Pablo Eguirón – Head, IR Ángel Vilá – CFO and Corporate Development Officer Eva Castillo Sanz – Chairwoman and CEO, Europe Santiago Fernández Valbuena – Chairman and CEO, Latin America

Mandeep Singh – Redburn Partners Luis Prota – Morgan Stanley Fabián Lares – JB Capital Markets Akhil Dattani – JP Morgan Giovanni Montalti – UBS Justin Funnell – Credit Suisse Robin Bienenstock – Sanford Bernstein Frederic Boulan – Nomura Georgios Ierodiaconou – Citi Will Milner – Arete Research James Ratzer – New Street Research Jonathan Dann – Barclays Capital James McKenzie – Fidentiis Ivón Leal – BBVA

Ladies and gentlemen, thank you for standing by, and welcome to Telefónica’s January-September 2013 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today’s conference call is being recorded. I would now like to turn the call over to Mr. Pablo Eguirón, Head of Investor Relations. Please go ahead, sir. Pablo Eguirón: Good afternoon, ladies and gentlemen, and welcome to Telefónica’s conference call to discuss January-September 2013 results. I’m Pablo Eguirón, Head of Investor Relations. Before proceeding, let me mention that this document contains financial information that has been prepared under International Financial Reporting Standards. And that this financial information is not audited. This presentation may contain announcements that constitute forward-looking statements, which are not warranties 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 in 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 release and the slides, please contact Telefónica’s Investor Relations team in Madrid by dialing the following telephone number, 3 (491) 482-8700. Now, let me turn the call over to our Chief Financial and Corporate Development Officer, Mr. Ángel Vilá, who will be leading this conference call. Ángel Vilá: Thank you, Pablo. Good afternoon, ladies and gentlemen, and welcome to Telefónica’s 2013 third quarter results conference call. Today, with me are the members of the executive committee, so during the Q&A session you will have the opportunity to address to them any questions you may have. The results released today show our strong operating and financial execution, enables us to achieve full-year outlook earlier as we have made significant progress in three areas. First, Q3 confirmed acceleration of year-on-year organic revenue growth for the second consecutive quarter with sales up to September turning positive 2.04%. Second, organic OIBDA stabilizes. Top line growth, efficiency gains and cost control have proven to be successful, limiting OIBDA margin erosion to 0.2 percentage points despite intensified commercial activity. The operational improvement together with strong financial execution allowed free cash flow ex-spectrum to remain stable year-on-year in the first nine months despite FX headwinds and changes in the perimeter. The third key strategic pillar is on balance sheet improvement. Net debt decreased substantially in the quarter to EUR 46 billion or 2.30 times net debt to OIBDA. In addition, our focused portfolio management keeps progressing in the right direction with a Czech Republic transaction being the latest example. Including post-closing events, net debt would stand below EUR 45 billion implying a EUR 14 billion reduction since June 2012 when deleverage was established as a priority. Finally, let me stress that we fully confirm our goals for 2013 and our dividend commitment of which EUR 0.35 were already paid on Wednesday. Let me now start with a summary of key financials on Slide 4. In organic terms and in July-September period, revenues posted the highest growth for the last 12 quarters at 2.1% to being EUR 14.1 billion. OIBDA reached EUR 4.7 billion and reduced its quarterly decline to 0.3% year-on-year while profitability stood at 33.3%, 0.8 percentage points lower than the year ago impacted by commercial investments leading to revenue streams. From a cash generation standpoint, January to September operating cash flow stood at EUR 9.1 billion excluding spectrum relatively flat year-on-year. It is important to highlight that reported headline figures and the year-on-year trends are negatively impacted by FX and to a lesser extent by changes in the consolidation perimeter. July to September period is impacted by the sharply weaker Latin American currencies especially Brazilian reals which deducted around 10 percentage points of revenues and OIBDA year-on-year change. Nevertheless, let me highlight that this negative FX impact is mitigated at free cash flow level as shown in the next slide. Moving to Slide #5. Free cash flow generation before spectrum payments remains stable year-on-year in the first nine months at EUR 4.7 billion observing the mentioned adverse effects FX impacts. This performance is driven by an improving free cash flow throughout 2013 supported by better operating results and strong management of non-operating results flowing directly to cash. Free cash flow reached almost EUR 2 billion in the third quarter and EUR 3.4 billion in the first nine months after spectrum. Earnings per share up to September was EUR 0.70. And free cash flow per share totaled EUR 0.75 both providing strong comfort about our EUR 0.75 dividend commitment for 2013. Slide 6 shows the solid results delivered by our strategy centered around high value customers. The accelerated growth of contract customers set the way as is to keep smartphone uptake acceleration. Smartphone penetration is up more than 8 percentage points year-on-year to 25%. As highlights I would like to point out that first, most of the contract net adds were 1.6 times higher than a year ago and 1.8 times in the case of Latam, leverage of very rapid smartphone adoption. And second that our commercial proposition allows us to capture all profitable growth opportunities. Our increased investments in the ultra-broadband proved commitment on quality growth with coverage reaching 32% and with 11% of customers already connected at the end of September. We are also advancing on LTE in our main markets. In Slide 7, I would like to show the improved organic performance year-on-year from top line to OIBDA in Q3. Since the beginning of the year, Group revenues are consistently improving on a quarterly basis, the combination of very good evolution at Latin America and very robust mobile data. In addition, Telefónica maintained its accelerating growth trends while Europe continued with its progressive stabilization. This performance led Group revenues to show a sequential organic improvement of 160 basis points and 50 basis points in OIBDA. Good progress on profitability in the third quarter underlines the benefits of our best-in-class diversification balancing the capture of growth opportunities in Latam with a margin expansion in Europe. Let me stress that if we exclude the negative impact of regulation, our revenues would have grown 2% and OIBDA 0.7% through the first nine months of 2012, or plus 3.9% and 0.9% respectively in the third quarter. Please turn now to Slide #8 for the first review of some initiatives we are adopting to increase the benefits of our scale. On top of local and regional efficiency measures, Telefónica Global Resources further enhances business profitability and contributes to the fast and efficient development of networks and IT, adapting to the current needs of transformation. This can be seen in the fast rollout of LTE and fiber. Key tools to capture market growth and the virtualization process that further contributes to the vision digitalization. In terms of IT, we are also changing the way we operate and keep on taking transformation elections with 33% of servers virtualized, 1,400 physical servers, six data centers closed and more than 700 applications decommissioned. Regarding devices, we are productively rebalancing operating systems by reaching agreements with key players. Finally, global end-to-end procurement transformation continued to provide very tangible results. Next in Slide #9, I’d like to talk about progress in our key product areas showing our traction as a digital Telco. Firstly, we have successfully established products and services in new markets. In August, Telefónica was awarded with 1.5 billion pound contract to deliver Smart Meter Communication Services in the U.K., clearly demonstrating our strong position in the machine to machine market. We have also made some important progress in the financial services space. The JV we’re setting up with Santander and Caixabank has been cleared by the European Union antitrust authorities paving the wave for us to start to jointly create new digital financial services. Secondly, we are continuously evolving our core communications proposition, building the best range of value-added services for our customers. Firefox OS handsets were already launched this quarter in Spain, Colombia and Venezuela, in October in Brazil, and in November in Peru. Meanwhile, in the U.K, we launched, TU Go, our unique communication service, the commercial push with Telefónica U.K.’s “Be More Dog” campaign reaching 161,000 active users. Lastly, we have made investments and partnerships like Rhapsody, Pinterest and Evernote. Please turn to Slide #10 to review our operations in Latin America. Commercial activities remains strong in the most valuable segments with contract mobile net adds once more reaching a record high this quarter. This is key to continuous strengthening our regional leadership in smartphone. At the same time, fixed services improved once again this quarter. The strong commercial effort developed over recent quarters is driving revenue and OIBDA acceleration. Revenue growth ramped up to almost 11% year-on-year on strong mobile service revenue performance, mainly boosted by data