María García-Legaz Ponce – Head of Investor Relations César Alierta – Chairman and Chief Executive Officer Santiago Fernández Valbuena – General Manager Strategy, Finance & Corporate Development and Chief Financial Officer Guillermo Ansaldo – Chairman and Chief Executive Officer – Telefónica Espana Jose Maria Alvarez-Pallete – Chairman and Chief Executive Officer – Telefónica Latinoamerica Julio Linares – Chief Operating Officer Miguel Escrig – Chief Financial Officer

David Wright- Deutsche Bank Tim Boddy – Goldman Sachs Mathieu Robilliard – Exane BNP Paribas Torsten Achtmann – JPMorgan Luigi Minerva – HSBC James McKenzie – Fidentiis Equities Jonathan Dann – Barclays Capital Justin Funnell – Credit Suisse Luis Prota – Morgan Stanley Jesus Romero – BofA Merrill Lynch David Strauch – Natixis James Ratzer – New Street Research Giovanni Montalti – CA Cheuvreux Ivon Leal – BBVA Global Markets Will Milner – Arete Research Jeremy Dellis – Jefferies

Ladies and gentlemen, thank you for standing by. Welcome to Telefónica's January to December 2010 results conference call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to hand the call over to Ms. María García-Legaz Ponce, Head of Investor Relations. Please go ahead, madam. María García-Legaz Ponce: Good afternoon, ladies and gentlemen and welcome to Telefónica's conference call to discuss January-December 2010 results. I am María García-Legaz Ponce, Head of Investor Relations. Before proceeding, let me mention that this document contains financial information that has been prepared under International Financial Reporting Standards. This financial information is audited. This presentation may contain announcements that constitute forward-looking statements, which are not guarantees of future performance and involve risk and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. We invite you to read the complete disclaimer, including the first page of the presentation, which you will find on our website. We encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators. If you don't have a copy of the relevant press releases and the slides, please contact Telefónica's investor relations team in Madrid by dialing the following telephone number, 34-91-482-8700. Now, let me turn the call over to our Chairman and CEO, Mr. César Alierta, who will be leading this conference call. César Alierta: Thank you, Maria. Good afternoon, ladies and gentlemen. Thank you for attending Telefónica's 2010 full-year results conference call. Today I have with me Julio Linares, Chief Operating Officer; Santiago Fernández Valbuena, Chief Strategy Officer; Guillermo Ansaldo, head of Telefónica Espana; Jose Maria Alvarez-Pallete, head of Telefónica Latinoamerica; Matthew Key, head of Telefónica Europe; and Miguel Escrig, Chief Financial Officer. During the question and answer session you will have the opportunity to ask questions directly to any of them. 2010 achievement reinforce our track record as a highly predictable and reliable Company, and proves our differential profile in the industry with tangible results. First, in 2010 we have posted a solid set of results, delivering superior top-line growth, best-in-class profitability, and high cash generation. A strong execution and diversification has been key for this strong performance. Let me highlight Latin America accounted for 43% of Group sales, while our push in mobile broadband data has delivered a 19% annual organic growth in mobile data revenue. This was achieved in a context of strong commercial effort, resulting in a very rapid expansion of the customer base and the acceleration of restructuring measures that will further increase efficiency in the future. Second, we have completed key strategic transactions, particularly the acquisition of 50% of Brasilcel following the M&A path set in October 2009. Third, we continue delivering on our commitments, meeting our 2010 guidance and maintaining a robust balance sheet. All this with leading cash returns for our shareholders, raising the dividend for 2011 14% year-on-year to EUR1.60 per share. Please turn to slide number three to review 2010 major financial metrics. Reported year-on-year growth rates were impacted by several nonrecurring effects – change in consolidation, especially the full consolidation of Vivo in the fourth quarter and ForEx. Nevertheless, underlying results remain very robust. Revenue increased 7.1% in nominal terms to EUR60.7 billion and 2.4% year-on-year on organic terms. 2011 OIBDA exceeded EUR25.8 billion, up 14% or 0.8% in organic terms. As a proxy to cash flow generation, operating cash flow almost reached EUR15 billion in 2010, despite increasing CapEx and the spectrum acquisitions. Net income exceeded the EUR10 billion mark, increasing by 31% over the previous year. At the OIBDA level the EUR3.8 billion positive impact derived from the revaluation of our persisting stake in Vivo was partially offset by our decision to accelerate operations restructuring, which led to non-recurrent restructuring expenses amounting to EUR1.3 billion in the second half of the year, EUR1.1 billion in the fourth quarter. On top of that, in the fourth quarter of the year we had the impact of the tax asset reassessment in Colombia. Nonrecurrent restructuring expenses were mainly related with personnel reorganization, EUR658 million, and firm commitments relating to the Telefónica Foundation's social activities. This reached EUR400 million in total, 70% recorded at Telefónica and the remaining 30% at Telefónica Latinoamerica. Depreciation and amortization increased year-on-year, recording EUR84 million in the fourth quarter, due to the amortization of the Vivo purchase price allocation. We estimate an annual impact or depreciation/amortization of around of EUR350 million for the next five years. So these impacts are preliminary and analgesic. As a result, earnings per share reached EUR2.25, above our target of EUR2.10 per share. Turning to slide number 5, a value-oriented strategy across the Group is behind the sound commercial performance recorded in 2010, which has allowed us to maintain our strong competitive position. We focus our commercial investments on value and growth levers. Mobile broadband data continues to shine, with a demonstrable year-on-year increase of 64% to reach the 22 million mark. The contract segment kept gaining traction, accounting for 53% of 2000 mobile net adds, while Vivo brand net adds increased over 44% in organic terms. As a result, we now manage over 288 million accesses, 7% more than a year ago in organic terms. Let's turn to slide number 6 for the review of the top line. Reported revenue growth recorded the fourth sequential quarter of improvement, ramping up 9 percentage points from 2009 year-end, underpinned by the faster customer base expansion and the full consolidation of Vivo since October 2010. In organic terms, sales sustained a positive trend, positive up to September, showing a healthy 2.4% year-on-year growth. Excluding the impact for MTR's cuts, organic sales growth jumped to 3.4% year-over-year. Nice how that 190 basis points more than a year ago on the back of our strong commercial efforts to drive penetration and usage growth. Slide number 7 outlines the high-class diversification of our sales. From a regional perspective, Telefónica LatAm continues to be the key growth driver of the Group. Telefónica Europe also posted some numbers compensating the lower contribution from Telefónica Espana. From a business perspective, we are increasing our exposure to the high-growth business, broadband connectivity, applications, and new service revenues with already 23% of total sales in 2010, 3 points more than a year ago, with significant growth rates across those services. Please turn now to the next slide to get more color on our mobile broadband strategy. Mobile broadband adoption is booming in our markets, and we are capturing this growth opportunity. Mobile broadband active users already account for 10% of our total mobile base, 3 percentage points more than the previous year, backed by the increasing penetration of the smartphones. I would like to stress the 20% mobile broadband penetration mark already achieved in our European footprint, while the 5% level reached in Latin America give us a very clear opportunity for the future as handset costs continue to decline favorably. As a result, mobile LatAm revenue recorded a solid 90% year-on-year increase, purely in organic, driven by the (inaudible) 52% growth in non-P2P SMS sales. Please notice that we have already launched tiered pricing across our footprints, which will allow us to profitably monetize the data opportunity. On top of that, we continue to ratch our handset portfolio, leveraging our scale to further reduce costs. It was great to see the new devices, applications, and continuous innovations in the recent Mobile World Congress. This is key to further stimulate growth in the mobile LatAm business. Turning to slide number 5, (sic – see slide 9) in 2010 we retained a benchmark profitability in a context of renewed commercial efforts to drive future revenue expansion. Underlying OIBDA trends improved throughout the year, as we had previously outlined, driven by sales expansion, further advances in cost control initiatives, and tactical synergies, further integrating management model, and also from our global initiatives. The acceleration of the restructuring measures announced will further enhance efficiency in the future. As such, underlying OIBDA margin stood at 38.3% for the Group, built toward a stable basal OIBDA in organic basis. Let's now turn to slide number 10. Total CapEx reached EUR10.8 billion in 2010, raising growth to 50% year-on-year, mainly due to investments in spectrum in Germany and Mexico totaling EUR2.6 billion. In organic terms and stripping out the spectrum acquisitions, CapEx increased 3% year-on-year to support growing usage and fast customer expansion. By regions, Espana and Latin America underpinned the increasing CapEx with focused investments in fixed broadband and mobile broadband networks. Lower CapEx at Telefónica Europe was driven by Germany, where we already have a high-quality owned network. 77% of the Group CapEx, excluding the spectrum costs, was devoted to growth and transformation, with maintenance accounting for the remainder. Let me just finish the section highlighting that we have delivered on our annual targets for eight years in a row, as the slide number 11 outlines. Now let me hand over the call to Santiago. Santiago Fernández Valbuena: Thank you, Cesar, and good afternoon, ladies and gentlemen. Let me now summarize the performance of our businesses in Spain, where we have delivered on the business priorities that we announced for the year. Amid a backdrop of strong competition and a weaker than anticipated telecoms market, our valued-oriented commercial activity allowed us to maintain our undisputed leadership in the market with an estimated revenue share of 53% and limited erosion year-on-year. We have also retained a comparable benchmark OIBDA margin of close to 47% in spite of reinvesting efficiency gains to set the basis for future growth. Cost-cutting measures in those areas where OpEx is manageable in the very short term have been already implemented, leading to a 3% year-on-year decline in non-labor costs on a comparable basis despite increased commercial efforts. Cash flow generation remained strong with an operating cash flow margin of 36% on comparable terms, again a best-in-class mark. Taking into account the significant pressures in revenues, the increased CapEx, and higher commercial volumes year-on-year, it should be highlighted the efficient management of the working capital, which allowed to limit the decline in operating cash flow after working capital in reported terms to 5.5%, well below the drop in the operating cash flow numbers. On slide number 13 the outline the top-line performance in Spain. On top of challenging economic conditions, adverse regulatory measures explain 1.4 percentage points of the 4.4% year-on-year decline in revenues. ULL prices in Spain are not only the lowest in Western Europe but they were also below our costs, according to the regulators' cost accounting methodology. In our view, current prices are not sustainable. Obviously, competitors are taking advantage of these attractive prices to launch aggressive commercial campaigns in the fixed broadband market, therefore impacting our retail actions in fixed broadband revenues. These, together with lower consumption patterns, are the main drivers of the decline in sales. Price pressure intensified in the fourth quarter of the year and has continued during the first months of 2011, with the traditional rational network competitors launching very aggressive campaigns. So there might be some regulatory consequences as, according to the press, one player has sued one of them in the CMT, the local regulator, for dumping. We continue to focus on value. Therefore, though this situation is also affecting our pricing policy, leading to higher promotions, we keep upgrading and enhancing our fixed broadband offer to increase its perceived value and to preserve the value of the market. We expect competitors' rationality to come back to the market. To finish up with Spain, I would like to stress that we keep working to have a more competitive cost structure. On top of the initiatives already launched that have allowed non-labor costs go down in 2010, we are making progress in our goal to reshape personnel expenses and we aim to accelerate these measures in the coming months. We are already reducing management positions in Spain, and we are analyzing the potential outsourcing of some operations and further headcount restructuring processes. At the same time, we will negotiate with labor unions to have more flexible labor conditions and pay reviews not linked to CPI. We will continue optimizing operational and commercial costs. Further capitalizing Group scale will lead to additional savings. Finally, an active management of our asset portfolio should help us to deliver healthy profitability, which will continue to be benchmarked in the sector. Please turn now to slide number 15 to review our Latin American operations. 