Slide 1: Quarterly Results January - June 2007
Quarterly Results January - June 2007 TELEFONICA S.A. July 30th, 2007 | Ss st Lv NS AY a oe 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, b
Slide 3: 1H07 results: growth and returns well ahead of the pack
GROUP FINANCIALS 1H07 results: growth and returns well ahead of the pack... € in millions Jan-Jun Jan-Jun % Change % Change 1HO7/1HO6 (% change y-o-y) 2007 2006 1HO7/1HO6 organic? Revenues 27,826 25,163 Operating income before D&A 11,269 9,242 (o1ppa) Operating income 6,557 4,508 (o)) Net Income 3,8
Slide 4: Solid net income growth, up by more than 66.4%
GROUP FINANCIALS .fully flowing into solid net income growth, up by more than 66.4% € in millions (% change y-o-y) +21, "é 445.4% 466.4% 423 78 ME (Cesky’s ar 14, ik 6,557 aa (0.5%) “4,437 ae 3,830 (20.7%) “4,257 TT (41.9%) (33.6%) > Fa i 1H07 OIBDA D&A 4H07 O Assodates Financialresults Taxes Minori
Slide 5: Progressing on commitment to double EPS by 2009
GROUP FINANCIALS We are progressing fast on our commitment to double EPS by 2009, with very solid nominal and underlying rates EPS growth | Underlying EPS growth (in¢) ind) | (ex-capital gains/losses and others) 2005 2006 | 2006 “TR's capital Redundancy Underlying i gains Program 2006 Undertyi Under
Slide 6: Solid organic growth across the board and diversification
GROUP FINANCIALS Solid organic growth across the board and diversification Annual revenue growth breakdown Accesses (Organict) 412.8% (in millions) ‘June 06 June 07 4HO7 HO7 HO7 4HO7 T.Espafia 7.02 Europe ‘T.tatam Telefonica Mobile: 415% Broadband: +35% Pay-TV: 465% 1H07 Revenue breakdown Others & e
Slide 7: Scale is paying off in terms of efficiency
GROUP FINANCIALS ..and scale is paying off in terms of efficiency OpExt Organic? Growth Organic O1BDA Margin 12.2% 35.9% 35.8% 2005 2006 1007 1Ho7 OIBDA Margin (ex-Airwave capital gain) 46.3% T. Espatia T.latam 7.02 Europe Group TELEFONICAS.A, (2) Supplies, Personnel Expenses (e-resiractating cost),
Slide 8: Positive evolution drives 2007 guidance upgrade
GROUP FINANCIALS This positive evolution drives our 2007 guidance upgrade Group Revenues Group O1BDA (€ in millions) i) 1 | €inmilions) 1 4+8%/411% 1 1 29426 19,040 52,901 51,298 2006 2006 2007 2006 2006 adjusted 2006 adjusted 2007 (ex Endemol & Airwave) (reported) — forguidance —_forguidance (ex En
Slide 9: 2007 targets, a guide to calculations
GROUP GUIDANCE 2007 targets, a guide to calculations FROM 2007 REVENUES GUIDANCE TO 2007 REPORTED REVENUES : please include ™ 2007 forex impact © 1007 Airwave results and 1HO7 Endemol results FROM 2007 OIBDA GUIDANCE TO 2007 REPORTED OIBDA : please include ™ 2007 forex impact © 1007 Airwave results
Slide 10: Telefónica España: Sustained strong results in Spain
TELEFONICA ESPANA Telefonica Espafia: Sustained strong results in Spain Revenues OIBDA and Underlying OIBDA OIBDA Margin (€ in millions) (€ in millions) (%) 10,191 9,665 14.3% 1H06 4HO7 1H06 4HO7 1HO6 4HO7 = Total accesses increased by 5.5% (Jun-07 vs. Jun-06) exceeding 45 Million = Revenues growing
Slide 11: Wireline Business: healthy Broadband and Pay-TV growth
TELEFONICA ESPANA Wireline Business: healthy Broadband and Pay-TV “““qrowth led by TEF Fixed Telephony Accesses (in thousands) = Successful customer retention = Lowest quarterly fixed telephony accesses loss since 4004 Retail Iintemet BB Accesses (in thousands) 4,198 = Sustained market share at 56%
Slide 12: Wireline Business: superior top line growth
TELEFONICA ESPANA . s ° ° ° WIRELINE BUSINESS Wireline Business: superior top line growth Revenues evolution (% change 1H07/1H06) +18.5% +10.2% 43.8% 2.0% Traditional internet & Data & iT TOTAL WIRELINE Access & Voice Broadband BUSINESS = Expanding BB customer base v 26.4% of lines have BB (20.1% in
