated revenues) recorded revenues of 14,676 million euros in the period January-September 2007, 10.8% more than in the same period last year (+14.5% in constant euros). Organic revenue growth2 was 12.6%. In constant currency terms, the countries contributing most to revenue growth, leaving aside Colombia due to the change in the consolidation perimeter, were Mexico and Venezuela, each contributing 3.1 percentage points, followed by Argentina (+2.0 percentage points). In absolute terms, Brazil remains Telefonica Latinoamerica's greatest contributor accounting for 38.4% of total revenues, followed by Venezuela (11.7%) and Argentina (11.4%). TASA is the best performing fixed telephony operator in the region, reporting 9.3% growth in local currency thanks to higher broadband revenues (+53.5% in local currency) and a robust traditional business (+5.6% in local currency). In Brazil, VIVO (revenues up 15.8% in local currency) should be highlighted, whose results prove the advance in the target of obtaining profitable growth. -------------------------------------------------------------------------------- 2 Assuming constant exchange rates and including Telefonica Telecom in the consolidation in January-September 2006. Telefonica O2 Europe contributed 10,776 million euros (25.6%) to the Telefonica Group's total revenues in the first nine months of 2007. Telefonica O2 Europe's 2006 revenues include the O2 Group assets for February-September 2006, as well as Telefo Deutschland and Telefonica O2 Czech Republic for January-September 2006. The continued growth in the customer base and ARPU have helped O2 UK's revenues increase 10.2% in local currency vs. the first nine months of 2006 despite a tough market environment. At Telefonica O2 Czech Republic, cumulative revenues to September rose 3.3% year-on-year in local currency, boosted by the mobile business and a stable fixed business. However, at O2 Germany revenues fell 2.5% vs. January-September 2006 due to the cut in termination rates and intense competition. In the first nine months of the year, operating expenses at the Telefonica Group totalled 27,050 million euros, 8.2% higher than the same period the year before. This increase is largely due to changes in the consolidation perimeter and the higher commercial efforts carried out in Latin America and Europe, in a context of maximizing the cost structure efficiency. Supplies rose 10.6% year-on-year in the period January-September to 13,254 million euros (up 11.6% excluding the exchange rate effect). Excluding also changes to the consolidation perimeter, supplies would have risen 9.3%, mainly due to higher interconnection expenses at Telefonica Latinoamerica and O2 UK. Personnel expenses rose 2.2% year-on-year to 5,315 million (+3.1% in constant euros). The average number of employees in the period was 242,605, 16,726 more than the year before, due to the increase of the Atento Group workforce and the inclusion of new companies in the consolidation perimeter. Excluding the Atento Group workforce, the average number of employees at the Telefonica Group would have been virtually flat year-on-year, reaching 127,385 employees. Workforce restructuring expenses amounted to 299 million euros in the period January- September 2007, mainly due to the 126 million euro provision due to Telefonica Espana's Wireline Business 2003-2007 redundancy programme (with 445 employees signing up) and the provision of 114 million euros at the O2 Group (Germany, UK and Ireland) also associated to workforce restructuring programmes. External service expenses in the period January-September increased 8.5% year-on-year (9.7% in constant euros) to 7,220 million euros. In organic terms, this increase was mainly due to increased commercial activity at Telefonica Latinoamerica and in Telefonica Espana's Wireline Business. Also, in the first nine months of the year, gains on sale of fixed assets totalled 2,634 million euros due to the recognition in the second quarter of 1,296 million euros of capital gains from the sale of Airwave and in the third quarter of 1,368 million euros of capital gains from the disposal of Endemol. Meanwhile a capital loss of 45 million euros was recorded in connection with the disposal of the Group's 6.9% stake in CANTV. Operating income before depreciation and amortization (OIBDA) in the period January-September totalled 18,248 million euros, 24.5% higher than in the same period last year, thanks to OIBDA growth in the third quarter (+29.0% to 6,979 million euros) due to the recognition of the capital gains generated by the sale of Endemol. Excluding capital gains from Airwave and Endemol disposals, OIBDA rose 6.3% year-on-year in cumulative terms. At the end of September, organic growth3 in OIBDA was 24.7% (6.8% excluding capital gains). The OIBDA margin in the first nine months of 2007 was 43.4% (37.1% excluding the Airwave and Endemol capital gains vs. 37.9% the year before). -------------------------------------------------------------------------------- 3 Assuming constant exchange rates and including the O2 Group, Telefonica Telecom and Iberbanda in January-September 2006. It excludes the consolidation of Telefonica O2 Slovakia in January-September 2007, the consolidation of Airwave in April-September 2006 and the consolidation of Endemol in July-September 2006. Telefonica Espana (47.4%4 of consolidated OIBDA) reported OIBDA of 7,384 million euros in the period January-September 2007, 7.6% more than in the year before. The OIBDA margin was 47.8%, 1.1 percentage points wider than in the same period last year. OIBDA at Telefonica Latinoamerica (5,309 million euros) represented 34.1% of consolidated OIBDA4 for the first nine months of 2007, a year-on-year increase of 10.4%, or organic growth5 of 12.2%. In constant euros, OIBDA rose 13.8%. The biggest contributors to growth were Venezuela (+4.9 percentage points), Mexico (+3.2 percentage points) and Colombia (+2.4 percentage points), the latter due to the change in the consolidation perimeter. The OIBDA margin to September was 36.2%, largely in line with the same period the year before. -------------------------------------------------------------------------------- 4 Telefonica Group's OIBDA for January-September 2007 excludes the capital gains from the sales of Airwave (1,296 million euros) and Endemol (1,368 million euros). 5 Assuming constant exchange rates and including Telefonica Telecom in January-September 2006. Telefonica O2 Europe generated OIBDA of 4,151 million in cumulative terms including the 1,296 capital gain on the sale of Airwave, a contribution of 18.3% to total Telefonica Group OIBDA6. In the period January-September 2006, Telefonica O2 Europe reported OIBDA of 2,798 million euros; this figure consolidated the O2 Group assets for February-September and Telefonica O2 Czech Republic and Telefonica Deutschland for the full nine months. The OIBDA margin excluding the Airwave capital gains was 26.5% vs. 29.7% in January-September 2006. In the third quarter, OIBDA growth at O2 UK accelerated to 9.0% year-on- year in local currency (+5.1% in the second quarter 2007 and -4.6% in the first quarter 2007). The OIBDA margin was 27.3% in the third quarter, practically flat year-on-year. In O2 Germany, OIBDA grew 8.4% year-on-year in the third quarter 2007 to 197 million euros, leaving an OIBDA margin of 21.7%. At Telefonica O2 Czech Republic, the OIBDA margin to September 2007 was 45.8% (3.1 percentage points lower than in the same period last year), with a negative impact of around 2 percentage points from operations in Slovakia. -------------------------------------------------------------------------------- 6 Excluding Airwave capital gain (1,296 million euros) in Telefonica O2 Europe OIBDA and capital gains from both Airwave (1,296 million euros) and Endemol (1,368 million euros) at Telefonica Group level Depreciation and amortization in cumulative terms totalled 6,985 million euros, 2.9% lower than the year earlier figure. Telefonica Espana and Telefonica Latinoamerica (6.3% and 7.4% less year-on-year, respectively) contributed the most to the lower depreciation and amortization of Telefonica Group. Meanwhile Telefonica O2 Europe recorded an increase (4.2% year-on-year) as a result of the recognition of the O2 Group's Purchase Price Allocation (of 616 million euros) and the Telefonica O2 Czech Republic (of 117 million euros). In organic terms 7, depreciation and amortization at the Telefonica Group fell 5.5%, similar to the decline recorded in the first half of 2007, being Telefonica Latinoamerica the main contributor to this reduction. -------------------------------------------------------------------------------- 7 Assuming constant exchange rates and including the O2 Group, Telefonica Telecom and Iberbanda in January-September 2006. It excludes the consolidation of Telefonica O2 Slovakia in January-September 2007, the consolidation of Airwave in April-September 2006 and the consolidation of Endemol in July-September 2006. The sharp rise in OIBDA and fall in depreciation and amortization drove operating income (OI) 51.0% higher in the first nine months of the year to 11,263 million euros. Excluding the impact of the Airwave and Endemol disposals, OI would have increased by 15.3%. Organic growth8 was 55.3% (+19.2% excluding capital gains from Airwave and Endemol). -------------------------------------------------------------------------------- 8 Assuming constant exchange rates and including the O2 Group, Telefonica Telecom and Iberbanda in January-September 2006. It excludes the consolidation of Telefonica O2 Slovakia in January-September 2007, the consolidation of Airwave in April-September 2006 and the consolidation of Endemol in July- September 2006. Profit from associates jumped 75.6% to 107 million. The bulk of the increase was due to Lycos Europe, which in April sold its investment in the Czech-based Internet portal provider Seznam, c.z. The improvement is also underpinned by the fact that Sogecable and The Link are no longer consolidated under the equity method since the fourth quarter of 2006. Net financial results at the end of September 2007 amounted to 2,095 million euros, 8.6% above those of the same period of 2006. This variation arises mainly from the increase in the average cost of debt for the Telefonica Group due to higher interest rates in Europe and higher percentage of debt in Latin America, that drives financial expenses up by 242 million euros. Management of the present value of pre-retirement plan commitments and other positions associated to marked-to-market positions, have a positive impact of 107 million euros, 22 million euros above the figure reported for the first nine months of 2006. The average cost calculated on average total net debt for the period January- September 2007 is 5.39% and 5.41% when excluding FX results. Free cash flow generated by the Telefonica Group in the period January-September 2007 totalled 5,959 million euros of which 1,797 and 1,425 million euros were assigned to Telefonica S.A. share buyback program and dividend payment respectively, and 587 million euros to commitment cancellations derived mainly from the pre-retirements plans. Due to the fact that financial divestitures for the period amounted to 4,875 million euros, mainly due to Airwave and Endemol disposals, net financial debt decreased in 7,024 million euros. Also, net debt was reduced by an additional 1,117 million euros because of foreign exchange impact, changes in the consolidation perimeter and other effects on financial accounts. All this has been translated in a decrease of 8,141 million euros with respect to the net financial debt of the fiscal year 2006 (52,145 million euros), reaching the net financial debt of Telefonica Group 44,004 million euros at September 2007. The tax provision for the first nine months of the year totalled 1,271 million euros, implying a 13.71% tax rate. However, the cash outflow for the Telefo Group will be further reduced as negative tax bases from past periods will be compensated. In 2007, the tax rate has been reduced due to several factors, mainly the disposal of Endemol, that implied a fiscal loss, the fiscal reform in UK, implying a reduction in terms of deferred liabilities and the disposal of Airwave, with no fiscal impact. Minority interests substracted 156 million euros in the period January-September 2007, a 42.8% year-on-year decrease mainly due to the merger by absorption of Telefonica Moviles, S.A. by Telefonica S.A. in July 2006. Minority stakes in Telesp and Telefonica O2 Czech Republic accounted for the bulk of profit attributable to minority interests. In all, consolidated net profit to September totalled 7,848 million euros, up 51.0% year-on-year. Basic earnings per share jumped 50.4% to 1.644 euros. In the third quarter, net income amounted to 4,018 million euros, 38.7% more than in the third quarter of 2006, while earnings per share stood at 0.849 euros compared to 0.6 euros per share in the third quarter of 2006. CapEx in the first nine months of 2007 totalled 5,027 million euros, down 0.8% year-on-year. Exchange rate effects detracted 1.2 percentage points However, CapEx is highly seasonal, so this trend should not be extrapolated for the full year. FINANCIAL TARGETS (9): The Telefonica Group reiterates its financial targets for 2007, upgraded in the second quarter 2007, specifically the following: â€¢ Growth in consolidated revenues of +8%/+10% compared to the initial target of +6/+9% â€¢ OIBDA growth of +10%/13% vs. +8%/11% previously announced. â€¢ OI growth of +19%/+23% vs. the previously announced guidance of +14%/+20%. â€¢ CapEx of less than 8,100 million euros vs. the initial estimate of < 7,814 million euros. -------------------------------------------------------------------------------- 9 2006 figures include eleven months of the O2 Group (consolidated from February 2006), eight months of Telefonica Telecom (consolidated from May 2006), six months of Iberbanda (consolidated from July 2006), three months of losses for the start-up of operations in Slovakia, while Endemol and Airwave results are excluded. 