María García-Legaz Ponce - Head of Investor Relations Cesareo Alierta Izuel - Executive Chairman, Chief Executive Officer and Chairman of Executive Commission Ángel Vilá Boix - General Manager of Finance and Corporate Development Julio Linares Lopez - Chief Operating Officer, Executive Director, Member of Innovation Committee and Member of Executive Commission Santiago Fernandez Valbuena - Chairman of Telefónica Latinoamérica and Director of Telefónica Latinoamérica Guillermo Ansaldo Lutz - General Manager of Global Resources

Torsten Achtmann - JP Morgan Chase & Co, Research Division Luigi Minerva - HSBC, Research Division Georgios Ierodiaconou - Citigroup Inc, Research Division Mathieu Robilliard - Exane BNP Paribas, Research Division Timothy Boddy - Goldman Sachs Group Inc., Research Division Will Milner - Arete Research Services LLP Sean Johnstone Paul Marsch - Berenberg Bank, Research Division James Ratzer - New Street Research LLP James McKenzie Luis Prota - Morgan Stanley, Research Division Frederic Boulan - Nomura Securities Co. Ltd., Research Division Jonathan Dann - Barclays Capital, Research Division Stanley Martinez Jeremy A. Dellis - Jefferies & Company, Inc., Research Division

Ladies and gentlemen, thank you for standing by, and welcome to Telefónica's January-June 2012 Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Ms. María García-Legaz, 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-June 2012 results. I am María García-Legaz, 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 unaudited. This presentation may contain announcements that constitute forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties, and that certain 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 included in 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 and market regulators. If you don't have a copy of the relevant press release and the slides, please contact Telefónica 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.