2010 results confirm the success of our profitable growth model on the back of an integrated management of the operations in the region, a model that is now bringing benefits to Vivo as the company is already under full control of Telefónica. Revenues from Latin America increased 7% year-on-year in organic terms up to December, fueled by the double-digit growth in MSRs and sequential acceleration of fixed broadband revenues. OIBDA performance was strong, with year-over-year growth ramping up to 9% in organic terms by year-end, leading to a solid OIBDA margin of close to 40%, if you exclude the capital gain from the revaluation of our previous stake in Vivo and nonrecurring charges booked in the fourth quarter of the year. The improvement in profitability was achieved despite higher commercial volumes especially in mobile contract. In 2010 mobile contract net adds reached 6.7 million, and were almost half of total net additions, a benchmark ratio for the region. As a result we reached 184 million total accesses by the end of 2010, or 9% higher than a year ago. Moving to slide number 16 on mobile, we are enjoying the perfect combination of growing voice and data revenues. The strong net adds and the higher quality of the accesses growth drove double-digit growth in MSRs, with positive growth in voice revenues. And over 40% year-on-year increase in data revenues shows our focus on enhancing customer value. Our strategy in the region is not about capturing growth at any price but to focus our commercial efforts in the higher value segments. This is proven by the sound performance of the contract segment, up 29% year-on-year in 2010 on the back of higher gross adds, lower churn rates, and an active prepaid-to-contract migration policy. It is also worth noting the strong push in mobile broadband accesses, which are almost doubled versus 2009, and already account for over 5% of our total mobile base in the region. As a consequence (inaudible) remained almost flat year-on-year despite the 11% rise in the customer base and negative regulatory impact. Regarding our wireline business in Latin America, in 2010 we posted a strong commercial momentum which gradually led to improved trends in financial metrics through the year. Broadband accesses rose 16% year-on-year on the back of very strong net adds, which almost tripled versus 2009, reflecting the success of our strategic levers – bundles and term contention leveraging enhanced quality. It is also worth mentioning the positive evolution of fixed accesses, which remained virtually stable year-on-year as we continued to push bundles. Pay TV also delivered positive performance in the fourth quarter, leading to a 9% year-on-year increase in the access base. As a result, Internet and Pay TV revenues growth improved sequentially to account for 22% of total wireline revenues in 2010 and growing contribution across our markets. On slide number 18, we view the strong results recorded in Brazil in 2010, with fourth-quarter figures confirming the trends already delivered up to September. In Telesp, our efforts to enhance quality led to a record level of fixed broadband net adds, over 680,000 accesses. More importantly, the company continued to regain market share, leveraging an enhanced broadband offer. We also managed to turn around the traditional business with a positive growth in the customer base versus significant line losses in 2009. As a result the financial metrics continued to gradually recover through the year, especially on the top line. On the other side, Vivo continues to outperform in a very competitive wireless market with even better results in the fourth quarter. The focus on quality growth allowed Vivo to gain market share in the contract segment, which accounted for a third of total net adds in 2010. Thus, the strong rise in customers and the actions to foster voice and data usage led to a healthy 11% increase in mobile service revenue in 2010, with an acceleration in the fourth quarter. Profitability improved with OIBDA margin expansion year-on-year despite increased commercial efforts and efficiency initiatives – again a very different performance versus our key competitors. I would also like to highlight that we are fully on track with the capture of synergies derived from the combination of Vivo and Telesp. We will provide further details on the execution process in our Investor Day, but we are very positive about all the opportunities we have ahead of us. Finally, with Brazil let me remind you that the tender offer for Vivo's ordinary shares has already been launched and is expected to finish by the third week of March. The total outflow should be below EUR800 million, in line with our expectations. On the other side, the corporate restructuring of Vivo and Telesp be is also on track, with the full process expected by the end of the first half of this year. To finish up with Latin America on slide number 20, we will just make two comments on Mexico and Venezuela. In Mexico in 2010 we continued to gain market share. We reshuffled our prepay offer in the fourth quarter, already leading to better commercial results, as prepaid net adds doubled quarter-on-quarter. Nevertheless it is too soon to see the results in financial metrics, but we expect sequential improvements throughout 2011. We have also strengthened our position through the investment in spectrum, which should lead to better results in the mobile broadband market in 2011. In Venezuela we posted strong financial results, leveraging a very robust increase in data revenues despite lower commercial activity impacted mainly by limited availability of handsets. Let's now turn to slide number 21 to review Telefónica Europe that delivered strong financial and operational operating performance in 2010, with continued expansion of our customer base and the fast growth of mobile data revenues. Of our new mobile customers, 65% were in the contract segment and now represent close to 50% of the base. Significantly, active users of mobile broadband increased 46% year-on-year in 2010, resulting in a customer base of close to 10 million. As a result organic revenue accelerated its growth trends throughout the year, topping a 7% year-on-year growth when excluding MTR cuts, underpinned by the healthy organic rise in non-SMS P2P revenue, 26% year-on-year in 2010. We managed to maintain a stable OIBDA margin in 2010 despite higher commercial investment, recording a very solid 17% operating cash flow growth, both in comparable terms. On slide number 22 we show that show that Telefónica O2 UK showed a strong result in 2010, underpinned by the growth of mobile broadband while mobile core continued to excel. 23% of our customer base actually paid for using data services at year-end 2010 which is a significant 7 percentage point improvement over 2009. We advanced on our goal to profitably monetize the mobile data opportunity with the introduction of data caps in the fourth quarter, already taken by 36% of retail mobile contract date users. We also reduced handset subsidies in the fourth quarter, leading to higher hardware revenues. As a result, total revenue growth for the year was 6.5% year-on-year in local currency underpinned by the strong 5.6% rise in mobile service revenue despite the drive from MTR cuts. Continued efficiencies led to a sound 7% year-on-year OIBDA growth in comparable terms. We also increased our investment in the network, including the recent 900 megahertz reforming to ensure best-in-class quality. Let's now turn to slide number 23 to explain the performance of Telefónica O2 Germany. 2010 continued to deliver growth in the mobile business, in particular in the contract segment which accounted for over 50% of total net adds in the fourth quarter. This was driven by improved customer service and strong demand for mobile broadband, including the iPhone, which we have been selling from October. LTE network rollout in rural areas is already in progress with much most of the planned sites for this year located in existing auto premises and commercial operations due to begin in the second quarter of 2011 after successful trials with customers in four locations. Mobile service revenue growth accelerated through 2010 to 5% year-on-year in the fourth quarter, excluding mobile termination rate cuts, which were halved in December. This, compounded with My Handy handset model, which does not allocate subsidies into mobile service revenues, led to a strong 8% organic year-on-year increase in total revenues for the year. Profitability improved sharply in 2010, further capturing synergies with HanseNet and continued operational efficiencies, leading to an operating cash flow that more than tripled 2009 figures in comparable terms. Turning now to slide 24, I would like to highlight that we have generated close to EUR8.5 billion cash and dedicated 8% of it – nearly EUR6.8 billion – to shareholder remuneration. On the first chart, you see that our debt has increased by EUR12 billion in the year, of which EUR8.6 billion are due to financial investments, mainly the Vivo acquisition, and EUR2.4 billion to changes in foreign exchange. Close to 50% of those are due to the Bolivar devaluation in Venezuela. Even so our financial flexibility at the beginning of the year has allowed us to accommodate this increase without exceeding our 2.5 times limit for the debt and commitments of our OIBDA as shown on the bottom chart. That limited is respected both on a reported basis and if adjusted – by adding Vivo's OIBDA not consolidated in the first nine months, and subtracting the positive result of the gains on the sale of fixed assets, net of nonrecurrent restructuring expenses. Even if nonrecurrent restructuring expenses – other than the firm commitment to Telefónica Foundation – were kept within OIBDA, the leverage ratio would still not exceed 2.5 times. Turning to the next slide, we show that we have decreased our effective interest rate ex-FX, at 5% of our debt, 54 basis points lower than in 2009, while implementing a prudent financial management. So we have succeeded in keeping our financial expenses ex-foreign exchange at EUR2.5 billion, nearly exactly the same level as we had in 2009, excluding from the previous year about EUR600 million charge due to hyperinflation in Venezuela. All this despite the aforementioned debt increase. On our financial management, let me mention first that we have taken advantage of the low rate environment to increase our fixed rate debt by close to EUR13 billion, though EUR6.8 billion have been implemented through forward swaps starting to fix our debt in the middle of 2011. The weighted average interest rate of these swaps is 2.7% with average maturity in 2017. Had we fixed this amount of debt at the end of January 2011, we estimate that the equivalent cost would have been 60 basis points higher at 3.3%. Second we have been reinforcing our liquidity position by increasing our undrawn committed credit lines up to EUR9 billion, EUR1.8 billion up in the year, with 100% of the amount of the credit lines maturing in 2010 rolled out successfully. Lastly we have raised around EUR16 billion long-term financing in 2010 – EUR8 billion through a syndicated loan; close to EUR6 billion through bond issues; and around EUR2 billion in LatAm financing in public entities. Despite the less active fourth quarter, leading to a one-quarter reduction in the average life of our debt in the quarter – not surprisingly – the issuance at the beginning of the year by EUR3.2 billion should be enough to slightly exceed our six-years medium-term limit for the average life of our debt. With this, let me now hand back the call to our Chairman. César Alierta: Thank you, Santiago. Let me set now with you our priorities for 2011. We continue to prioritize revenue growth, leveraging our diversification. Further momentum at Telefónica LatAm and Telefónica Europe will outpace top-line process in Telefónica Espana. We will focus our efforts on capturing the mobile data growth opportunity in our footprint with commercial efforts, our enter to increasing customer value, and therefore quality growth. As a result and according to (inaudible), Group revenue is expected to increase up to 2% in 2011. We report the growth rate being significantly higher due to the full consolidation on Vivo in the Group accounts since the fourth quarter 2010. Despite increased commercial activity, we will be able to deliver an industry-leading profitability. We expect Group OIBDA margin to be in the upper 30%s, limited margin erosions despite high commercial activity, based on executing our profitable Group business model; further leveraging scale economics; and benefits from global initiatives. Total CapEx as the spectrum coursed will be around EUR9 billion a year. We continue setting the foundation for future growth, improving network capability to support the mobile data explosion and further growth in fixed broadband. CapEx excluding the spectrum acquisitions will go up in LatAm and in Spain, remaining nearly flat in Europe despite higher investment in the United Kingdom network. Please notice that the full reconciliation of Vivo has a significant impact in this figure. We have fully consolidated 100% of Vivo CapEx in 2011, which is expected to be around BRS2.7 billion. Please be aware that the quarterly performance is going to be heavily backloaded as the market recovery in Spain takes longer to materialize and the bulk of the synergies in Vivo Telesp will start after the operational integration is completed. In 2011 we will honor our commitments to deliver growing dividends. There are no key strategic transactions pending on the M&A front, and therefore the focus will be on acquiring additional spectrum in countries we are already present, to secure future growth. We will continue analyzing value-creation opportunities, maintaining an active management of our non-core asset portfolio. And we expect to improve the leverage ratio. Therefore, the Board will propose a dividend – the execution of the dividend of EUR1.60 in 2011, growing 14.3% year-on-year. As usually, the dividend will be paid in two tranches. Free cash flow payout is clearly below the 101%. With no doubt, we do reiterate our commitment to pay EUR1.75 in dividend next year. Regional priorities are outlined on slide 28. First, there is one clear common priority for all of them – increase the value of the customer base and monetize the mobile broadband opportunity in a very profitable way. By region, in Spain we will define our revenue leadership with a rational commercial approach focused on leveraging our integrated profile. While we aim to further broadband revenues, both fixed and mobile, and to capture the remaining growth opportunities in the corporate segment, where the demand for ICT service should recover strongly in 2011. In Latin America, we will speed up the integration of fixed and mobile business to maximize the benefits of being integrated, maintaining at the same time a strong commercial momentum. In Europe, we aim to continue outperforming in the contract segment and to lead the mobile broadband monetization. In summary, our high-class diversification, with a growing bias toward emerging markets and integrated operations, will allow us to deliver further top-line expansion and to prove we continue to generate a strong cash flow for our service products. To recap, we have delivered a solid set of numbers at the Group level, leveraging our high-class diversification and our strong execution and skills that mitigate external challenges. Once again we have met year-on-year target for the eighth year in a row. We have also completed key strategic transactions in 2010, positioning us much better for the future and follow with the M&A passed in October 2009. Finally, in 2011 we will continue to focus on capturing the growth opportunities of the digital world while maintaining premium returns. Thank you very much for your attention. I hope you will join us in our next Investor Day in London, where we will share with you the main challenges and opportunities for the industry, and we will provide an update on Telefónica's strategy for the coming years. Now we are all of us ready to take your questions.