adoption. This improvement is quite widespread among different markets. Regarding OIBDA, it is also starting to reflect a strong revenue acceleration growing by almost 5%. This had margin pressure mainly due to the more intense commercial activity. The outstanding commercial performance is especially remarkable in Brazil, where we keep strengthening our leadership on high value customers as shown in Slide #11. Thus, we captured 64% of market growth in the contract segment this quarter, reaching 1.5 million net adds, the highest quarterly figure achieved by a Brazilian operator ever. This growth is further improving the quality mix of our customer base and accelerating smartphone adoption which already reached almost 15 million. On the fixed services, commercial turnaround continues with better operational momentum underpinned by improved quality and offers across services. Turning to Slide #12, we provide more color on Brazilian financial performance. Mobile service revenue accelerated to 7% year-on-year in Q3, mainly driven by strong data growth on despite the 2 percentage points negative impact from regulation. In the fixed business, revenue deceleration stems from the volatility on corporate IT projects and some specific factors negatively affecting traffic trends this quarter. Finally, profitability is showing the facts of the strong commercial efforts. In Slide #13, we’ll review other operations in Latam. In Peru, gradual revenue and OIBDA growth consolidated in Q3, maintaining solid commercial momentum. In Argentina, best ever mobile net adds fueled top line acceleration, while OIBDA trend also improved on year-on-year comparisons. And finally in Chile, we’re also posting enhanced trends has received commercial data-centric offers are driving KPIs recovery underpinning solid revenue and OIBDA growth. Turning to Slide #14. In Colombia, commercial activity remains strong. Revenue ramped up as a result of improved trends across services, while OIBDA margins reflected the strong commercial activity in the quarter. In Mexico, the progressive adoption of new commercial proposals had a negative impact on revenue performance this quarter as customer base is repositioning to new plans. In the meantime, the process to change the regulatory framework keeps fulfilling scheduled steps. Lastly, in Venezuela, increased usage is the main driver of the outstanding revenue performance with voice traffic jumping more than 20% year-on-year and data traffic more than 40% in Q3. This growth is based on the differential quality proposition and is fueling revenue and OIBDA growth above 50% this quarter, ahead of inflation. Turning to Slide 15, we will review our operations in Europe. In the third quarter, we enhanced our tariff portfolio, with a clear focus on LTE reinforcing our market positions. As such, we increased the value for money proposition in Spain with a strong focus on fiber. We launched O2 Refresh in all the data channels in the U.K. and we further pushed on the O2 new tariffs in Germany. In terms of financials, top line performance improved sequentially despite the higher negative impact from regulation. And profitability expanded year-on-year in organic terms for the fourth consecutive quarter driven by sound cost control and efficiencies. Lastly, let me remark that we continue adopting ultra-broadband networks to capture the demand for higher speeds, leveraging also on our rationale CapEx approach including network sharing. Moving to Spain on Page 16. Movistar Fusión, one year on consolidated as game changer in the Spanish market and one of the pillars of our commercial strategy, reaching 2.6 million customers. It is especially remarkable that 60% of gross adds in the quarter were from new customers and upselling. Quality differentiation is another pillar to strengthen our market leadership as reflected in our decisive bet on fiber. Fiber adoption has doubled year-on-year and is contributing to foster revenues as well as reducing churn. Potentially it’s huge. As reflected in our target to reach eight million homes passed by 2015 if current regulation is maintained. In mid-September, Telefónica Spain enhanced the value of its offer leveraging on its differential advantages namely fiber, 4G and TV, widening the quality working gap of its portfolio. Let me note that first positive signs of improved trading would already see in October and the first week of November. Turning to Slide 17, we will review Telefónica Spain financials. Total revenues ex-handset sales maintain its gradual improvement trend in the third quarter, once the regulation impact is excluded. In Q3, OIBDA margin reached a record level at 50.2%, more than 3 percentage points higher year-on-year reflecting the deep business transformation. Margin improved also from previous quarter reflecting further cost reductions and the moderate commercial activity which I said before was intensified from October. On top of that, we continued taking decisive actions on priority projects such as in-sourcing of activities, the redefinition of CRM and the reshaping of distribution channels aimed at the improving the quality of the sales while driving further savings in the coming quarters. On CapEx and despite intensive effort in deploying LTE on fiber, a high level of efficiency is flowing to the operating cash flow which is stable year-on-year in organic terms with an operating cash flow margin close to 40%. Turning now to Slide 18. Telefónica U.K. maintained commercial momentum supported by the success of O2 Refresh. This is a promising trend considering that LTE was only available from the end of August. We are now accelerating the speed of LTE rollout with 11 cities covered by now. Initial figures show encouraging results with customers opting for higher value offers and a visible ARPU uplift. We continued to gain the high value customers with contract customer base expanding by more than 9% year-on-year and on top of that, market leading contract churn. The strong commercial traction flows into financials with mobile service revenues posting a stabilizing trend year-on-year despite the negative impact of Refresh. In terms of profitability, OIBDA margin grew 0.2 percentage points year-on-year benefited by the new commercial model. Finally, let me remind that the company continues working towards a more sustainable business model based on increased direct distribution activity and optimizing investments through the execution of network sharing agreement. To review Telefónica in Germany, please turn to Slide 19. With LTE gaining traction as differentiating tool in a very dynamic market, we are optimistic on the increased opportunity to monetize data ahead of us. We are seeing very positive signs of LTE adoption with 55% of devices sold being LTE-enabled and three times higher data usage. Main metropolitan areas are already covered as we are doubling LTE-related CapEx year-on-year. Mobile service revenue declined by 1.8% year-on-year in Q3, affected by a combination of trading momentum, tariff renewals and lower SMS volumes. On the positive side, we managed to improve the tariff mix and as a result ARPU decline stabilized. At the same time, OIBDA and OIBDA margin evolution reflect increased commercial efforts. The announced transaction to acquire E-Plus is on track. KPI shareholders voted in favor and we are confident that merger clearance will be granted by the second quarter of 2014. This merger will give us the right scale to become an even more competitive player in the market. Let me now move to the financial side on Slide 20. Telefónica continues to harvest the benefits of bold actions towards deleveraging. Reported net debt as of end of September stands at EUR 46 billion, already below 2013 year-end targets on both net debt figure and leverage ratio. If we were to include announced divestments pending closing such as Czech Republic and Ireland, but we were to exclude the hybrid linked to the E-Plus acquisition, net debt would stand at EUR 44.6 billion. Let me summarize how we have reduced a $7.5 billion of net debt figure compared to December 2012 net debt adjusted by the Venezuelan evaluation. Half of this figure, $3.8 billion stems from free cash flow and FX savings, and the other hand, $3.7 billion comes from portfolio and financial management. On Slide 21, I would like to emphasize, how we continue moving our maturity profile. So in 2014 and 2015, debt maturities are slightly above EUR 5 billion per year. We are also increasing our average debt life to close to seven years more than half year longer than in December 2012, all contributing to an outstanding liquidity cushion. Telefónica’s extended and diversified financial activity year-to-date has been an important pillar in reinforcing our financial flexibility. We have raised in excess of $10 billion including hybrids. Again this quarter, I would like to point out that the effective interest costs continue its downward progress within the bottom of guided range, 18 basis points below December 2012. To conclude, let me highlight that in the third quarter we have delivered solid financial and operating performance meeting full-year targets in advance. We continued recovering growth with organic revenues accelerating and flowing directly to OIBDA stabilization. Free cash flow posted a strong performance in the year and is stable year-on-year before spectrum acquisitions, despite the currencies volatility. We are strongly reinforcing the quality of our balance sheet, progressing in our delevarge priority. Moreover, by actively managing our portfolio, we are improving our financial flexibility while enhancing our growth potential at the same time. Thank you very much. And now we are ready to take your questions.

