Good morning and welcome to Telefónica conference call to discuss January-March 2019 results. I'm Pablo Eguiron, Head of Investor Relations. Before proceeding, let me mention that financial information contained in this document related to the first quarter 2019 has been prepared under International financial reporting standards as adopted by the European Union. From the January 1, 2019, we implemented IFRS 16. In organic terms, the effects of the accounting change to IFRS 16 are excluded in 2019. This financial information is unaudited. This conference call webcast including the Q&A session may contain forward-looking statements and information relating to the Telefónica Group. These statements may include financial or operating forecasts and estimates based on assumptions or statements regarding plans, objectives and expectations that make reference to different matters. All forward-looking statements involve risk, uncertainties and contingencies, many of which are beyond the company's control. 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 or London. Now, let me turn the call over to our Chief Operating Officer, Mr. Ángel Vilá. Ángel Vilá: Thank you, Pablo. Dear investor and analyst community, good morning, and welcome to Telefónica's first quarter results conference call. With me today is Laura Abasolo, Chief Financial and Control Officer. Following our presentation, we will host a Q&A session and invite you to ask any questions you may have. I would like to start this call by sharing with you our main achievements during Q1. First, we continue increasing customer relevance by offering the best digital experience. High-value accesses continue to be the pillar. And increasing accesses and penetration translates into tangible results. Average revenue per access accelerates into organic growth to 4.2% year-on-year amidst stable churn. Customer satisfaction increased as Movistar ranked second topmost valuable Spanish brand, the only telco brand in the top-20. Second, connectivity is the foundation to allow the best customer experience. Smart connectivity, our new high-speed flexible secure and advanced networks, featuring elements of artificial intelligence. Third, our growth is consistent and profitable with revenue improving its growth rate this quarter to 3.8% organic. Our revenues continue the transformation process with 56% of revenues already coming from broadband connectivity and digital services. Our OIBDA recorded positive growth and our earnings are outstanding, with net income and EPS growing strongly and free cash flow improving substantially. Finally, the clear deleveraged path we initiated some years ago continues to be confirmed with eight straight quarters of declining net debt, which stood below the €39 billion mark at the end of the quarter, when including the sale of both our Central American assets and data centers recently announced. Turning to Slide number 2, let me summarize our main financials. Reported figures for the first quarter reflect the new IFRS 16 accounting standards with a positive impact of €414 million in OIBDA and a negative impact of €17 million in net income. Let me remind you that 2018 figures are reported under IAS 17, as such, year-on-year reported changes reflect, on one hand, the organic growth, and are also affected by accounting changes by the negative evolution of FX regulation and other special factors like capital gains among others. Reported revenues reached almost €12 billion. OIBDA stood at €4.3 billion, a 35.6% margin, whilst net income exceeded €900 million. Free cash flow of €1.4 billion is a remarkably strong number, 2.6 times larger than in the same period last year, and allowing to reduce our net debt by 5.7% on a yearly basis to €40 billion. On an organic basis, it is worth to highlight the acceleration in the revenue growth rate to 3.8%, thanks to improving service revenue trends, while OIBDA posted positive growth of 1%. Next slide shows our 2019 guidance, which is well on track following Q1 results and fully aligned with our expectations. We also confirm the dividends to be paid in the calendar year and to be approved in the next AGM, €0.2 per share on the June 20, which is the second tranche to the 2018 dividend, and €0.2 per share on December 19, which will be the first tranche for the 2019 dividend. The second tranche of 2019 dividend, another €0.2 per share will be paid in June 2020. Let's move to Slide 4 where we entail the net income components and their evolution. We have achieved 10.6% annual growth in net income and surpassed the €900 million mark, despite FX headwinds and IFRS 16 negative impact. Reported earnings per share reached €0.16, increasing a significant 33.8% versus the final quarter of 2018, reflecting our solid operational performance and further boosted by savings from financial management. As you can see in Slide 5, and as mentioned at the beginning of presentation, I would like to remark the better trend registered at the top-line, plus 80 basis point sequential improvement versus Q4 2018 to 3.8% in organic terms and 4.6% excluding regulation. The mix of this improvement is important as well. Since service revenues ramped up by 130 basis points to 2.6% positive growth year-on-year and handset sales continued to post a robust increase of 15.6%. By segments, there is growth across the board and we are benefiting from our unmatched diversification. Latin America being the main contributor to this better performance of revenues, increasing at a pace of 6.2% on a yearly basis and accelerating versus Q4 2018 by as much as 260 basis points, while Europe remains growing healthily at 1.6%. Now, let me present the OIBDA performance in the first quarter, which we show on Slide 6. OIBDA grew by 10.3% in reported terms, reflecting mainly the positive impact of IFRS 16, while in organic terms, it increased by 1% or 1.7% ex-regulation. Main contributors to this organic performance are Hispam South, Brazil and UK, with Spain improving its trend versus the one registered the previous quarter. Mexico facing tougher year-on-year comps. OIBDA margin topped 35.6% growing 4 percentage points on a reported basis. As such, operating cash flow increased 14.6% from the same period last year in reported terms, while in organic terms declined 5.3% affected by CapEx phasing in this quarter, which is growing by 11.2% year-on-year. On Slide number 7, you can see we are accelerating the deleverage path, bringing down net debt by almost €700 million in Q1, again, driven by solid free cash flow generation. This is the eighth quarter in a row of debt decline. Free cash flow reached €1.4 billion, 2.6 times or €858 million higher than the one posted in the same quarter last year. This remarkable performance is mainly explained by our operations performance and the tax refund obtained in Spain, despite usual negative seasonality impacts during this period of the year. For the rest of 2019, we expect working capital seasonality to swing and positively impact free cash flow. Turning to Slide number 8, let me give you some more details for the B2C segment. Leveraging on a strong set of assets, we can grow relevance through a continuous focus on delivering a better customer experience. All in all, a simple quality offer ready for tailor-made personalization is the base of our value proposal. Video is a key driver for ARPU and customer loyalty improvement, with IPTV accesses up 17% year-on-year in the first quarter. And over-the-top video service, Movistar Play already being present in all Hispam countries after its launch in Mexico and Argentina this quarter. Ultra-broadband speed with [price] [ph] premier increases both satisfaction and ARPU. And its penetration over the total fixed broadband base reaches 63% at the group level, 9 percentage points higher than a year ago. Mobile data use keeps on growing, in both the prepaid segment, thanks to recurrent plans and incentives to top-ups. And in contract, once offers and enriched with new services as data sharing, data transfer or dedicated data for apps. Finally, customized integrated handset offers focused on high-value customer renewals are delivering very positive results. We now move on to Slide number 9, where we show how B2B representing 20% of group revenues, is speeding up its pace of growth. B2B revenues are growing 6% year-on-year on the back of improving trends, in both corporate plus 10% year-on-year, and SMEs plus 2% year-on-year. The evolution of the B2B portfolio around the digital core of communications, cloud and security services with building blocks of best-in-class portfolio of own and third-party digital services deliver strong revenue performance, mainly in advanced digital services. Set on the best networks, the B2B proposal evolves towards customer-centric end-to-end solutions with operational excellence. Let me just highlight cloud and security services, and our virtualised IoT platform, widely awarded and considered as an industry preference. Moving to Slide 10, in the first platform, we already cover 85 million premises with ultra-broadband and 78% of population with LTE, 95% in Europe, with an efficient network that enabled CapEx need decrease by 40%. Network virtualisation with UNICA was deployed in 10 countries and up to 66% of processes are digitalized and managed in real time, while 30% of customers migrated to full stack. The third platform provides an enlarged offering with digital services revenues growing by 21% in the first quarter, leveraging on personalization in the residential business and becoming the best partner for the enterprise's digitalization process. The fourth platform enriches all the above with artificial intelligence and open platforms. New functionalities are available in Movistar Home and more use cases with big data and data analytics facilitate our decision-making processes. On next slide, we show how we are advancing in our digital transformation program, pushing for further efficiency gains. As such, the execution of the several initiatives set around sales, customer service digitalization and process automation is translating into a higher use of digital channels, better customer experience and additional savings to the ones captured in 2018. In terms of organization, we are taking a step forward, evolving into a simpler more agile and flexible way of working with an agile mindset methodology. As a result, we are progressing well on track and already capturing at the end of the first quarter 20% of the targeted savings for this year of more than €340 million. Now, I hand over to Laura.