(Operator Instructions) Our first question comes from David Wright from Deutsche Bank. Please ask your question. David Wright – Deutsche Bank: Yes, good afternoon, everyone. A couple of questions from me. First of all, just on the revenue guidance you have given, can you just elaborate a little on the assumptions for Spain within – I know, Santiago, you said that January had been very similar to Q4. Are you actually assuming things get a great deal better in 2011? So just a little more thought around that, please. Then second of all, just on the restructuring and Telefónica Foundation charges to OIBDA, could give us some guidance on how they will feed it through the cash flow statement, please, in 2011? Whether they are immediate impacts or whether they are run over a certain period. Thank you. César Alierta: Regarding our revenue guidance and looking into Spain, we expect strong commercial activity in Spain, value-oriented, focused on total broadband, both fixed and mobile. And we expect a gradual recovery in consumption around the year. Santiago Fernández Valbuena: Yes, David, this is Santiago. On the restructuring charges, what we have done is accepted as irrevocable some of the commitments that had been previously done with the Telefónica Foundation, especially to fund our star program which is called Pronino; and you may have very well heard of it. By making this irrevocable commitment, we had to register in our accounts the full amount that is going to be dispersed over a three- to four-year period. So hitting the cash flow is going to be spread out over a few years, depending on whether we are looking at Latin America or Europe. María García-Legaz Ponce: Next question, please.

The next question comes from Tim Boddy from Goldman Sachs. Please ask your question. Tim Boddy – Goldman Sachs: Yes, thanks. A couple of questions from me. The first is just around the way you framed your guidance which is obviously somewhat open-ended to the downside. Normally you give a much more precise range of guidance. So I'd just like to understand why you have changed that. Obviously one conclusion could be that with the uncertainty in Spain there is less visibility at this point in the year than normal. So if you could talk to that I would be grateful. Secondly, you talk in the release also about regulatory pressures. Some of your peers have articulated the size of regulatory impact this year on revenue and EBITDA for the market major markets, I guess particularly in Europe. If you could do the same, that would be most helpful. Thanks very much. Santiago Fernández Valbuena: Tim, Santiago again. Let me take the first part of the question on how we frame the guidance. After having giving it a lot of thought and having made all the comparisons, we have decided that besides credibility – which is what we have been able to build over the past eight years, as the Chairman explained – we should build some flexibility going forward. We think we are in a growing sector, and that is why we are – and certainly we are a growing Company and that is why we have guided to positive growth, modest but positive growth Group-wide for 2011. But we wanted to hold a few of our cards in case that we have to fight back on some commercial fronts or we want to increase the commercial efforts, should those be necessary. So it is not our intention to be vague. It is our intention to become more flexible than we have been in the past, and that is why we have framed it the way we have. César Alierta: Regarding the input that we see in the regulatory front for 2011, basically we have said that MTR changes in Europe will have an impact of around EUR1 billion in our overall footprint in Europe in the year, on revenues. María García-Legaz Ponce: Next question, please.

The next question comes from Mathieu Robilliard from Exane BNP Paribas. Go ahead with your question. Mathieu Robilliard – Exane BNP Paribas: Yes, good afternoon. Two questions please. First with regard to CapEx, I think I understood well that you plan to increase CapEx in Spain. Maybe if you could give us a little bit of color as to where that CapEx will go. Second, with regards to Latin America there was a very noticeable reacceleration in mobile service revenue growth in pretty much all the countries. Maybe if you could give a little bit more color in terms of whether that was driven by more volumes or a better pricing environment. And the follow-up to that would be if you fear or you include maybe a potential negative impact from rising inflation in some of these countries. Thank you.