2007 guidance assumes constant exchange rates from 2006 and excludes changes in the consolidation perimeter. In terms of guidance calculations, OIBDA and OI exclude exceptional revenues and expenses not foreseeable in 2007. Staff restructuring and real estate plans are included as operating revenues/expenses except those which are decided on after guidance has been announced. For comparative purposes, equivalent extraordinary revenues/expenses recorded in 2006 have also been deducted from the reported figures. CapEx excludes investments related to the real estate efficiency plan. TELEFONICA GROUP Financial Data SELECTED FINANCIAL DATA Unaudited figures (Euros in millions) January - September 2007 2006 % Chg Revenues 42,014 38,704 8.6 Operating income before D&A (OIBDA) 18,248 14,654 24.5 Operating income (OI) 11,263 7,460 51.0 Income before taxes 9,275 5,592 65.9 Net income 7,848 5,198 51.0 Basic earnings per share 1.644 1.093 50.4 Weighted average number of ordinary shares outstanding during the period (millions) 4,772.3 4,754.0 0.4 Note: Figures are presented considering the Purchase Price Allocation of O2 as of February 2006. Note: For the basic earnings per share calculation purposes, the weighted average number of ordinary shares outstanding during the period have been obtained applying IFRS rule 33 'Earnings per share'. Thereby, there are not taking into account as outstanding shares the weighted average number of shares held as treasury stock during the period. TELEFONICA GROUP RESULTS BY REGIONAL BUSINESS UNITS Unaudited figures (Euros in millions) REVENUES OIBDA OPERATING INCOME January - September January - September January - September 2007 2006 % Chg 2007 2006 % Chg 2007 2006 % Chg Telefonica Espana 15,462 14,720 5.0 7,384 6,863 7.6 5,590 4,949 13.0 Telefonica Latinoamerica 14,676 13,242 10.8 5,309 4,811 10.4 2,760 2,059 34.1 Telefonica O2 Europe (1) 10,776 9,434 14.2 4,151 2,798 48.3 1,585 336 371.8 Other companies and eliminations (2) 1,101 1,308 (15.9) 1,403 182 n.m. 1,328 116 n.m. Total Group 42,014 38,704 8.6 18,248 14,654 24.5 11,263 7,460 51.0 Note: Figures are presented considering the Purchase Price Allocation of O2 as of February 2006. Note: OIBDA for wireline operations in Latin America is presented after management fees. (1) Telefonica O2 Europe includes in 2006 Telefonica O2 Czech Republic (January-September), T. Deutschland (January- September) and O2 Group (February-September) (2) OIBDA and Operating Income exclude the variation in investment valuation allowances accounted by Telefonica S.A. CAPEX BY REGIONAL BUSINESS UNITS Unaudited figures (Euros in millions) January - September 2007 2006 % Chg Telefonica Espana 1,571 1,457 7.8 Telefonica Latinoamerica 1,885 1,628 15.7 Telefonica O2 Europe (1) 1,450 1,675 (13.4) Other companies and eliminations 121 306 (60.4) Total Group 5,027 5,067 (0.8) Note: Group CapEx in 2006 at cumulative average exchange rate. (1) Telefonica O2 Europe includes in 2006 Telefonica O2 Czech Republic (January-September), T. Deutschland (January- September) and O2 Group (February-September) TELEFONICA GROUP CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Revenues 42,014 38,704 8.6 14,188 13,542 4.8 Internal exp capitalized in fixed assets (1) 497 524 (5.1) 160 182 (12.2) Operating expenses (27,050) (25,003) 8.2 (8,927) (8,474) 5.3 Supplies (13,254) (11,985) 10.6 (4,411) (4,246) 3.9 Personnel expenses (5,315) (5,201) 2.2 (1,670) (1,612) 3.6 Subcontracts (7,220) (6,652) 8.5 (2,427) (2,251) 7.8 Bad Debt Provisions (537) (484) 10.9 (178) (128) 38.7 Taxes (725) (681) 6.5 (242) (238) 1.6 Other net operating income (expense) 166 219 (24.4) 185 94 96.3 Gain (loss) on sale of fixed assets 2,634 224 n.s. 1,375 72 n.m. Impairment of goodwill and other assets (13) (14) (7.5) (2) (4) (40.5) Operating income before D&A (OIBDA) 18,248 14,654 24.5 6,979 5,412 29.0 Depreciation and amortization (6,985) (7,194) (2.9) (2,272) (2,460) (7.6) Operating income (OI) 11,263 7,460 51.0 4,707 2,952 59.5 Profit from associated companies 107 61 75.6 26 21 22.9 Net financial income (expense) (2,095) (1,929) 8.6 (657) (738) (10.9) Income before taxes 9,275 5,592 65.9 4,075 2,235 82.4 Income taxes (1,271) (1,717) (25.9) (15) (831) (98.2) Income from continuing operations 8,004 3,875 106.5 4,061 1,404 189.3 Income (Loss) from discontinued ops. 0 1,596 n.m. 0 1,577 n.m. Minority interest (156) (273) (42.8) (43) (84) (48.4) Net income 7,848 5,198 51.0 4,018 2,897 38.7 Weighted average number of ordinary shares outstanding during the 4,772.3 4,754.0 0.4 4,730.2 4,828.1 (2.0) period (millions) Basic earnings per share 1.644 1.093 50.4 0.849 0.600 41.6 Note: Figures are presented considering the Purchase Price Allocation of O2 as of February 2006. 'Bad debt provisions' have been reclassified from 'Other net operating income (expense)' to 'Operating expenses'. (1) Including work in process. Note: For the basic earnings per share calculation purposes, the weighted average number of ordinary shares outstanding during the period have been obtained applying IFRS rule 33 'Earnings per share'. Thereby, there are not taking into account as outstanding shares the weighted average number of shares held as treasury stock during the period. TELEFONICA GROUP CONSOLIDATED BALANCE SHEET Unaudited figures (Euros in millions) January - September 2007 2006 % Chg Non-current assets 85,150 90,426 (5.8) Intangible assets 18,554 20,986 (11.6) Goodwill 20,045 21,828 (8.2) Property, plant and equipment and Investment property 32,065 33,428 (4.1) Long-term financial assets and other non-current assets 6,343 5,981 6.1 Deferred tax assets 8,143 8,202 (0.7) Current assets 20,473 19,128 7.0 Inventories 1,002 1,052 (4.8) Trade and other receivables 10,258 9,709 5.7 Current tax receivable 1,174 1,468 (20.1) Short-term financial investments 1,482 1,788 (17.1) Cash and cash equivalents 6,545 5,101 28.3 Non-current assets classified as held for sale 13 9 40.8 Total Assets = Total Equity and Liabilities 105,623 109,554 (3.6) Equity 22,410 19,185 16.8 Equity attributable to equity holders of the parent 19,700 16,397 20.1 Minority interest 2,710 2,788 (2.8) Non-current liabilities 58,142 63,908 (9.0) Long-term financial debt 47,362 51,647 (8.3) Deferred tax liabilities 4,004 4,727 (15.3) Long-term provisions 5,783 6,545 (11.6) Other long-term liabilities 993 988 0.5 Current liabilities 25,071 26,462 (5.3) Short-term financial debt 6,458 8,975 (28.0) Trade and other payables 8,542 8,782 (2.7) Current tax payable 2,671 2,529 5.6 Short-term provisions and other liabilities 7,400 6,176 19.8 Liabilities associate with non-current assets classified 'held for sale' 0 0 n.m. Financial Data Net Financial Debt (1) 44,004 52,239 (15.8) Note: Figures are presented considering the Purchase Price Allocation of O2 as of February 2006. (1) Net Financial Debt = Long term financial debt + Other long term liabilities + Short term financial debt - Short term financial investments - Cash and cash equivalents - Long term financial assets and other non-current assets. TELEFONICA GROUP FREE CASH FLOW AND CHANGE IN DEBT Unaudited figures (Euros in millions) January - September 2007 2006 % Chg I Cash flows from operations 14,068 13,730 2.5 II Net interest payment (1) (2,373) (1,711) III Payment for income tax (1,157) (879) A=I+II+III Net cash provided by operating activities 10,538 11,140 (5.4) B Payment for investment in fixed and intangible assets (5,067) (4,982) C=A+B Net free cash flow after CAPEX 5,471 6,158 (11.2) D Net Cash received from sale of Real Estate 29 24 E Net payment for financial investment 4,846 (21,302) F Net payment for dividends and treasury stock (2) (3,321) (3,521) G=C+D+E+F Free cash flow after dividends 7,024 (18,641) c.s. H Effects of exchange rate changes on net financial debt (421) (616) I Effects on net financial debt of changes in consolid. and (696) 4,147 others J Net financial debt at beginning of period 52,145 30,067 K=J-G+H+I Net financial debt at end of period 44,004 52,239 (15.8) (1) Including cash received from dividends paid by subsidiaries that are not under full consolidation method. (2) Dividends paid by Telefo S.A. and dividend payments to minoritaries from subsidiaries that are under full consolidation method and treasury stock. RECONCILIATIONS OF CASH FLOW AND OIBDA MINUS CAPEX Unaudited figures (Euros in millions) January - September 2007 2006 % Chg OIBDA 18,248 14,654 24.5 - CapEx accrued during the period (5,027) (5,067) - Payments related to commitments (587) (616) - Net interest payment (2,373) (1,711) - Payment for income tax (1,157) (879) - Results from the sale of fixed assets (2,634) (224) - Invest. in working cap. and other deferred income and exp (1,000) 1 = Net Free Cash Flow after CapEx 5,471 6,158 (11.2) + Net Cash received from sale of Real Estate 29 24 - Net payment for financial investment 4,846 (21,302) - Net payment for dividends and treasury stock (3,321) (3,521) = Free Cash Flow after dividends 7,024 (18,641) c.s. Note: The concept expected 'Free Cash Flow' was introduced to reflect the amount of cash flow available to remunerate Telefo S.A. Shareholders, to protect solvency levels (financial debt and commitments), and to accomodate strategic flexibility. The differences with the caption 'Net Free Cash Flow after CapEx' included in the table presented above, are related to 'Free Cash Flow' being calculated before payments related to commitments (workforce reductions and guarantees) and after dividend payments to minoritaries, due to cash recirculation within the Group. Jan-Sep 2007 Jan-Sep 2006 Net Free Cash Flow after CapEx 5,471 6,158 + Payments related to cancellation of commitments 587 616 - Ordinary dividends payment to minoritaries (99) (289) = Free Cash Flow 5,959 6,486 Weighted average number of ordinary shares outstanding during the period (millions) 4,772.3 4,754.0 = Free Cash Flow per share 1.249 1.364 NET FINANCIAL DEBT AND COMMITMENTS Unaudited figures (Euros in millions) September 2007 Long-term debt 47,646 Short term debt including current maturities 6,458 Cash and Banks (6,545) Short and Long-term financial investments (1) (3,556) A Net Financial Debt 44,004 Guarantees to IPSE 2000 365 B Commitments related to guarantees 365 Gross commitments related to workforce reduction (2) 4,802 Value of associated Long-term assets (3) (670) Taxes receivable (4) (1,475) C Net commitments related to workforce reduction 2,657 A + B + C Total Debt + Commitments 47,026 Net Financial Debt / OIBDA (5) 2.1x Total Debt + Commitments/ OIBDA (5) 2.3x (1) Short term investments and certain investments in financial assets with a maturity profile longer than one year, whose amount is included in the caption 'Investment' of the Balance Sheet. (2) Mainly in Spain. This amount is detailed in the caption 'Provisions for Contingencies and Expenses' of the Balance Sheet, and is the result of adding the following items: 'Provision for Pre-retirement, Social Security Expenses and Voluntary Severance', 'Group Insurance', 'Technical Reserves', and 'Provisions for Pension Funds of Other Companies'. (3) Amount included in the caption 'Investment' of the Balance Sheet, section 'Other Loans'. Mostly related to investments in fixed income securities and long-term deposits that cover the materialization of technical reserves of the Group insurance companies. (4) Net present value of tax benefits arising from the future payments related to workforce reduction commitments. (5) Calculated based on September 2007 OIBDA, excluding results on the sale of fixed assets and proportionally annualized. TELEFONICA GROUP EXCHANGES RATES APPLIED P&L and CapEx (1) Balance Sheet (2) Jan - Sep 2007 Jan - Sep 2006 September 2007 September 2006 USA (US Dollar/Euro) 1.344 1.243 1.418 1.266 United Kingdom (Sterling/Euro) 0.677 0.685 0.697 0.678 Argentina (Argentinean Peso/Euro) 4.172 3.821 4.466 3.930 Brazil (Brazilian Real/Euro) 2.688 2.714 2.607 2.753 Czech Republic (Czech Crown/Euro) 28.076 28.441 27.605 28.330 Chile (Chilean Peso/Euro) 710.657 659.895 724.873 679.880 Colombia (Colombian Peso/Euro) 2,808.805 2,948.089 2,854.488 3,034.691 El Salvador (Colon/Euro) 11.756 10.880 12.407 11.078 Guatemala (Quetzal/Euro) 10.313 9.462 10.994 9.649 Mexico (Mexican Peso/Euro) 14.714 13.543 15.490 13.945 Nicaragua (Cordoba/Euro) 24.625 21.707 26.468 22.510 Peru (Peruvian Nuevo Sol/Euro) 4.261 4.093 4.393 4.111 Uruguay (Uruguayan Peso/Euro) 32.199 29.898 32.824 30.257 Venezuela (Bolivar/Euro) 2,888.586 2,673.433 3,048.485 2,721.900 (1) These exchange rates are used to convert the P&L and CapEx accounts of the Group foreign subsidiaries from local currency to euros. (2) Exchange rates as of 30/Sep/07 and 30/Sep/06. RESULTS BY REGIONAL BUSINESS UNITS Telefonica Espana In third quarter 2007 Telefonica Espana Group extended the healthy earnings trend seen in the first half, underpinned by the strength of its competitive positioning in the wireline and wireless businesses. Revenues climbed 5.0% to 15,462 million euros in the January-September 2007 period, and OIBDA jumped by 7.6% to 7,384 million euros during the same period, leaving an OIBDA margin of 47.8%. The following should be highlighted in Telefonica Espana Wireline Business: â€¢ Sustained topline growth (+3.7% in the nine months to September 2007 over same period 2006) underpinned fundamentally by growth in Internet and Broadband, where revenues surged 16.8% year-on-year. â€¢ Competitive strength in the Broadband market, with Telefo maintaining an estimated market share slightly above 56%. â€¢ Leadership in Pay TV market growth during third quarter 2007, reaching a 12% estimated market share at the end of September. â€¢ Contained losses of fixed telephony lines, with year-on-year decline maintained at 0.7%. â€¢ Significant 5.6% underlying OIBDA growth (once stripped out special effects such as the redundancy programme, the real estate plan and subsidies) in the nine months to September 2007. The following are note worthy in Telefonica Espana Wireless Business: â€¢ Service revenues grew by 5.2% year-on-year in the nine months to September, driven by the strong performance of customer revenues (+8.8%). â€¢ Commercial activity during the third quarter (up 5.3% on third quarter 2006) and the churn containment (churn in the contract segment was lower year-on-year) drove the customer base 6.7% higher vs. September 2006, with a noteworthy 13.1% jump of post pay customer base. â€¢ Data revenues grew by 14.5% in the period January-September 2007 vs. same period 2006, with connectivity revenues posting the strongest performance. â€¢ On-going solid OIBDA growth in the first nine months of the year of 6.9%, with an OIBDA margin of 45.8%. RESULTS BY REGIONAL BUSINESS UNITS Telefonica Espana WIRELINE BUSINESS Revenues in the January-September 2007 period amounted to 9,219 million euros, with growth vs. nine months to September 2006 reaching 3.7%. Year-on-year revenue growth in the third quarter was 3.4%. Topline growth was underpinned by strong performances in Internet and broadband service revenues in addition to higher IT and data service revenues. Meanwhile the declines in voice revenues continued to narrow. Traditional access revenues through September amounted to 2,084 million euros, a year-on-year increase of 0.2% relative to nine months to September 2006, led by fewer losses of fixed telephony accesses and the 2.0% increase in the PSTN line monthly fee. â€¢ So far this year, growth in the Spanish wireline market has