Slide 1: Annual Results January - December 2007
Annual Results January - December 2007 TELEFONICA S.A, February 28th, 2008, & ca a SAT f Taeomeasa. 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: Telefonica: Solid fundamentals and high returns
Telefonica: Solid fundamentals and high returns Sound 2007 results: upgraded guidance met or exceeded Strong execution of operations Leveraging our diversification Steady customer base expansion Cost contention, integrated delivery & scale benefits Increased DPS to 1€ in 2008 New share buy-back prog
Slide 4: 2007 results: Solid performance across the board
GROUP FINANCIALS 2007 results: Solid performance across the board... jnmitore Jan-Dec Jan-Dec 9% Change % Change organic * (change yo) 2007 2006 FY O7/FY 06 Revenues 56,441 52,901 46.7% Operating Income before D&A 22,825 19,126 |+19.3%| (o1BDA) Operating Income 13,388 9,421 |+42.1%| (ol) Net Income
Slide 5: With very strong increases in net income and EPS
GROUP FINANCIALS .. With very strong increases in net income and EPS ... €in millions (% change y-oy) 98K 824% 420% — €s02m(02'sPPa) 138 m(T.02CR"s PPA) 22,825 23.308 =a 2,906 456 (323%) (es) FY2007 D&A FY 200701 Avsocates Financialresulls Taxes Minorities FY 2007 oeba Olscontinued Net Incorme Opera
Slide 6: We have met or exceeded our upgraded guidance
GROUP FINANCIALS We have met or exceeded our upgraded guidance ... Revenue Growth OIBDA Growth 9.8% 412.8% % Change FY O7/FY 06 % Change FY O7/FY 06 01 Growth Capex 927.0% 3087 % Change FY 07/FY 06 FY 2007 TEEFONICASA, Investor Relations
Slide 7: Restructuring measures to enhance efficiency
GROUP FINANCIALS We are implementing restructuring measures that will further enhance efficiency in the coming future FY 2007 OIBDA €in millions 12,619 22,825 +452 +182 159 € 21069 | ee FY200601BDA FY 2007 Net capital Personnel Others | 2007 018DA adjustedfor adjustedfor —OIBDAreported gains reergan
Slide 8: Capitalizing our diversification, driving customer growth
GROUP FINANCIALS We are capitalizing our diversification, driving customer growth... Accesses (Dec-07/Dec-06) “= +1603% 160% T.Espafia T.Europe T.latam Total Motile 88 —PayTV Fixed 34% with volce, BB ‘and TV bundles (+8 pip. vs Dec-06) TEEFONICASA, Investor Relations FY 2007 Revenue growth by region
Slide 9: Scale and cost contention sustain healthy profitability
GROUP FINANCIALS .. while scale and cost contention sustain a healthy profitability... OpEx* Organic Growth 9.0% 72%! Organic? OIBDA Margin FY 2006 FY 2007 36.0% 35.0% 2007 Organic OpEx* breakdown sorpp. 47.2% saspp iil Fy 2006 2007 T.Espafia TEurope Tlatam _Othes& Total Eliminations Taroncasa, Inve
Slide 10: Investing for future growth while generating high OpCF
GROUP FINANCIALS We are investing for future growth while generating high Opcr Cane spending 2007 Group CapEx breakdown €in millions) Organict po-y {Ein millions) ‘ab gan able coverage & capacity to face srowth rate high demand Deployment af new services (Pay TM 25% Maintenance BB expansion (Fixed &
Slide 11: Telefonica España: strong results, delivering on guidance
TELEFONICA ESPANA Telefonica Espaiia: strong results, delivering on guidance Revenues OIBDA Capex (Ein millions) (Cin milion age, (Ein millions) DIBDA growth sccaring louidenecarte: Fy 2006 FY 2007, Fy 2008 Fy 2007 Fy2006 FY 2007 "© 2007 targets met or exceeded at all levels, outperforming European
Slide 12: Wireline Business: expanding access base
TELEFONICA ESPANA WIRELINE BUSINESS Wireline Business: expanding access base by upsellin; and getting new customers .. ixed Telephony Accesses (in thousands) Total ARPU 15,950 <1 ssa ie Dee-05 9307 ee ° neadds neadds OPPO? Retail Internet BB Accesses {in thousands) i #Y 206 +227 5 3,743 ao Gel Reven
Slide 13: Wireline Business: outstanding top line growth