Yes, Mathieu, this is Guillermo. I will take the first question regarding CapEx in Spain. Yes, what our priorities policy for next year regarding CapEx in Spain is the following. We will continue investing in the future in the next years. Second we will continue focusing on value customers. And third, we will focus on premium quality. That means that we will continue investing heavily on 3G, since we are seeing great growth opportunities and profitability there. Second, we will continue investing on SMEs and corporates, where we now have a very strong market position; and that means fiber for this type of customer, new services, cloud computing, machine-to-machine, and so on. And third, we will continue with our very selective deployments in fiber for the residential and (inaudible) business. That will mean that the CapEx level will be about the same level or a little bit over the number that we have in 2010. Also, please take into account when you compare Spain with other incumbent operators in Europe, we are in the lower part of the range. Jose Maria Alvarez-Pallete: Taking your question on Latin America on the revenue, on the services revenue growth, in fact it is due to both third-parties volume, significant parties volume as traffic keeps growing. There is also a question of value, that we have been able to focus on value and foster migration to prepaid-to-postpaid and prioritizing contract customers with regard to prepaid. As a result we have been able to reach our customer base in contract, which is almost – in fact surpassing 20% of the total customer base at the end of 2010, as well as we keep significantly growing data revenues, which are growing 43.4% with an ARPU that is practically stable. So it is a mix of different effects. We had been managing our customer base, the existing one and the new adds. And we keep focusing, very focused on the value customers. With regard to inflation, inflation is much more focused as you know in two countries, Venezuela and Argentina. In the both countries we are holding up as much as we can with inflation on the mobile targets. In other countries in fact we are holding on pretty well, namely in Brazil, where you know that the euro has been having an outstanding year. So it is a mix of different effects. I would outline the customer, the contract, the postpaid focus that we have been having; the value focus that we have been having; and in fact trying to be much more effective in terms of campaigns and subsidizing less in terms of handsets. Mathieu Robilliard – Exane BNP Paribas: Thank you very much. María García-Legaz Ponce: Next question, please.

Your next question comes from Torsten Achtmann from J.P. Morgan. Please ask your question. Torsten Achtmann – JPMorgan: Good afternoon. Two questions please. Number one is on Venezuela, if you could give me any update on cash and if there is any improvement in terms of getting the cash out. Secondly on Brazil, Vivo is clearly outperforming all its competitors, which I think is mainly driven by the focus on data. So looking into 2011, where all the competitors are investigating more, where do you think that is sustainable? And also on the MTR cuts in Brazil, is it more likely that we don't see any MTR cuts in 2011 now? Thank you. Jose Maria Alvarez-Pallete: Hello, Torsten. Regarding the tax we have in Venezuela, it is equivalent roughly speaking to EUR1.1 billion. This year we have been granted authorization to pay import denominated in US dollar for around $500 million in the year. We have been able to repatriate a small amount based on structure notes. We have not been granted access to dividends that we have been claiming for the year. And we expect that this could happen in the future. That's it. Santiago Fernández Valbuena: Taking your question on Brazil, on Vivo, yes, we have a very good 2010 with revenues 9.3% up and a very sound OIBDA performance, which is also very, very important with our stable and growing OIBDA margin, which is the highest in the industry. (inaudible) based on several factors. The first one being that Vivo is the most valuable and recognized brand on the mobile market in Brazil. By the way, the Brazilian mobile market is the fastest growing out of the 10 largest mobile markets on earth. We have the largest coverage of 3G thanks to our network in Brazil. We were the first one to deploy and we have been pretty consistently investing on that front. We have also been at the forefront on the data expansion both in smartphones and in big-screen, and we will keep going. In fact, we have been growing at a very high rate in 2010. We have been also basing, mainly in the last part of this year, on contract. In fact the contract customer already accounted for 21% of our total customers in Brazil. The traffic over our network has been up significantly over most, slightly decreasing, almost stable, a 1.1% decrease. And ARPU is almost flat; it is a 3% increase. (inaudible) ARPU has been growing 31%, so it is having some different factors. I would say that I think that we have an outstanding distribution network; an outstanding brand, which is by the way the most valuable brand in Brazil; their customer satisfaction index is the highest in the industry. So it is a mix of different factors and we intend to keep going into the same direction. We have been aggressive in the last spectrum auction in Brazil because we wanted to increase the spectrum capacity of the Group, and we have been successful on that front. This is especially important in the northeast part of the country where we are a new entrant. So I would say that our plan is to keep going, to preserve our leadership position, to optimize the level of our OIBDA margin. And I think we will have an outstanding platform to keep leading the Brazilian market. María García-Legaz Ponce: Next question, please.

The next question comes from Luigi Minerva from HSBC. Go ahead with your question, please. Luigi Minerva – HSBC: Yes, good afternoon, everyone. Two questions please. The first question is on mobile applications. It looks like the Wholesale Application Community has made little progress since it was launched more than a year ago. Do you think operators are still in a position to regain a role here and properly monetize the application layer in mobile? Or shall we consider this opportunity as lost for good to the likes of Google and Apple? My second question is on your core holdings. Is your stake in Telecom Italia still core to your strategy? Thank you.

This is Julio Linares. Regarding your first question on WAC, I think that the WAC was announced one year ago. Progress has been pretty good till now, taking into account the number of memberships, inboards; taking into account that WAC 1.0 was released in September for developers community. Based on that there are around 12,000 widgets already available in September last year. The number is increasing. It is very important to take into account that the release 2.0 was delivered in February this year, including HTML 5 and is available for developers community with significant improvement versus previous version. And there is a commitment on WAC in order release WAC 3.0 in September this year. That will include network APIs that will be a significant differentiation regarding other ecosystems. So overall we are pretty comfortable with the progress till now and very confident on the future of WAC. César Alierta: This is Cesar regarding Telecom Italia. We are very happy with the present participation we have in Telecom Italia. We don't intend to put it up or put it down. So we are going to maintain the present position. I want to stress that our relation with our telco shareholders are (inaudible) and very good on the key dedications. We are very happy with the management of Telecom Italia. So I think now as I sit we will stay as we are, and I think Telecom Italia's on the right track. María García-Legaz Ponce: Next question, please.

Your next question comes from James McKenzie from Fidentiis. Go ahead with your question. James McKenzie – Fidentiis Equities: Hi, thanks for taking the questions. A couple if possible. Firstly, the financing costs in the last couple of years in the cash flow statement has been around EUR2 billion. That is well below the P&L cost. Is this more representative of the sort of clean cash cost of interest for you in these two years and then going forward? Then secondly, I wonder could you remind us how much intangible or PPA depreciation has been in 2010? Maybe give us a guess just what it might be in 2011 in total. Thanks very much.

