Slide 1: Quarterly Results January–March 2006
Quarterly Results January — March 2006 May 12%, 2006 Telefénica, S.A Investar Relations This presentation is being broadcast live on the Internet
Slide 2: Disclaimer
Disclaimer ‘This document contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in 3 umber of places in this dacument and include statements regarding the intent, b
Slide 3: 1Q06 financial highlights: an attractive growth profile
1006 financial highlights: an attractive growth profile... € in Millions ee ‘ (% change y-o-y} 1% Change % Change § Jan-March Jan-March % Change 1106/1905 1906/1005! 2006 2005 1906/1905 1 ex-forex* Organic? | Revenues 12,036.4 82788 — |+45.4%] Operating Income before D&A 4,686.7 3,414.7 |+37.3% (o1p
Slide 4: ..from top to bottom
..from top to bottom € in Millions (% change y-o-y) OO +2.3 pp. rT January-March 2006 I Bet +34.2% +39.6% “666.2 924 (149%) 433.0%) 1906 DBA 1008 Associates Financial Taxes Minorities 100 fe Operating results Net income Theome, 1.06 EPS REACHED EQUIVALENT TO A 43.8% ANNUAL G Telenica, SA, Investor R
Slide 5: The new dimension of Telefonica gives birth to a much more diversified group
The new dimension of Telefonica gives birth toa much more diversified group... OIBDA 1005 OIBDA 1006 Others Others % Comerget 5% BS ; Faxed Business we Diversification Fixed om OIBDA 1005 OIBDA 1006 Europe ROW row ee tampe_3* 1% , Spain Geographic a Diversification sain ox Lata 3% Telefinia, SA, Hom
Slide 6: ..to consistently deliver sound organic revenue and OIBDA growth
..to consistently deliver sound organic revenue and OIBDA growth Contribution to organic revenue g +12 pp. 189% +24 pp. +38 pp. +10pp. 108 pp. Td Tiatem Tem 102 Others ® Total Group “Group Group Europe eliminations The value of being diversified Contribution to organic OIBDA growth +38 pp. 16.2% +07
Slide 7: A continuous effort on cost containment
Acontinuous effort on cost contention OpEx Organic Growth 1006 Organic OpEx breakdown clea +22pp. 111.9% 415.5% 414.0% 412.2% 411.9% Td Tisem TEM 1.02 then & anos amas ¥05 ago Group "Group Graup Europe eliminations “°! 1006 OIBDA Margin 42.9% 32.2% 38.9% Fed? Mobile business? Group felefonica ]Suppl
Slide 8: Solid cash flow generation across all businesses
Solid cash flow generation across all businesses 1006 CapEx Evolution 1006 Capex breakdown (€ inition) (ein ition) +764% 1005 1005 «1008-1005 2 Tée Tata Te 7.02 ‘Total reported crganic* reported organic Group "Group! Grup Europe 1006 OpGF (OIBDA-CapEx) growth (€ in Million « d +374% 426.4% @ 416.9%
Slide 9: 1Q06 performance is in-line with year-end targets
1006 performance is in-line with year-end targets A 2006 target Group Revenues iniions #34 I7% (€inaitions poe 3460437 22,036. 4 8,278.8 8,214,0 iad 11,2014 —T Bs0 pated fSrgudoree adjnted repaid Sguusnr edjared ee Segue Group 010A M&S gosta) Gro @& x06 target {€ in Millions) r 428.5% 426%E+29% {€ i
Slide 10: OIBDA growth.. (Telefónica de España)
OIBDA growth.. Contribution to Telefonica de Espafia Group Revenue Growth ‘Traditional Traditional Internetand Data Bape voi Broadband saviess sevice "Servis TdE Group Opex Breakdown {€ in Millions) Annual growth ric ee, GBR GEDRG 501 1,7038 OM 3117 7078 29% 634.3 Remaining SY fereonnal nts IDR RAUF
Slide 11: in a scenario where the pressure on the traditional business...
in a scenario where the pressure on the traditional business... Accesses Evolution Pre-selected Lines Net Adds {in thousands) 1006 {in thousands) Fixed Telephony Access net 274 Josses 23.9 Full ULL netadds 70.6 Shared ULL netadds 413 81-874 Fixed Telephony Access (1006) 16,1085 Estimated Traffic Sch
Slide 12: ..is being offset by the drive to develop broadband penetration
..is being offset by the drive to develop broadband penetration Spanish market reaches 5.§ Million Internet BB accesses +1.0Miill. |BB accesses during last 6 months: one of HIGHEST GROWTH RATES IN EUROPE Effort by Telefénica de Espafia is driving BB penetration in Spain Internet Broadband estimated
Slide 13: Telefonica Latinoamérica: combining a positive top-line performance in all countries
Telefonica Latinoamérica: combining a positive top-line performance in all countries... 1006 Revenues 1006 contribution 1o revenue growth by company {€ in millions) & {in €, constant currency) 403pp. +61% eR ses woapp one EES AL 6% +09pp Py 0G» 2318.1 +40pp. 1,883.2 1008 Telesp TASA Tchile dP Others
Slide 14: ..with broadband becoming a distinctive catalyst for growth
.-with broadband becoming a distinctive catalyst for growth... Retail Internet BB Connections Broadband revenue growth (Thousands) on e (1006/21005, local currency) 49.5% x | 23% 1,307 Tcksp ASA Tithe TdF? T.latam? Telesp TASA™ T.chile dP —T.Latam 1 Traditional Servizes Revenue growth contribution:
Slide 15: ..with a focus on efficiency through local and regional management
..with a focus on efficiency through local and regional management Evolution of revenues & costs* (Local currency, 1006/1005) Adjusted OIBDA# {€ in Millions) mgt 3. 29% ee 8107 (constantterms2) impact (urrentterms) 1008 1008 100% Seal except wins gains Lesloptton'o a inca rrcyeus forme soups unde mp
Slide 16: O2 UK: revenue growth underpinned by solid operating metrics
Service Revenues {¢ in Millions) ag +166% ” 855 1005 1008 Telefonica Telenica, SA, Investor Relations Stable SAC for both pre-pay and contract. Evolution of client base {in thousands) 1005 mPre-pay ‘Monthly ARFU (e) 1005 acontract 1008 O2 UK: revenue growth underpinned by solid operating metrics 359
Slide 17: O2 Germany: top quality client growth in an increasingly competitive environment
O2 Germany: top quality client growth inan increasingly competitive environment Evolution of client base {in thousands) 330,000 net new customersin Service Revenues 1006 {€inqstions) 730 51% of total base on contract Paz at the end of the quarter 4125% 7 1005 1008 649 sPre-pay Contract Monthly ARFU
Slide 18: Cesky Telecom: a focus on broadband and mobile to grow top-line
Cesky Telecom: a focus on broadband and mobile to grow top-line sc cy name Somes spe Revenues 490 545 +5.0% 40.1% OIBDA 237 252 45.9% +0.9% OIBDA Margin 48.5% 48.9% +0.4pp. Operating Income (Ql) 81. 106 ¥310% |] @2a38% Quarterly average BB net adds? Evolution of mobile client base {in thousands) 2.
Slide 19: Progressing with O2 integration as planned
Telefonica Business Initiatives Progressing with O2 integration as planned, with key business initiatives already in execution mode Alignment of] processes & systems Mobile Germany International] Traffic Cesky Telecom Telenica, SA, Investor Relations Centralisation ofcash pooling Single Brussels Off
Slide 20: Actively managing liabilities to limit the impact of higher gearing
Actively managing liabilities to limit the impact of higher gearing 1006 1905 Net Interest Expenses (519.0) (380.5) 436.4% FX Results, (4.7) 628 Reported Financial Expenses (523.7) (317.7) 464.8% Average Total Net Debt Evolution of average Effective (€ inmitions) Debst Service Rate* wy 46,7289 5.5%
Slide 21: Cash Flow & Debt Reconciliation
Cash Flow & Debt Reconciliation Net Financial Debt Evolutionin 1006 {€ in Millions) 19x OIBDA* 62% of FCF post minorities devoted to dividends and share buyback BEC”, Gomes Oidente Imenincn comogaton "Mr DEO hony Ste — iteck Adjusted FOF Debt and Commitments Breakdown {€ in Millions) {€ in Millions)
Slide 22: Conclusions
Conclusions = We are posting a solid financial performance across the P&L, with organic top-line growth remaining robust in the high single digit range Our 1906 key financial metrics fall comfortably within year-end guidance for all our businesses = We have become a much more diversified group after
Slide 23: For further information
Para más información / For further information Dirección de Comunicación Corporativa Tel: +34 91 584 09 20 Press Office Fax: +34 91 532 71 18 Gran Vía, 28 - 3ª Planta e-mail: prensa@telefonica.es 28013 - MADRID http://www.telefonica.es/saladeprensa SIGNATURES Pursuant to the requirements of the Secu