(Operator Instructions) We currently you to ask a maximum of two questions per participant and if possible we’ll recommend you not to use your cell or hands free phone. There will be a short silence whilst questions are being registered. Our first question comes from the line of Singh Mandeep from Redburn Partners. Please go ahead. First question comes from the line Singh Mandeep from Redburn Partners. Please go ahead. Mandeep Singh – Redburn Partners: Hi, can you hear me? Pablo Eguirón: Yes, we can. Mandeep Singh – Redburn Partners: Okay, my first question. My question is actually on Telecom Italia. I’ve got two questions on Telecom Italia. The first one is in terms of the mandatory convert. Can you confirm what the Telecom Italia management said last night that you participated in the transaction and therefore we increased your exposure to Telecom Italia? That’s the first question. And the second question is, can you sort of give us a bit more color on your medium-term intentions regarding your TI position? Thank you. Ángel Vilá: Thank you for the questions. This is Ángel Vilá. Yes, we participated last night in the mandatory convertible issued by Telecom Italia. We are indirectly the largest individual shareholder of TI. And we decided to express our support to the new plan issued by Mr. Patuano and his team. The amount that we invested in the mandatory convertible was EUR 103 million. That allows us to mitigate dilution of our indirect stake. And for this, a waiver was granted by our Telco partners, just for this specific purpose. With regard to our intentions in Telecom Italia, and as we said in our previous conference call, we believe that this was important to provide stability to the company with Telco as our referential shareholder and that’s why we reached an agreement to recapitalize Telco. Being indirectly the largest shareholder in Telecom Italia, we are the most interested in company’s value creation. So our final goal as the largest individual shareholder is to support the management to unlock the highest value potential. Yesterday, TI top management defined a new strategy which is in the right direction in terms of strengthening the domestic business and investing more in broadband in Italy. Also there are actions to de-lever and regain financial flexibility. And we believe that this plan as I was saying is in the right direction and we decided to show our support to it by participating in the mandatory convertible. Mandeep Singh – Redburn Partners: Thank you very much. Pablo Eguirón: Thank you, Mandeep. Next question please.

Our next question comes from the line of Luis Prota from Morgan Stanley. Please go ahead. Luis Prota – Morgan Stanley: Yes, hello. Two questions please. First is on Brazil. When should we expect investment for growth to slowdown in that country and maybe margins to pick up again, or in other words, do you still see growth opportunities in that market going into 2014. Which are those growth opportunities? And should we expect top line acceleration going into next year? And the second question on Spain. With the big tariff cuts that we saw in the fourth quarter of 2011 and then launching Fusión in the fourth quarter of 2012 and with customers progressively migrating to the new tariff, should we expect a big delta in terms of year-on-year growth in the fourth quarter revenues in Spain, thanks to easier comparison in terms of average pricing. And do you see – you were mentioning in the presentation some positive evolution in KPIs, thanks to the new tariff launch in September. Can you elaborate a bit more on what are you seeing there? Thank you. Ángel Vilá: Hi Luis, this is Ángel Vilá. On the Brazilian question, two observations. One is that the managements here for growth and transformation. Growth in the later part of a mobile world where we’re making we think good progress and our margins all to be stabilized and at a very sensible and healthy level going forward. And the transformation part comes from the transformation of the fixed line in which we have longer period, longer duration investments that are being made especially in fiber, that are going to be slower to bear fruit, but we think would eventually prove themselves to be the right things. So we will continue to invest in the Brazilian business in 2014 although the final numbers have not been put together yet, because we do perceive that there is a lot of value in transforming the prepaid onto the postpaid base and accessing the data opportunity as we have been doing this year.

Thank you for your question, Luis. I think that with regards to how we seen the offer. The market always moving towards increasing the value of the offer so what we call value for money and pricing position is actually expected to be less intense and we are seeing that already in from September. I think that when you ask about the repositioning, we believe it’s pretty much done and we’re not seeing any new reposition. And in fact, we have seen very much stability in that. And I have a lot of details I could give you off the line. Regarding the new commercial portfolio, as you know, we have focused a lot on two items. One, the convergent offer and the second one in the only mobile offering. In convergent arena, including 4G and on Fusión Cero including TV Mini and all Fusión fiber bundles and increasing mobile minutes allowance in the bundle. That is already showing an increase in the take-up especially when you look at the fiber, which is not only as in September doing really well, but just anticipated that we’ll had a record fiber net adds in October compared to September. When you look at mobile-only space, we believe we have completed the portfolio with the Movistar 20, as you know is also getting 4G, including 4G also in the Movistar Total, the EUR 35 offer and removing the mobile commitment in all the new and existing customers and also the SIM lock. Another thing that might be interesting for you is we have improved the handset financing program, so we don’t have any financial cost to customer and we have a better pricing. With regards to trends, we believe revenue trends are to continue in to the fourth quarter and we have seen as in previous quarters we said in previous quarter, the positive impact of the loyalty program already facing off. And in the third quarter, the impact is smaller than in previous quarters. This impact probably will be diluted as we already stated when we started the comparing on like-for-like basis. I hope I covered all the questions. Luis Prota – Morgan Stanley: Yes, thank you very much.

Thank you. Pablo Eguirón: Thank you Luis. Next question, please.

Our next question comes from the line of Fabián Lares from JB Capital Markets. Please go ahead. Fabián Lares – JB Capital Markets: Hi, good afternoon. Thank you for taking my questions. With regard to the Fusión evolution in Spain, I would like to know a little bit more with regards to what the tendency has been with clients demanding if any, the offering more in between, if there is demand for this, and if you were thinking about doing something about this given that you are positioned both in the 10 megabyte range in ADSL and in the Fiber-to-the-Home 100 megabyte range? That will be my first question. With regards to the deployment of Fiber-to-the-Home in Spain, I see that you’re maintaining your target for 2015 of eight million homes. Are you in anyway considering that this target could fall short if the dynamics or the costs should change or reviewed by the CNMC new obligations are made on fiber access?

Thank you very much. Let me start with the first question. And I think you know what the evolution of Fusión is being so far. It continues being the pillar of our offering here in the Spain. We have reached to the expected levels of total customers within 2.6 million at the end of September and also we have seen as Ángel Vilá and Pablo mentioned earlier, that we have the right mix with regards to the new upselling customers in the gross adds. When you ask me specifically about Fusión Mini or the lower end of our offer within limited impact. At the moment we have more than 66% of our convergent gross adds opting for the standard Fusión product, or if you look at from the customer ways, 10% would be Fusión Mini and the rest would be at 90%. Again I would highlight like I would always continue to highlight that the fiber continues to show a strong commercial traction and we expect to accelerate deployment into the fourth quarter. We believe that’s a strong upside potential at the moment. We have around 12% of Fusión customer in fiber bundles, so you can see what the potential upside is. I pointed out that the third quarter had a strong net adds of 63,000 versus 59,000 in the second quarter and anticipate that October had a record fiber net adds at the moment. I think that in terms of the fiber plan, we had committed greatly to our established eight million households by 2014 – sorry 2015. And always we are happy to evaluate based on the data and the regulation situation. We believe we are on track and doing quite well there. Pablo Eguirón: Thank you, Fabián. Next question please.

Next question comes from the line of Akhil Dattani from JP Morgan. Please go ahead sir. Akhil Dattani – JP Morgan: Yes, hi good afternoon. Can I ask two questions please? Firstly, on Spanish mobile. If you look at the CMT data, that’s been provided over the last year, we seem to seeing quite a strong improvement in the net add momentum. The market was losing about 300,000 customers a month at the beginning of the year. And now the market seems to be relatively stable. So just wanting to understand from you what you think is driving that change? And within that you’ve seen any signs that either so any other metrics that you’ve seem to be tracking, whether you feel that there is signs here that economical customer spending behavior is now starting to inflect? And then secondly, just in terms of the whole theme of consolidation. If I understand correctly, couple of quarters ago, the suggestion or the feeling from yourselves was that the Irish deal would close by year-end. So I guess just keen to understand if you are surprised that the deal has gone to Phase II, and whether you see to have any significant implications? And from that any other color and commentary around when you expect the Deutschland and E-Plus review to be completed, would be useful as well. Thanks.

Okay. So if I start with this first question on the mobile trading environment. The contract net adds are still a concern for us, due to the number portability deterioration which is a result of a strong competition in the quarter, but the Spanish market as we are seeing it, is about convergence and we believe we have a strong position there. With the launch of Movistar 20, we believe we have filled the gap at the medium level and now we address the customer needs with the complete and competitive portfolio we believe. Additionally, as you know we have enhanced our only mobile portfolio and we are giving more value for the same price. We are seeing positive preliminary results in October. And overall, we believe we have a very complete offer there. With regard to the macro environment. That we are tracking very closely. We are seeing a very slight improvement in some of the macro parameters. To start seeing a positive impact on our business, we believe it is necessary that the disposable income show a recovery trend that will foster the private consumption which is so key for our sector. We believe that recover consumption to the pre-crisis will take much longer. And in the meantime, what is clear to us is that company is very well positioned with its fiber and a very solid convergent offer to capture the growth when those households will start getting more consumption or become improved in consumption levels. Hope this is answered. Akhil Dattani – JP Morgan: Yes, thank you. Santiago Fernández Valbuena: Okay, taking your second question on the consolidation and the Irish and German transactions. We are not surprised that the Irish one went into Phase II. That could happen. This as you know is been headed by Hutchison Whampoa being the buyer. They have submitted the case. I think that we think they have a solid case for approval, because it will make sense in the Irish market to consolidate based on the fact that the joint entity will have a more financial power to invest more heavily and more rapidly and therefore to increase competition in that market. And exactly the same case applies for the second one for the German transaction that we are headed as being the buyer in the European Commission. Our case in German I think is very solid in terms of presenting a joint entity that is going to be a much more stronger third player and therefore been able to compete more fiercely and more intensely with probably the best or one of the best mobile networks in Germany. And therefore be much more competitive namely on the SMEs and corporate market. So we are not surprised. Things are going on track. We keep having this submitted. There is no room for so many players in Europe, therefore consolidation makes sense. And I think now is to European Commission to rule and to finally clear the transaction when the time is convenient. So everything is on track and therefore both transactions have gone into the direction that was foreseen when structured. Pablo Eguirón: Thank you, Akhil. Next question please.

Our next question comes from the line of Giovanni Montalti from UBS. Please go ahead. Our next question comes from the line of Giovanni Montalti from UBS. Giovanni Montalti – UBS: Good afternoon. May I ask you if you have had the discussions with the Brazilian regulator to assess the viability of market consolidation there? Thank you. Ángel Vilá: There are no discussions going on at official level. Everyone is using their spreadsheets and understanding what might happen there, but there are no official or unofficial open conversations about that. We can all make our assumptions. We certainly think it is not impossible that the market eventually consolidates but there is no movement at this point on that direction. Giovanni Montalti – UBS: So should you have a time horizon for such a scenario, would you look for 2014, 2015. Do you think there is still a lot that has to happen before we can see a materialization of a consolidation in the market? Thank you. Ángel Vilá: We have no time horizon on anything like that. The rules are quite clear. The laws have been written and they could be changed, but certainly not by us and that is not something we think is necessary for us to continue to envisage the way we are. So should conditions change, we would have to adjust our behavior. And so far we think that the rules are quite clear. Pablo Eguirón: Thank you, Giovanni. Next question please.

Our next question comes from the line of Justin Funnell from Credit Suisse. Please go ahead. Justin Funnell – Credit Suisse: Yes, just three quick questions please. I think Gusto [ph] was recently saying that it was so encouraged by its experience with its fiber JV with Telefónica that it would like to do more than the original three million shared household. So are you sort of open to Gusto [ph] extending their footprints, given that you seem to have perfectly capable of going to eight million on your own? Secondly, obviously very successful in deleveraging and that starts to various question marks on where are you heading over the next 12 to 24 months? Do you want to continue to de-lever so fast or could we start to think about dividends rising in the current level of some points. Is the dividend increase totally off the table? And thirdly, I think Mr. Alierta met with President of Italy recently, I was wondering if there were any takeaways, does Telefónica feel welcome to proceed in Italy?

I’ll start with this Spanish question. With regard to our current agreement, we’re quite happy with it and happy with our commitment on initial three million. Obviously if there is a need, we will be happy to discuss. Ángel Vilá: Regarding debt reduction, deleveraging and dividend. Well, we have already achieved our 2013 leverage targets. We keep committed to continue in the direction of deleverage, while at the same time strengthening our operations and fostering growth. And as such for instance we have structured us in E-Plus transaction in such a way that it would improve leverage metrics while at the same time, we are expanding and strengthening our position in Germany. We don’t have any urgency regarding execution of new deals for any deleverage. We have many opportunities to keep improving if that is that’s the case. Regarding dividend after we suspended it in 2012, we resumed shareholder remuneration, 2015, we have set a firm commitment of EUR 0.75 in cash. We already paid EUR 0.35. The second tranche is going to be paid in cash in the second quarter of next quarter. At this stage, we are not announcing a new remuneration policy because we prefer to implement – our strategy is to keep an attractive shareholder remuneration, and to have a reasonable level of debt, so these future dividend will be announced when we do the full year results presentation at the beginning of next year. Regarding Italy, what I can say is that we have proven to be loyal and stable shareholder of Telecom Italia. We believe that it was important as I was saying before to provide stability to Telco as referential shareholder. We have shown our commitment by investing even in last night’s mandatory convertible and we are supporting new management’s plan, which is showing in very few weeks clear ideas and is showing execution and it has moves which we believe are in the right direction. So we are supportive of Telecom Italia. And we feel that we have been a loyal shareholder in the company and we will continue to be. Justin Funnell – Credit Suisse: Thank you. Pablo Eguirón: Thank you, Justin. Next question please.

Our next question comes from the line of Robin Bienenstock from Sanford Bernstein. Please go ahead. Robin Bienenstock – Sanford Bernstein: Thanks very much. Two questions if I may. First, I’m just wondering if you can tell me Brazil specifically but Latin America more generally where I saw margin weakness. How much of those [indiscernible] increase commercial investment and how much of that is being driven by wage inflation? So to an extent to actuary that we’re actually that you were suffering from the effects of inflation in Latin America? And separately are you worried at all that Telco could dissolve as early as June 2014, and do you think that would be your risk or a potential problem for you? Thanks. Santiago Fernández Valbuena: Hi Robin, this is Santiago Fernández. If I understood your question correctly, you were asking about the breakdown of wage inflation and the other cost. I’d say it’s about 50-50, although it is a very uneven depending on the country we’re talking to. Further you go into the more inflationary economies the more difficult it is to pass costs on to prices, but I am more than happy to entertain further details on offline. Robin Bienenstock – Sanford Bernstein: Thanks. Ángel Vilá: Hi Robin, regarding Telco, when we renegotiating agreement back in September none of the shareholders requested the merger. We set up a window in June 2014 and then the shareholder agreement expires in February 2015. We don’t know what is intention of the partners. My assumption – and my personal assumption would be that they would rather look at February 2015 and June 2014. Robin Bienenstock – Sanford Bernstein: And would it be a problem for you if they change the deadline? Ángel Vilá: No, I don’t think it would be a problem. Robin Bienenstock – Sanford Bernstein: Thank you. Pablo Eguirón: Thank you, Robin. Next question please.

Our next question comes from the line of Frederic Boulan from Nomura. Please go ahead. Frederic Boulan – Nomura: Hi good afternoon. Two questions for me. Firstly, on the U.K. If you could explain the full year benefit of the – on the EBITDA of the change in the handsets accounting. Handset revenues were up about EUR 100 million [ph] in Q3 year-on-year. If this is a good guide of the positive impact on EBITDA for this quarter and therefore suggesting a full-year run rate of EUR 500 million in cash. I don’t know, maybe we can ask the question the other way, looking at how much negative working cap we should expect for the U.K. business this year and next? And secondly, just on as you realize, could you just update us on how much cash you have there in euros and just going to find that you use the rate of 8.5 [ph] per euro in this calculation. Thank you very much.

Hi Frederic. If I understood correctly and I can explain our EBITDA performance in the U.K. and specifically because of Refresh is right now impacted by two important issues. Of course the launch of Refresh and our commercial decisions to move volumes into the direct channels. As you understood correctly, the Refresh proposition allows our customers to change the device whenever they want without penalty and enhance our competitiveness in the market, but that at the same time, has an accounting impact for the full recognition of handset sale upfront instead of a monthly recognition into the MSR as part of the tariff. Also and at the same time, as we are moving more volumes to the direct channel, you well pointed out, that on one hand improved efficiency of our distribution level, but also the direct channels have higher upfront cost than the indirect. Going forward, and I think I said this in the previous quarter, we expect that the positive impact of Refresh will normalize and we will just see the impact of moving volumes to direct channels increasing efficiency of our distribution model. Frederic Boulan – Nomura: And just to clarify, can you just confirm the numbers [indiscernible].

I think that also regarding your question of the Refresh effect on the working capital and as I said last quarter, we expect to factor handset re-saleable as we’ve done in other quarters. And the effect on revenues that we have disclosed goes down to the EBITDA level as we have so pointed out in the previous quarter. We will see higher upfront of direct volumes as we are moving more into the direct channel. I hope it is clear. Frederic Boulan – Nomura: Okay, thanks. Ángel Vilá: Regarding Venezuela, our cash position in euros equivalent at the official exchange rate amounts to EUR 2.4 billion. This figure is not included or it has been excluded of the liquidity figure that I previously presented on Slide #21 of the presentation. Frederic Boulan – Nomura: So it is included in your net debt number? Ángel Vilá: It is in the net debt number. Frederic Boulan – Nomura: Okay, thanks very much. Pablo Eguirón: Thank you, Frederic. Next question please.

Our next question comes from the line of Georgios Ierodiaconou from Citi. Please go ahead. Georgios Ierodiaconou – Citi: Yes. Hello, I’ve got two questions please. The first one around Telco, and I was wondering with after the conversion of the Class C shares to voting shares, if I am not mistaken you have not yet asked Carter [ph] for approval. Is there a reason for that and should we expect that will happen between now and January? And based on the conversations you had with them, would there be any problems for the status quo to continue after the convergent? And then, secondly on hybrids. Can you give us an idea of the capacity you have left to raise hybrids after the E-Plus transaction, whether you would be looking at this option in case of acquisitions, and if you would make any adjustments to your leverage ratios to reflect to use of these hybrids? Thank you. Ángel Vilá: With regards to Telco, we have not started the discussion with the authorities regarding the potential conversion of C shares, the non-voting shares into voting shares. We have just as we announced in September, announced a transaction which has gradual steps, those steps are Telefónica options, obviously subject to regulatory approvals. We have not obligation. And as we see it fit and depending on the [indiscernible], we will be requesting the possibility to exercise such options but they can come from that as now. We have not entertained discussions with the authorities towards that conversion. With respect to hybrids, we should this EUR 1.75 billion transaction as part of the financing of the E-Plus transaction. At the time of the transaction, we announced that 50% to 65% of the financing of the transaction would be hybrids. We still have therefore around up to EUR 0.5 billion regarding this transaction that could be issued in currencies, in other currencies potentially different from euro. And we are monitoring when would be the right market windows to go ahead. Apart from these we are not contemplating at this stage any other higher additions for the time being. Pablo Eguirón: Thank you, Georgios. Next question please.

Next question comes from the line of Will Milner from Arete Research. Please go ahead. Will Milner – Arete Research: Thanks. I’ve got a couple of questions. Firstly, on the OIBDA and free cash flow composition. I think in the quarter you quoted 50% organic OIBDA growth from Venezuela and 25% in Argentina. And every quarter I guess it seems as though, those two operations contribute more and more to your quoted organic trends. Just in that context would mind understanding how much cash you’ve been able to repatriate from those two markets over the last 12 months? I know Venezuela I think has a zero, but I’d like to get view on both of those? And then secondly internally, do you consider those cash flows when you strike the dividend that you have struck? And then the second question is just a bit on Mexico. AMX obviously called out economic weakness in that market. And I wonder if you could give us your thoughts on the outlook in Mexico and the prospects to returning to OIBDA growth there? Thanks. Ángel Vilá: This is Ángel Vilá. Regarding the first question, we have not repatriated money from Venezuela or Argentina so far this year. Repatriation from Latin America in the nine months have amounted to EUR 757 million, up from EUR 677 million last year. And for the full year repatriations, we are aiming of about EUR 2 billion in line with last year. When we analyze the coverage of our dividend, we do not need the free cash flow from Argentina, Venezuela to be able to pay such a dividend. Santiago Fernández Valbuena: This is Santiago. On the Mexican outlook, it is true that the market is a bit weaker than it was, not been some substantial but a bit weaker. We do not attribute to market weakness. The numbers that we have – we are continually repricing our prepaid base. We are not done yet, but we will in the next five to six months I hope. We are all expecting the details of the constitutional reform that is now becoming secondary law and this is going to be substantial for the future developments of the Mexican market. And we do expect to make significant progress in the wholesale market over the next couple of months. I think all these three things together should make us be hopeful that we will return to positive growth sometime next year. Pablo Eguirón: Thank you, Will. Next question please.

Our next question comes from the line of James Ratzer from New Street Research. Please go ahead. James Ratzer – New Street Research: Yes, thank you very much. I had two questions please. The first one was just going back to the question earlier on the U.K. business. I was wondering if you could give us just two specific numbers please. In the Q2 presentation, you said that the margin uplift from the new commercial model was 2.3 percentage points in Q2. Could you please just give us the number that is for Q3? And secondly, you also referenced in your documentation a one-off in Q3 last year, a positive of the court appeal ruling. Could you quantify how much that was please? And then secondly, I just had a quick question on China Unicom. I mean as a small investment you made recently you kind of increased your stake. I was wondering if you could just explain the rationale for that transaction and if that’s still a co-holding? Thank you.

Thank you, James. I think that continue with the question earlier to confirm that the effect on revenues that we have disclosed goes down into EBITDA and that obviously we need to consider the higher upfront cost coming from the direct volumes. James Ratzer – New Street Research: So the 2.3 point margin in Q2 that you reported, do you hope that in Q3 please?