Thank you, Ángel. On Slide 12, we start reviewing the performance of our Spanish operations, which again show growth in share of value, thanks to our premium quality differentiated offering. Within a period of tariff upgrades, which tend to impact commercial trading, we continue improving our customer base mix growing in convergent, TV, FTTH and mobile contract during the quarter. Furthermore, trading for all our value accesses has improved throughout the quarter, with March showing the best monthly data in the period. We have recently announced the launch of new commercial initiatives for the coming months, such as priority customer care service or broadband for true homes on our Fusión clients, which should help to carry out with our More for More strategy in convergence. It is worth highlighting that Telefónica España is growing its share of net adds in the Spanish fiber. Putting together retail and wholesale customers, Telefónica España share in fiber net adds during the first quarter stands largely both in overall market shares with uptake growing significantly in wholesale. The combined take up of more than 26% in Q1 2018. This brings in visibility and sustainability to our business. Moving on to Slide 13. Service revenue grew by 0.8% year-on-year in the quarter, about the 0.8% growth seen in the previous quarter. This is the seventh consecutive quarter of service revenue growth of Telefónica España, quite a remarkable achievement. Within a quarter of lower price increases that those seen in the same period last year, consumer revenue has stayed flat year-on-year. An improving mix of customers and promotions expiry, as from Q3 we should continue driving B2C revenue growth this year. B2B revenues increased by 3% year-on-year, growing for four straight quarters already with wholesale and other revenue start showing a reverse in trend. One drag such as MTR cut and MVNO agreements start to be removed. We should expect this trend to turn even more evident in the second half of the year. OIBDA performance improved by as much as 3 percentage points from the previous quarter. As we had anticipated, negative content one-off seen in Q4 have been removed and incremental savings in personnel and digitalization allowed to partly offset growing content cost. Again, we should expect better margin outlook in the second half, once top-line trends improve and content comparison base eases. Lastly, worth mentioning, Telefónica España remains a benchmark in CapEx over sales at 12.1% in Q1, despite facing impact in CapEx 9.2% year-on-year growth. Moving to Slide 14, Telefónica Deutschland posted a strong commercial quarter. The company has launched new value added initiatives improving ARPU and churn. The O2 free portfolio continues to drive usage and ARPU growth leveraging our improved network. On Tuesday, we also announced a significant enhancement of our infrastructure portfolio with the addition of cable wholesale access to a long-term agreement with Vodafone. This still is subject to the completion of Vodafone's acquisition of Unitymedia. Telefónica Deutschland registered 206,000 contract net additions, 94% up year-on-year. O2 contract churn improved 0.2 percentage points year-on-year. O2 contract LTE customers accelerated their average data usage to 4.2 gigabytes per month, up 52% year-on-year. It is worth highlighting the sustained revenue growth of 0.7 year-on-year mainly supportive by another quarter of strong handset sales, up 12.6% year-on-year. The OIBDA year-on-year trend has improved 3.8 percentage points compared to last quarter. CapEx in the quarter strongly increased by 28.3% year-on-year mainly due to front-loaded LTE rollout, a trend expected to normalize over the year. Telefónica UK continue delivering good growth in its main financials and overall customer base. The company maintained its market-leading position as UK's favorite mobile network, increasing the O2 contract customer base by 4% year-on-year and improving churn to 0.9%. It is also worth highlighting that O2 has been recognized as best network performance at Mobile News Awards and best sponsorship of the last 25 years for the O2 at the UK Sponsorship Awards in March. Revenue were up 5.3% year-on-year mainly driven by the continuous access of its flexible tariff offerings, high-value handset sales and other revenue, which also supported OIBDA growth of plus 3.4% year-on-year. The company continues to invest efficiently in network capacity and customer experience, and operating cash flow show a strong improvement of 5.8% year-on-year. On Slide 16, we can see how our More for More strategy is reaping benefits in our Brazilian operations, where we are delivering profitable value growth. First, as regards to mobile business, we have implemented different price increases during the last few months, starting with fewer postpaid and hybrid in the last few months of 2018, and following the same prices in prepaid packages during March and April. These coupled with a better base mix, contract ARPU is as much as 4 times higher than that of a prepaid customer fixed through to mobile ARPU, which grows by 2.6% year-on-year in the first three months of the year. As for the fixed business, we continue to speeding up our transformation journey seeking for a major ARPU increase. We have already passed 9 million homes with FTTH, 2 million homes already connected, which allows fixed broadband ARPU to post as much as 14% annual growth in the quarter. Fiber ARPU is 1.4 times higher than DSL. We already offer our IPTV service in all cities with FTTH, 130 versus 121 at the end of Q4, which should be farther driving force to future revenue growth. IPTV ARPU is some 20% higher than DTH ARPU. Next slide shows that our strategy of seeking profitable value results into improving top-line trends. Service revenue trend improves again, mostly due to a strong growth in contract at plus 8.2% in the quarter versus plus 6.9% in Q4 2018, which leads to total mobile service revenue growing by 1.6% year-on-year, a marked improvement from the flat performance seen in the last quarter of 2018. In fixed, a growing weight of high-value access, fiber and IPTV, helped to