remained steady at en estimated 2.1%, in clear contrast to the prevailing trend in other European markets. Telefonica Espana's fixed telephony accesses totalled 15,865,165 at the end of the third quarter in the wake of net quarterly line losses of 40,996. This figure is equivalent to a year-on-year decline of 0.7%, the same rate recorded last quarter (second quarter 2007). The strong performance during the third quarter means that January-September 2007 net line losses were contained at 84,702, down substantially on those recorded in January-September 2006 (157,429 net access losses). â€¢ Telefonica's share of the wireline access market remained stable vs. June 2007 at an estimated 81%. Traditional voice service revenues rose 0.6% year-on-year in the third quarter 2007, thus limiting year-on-year decline in the first nine months to 2.1%. The strong third quarter performance is underpinned by an 8.2% jump in interconnection revenues, driven by higher incoming international and carrier traffic, and the narrower fall (-0.8%) in voice revenues. â€¢ The number of pre-selected lines continues to fall, declining by 89,202 so far this year to 1,817,317 at the end of September. â€¢ In line with the positive trend in revenues, Telefonica Espana's estimated share of wireline traffic remains unchanged at 65%. Internet and broadband revenues surged by 13.4% in the third quarter, boosted by revenues in the retail broadband segment which were 22.5% higher year-on-year. Internet and broadband revenues rose 16.8% in January-September 2007 vs. same period 2006. Year-to-date retail broadband service revenues are up 26.9%, accounting for 4.1 percentage points of the growth in revenues at Telefonica Espana's wireline business. Meanwhile, wholesale broadband service cumulative revenues fell 11.7% year-on-year mainly on account on lower growing revenues per ULL in both unbundled and shared access loops. â€¢ Estimated net adds in the fixed broadband Internet access market in the third quarter amounted to 0.2 million, leading to 1 million cumulative net adds for the Spanish market in the nine months to September 2007; estimated net adds for the January-September 2007 period were 13.8% lower than those of the January-September 2006 period. At the end of the third quarter, the size of the Spanish market is estimated at 7.7 million accesses. â€¢ Telefonica's retail Internet broadband net adds during the third quarter came to 145,756, taking total accesses to 4,344,119 by the end of September. This gave Telefonica continued segment leadership with an estimated market share slightly above 56%. â€¢ Unbundled loops accounted for a steady 16% share of the broadband Internet access market as of September 2007 end. Net adds during the quarter amounted to 67,844 loops, 29.7% less than a year earlier. Total unbundled loops at the end of September amounted to 1,237,852, of which 57.6% were shared access loops. â€¢ Wholesale ADSL accesses smoothed their declining trend during the third quarter due to slower growth in unbundled loops. In the wake of net third quarter losses of 17,536, total wholesale accesses amounted to 512,921 at the end of September 2007. â€¢ Telefo continues to spearhead the development of the pay TV market in Spain, reaching a 12% estimated share of the Spanish pay TV market by September 2007. Net adds in the third quarter amounted 18,142, to bring overall customer base to 469,067 subscribers at the end of September. â€¢ The total number of Duo and Trio bundles stood at 3,528,313 units at the end of September 2007; almost 11% of this figure is accounted for by triple play subscribers. Revenues from data services rose 5.6% year-on-year in the first nine months of 2007. This growth is underpinned by the strong performance of Virtual Private Networks (VPNs), which were 20% higher driven by the strong uptake in fibre and ADSL VPNs. IT service revenues in the first nine months of the year rose a noteworthy 18.8% year-on-year. Operating expenses at Telefonica Espana Wireline Business totalled 5,152 million euros in January-September 2007, 3.1% less than in January-September 2006. This fall relates to the 70.4% lower workforce restructuring provision during the first nine months of 2007 vs. same period 2006. A restructuring provision amounting 116 million euros was accounted for in the nine months to September 2007, linked to 445 employees joining the Redundancy Plan (E.R.E.), compared to the 392 million euros E.R.E. provision for the January-September 2006 period. Stripping the E.R.E. effect out, operating expenses were 2.2% higher in the first nine months of 2007. This growth was shaped by an 8.4% increase in external services to 1,022 million euros reflecting stronger commercial activity through the year, and a 1.7% increase in supplies, mainly in connection with the purchase of equipment for resale and content for Imagenio, which totalled 2,213 million euros. Personnel expenses amounted to 1,706 million euros, dropping 14.3% year-on-year vs. January-September 2006, or by 0.6% excluding redundancy provisions from both years and the actuarial review Topline growth outpaced expenses excluding the E.R.E. provisions. This, together with the lower E.R.E. provision in the first nine months of 2007, boosted January-September 2007 operating income before depreciation and amortization (OIBDA) 7.9% higher year-on-year to 4,068 million euros. In the third quarter of 2007, OIBDA amounted 1,442 million euros, slightly under that of the third quarter 2006 (-0.4%). This reflects a 22 million euros E.R.E. provision in the third quarter 2007 (compared to no charge in third quarter 2006) and 86 million euros real estate capital gains recognised during July-September 2006. Stripping out specific items such as the E.R.E. provisions, the real estate programme, subsidies and the fine imposed by the EU and recognised in the second quarter, and others, year-on-year underlying OIBDA growth stood at 5.6% for the nine months to September 2007, in line with the growth recorded in the first half 2007, after reaching 5.6% in the third quarter. OIBDA margin reached 44.1% for the January-September 2007. Excluding the effect of the E.R.E. provisions and the actuarial review in both years, as well as the E.U. fine recognised in the second quarter, the OIBDA margin would have expanded by 0.2 percentage points to 47.0%. RESULTS BY REGIONAL BUSINESS UNITS Telefonica Espana WIRELESS BUSINESS The Spanish wireless market surpassed the 49.5 million-line mark by the end of September 2007, with an estimated penetration rate of over 108% (+6 percentage points vs. September 2006). In this context, Telefonica Espana Wireless Business posted net adds of 317,038 lines in the third quarter of 2007 (364,698 in the third quarter of 2006), boosted by the summer campaign and churn containment. The contract segment is driving this growth, posting 341,891 net adds in the third quarter of 2007 (335,214 in the third quarter of 2006). Year-to-date, Telefonica Espana's net adds are running at 973,759 lines (1,129,792 in the first nine months of 2006), with a noteworthy number of added customers in the contract segment (1,118,751, up 9.1% on the first nine months of 2006). Commercial activity in the third quarter of 2007 was more intense than in the same period of the year before, with 2.8 million commercial actions (up 5.3%) driving the total customer base to over 22.4 million (+6.7% vs. September 2006). As with the preceding quarters, the contract segment increased strongly with a year-on-year growth of 13.1% to represent more than 59% of the total customer base (3.4 percentage points more than in September 2006). In portability, lines were added on balance in the third quarter of 2007, underpinned by the strong performance of the high value segment, with 59,156 net contract adds. For the first nine months the net portability balance therefore narrowed to a loss of 5,413 lines, with cumulative net adds in the contract segment of 201,727 lines. Strong gross adds (up 4.5% in the third quarter of 2007) and good churn performance were key to the healthy commercial results achieved by the company. During the third quarter of 2007 churn was 1.8%, virtually unchanged compared to the third quarter of 2006 (+0.1 percentage points), despite more intense competition. The positive performance of contract churn this quarter, at 0.98%, was noteworthy and slightly lower than the last quarter and the one reached in the third quarter of 2006 (-0.02 percentage points). Once again, residential segment handset upgrades (+11.6% vs. the third quarter of 2006) played a relevant role in customer loyalty. In terms of usage, the summer campaign, over 1.7 million sign-ups, drove traffic carried 14.9% higher year-on-year in the third quarter to 16,883 million minutes. On-net traffic rose a noteworthy 23.1% in the third quarter of 2007. MoU amounted to 168 minutes (+6.2% vs. the third quarter of 2006). Voice ARPU reached 28.3 euros in the third quarter, 3.4% lower than in the third quarter of 2006. The decrease was caused by the October 2006 and April 2007 cuts in interconnection rates (-13.9% in all). Outgoing voice ARPU held virtually despite lower prices and the summer promotional campaign. Meanwhile, data ARPU reached 4.9 euros in the third quarter, year-on-year growth of 6.1% (with an increase of 6.3% in outgoing data ARPU). The growth in data ARPU is underpinned by the strong performance in data connectivity revenues (up 57%), in non P2P SMS revenues (up 24%) and by the new data rate plans launched during the second quarter. Interpersonal communications represented just 54% of revenues for the quarter, with the remainder accounted for by advanced connectivity (14%) and content services (32%). The company has almost 190,000 customers on data flat rate and e-mail plans. The third quarter also featured additional increases in the overall number of UMTS/HSDPA handsets held by Telefo Espan customers to close to 2.9 million as commercial activity was adapted to market evolution. As a result, total ARPU in the third quarter of 2007 was 33.1 euros, 2.1% lower than in the third quarter of 2006 due to the cuts in interconnection rates, which more than offset the growth in outgoing ARPU (up 0.2% year-on-year). Revenues rose 3.6% in the third quarter to 2,536 million euros and by 6.1% in the first nine months to 7,287 million euros, driven by higher customer revenues. It is worth noting that since the 1st of January 2007 there has been a change in the way of accounting pre-pay sales and top-up commissions which changed from being registered as minor revenues to being added to costs and the registering of revenues/costs of portability transit routing which are now registered for the net amounts. The net effect of this change is neutral at the OIBDA level, although revenues would have risen 3.3% year-on-year in the third quarter of 2007 and 5.9% year-on-year in the first nine months of 2007 excluding these accounting changes. Highlights by revenue item: â€¢ Service revenues grew 3.3% year-on-year in the third quarter of 2007 to 2,245 million euros, and were up 5.2% year-on-year in the first nine months of 2007. This growth was driven mainly by growth in customer revenues, which rose 7.2% year-on-year in the third quarter of 2007 to 1,801 million euros and 8.8% year-on-year in the first nine months of 2007 on the back of the sharp year-on-year increase in the total customer base, particularly in the contract segment, and by increased data usage (data revenues were 14.5% higher in the first nine months of the year). â€¢ Interconnection revenues fell 11.8% year-on-year in the third quarter of 2007 (-7.8% in nine months of 2007), due to the impact of the reduction in interconnection rates. â€¢ Roaming revenues fell 11.7% due to the downward trend in wholesale prices (-13.8% in the nine months of 2007). â€¢ Revenue from handset sales hit the 291 million-euro mark in the third quarter, a 6.7% increase over the third quarter of 2006. Year-to-date, handset sale revenues are up 13.5%. Operating costs rose 1.2% year-on-year in the third quarter to 1,333 million euros, driven by higher efficiency in costs. Cumulative growth in costs for the first nine months of the year is running at 5.5%. Driven by topline growth and by the good evolution of costs, operating income before depreciation and amortization (OIBDA) in the third quarter of 2007 amounted to 1,226 million euros, an increase of 6.7% over the same period last year. The third quarter OIBDA margin stood at 48.3%, 1.4 percentage points higher than in the third quarter of 2006. OIBDA is up 6.9% year-to-date, while the margin is running at 45.8% (vs. 45.5% in the first nine months of 2006). TELEFONICA ESPANA ACCESSES Unaudited figures (thousands) 2006 2007 September December March June September % Chg y-o-y Final Clients Accesses 41,951.0 42,620.8 43,115.8 43,508.2 43,885.2 4.6 Fixed telephony accesses (1) 15,978.1 15,949.9 15,920.3 15,906.2 15,865.2 (0.7) Internet and data accesses 4,648.8 4,842.0 4,963.2 5,048.4 5,131.3 10.4 Narrowband 1,177.7 1,040.5 916.0 798.1 736.5 (37.5) Broadband (2) 3,411.3 3,742.7 3,992.7 4,198.4 4,344.1 27.3 Other (3) 59.8 58.8 54.4 52.0 50.7 (15.2) Mobile accesses 21,019.7 21,446.0 21,813.7 22,102.7 22,419.7 6.7 Pre-pay 9,290.7 9,303.0 9,283.8 9,182.9 9,158.0 (1.4) Contract 11,729.0 12,142.9 12,529.9 12,919.8 13,261.7 13.1 Pay TV 304.4 383.0 418.6 450.9 469.1 54.1 Wholesale Accesses 1,406.5 1,531.8 1,640.8 1,707.8 1,757.2 24.9 Unbundled loops 774.8 939.0 1,071.2 1,170.0 1,237.9 59.8 Shared ULL 438.5 527.7 605.2 664.5 713.5 62.7 Full ULL 336.3 411.3 466.0 505.5 524.4 55.9 Wholesale ADSL 625.2 586.4 561.7 530.5 512.9 (18.0) Other (4) 6.5 6.4 7.8 7.4 6.5 0.4 Total Accesses 43,357.5 44,152.6 44,756.6 45,216.0 45,642.5 5.3 (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) ADSL, satellite, optical fibre, cable modem and broadband circuits. (3) Leased lines. (4) Wholesale circuits. Note: Does not include Iberbanda's accesses TELEFONICA ESPANA CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Revenues 15,462 14,720 5.0 5,271 5,055 4.3 Internal exp capitalized in fixed assets (1) 161 150 7.6 50 49 0.2 Operating expenses (8,138) (8,102) 0.5 (2,688) (2,599) 3.4 Other net operating income (expense) (79) 24 c.s. 38 11 n.m. Gain (loss) on sale of fixed assets (7) 83 c.s. (7) 72 c.s. Impairment of goodwill and other assets (14) (11) 22.4 (2) (4) (37.8) Operating income before D&A (OIBDA) 7,384 6,863 7.6 2,661 2,585 3.0 Depreciation and amortization (1,794) (1,914) (6.3) (587) (623) (5.8) Operating income (OI) 5,590 4,949 13.0 2,074 1,962 5.8 Note: 'Bad debt provisions' have been reclassified from 'Other net operating income (expense)' to 'Operating expenses'. (1) Including work in process. TELEFONICA ESPANA: WIRELINE BUSINESS SELECTED