Slide 13: Wireline Business: strong focus on operational efficiency
TELEFONICA ESPANA . ° ° ° WIRELINE BUSINESS Wireline Business: strong focus on operational efficiency leading to margin improvement OIBDA Margin *09pp: 46.7% ZHO6 exE.R.E. EHO? ex ERE, provision and EU fine provisions OIBDA Growth 1H07/1HO6 413.1% -12.8 p.p. TrEronica sa Filefinica investor Relation
Slide 14: Wireless Business: solid 2007 performance with strong focus on value
TELEFONICA ESPANA WIRELESS BUSINESS Wireless Business: solid 2007 performance with strong focus on value Net adds NEW TARIFFS LAUNCHED Gn thowsone) = oer = Sinplified offer (4 options) aa i] = Leveraging “community effect” 378 390 eit 349 289 1 STRONG CHURN PERFORMANCE 2008 2002 = 58% contract mix (
Slide 15: Wireless Business: data revenue acceleration drives ARPU
TELEFONICA ESPANA . . . WIRELESS BUSINESS Wireless Business: data revenue acceleration drives ARPU performance 2007/2006 (y-0-y growth rates) = APU Growth tL1% 2006 2007/2006 DataRevenuegrowth Data revenues split +79% P2P Communications 59% +17% = Data traffic: x7 (2Q07 vs. 2Q06); x2 \NonP2P SMS Con
Slide 16: Wireless Business: healthy top line performance & robust OIBDA growth
TELEFONICA ESPANA . ° ° WIRELESS BUSINESS Wireless Business: healthy top line performance & robust OIBDA growth Revenues Handset Revenues Service Revenues Customer revenues 49.3% 49.6% Interconnection revenues -8.1% “5.7% Roaming-in revenues “11.9% “15.6% @ comparabte growth * OIBDA @ yoy growth (€
Slide 17: Telefónica España: Upgrading 2007 guidance
TELEFONICA ESPANA Telefonica Espafia: Upgrading 2007 guidance on sound wireline and wireless performance OIBDA from 40.5% /+2% fevenues: %s % (Ein mits) UPGRADED (6 in milfonsy “SUBGRADEDI> To 43.5% 144.5% 10.5% 142% on) 49% /412% 19,750 ; To +13.5%/+16% {€ in miltions) 2006 2007 2606 adjustedfor 20
Slide 18: Telefónica Latinoamérica: very strong revenue and OIBDA growth
TELEFONICA LATAM Telefonica Latinoamérica: sound operating trends lead to very strong revenue and OIBDA growth Revenues OIBDA OIBDA Margin (€ in millions) ae (€ in millions) (6) _— 9,628 3,392 35.2% 8,707 3,002 34.5% 415.5% 417.8% ‘HOG 4HO7 HOG 4HO7 HOG 4HO7 = Revenue growth accelerates vs. 1007 (+8
Slide 19: Healthy growth in revenues and OIBDA in all major markets
TELEFONICA LATAM Healthy growth in revenues and OIBDA in all major markets Revenues OIBDA 41HO7 % 4HO7 % Ein milfions) change* (Ein milfions) _ change* = Brazil? z 1,493 #1.2% = Argentina » . 394 417.6% = Chile : 329 414.0% = Peru . 279 40.4% = Colombia E 209 nm, = Venezuela = Mexico = Central Ameri
Slide 20: Strong broadband and Pay TV development across the region
TELEFONICA LATAM BROADBAND Strong broadband and Pay TV development across the region Retail intemet BB connections* Pay TV clients (in thousands) (in thousands) PB , 52 3,202 po cas T, * 171,400 clients in Chile 100 © 59,700 clients in Peru 26 = 28,300 clients in Colombia Breakdovm of retail BB conn
Slide 21: Brazil wireless: improving operating trends
Brazil wireless: improving operating trends fully TELEFONICA LATAM VIVO flowing into financial results 1H07/1H06 chan MoU ARPU 33 kxchucting B&K effect 7. ge (minutes) (local asrrency) 423% 1 77 66 Gross Churn Net Customers 2906 = 2007 Adds Adds! Service revenue growth OIBDA growth +38.3% OIBDA marg
Slide 22: Mexico wireless: sustained healthy commercial activity
TELEFONICA LATAM MEXICO Mexico wireless: sustained healthy commercial activity leads to very strong revenue & OIBDA growth Gross adds Net adds Blended chum Customer growth (in thousands) (in thousands) (%) hoy) es 42° 3.9 a ad 3,322 2,095 4,680 29 98 749% 750% ~ +35% 497 HOG 4HO7 HOG aHO7 1006 2006