Hello, James. This is Miguel. Regarding the difference between the accrual and the payments in interest, it's effects really in the financial expenses. It's effects – we have had this year some extraordinary effects. One of them is the fact that we are including there the write-down of our participation in BBVA as financial expense, while there is no payment related to that. Other than that we have also some zero coupons that are creating some savings in payments. Also partially there are some effects at year-end depending on the payment date of some interest in loans, which amount roughly speaking to EUR50 million in that area. But over time we estimate that we will be converting to the same amount as we are accruing. Santiago Fernández Valbuena: So, James, Santiago again. On the impact of the PPA, what I can tell you is that increase from last year into this year has meant going from EUR753 million to EUR867 million. And the greatest contribution is something we have mentioned in the call; it is the inclusion of Vivo and the new PPA of EUR84 million allocated to Vivo. So the overall number is EUR867 million in PPA amortization this year. María García-Legaz Ponce: Next question, please.

The next question comes from Jonathan Dann from Barclays. Please ask your question. Jonathan Dann – Barclays Capital: Hi there. I was just – could you elaborate on your comments around the guidance that the performance would be back-end loaded, if I understood correctly? Also, just – am I right in thinking, does the guidance still allow you to include any M&A within the guidance? Could you just walk through the guidance on a clean basis, excluding the additional quarters of Vivo, just for a bit of clarity?

This is Julio Linares. Regarding the guidance that we provided for the whole year, organically this is back-end, at the end of the last part of the year. César Alierta: But with regards to M&A, I want to make clear that we have fulfilled our M&A strategy. We are very happy with the present footprint we have. We might do more acquisitions on the level that we did, of 20 a year on some bilateral business. But we are – we have completed our footprint. We think with the footprint we have now, we have tremendous capacity of organic growth; and with that we're going to concentrate our organization to deliver organic growth of the Group because we have tremendous potential. María García-Legaz Ponce: Next question, please.

Your next question comes from Justin Funnel from Credit Suisse. Go ahead with your question. Justin Funnell – Credit Suisse: Thank you. Yes, a couple of things. In Brazil, obviously there is this trend with long-distance pricing that TSU is exploiting. I guess if we look at Brazil it's quite an archaic market, quite an old market. Most markets long distance is gone. Just wondering what your exposure is to long-distance within Telesp and whether at some point, perhaps post the merger, we should expect you to attack that mobile long-distance market and take some share back off TSU. Secondly just big-picture in LatAm. Could you give us a feel in 2010 as to how much of your mobile data growth is driven by dongles versus smartphones? And whether 2011 is the year where you hit a sort of tipping point on smartphones coming down to the right price to hit the Class B and Class C parts of the population in that region? Thank you. Santiago Fernández Valbuena: Thanks for the questions. The first one we are looking for the exact figure of exposure to long-distance; but in the meantime let me tell you that as we have been bundling aggressively in the last three to four years in Telesp, not only traditional products with broadband, but as well within the traditional products in terms of voice, between domestic long-distance and international long distance. I think that the exposure that we have to the traditional long distance or plain-vanilla long-distance product has been significantly reduced in the last four years. We are looking for the current figure; as soon as have it I will give it to you. Let me – while you were asking your question I remind that I didn't ask about the MTRs cut in Brazil in the previous one. Let me stress the fact that nothing has happened yet on that front on the mobile side. That if you remember the initial draft for public hearing that (inaudible) issued some months ago, were proposing a steady decline of 10% in the next two years. This draft is still under discussion, so we are not – it is not clear for us when this is going to happen. But it is clear for us that it is probably going to be steadier, and nothing significant or immediate cut, at last with the current environment. In the meantime, Vivo exposure to interconnection rate keep being reduced, as we are fostering on-net traffic. With regard to your comment on the mobile broadband in Latin America in terms of how much we have, out the total 7.5 million mobile broadband customers that we have in the region approximately 3.5 million are smartphones, and this amount is growing very rapidly. The smartphone penetration in Latin America at the end of 2010 is in the neighborhood of 5%. That compares with something in the neighborhood of 30-something in Europe. So the rules of the game are still to be written in Latin America in terms of subsidies. The main barrier of entry is the price of the handset; it is still too expensive to be modified. But in the last year prices have declined very, very dramatically. We are seeing already some handsets in the neighborhood of $150 and going down. So I guess that probably 2011 is going to be a year of explosion of the smartphone in Latin America, and that provides us with a very good opportunity. And that is why we have been working so hard in the last two years in our customer – in our postpaid database and namely on being more, I would say, precise on the knowledge that we have of our customers. I am afraid that we don't have the number that you were asking us in terms of the long-distance; but please get to our investor relations team and we will share that number with you. But remember that most of our traffic of our traditional voice is already bundled in Telesp. María García-Legaz Ponce: Next question, please.

The next question comes from Luis Prota from Morgan Stanley. Please go ahead with your question. Luis Prota – Morgan Stanley: Yes, hello, everyone. I have two questions. The first one is on the guidance slide in the presentation. You are mentioning setting basis for profitable mobile broadband growth, and you are mentioning this throughout the whole presentation many times. So if you could elaborate a bit on this, I am wondering whether the focus is on the cost and subsidy of the handset, maybe tiered pricing and art implications, maybe applications. I guess that all of them important; but if you could elaborate a bit on what is the main focus now and how you see this evolving, that would be very helpful. The second question is on retail share of broadband in Spain, which you are mentioning to be around 53%. You are saying a solid market share, 53%; but that has come down 1 percentage point or around that in the fourth quarter, and around 2 percentage points for the full year. So clearly accelerating in the fourth quarter. So I am interested in getting your thoughts in whether this negative trend is going to continue or it was especially aggressive fourth quarter, and you are expecting this aggressiveness to slow down. And if possible, what could be the level of market share at which you would consider – minimum at which market share should stabilize? Thank you. César Alierta: Luis, it is Cesar. We talk a lot about that because that is one of the biggest leverage of growth opportunities, not only for Telefónica but the whole industry. In our Investor Day we will elaborate a lot more on that. But there is one thing which is clear – it is clear now; it wasn't so clear last year. It is tier pricing is working in our markets and is working very well. You know that we are stealing people and really working at setting the tier pricing. So that is really good news (inaudible). The second thing which is very good news is that smartphones are going down in the prices. And every time there is going to be more competition, it's smartphones. The competition in smartphones is going to be very strong, especially in the second part of this year. So both news are good. So when we talk – and then you have seen our presentations, and we have talk a lot the value of the client. We are weighting a lot on Telefónica on the value of the client in every three of the business lines – Europe, Spain, and LatAm. But as I said we are very confident on that. It is going to (inaudible). But this is something that on Investor Day we are going to talk a lot more about it.

This is Guillermo, I will take your question regarding retail market share on broadband. First, it is true; in the last quarter in the last year, we witnessed an increased level of competition, price-based competition in fixed broadband. Two type of conducts or behaviors. One is aggressive promotions, as usual; and second, cross-promotions, meaning that players with mobile operations giving discount to fixed broadband if they bring also the voice with them. This is a conduct that has been challenged by another operator under CMT. We'll see what happens with that. My belief is that that will soften in the near future, that players will become more rational. And also take in account that according to the CMT own accounting, regulatory accounting, the ULL prices are below cost. So that is something that should be solved in the future in some way or another. Finally, keep in mind that our focus is on value. That means that we will put more emphasis on value market share, not in access market share. That is why we have been highlighting that our retail revenue market share is around 53% and only 1.3 points below last year. So we keep the leadership in the market. And our profitability measure, for example OIBDA margin, is benchmarked in Europe. Thank you. María García-Legaz Ponce: Next question, please.