FINANCIAL DATA Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Revenues 9,219 8,894 3.7 3,074 2,973 3.4 OIBDA 4,068 3,770 7.9 1,442 1,448 (0.4) OIBDA margin 44.1% 42.4% 1.7 p.p. 46.9% 48.7% (1.8 p.p.) CapEx 1,062 1,049 1.2 337 373 (9.7) TELEFONICA ESPANA: WIRELINE BUSINESS SELECTED REVENUES DATA Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Traditional Access (1) 2,084 2,079 0.2 694 696 (0.4) Traditional Voice Services 3,589 3,666 (2.1) 1,201 1,194 0.6 Domestic Traffic (2) 2,192 2,275 (3.6) 726 732 (0.8) Interconnection (3) 715 696 2.8 253 234 8.2 Handsets sales and others (4) 681 695 (2.0) 222 228 (2.9) Internet Broadband Services 2,058 1,763 16.8 685 604 13.4 Narrowband 77 118 (34.1) 23 37 (38.2) Broadband 1,981 1,645 20.4 662 567 16.8 Retail (5) 1,737 1,369 26.9 587 479 22.5 Wholesale (6) 244 276 (11.7) 75 88 (14.2) Data Services 851 806 5.6 283 273 3.8 IT Services 304 256 18.8 102 90 13.2 Note: Telefonica de Espana parent company's operating revenues includes Terra Espana's revenues as of the first quarter 2006. (1) Monthly and connection fees (PSTN, Public Use Telephony, ISDN and Corporate Services) and Telephone booths surcharges. (2) Local and domestic long distance (provincial and interprovincial) traffic, Intelligent Network Services, Special Valued Services, Information Services (118xy), bonusses and others. (3) Includes revenues from fixed to fixed incoming traffic, fixed to mobile incoming traffic, and transit and carrier traffic. (4) Managed Voice Services and other businesses revenues. (5) Retail ADSL services and other Internet Services. (6) Includes Megabase, Megavi, GigADSL and local loop unbundling. TELEFONICA ESPANA: WIRELESS BUSINESS SELECTED FINANCIAL DATA Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Revenues 7,287 6,866 6.1 2,536 2,446 3.6 OIBDA 3,340 3,125 6.9 1,226 1,149 6.7 OIBDA margin 45.8% 45.5% 0.3 p.p. 48.3% 47.0% 1.4 p.p. CapEx 510 409 24.7 204 168 21.7 TELEFONICA ESPANA: WIRELESS BUSINESS SELECTED REVENUES DATA Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Service Revenues 6,398 6,084 5.2 2,245 2,174 3.3 Customer Revenues 5,143 4,729 8.8 1,801 1,680 7.2 Interconnection 1,039 1,127 (7.8) 345 391 (11.8) Roaming - In 176 204 (13.8) 83 93 (11.7) Other 40 23 72.6 17 9 91.2 Handset 888 783 13.5 291 273 6.7 TELEFONICA ESPANA: WIRELESS BUSINESS SELECTED OPERATING DATA Unaudited figures 2006 2007 September December March June September % Chg y-o-y Mobile customer (thousands) 21,019.7 21,446.0 21,813.7 22,102.7 22,419.7 6.7 Pre-pay 9,290.7 9,303.0 9,283.8 9,182.9 9,158.0 (1.4) Contract 11,729.0 12,142.9 12,529.9 12,919.8 13,261.7 13.1 3Q 4Q 1Q 2Q 3Q % Chg MOU (minutes) 158 157 160 159 168 6.2 Pre-pay 71 66 74 67 89 25.0 Contract 228 228 224 225 223 (2.1) ARPU (EUR) 33.9 33.0 31.7 32.8 33.1 (2.1) Pre-pay 17.6 15.9 14.9 15.7 16.5 (6.3) Contract 46.9 45.7 44.3 45.1 44.8 (4.5) Data ARPU 4.6 5.0 4.6 4.6 4.9 6.1 %non-P2PSMS over data revenues 43.9% 45.3% 48.1% 49.5% 48.4% 4.5 p.p. Note: MOU and ARPU calculated as monthly quarterly average. RESULTS BY REGIONAL BUSINESS UNITS Telefonica Latinoamerica In accordance with the Group's new structure, Telefonica Latinoamerica's results include Telefonica Group's fixed line and wireless operators' results in the Latin American region. Furthermore, figures for the Telefonica Latinoamerica Group also include the results of Telefonica Telecom, from the 1st of May 2006. Year-on-year the currencies of the countries in which in Telefonica Latinoamerica's operates have all depreciated relative to the euro with the exception of the Brazilian real and the Colombian peso, whose average exchange rate show an appreciation of 0.9% and 5.0%, respectively. This has detracted 3.7 percentage points and 3.5 percentage points from revenue and OIBDA growth, respectively although less than in previous quarters (currency effects reduced revenue and OIBDA growth by 5.0 percentage points and 4.9 percentage points in the first six months, and both revenues and OIBDA by 8.1 percentage points in the first quarter of 2007). Revenues at Telefonica Latinoamerica in the first nine months of 2007 rose 10.8% year-on-year in current euros to 14,676 million euros. In constant euros revenue growth was 14.5%, with Telefonica Telecom contributing 1.9 percentage points of the total. In constant currency terms, the countries contributing most to topline growth, leaving aside Colombia due to the change in the consolidation perimeter, Mexico and Venezuela are particularly noteworthy, each contributing 3.1 percentage points, followed by Argentina (+2.0 percentage points). In absolute terms, Brazil remains Telefonica Latinoamerica's greatest contributor accounting for 38.4% of the total revenues, followed by Venezuela (11.7%) and Argentina (11.4%). Operating income before depreciation and amortization (OIBDA) jumped 10.4% in current euros to 5,309 million euros. In constant currency terms, OIBDA growth in Telefonica Latinoamerica increased to 13.8%, with Telefonica Telecom contributing 2.0 percentage points. By country, Venezuela contributed most to OIBDA growth (+4.9 percentage points), followed by Mexico (+3.2 percentage points) and Colombia (+2.4 percentage points), the latter shaped by the change in the consolidation perimeter. In absolute terms, Brazil is Telefonica Latinoamerica's greatest contributor accounting for 41.9% of total OIBDA, followed by Venezuela (14.2%) and Argentina (11.4%). Telefonica Latinoamerica's CapEx amounted to 1,885 million euros at the end of September (an increase of 15.7% in current euros and of 19.9% in constant euros). Investment was largely deployed in the expansion of the broadband and TV businesses in addition to enhancing its GSM networks. At the end of the third quarter Telefonica Latinoamerica generated operating cash flow (OIBDA-CapEx) of 3,425 million euros, recording a growth of 7.6% in current euros (+10.7% in constant euros). At the end of September 2007, Telefonica Latinoamerica managed 126.5 million accesses, a year-on-year increase of 14.9%, boosted by growth of 20.2% in cellular customers to over 94.7 million. This advance in mobile customers reflects healthy growth in nearly all countries, with noteworthy growth in Mexico (up 48.8% year-on-year) to surpass the 11 million mark, in Argentina (+28.8%) with over 13 million customers and Peru (+60.0%). Fixed telephony accesses reached 24.0 million, in line with those managed a year earlier, with significant growth in Peru (up 11.1% year-on-year) which alone almost compensated the relatively poorer performance in other countries. Regional growth in the Group's retail internet broadband accesses remained buoyant, up 34.4% year-on-year to over 4.7 million accesses, reflecting the sales and marketing efforts made by all the operators. Telefonica Latinoamerica already has 880,000 pay TV subscribers at its operations in Peru, Chile, Colombia and since third quarter 2007 in Brazil. BRAZIL In the first nine months of the year, Telefonica Latinoamerica generated revenues of 5,637 million euros in Brazil, with a year-on-year growth in local currency of 3.5% while operating income before depreciation and amortization (OIBDA) fell 5.4% to 2,226 million euros, as the significant improvement at Vivo was not sufficient to offset lower profits at Telesp, partly due to the recovery of past taxes in 2006. Meanwhile CapEx in the first nine months of the year amounted to 656 million euros, an increase of 12.3% year-on-year in local currency, driven by greater investments carried out by Telesp. From an operating standpoint, Telefonica Latinoamerica managed 46.6 million accesses in Brazil at 30 September 2007, 4.7% more than the year before. This growth reflects the 9.0% increase in Vivo's customer base, partially offset by a slight reduction in the number of fixed line accesses at Telesp and the changes to the accounting criteria used to record narrowband internet accesses made in the second quarter of 2007. TELESP At the end of the third quarter, Telesp managed 15.3 million accesses (fixed telephony and broadband), 3.0% less than the figure registered at the end of September, 2006, due both to the reduction in the number of fixed line accesses caused by the strong growth in the cellular business in the country and the implementation of a more restrictive accounting criteria (based on activity) for narrowband internet accesses. The company ended the quarter with 12.0 million fixed line accesses (-2.2% year-on-year), of which approximately 22% were pre-pay or lines with consumption limits. In the third quarter the broadband market continued to grow at a strong pace (over 39% year-on-year, slightly less than the 41% growth recorded in the previous quarter), and Telesp captured circa 56% of this increase, bringing its retail broadband accesses to 1.9 million (+30.4% year-on-year). Net adds in the third quarter were 124,300, 1.8% more than the previous quarter. It is worth highlighting the launch of the Trio Telefonica triple play bundle on 12th August, with different connection speed options and a range of TV content choices. On 30 September the company added GloboSat content to its menu, thereby increasing the value of its offer. Telesp carried slightly more traffic during the first nine months of the year (+0.3% year-on-year to reach 52,787 million minutes), due mainly to growth in long distance traffic between SMP mobile accesses (+31.2%) as a result of a joint marketing strategy undertaken with VIVO. Nonetheless, local traffic continued to fall (-1.1% year-on-year) due to the reduction in fixed lines on the back of the surge in mobile telephony and a stricter sales policy designed to reign in fraud and defaults. Fixed-mobile traffic fell a noteworthy 4.4% year-on-year as a result of heavy migration to wireless networks. To counteract this trend, the operator is focusing on the sale of traffic bundles; Telesp had 3.5 million bundled lines (monthly fee + local traffic bundles) at the end of September, which represents 29% of fixed line accesses, and 1.6 million traffic packages bundling long distance calling, fixed-mobile calls or narrowband internet access. It is worth highlighting the impact of traffic packages on long distance intra-state traffic which fell by just 2.2% year-on-year, as bundled minutes rose 8-fold year-on-year without having seen a big impact on revenues. The downward trend in inter-state traffic seen in recent quarters was plugged (+5.3% year-on-year in the first nine months of the year), partly due to larger discounts extended to corporate customers aimed to increase customer loyalty. From the regulatory standpoint, it is important to note migration process from invoicing by pulses to minutes, which commenced in mid March and was completed at the end of July with approximately 95% of customers in the Basic plan. On 13th July Anatel published its tariff adjustments for 2007. These entailed a 2.21% increase in the local basket (effective from 1st October), as well as for Domestic Long Distance rates. In addition, the regulator approved a 3.29% hike in the fixed to mobile rate (VCs) and of 2.25% in the fixed to mobile interconnection fee (VUM), all effective from 20th July. Telesp reported revenues of 4,154 million in the January-September period, down 1.0% year-on-year in local currency. This decrease was mainly due to the fall in traditional business revenues (-2.1% in local currency), following the tariff adjustment made in July 2006, the delay in implementing the new local calling rates until October, and the change in the customer mix with a higher percentage of lines with consumption limits. The 20% reduction in local interconnection rates implemented in January was also a contributing factor. The increase in broadband revenues (+14.8% in local currency), lagged broadband accesses growth due to more intense competition that drove ARPU down and was not sufficient to full offset the fall in traditional revenues. Internet revenues (narrowband and broadband) posted growth in line with the second quarter (+10.3%), to account for an increasing percentage of total revenues, as they weighted 9.4% at the end of September. Operating expenses increased by 6.1% year-on-year in local currency in the first nine months of the year, mainly due to higher external service expenses (+6.2% year-on-year in local currency) caused by stronger commercial activity. In addition, the company, after having finalized its billing systems migration process, has experienced an increase in bad debt, which has led to higher provisions for bad debts (+88.3% in local currency vs. the same period of 2006). The ratio of bad debt to revenues was 3.9%, less than the 4.1% figure already achieved in the January-June period. This has been the result of the implementation of various measures conceived to reign in bad debt. These include setting up strict entry filters and more actions to recover bad debts. Personnel expenses (+0.8% year-on-year in local currency) reflect the results of the workforce restructuring programmes carried out in March 2006 and February 2007, in addition to the impact of the headcount reduction made in June this year which affected 759 employees. Supply costs increased by 3.2% year-on-year in local currency despite the 20% reduction in the local interconnection tariff, mainly due to the rise in traffic with interconnection to other networks. Telesp reported operating income before depreciation and amortization (OIBDA) of 1,806 million euros in the first nine months of the year, down 10.5% year-on-year in local currency due to higher bad debt provisions, the loss of traditional business revenues and higher workforce restructuring costs (up 12.6% year-on-year in local currency). The comparison is further affected by the fact that in September 2006 Telesp recovered past taxes (Pis/Cofins). Stripping out this effect, OIBDA would have fallen by 4.9%, in line with the performance through to June. The OIBDA margin at 30th September 2007 stood at 43.5%, 4.6 percentage points lower than the year before, or 1.8 percentage points lower stripping out the taxes recovered in 2006. CapEx in the first nine months of the year was 482 million euros, 25.6% year-on-year in local currency higher than the figure reported the year before, due to greater investments in broadband and pay TV and higher cable theft (already reported in the previous quarter). This left operating cash flow (OIBDA-CapEx) of 1,324 million euros (down 18.9% year-on-year in local currency). VIVO Vivo's third quarter results continue to reflect the management measures implemented to achieve profitable growth and increase customer satisfaction as evidenced by the significant growth in the customer base. Despite scant loss of market share, ARPU jumped significantly quarter-on-quarter and year-on-year. Also noteworthy is the strong take-up of Vivo's GSM technology, with current coverage of more than 99% of the towns where the company operates. Vivo made 77% of gross adds in the quarter in this technology, putting its GSM customer base at the end of September over 6.7 million, 22% of its total customer base. Vivo is still the only operator to provide solutions using two technologies, offering CDMA/EVDO technology as the best data solution on the market. It has been leveraging this technology to steadily grow its WAP offer and Vivo ZAP solutions (EV-DO PMCIA cards and USB), and to launch innovative services using Vivo PLAY (downloads and video streaming) and Vivo Flash (mobile Internet access). Vivo ended September with a total of 31.3 million customers (+9.0% vs. September 2006) in a market with an estimated penetration rate of 61.2% (+7.9 percentage points year-on-year). This marks a slight acceleration in market growth and is evidence of the strong commercial activity undertaken this quarter. Vivo's commercial strategy centred on its Father's Day campaign, which attracted the bulk of new adds (3.2 million in the third quarter, one of the highest numbers seen in recent years and 29.5% higher than the third quarter of 2006, despite marking a slight slowdown on the record second quarter figure). This good performance was underpinned by the wider variety of handsets on offer, keeping leadership in commercial capillarity, continued pre-pay traffic promotions and improved contract subscriber acquisition capabilities through the launch of the new 'Vivo Escolha' plans. Blended churn in the third quarter was 2.2%, down from 2.3% in the second quarter. By the end of the third quarter, 39.5% of the contract segment had subscribed to a Vivo Escolha plan, significantly enhancing the market's perception of Vivo's commercial offer. Contract adds rose 54.1% year-on-year in the third quarter. Regarding financial results, revenues through to September totalled 1,740 million euros (+15.8% year-on-year in local currency). Service revenues grew 18.9% year-on-year in local currency, largely driven by higher interconnection revenues after the elimination of the Bill & Keep rule in July 2006. Stripping out this factor, the increase would have been 8.1%. In the contract segment, it is worth to highlight that the 'Vivo Escolha' plan continued providing the company with an acquisition and retention tool for its most valued customers. In addition, it is important to highlight the continued performance of the pre-pay segment, with an outgoing cumulative ARPU growth of 26.6% year-on-year in local currency as a result of successful traffic incentive campaigns, which led to a 42% year-on-year increase in outgoing pre-pay MoU for the period. As a result blended MoU in the January-September period rose 7.8% year-on-year, while blended ARPU jumped 19.1% year-on-year in local currency to 11.7 euros over the same period. In the third quarter, MoU remained stable, while ARPU jumped 11.3%. VIVO recorded operating income before depreciation and amortization (OIBDA) through to September of 420 million euros, an increase of 24.2% in local currency over the same period of last year. Contributing factors include topline growth combined with control over customer management costs, notably the 50.3% year-on-year reduction in local currency in bad debts provisions. This in turn evidences that the strict control exercised over new customer acquisitions in the end-of-year campaigns were sufficient to offset higher commercial expenses on the back of more intense marketing activity. The OIBDA margin in the first nine months of the year stood at 24.2%, 1.6 percentage points wider than a year before, while in the third quarter the margin widened to 3.1 percentage points to reach 23.8%. Stripping out the impact of the Bill & Keep rule, OIBDA growth in the January-September 2007 would have been 23.2%, with a margin of 26.2%. It is important to mention that at the beginning of August, Vivo has successfully closed the acquisition of Telemig Celular in the Minas Gerais region of Brazil and Amazonia Celular in the Amazon region, and more recently, on the 23rd October, Anatel approved the Telemig Celular acquisition, being the Amazonia Celular acquisition still pending from regulatory approval. In addition, Vivo participated in the spectrum tender held by Anatel in September in the 1,900 Mhz band. It prevailed in 13 of the 15 blocks it bid for, including spectrum in north-eastern Brazil. This spectrum, together with the acquisition of Telemig gives Vivo nationwide coverage. ARGENTINA Telefonica's competitive positioning in Argentina enabled to maintain its leadership in its operating area in the first nine months of 2007, underpinned by 19.4% year-on-year growth in the total number of accesses to 18.8 million customers. This growth was fuelled primarily by a 28.8% growth in the number of wireless customers to 13.1 million and 50.6% growth in the number of broadband users to 720,000. In the wireline business, the operator increased lines by 0.4%. This strong business momentum boosted revenues 16.6% higher year-on-year in the first nine months of the year to 1,678 million euros. Operating income before depreciation and amortization (OIBDA) meanwhile stood at 605 million euros in the January-September 2007 period, up 16.6% year-on-year, further underscoring the strong business momentum. CapEx through September 2007 totalled 179 million euros. TELEFONICA DE ARGENTINA Telefonica de Argentina (TASA) reached 5.7 million accesses at the end of September 2007, up 2.2% vs. September 2006, boosted by 50.6% growth in retail broadband users to 720,000. Fixed line accesses meanwhile were flat over the previous quarter and 0.4% higher than in September 2006 at 4.6 million, marked by limited operations as a result of the labour conflict that lasted from June 2007 until the beginning of August. The performance in fixed accesses and the strong trend in usage drove traditional business revenues 5.6% higher in the first nine months of 2007. Total voice traffic was flat year-over-year with mobile-to-fixed interconnection traffic (up 26.7% vs. the period January-September 2006) offsetting lower fixed-to-fixed traffic, both local (-5.0% vs. the first nine months of 2006) and interconnection (-4.7% vs. the first nine months of 2006). Growth in intelligent network traffic continued to improve (+55.8% vs. the January-September period), while public telephony usage fell further (-19.5% vs. the first nine months of 2006). Revenues came to 731 million euros in the first nine months of the year, year-on-year growth of 9.3% in local currency terms, with the traditional fixed line and internet businesses making equal contributions to this growth. Traditional revenues rose 5.6% in local currency in the first nine months of 2007, reflecting the strong uptake of minutes bundles, interconnection traffic and value added services. Bundle revenue growth was underpinned mainly by local fixed-to-fixed calling plans on the back of the flat call rate launched mid-2006. Higher interconnection revenues were driven primarily by traffic generated by mobile operators and incoming international traffic. Internet and broadband revenues grew 39.7% year-on-year in the first nine months of 2007. The weight of this segment in overall revenues continued to increase, currently accounting for 14% of the total revenues. The broadband business was the main growth driver in the first nine months of 2007 with revenues up 53.5% year-on-year in local currency and accesses at 720,000 at the end of September (up from 477,900 in September 2006). Broadband was in turn boosted by the launch of the DUO plan (a flat rate plan bundling voice and broadband) in the last quarter of 2006 with 34% of broadband users currently using this plan. In the first nine months of 2007 the data and IT revenues increased 5.6% in local currency mainly as a result of higher revenues from VPNs and satellite services. Over the first nine months of the year, operating expenses grew 17.0% year-on-year in local currency. This was largely due to an increase in personnel expenses (+32.7% in local currency) caused by salary rises and severance payments in connection with the workforce restructuring plan launched during the second half of 2006. Supply costs in the first nine months of 2007 also grew by 14.9% in local currency due to higher interconnection and equipment lease costs. In the first nine months of 2007, external service expenses rose 6.4% year-on-year in local currency due to more intense commercial activity in terms of both advertising and commissions as well as price increases across various services including rents, energy, billing, etc. The ratio of bad debt to revenues stood at 1.1%, 0.5 percentage points higher than in the first nine months of 2006 due to the impact of the days of strike, which meant lower collection activity during those days. Collection management, however, remains solid and the pre-pay and the consumption control plant continue to account for 28% of the total customer base. TASA posted operating income before depreciation and amortization (OIBDA) of 316 million euros in the first nine months of 2007, a 1.3% year-on-year decline in local currency, due primarily to higher personnel expenses as detailed above. CapEx amounted to 108 million euros, a 26.0% increase in local currency on the first nine months of 2006. Investment was primarily earmarked for the development of broadband and new businesses. Operating cash flow (OIBDA-CapEx) at the Argentinean wireline business came to 208 million euros. TEM ARGENTINA The Argentine cellular market continued to grow at a strong pace in the third quarter of the year, boosting penetration to over 93% (+24 percentage points higher than in September 2006), still the highest of all Latin America. Net adds in the third quarter of 2007 amounted to 668,695 (664,181 in the third quarter of 2006), bringing the total for the first nine months of the year to 1,878,350, just above the first nine months of 2006 figure. The healthy performance in net adds was due to practically flat levels of gross adds in both periods combined with the excellent churn rate, which stood at 1.5% in the third quarter of 2007 (0.4 percentage points lower than in the third quarter of 2006 and 0.2 percentage points lower than in the second quarter of 2007). As a result, the company ended the quarter with over 13.1 million customers, representing a 28.8% increase in the customer base from September 2006. GSM customers accounted for 84% of the total customer base at the end of the period (a 15.2 percentage point year-on-year increase). Revenues hit the 1,000 million euro mark in the first nine months of 2007, a 20.5% year-on-year increase in local currency. Driving growth was a solid performance of service revenues, which were 22,0% higher in local currency than during the same period a year earlier. Revenue growth, coupled with lower unit commercial costs and customer management expenses as well as lower network expenses, led to an increase in operating income before depreciation and amortization (OIBDA) of 45.4% year-on-year in local currency in the first nine months of 2007 to 289 million euros. This left the OIBDA margin in the first nine months of 2007 at 28.9%, 5.0 percentage points higher than the year-earlier figure. CapEx for the first nine months of 2007 amounted to 72 million euros, virtually flat compared to the first nine months of 2006, flowing therefore all OIBDA improvement to operating cash flow (OIBDA-CapEx) to stand at 218 million euros (up 59.1% in local currency vs. the first nine months of 2006). CHILE At the end of the third quarter Telefonica Latinoamerica managed a total of 9.1 million accesses in Chile (+7.5% year-on-year). Net adds in the third quarter 2007 totalled 168,574, underpinned by growth in mobile users, and to a lesser extent retail Internet broadband accesses and pay TV subscribers, while the number of fixed telephony accesses held fairly steady. At the end of the quarter, Telefonica managed 6.1 mobile accesses, 7.7% more than a year earlier, and 2.2 million fixed line accesses, with the year-on-year decline plugged at 2.4%. Solid growth was also seen in retail Internet broadband accesses (up 33.1% year-on-year) and in pay TV (satellite TV/DTH), a service that was launched in June 2006. Revenues for the first nine months of the year totalled 1,319 million euros, a year-on-year increase of 12.3% in local currency. Topline growth was still driven by sharp expansion in the mobile telephony (+22.6%) and broadband and pay TV (+81.5%) businesses which more than offset the decline in traditional telephony revenues (-7.5%). Operating income before depreciation and amortization (OIBDA) for the January-September 2007 period totalled 514 million euros, a year-on-year increase of 10.3% in local currency. Telefonica Latinoamerica continues to invest heavily in Chile. CapEx in the nine-month period totalled 285 million euros, an increase of 33.3% in local currency from the same period last year. Investment is still being poured into the fastest growing businesses: mobile telephony, ADSL and pay TV. TELEFONICA CHILE Overall accesses at Telefonica Chile grew further in the third quarter thanks to growth in the broadband and pay TV businesses. At the end of September, Telefonica Chile managed a total of 3.0 million accesses (year-on-year growth of 7.2% vs. September 2007), after adding 165,152 net accesses in the January- September 2007 period. The number of fixed line access at Telefonica Chile fell a scant 1,718 in the third quarter 2007. The company therefore stemmed the declines recorded the year before, consolidating the shift in trend initiated in the first quarter: the average quarterly loss in fixed lines in 2006 was 56,000; this figure narrowed to 28,852 in the first quarter 2007, and to 2,994 in the second quarter. At the end of September the Company managed 2.2 million fixed lines, 2.4% fewer than at the end of the third quarter 2006. Telefonica Chile remains the Chilean fixed line market leader with an estimated share of 66%. The operator has managed to plug the rate of loss in the last twelve months at 2.5 percentage points (loss of 3.9 percentage points in last twelve months to June 2007). Broadband and pay TV accesses continued to grow. The company's commercial focus was set on fostering customer loyalty by pushing the DUO and TRIO bundles (double and triple play bundles), packages which additionally increase ARPU. At the end of September, retail broadband Internet accesses totalled 606,866 thanks to net gains of 32,778 in the July-September 2007 period, and 112,397 in the first nine months of 2007. Telefonica Chile remains the leading broadband Internet access provider in the country with an estimated market share of 49% at the end of the third quarter. Telefonica Chile is still boosting the development of the pay TV business, adding 25,893 subscribers in the third quarter 2007 and 103,070 in the nine months to September 2007, to put the total satellite TV (DTH) subscriber base at 197,279 at the end of the third quarter. One year since the business was launched, Telefonica Chile has established itself as the country's second largest pay TV player with an estimated market share of 16%. In June the company launched its IPTV service (modelled on Telefonica Espana's IP TV service, Imagenio), providing coverage in certain areas of Santiago, and becoming the first company to do so in Latin America. In addition, new services on the DTH platform, such as decoders equipped with personal video recorders (PVRs), were launched in September. The competitive landscape in the Chilean telephony market is marked by a significant fixed to mobile substitution effect, predominantly since the mobile operators launched on-net pricing packages. Triple play is the cornerstone of Telefonica Chile's strategic focus. The goal is to increase the number of services per customer and accordingly, ARPU. In this way the Company continued to offset the contraction of its traditional telephony business due to the fixed-to-mobile substitution effect with revenue growth in broadband and pay TV. Against this backdrop, revenues for the first nine months of the year totalled 720 million euros, a year-on-year increase of 2.3% in local currency. Revenues from broadband and pay-TV services rose 81.5% year-on-year in local currency during the first nine months of 2007 driven by the launch of the pay TV business in July 2006 and growth in ADSL penetration. This revenue expansion was sufficient to offset the 7.5% decline in revenues generated by the traditional business. Internet and broadband revenues accounted for 18% of the total in the nine months to September 2007, 8 percentage points more than in the first nine months of 2006. Revenues from data and IT services rose 4.0% year-on-year in local currency in the January-September 2007 period. Operating expenses advanced 6.7% in local currency over the nine months to September 2006 reflecting a 19.1% increase in external services costs on the back of more intense commercial activity, improvements made to service quality and customer service. Personnel expenses declined by 2.2% due to the personnel restructuring charges accounted for in 2006; excluding this effect, personnel expenses increased by 12.8% affected by the enactment of the Chilean Subcontracting Law. Supply costs were virtually flat, up just 0.8% in local currency, with the increase in expenditure on TV content and satellite capacity offset by lower interconnection costs, especially in fixed-mobile traffic. Bad debt provisions in January-September 2007 were 4.7% higher year-on-year in local currency, amounting to 2.9% of revenues. With expense growth outpacing topline growth, operating income before depreciation and amortization (OIBDA) fell 5.9% year-on-year in local currency in January-September 2007 period to 275 million euros. CapEx in the nine-month period totalled 137 million euros, an increase of 34.3% in local currency from nine months to September 2006, driven mainly by sharp growth in satellite TV services (DTH), the launch of IPTV, growth of the ADSL accesses and initiatives designed to enhance network quality. Operating cash flow (OIBDA-CapEx) through September amounted to 138 million euros, a decline of 27.4% in local currency vs. January-September 2007 as a result of increased investment activity. TEM CHILE The rate of growth of the Chilean mobile market slowed in the third quarter of 2007, with penetration increasing an estimated 0.3 percentage points to 87%; market resilience in the last twelve months remains noteworthy with penetration increasing 8.4 percentage points between September 2006 and September 2007. Telefonica Moviles Chile remains market leader, with over 6.1 million customers at the end of September 2007 boosted by net adds of 124,344 in July-September 2007. Growth in the customer base was driven by net adds to the GSM service, accounting GSM customers for 86% of the total base by the end of September, 4 percentage points more than in June 2007. This trend puts the company on target to achieving its goal of migrating its entire customer base over to GSM technology by year-end 2008. Contract customers (1.5 million, up 29.6% year-on- year) are driving growth in the customer base, which expanded 7.7% vs. September 2006, thanks to net adds of 433,765 in the twelve months to September 2007. Revenues for the first nine months of the year totalled 662 million euros, a year-on-year increase of 22.6% in local currency. Service revenues jumped 20.2% in local currency, driven by growth in ARPU, which rose 8.4%, 10.5% and 11.6% in local currency in the first, second and third quarters of 2007 respectively. This trend is underpinned by migration to GSM technology, growth in the contract customer base, plan upgrades and the sale of minute bundles and Value Added Services (VAS). Operating income before depreciation and amortization (OIBDA) rose 38.2% in local currency in January-September 2007 vs. same period 2006 to 240 million euros, reflecting revenue growth and enhanced operating efficiency. Thanks to this operating efficiency, the OIBDA margin in the first nine months of 2007 jumped 4.1 percentage points vs. January-September 2006 to 36.3%, despite increased commercial initiatives aimed at fostering customers migration to GSM technology and to the contract segment and in response to stiffer competition in the marketplace. CapEx for the first nine months of 2007 amounted to 148 million euros, putting operating cash flow (OIBDA-CapEx) at 92 million euros. PERU Revenues for the first nine months of 2007 amounted to 1,126 million, growth of 11.2% on January-September 2006. This growth was driven by a 24.0% increase in local currency of Internet and broadband revenues in the wireline business and a 161.1% jump in outgoing revenues in the wireless business in the pre-pay segment. Operating income before depreciation and amortization (OIBDA) fell by 1.9% in local currency to 415 million, with intense commercial activity taking place in both, wireline and wireless businesses. OIBDA growth at the wireless division (+20.4% first nine months 2007 vs. same period 2006 in local currency) was not sufficient to fully offset the 7.8% decline in OIBDA in the wireline business. Cumulative CapEx to September 2007 rose 29.2% in local currency over January-September 2006 to 156 million euros owning primarily to heavy investment in mobile telephony (up 94.9% in local currency) in order to service capacity requirements on the back of higher usage. At the end of the quarter, accesses in Peru stood at 11.2 million (4.0 million wireline and 7.2 million wireless), year-on-year growth of 40.3% mainly as a result of significant growth in the pre-pay customer base (up 70.4% year-on-year) and 14.7% in the wireline business (including TV, broadband and traditional accesses). In mid-March 2007 the IRIS project was launched, a collaboration project between the wireline and wireless businesses conceived to generate synergies and facilitate access to fixed telephony using wireless technology. By the end of September almost 190,000 customers had signed up for the IRIS service. TELEFONICA DEL PERU Telefonica del Peru had 4.0 million accesses at the end of September, up sharply year-on-year (+14.7%) accelerating the posted cumulative growth to June 2007 (+12.2%): net adds for the twelve months ended September 2007 stood at 0.5 million accesses compared to net adds of 0.4 million in the twelve months ended June 2007. Growth in fixed line accesses picked up (+11.1% year-on-year to September 2007 up from +7.1% to June 2007) to reach a total 2.7 million accesses; fixed line accesses growth constituted the main growth driver for accesses. Broadband accesses jumped 27.6% to 555,869. Pay TV subscribers reached 628,014 in the quarter, up 23.7% year-on-year: of these, 550,444 were cable TV subscribers and the remaining 77,570 satellite subs (DTH). Fixed wireless telephony was launched on 15 March 2007 with the aim of extending fixed coverage. Of total fixed lines at the end of September, 189,482 were fixed wireless lines. Growth in voice traffic remained healthy at 8.7% in January-September 2007 due to the strong performance of basic telephony service traffic (+15.2%) in local, long distance and incoming calls. In contrast, public telephony traffic slumped (-32.1%) as a result of increased mobile telephony and illegal call centres in both the wireless and fixed segments. Revenues for the first nine months of the year totalled 786 million euros, slightly below the previous year's figure (-0.2% in local currency). Revenues grew in the Internet and broadband business (up 24.0% in local currency on the firs nine months of 2006) thanks to intense sales and marketing activity. Broadband revenues rose a noteworthy 26.7% year-on-year while TV revenues jumped 23.5%. Internet and broadband revenues accounted for 24.4% of Telefonica del Peru's total revenues in the January-September 2007 period. Data service revenues were also higher, up 2.5% in local currency, thanks to increased revenues from Virtual Private Networks (VPNs). In contrast, traditional business revenues declined 6.0% in local currency in the January-September 2007 period due mainly the 25.7% fall in public telephony revenues, the fixed-mobile substitution effect and competition from illegal call centres, as detailed above. Meanwhile, IT revenues were dragged down 15.6% due to fewer turnkey projects (activity was intense in 2006 due to projects undertaken for the administration in connection with the Peruvian elections) and government projects delayed until 2008. Operating expenses rose 6.3% in local currency reflecting more intense commercial activity which specifically impacted expenditure on equipment, customer service expenses and sales commissions. Furthermore, the Telefonica del Peru spent more on enhancing security to prevent cable theft. Other contributing factors include higher expenditure on equipment rental (+4.4% in January-September 2007), mostly in the TV business, and bad debt provisions, which accounted for 1.4% of revenues, higher interconnection expenses due to the rise in fixed-mobile and international traffic carried and, finally, a 2.1% increase in personnel expenses. Operating income before depreciation and amortization (OIBDA) totalled 309 million euros for the January-September 2007 period, a year-on-year drop of 7.8% in local currency due to higher expense and the recognition of contingencies, mostly labour- and tax-related. The OIBDA margin was 39.3%, compared to 42.6% for January-September 2006. CapEx in the nine-month period totalled 75 million euros, a decrease of 5.1% in local currency from nine months to September 2006. Operating cash flow (OIBDA- CapEx) was 234 million euros, down 8.6% in local currency terms. TEM PERU The Peruvian mobile market grew 7.0% in the third quarter. Penetration stood at 42.7% at the end of September (+2.7 percentage points. vs. June 2007 and +14.3 percentage points year-on-year). At the end of the quarter, Telefonica Moviles Peru's customer base stood at 7.2 million. Pre-pay customers accounted for 88.5% of the total. The customer base growth rate picked up to 60.0% year-on-year to September 2007 compared to 57.2% to June 2007. Migration to GSM technology was ongoing during the quarter. At September-end 2007 GSM customers accounted for 71.5% of the total. Ongoing intense commercial activity at Telefonica Moviles Peru translated into significant year-on-year growth in gross adds of 83.9% in the January-September 2007 period. Gross adds during the quarter reached a record high level of 1.4 million. Revenues surged 40.4% to 430 million euros in local currency, underpinned by growth in service revenues driven mainly by outgoing revenues in the pre-pay segment (+161.1% in local currency in the first nine months of 2007) as a result of efforts to boost card top-ups with the 'double' and 'triple' campaigns, and to a lesser extent in the contract segment (+15.8%). Operating income before depreciation and amortization (OIBDA) rose 20.4% year-on-year to 106 million euros despite higher commercial expenditure which paid off in terms of higher accesses. The OIBDA margin stood at 24.7% in the January-September 2007 period, a 4.1 percentage points drop over same period 2006. CapEx amounted to 81 million euros, up 94.4% in local currency on the same period last year. This investment was used to service demand on the back of sharp growth in the customer base and in traffic. With CapEx outstripping OIBDA growth, operating cash flow (OIBDA-CapEx) fell 46.1% in local currency terms to 25 million euros. COLOMBIA During the first nine months of 2007, revenues from fixed and mobile businesses reached 1,138 million euros, up 31.1% on the same period the previous year in constant currency, reflecting the first time consolidation of Telefonica Telecom in May 2006 and strong growth in internet and broadband revenues and service revenues at the mobile business. Operating income before depreciation and amortization (OIBDA) rose 59.8% year-on-year In local currency terms, to 328 million euros in the January-September period as a result of the consolidation of Telefonica Telecom from May 2006. The OIBDA margin for the period stood at 28.8% (up 5.2 percentage points on September 2006). At the end of September 2007, Telefonica reached 10.1 million accesses in Colombia which translates into a growth of 0.1% compared to September 2006. TELEFONICA TELECOM 1 Telefonica Telecom had a total of 2.6 million accesses as of the end of September 2007, 6.1% above last year's figure, underpinned by strong growth in broadband users (296.4% compared to September of 2006) that reached a total of 167,511 users. -------------------------------------------------------------------------------- 1 Telefonica Telecom is consolidated into the Telefonica Group since May 2006. Year-on-year variations are calculated against proforma figures. The Satellite TV product was launched at the start of the year. This is a key product which will enable Telefonica Telecom to launch 'Trio' triple play bundles (voice, broadband and TV). The number of satellite TV customers had reached 46,200 by September 2007 de TV. Revenues for the fixed telephony business through September 2007 reached 527 million euros, equivalent to an annual growth of 3.1% in local currency, driven mainly by internet and broadband growth (+95.8% year-on-year in local currency). The contribution