I think that’s a combination of the two effects. And as you can imagine there are maybe more impacts in this moment. So I cannot disclose that number now. James Ratzer – New Street Research: Okay. Do you have the court appeal ruling from Q3 last year please? Pablo Eguirón: Hi James, this is Pablo. We will give you this detail later on in the telephone. Thank you. James Ratzer – New Street Research: Okay, thank you. Ángel Vilá: Regarding China Unicom, in September we increased from 4.99% to 5.02%. The rationale is that we were diluted voluntarily due to the issuance of new share capital of China Unicom, due to conversion of some convertible securities. So we were just adjusting to the previous situation. And then on November 4, our percentage has decreased to 5.01% due to a new exercise of options. For us, and looking at potential future scenarios to hold more than 5% would have better tax treatments than if we were to be below 5%. James Ratzer – New Street Research: Okay, that’s clear. Thank you. Pablo Eguirón: Thank you, James. Next question please.

Our next question comes from the line of Jonathan Dann from Barclays. Please go ahead. Jonathan Dann – Barclays Capital: Hi there. It’s a question around bit stream regulation in Spain. Could you just explain what’s happening? I think there is something going on with Digital Plus as well. And also I’m slightly confused how the deal with Yoigo operates. And then a second question. Has anything moved on renegotiating debt in Colombia? Thank you.

Well with regards to Yoigo, if I may start. The program goes in four parts and I don’t know if you want me to expand or not, but first of all – we have an LTE rollout and this is purely a shared radio access over Yoigo’s LTE network on the 1800 with a national roaming agreement until Telefónica replies its own network, which by the way we are deploying. As you know, we also have a wholesale agreement with them on the renewal of the current national roaming agreement until 2016. We have a retail agreement to commercialize Fusión to Yoigo and Yoigo distribution channels. And we have also a portion of tower sales, that is a functioning well, and we believe that if you refer to the claim of two of our competitors, the regulator had – that’s the way to open procedure is what they’ve done at the beginning of week and this could take probably a year and we will explain to the regulator why this is a commercial agreement that makes sense for customers. With regards to the current regulatory framework, that regulatory framework is providing a fiber specifically that for speeds above 30 megawatts, Telefónica competitors have to deploy their own infrastructure which have established as you may take obligation of civil infrastructure access and sharing symmetrical fiber verticals in buildings. So the opening of that guarantees the ability of any investor to undertake new project. Then and according to market trends, and the outcome of the inquiry to the market, Telefónica expects that the CNMC will confirm the limits of the current offer. Ángel Vilá: Regarding Colombia debt and the big transaction that led to debt reduction took place last year when we combined the fixed and the mobile activities. And some of the liability was reduced. We continue to see, as I said before in the presentation, very good growth in the company and we continue holding talks with the partner, the Colombian government to see what’s the best way to capitalize and exploit the growth and potentially provide them some liquidity, but those talks are ongoing and there is no progress to report and when there would be, we would report that. Pablo Eguirón: Thank you, Jonathan. Next question please.

The next question comes from the line of James McKenzie from Fidentiis. Please go ahead. James McKenzie – Fidentiis: Yes, I’ve got a couple of questions on Spain if I may. Firstly just on your churn. I wonder if you could give us any qualitative feeling as to what churn on your Fusión product is? Is it below the 1.5% that you’re reporting on fiber, or is it closer to 1.8% on contract mobile? And it’s tendency, if it’s going up or if it’s going down? And then just looking on your cost base in Spain, I see that subcontract costs continue to fall very sharply. Now we’ve now lapped the elimination of subsidies and I was wondering what exactly is driving this in the third quarter alone? And are we going to continue to see big year-on-year quarterly reductions going forward?

Thank you, James. With regard to your first question, yes, the churn is way below those levels. And with regards to the Fusión, we’re not seeing any issues at all. With regards to the second question, I think that what we can say is that the OIBDA margin will be maintained high and that on the back of fairly continued effort and the cost discipline that we’re able to do in the operation. Although, we expect it to be impacted by higher trading activity and some more commercial push into fourth quarter. This is an ability of the margin going forward. Actually I can give you many more of the measures that we’re going to take and some of the benefits, but we continue doing simplification of call centers. We already have 64% of traffic in shore and more than 70% of positions already transferred to the regions, but we are optimizing this division model with focusing a lot in there and we continue doing in-sourcing in new capabilities. Pablo Eguirón: Thank you, James. I think we have time for just one question more please.

Our last question comes from the line of Ivón Leal from BBVA. Please go ahead. Ivón Leal – BBVA: Yes. Good afternoon everybody. Two very quick clarifications on Spain actually. I think you say that you’ve seen success on the mobile only Movistar 20 tariff. I don’t know if you’re also been successful on touching more than two SIMs per Fusión contract? And the second one on the loyalty program as you mentioned, I think previously you mentioned the impact on year-on-year growth is ending of the fourth quarter of this year or reducing. Am I right to say that reduction of that impact is going to happen negative effect on share on share revenue growth?

Okay, first thank you, Ivón. First of all to confirm that we call Fusión ethos are those additional lines are now one million and the trend continue being a positive into the fourth quarter. So what we are seeing is correct and you see that. With regards to the loyalty, I think that there is two issues we need to take into the account. First of all – and we took this in the previous quarters, the positive impact of the loyalty program is facing off. The third quarter impact, this is smaller than in previous quarter and we believe also that this impact will be diluted as we start comparing a more like-for-like basis. We are preparing if you will, mentioned the launch of our new loyalty program which is called Por ser Movistar with lots of feeds for our customers which will have a positive effect in customer satisfaction and churn evolution going forward. So we believe that to be positive. Ángel Vilá: Thank you very much, ladies and gentlemen, for your participation. And we certainly do hope we have provided some useful insights for you. Should you still have further questions, we kindly ask you to contact our Investor Relations department. Good afternoon.

Telefónica’s January to September 2013 Results Conference Call is over. You may now disconnect your line. Thank you.