Slide 23: Key highlights for other Latam mobile operations
TELEFONICA LATAM ° e ° ° REST OF MOBILE Key highlights for other Latam mobile operations 1H07/1H06 1HO7/1HO6 1HO7customer 5 ‘ ‘ 1HO7/1HO6 @® veovgrowth basa | srvkereerue | outgingsevie | ton margin ARGENTINA | Solid revenue growth backed by | strong customer growth & margin Umprovement despite high
Slide 24: Strong results drive 2007 guidance upgrade
GROUP GUIDANCE This strong set of results drives 2007 guidance upgrade Revenue Growth OIBDA Growth (€ in millions) © UPGRADED (€ in millions) | UPGRADED from 411% / 414% from +12% /+16% To +13%/+16% To +14%/+17% 18,089 6,607 2006 2007 2006 2007 adjusted for guidance TELEFONICA 2S rin href gor eerion
Slide 25: Telefónica O2 Europe: tackling mobile pressures
TELEFONICA 02 EUROPE Telefonica O2 Europe: proactively tackling mobile pressures & selectively exploiting BB growth opportunities Revenues * OIBDA* OIBDA Margin * (€ in millions) (€ in millions) (%) = UK: healthy top line pushed by customer and ARPU growth and margin improvement = Germany: a new man
Slide 26: O2 UK: healthy top-line and margin improvement
TELEFONICA 02 EUROPE O2 UK: healthy top-line pushed by customer and ARPU “ growth and margin improvement Mobile customer growth boy) I 785% 35,8% of base (10.9 pp) Total Pre-pay Contract Average Revenue per user (blended quarterly monthly average, in £) Revenues (Organict, £ in millions) 10.6 am z o
Slide 27: O2 Germany: a new management to address market opportunities
TELEFONICA 02 EUROPE O2 Germany: a new management to address market “4 opportunities Mobile customer growth Average revenue per user Revenues yoy) (blended quarterly monthly average, in €) (Organict, € in millions) 1,754 * a8, +12.6% 24.2 “ass, 4,703 49-9.% of fd Total Pre-pay Contract 2006 2007 1HO
Slide 28: T.O2 Czech Republic: solid financial performance
TELEFONICA 02 EUROPE (CZECH REPUBLIC T.02 Czech Republic: solid financial performance through a tight operational focus Operating revenues (C2K in billions) Fixed revenues ® Line loss contention ce ao boy) (1007:-114,000 2007:-81,000) 29.9 " Leadership in BB growth backed on bundles (retail BB rev.
Slide 29: 1H07 synergies aligned with year-end target
GROUP SYNERGIES 1H07 synergies are totally aligned with year-end target, leveraging our top initiatives OpCF from synergies 2007E OpCF from synergies 1HO7 (€ in millions) in mitfions) Regionalization 7 Branding & commercial campaigns Handset & SIMs purchases Mundo Movistar Service platforms AK Conve
Slide 30: Active financial risk management
GROUP FINANCIAL EXPENSES Active financial risk management Reducing cost of debt to 5.45% 4H 2007 Net interest Expenses (1,437) Total Average Debt 53,194 Effective interest rate 545% improving debt maturity profile 41H 2007 Bond issuance 4.1 bn Eur Average maturity 6.4 years Average credit spread 41
Slide 31: De-leveraging on track
GROUP DEBT De-leveraging on track 41HO7 Net Financial Debt Evolution €€ in million) 7X OIBDA* x OIBDA? OIBDA2 52,267 49,219 Net Fin, Debt Commitments Share buy-back Net Financial. ~— Change in. “Net Fin. Debt Net Fin. Debt & Dec. 06 cancellation and TSA dividends Investments —_ consolidation, June 0
Slide 32: Conclusions
Conclusions i. Growth and returns well ahead of the pack = From +10.6% revenues to 63.7% EPS growth = Twelve consecutive quarters growing simultaneously revenues, OIBDA, Ol and net income 2. Solid Organic growth across the board = +7.4% and 7.1% organic? revenues & OIBDA growth rates 3. Benefiting f
Slide 33: 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: July 30 th , 2007 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernández V