Slide 1: Quarterly Results January-December 2005
Quarterly Results January —- December 2005 & March ast, 2006 Telefénica, S.A Investor 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 a number of places in this document and include statements regarding the intent,
Slide 3: We have a consistent and clear framework to manage our operations
We havea consistent and clear framework to manage our operations Management Focus To generate sustainable top-line growth, REVENUES ahead of our peers To provide the best combination of To achieve operating excellence, OIBDA growth and cash maximizing profitability returns in the ol industry To main
Slide 4: FY05 Financial Highlights: Building an Attractive Growth Profile...
FY05 Financial Highlights: Building an Attractive Growth Profile... € in Millions (@% change y-0-y) % Change Management Jan-Dec Jan-Dec % Change FYOS/F¥O4 Focus 2005 2004 FYOS/FYO4. Organic Top-line Revenues 37,882.14 30,280.9 ]+25.1%| 49.3% growth Operating Income +9.9% 0 before D&A (OIBDA) 15,276.
Slide 5: ...from top to bottom...
..from top to bottom... € in Millions (% change y-o-y) +15 pp. tT +25.0% +30.5% +40.0% 15,2764. 67177 (18.6%) "128.2 (4153.9) 0343 (03%) 1,969.2 “381.2 (30.2%) (123.0%) DRA FIO Associates Financial Taxes FIO 1D results ‘minorities FYOS Net Income Telenica, SA. Investor Relations (0) Netoftmeand mino
Slide 6: Our revenue growth is underpinned by the strong performance of all our businesses...
Our revenue growth is underpin by the strong performance ofall our businesses... Group Orgaric Revenue Growth # Forex Impact on revenues in 2005 +4.7pP. 92% 202% 99% 93% +3.0p Pp. +1.2pp. Froa 1005 THOS 905 FYOS -O6pp. 1005«1HOs «SMS -FYDS -2.4pp. Organic Revenue Growth by businesslines # (96 change
Slide 7: ...based on the expansion of the portfolio of services we are selling...
..based on the expansion of the portfolio of services we are selling for the benefit of total ARPU... Telefonica de Esparia total ARFU Telefonica Latinoamérica total ARPU* ) ©) 55.5 31 “a Pol +6% +19% oa 525 26 20g 2005 20g Telefnica Méviles Esparia total ARPU one ‘Méviles Latam total ARPU iS 33 ose
Slide 8: We have kept a strong hold on costs across the year
We have kepta strong hold on costs across the year to retain benchmark profitability Group Orgaric OIBDA Growth Forex Impact on OIBDA in 2005 1% 95% EEE +4.5pp. +3.0pp. 6.6% 6.7% +Lapp. Fro 1005 HOS SMO5 FOS 0.2 agps 105 9Mo5_ FYO5 “L7pp. Group O1BDA Margin 404% 403% Fy2004 Fy2005 (el amuringonmant
Slide 9: We are generating healthy cash flow while investing for future growth
We are generating healthy cash flow while investing for future growth Group Capex 2005 Group Capex breakdown fe ser (ein witions} r 27% [sae BR, }, 5358.7 3,725.9 36 37671 G2 cuioance preca.so0 Fv2004 Fv2005, FY 2005, 5% 32% (guidance 1 Fixed 86 &:transformation Mobile growth criteria %) 1 Other gro
Slide 10: A performance that meets guidance by far, even after an upgrade