to total revenues from this business jumped to 8.4% in the first nine month of 2007 from 4.4% at September 2006. The strong growth in the number of ADSL users (+296.4%) offset the drop in the revenues of the narrowband business (-11.5% in local currency) due to migration to broadband. In the first nine months of 2007, the company extended broadband coverage to new towns and cities and strengthened its position in areas where it maintains a leadership position. The broadband business was also boosted by marketing bandwidth upgrades to corporate customers. Operating expenses in the January-September period rose 4.9% year-on-year in local currency, mainly as a consequence of the growth in supplies and bad debt provisions. Telefonica Telecom's operating income before depreciation and amortization (OIBDA) amounted to 219 million euros in the first nine months of the year, which represents year-on-year growth of 24.7% in local currency, driven largely by the strategic commitment to broadband. CapEx through September 2007 stood at 84 million euros. The bulk of this was invested in deploying broadband and a series of regional systems projects such as ATIS and SAP. Operating cash flow (OIBDA-CapEx) came to 135 million euros in the January-September 2007 period. TEM COLOMBIA The Colombian cellular market ended September with a total of 29.5 million customers, 0.3 million more than in September 2006. Penetration stood at 69%. In the third quarter of 2007, there was a 19.6% drop in gross adds when compared to the third quarter of 2006, due to the reduction in handset subsidies. Churn was slightly higher than in the second quarter of 2007 (+0.1 percentage points) standing at 3.9% due to the disconnection of low value customers who signed on in the aggressive campaigns launched in 2006. As a result, the company recorded a negative net gain of 60,317 clients, leaving the customer base at 7.6 million at the end of September 2007 (down 1.8% versus September 2006). Of the total, 77% were GSM customers (+5.3 percentage points on the second quarter of 2007). Revenues in the first nine months of 2007 amounted to 641 million euros, up 4.6% year-on-year in local currency. Third quarter revenues were 5.8% higher year-on-year in local currency when compared to the third quarter of 2006. Service revenues rose 12.8% year-on-year in local currency in the first nine months of 2007 and by 12.5% in local currency in the third quarter of 2007, despite the slight fall in the average customer base. Operating income before depreciation and amortization (OIBDA) rose 21.9% year-on-year in local currency to 108 million euros in the January-September 2007 period. Third quarter OIBDA amounted to 50 million euros, equivalent to a year-on-year growth of 33.5% in local currency, as a result of service revenue growth and lower subsidies offered to new customers. The OIBDA margin stood at 16.9% in the first nine months of 2007 and 22.4% in the third quarter of 2007, up 2.4 percentage points and 4.4 percentage points year-on-year, respectively. CapEx in the January-September 2007 period amounted to 63 million euros (37 million euros in the third quarter of 2007), leaving operating cash flow (OIBDA-CapEx) of 45 million euros at the end of September 2007. MEXICO Telefonica Moviles Mexico continued to step up its commercial activity significantly in the third quarter, leveraging the strong competitive positioning of its promotions, underpinned by the launch of innovative products and the result of initiatives designed to continually improve its sales processes and network quality. Growth in the Mexican cellular market accelerated yet again with the penetration rate reaching an estimated 60% by September 2007 (up 10 percentage points vs. September 2006). Telefonica Moviles Mexico's customer base at the end of the quarter had reached 11.1 million (of which 623,000 thousand were contract customers), a growth of 48.8% vs. September 2006. The strong growth in the customer base in the third quarter was underpinned by a competitive and flexible commercial offer in the pre-pay segment to surpass 1.6 million gross adds in the third quarter of 2007, 33.0% more than in the third quarter of 2006. The higher quality of gross adds in recent quarters along with the introduction of lower top-up amounts led to further 0.6 percentage points year-on-year improvement in churn to 2.5% in the third quarter of 2007 (vs. 3.1% in the third quarter of 2006 and 2.8% in the second quarter of 2007). As a result, third quarter net adds approached 840,000, year-on-year growth of 45.4%. Net adds for the first nine months of the year are running at over 2.5 million, more than 2.3 times the net adds figure recorded in the first nine months of 2006. Traffic growth remains buoyant, particularly outgoing and on-net traffic, although expanding at slower rates than in previous quarters since it is now a year since the launch of the commercial offer that introduced the new concept of 'Fixed rate per call' in the Mexican market As a result, third quarter MoU reached 145 minutes, year-on-year growth of 65.6%. Higher usage fed through to ARPU in the third quarter of 2007, up 14.4% year-on-year to 141 Mexican pesos. The company's strong business momentum fuelled a 57.7% year-on-year increase in revenues in local currency in the third quarter of 2007 to 358 million euros and a 59.4% year-on-year increase in the first nine months of 2007 to 1,011 million euros. Up 69.1% year-on-year, service revenues continued to grow strongly in the third quarter. The rate of growth slowed slightly compared to the 73.1% recorded in the second quarter, which included the effect of the Mothers' Day campaign. However, the third quarter 2007 figure is stronger than the performance in the first quarter when service revenues were 66.4% higher year-on-year. Service revenues continued to outstrip growth in the company's customer base (+48.8%), underscoring the higher quality and usage of its customers. Year-to-date, service revenues are 69.6% higher. Service revenue growth was driven by both outgoing and incoming revenues, both underpinned by the launch of the national calling party pays system in November 2006. The pace of growth of outgoing revenues slowed slightly to 85.7% year-on-year in local currency in the third quarter of 2007 from 91.0% in the first half of 2007 on the back of sustained growth in on-net traffic. Meanwhile, the launch of the national calling party pays service underpinned a sharp 44.7% jump in incoming traffic revenues in the third quarter of 2007. Operating income before depreciation and amortization (OIBDA) growth in the third quarter is the reflection of the solid topline growth, economies of scale reached and the closure of the CDMA network at the end of June 2007. Despite intense commercial activity in the quarter, OIBDA reached 52 million euros, compared to the 0.7 million euros in the third quarter of 2006. In the first nine months of 2007, OIBDA amounted to 113 million euros to put the OIBDA margin at 11.2%, compared with an OIBDA loss in first nine months of 2006 of -33 million euros. CapEx through September 2007 amounted to 154 million euros (97 million euros in the first nine months of 2006). This high level of investment is the reason why the operator generated, despite strong growth in OIBDA, negative operating cash flow (OIBDA-CapEx) of 40 million euros in the first nine months of 2007, significantly less negative than what was generated in the first nine months of 2006. VENEZUELA The Venezuelan cellular market continued to record strong growth in the third quarter of 2007, although at a slightly slower pace due to market maturity, with penetration reaching an estimated 79% by the end of September, 18 percentage points higher than by September 2006. Telefonica maintained its intense commercial activity in Venezuela, focusing this quarter on end-of-holiday and back-to-class campaigns, clearly targeting the youth segment. Commercial initiatives accelerated gross adds in the third quarter of 2007, driving them up by 17.4% vs. the third quarter of 2006, compared to a 7.1% growth for the first nine months of the year. Telefonica Moviles Venezuela's commercial strategy this quarter was designed around broadening the range of handsets on offer vis-a-vis its competitors, offering certain models on an exclusive basis. The operator also launched new plans in the prepay segment. These so-called 'A tu medida' plans enable customers to adapt the basic package to their specific needs. Under these plans customers can add on to the basic on-net usage plan additional plans such as higher on-net traffic plans, calls to other operators, flat rate text messages or data download packages, depending on their individual preferences. At September 2007, Telefonica Moviles Venezuela's customer base stood at over 9.8 million (+22.6% year-on-year), after recording net adds of over 1 million customers in the first nine months of the year. Since the network began operating at the beginning of the year, GSM adds have accounted for 62% of the total. GSM customers made up 28% of the total customer base at September 2007. This rapid migration of the customer base to GSM technology, together with the sharp overall growth of the market in the last year, is behind the 0.4 percentage points increase in churn to 2.8% in the third quarter of 2007. Although high, churn fell by 0.1 percentage points compared to the second quarter of 2007 thanks to policies designed to improve activity and increase customer retention rates. Revenues to September 2007 amounted to 1,716 million euros in the first nine months of 2007 (+27.9% year-on-year in local currency), driven by higher growth in service revenues (+30.2%) than in the customer base and a noteworthy 1.6% increase in ARPU in the third quarter of 2007, albeit slightly lower growth than in preceding quarters, pushed down by the cut in interconnection rates implemented in July 2007. Operating income before depreciation and amortization (OIBDA) in the first nine months of 2007 reached 756 million euros, 41.0% more than the first nine months of 2006 figure in local currency, owing to growth in revenues and commercial savings due to lower unit costs for GSM handsets, which more than offset the pick up in commercial activity. As a result, the OIBDA margin stood at 44.0%, a 4.1 percentage points increase over the first nine months of 2006 and a 2.2 percentage points increase over the first six months of the year. CapEx for the first nine months of 2007 amounted to 154 million euros, generating operating cash flow (OIBDA-CapEx) of 602 million euros (up 39.5% in local currency vs. first nine months of 2006). CENTRAL AMERICA Telefonica Moviles de Centroame (Panama, Guatemala, El Salvador and Nicaragua) continued to ramp up commercial activity in the first nine months of 2007 when compared to the same period last year, especially in Guatemala. At the end of September 2007, the penetration of the Central American market stood at an estimated 63% (up 21.3 percentage points versus September 2006). In this context, Telefonica Moviles de Centroame's customer base rose 36.8% year- on-year reaching 4.9 million clients (259,840 fixed wireless and 376,693 contract customers). Growth was fuelled by the effectiveness of commercial campaigns carried out in the third quarter, focused on traffic promotions that increase usage, and underpinned by a robust network performance. In addition, only SIM campaigns drove total gross adds 56.9% higher year-on-year to 720,053 in the third quarter of 2007. As a result, third quarter net adds stood at 407,960. At the operating level, traffic growth remained noteworthy, especially outgoing, buoyed by the promotional plan which encourages pre-pay usage. MoU for the third quarter of 2007 came to 140 minutes, up 5.1% compared to the third quarter of 2006. As a result of the company's strong commercial performance, revenues in the first nine months of 2007 totalled 439 million euros, up 18.6% year-on-year in constant terms. Service revenues rose 19.4% year-on-year in constant currency in the January-September 2007 period, extending the positive trend of previous quarters. This was driven by higher outgoing revenues (+30.4% in constant terms), higher on-net traffic (+88% when compared to the third quarter of 2006) and incoming revenues (+10.5% in constant terms), mainly due to the growth of the pre-pay customer base. Despite the increase in commercial activity, operating income before depreciation and amortization (OIBDA) reached 171 million euros in the first nine months of 2007, up 47.2% year-on-year in constant terms. The OIBDA margin stood at 39.1% in the January-September 2007 period, an improvement of 7.6 percentage points when compared to the same period the previous year. CapEx through September 2007 amounted to 63 million euros, 6.0% below the January September 2006 figure in constant currency. Operating cash flow (OIBDA- CapEx) surged 119.9% in constant terms to 108 million euros compared to the first nine month of 2006, fuelled by growth in OIBDA and lower investment effort. ECUADOR The Ecuadorian cellular market has experienced strong growth year-to-date, with penetration reaching 69% by September 2007, 11.6 percentage points higher than last year's figure. Telefonica Moviles Ecuador's customer base at the end of September 2007 stood at 2.7 million, 65% of which were GSM customers. Revenues for the first nine months of the year totalled 211 million euros, equivalent to an annual growth of 3.6% in local currency. In the January-September 2007 period, service revenues fell 3.9% year-on-year in local currency, showing a change in the declining trend (from a year-on-year retreat of 9.3% through June 2007) due to the stronger outgoing contract revenues. Operating income before depreciation and amortization (OIBDA) rose 3.2% year-on-year in local currency to 52 million euros in the January-September 2007 period. OIBDA margin stood at 24.4%, 0.1 percentage points lower than in the same period the previous year. CapEx through September totalled 28 million euros, 40.3% higher in local currency than in the same period last year in order to service the increase in traffic carried out by the operator. As a result of this high level of investment, operating cash flow (OIBDA-CapEx) declined to 24 million euros in the first nine months of 2007, compared to the 33 million euros reached in the same period the previous year. TELEFONICA INTERNATIONAL WHOLESALE SERVICES Momentum remained strong at Telefonica International Wholesale Services (TIWS) throughout the third quarter. In line with previous quarters, business momentum was underpinned by strong growth in wholesale revenues (mainly traffic and IP capacity). Revenues rose 24.0% year-on-year in constant