reduce to further offset declines in traditional voice, which coupled with sequential improving B2B revenue helped our Brazilian operation total revenue to show a significant sequential improvement. As regards to profitability and no matter we have been expanding margins for the last nine consecutive quarters, we have seen again - we have been again able to beat inflation. OpEx growing by 2.3% year-on-year, which compares with 4.6% inflation rate and saw 0.5 percentage points annual improvement in our OIBDA margin. Moving on the review of our Hispam operations and starting with South Hispam on Slide 18, we could highlight revenue trend acceleration in the quarter driven by positive mobile contract net adds for six straight quarters with stable OIBDA evolution despite salaries catch-up taking place in Argentina during the period. Our revenue increased by 15% year-on-year in organic terms with Argentinian revenue growth accelerating on tariffs increases and Peru showing better year-on-year performance than in the previous quarter. In the latter, we have recently launched our convergent offer Movistar Total, the first and only truly convergent option in the market, which is showing promising result so far. OIBDA shows similar growth rate as seen in the previous quarters, even despite salary catch-up in Argentina on efficiencies and lower subsidies in Chile and Peru. As for North Hispam on next slide, negative revenue trend has been reversed in this first quarter of the year, thanks to Colombia accelerating its top line growth rate. The good performance seen in Central America and revenue in Mexico growing by 1.2% year-on-year, first time in five quarters on the back of ARPU improvement and lower regulatory impact versus previous quarter. OIBDA performance is nevertheless penalized by a charge in the booking criteria - a change in the booking criteria of spectrum fees and regulation in Mexico. Should we exclude those running FX, OIBDA would have maintained similar year-on-year trends versus the previous quarter. On Slide 20, we see how Telxius premium infrastructure continues bearing fruit. 75 new towers have been added to the portfolio in the quarter, mainly in Spain, Brazil and Peru with a tenancy ratio increasing to 1.37 times from 1.34 times in March 2018. Revenue and OIBDA were positively impacted by the sale of exceptional capacity in the MAREA submarine cable that connects Spain and the United States. Excluding this impact, top-line and OIBDA could have grown by 6% and 9.1% year-on-year respectively, sequentially improving in both cases. On the other hand, CapEx declined more than 80% from the first quarter of 2018 after the completion of the BRUSA and MAREA cables that came into service last year driving operating cash flow up by 2.9 times higher, excluding the one-off aforementioned. Let's now move to balance sheet metrics on Slide 21. One more quarter, we continue to progress on our deleveraging path, relying on a strong free cash flow generation that stood at €1.4 billion in the period and comfortably allows to cover all our commitment and continue bringing down debt, which is reduced by €0.7 billion in this quarter, continuing with previous year's trend. Should we include foreclosing events, net debt could come down by €2.4 billion, bringing total net debt figure down to €38.7 billion at the end of the quarter? Hybrid reliability management exercise had a temporary effect on debt reduction, coming mainly from the positive effects of the issuing hybrids in excess of the amount of hybrids repurchased. Overall, the two high reliability management exercises since March 2018 will reduce our annual hybrid coupons by more than €70 million. Finally, let me mention then under IFRS 16, net debt could be impacted by €7.4 billion worth of leases, within the low end of the range provided in February 2019. Slide 22 shows how Telefónica keeps on increasing its financial flexibility through actively assessing debt capital markets, including the issuance of the first green bond in the telecommunication sector worldwide during the quarter, with over €5.3 billion long-term financing completed year-to-date in 2019. By issuing loan [tenders] [ph], we extended our average debt life in excess of 10 years, while keeping a comfortable liquidity position over €24 billion that exceeds next two years of maturities. And all this happened while lowering our interest payments effective cost of 3.39% as of March 2019, 18 basis points lower than in March 2018. Moving to Slide #23, we share more details with regards to FX impacts on our results. FX headwinds in the first three months of 2019 dragged close to 5 percentage points to the year-on-year evaluation on revenue and OIBDA. Argentinian peso and Brazilian real are the currency that depreciated the most during the quarter. These negative effects of €180 million at the OIBDA level translated into just €74 million in free cash flow terms. Once CapEx and tax payments in local currency largely mitigated the impact. As regards net debt in the 12-month rolling period to March 2019, FX had a small positive impact. Meanwhile, organic contribution to the reported figures continued to be very solid on a yearly basis. I will now hand back to Ángel. Ángel Vilá: Thank you, Laura. To summarize, first, today's results showed a solid start of the year, advancing in our strategic positioning and delivering a consistent profitable and sustainable growth, demonstrated with a strong improvement in revenue growth trends. Second, we have achieved double-digit net income and EPS growth. Third, we further deleverage, de-risk our balance sheet and improved returns with asset sales. We have brought down net debt by eight straight quarters. Fourth, best-in-class infrastructures continue to be key for ensuring top quality customer experience. And fifth, monetization of the corner extended offering along with digitalization efficiencies are translating in higher efficiencies. This allowed us to confirm the outlook for 2019 and to continue returning value to our shareholders through our proposed €0.4 dividend per share. Thank you very much for listening, and we are now ready to take your questions.