A performance that meets guidance by far, even after an upgrade, at the Group level... Revenue Growth OIBDA Growth ®) (guidance criteria) (guidance criteria) 17.2% 12.3% ‘GUIDANCE (GUIDANCE 25m 508/39 (lifted in30D5) % Change FrosiFYo4 % Change FrosiFYo4 01 Growth (guidance criteria) 161% GuDaNce 25
Slide 11: ...with all our major business lines delivering
.-with all our major business lines delivering TdE Group T Latinoamérica T. Méviles 62% 37.4% cuioance _ Revenue sue Seem Growth # (guidance criteria) 96 change FYDS/FYOR 96 change FYDS/FYOR 96 change FYDS/FYOR one crowin® [guidance criteria) Gunance 19m 9b Change FYOS/FYOR GUIDANCE Er 98 Change FYD
Slide 12: Telefonica de España Group: In line with Upgraded Revenue Guidance
Telefonica de Espafia Group: In line with Upgraded Revenue Guidance Defend traditional Drive broadband Lead IT & Data business growth ‘opportunities Traditional Services Internet & Broadband Services IT & Data Services {€ in Millions) Ae {€ in Millions) {€ in Millions) tA 3,022.6 % 7.9380 B80 2043 a
Slide 13: Telefonica de España Group: commercial effort, OIBDA guidance
commercial effort TdE Group Opex Breakdown (€ in Milions) ‘Annual growth rate 464% 450% 193% 196.0 7,213.7 GR 12309 30320 “08x 2,695.8 Remaining ES% erconnal costs PBB ERE PreMsion + Actuarial revision Personnel Supplies External Taxes Services {€ in Millions) Adjustments for 45.1% ODA | guidance ca
Slide 14: Telefonica de España Parent: Traditional Services
Telefonica de Espafia Parent: Traditional Services Accesses Evolution Pre-selected Lines Net Adds {in thousands) {in thousands) ra005 Faced Wepiory | 593 ‘neces et losses Pus tt net ai m3 Shared Ut net nara Feed Tete Se os Estimated Traffic echo (tiionminates) 2005 | 2004 Chane OOTGONG Tae) Coe) | a
Slide 15: Telefonica de España: Strong Growth of Internet BB While Recovering Market Share
Telefonica de Espajia: Strong Growth of Internet BB While Recovering Market Share Retail Internet BB Market Share # Spanish market reaches some § Million Internet 88 accesses 55% 55% 4005 40:5 Mill. 188 accesses: HIGHEST Meu GROWTH EVER during 2 quarter in Spain Telefénica de Espatia pushing for IBB
Slide 16: Cesky Telecom: Managing a rapid turn-around since takeover
Eesky Telecom: Managing a rapid turn-around since takeover Mobile Net Adds 256,000 x98 77 62,000 26,000 THOS “HOS “HOS HOS Growing ADSL market share #1 positionby market toa stable 80% share of customers & revenues ‘Annual Revenue Growth # Annual OIBDA Growth ¢ (Local currency) (Local cureny) TF fpk
Slide 17: Telefonica Latinoamérica: Growing Solidly across Regions...
Telefonica Telefonica Latinoamérica: Growing Solidly across Regions... Revenues Revenue Growth Rate (€ in millions) (% annual change, ex-Terra) x= +208% 171% 208% —* yoy growth rate 162%, 2005 target! +4%17% 81545. Terra adds 1110 Me 125% to total revenues 73670 4987.5 6.5%] 65% 45% 6.2% ia (eonstan
Slide 18: Broadband Services...