euros in the first nine months of the year to 202 million euros. By revenue contribution International IP revenues (up 18.4% year-on-year in constant euros) are noteworthy, accounting for around 51% of the total, boosted by sharp growth in operators' demand. Remaining services also posted healthy growth, led by bandwidth capacity (+46.3% in constant euros), VPNs (+29.1% in constant euros) and satellite services (+36.2% in constant euros). Operating income before depreciation and amortization (OIBDA) amounted to 70 million euros (+26.9% in constant euros). Topline growth offset the increase in operating expenses (+23.0% in constant euros), mainly the result of higher supply costs on the back of increased business activity. The OIBDA margin stood at 34.5%, 0.8 percentage points higher than in the same period of the previous year. TELEFONICA LATINOAMERICA ACCESSES Unaudited figures (thousands) 2006 2007 September December March June September % Chg y-o-y Final Clients Accesses 109,987.5 114,604.4 116,905.7 121,773.0 126,423.0 14.9 Fixed telephony accesses (1) 24,072.6 23,916.9 23,810.9 23,894.7 24,027.4 (0.2) Internet and data accesses 6,563.3 6,723.7 6,757.6 6,467.8 6,803.4 3.7 Narrowband (2) 2,931.2 2,813.5 2,615.3 1,989.8 2,000.6 (31.7) Broadband (3) (4) 3,500.2 3,780.3 4,045.6 4,380.4 4,703.5 34.4 Other 131.8 130.0 96.7 97.6 99.3 (24.7) Mobile accesses 78,777.4 83,298.4 85,637.0 90,610.9 94,712.1 20.2 Contract 63,501.6 67,329.9 69,112.7 73,654.3 77,117.4 21.4 Pre-pay 14,075.4 14,705.4 15,208.7 15,582.9 16,210.8 15.2 Fixed Wireless 1,200.4 1,263.1 1,315.5 1,373.7 1,384.0 15.3 Pay TV 574.2 665.3 700.1 799.6 880.0 53.2 Wholesale Accesses 76.0 65.9 64.6 64.5 64.1 (15.6) Total Accesses 110,063.5 114,670.3 116,970.3 121,837.5 126,487.1 14.9 (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 narrowband ISP of Terra Brasil and Terra Colombia. (3) Includes broadband ISP of Terra Brasil, Telefonica de Argentina, Terra Guatemala y Terra Me. (4) Includes ADSL, optical fiber, cable modem, broadband circuits and Telefonica de Argentina ISP in the North part of the country. TELEFONICA LATINOAMERICA CONSOLIDATED INCOME STATEMENT Unaudited figures (Euros in millions) January - September July - September 2007 2006 % Chg 2007 2006 % Chg Revenues 14,676 13,242 10.8 5,048 4,535 11.3 Internal exp capitalized in fixed assets (1) 69 72 (4.4) 23 24 (6.4) Operating expenses (9,639) (8,685) 11.0 (3,285) (2,858) 15.0 Other net operating income (expense) 200 184 8.6 118 103 14.5 Gain (loss) on sale of fixed assets 3 (1) c.s. 15 4 n.m. Impairment of goodwill and other assets 0 (2) n.m. 0 0 n.m. Operating income before D&A (OIBDA) 5,309 4,811 10.4 1,919 1,809 6.1 Depreciation and amortization (2,550) (2,752) (7.4) (846) (924) (8.5) Operating income (OI) 2,760 2,059 34.1 1,073 884 21.3 Note: 'Bad debt provisions' have been reclassified from 'Other net operating income (expense)' to 'Operating expenses'. (1) Including work in process. TELEFONICA LATINOAMERICA ACCESSES BY COUNTRIES (I) Unaudited figures (Thousands) 2006 2007 September December March June September % Chg y-o-y ----------------------------------------------------------------------------------------------------------------- BRAZIL Final Clients Accesses 44,484.7 44,716.9 44,599.1 45,344.4 46,607.3 4.8 Fixed telephony accesses (1) 12,295.1 12,107.1 12,033.6 12,031.3 12,019.0 (2.2) Internet and data accesses 3,463.9 3,556.8 3,535.2 3,072.6 3,259.5 (5.9) Narrowband 1,884.5 1,856.6 1,786.3 1,201.1 1,262.3 (33.0) Broadband (2) 1,485.2 1,608.2 1,690.8 1,813.0 1,937.3 30.4 Other 94.2 92.0 58.1 58.6 59.9 (36.4) Mobile accesses 28,725.7 29,053.1 29,030.3 30,240.5 31,320.2 9.0 Pre-pay 23,481.5 23,543.4 23,377.0 24,549.4 25,456.8 8.4 Contract 5,244.1 5,509.6 5,653.2 5,691.1 5,863.5 11.8 Pay TV 0.0 0.0 0.0 0.0 8.5 n.m. Wholesale Accesses 46.4 38.4 38.9 38.1 37.4 (19.4) Total Accesses 44,531.1 44,755.3 44,638.0 45,382.5 46,644.7 4.7 ----------------------------------------------------------------------------------------------------------------- ARGENTINA Final Clients Accesses 15,761.5 16,809.4 17,464.1 18,112.1 18,812.2 19.4 Fixed telephony accesses (1) 4,612.4 4,636.3 4,627.9 4,633.5 4,633.1 0.4 Internet and data accesses 998.9 973.7 1,023.2 1,069.5 1,101.3 10.3 Narrowband 504.1 439.2 418.0 392.9 363.6 (27.9) Broadband (2) 477.9 517.7 588.1 659.0 719.7 50.6 Other 16.8 16.8 17.1 17.7 18.1 7.4 Mobile accesses 10,150.2 11,199.4 11,813.0 12,409.1 13,077.8 28.8 Pre-pay 6,498.1 7,315.8 7,753.1 8,112.8 8,553.1 31.6 Contract 3,499.4 3,742.9 3,925.8 4,169.9 4,410.4 26.0 Fixed wireless 152.7 140.7 134.2 126.3 114.3 (25.2) Wholesale Accesses 7.2 7.3 7.6 8.7 8.9 24.5 Total Accesses 15,768.7 16,816.6 17,471.7 18,120.8 18,821.2 19.4 ----------------------------------------------------------------------------------------------------------------- CHILE Final Clients Accesses 8,435.3 8,538.4 8,670.5 8,909.3 9,077.8 7.6 Fixed telephony accesses (1) 2,225.9 2,206.2 2,177.4 2,174.4 2,172.7 (2.4) Internet and data accesses 538.9 557.7 597.3 636.0 656.0 21.7 Narrowband 72.8 53.3 59.0 52.5 40.1 (44.9) Broadband (2) 456.0 494.5 528.2 574.1 606.9 33.1 Other 10.1 10.0 10.0 9.5 9.0 (10.4) Mobile accesses 5,618.1 5,680.2 5,766.8 5,927.5 6,051.9 7.7 Pre-pay 4,491.6 4,507.6 4,515.7 4,557.9 4,591.4 2.2 Contract 1,126.5 1,172.7 1,251.1 1,369.6 1,460.5 29.6 Pay TV 52.4 94.2 129.1 171.4 197.3 n.m. Wholesale Accesses 21.9 19.9 17.6 17.2 17.3 (21.2) Total Accesses 8,457.2 8,558.3 8,688.1 8,926.5 9,095.1 7.5 (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 ADSL, optical fiber, cable modem and broadband circuits. TELEFONICA LATINOAMERICA ACCESSES BY COUNTRIES (II) Unaudited figures (Thousands) 2006 2007 September December March June September % Chg y-o-y ----------------------------------------------------------------------------------------------------------------- PERU Final Clients Accesses 7,983.8 8,710.9 9,303.2 10,152.5 11,199.0 40.3 Fixed telephony accesses (1) 2,468.2 2,498.5 2,531.2 2,605.7 2,742.1 11.1 Internet and data accesses 494.2 525.5 547.4 581.8 608.4 23.1 Narrowband 49.6 47.8 40.3 44.2 42.4 (14.5) Broadband (2) 435.7 468.5 497.7 527.8 555.9 27.6 Other 8.9 9.2 9.4 9.7 10.2 14.2 Mobile accesses 4,513.8 5,129.8 5,663.5 6,365.0 7,220.5 60.0 Pre-pay 3,749.7 4,353.3 4,882.3 5,570.7 6,389.7 70.4 Contract 691.9 705.2 711.0 724.4 763.2 10.3 Fixed wireless 72.2 71.3 70.2 70.0 67.7 (6.3) Pay TV 507.5 557.2 561.1 600.0 628.0 23.7 Wholesale Accesses 0.5 0.4 0.4 0.5 0.5 (1.3) Total Accesses 7,984.2 8,711.4 9,303.6 10,153.0 11,199.5 40.3 ----------------------------------------------------------------------------------------------------------------- COLOMBIA Final Clients Accesses 10,094.9 10,190.0 9,995.9 10,095.6 10,105.5 0.1 Fixed telephony accesses (1) 2,362.6 2,359.4 2,346.5 2,330.5 2,340.3 (0.9) Internet and data accesses 45.4 70.9 94.3 125.0 167.5 n.m. Narrowband 3.1 2.9 0.0 0.0 0.0 n.m. Broadband (2) 42.3 68.0 94.3 125.0 167.5 n.m. Other 0.0 0.0 0.0 0.0 0.0 n.m. Mobile accesses 7,687.0 7,759.7 7,545.2 7,611.8 7,551.5 (1.8) Pre-pay 5,883.5 5,960.5 5,734.6 5,887.0 5,867.4 (0.3) Contract 1,803.5 1,799.2 1,810.6 1,724.8 1,684.1 (6.6) Pay TV 0.0 0.0 10.0 28.3 46.2 n.m. Wholesale Accesses 0.0 0.0 0.0 0.0 0.0 n.m. Total Accesses 10,094.9 10,190.0 9,995.9 10,095.7 10,105.5 0.1 ----------------------------------------------------------------------------------------------------------------- MEXICO Mobile accesses 7,443.3 8,553.2 9,319.6 10,232.8 11,072.7 48.8 Pre-pay 6,950.7 8,017.8 8,775.0 9,655.2 10,446.9 50.3 Contract 490.9 533.4 542.4 574.8 622.6 26.8 Fixed wireless 1.6 2.0 2.2 2.8 3.2 97.0 Total Accesses 7,443.3 8,553.2 9,319.6 10,232.8 11,072.7 48.8 ----------------------------------------------------------------------------------------------------------------- VENEZUELA Mobile accesses 8,025.9 8,826.2 9,100.3 9,746.6 9,840.0 22.6 Pre-pay 6,813.6 7,520.2 7,724.2 8,345.1 8,392.2 23.2 Contract 431.6 469.4 495.4 474.7 510.3 18.2 Fixed wireless 780.7 836.6 880.7 926.8 937.5 20.1 Total Accesses 8,025.9 8,826.2 9,100.3 9,746.6 9,840.0 22.6 (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 ADSL, optical fiber, cable modem and broadband circuits. TELEFONICA LATINOAMERICA ACCESSES BY COUNTRIES (III) Unaudited figures (Thousands) 2006 2007 September December March June September % Chg y-o-y ----------------------------------------------------------------------------------------------------------------- CENTRAL AMERICA (3) Fixed telephony accesses (1) 108.4 109.4 94.4 119.4 120.3 10.9 Internet and data accesses 25.2 26.0 26.0 22.3 22.2 (12.1) Broadband (2) 23.4 24.1 24.0 20.2 20.0 (14.4) Other 1.9 1.9 2.0 2.1 2.2 15.9 Mobile accesses 3,564.8 3,829.5 4,042.1 4,469.4 4,877.4 36.8 Pre-pay 3,078.9 3,303.1 3,472.5 3,856.6 4,240.8 37.7 Contract 295.0 315.6 342.8 366.6 376.7 27.7 Fixed Wireless 190.9 210.9 226.7 246.2 259.8 36.1 Pay TV 14.3 14.0 0.0 0.0 0.0 n.m. Total Accesses 3,712.8 3,978.9 4,162.5 4,604.1 5,019.8 35.2 ----------------------------------------------------------------------------------------------------------------- ECUADOR Mobile accesses 2,393.1 2,490.0 2,481.7 2,645.0 2,653.2 10.9 Pre-pay 1,984.0 2,133.0 2,116.8 2,275.2 2,272.1 14.5 Contract 406.9 355.3 363.3 368.2 379.6 (6.7) Fixed Wireless 2.2 1.7 1.6 1.5 1.5 (34.3) Total Accesses 2,393.1 2,490.0 2,481.7 2,645.0 2,653.2 10.9 ----------------------------------------------------------------------------------------------------------------- URUGUAY Mobile accesses 655.4 777.3 874.6 963.1 1,047.0 59.7 Pre-pay 569.8 675.3 761.4 844.3 907.0 59.2 Contract 85.6 102.0 113.2 118.8 140.0 63.5 Total Accesses 655.4 777.3 874.6 963.1 1,047.0 59.7 (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 ADSL, optical fiber and broadband circuits. (3) Includes Guatemala, Panama, El Salvador and Nicaragua TELEFONICA LATINOAMERICA SELECTED FINANCIAL DATA (I) Unaudited figures (Euros in millions) January - September 2007 2006 % Chg % Var Local Cur ----------------------------------------------------------------------------------------------------------------- BRAZIL Revenues 5,637 5,397 4.4 3.5 OIBDA 2,226 2,330 (4.5) (5.4) OIBDA margin 39.5% 43.2% (3.7 p.p.) CapEx 656 579 13.4 12.3 Telesp Revenues 4,154 4,157 (0.1) (1.0) OIBDA 1,806 1,998 (9.6) (10.5) OIBDA margin 43.5% 48.1% (4.6 p.p.) CapEx 482 380 26.7 25.6 Vivo Revenues 1,740 1,488 16.9 15.8 OIBDA 420 335 25.4 24.2 OIBDA margin 24.2% 22.5% 1.6 p.p. CapEx 175 196 (10.9) (11.8) ----------------------------------------------------------------------------------------------------------------- ARGENTINA Revenues 1,678 1,572 6.8 16.6 OIBDA 605 566 6.8 16.6 OIBDA margin 34.6% 34.6% 0.0 p.p. CapEx 179 161 11.3 21.5 Telefonica de Argentina Revenues 731 730 0.1 9.3 OIBDA 316 349 (9.6) (1.3) OIBDA margin 36.7% 40.7% (4.0 p.p.) (1) CapEx 108 93 15.4 26.0 TEM Argentina Revenues 1,000 907 10.3 20.5 OIBDA 289 217 33.2 45.4 OIBDA margin 28.9% 24.0% 5.0 p.p. CapEx 72 68 5.6 15.2 ----------------------------------------------------------------------------------------------------------------- CHILE Revenues 1,319 1,265 4.3 12.3 OIBDA 514 502 2.4 10.3 OIBDA margin 38.9% 39.7% (0.7 p.p.) CapEx 285 230 23.8 33.3 Telefonica Chile Revenues 720 758 (5.0) 2.3 OIBDA 275 315 (12.6) (5.9) OIBDA margin 38.2% 41.5% (3.3 p.p.) CapEx 137 110 24.7 34.3 TEM Chile Revenues 662 581 13.9 22.6 OIBDA 240 187 28.3 38.2 OIBDA margin 36.3% 32.2% 4.1 p.p. CapEx 148 121 22.9 32.3 OIBDA is presented after management fees. Data for Telefonica de Argentina include the ISP business of Advance. (1) Margin over revenues includes fixed to mobile interconnection. TELEFONICA LATINOAMERICA SELECTED FINANCIAL DATA (II) Unaudited figures (Euros in millions) January - September 2007 2006 % Chg % Var Local Cur ----------------------------------------------------------------------------------------------------------------------- PERU Revenues 1,126 1,054 6.8 11.2 OIBDA 415 440 (5.8) (1.9) OIBDA margin 36.9% 41.8% (4.9 p.p.) CapEx 156 126 24.1 29.2 Telefonica del Peru (2) Revenues 786 819 (4.1) (0.2) OIBDA 309 349 (11.4) (7.8) OIBDA margin 39.3% 42.6% (3.3 p.p.) CapEx 75 82 (8.9) (5.1) TEM Peru Revenues 430 319 34.9 40.4 OIBDA 106 92 15.6 20.4 OIBDA margin 24.7% 28.8% (4.1 p.p.) CapEx 81 43 86.7 94.4 ----------------------------------------------------------------------------------------------------------------------- COLOMBIA Revenues 1,138 826 37.7 31.1 OIBDA 328 195 67.8 59.8 OIBDA margin 28.8% 23.6% 5.2 p.p. CapEx 147 188 (21.7) (25.4) Telefonica Telecom (3) Revenues 527 243 n.c. n.c. OIBDA 219 111 n.c. n.c. OIBDA margin 41.6% 45.8% (4.2 p.p.) CapEx 84 36 n.c. n.c. TEM Colombia Revenues 641 584 9.8 4.6 OIBDA 108 84 28.1 21.9 OIBDA margin 16.9% 14.5% 2.4 p.p. CapEx 63 152 (58.7) (60.7) ----------------------------------------------------------------------------------------------------------------------- MEXICO (TEM Mexico) Revenues 1,011 689 46.7 59.4 OIBDA 113 (33) c.s. c.s. OIBDA margin 11.2% (4.8%) 16.1 p.p. CapEx 154 97 58.0 71.7 ----------------------------------------------------------------------------------------------------------------------- VENEZUELA (TEM Venezuela) Revenues 1,716 1,451 18.3 27.9 OIBDA 756 579 30.5 41.0 OIBDA margin 44.0% 39.9% 4.1 p.p. CapEx 154 113 36.3 47.3 ----------------------------------------------------------------------------------------------------------------------- CENTRAL AMERICA (4) Revenues 439 404 8.8 OIBDA 171 127 35.2 OIBDA margin 39.1% 31.4% 7.6 p.p. CapEx 63 73 (13.7) ----------------------------------------------------------------------------------------------------------------------- ECUADOR (TEM Ecuador) Revenues 211 220 (4.1) 3.6 OIBDA 52 54 (4.5) 3.2 OIBDA margin 24.4% 24.5% (0.1 p.p.) CapEx 28 21 29.9 40.3 OIBDA is presented after management fees. (2) Telefonica del Peru includes Cable Magico. (3) Data for Telefonica Telecom (formerly Colombia Telecom) only include results for May-December 2006 period, including Telefo Data Colombia. (4) Includes Guatemala, Panama, El Salvador and Nicaragua TELEFONICA LATINOAMERICA SELECTED FINANCIAL DATA (III) Unaudited figures (Euros in millions) January - September 2007 2006 % Chg % Var Local Cur ----------------------------------------------------------------------------------------------------------------- URUGUAY (TEM Uruguay) Revenues 72 54 34.4 44.8 OIBDA 17 10 70.2 83.3 OIBDA margin 23.9% 18.9% 5.0 p.p. CapEx 8 4 87.4 101.8 ----------------------------------------------------------------------------------------------------------------- TIWS Revenues 202 168 20.5 24.0 OIBDA 70 57 23.3 26.9 OIBDA margin 34.5% 33.7% 0.8 p.p. CapEx 30 22 37.8 37.8 OIBDA is presented after management fees. MORE TO FOLLOW This information is provided by RNS The company news service from the London Stock ExchangEspana

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