The next question comes from Jesus Romero from Merrill Lynch. Please ask your question. Jesus Romero – BofA Merrill Lynch: Thank you; it is Jesus from Merrill Lynch. The first one is on cash taxes. You have given us guidance for operating free cash flow in 2011. I wanted to know if you could give us something on cash taxes for 2011 and also working capital, whether there was a big movement in the fourth quarter. And the second question on the Vivo dividend. From a Telefónica shareholders' point of view, can you explain the logic for such a high increase in the Vivo dividend? And why that, versus maybe delaying that dividend for a later stage after the merger with Telesp, or perhaps doing a buyback of a minority piece in Vivo? Thank you.

Okay, Jesus. This is Miguel. Well, we have had this year a cash tax of 27.5, and we will still – may be within the range we have stated previously; and certainly around 27% in the next year. Regarding working capital, we are working a lot on that front but we do not expect to repeat the excellent result of 2010 that has also been underpinned by some extraordinary facts. Such as the fact that we are not paying in full in the spectrum acquired in Mexico, or that the provisions that we have recorded in the last quarter had no impact in cash, while the depressing the EPA. This has been behind the extraordinary result in 2010 in part, on top of a lot of efforts on the CapEx payment and also on the bad debt recovery especially in Spain. For the next year, we expect maybe something slightly negative, also driven by the fact that we expect some revenue growth. That has always a negative impact on the working capital. Santiago Fernández Valbuena: Jesus, this is Santiago again. Just a quick comment. Not that there is much we can say about this, but the one thing I do want to say is that we don't change our mind depending on the size of our stake. So we had a dividend policy in place before this whole thing started, and when this is over we will probably have to review it. But until that happens, we will think we are on the right track in applying the policy, the dividend policy that had been done at the regional level. And at the top level, you know that we pride ourselves in being a shareholder-oriented Company. You may or may not like the policy that we have towards the dividend, but certainly we will give you an update on the Investor Day as how we think about this going forward. But for the time being, we thought this was the right way of completing the top-line payment – the top Company payment María García-Legaz Ponce: Next question, please.

The next question comes from David Strauch from Natixis. Please ask your question. David Strauch – Natixis: Yes, thank you. My first question is – I would like to know to which extent you're committed to come back quickly to the middle or the low end of your comfort zone in terms of net debt to OIBDA ratios, or if you are pretty easy with the current level at 2.5 times. Secondly, in terms of organic revenue growth, 2011 in fact should be close to 2010 despite Vivo's having a higher weight in 2011, which implies probably weaker trends out of Brazil. So is it mainly coming from the MTR cuts in Europe, or are there any other reasons?

Hello, David. Regarding our comfort with the current leverage, it is not very high, certainly. We have stated that we want to be in the 2, 2.5 range, and we are in the 2.5, which is the upper limit. So we want to reduce it, and we count on improving that ratio over the year. This is our ratio that has (inaudible) in the past. We have been able of acquiring Brasilcel in 2010, this is partly due to the fact that we have flexibility and that we were not at the top of our leverage. Also it's good to be below that limit in order to accommodate any unforeseen damage such as could have been with a devaluation for instance in Venezuela or in other countries. So we are committed to going to the (inaudible). César Alierta: Regarding your second question, on our revenue organic growth of the MTRs that we see over the whole year, it is around EUR1 billion, as I mentioned before, for the whole Telefónica Group, basically in Europe. So today in Brazil we do not see an immediate impact. María García-Legaz Ponce: Next question, please.

The next question comes from James Ratzer from New Street Research. Go ahead with your question. James Ratzer – New Street Research: Yes, good afternoon. I had two questions, please. The first one was just regarding your CapEx guidance. I believe in 2009 in Madrid you talked about CapEx gradually being able to come down from a level of about EUR8.4 billion. So this seems a bit of a change in the CapEx outlook. I was wondering; is this a case of front-end loading CapEx, so we can expect a sharp decline in 2012? Or do you see CapEx now on an ongoing level nearer the EUR9 billion mark? The second question I had, please, was just regarding your Vivo shares. Last year you wrote the value of those up in your books following the offer for Brasilcel. Does that mean that if the offer made by Telesp for your current Vivo ON shares is below the price on your books that you pay for Portugal Telecom you will have to make a write-down in the 2011 P&L? And is that something you would be happy to do? Thank you. César Alierta: Regarding the first question on our CapEx, first of all you have to take into account the difference in our limiter, because now we have new companies in Germany; we have 100% of Vivo; so that has significant impact. In addition to that, based on our commitment to capture revenue growth opportunities, there is a change in the mix of our CapEx, and we are going to go deeper in the development of all the broadband networks, particularly in the mobile side of the business. Santiago Fernández Valbuena: James, Santiago back again. In terms of the accounting impact, you are absolutely right in pointing out the effect that our proposal to buy the 50% of Brasilcel had on our accounts. Let me also remind the audience that we did not imply that that offer was going to be recorded at exactly that price on our books. It was rather a lower number, which is closer to the one that we have proposed to the minorities, the voting minorities, of Vivo to come in. So yes it is based on the offer that we made; but no, it is not the exact price, but a lower number. With the ongoing process of putting together Vivo and Telesp, we do not expect any change in either the valuation or in the accounting impact of them. But of course as this is a pending and ongoing issue, we will have to wait until the end, until that is fully realized. María García-Legaz Ponce: Next question, please.

The next question comes from Giovanni Montalti from Cheuvreux. Ask your question please. Giovanni Montalti – CA Cheuvreux: Could you please provide us some comments on the competitive dynamics in the Spanish mobile? It seems that in Q4 the mobile service revenues trend of Vodafone and especially Orange was majorly better than yours, even more than it was already in Q3. If you could provide us some comments, please. Thank you.

Giovanni, this is Guillermo. The last day quarter, as you know, is always a quarter of strong seasonality and a lot of campaigns in the mobile market. In Spain it was very active. What we have seen in the last months is stronger price competition, started from the mobile beta operators, Yoigo; and then Orange competing against Yoigo with the small carriers. Later Vodafone made some moves in order to be competitive on the pricing arena. So looks like dynamics in the last quarter were little bit more loaded towards the tariff price, while Spain with traditional market that was a little more balanced between handsets and prices. I think during this year 2011 we will see more rational or balanced approach. We continue focusing on our market share. Let me remind you to give you an example, that in terms of in the mobile market, in revenue market share, when you compare our revenue market share with our access market share at the beginning of the year, in 2010 we had a 4 percentage point difference; and at the end of the year 5 percent-point difference. That means that a lot of the accesses that have been traded in the market has somewhat been and the majorities little value. Thank you. María García-Legaz Ponce: Next question, please.