Broadband Services... 2005 total accesses {in paitlions) Total FY2005t FY2004 2005 Traditional revenue growth ..By Leveraging on Both Traditional and 2005 retail BB net adds 223,753 201,770 184,593 116496 ions 2005 aS gS 2005 Broadband revenue growth (%) (%) 19.4% BI 53.8% 46% ‘Telofinica Nominal te
Slide 19: ...While Keeping Profitability High
..While Keeping Profitability High in Our Way to Reinforce our Market Positions Adjusted OIBDA Group OIBDA margin {€ in Millions) 423.3% S&S bau oostarga—» yoy growthrate - 181 6 %9% z 3.6254 8.8% 455% ga oy 31801 +4451 5% FO5 forex __-AYOS (constant terms ) impact (currentterms) Terra Terra FrOg Fr
Slide 20: An Active Management of Liabilities to Limit the Impact of Higher Gearing
An Active Management of Liabilities to Limit the Impact of Higher Gearing FYOS FYO4 Net Interest Expenses (1,796.3) (1,462.4) © 22.9% FX Results. 162.0 (177.0) Reported Financial Expenses (1,634.3) (1,639.4) 0.3% = Higher net interest expenses due to higher total debt and higher debt in Latam curren
Slide 21: Cash Flow & Debt Reconciliation
Cash Flow & Debt Reconciliation 18x ES Ox OIBDA ® ES C) Debt evolutionin 2005 (€ inmittions} e £55 Ba BES Fels ERTLET ontients revtmone conskicisn “eecos “hany™ “SNR “Gage” "Char ir = a veces Cz hetfenca! “Bete y spe, PO, POH Beet septs) 2A71. 22048 0 4571 729 28,8022 30067: 23,698.4 44761 6928 7108
Slide 22: Share Buyback Program Progress Report
Share Buyback Program Progress Report vuton of he 2.8% of capital held in treasury Evolution of Sharesin Treasu y An additional 39 million shares currently {in paitlions) in call options, expiringin 2006 297 2524 2461 3874 23.6 Treasurystock Acquisition Distribution/Cancellation Treasurystack Treasu
Slide 23: O2: an ambitious integration/alignment process
Telefonica 02: an ambitious integration/alignment process that is running at full speed... ae A clear set of targets to be “xecutive achieved before the end of May, Committee Progress Report Aligning 02’s functional each fortnight processes with Telefénica’s Office of Integration of Processes and Sy
Slide 24: Identified & quantified synergies
ww Identified & quantified at Identified but not quantified at acquisition date
Slide 25: We are expanding Cesky Telecom expected synergies
We are expanding Cesky Telecom expected synergies by additionally integrating fixed and mobile within the O2 Group PRODUCT DEVELOPMENT, MARKETING AND R&D IPTV, UMTS, IP based VAS, content, integrated solutions PROCUREMENT substantial OpEx and CapEx savings TECHNOLOGY AND SOFTWARE PLATFORMS Integrati
Slide 26: An attractive Group guidance for 2006...
An attractive Group guidance for 2006... Group Revenues Group O1BDA {€ in Millions) {€ in Millions) 434% £ 437% +26% / 429% 37,8821 37,3139, 25,2764 15,0067 14,7858, Frooos FY 2008 (TPlasFY2006 Fr2005_FY2005 adjusted FY2005 adjusted FY2005 s st (reported) ferguidanes) fer guidance, TPlas discontinue
Slide 27: ...both for our long-established fixed & mobile businesses...
..both for our long-established fixed & mobile businesses... TdE Group iT tatinoamésica |r pevis i ! féviles Grou Goctates 12 monttsoffera Spanj | faciukes 12 months oflera tata e 05% 2% | 4.0% /60% | 9.0% 112.0% Revenue 1 1 Growth 2M7554 gasea i a65135 le innaitions) : H Face; Froo0s j= ab05 Frn006
Slide 28: ...as well as for our newly managed O2 division
..as wellas for our newly managed O2 division Cesky Telecom 02 Group Service Revenue Growth] | OIBDA Margin (€ in willions) (6) We expect to stop the decline of aos 60%/ 90% Tevenues and OIBDA in 2006 and 203% [Babe teach the same level as in 2005 H | | Capex Growth [E in Millions) aog7 ABPOX.225 2,
Slide 29: A view on Telefónica's 2005 key pro-forma metrics
Aview on Telefénica’s 2005 key pro-forma metrics Group Revenues Group OIBDA (€ inittions} ono 43oa59 — (Einmllions) 373139 10159 2 3. 1 18,1468 17,894.7 oss [i ssa 2521, I : Froo0s—aHos Gasky = 022005, repmcatnes “akcow — °7 ga anay ASIEN PRE Reportad(TPlas Telaxm (proforma) "rontal Bee ned fr dismn
Slide 30: Conclusions
Conclusions Our management of operations, centred on top-line growth, efficiency, and cash generation is proving to be successful across the P&L, with Net Income increasing by 40% We have kept organic growth at unparalleled levels, backed by the strong performance in subscribers and ARPUs for all di
Slide 31: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Telefónica, S.A. Date: March 2 nd , 2006 By: Santiago Fernández Valbuena Name: Santiago Fernández Valbu