TELEFONICA ESPANA WIRELINE BUSINESS Wireline Business: outstanding top line growth Revenue growth and contribution to revenue growth(? (F¥2007 vs. FY2006) % age OD Traditienal Intemet & Access & Voice Broadband Data 42.0% PSTN monthly fee increase in 2007 (+2.0% in 2008) Line losses capped down to -
Slide 14: Wireline Business: top line growth increased at OIBDA level
TELEFONICA ESPANA WIRELINE BUSINESS Wireline Business: Top line growth increased at OIBDA level OIBDA (million euros) ae FY 2006 Fr 2007 Underlying OIBDA Growth FY 2007/FY 2006 114.8% “ALO pp. Reporled Lower workforce EUFineprovision Subsidies, Real Underlying rightsinggrovsin "(C1549)" Estateprogra
Slide 15: Wireless Business: Strong focus on value
TELEFONICA ESPANA WIRELESS BUSINESS Wireless Business: Strong focus on value CONTRACT a Customers 21006 eos aor FY 2006 FY 2007 Dec-05 2007 net Dec-07 adds aes ation® Lending the growth inthe = market TEERONICASA, Yoo Sanee GOV eu oar “Felefinica Investor Relations 15
Slide 16: Wireless Business: Sustained outgoing ARPU
TELEFONICA ESPANA Wireless Business: Sustained outgoing ARPU on WIRELESS BUSINESS solid data usage FY 2007 / FY 2006 (y-o-y growth rates) = ARPU Growth ‘OUTGOING ‘= Mou Growth TOTAL ARPU* Cumulative 14.0% MTR cut in April 07 & Oc.07 jowdown DATA ARPU GROWTH SUSTAINED Data revenues growth 3G over Cus
Slide 17: Wireless Business: robust top line growth
Wireless Business: robust top line growth while improving efficiency Revenues Handset Revenues Service Revenues TELEFONICA ESPANA WIRELESS BUSINESS +11,9% a Customer revenues Interconnection revenues Roaming-in revenues OIBDA (€ in millions) @ yoygowtn yoy gronth according 2007 OIBDA margin ex- prov
Slide 18: From Reported OIBDA to adjusted OIBDA for guidance
TELEFONICA ESPANA Telefonica Espaiia: from Reported OIBDA to adjusted OIBDA for guidance comparison JUSTMENTS DUE TO (ition euros) = SS | 5,249 se 7 5.283 =) +1540 4395 = E : . TEEFONICASA, Investor Relations
Slide 19: Telefonica Latinoamérica: robust performance, meeting targets
TELEFONICA LATAM Telefonica Latinoamérica: robust performance, meeting targets can ica Dec-07 Accesses Revenues OIBDA fin mitions) > (en mitions) (€in millions) [| - 1020 wom 208 Total _Motle 68 Paytit™__Fr2008 2007 yao 2007 = Strong commercial activity in a high growth region: = Average Latin Ameri
Slide 20: Healthy growth in revenues and OIBDA in all major markets
CA LATAM TELEFON! Healthy growth in revenues and OIBDA in all major markets (> &pesome cognition prviton OIBDA FY 2007 change? (Ein millions) Revenues FY 2007 (€in millions) Brazil? 7,662 43.2% 3,026 3.8% = Argentina 2,264 415.7% TB +8.0% = Chile 1,814 414.3% 716 48.2% = Peru 1,513 410.5% 469 “15.6%
Slide 21: Accelerating fixed transformation: bundles, broadband, Pay TV
TELEFONICA LATAM Accelerating fixed transformation by fostering moan inno bundles, broadband and Pay TV Retail Internet BB connections* Pay TV clients? {in thousands) {in thousands) B¥ 03 Cn 3,780 * 665 200332 Breakdown of retail BB connections {in thousands) = Dec-07 Retsil BB connections bbundless
Slide 22: Brazil wireless: robust commercial activity
‘TELEFONICA LATAM Brazil wireless: robust commercial activity accelerates top line and OIBDA growth rt crrasosconae ES 2007/2006 change ARPU {local currency) 5% of ED =, 466% 5% app. 2.6pp. FY 2006. FY 2007 Gross Chum Net Adds Gross chum Net. Customers Excluding BliKetfec Fein ae ra 2007/2006 growth
Slide 23: Mexico wireless: further enhancement of operations
TELEFONICA LATAM Mexico wireless: further enhancement of operations = ““" 2407/9406 change 2007/2006 change Customer growth 482% +43% 448% 31% 32% 447% 31% 2.4pp. o8pp. Total Contract Pre-pay Grose Chum Net Adds Grass Chum Net Adds ae ase 2007/2006 growth OlBDA opcF (in local currency) (€in millions
Slide 24: Key highlights for other Latam mobile operations
TELEFONICA LATAM Key highlights for other Latam mobile operations = “°“"* Decor customer | FY 2007/8 2006 TOMEOE SS | ey 2007 ODA @ eves beselon) | MEERram ony varia ARGENTINA | vere ogg mest ‘customer growth driving service revenue | upata healthy rate. Further advanees in “efficiency drive margin
Slide 25: O2 UK: continued outperformance
TELEFONICA EUROPE UK O2 UK: continued outperformance Growth rates under idanceerit Mobile contract net adds ARPU Revenues {in thousands) {in £) (Organic, £ in millions) ns Bin B-,, 230 227 Be] le Fv06 FY O7 FY 2008 Fy2007 Qtos Qao7 Qucs Quo? FYOS FYO? MoU": +9.8% y-o-y to 197 minutes ‘= Total custom
Slide 26: O2 Germany: increasing commercial activity
TELEFONICA EUROPE GERMANY O02 Germany: increasing commercial activity to capture growth Mobile customer growth Contract Net additions ULLlines (y-oy) oo eeneneennnn (in thousands) {in thousands) sade cluding repay base t 156 #13, 198 ok ae 204 93 Total Contract FY 2006 Qu07 Q207 Q307 Q4o7 FY2007 —_N
Slide 27: T.O2 Czech Republic: maintaining growth with improved efficiency
TELEFONICA EUROPE (CZECH REPUBLIC T.02 Czech Republic: Maintaining growth with improved efficiency Fixed Telephony net adds Operating revenues tin thousands) © Decline in fixed line losses trend (C2kin billions) Ea ‘a Qi07__Q207_Q207_guor rt ® Focus on bundled propositions Ee 2 6 Retail Internet BB
Slide 28: Maintaining good performance in Synergies
GROUP SYNERGIES, Maintaining good performance in Synergies ‘OpCF (OIBDA-CapEx) (€in millions) Local Regional Global 2007 Commercial F-M integr P&SRoadrrap Channelsintegration Technology, Operations & Systems integration (T.0,) Fixed-Mtobile Combination of 3 areas Commercial Approach Brand, Recharges
Slide 29: Stable financial profile and comfortable liquidity position
GROUP FINANCIAL EXPENSES AND DEBT Stable financial profile and Comfortable liquidity position EUR us com 3% LATAM 15% ‘GBP a By a 5% Dec-07 Net Financial Debt Maturity Dec-07 Unused committed credit facilities 98 Ein lions Ein billions 4a 57 03 2 2009 2010 Stable cost of debt in millions 2007 Net in
Slide 30: Shareholder remuneration increased and de-leverage target achieved
GROUP DEBT Shareholder remuneration increased and de-leverage target achieved 22Mo7 Net Financial Debt Evolution (Ein millions) 2.7% OlBDAY 52,145 NetFin,Debt FoF Commitments Sharebuy-back Netinancial"“Changein”_NetFin-Debt Decos Post. cancelation asa Investments consolidation, Dec-o7 Minerities ait
Slide 31: Well positioned to capture additional growth
GROUP GUIDANCE ..Well positioned to capture additional growth in our markets ... Revenues ‘OIBDA (€in millions) RA (in millions) 20536 9,655 ee 2007 «2008, 2007 ‘20088 adjusted for guidance Revenues (Ein millions) Revenues ‘OIBDA (cin ae 14,358 BE 2008 ae TEERONICASA, Haste rour renal tonne ontsciuc
Slide 32: On track to meet 2010 targets
GROUP GUIDANCE On track to meet 2010 targets Implicit 08E-10E 2006-2007A under 2006-2010 ("*) CAGR to meet 2010 CAGR gublance guidance 2.2% 17.1% 5% 18% 7.0% / 11.0% 4.0% /10.1% 12.1% /16.9% 16.0% / 20.0% ‘Cum. 07-10E <€ 33,000 m TELEFONICASA, Investor Relations
Slide 33: 2008 targets, a guide to calculations
GROUP GUIDANCE 2008 targets, a guide to calculations 2007 ADJUSTED FIGURES FOR GUIDANCE: ‘m Excludes Endemol and Airwave (revenues: € 643 mand € $9 m respectively; OIBDA: € 87 mand € 40 m) ‘© Excludes Airwave and Endemol capital gains (€ 1,296 m and € 1,368 m respectively) 1 TelefSnica Espafia and G
Slide 34: A growing path on shareholders returns
A growing path on shareholders returns 5.2 Bn€ paid to shareholders in 2007 = Total 2007* DPS :0.75 € Total 2008? DPS: 1€ € 2.7 Bn completed in 2007 = 2008- H1.09 program: 100 m shares, sensitive to cash flow generation and share price TELEONICASA, —§) nummer srGantont been Bat Telefonica Investor R
Slide 35: Closing remarks
Closing remarks TELEFONICASA, Investor Relations Tilefini
Slide 36: 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: February 28 th , 2008 By: /s/ Santiago Fernández Valbuena Name: Santiago Fernánd