The next question comes from Ivon Leal from BBVA Research. Please ask your question. Ivon Leal – BBVA Global Markets: Hello, good afternoon, everybody. A couple of them, the first one on the broadband business in Spain. How concerned you are about ONO upgrading the networks to DOCSIS 3.0? Maybe it would be useful if you could share with us the share of net adds in the areas where ONO is upgrading and where it is not. And eventually if that would push or could push you in the future to anticipate a fiber to the home deployment in Spain? The second one is about Telesp. It's true that the top line is doing rather well. But still the company looks to be lagging a bit in terms of EBITDA. So what is – when do you expect to see EBITDA stabilize in Telesp? Somewhere in 2011 or maybe still too soon? And if there is a way to slow down that aggressive fixed mobile substitution in Brazil?

This is Guillermo; I will take the first question regarding the broadband market in Spain, and particularly the cable operator ONO. As it has been published by ONO, ONO is upgrading its network to DOCSIS 3.0. They have been focusing so far more on their own customer base, which is logic, in order to improve the quality and speed of the network and to retain the customer base. Ono in the last years has been losing or flattish in terms of market share. So this looks like in the first wave a defensive move. In the future we will see if they escalate to be on defensive side, taking to account that given the leverage that ONO has the room for maneuver is limited. I don't have here rank in shares per region. We usually note we don't disclose that. But if you look at the Spanish markets and the information that is provided by the CMT, you will see that in 2010 the ones that are gaining market share are the unbundlers, not the cable operators. Ivon Leal – BBVA Global Markets: Okay. Jose Maria Alvarez-Pallete: Good afternoon Ivon; it's Jose Maria speaking on your question on Telesp. You know that after a very complex and tough and difficult 2009 we decided to turn around Telesp, basing on several pillars. The first one of them being the quality – quality and customer satisfaction index. As a result of that during the whole of 2009 and '10 we have been working on that front. We have increased significantly the subcontracting effort in order to ensure that we were able to preserve both the level of quality of the existing customers and have got existing network, and at the same time retaking our commercial effort. It is true that in terms of revenues we have been having a turnaround situation, and we have been able to slightly increase revenues in the company during 2010. It is also true that the OIBDA has been impacted by several effects, one of them being positive, like door sales. But also another one is being the fact that we have incurred more cost to ensure quality and preserve the level of net adds. Taking everything into consideration, the year for Telesp has been outstanding. We have been able to almost maintain the traditional line customers, the number of customers of traditional lines. While in 2009 we had been losing 400,000, we have an increasing broadband almost 700,000 customers which is historically high. We have been adding more customers. We have been having more net adds in the month of December of 2010 than in the three previous years all together. We have also been retaking growth on the TV part, which is part of our pending issue. And we have been able to do that with the highest level in the history of Telesp of customer satisfaction. Taking everything into consideration and excluding nonrecurring items, the door sales, and other one-time impacts of 2009, OIBDA margin in Telesp is more stable in 2010 than in 2009. It is true, that at a lower level; but it is not decreasing, at least not decreasing at the same pace and we think that all the effort that we are doing in Telesp are going to be paying off in 2011. Take into consideration as well the fact – and I take advantage of the opportunity to communicate that to you – that in the first two months of this year it has been raining even more than in the previous year. 2010 was the heaviest rain period in the last 63 years; 2011 has been the highest one in the last 64 years. And therefore we have also focused on quality, and therefore commercial activity in the first two months of the year is going to be lower. But we are fully confident that we will be retaking the commercial effort as the Brazilian market is booming. In terms of fixed-to-mobile substitution that you were mentioning, I would just outline the fact that we have been able to preserve basically the number of traditional lines. We have been just losing 39,000 in 2010. So I think that the bundling strategy and the transformation strategy and the quality focus that we have been putting is paying off. So we will keep you posted. We are much more optimistic about Telesp, and we are waiting for the final process of the Vivo tender offer and integration in order to do even more things together with Vivo. María García-Legaz Ponce: Next question, please.

The next question comes from Will Milner from Arete. Please ask your question. Will Milner – Arete Research: Yes, thank you. A couple of questions. Firstly on Spain on the restructuring charge, I just wonder what level of savings on personnel costs you might achieve this year, after you book the EUR202 million charge. And also I guess, how many employees does that cover? You also mentioned outsourcing. I just wonder what sort of political pressure you are under to not reduce headcount too much given the unemployment levels in Spain right now. And a second question again, just it was interesting to see the Vivo dividend yesterday. I just wonder; after you have completed the merger between Telesp and Vivo is there anything to prevent a full 100% payout of free cash flow of the consolidated entity? I am thinking really around distributable reserves, that context. Thanks.

Well, this is Guillermo. Regarding human resources in Spain, yes, it is provision for several projects, restructuring in Spain for a total amount of EUR202 million. Among them there is a program for example for reducing managers' positions that was mentioned in the presentation. Roughly we are thinking about a reduction of 6% of these management positions, roughly 250 people. Obviously, the unit costs are completely different to the ones we had in the previous rate on the [supervisory], because we are talking about managers; and the payback is similar to the previous one. Regarding outsourcing, we will have no political pressure at all. This is basically a typical managerial discussion and analysis that we are conducting. We will give more color information in the Investor Day in London.

Taking your question on the dividend policy of the integrated unit, as the process is completed, as we are right in the middle of the process we are highly restricted of sharing additional information. We will wait for the final process to be completed and achieved in order to share with you the dividend policy of the joint unit afterwards. María García-Legaz Ponce: Next question, please.

The next question comes form Jeremy Dellis from Jefferies. Ask you question please. Jeremy Dellis – Jefferies: Yes, good afternoon. I just have two question please. Firstly on Spain, you noted there has been a certain amount of price promotion on the fixed broadband side. I wonder how much additional pricing pressure you have been seeing on the mobile side and whether your guidance accommodates an element of price rebalancing on the mobile side during 2011. Then secondly, just on Vivo and just to labor the point on distributable reserves. Obviously the Vivo dividend is a 127% payout ratio. I just wondered whether there is anything to prevent you in future running down those distributable reserves to boost cash flows into the corporate center. Thank you.

Jeremy, this is Guillermo. Yes, there is price promotions in the fixed broadband also, some more intense productivity on the mobile side. That is taken into account obviously in our guidance in the future. Let me stress that our focus in present and the future will be on value. That means revenue market share is a much more relevant metrics than access market share, and we have been defending very well that metrics. Profitability as usual is all a very good measure, and we still have almost 47% OIBDA margin. So we will put focus on value. We will not enter in distractive price wars or tactics, and we will continue focusing on our best customers and our bottom line.

Taking your question on the structure – would there be any restriction or limitation on the deal or the integrated unit dividend payment after the process is completed? Again, we are highly restricted to comment, but it is going to be highly dependable on the final structure of the exchange ratios and all that. So it is very soon to conclude. We will keep you posted, but for the time being we do not see any major limitation. César Alierta: Okay. This is César Alierta. I want to thank all of you on behalf of all the team of Telefónica for your attendance at today's conference call. As I said before we are looking very much forward to see you in London on the 13th and 14th of February, in which we will share with you how we see the maintenace especially the big opportunity for the industry, and update you on the strategy of Telefónica for the coming year. Thank you very much and good weekend.