[Operator Instructions] Our first question comes from the line of Mathias Robilliard from Barclays. Please go ahead.

Yes, good morning. Thank you very much. I had two questions. First, on Spain, in terms of the different revenue dynamics, so I think wholesale did a bit better probably than what you were flagging at the end of last year. So if you could explain the different moving parts there? And when I look at consumer, do you think that the recent initiatives that you announced - I'm talking about for example the premium service called Priority and other ones, can have a contribution that is meaningful to the top-line already in 2019? And then, I had a question on Brazil. So, obviously, improved mobile performance there, but when we look at fixed, despite all the investments that you're doing, it is still tough in terms of the KPIs. I understand there's more competition from small players in different areas. Is this a business line? I'm talking fixed Brazil that you think can revert to growth or stabilization in the short-term or is it more delayed? Thank you very much. Ángel Vilá: Thank you. Thank you, Mathieu. On Spain revenue dynamics, you have seen that we are posting revenue growth, again, on service revenue growth for seven quarters in a row. This is consistent with what we have been expecting and communicating in the previous conference call. The components here on B2C, which accounts for a bit more than 50%, actually 55% of service revenues, it has a flat performance in the quarter, mainly due to the different phasing of price or tariff upgrades in this first quarter of this year compared to the first quarter of last year, and also, to a more muted commercial performance in the quarter. At the same time, B2B, which account for 28% of service revenue, growing 3% for the fifth quarter in a row. Here I would like to highlight that very strong growth of IT at 18.5%, which more than offsets the decline on the traditional communications part in IT. And this is due to all other digital services efforts that we are doing in B2B, not only in Spain, but all across the footprint. And third, the component of wholesale and other, which accounts for 17% of service revenue. It has turned around and is growing at 0.2% in this quarter. The reduced impact of MVNO loss and the regulatory impacts that we saw last year, are absorbed by growth in NEBA and TV, and roaming revenues. We think and we have been expecting this turnaround of the trend. It is true that in the previous call, I got a question whether this would turn to growth. And at that point, we were cautious in projecting forward what could be trends. But what we have seen in the first quarter, we think that we can continue seeing in additional quarters. I think you are also asking about commercial initiatives, new commercial initiatives that we are working in, in Spain. Here, we have - and this is linked to our More for More strategy - we are enriching the offer that we have for our customers. And we are launching different services targeted to improve and increase the engagement of the customers with some support on More for More strategies. As such, we have been launching services like Movistar Car, which includes connectivity, SOS, safety, car diagnosis for the vehicles of our customers. We have launched security or services like Conexión Segura, Movistar Cloud. Services which are quite interesting for families like Movistar Junior or Parental Projection, especially for light families like Pablo's family, I should say. And then, we are also giving devices with more intelligence for the home like Movistar Home. And we are getting into financial services with Movistar Money. Soon, we are going to be launching our traditional services like priority Movistar, a premium service treatment for our more valued customers. And also, we are launching Fusión for second residences, which is a segment where we see high potential in Spain. You have to take into account that there are almost 3 million second homes in this country. Regarding Brazil and the revenue trends in Brazil, what we have seen is an improvement of the top-line. This has been driven by acceleration of - and positive acceleration and performance of the revenues in mobile and a better trend in the fixed revenues. Here, we are working in a big effort of transformation, in which businesses such as voice, DTH, copper are declining, while what we're seeing is ultra-broadband and fiber growing strongly double-digits. So the trend that we are seeing quarter-by-quarter in this transformation of the revenue function of the fixed business, we think is going to continue in the same direction, and probably produce positive results in the future. I don't know if that would address your question.