Thank you, María. Good morning to everybody. As you can see, our second quarter results saw a significant improvement quarter-on-quarter. We delivered performance across all the metrics from OIBDA to net income in underlying terms. OIBDA in absolute level rose on a quarterly basis, and profitability enhanced sequentially, with quarter-on-quarter growth across the board. These results today show the benefit of our diversification or key strengths to face very different realities, with a positive revenue growth on the part of further commercial push and a very solid evolution in Latin America. On top of that, we have been taking broad actions to improve market dynamics and enhance our business model through efficiency gains, like the removal of fast handset subsidies in Spain and the gradual reduction in the U.K., and the network sharing agreement reached in U.K. and in Mexico. In addition, the recent news of our regulation in Europe, points to a drastic change in the way this telco industry has been regulated in recent years and is a very, very positive signal for the sector as a whole. On the financial side, we have taken decisive actions to improve the balance sheet and diffuse potential risk, including an exceptional use demand of remuneration policy, which allow us to have a full year refinance maturity behind the end of 2013. We are managing productively our portfolio of assets, with visible results year-to-date. And we have decided next actions, including preparation for an IPO of Telefónica Germany in the fourth quarter. And we continue making significant progress to enhance our growth profile and capture the significant growth opportunities arising in the digital space. Let me now review, with more detail, our first half performance starting with the summary of the key financials on Slide #4. In the first half of both 2012 and 2011, we look at several significant exceptional items. So to better understand the underlying performance of the company, we are providing a P&L, excluding those nonrecurring effects and noncash impacts. January-June revenue grew 0.3 year-on-year to reach almost EUR 31 billion euros, while underlying OIBDA topped at EUR 15 billion, with a better performance in the second quarter. OIBDA-CapEx operating cash flow gained close to EUR 7 billion. Underlying net income was over EUR 2.8 billion and earnings per share is EUR 0.62 in the first half. Let me mention that those metrics significantly improved the year-on-year performance in the second quarter. CapEx to sales was 12%. The emerging highlight of the second quarter results is the quarter-on-quarter increase in OIBDA across the main ratios and key operations, as you can see clearly on the Slide #5. As a result, the consolidated OIBDA margin stood at 34.6 in the second quarter and expanded 180 basis points sequentially, leaving a significant lower year-on-year erosion versus the previous quarter. In my opinion, EBITDA reached the bottom in the first quarter of the year, and I want to underline that. It is my total condition that the OIBDA reached the bottom in the first quarter of this year. And improved trends will consolidate in the second half of the year. And I'd like to highlight the better performance in Spain, where OIBDA was up 3% versus the first quarter of the year. Slide #6 outlines how we are finally enhancing our geographical diversification. We have increased our exposure to Latin America significantly in the last 12 months, represent [indiscernible] 50% of key financial metrics of our results, with significant contributions from the individual markets. And as you can see, we are not only highly diversified in terms of regions, but also in currency terms, with the risk exception that is totally decoupled with the fundamentals of our business. Our exposure to Southern Europe or even to the euro is well below the exposure of other European players, [indiscernible] are not in Spain. And importantly, our operating cash flow in Spain remains pretty stable quarter-on-quarter. Our revenues' results in operating cash flow are clearly one with the March spread and diversified of the whole industry, and it's shown very clearly in this slide. And we are not talking only about the diversification, but also about performing our business model for an additional telco, to a digital telco, where growth opportunities are very, very large. Clearly, in the upcoming transformation of wider parts of the economy, including security, education, public administration, sales, financial service and other areas, that represent between 75% and 40% of GDP, within other several markets to products of up to 2%, which is nearly double the market today of the telco industry represent a tremendous opportunity, and I can assure you, Telefónica will not miss this huge opportunity. As you can see on Slide #8, telcos can use the models to capture the value coming from digitalization wave, as connectivity providers, as an enabled retailer or as a service provider. Connectivity plays in our strength, infrastructure and spectrum, among others. We expect this to remain our strongest play for the coming future. Digital service are complements. The more are being used, the better, clearly, for us. Here, we had made already a number of announcements on fiber and LTE deployment, and now we're sitting in agreements in tariff initiatives. We see enabler-retailer role very important. This is where our asset base complement all the plays in our ecosystem. This is about creating new markets, not taking markets from someone else. Here again, we prove [indiscernible] on many fronts. Digital services, we would need to maintain relationship and customer engagement on few selected services, for example, communications, financial services and other. We will be selective and focused on some of those services, where we can make a clear difference. We follow opportunities to come in the coming future. It will be our being innovative, develop and self-produce behind connectivity to social needs, and to be a catalyst for change in business value chains, while reinforcing our core business. Our view of digital telco, none of these 3 models, but it's really one of the combination of those 3 models. Eventually, with difference is work depending on the local market conditions. This is the reason why we organized Telefónica the way we did. Different divisions working together towards a common goal with different roles, responsibilities, assets and a skill set. And we have done that clearly ahead of our peers. And now let me hand it over to Ángel for a detailed overview of our operating and financial performance. Ángel Vilá Boix: Thank you, César. Please turn now to Slide #9. In the second quarter of 2012, we continue to regaining commercial momentum, despite strong competition across countries. Our customer base surpassed the EUR 610 million mark at the end of June, 6% more than a year ago, driven by the growth in key strategic areas. Strong focus on the smartphone adoption fueled the solid 18% growth in mobile net adds versus the first half of 2011. Smartphone net adds grew 40% versus last year figure, with growth rate reaching 99% in Latin America. In parallel, we are advancing a transformation of our fixed line businesses with a selective deployment of UltraBroadband services, in those markets where there is potential demand and appropriate regulation and competition. Approximately 24% of our fixed accesses are currently ready for commercial UltraBroadband services, and out of them, around 7% are already connected. As Slide #10 shows, revenue growth was driven by the robust performance at Telefónica Latin America and mobile data across the group, offsetting headwinds in Europe. Data revenues continued to deliver a sustained ramp-up in their quarterly year-on-year increase, and over the account for 35% of mobile service revenue on the back of a profitable data monetization, leveraging peer pricing along with integrated tariffs. I would like to stress the marked sequential slowdown in OpEx in the second quarter of 2012, reflecting the continued focus on efficiency improvements and its commercial cost growth on the back of the new handset policy in Spain. As a result, consolidated OIBDA improved its year-on-year trend in the second quarter, and our OIBDA margin expanded 180 basis points sequentially. Year-on-year, margin erosion also improved by almost 100 basis points versus the previous quarter. Please turn now to Slide #11 to start with our Latin American operations, where business fundamentals remain sound. Organic revenue growth rates keep healthy levels, driven by a double-digit growth in mobile, thanks to sustained commercial activity with gross adds growing above 20% in the first 6 months. Smartphones adoption continues booming in our base, more than doubling its penetration on the base year-on-year. Mobile revenue growth is fueled by strong mobile service revenues on the back of increased data consumption and growth in voice services. The weaker performance in the fixed business is strongly affected by specific factors in Brazil in the quarter. Increasing mobile traffic is affecting traditional fixed business. However, our exposure to traditional fixed voice is at 20% of revenues in the region, while the remaining 80% keeps growing almost at double digits. Turning to Slide #12. OIBDA in the second quarter showed a sequential improvement. It was higher than in the first quarter in absolute terms, but it also improved, both in terms of year-on-year evolution and margins. In such a diversified portfolio, there are, as always, negative and positive impacts affecting quarterly performance, with our sales and some other specific factors in Argentina, Venezuela and Brazil affecting margin evolution. However, efficiency gains were visible in the quarter, supporting the quarter-on-quarter margin improvement. In terms of year-on-year comparisons, profitability continues to be explained by the increased commercial activity in 2012 and the higher effort in transformation towards mobile data. Year-on-year commercial efforts will be more comparable in the second half of the year, leading to a lower-margin erosion. Please turn to Slide 13 to review our Brazilian operations. We continue to read the market, leveraging our differential propositions, both in terms of asset and strategy. Our focus on providing superior service quality is clearly bearing fruits. Telefónica Brazil maintained a strong commercial activity in the quarter with mobile net additions up by almost 30% year-on-year. Smartphone users multiplied by 3x versus June 2011. Vivo is leading mobile broadband adoption in the market, on the back of its superior 3G coverage and network quality, which are clearly visible at revenue level. Data already accounts for more than 25% of mobile service revenue, a benchmark in the market. We aim to continue leading quality in the Brazilian market, and for this, we keep investing strongly for the future, as shown by the recent acquisition of spectrum. In the fixed business, we're accelerating the transformation, speeding up UltraBroadband connections with increased CapEx in the second half of the year, to enhance commercial momentum in the fixed broadband market. I would also like to highlight the successful rebranding and just 1 quarter after marketing our fixed business in the Vivo brand, the company is leading customer satisfaction in Brazil. In terms of financials, revenue growth in Brazil continues to be sound, with marked differences between businesses. Mobile service revenues kept growing pretty nicely at over 13% year-on-year x regulation, with pretty strong prepaid top up levels and no signs of slowdown. In terms of fixed-to-mobile substitution, it should be noted that mobile service revenue expansion is more than 2.5x the erosion in traditional fixed voice revenues, resulting in the net of both impacts being clearly positive. Fixed revenue performance quarter-on-quarter was impacted by several issues, with 2/3 of the weaker performance explained by nonrecurrent factors. These include the full consolidation of TVA from second quarter 2011, retroactively to 1st January of that year, which means that in Q2 2011, we included 6 months of TVA's results instead of just 3 months. They also include the seasonality associated with different execution of projects in the corporate segment. On the other hand, OIBDA improved sequentially, both in absolute terms and in margin. Moving to our operations in the Southern Region on Slide 15. The highlights are that revenue growth remains strong across key countries, mainly fueled by the strong commercial activity and solid mobile data revenues. Especially remarkable is the good growth recorded in Peru and Argentina, with top line in Colombia being hit in Q2 by seasonality of IT projects. Chile continued to deliver a steady performance amid increased competition. OIBDA level as whatever is explained there, different specific factors impacting performance in the quarter, especially in Argentina and Peru. On the next slide, #16, we summarize the results recorded in the Northern Region. Let me highlight that Mexico is already showing revenue growth in the second quarter, a significant progress from previous quarters, and just 1 year after the introduction of aggressive MTR cuts. In addition, the recently announced agreement with Ucell and our new commercial proposition will drive further benefits. Let me now give you our performance in Europe starting on Slide 17. We have regained commercial momentum across our footprint over the second quarter, on the back of the good traction of our refreshed tariffs and term reduction, which led to a strong performance in mobile contract net adds, up 22% quarter-on-quarter. Moreover, focus on the expanding smartphones led to a 32% penetration rate. Improved commercial results were compatible to which have better OIBDA evolution. OIBDA reached a growth to EUR 2.7 billion in the second quarter, up 6.3% quarter-on-quarter, leveraging a sharp cut in commercial costs, down close to 7% in the quarter. As a result, margin improved sequentially to 35.5% in the quarter, with further benefits to come from our recent decisions to improve profitability across markets. Top line continued to be impacted by the intense macroeconomic, competitive and regulatory pressures. Turning to Slide 18, to review our operations in Spain. I would like to highlight that our plan to revert the situation is starting to yield positive results. Our initiatives to recover competitiveness through a proactive migration of customers in the consumer segment to our refresh tariffs, have led to more than 2/3 of fixed broadband customers and over 50% in the mobile contract business already enjoying better propositions. The major benefit from this fast repositioning is the sharp churn reduction across services, which has become more visible in Q2, leading to a much better evolution of net adds quarter-on-quarter, especially in mobile contract segment. Please note this, that net adds in contact voice accesses were already in positive in May and June. On the other hand, the rapid adoption of the new tariffs is negatively impacting ARPU, though we expect ARPU erosion to ease from Q4 on the anniversary of the new portfolio. The second key lever of our turnaround plan is the implementation of a new industrial model to enhance efficiency. On this front, results are also evident. Our decision to remove mobile subsidies for new customers from March was followed by some competitors, leading to lower activity volumes in the portability market, with a better trend in our net results despite the introduction of the 24-hour portability from June 1. Subsidies removal is driving significant net savings in commercial costs, which are already flowing into the P&L. Additionally, improved quality has led to a strong reduction in customer claims, driving further cost savings. Efficiencies gains are also coming from the rapid completion of the redundancy program in the fixed line business, positioning us well ahead of our peers, to benefit from the sector transformation derived from the new regulatory framework in Europe. We have already done our homework to adapt the cost structure of the legacy businesses, with very material savings in personnel costs, close to EUR 120 million in the first half of the year. The gradual improvement in operating performance and a tight cost management make us comfortable to assess that our Spanish business reached the bottom in the first quarter, with a better financial performance expected for the coming quarters as we fully capture the benefits from the new commercial model and the headcount redundancy plan. This better evolution was already visible in Q2. OIBDA reached over EUR 1.7 billion in the second quarter, increasing sequentially. OIBDA margin also expanded quarter-on-quarter, reaching 45% in the quarter, with a very limited year-on-year erosion. This performance was achieved despite the increased top line pressure in the fixed business. Mobile service revenue remained more resilient in April to June, with a much lower sequential deterioration than in the previous quarter, where we recorded a positive impact from the midyear. This performance is explained by a low impact from our loyalty programs, which offset the negative drag from the termination of a contract with an MVNO in the quarter. Enhanced quality and lower churn are also driving CapEx efficiencies. Despite the significant higher budget for fiber investment in 2012, 30% up year-on-year, total CapEx in Spain will be down versus 2011, further supporting an improved operating cash flow year-on-year performance versus 2011 along the year. On top of that, let me stress that the recent news from regulation will be particularly positive for our business in Spain, where abundant local loop prices are well below the European average. Please turn now to Slide 20 to review our operation in the U.K. Telefónica U.K. consolidated its improved market momentum in the quarter, expanding its mobile base on increasing contract gross adds, up 26% year-on-year in Q2 and a sustained contract churn improvement. As a result, contract net adds grew sharply totaling 251,000 in Q2, with further increases in the contract mix to 51% over the total base. At the same time, OIBDA performance improved, rising quarter-on-quarter, on the back of efficiency measures and contention on commercial expenses, as the company gradually lowered handset subsidies and upgrades slowed down. This resulted into a sequential OIBDA margin expansion to reach 23.4%. The better trading activity led to a consistent improvement of revenue trends with mobile service revenues x MTRs, consolidating their stabilization trend. Non-SMS data sales growth accelerated to 19.5% in the second quarter, on the back of successful data monetization strategy. We expect to continue strengthening mobile service revenue in the second half of the year, despite competitive pressures in the market. In Germany, our strong franchise continued to deliver a solid set of results as the Slides 21 and 22 show. Our new commercial approach, adapting our contract portfolio with the launch of Fotoblu [ph], reinforce value for money propositions. LTE tariffs recently launched an additional focus, are delivering continuous churn improvements and a steady mobile base expansion, with a better customer mix as contract segment already accounts for 52% of our mobile base. The strong commercial momentum has led to consistent market share gains, especially among higher value customers, reaching a 19% share in the contract segment and deflecting our market lead in smartphone penetration. Additionally, the strong investments in recent years to expand our distribution channels, our solid network and the spectrum, to exploit the mobile data opportunity, leave us in the best position to capture future growth in the effective German market. We experienced solid trading momentum and ARPU growth year-on-year and sequentially, leverage on better contract mix and higher consumer spend due to successful data monetization. All of these flow into financials, with mobile revenues growing 11% year-on-year in the second quarter and total revenues accelerating the growth trend to close to 7%. OIBDA is up close to 13%, both quarter-on-quarter and in the first half, on the back of strong top line performance and efficiency measures, driving an OIBDA margin expansion to 25.7% in the second quarter. January to June operating cash flow increased by 13.4% year-on-year, showing the strong acceleration in growth from top line to cash generation. To finalize with the operating performance, let me update you on our guidance for 2012. Last February, we give our guidance for revenue growth above 1% in current terms at the specific full year exchange assumptions. However, given weaker-than-anticipated macroeconomic conditions and the stronger drag from regulation than previously envisaged, we now expect to deliver flat to positive revenue growth by year end. Nevertheless, we will reiterate our expectation for OIBDA margin erosion in 2012 that will be lower than in 2011, with a better year-on-year evolution in the second half of the year, driven by better year-on-year comparisons in commercial activity, net savings in commercial costs in Spain and further cost efficiencies across countries. On top of that, operating synergies in Brazil will become visible in the coming months. CapEx to sales guidance remains unchanged at similar levels than in 2011. Let's now move to the financial side on Slide #24. Net financial debt increase in the quarter is mainly related to the timing of the dividend payment and execution of the share buyback, which, coupled with negative FX movements, commitments cancellation and the impact of temporary financing, offset positive free cash flow generation and the EUR 1.5 billion debt reduction from the closing of the Colombian restructuring. Further positive impacts from our asset rationalization strategy will be visible in the short term. We have already got all the necessary regulatory approvals for the partial sale of our stake in China Unicom, which will effectively reduce our debt burden from July 30. This, coupled with the sale of our stake in Hispasat, will contribute with EUR 1.3 billion cash proceeds. Free cash flow generation will improve in the second half of the year on the back of a better operating performance and the unwinding of the working capital consumption recorded in the first half of the year. Debt reduction will be significantly accelerated by the shareholder remuneration measures announced yesterday that will generate significant cash savings. We maintain a solid liquidity position, with debt maturities covered until beyond the end of 2012 -- 13, until the end of 2013. This comfortable position is driven by our strong activity in the bond and credit markets since the beginning of the year and the recent adjustment of our remuneration policy, which improved liquidity immediately and reduces refinancing risk. We fully refinanced 2012 maturities in the first quarter, and we have also reduced 2013 maturities by nearly EUR 1 billion, to EUR 6.7 billion. Our cash position, excluding Venezuela, stood at over EUR 5 billion at the end of June, while total undrawn credit lines amount to EUR 8.9 billion, with over 80% maturing long-term. It is worth to highlight the geographic diversification of undrawn credit lines, with about 1/4 of them signed with Spanish institutions while American and Asian banks represent another 1/4, and the rest being widely split among diverse other European countries. Let me say that although credit markets have deteriorated, we have demonstrated our ability to refinance and extend existing credit line maturities for an amount of EUR 2.4 billion in the year. We are also benefiting from our geographic diversification. And in the current credit environment, we have recently secured full underwriting of a BRL 2 billion debentures issuance that will be closed in the coming weeks. Effective interest costs have increased in the quarter, though continue to remain at the middle part of our guidance. And the acceleration and debt reduction will lead to lower-than-anticipated financial expenses, affecting positively the P&L. Let me now hand it back to César.

Thank you, Ángel. Let me stress that we are fully committed to enhance our financial flexibility and to deliver our leverage targets for year end. In the current. extremely challenging economic and financial environment, a softening of factors are creating severe instability and are exacerbating potential financial risks. These soft factors are clearly behind Telefónica control. It is crucial as the company takes definitive steps to effectively diffuse potential risk. In consequence, the Board of Directors decided yesterday, that in the criteria of prudent administration, it is in the best interest of Telefónica's stakeholders that dividend in share buyback term corresponding to 2012 be canceled as a onetime exceptional measure. The rationale behind this decision are first, to further strengthen the balance sheet; second, to substantially accelerate their resolution in the short-term; third, to decouple from exogenous macro factors affecting our country or domicile; fourth, to immunize from debt market liquidity conditions by having refinanced maturity behind 2000 -- the end of 2013; fifth, to de-risk the execution of the already-announced portfolio management; and sixth, to continue investing in profitable growth in our operations. Additionally, we are fully committed with the execution of the already-announced portfolio management and asset divestment program, including the sale of Atento and the IPO of Telefónica Germany in the fourth quarter of this year, in the analysis of potential listing alternative for Latin American business. On top of that, we are continually monitoring market conditions to make further selective asset monetization. All of these actions should help to reduce the company risk position to levels that are aligned with our business fundamentals. To sum up, in the second quarter, we have delivered OIBDA performance across metrics from OIBDA to net income in underlying terms. Our risk position is clearly decoupled from business fundamentals and does not reflect our best-in-class diversification. OIBDA improve materially quarter-on-quarter, with sequential increases across operations. And OIBDA margin's performance in the first half of the year is consistent with 2012 guidance, with the EBITDA revolution expected for the second part of the year. We have taken further initiatives to optimize resources and improve business profitability. And in the country's extremely challenging economic environment, we are undertaking actions to improve balance sheet and diffuse potential risk. And we are clearly making significant progress in our journey to become a total digital telco. Thank you very much, and now, we are ready to take your questions.

[Operator Instructions] Our first question comes from Torsten Achtmann from JPMorgan. Torsten Achtmann - JP Morgan Chase & Co, Research Division: The first one is on Spain. While the wireless business has stabilized on the quarter-on-quarter basis, wireline seems to have accelerated at downturn. Could you explain what is behind that? And is that something which would continue throughout the year? And second one would be on the credit lines. Are there -- are the credit lines entitled to any rating? Or in other words, could they be cut or pulled if you -- if your rating gets downgraded by 2 more notches, in any case?

Taking your question on the evolution of the wireline business revenues in Spain. Let me say, that this is partially due to an induced movement that we have been doing in actively migrating our most valuable broadband customers to a lower tariff. And therefore, right now, more than 2/3 of our customers on growth and have already migrated to new tariffs. And this has created a short-term impact on the revenue growth. But at the same time, we have been able to manage a better margin on average margin per user performance. Because churn has been significantly reduced, and before that we used to have a -- roughly 50% of the customers are already stepping out of a promotion, leaving the company for another supplier. Right now, we are able to preserve those customers. And that, jointly with the fact that we are significantly increasing the quality of our services here in Spain, means that churn are at the historically low levels in Spain. So it is true that, that has been affecting the short-term, additionally to the macroeconomic condition. Revenue performance in Spain, that would stabilize progressively, but we have a much more loyal customer base, much lower churn, much better operational metrics and a margin evolution. And on top of that, that is going to have a significant impact on lower CapEx because the effort of preserving those customers is definitely stalling -- or getting more customers from the outside, was putting significant pressure on CapEx. So overall, it is true that, that has been affecting our revenues in this quarter, and it's probably going to be affecting in the coming months. But the overall equation is positive, and it is further contributing to a further, to a bigger margin per customer and to a lower intensity of CapEx. By the way, the equation is solidly based on the fact that churn is at historically low levels. Ángel Vilá Boix: Torsten, this is Ángel. We have no rating triggers in our financing, either in the credit lines nor in the bonds, nor in the long-term facilities. So no rating triggers in our financing. And also, as you can see on Slide #25, we have very well-diversified the list of origin of counter-parties for our credit lines.

Our next question comes from Luigi Minerva of HSBC, London. Luigi Minerva - HSBC, Research Division: I wanted to go back on your positive comments about the European Commission policy statement on fiber. And I wanted to ask you 2 things. Firstly, how that statement is going to change your fiber strategy, let's say, over the next 12 to 18 months? And secondly, speaking on the point that the commission emphasizes, that they endorse a technology-neutral approach, whether this statement will push your network architecture more towards the fiber to the node compared to fiber to the premises?

This is Julio Linares. Our view on the new regulatory policy for Europe is positive, as it is for the investment community. We really believe that there is a significant change in the right direction that is addressing the first priority for the European market, trying to achieve a less-regulated policy framework that is the most adequate one, in order to push and stimulate investment around next-generation access network. As you know, there are 2 new recommendations coming with this general policy that has one, for non-discrimination, and the second one, around cost methodology, to be applied for the determination of the regulated wholesale services. That will take several months, and then it will be very unlikely that will have a real impact in the next 6 months. But of course, it will be a very positive impact for the next coming months. Saying that, in addition to these general framework, I think it is very positive to take into account that there are not going to be any pressure on the current money local loop prices. On the other side, taking into account our prices in Spain, we have even an upside possibility here. I think, as you said, that it is very important that this policy is technologically neutral. But we don't see any impact on our current strategy regarding the deployment or the different technologies. As you know, we will use the best mix of the available technologies in each market, depending on the current competition, on situation of each individual country and market.

Our next question comes from Georgios Ierodiaconou from Citi. Georgios Ierodiaconou - Citigroup Inc, Research Division: Two questions, please. My first question is from the country of domicile. This was one of the reasons you mentioned that drove the decision to cut the dividend. And as you highlighted earlier on Page 6, you are a lot more diversified than some of your peers, yet they had of course, presumed to make all the difference. Can you clarify if it would be possible, in principle, to change domicile, if it's feasible in practice, and whether if you have to make such a move, it would be enough to decouple your rating from that of the sovereign. And my second question is on the dividend. Can you please confirm that the EUR 0.75 for 2013 onwards will be all in cash, or -- and whether will-- you will roll out script dividends in the future?

This is César Alierta. If you see the evolution of our debt, basically, the evolution of our debt is due to 2 factors, the buying of [indiscernible] and the operation in Vivo. So we are being penalized for having invested outside Spain, which is clearly, to me, a very clear contradiction, okay? The increase of our debt is due basically, to investing in Europe and in Brazil, and investing in some of the biggest growing market. And I see a very clear contradiction that a correlation between the financial risk they are giving to Telefónica, which is 3x or 4x more than our peers, we have more revenues in the euro and [indiscernible] with recreation [indiscernible] to us. And we have the domicile in Madrid, and we will keep the domicile in Madrid because we are in 25 countries, and I think our business will be [indiscernible] in the 25 countries, and I'll remind you that Spain generate 51% [ph] of the revenues and are stable. So that is very clear. And that's the reason that -- anyway, taking the present situation, it was clear to the Board that we had to take an action to the courtroom and make the reality to be related to the fundamentals of our business, and that's reason we took this decision on the dividend, extending the maturity behind 2013. And that means then that we feel very comfortable. We will achieve the leverage ratio that we said that will reach at the end of the year, and we'll continue on optimizing our asset for portfolio on deleveraging Telefónica while not affecting the growth potential of Telefónica. And this is clear, and we can do both things. And the thing we have done in the 7 -- the first 7 months of the year are very clear, with the optimization of portfolio and it's what we're going to continue to do. And we are going to pay EUR 0.75 in cash. And I might remind you that EUR 0.75 is less than 50% payout of a free cash flow with respect for the coming years. So that's the answer to your question.

Our next question comes from Mathieu Robilliard of Exane BNP Paribas. Mathieu Robilliard - Exane BNP Paribas, Research Division: First, the question with regards to your revenues. As you've shown that you still have good revenue growth in most of Latin America, yet there's been a slight slowdown when we compare it to Q1. There's also some slowdown in some European countries. And so my question was, how do we reconcile that with the fact that you have continued to invest over the last few quarters? And is that the reason why you changed the revenue guidance, because you're seeing a slowdown already in some countries? And related to that, where have you been disappointed? The reason why you downgraded the guidance, is it because of Latin America? Is it because of Spain? And second question has to do with your financing strategy. And I'm trying to reconcile the slides that you put up today about debt maturities, and that's Slide 25 and the equivalent slide you put in Q1 result, at that time, you were talking about 40% of the 2013 maturities being prefinanced. That number doesn't show here this time. Maybe it's just a presentation issue, if you can clarify that? And also, I see that undrawn credit lines have declined from the previous quarters. So maybe also, if you could clarify that?

Regarding your first question, we see that Latin America revenues are growing, and they will keep growing. Then the only reason to change our guidance for revenues, is basically that we expect weaker macro conditions in some countries, not of course in all of them, but in some countries. And because we took into account as well the stronger DAC phone [ph] regulation that we are already facing. Mathieu Robilliard - Exane BNP Paribas, Research Division: But -- sorry, the weaker macro, is that only in Europe? Or is that also in Latin America?

Basically in Europe. Ángel Vilá Boix: Mathieu, this is Ángel. With respect to maturities of 2013, you are seeing on Slide #25 a lower figure than in the first quarter because we have been extending the maturities of some financing beyond, and then we have brought them forward. So that's why the figure is lower. And also, what we said at the end of the first quarter, that we had the 40% of maturities covered, now what we're seeing is that we have 100% of those covered. So we already have, even in the absence of divestments, and once we have closed the China Unicom transaction, we have all debt maturities covered until beyond the end of 2013. So here, we are in an exercise of expanding our liquidity action for the next period until the end of 2013 and beyond. Mathieu Robilliard - Exane BNP Paribas, Research Division: Sorry, if I can clarify that? By covered, you mean, prefinanced, as you mentioned in the previous quarter? Is that covered by the free cash flow, or is that covered by existing lines that are undrawn? Ángel Vilá Boix: What -- with the cash that we have, the cash that we're going to generate and the facilities that we have, we would be covered till beyond the end of 2013.

Our next question comes from Tim Boddy of Goldman Sachs. Timothy Boddy - Goldman Sachs Group Inc., Research Division: I wondered if you could confirm whether you've spoken with the credit rating agencies about this decision, and whether you have some reassurance that this can isolate you from the potential risk of a downgrade to the sovereign rating in Spain, reflecting the diversification you've been discussing. It would it also be helpful to understand whether with this stronger balance sheet, you are able to be more price-sensitive on any potential asset disposals that you plan? To just give you-- for example, if market conditions become even more challenging, does it give you flexibility to delay potential IPOs? And I guess related to that, does this change the way that you're thinking about German consolidation, given your balance sheet is again getting stronger? Ángel Vilá Boix: This is Ángel Vilá, again. My first observation about ratings agencies should be one of coherence. All of us have read the latest report from S&P, Moody's and Fitch, which were issued in May, June and July, respectively. They are public and they are objective metrics, which would lead to stabilization of our ratings. The results that we're presenting today, where we have a quarter-on-quarter sequential improvement, expected to improve performance in the second half, and the dividend action would position us in compliance with those metrics. So we would expect the rating agencies to be coherent, and properly incorporate these facts into their assessments, no? The second observation is about decoupling from sovereign rating. As you know, certain agencies have methodologies that link sovereign and corporate rating and the rigid application of such methodologies that would fail to take into account the geographic diversification, the solvency and liquidity of Telefónica, could create some potential and view them as just to Telefónica. Therefore, we would expect that the methodologies that would be applied by rating agencies would be applied in a way that recognize the diversification, solvency and liquidity of Telefónica. With respect to the second part of your questions, which is -- and by the way, we have had the preliminary conversations with ratings agencies after the announcement that we did yesterday, and they are showing or interpreting these as a very positive movement from Telefónica. With respect to the second part of your question, which relates to the investment policy, we continue to be committed to the divestments program that we have. But obviously, since we have other debt maturities covered until beyond 2013, even in the absence of those divestments, this provides us the flexibility with respect to timing, with respect to valuation of those investments, to which, I insist, will remain fully committed.

Our next question comes from Will Milner of Arete Research. Will Milner - Arete Research Services LLP: The first question, actually just following on from the last one, on the need for an IPO in Germany, I mean, given the cancellation for 2012 dividend, they certainly don't seem to have led to a sharp move in the share price. I just want to understand why you're still committed to IPOing the best European assets? And why would you not potentially also, delay restarting dividends in 2013 to prevent you from having to IPO Germany? And the second question is actually on Brazil. Quite a bit more evidence, I think in the quarter, of tougher competition especially on wireline. And I think certainly adjusted for a big provision reversal in some tower sales, the OIBDA is falling high single-digits in reals. I just wondered if you can talk a bit more about prospects to being able to generate consistent, underlying OIBDA growth, given the commentary you made about operational synergies being noticeable or coming through in the next couple of quarters? Ángel Vilá Boix: This is Ángel Vilá. Regarding the first question, we have not contemplated cutting the dividend beyond the onetime exceptional cut of 2012 because as we have reiteratively expressed in the past, it's in Telefónica SG&A to have an effective and compelling dividend to its shareholders, and with the financial projections that we are having with the operation of the business and the different measures that we're taking, we can be comfortably covering such a dividend. With respect to the German IPO, it provides -- that's a project that provides not only a potential source of liquidity and debt reduction, it's a project that provides a platform in Europe that can allow us to highlight the value of such an asset, that can provide us a platform for capital raising, in case there were continued financial volatility in Europe, and it provides us with a platform for further development. It's a very attractive asset, which we have been highlighting, that is growing in all its metrics from revenue to OIBDA, to operating cash flow, has a very effective cash generation even after taxes because of its tax position. And we believe that it should be very attractive for potential investors.

And let me highlight one thing. Clearly, we want to highlight the value of the group. And the IPO of Germany, one of the reasons in which-- when you look at the sum of the parts, there is clearly a discount we are having on the value of Telefónica because of having the domicile in Spain, we want to highlight the value of the group. And I want to reiterate to you one thing. For Telefónica, the domicile is the 25 countries in which we are. That is all domicile, okay?

Will, this is Santiago. Let me try and answer your question about Brazil. Well, number one, I appreciate that Qs 1 and 2 have been quite busy in one-offs. I will not go into detail, but I'll be more than willing to spend time on those. The one thing I can say is that 2 of those, the brand and launch that was extensive but successful, with Vivo now encompassing both fixed and mobile products, is clearly a one-off event, and it will not happen again in the second half of the year. And then the restructuring coming from the putting together of the fixed mobile businesses is also behind us. So clearly on those 2 fronts, the second half should be better. You were right to point out that the weakness relies exclusively on the fixed end of our businesses, and they are, in particular, on voice. And we have 2 observations there. One is that broadband continues to expand, and we continue to have an active pricings in that market. And second, we are ready to launch, around October, our new IPTV product, which we think is going to help us sell more to the upper echelons of the market, and will show that although we may be coming a bit late into the growth of that particular segment, we are going to make a lot of noise.

Our next question comes from Sean Johnstone of Bank of America.

I want to look at your statement on net debt. [Technical Difficulty]

Our next question comes from Paul Marsch from Berenberg Bank. Paul Marsch - Berenberg Bank, Research Division: I have 2 questions. On Page 25, it sounds like I'm not the only one who's a little bit confused by how your liquidity situation stacks up. And maybe one way of answering it is, could you perhaps give us your view of what that liquidity chart, the cash and equivalents plus the undrawn credit facilities, would look like if you hit your guidance for the full year, what would that look like at the end of the year? Then secondly, a question on Germany again, and clearly it's been widely reported that you were close to a deal with KPN on E-Plus, but couldn't get credit agency backing. Are you still working on resolving those credit agency concerns? And is it still an option in your plan to revisit that opportunity if credit agencies can be pacified?

And with regards to your -- this is Cesareo, and with regards to your KPN question, I mean, it's very, very clear that the more substantial synergies in the market consolidation in Germany, I will say very clearly that the priority for Telefónica is really the reaching into proof of financial flexibility. And that's the reason that this deal hasn't been done. Ángel Vilá Boix: This is Ángel Vilá. With regards to the first question, we will not give guidance on what would be the cash position at the end of the year. But clearly, this will be influenced by the position that we have now, by the cash that we're going to be generating in the second half of the year, that will be substantially higher than the one that we have generated in the first half, and also on the financing exercises that we can execute in this second part of the year. With respect to the evolution of cash between now and the second half of the year, the operating cash flow decline that you have seen in the first half will be lower, so the second quarter has already been better than the first quarter. The second half will be better than the first half. You should see a better evolution of operating cash flow. Also, the working capital consumption which you can see on Slide #24, it's cumulative, close to EUR 2 billion in the first half the year. It will more than fully reverse in the second half. Working capital, as you can see, in every single one of the last years is highly cyclical, and this will more than reverse. Third, on interest expense, we are having a higher interest expense because we have higher debt, and we have higher interest cost. Also, in the interest expense and payments that we've had in the first half of the year, we had about over EUR 200 million of nonrecurrent items. This financial expense in the second half would also go down because the debt will go down. And we are saving on taxes, so far compensating the increases that we see in Spain with savings that we're getting in other jurisdictions. So you should be expecting a much better free cash flow generation in the second half of the year, which coupled with financing activity, will result in the position that we will have in cash and under our own lines by the end of the year.

Our next question comes from James Ratzer of New Street Research. James Ratzer - New Street Research LLP: Yes, I have 2 questions, please. The first one is just regarding wireless in Spain, comparing your performance with that of Vodafone. I mean, obviously you have widely upsized your -- both changed your subsidy policies. But if I look at your average pricing per minute, Vodafone decided to give some of that value back to customers by cutting its voice pricing sequentially, whereas as your average price per minute seems to have actually gone up sequentially from Q1. Do you think that differential in pricing trends is sustainable, please? I'm interested in getting your thoughts on that. And secondly, I have another question with regards to Brazil. It's now coming up for almost 2 years since the deal completed. I was wondering if you could just give a scene of what's going on behind-the-scenes on the synergy process? Why it is now, 2 years on, that you feel confident the synergies are going to come through in the second half, and why haven't we've been able to see them in the first 2 years since the deal completed?

Taking your question on wireless in Spain, namely the comparison that you're making against Vodafone, we don't see those differences. And in fact, in the -- in market trends on the average entry points, we think that we have become highly competitive. So we strongly view to some of the bundles, actually, assignment that we have. So I would invite you to check that numbers with our team. I'm more than happy to go through those because we don't really feel the difference, and in fact, the market trends are very positive our side on this part of the business. So in my view, some bundle assignment. But on effective price permit, we are very competitive, and we have been very competitive both in contract and progressively in prepaid. And thanks to that, we have been able to show a significant improvement in churn. And we have been back to positive market gain, market net adds in contract, namely. So we don't experience that difference. Please check those numbers with our team. I will be happy to go through them because those doesn't account for market reality today. James Ratzer - New Street Research LLP: And do you think your price per minute hit has stabilized?

Well, in fact, what we see is that we have become competitive, as I was saying. The ARPU, if you measure that in terms of mobile service revenues in Spain, has been stabilizing. We have been migrating already 52% of our total account with customer to a lower tariff. This difference of tariff is roughly EUR 6 and the main comparison that you should drive is, what if we would not have done this? We are already passing through the point in which our revenues are already stronger today than if we would not have done that, because the churn levels that we were having before in the customers overseas, the euros were roughly 6%. And now we have historical low levels of churn. So thanks to that, the average margin per user is higher today than it was before. And in fact, the revenue trends compared to the one that would have been if we would not have moved our entry points is, today, starting to be better. So I think that now is not just our subsidies, it is entry points, it's offers the quality of services. It's about the fact that the number of calls that we are getting to the call centers has basically halved. And therefore, the margin trend is much more sustainable than before.

Yes, this is Santiago, again, in terms of when the Brazilians synergies will show up. Let me make just take 2 comments. One is that it is almost 2 years exactly to the date that we signed the deal with PT on Vivo, in the second half of [indiscernible] to be precise. But it's only 1.5 years or slightly less than since the deal closed. And it's only been 6 months since the 2 companies have finally integrated. And obviously a lot of the synergies are going to show on the negative side, that I just mentioned, in terms of integration costs. And from now on, I would commit to say that, through the end of this year, we should be more specific about what those synergies have actually turned up being. That should also include the tax synergies, which are not insignificant as a result of this merger, which only happened in February.

Our next question comes from James McKenzie of Fidentiis.

I have got a couple of questions. Firstly, Ángel, you were talking about the interest expense. In the last couple of years, we've become used to interest payments being well below accrued interest costs, and yet in this first half of the year, that situation is turned around. I was wondering, could you give us some idea of what you're expecting for H2? And then on the Spanish business, when I look at the churn, and churns obviously come down to very low levels, could you give us an idea of -- for the new plans, if the churn is significantly below the average churn you're showing in these charts? Ángel Vilá Boix: James, this is Ángel. In the first part half of the year, we have recorded some nonrecurrent interest expenses to the tune of EUR 200 million. Part of this had to do with Colombia, one of -- before we took all the debt reduction, there was 1 monthly payment that had to be put into the financial expenses and went into the first quarter. We also had some 1x related to Peru, and so on. Also, there is seasonality in the coupon payments. There is concentration of coupon payments in the first part of the year, that also make a distortion of that. Now so, this is basically either seasonal or nonrecurrent items that were in the first part of the year. From here, you should expect debt reduction. As I said before, next Monday, on July 30, we are closing the transaction regarding China Unicom that will provide an immediate debt relief in excess of EUR 1.1 billion. And we continue with our efforts to divest to assets, and the cancellation of the share buyback will result in us having the shares in our treasury stock. They will not be canceled, and we have full flexibility with respect to those. Obviously, we would not contemplate divesting them in this price because it's not reflecting Telefónica's value. And then the saving of the November -- the EUR 0.40 in November. That's around EUR 1.8 billion, also saving. All of these will result in reduction in the interest expense.

Sure. Any guidance with respect to -- specifically to payments versus accrued interest? Either cash flow interest rather than P&L interest? Ángel Vilá Boix: I can say that payment will be lower than accrued in the second half.

Taking your question on the Spanish business and churn load, the answer is, yes, on their customers that we are retaining on what we call the operation rate, which is the early signs of churn of the customers that we are acquiring and the ones that we are retaining on voice, which means that we are effectively having a better performance that the churn levels that you have to have seen on the slides, on the voice part of the business. We are still suffering from some dangles impact coming from previous year, coming from previous campaigns that are still affecting our churn levels. But if you ask me about the customers responding to the new policy, yes, the churn is even lower than the level that you have seen there. And that's why we think it is a sustainable trend. As you might imagine, we are monitoring that because that is the compensating factor or the fact we have been reducing the entry points, the prices. And that's why this equation is working in terms of average margin per user. If you include on top of that, the fact that the quality increase is having, as a result, a much less intense call center activity, and therefore, a significant cost reduction, the overall equation is becoming very positive.

You mentioned voice, would that include -- would you include fixed broadband in your churn calculations?

No, we are talking about voice versus smartphones. I'm just excluding the dangles, I mean, because it was specific one-off.

Is the fixed broadband churn also well below what you're reporting for -- as an average churn for broadband?

No, on the fixed broadband, it's in average, similar. But again, remember that we were losing the most valuable customers in both sides of the business, wireline and wireless. The effective result of this strategies that we have been stopped exporting high valuable customers for the portability market. And that means that the portability market has been significantly reduced, and in fact, it has been focused on the less valuable customers because we have been preserving the most valuable ones.

Our next question comes from Luis Prota of Morgan Stanley. Luis Prota - Morgan Stanley, Research Division: Two questions, please. First on Spain. The question is on the VAT increase we are going to have in Spain in September, whether you are planning to pass it onto customers, at least for mobile contract and fixed broadband, or you are planning to absorb VAT within your margin? And the second question is on Brazil. We've seen recently some regulatory action from ANATEL, which was leaving Vivo in a very good position, relative to peers. The question is whether you think that this is suggesting that the regulator is more vigilant now and could take action in other areas, maybe forcing Telefónica to invest further, and interest CapEx maybe in fiber or any other area?

Luis, I'm taking your question the VAT in Spain. Our prices -- the market prices in Spain, as what we said before VAT and therefore, I think that the market prices will keep the same structure and therefore, VAT will be passed to the customers. So we will not say to change that strategy.

And on the Brazilian regulatory action, I think the only thing I can say is that we're happy, not to have been included on that list. But we don't have any further comments on whatever the regulatory actions are. And it has always been very demanding and very vigilant, as you said, regulator. And we don't expect that to change. However, I think it proves that over the past couple of years, we've been investing just about right, in order to prevent these things from happening. Although, we will continue to monitor all the quality indicators, and that are numerous and not always easy to manage, so that regulatory hurdles are not an obstacle. Luis Prota - Morgan Stanley, Research Division: Sorry, if I can follow up on the VAT question. Obviously, it's quite difficult to pass onto prepaid customers, VAT. So I presume that they will be given less minutes for the same price? Are you expecting a very direct relation between VAT increase and reduction in prepaid ARPU?

Well, you're right. I mean, customers are used to top up a specific amount of money and therefore, effectively, they will have either less minute for the same price. So the answer is yes. How this is going to be affecting elasticity is still not clear, but we'll keep you posted.

Our next question comes from Frederic Boulan of Nomura. Frederic Boulan - Nomura Securities Co. Ltd., Research Division: Two questions, M&A. First of all, to follow up on the question on E-Plus. So I guess the market can appreciate that acquiring assets is difficult in the current credit environment, but will you consider reopening discussions with them based on different structure, on the merger or JV for instance? And secondly, on Latin America, you mentioned Germany as a kind of platform for further operations in Europe. Would you consider Brazil as a similar vehicle for Latin America IPOs? Or would you plan to work on the individual asset basis? Ángel Vilá Boix: Regarding Latin America, we are still in the internal phase of analysis of several alternatives. Clearly, we have a very good collection of assets in the region, second to none, and they are many different possibilities on how to structure it, albeit country by country basis, regional or semi-regional. All the alternatives have pros and cons, and we are still in the internal analysis phase of the course of action.

And in the case of KPN, we're very clear. The priority for Telefónica is to deleverage and I think -- and get the goals. And that's our priority. And as I said in my previous comments, I mean, the synergies are very clear. But we have to work, and work it for the priority, which is the deleverage of Telefónica.

Our next question comes from Jonathan Dann of Barclays. Jonathan Dann - Barclays Capital, Research Division: Two questions. The first relates to -- I guess if you-- have you spoken to the rating agencies about, I guess, if you raised debt at any of the subsidiaries, or I mean, are they still worried about subordination as a negative credit event? And then -- and as part of that, if you could remind us, where you are on your cash repatriation from Latin America? And then my second question, historically, a strong part of Telefónica's DNA has been management's commitment to share ownership. You mentioned there were treasury shares, will management be acquiring more shares? Ángel Vilá Boix: Okay. On the first question, we have got positive informal responses from rating agencies to remove, that we announced yesterday. With respect to Latam repatriation, we have been repatriating in the first half of the year over EUR 600 million, and with respect to the share ownership question, I pass to Cesar.

Okay, I mean, [indiscernible] the margin of Telefónica is heavily invested in Telefónica shares and the reason we are heavily invested in Telefónica shares is we believe that Telefónica value is much more higher than it is today. We know the fundamentals. And I don't think we don't at [indiscernible] based on the kind of factors. At the end of the day, the important thing is the fundamentals, and we're fully committed, and we are very happy with the purchase of shares we make. And I cannot say any more on that, as we believe, and I want to stress this that the real value of Telefónica's is basically more higher than today, and we know the cash flows and [indiscernible] the numbers. Ángel Vilá Boix: Sorry, I just realized. This is Ángel, that my response previously was incomplete. We have room for that in subsidiaries. At this stage, about 15% of our total gross that is sitting in subsidiaries, so we still have room to increase that we have in those subsidiaries, even up to around 10%, before we hit any concern that ratings agencies may have regarding subordination.

Our next question comes from Stanley Martinez of Legal and General Investment Management.

My first question returns to the Spanish fixed broadband business. And firstly, María, would you characterize your strategic repricing to new ADSL tariffs as substantially complete? Because it appears that your realized average broadband ARPU in H1 is now broadly level at about EUR 38 per sub per month with [indiscernible] much as your domestic mobile-realized ARPU is now lower at EUR 20 across the piece for all major carriers. So my question is, do you feel that the new tariffs in domestic broadband is now broadly affordable for current market conditions? Or does the price of value equilibrium for Telefónica and the whole Spanish broadband market still need to reprice lower, over several more quarters?