Thank you, Ángel, for recommending me this service. I will take it. And thank you, Mathieu, for the question. Next question, please.

We will now take our next question from Ivón Leal from BBVA. Please go ahead. Ivón Leal: Hello, good morning, everybody. Just thanks for these two questions. The first one is on that announcement launch in OTT offerings Spain in June. I don't know if you could give us a bit more detail on that, because I guess that's a meaningful change in your strategy. So I don't know if you could tell us about the timing. If I understand correctly, I think everything except football is going to be offered to all of the market, and eventually if that strategy is going to be exported to other countries. And the second one is on competitive landscape in Spain. ARPU has basically stabilized in last two quarters. This week we had Euskaltel basically blaming competition for margin pressure. And the same day, I think [Maxmovil was missing] [ph] guide. So it will be interesting to know your view on how ARPU is going to evolve in Spain going forward and how competition has kicked off in 2019? Thanks much. Ángel Vilá: Thank you, Ivón. On the first question on OTT launch, that we've announced in Spain and whether this means a change of approach, which the short answer is no. But let me elaborate. Video remains core for our customers. What we see is that at the core of our strategy of offering the best pay TV and the best video, this is delivering good results. We have more than 8 million daily audiences, growing 8% year-on-year on Movistar+ platform, with a daily consumption which is growing sequentially to more than 200 minutes per day. The TV offer, commercial differential and complete increases loyalty, it's TV customers have a churn which is 25% lower to non-TV customers. So, TV evolution is key to defend a very strong market position. At the same time, what we see is a low penetration of pay TV in Spain, which stands, according to different sources, between 35%, 45%, which compares to most other European markets around 60% to even 100% penetration. So we see a growth opportunity. So with these two elements, we have announced the launch of our OTT to take place in June at the cost of €8 per month. This will include a limited tasting of our content. So it will include generic channels produced in-house, Vamos and 0. Some limited linear channels, it will include - sorry, Movistar series and Seriesmanía, and some video on demand of in-house content. It will not include to be for sure any football. It will not include a big part of our premium and offer sport. So it will allow in a rational move to capture a complementary part of the significant growth opportunity that we see in the Spanish TV market. This is an online product, which will be linked to an app download. It seemed to appeal to a big number of online followers that are following already our content or some programs online, especially those of our own production included in channels like 0. So we aim to take them as a one B-OTT product and allow them to taste the - testing a preview of the Movistar+ content that will allow us later to attempt to up-sell those customers to a full convergent pay TV services. We see zero cannibalization risk. It does not detract value from our Fusión offering. It does include no football, includes no functionalities, no add-ons possibilities. And regarding the competitive landscape in Spain, we think or we see that overall dynamics remain rational and competitive. We had a softer competitive quarter in Q4 following a quite intense Q3. And what we have seen in this first quarter of the year was a quiet beginning of the quarter, which saw later higher promotional activity. Promotional intensity was mostly concentrated in the low-end, mainly through extra mobile data allowances. And what we saw also, Vodafone in the final quarter of the year for ahead of their full close, were quite active in promotions. It's not unusual since Vodafone has been for a while the most active promotional player in the market. At the same time, we have seen that market portability continues to slow down and remains in line with minimum levels seen in 2018, signaling a rationale competitive environment. We see again competition intense in the low-end, including prepaid where we are less exposed. And we expect, having seen that Vodafone new portfolio of offers, which include some More for More elements that their promotional activity would cool down and they would focus on the new proposal. So summing up, we see a rational environment in the high end, with value bundles, with ultra-broadband connection, speed TV services, value-added content, value-added functionalities which is where we focus, and where we still see room for selective More for More. And this is the segment that takes more of our B2C revenues, so, yes, competitive and rationale at the same time. Ivón Leal: Great. That was very clear, Ángel. Thanks much. Ángel Vilá: Thank you, Ivón.

Next question, please.

We will now take our next question from Michael Bishop from Goldman Sachs. Please go ahead.

Thank you. Good morning. Just two questions for me. Firstly, just moving to the UK, there were some headlines around O2 UK potentially looking at fixed line again during the quarter. And also, whilst it's very slow in terms of the uptake of convergence as a market, both Virgin Media and BT yesterday talked about potentially moving forward a bit more with fully converged products. So it'd be good to get your latest thoughts on that. And then secondly, in terms of working capital, I was just wondering whether you could just build on the comments around working capital unwinding through the rest of the year and where you potentially see the direction of working capital for the whole of 2019? Thank you very much. Ángel Vilá: Thank you, Michael. On the UK, we think that convergence remained supply led rather than demand led. It's not being demanded and is not growing at the speed that we have seen in other countries. What we have seen is that the majority of the market remains what we think, remains mobile focused being the UK one of the highest loyalty markets. Also, the telecom pricing and margins in the UK are already leaning towards some of the lowest in Europe and since convergence to take traction sometimes entails discount to the bundles, we think that there is a little scope and also the penetration of services like Pay TV that allow to build convergent bundles, the penetration is already very high in the UK, so one of the critical elements that we have seen for convergence to take up, clearly, does not have upside in the UK as it has had in other places. So we see convergence still as supply led and not demand led and having relatively little traction. However, of course, market conditions can change if the convergence segment was to grow, we have already a hedge with one of the largest convergence players whose MVNO is on us, being Sky. And there could be elements where we put access converged place. However, I have to say regarding what has been speculated is that we are delighted with Telefónica UK's mobile first strategy. You can see that this has been very effective by delivering top line, bottom line customer growth, customer loyalty, and we made the choice to exit the fixed market in 2013, and we have currently no plans to change this course and this decision that we took already in 2013.

Regarding working capital, Q1 has had a consumption of minus €711 million, which is due to seasonality impacts as it's usual in this first quarter of the year a net of working capital measures. The consumption in Q1 has been a slightly lower than the consumption of last year, but we will see throughout the year that that consumption diminishes with seasonality playing more in favor and continuing with working capital measures. So for the full 2019 year, we will expect a positive contribution of - in our free cash flow, and that's why we commented that this will be unwinding throughout the year, which is usually what happens every single year, so we usually see this trend.

Perfect. Thanks very much.

Thank you, Michael. Next question, please.

Our next question comes from the line of Mandeep Singh from Redburn. Please go ahead.

Hi. Thank you. Thank you for the question. I have a couple, please. First of all related to the Spanish sort of fixed line trends and broadband trends, obviously, I know you have price increases through and your trading improved sequentially through the quarter, but quite a big line loss number and a decline in broadband subs. So, I mean, can broadband net has returned to stability in sort of Q2 and beyond, that's the sort of - and also, it was the outlook for line losses, it's quite a big decline in Q1. So just linking that and how relative to the sort of big content investments you've made, is it surprising to see these sorts of trends given how much better your content offerings are versus everybody else? So that's the sort of first question. And the second question is whether the outlook for wholesale is sort of negative or positive on the basis - as corporate declines can never grow - take the strain for corporate declines. So those are the two questions, please. Ángel Vilá: Thank you, Mandeep. It's always a pleasure to talk to you again. On the Spanish trends, and you were asking on the fixed, no, which is more - I'm going to deal with the commercial trends, because as you know on revenues, we are looking at the bundles in a converged way. I should say that it's not unusual to see a softer KPIs in a quarter in which we updated tariffs. We updated in January tariffs for fixed only, for mobile only, and in February, we have updated tariffs for convergence. But if one looks at the evolution inside the quarter between the January, February and March, what we have seen is that an improvement takes once the tariff upgrade effect vanishes and actually, the month of March has an exit month for the quarter is quite positive. So for instance, in convergence, we've got 13,000 net adds, of which 13,000 positive net adds were in the month of March in mobile contract as well in TV. This happened as well as also in fiber. We expect this trend to continue improving. As you can see on Slide 12, we continue improving our customer base mix. We are growing convergent in TV, we're growing fiber, and we are growing in mobile contract. But more in particular, to what you were asking in fiber, you can also see on Slide 12 that we are growing our share of fiber net adds both on the retail side and both on the wholesale side. And we're also growing the uptake, the number of homes connected to homes pass both on retail and wholesale side. And on wholesale fiber, net adds were 197,000. So yes, it's been a more muted quarter, but we have seen trends that are supportive of what - of the commercial traction. And in any case, the decline in fixed broadband has been more significant in non-converged than actually in converged. We have launched, as I was talking in the previous question on new portfolio of digital services. We have external expectations of commercial traction, and we also see potential for selective More for More moves. Regarding wholesale, the different moving pieces I also spoke about in a previous question, we have seen, and we are seeing the fading away of what we have seen adverse moves or impacts from MVNO loss. We see lower impact of regulatory impacts. And then, we are seeing growth in NEBA, we are seeing growth in wholesale TV, and we are seeing growth in roaming revenues, which has made the track that we have in the wholesale line fade away and turn actually to slight positive revenue performance in the first quarter, which given the trends that we see, I'm more confident now about the sustainability of this performance.

Thank you.

Thank you, Mandeep. Next question, please.

Our next question comes from the line of David Wright from Bank of America. Please go ahead.

Yeah. Good morning, guys. And congratulations, Pablo, and also on getting this report out, getting your new additions. Just a question on Spain and O2, please. Obviously, that is now a contributing factor to convergent revenues. I just wondered if you would be willing to give us any KPIs perhaps for O2, any lineups, what kind of ARPU it is coming in just so we can maybe start to model some of the convergent dynamic. It's tempting to just see the convergent ARPU reflecting the Fusión momentum, but clearly now there is a dilutive negative effect from O2 adds. So I wondered if you could give us any granularity on that that I haven't - that I may have - I must have missed anything. Thank you. Ángel Vilá: Thank you, David. O2 is progressing according to the expectations that we have for this proposition. It's a way to - we thought cannibalization address some segments that were not fully addressed by our converged Fusión bundles. It's reaching some base around 50,000, 55,000, 60,000 fixed broadband subscribers. It's around 120,000 mobile subscribers. 80% of those would be converged subs. The ARPU is now we are - when we are publishing the converged ARPU used to be before - will include only the Fusión ARPU, now we are including Fusión and O2 ARPU. And obviously, also in the mix of converged customers between high-end, mid-end and low-end, we are including the O2 customers, this, obviously, are leaning towards the low end and are affecting the ARPU increase that we see year-on-year on converge functions, which I have to say is still a growing ARPU. In this sense, I would take advantage of your question to point out something, which is the mix of our converge customers. We are seeing in convergence, in addition to ARPU growth and year-on-year of 0.6%. We are seeing that the mix, 30% of the customer base continues to be high-value packages. Here we're - which is up 3 percentage points year-on-year, here we're talking about an average ARPU of €130. But we call - what we call - mid value, which is 33% of the mix, it's an ARPU of €85. And what we call low end of converge customers, which account for 37%, and this includes the O2 customers, first, an average ARPU of 60%. Bear in mind that we call low end with an average ARPU of 60%, is what is the average ARPU of our closest competitor which stands at 58%. So I would like to say that yes, O2 is increasing the mix in the - in what we call low end, yes, O2 is not ARPU in that category. But what we call low end ARPU is what our closest competitor calls average ARPU. Okay. So yes, we're getting traction, but it's not something that is not expected in our projections.

Okay. If I could maybe just follow-up and if given those broadband subs, I guess it launched late last year. I'm just trying to understand what is the sort of net adds O2, which could imply a slightly higher net loss perhaps in the Fusión base. Would that be right? Or is that not really the way to read this? Ángel Vilá: Well, what we're seeing is that portabilities from Movistar to O2 are quite reduced. More than 85% of the capture of O2 is not from us.

Okay. That's right. So thank you.

Thank you, David. And thank you for your comment. Next question, please.

Our next question comes from the line of Jakob Bluestone of Credit Suisse. Please go ahead.

Hi, good morning. A couple of questions, please. Firstly, just on your guidance on how you're sort of tracking against that. You're guiding for about 2% EBITDA growth for the full year and you did about 1% in Q1. And just sort of trying to understand which are the bits you expect to accelerate during the course of the year and you'd obviously cite Spain gets better later in the year. But just what I wanted to understand is that really what's driving that implied acceleration during the course of the year? Or are there other parts of business as well that you think will pick up in terms of EBITDA growth during the course of 2019? That's the first question. And then just secondly, just to follow-up from David's question, as you highlighted, I guess, the tidbits that was driving your Fusión ARPUs, one of them being this mix effect and then on the other side, you've been putting through various price hikes. But I guess sort of the evolution of convergent ARPU is really the balance of those two. I mean, is it fair to say that the mix effect is becoming bigger? So, we can actually start seeing convergent ARPUs decline from here just because of more and more of what you referred to as the low end becoming a sort of bigger share of it? Or do you think convergent ARPU is going to continue to grow, because of the pricing power that you have? Thank you. Ángel Vilá: Thanks, Jakob. On guidance, on OIBDA guidance, we have guided for OIBDA growth around 2% for the year. And in the first quarter, it's growing around by 1%. We expect group OIBDA growth to accelerate around the year with better growth in the second half versus the first half fostered by several factors. Spain is one that we've been flagging with reiteration in previous calls. Service revenue, we expect service revenue acceleration in the second half fostered by the end of football promotions, by IT revenues acceleration, new B2C, digital opportunities that I was talking in the previous question and the wholesale revenues acceleration. On the relation to revenues, the lower year-on-year growth in net content costs in the second half, and further efficiencies in areas like commercial channels, call centers, network, IT costs from digitalization and automation. So Spain is a clear area. We're also expecting better performance in second half in OIBDA in other geographies, Germany according to their own guidance as they stated in their call yesterday, Brazil as was also stated in their call yesterday. And what we see is that the drags that we have seen in Hispano-American units to be lower also. So we remain confident and reiterate our guidance of OIBDA growth around 2%. Regarding Fusión ARPU, we are not expecting to see a decline going forward in the first quarter. Fusión ARPU increased 0.6% year-on-year from €87.8 to €88.2. To explain this improvement, it had a positive impact from tariff upgrades, positive feedback from upselling and dilutive impact from promos, dilutive impact from mobile add-ons migrating to Fusión multiline impacts and dilutive effect from convergent offers in the multiline segment, as I spoke about regarding O2. We see potential for additional selective, More for More moves in the market especially in the high-end. And we are launching new commercial initiatives, where we aim to improve the engagement or further improvement, I should say, the engagement with our customers, which make us being confident that the positive ARPU, convergent ARPU evolution should be here to stay.