The answer is that remember that we have been taking the entry point down from EUR 39.9 to EUR 19.9, the basic offer and EUR 24.9, the basic over plus value-added services. Today, the take-up of customers is that the vast majority of them, the vast majority being more than 70% of them are going to the EUR 24.9 offer and that means that we have become competitive. If you are to the fact -- to that, the fact that we have been turning positive in net gain in this quarter, that means that we are back on track, being competitive. We are commercializing the fiber at a higher entry point and now that when we will be massively -- as we are massively deploying the fiber today in Barcelona and in Madrid, we will keep you posted about this enterprise. But today, we feel competitive. The next step for that is for the going farther into what we call the totalization, which means that bundling further the broadband products with voice, and with wireless, and potentially with TV, having a single approach to the customer would help us to become even more competitive and to increase the perceived value for money for the customers. So the answer is, yes, we feel we are competitive within that the commercial fields that we are getting and that traction that we are getting to support that assessment. The fiber is the next step, and you should expect from us, a totalization strategy to increase our competitiveness and the traction of our overall prices.

Now that's very encouraging. And [indiscernible] one other question, if I may, to Ángel on the financial model. I just wondered whether you could provide me and other investors with some realizable upside, potentially from higher ULL pricing? And also quantify some benefits that we may have from the various active network sharing arrangements that would support the Chairman's viewpoint that we have reached the trough in European OIBDA here in H1?

Well, if someone were to ask me to transfer that question. I mean, I'm more than happy to go through it at any point. I mean, in terms of unbundling, we feel comfortable with the current prices. Remember that the prices today in Spain is below the EUR 9 that have been established by the European fiscal. So we'll keep you posted on that potential upside at any point. And on network sharing, we have done a very aggressive network sharing -- aggressive meaning, that pretty ambitious, active and passive network sharing agreement with Vodafone in the U.K. that is going to help us to do 2 things at the same time. First, to catch up with the best network in the U.K. in a shorter period of time, and to do it in a much more efficient manner. We think it is a very valuable agreement, and we intend to extend that to whatever. We can do it in Europe, because we think it's the most sensitive way of deploying the next-generation networks. And I think that Europe doesn't have room for too many -- in that too many networks in Europe today. So we need to work very intensively for those agreements because it provides time to market and significant amount of synergies, and therefore, a huge amount of value for the customers.

Our next question comes from Jerry Dellis of Jefferies. Jeremy A. Dellis - Jefferies & Company, Inc., Research Division: I've got 2 questions, please. Firstly, in Spain, Vodafone said that a side effect for them is the new subsidy model, was it that they found the gross adds coming under heavy pressure? They said on the conference call the other day, that they may have to take a few measures to regain commercial traction in the weeks and months ahead. If Vodafone were to increase subsidies, how would you potentially react to that? And then in Germany, your recent margin growth momentum is obviously very strong, service margins almost back at 30% now. Do you believe that margin expansion is sustainable, bearing in mind the repricing that's really hitting the market from a number of your competitors, particularly EUR 20 flat rates?

In terms of the overall market in Spain, and we felt we're willing to comment on what might be the intentions of one specific competitors. I think that these -- that the model is starting to work and what am I saying that -- because, in fact, remember that Vodafone has started this thing 1 month later than we did, and therefore, the benefits of churn reduction would take a little a bit more to go through their own accounts. But basically, the goodness of the model is not just from the subsidies. Whereas the attraction of the model to subsidies is one part of the equation, but the lowering of the enterprises, the lowering of the entry points, retaining the most valuable customers, getting the kind of churn levels that we are getting, getting the number of calls that we are getting, which are significantly reduced, basically half in 6 months, we are entering into kind of a vicious cycle, in terms of -- and the subsidies is just one component of that. So we will monitor permanently the situation, but if the portability market might be one proxy of all the short-term impact of any of -- or those strategies, we have become pretty attractive on the -- we have improved significantly our portability metrics. And on top of that, we have been able to significantly try that market. So we'll keep you posted. But subsidies is just one part of the equation. I mean, the sustainability of market is not based on that. Remember that this is not just effective margin, it is also positively affecting CapEx in Spain, because the fact we are having a much lower level of churn means that we can do the same kind of market share with a significant less CapEx intensity, in terms of routers in the homes of the new customers. So it's starting to have a significant impact on capital allocation. We will keep you posted. We will monitor that significantly. But for the time being, it is just starting to get traction. And in terms of Germany, we think it is sustainable. We even ambition a little bit more. We have changed the model in Germany as well. Remember that we are not subsidizing hazard in Germany, that we have this -- my handy instrument, which is a factoring instrument that the customer decides how they want to finance their own handsets. We have been changing significantly the approach to market. We are getting traction on our customer base and everything on postpaid and therefore, you will have the cumulative benefits of the recurrent revenues. And on top of that, we have learned that it is very valuable to change our strategy and to become much more regional. Because being more regional, because of the tariff structure in Germany, means that we can enjoy upper margin on the on-net traffic, even on the off-net traffic in the German market. So there, we have several levels that we are tracking and monitoring. We are learning a lot on that market. Churn is coming down significantly again. So it is -- we ambition to have to preserve those levels of margins in Germany. María García-Legaz Ponce: We have time for the last question, please.

The last question comes from Simon Duff [ph] of MMG.

I've got 2 questions, one on liquidity and one on cash repatriation. On the liquidity, can we get further clarification on these EUR 5.1 billion cash and equivalents x Venezuela because I'm struggling slightly with that on the basis that the consolidated balance sheet only shows EUR 4 billion cash and equivalents. So does the EUR 5.1 billion includes some of the EUR 8 billion that's included in your net debt definition? And if so, can you just give us some idea of what the EUR 8.3 billion consists of, if it's not normal cash and equivalents? And what is the true cash and equivalents position x Venezuela as per the balance sheet definition, because clearly it's lower than the EUR 5.1 billion that's in Slide 25. And then the second question on the repatriation, I think -- did I catch you earlier in saying, it was EUR 600 million to date. I think last year, you did EUR 3.3 billion. So you're expecting an acceleration in the second half? Or can you give us a feel, therefore, of what the full year expectation for repatriation from Latam is? Ángel Vilá Boix: With respect to the second question, yes, we have repatriated certainly about EUR 600 million in the first half. We're expecting this to significantly improve in the second half of the year. We do not expect to hit the repatriation figure that we had last year of about EUR 3.3 billion. But we should be close to EUR 3 billion for the whole of the year. With respect to your second question, that you're asking, I can only say at this stage that the EUR 5.1 billion of cash and cash equivalents excluding Venezuela, has been calculated in a consistent manner, with the way that we have been presenting this information in every quarterly presentation. And we would encourage you to get in touch with our IR Department, so that they can give you all the details on the reconciliation.

Okay. [indiscernible] In behalf of all my colleagues of the Executive Committee, I want to thank all of you for attending our second quarter results and all your questions, and it is early, but I wish you a good weekend. Thank you very much.