Thank you.

Thank you, Jakob. Next question, please.

Our next question comes from the line of Carl Murdock-Smith from Berenberg. Please go ahead. Carl Murdock-Smith: Hi, thank you. Just my following on from Jakob's question asking on the other side of the convergence KPIs, I suppose taking a longer term view of convergent churn, five years ago, it was at 1.1%, now it's a 1.7%. Given the strength of your brand, the improvements you've made to mix and proposition, so I suppose that's quite - as a promise over that five-year period. And just kind of taking a longer term view, do you think that churn will now stabilize at that kind of level? Or looking forward five years, would you expect given the increasing competition in the market that convergent churn as you push through the penetration will still continue to trend up over the years to come? Thank you. Ángel Vilá: Thank you for your question. First, I would want to state that converged products being a bundle of several products. Once there is a move in any of the products that make part of the bundle that is accounted for as churn that's not meet that the customer returns. But it could be that the customer drops some product or some part of the churn. Second, for the last quite few quarters, churn has been moving in a relatively stable band around 1.5%, 1.6%. Yes, in this quarter, we have seen a spike slight to 1.7%. But we think that this is within control range. As you should imagine, this is one of the KPIs that we measure very carefully. We've seen our commercial moves and marketing moves in the converged world. So we are looking at the number of converged customers, their ARPU, the mix and the churn. And this is something that if we see any deviation that would be confirmed, we can clearly adjust our propositions in order to manage the situation, which at this point, we do not think that should be of concern. Carl Murdock-Smith: So in response to Jakob's question, you said that you thought that convergence ARPU would still go up, are you willing to say that you think convergent churn can stabilize around this level? Or should I expect it to trend upwards on kind of multiyear view? Ángel Vilá: We would expect Fusión turn to move in a band around these levels, but not spike up. Carl Murdock-Smith: Okay. Thank you.

Thank you, Carl. Next question, please.

Our next question comes from the line of Jerry Dellis of Jefferies. Please go ahead.

Yes. Good morning. I had a couple questions, please. First one has to do in Spain. As you said in Spain, your Pay TV intake this quarter was about sort of 4,000. Q1 last year was about 80,000. Recently, you revamped the Fusión lineup to segment in particular the football content in a different way. I think Netflix source have become available as an upsell for Fusión customers from December onwards. So to understand the TV dynamic would be interesting, please. And also to understand whether the sort of promotional pressures that you were seeing during the first quarter have extended into the sort of the first half or the second quarter as well. And my second question has to do with the UK. You reported a mobile service revenue growth rate of positive 0.5% today. And previously, as you reported on a different basis, the mobile service revenue trends that we had previously were on an IAS 18 basis. But you reported growth of 2.8% in Q4, and I think about 3.5% in Q3. Is the slowdown between the revenue growth rates that were reported previously and the one you reported today, is that purely an accounting effect? Is it possible to get any pro forma sense of what the underlying development in UK revenue trends has been, please? Thank you. Ángel Vilá: Thank you for your questions. Regarding Spain Pay TV, we continue to see an opportunity in the market. We see that penetration is still low compared to other markets. What we're also seeing is that this has to be a segmented approach. The number of net adds priced along quarters depending on factor, for instance, the start of this fall season, so in the same way that you saw in Q3 last year an important push ahead one would expect another type - similar type of movements in the third quarter this year. The difference of this first quarter versus last year is that one year ago, we included TV in some packages that were not having some contents before, and we don't have TV that make a jump in the first quarter last year, which has not been repeated this year. Regarding the promotions, what we see is less intensity of promotions on some players that have moved to innovative approaches such as Vodafone, more based on speed and less working on promos. Albeit, we don't think that is disruptive. And maybe tactically, some other players may be doing some promotions now, who saw lower commercial performance in the first quarter potentially, Orange could be promoting a bit. But this is not unusual. This is regular dynamics that we see in the Spanish market. Regarding the U.K., we continue to have a strong revenue, revenue performance. Revenues have grown in the first quarter 5.3%. This is driven by the continuing success of flexible tariff offerings like custom plans. Also traction on handset sales of value handset sales, and we continue to have revenue growth in other segments like [dsmit] [ph], IoT elements, in MVNO and in business ICT. Here, when one looks at the revenue function in the UK, the split between mobile service revenue and handset sales has been affected by the IFRS 15, and accounting between these two elements. That's why one should look at the total revenue rather than these two components. There have also been some elements such as decreasing out-of-bundle traffic, once bundles become larger, you have lower out-of-bundle traffic, and some slowdown in interconnect and outbound roaming. But we see that we continue to have a strong total revenue trend in the UK. And we expect to continue outperforming the market. At the same time, we are displaying the benchmark churn in the market of just 0.9%.

Thank you very much.

Thank you, Jerry. We have time for one last question, please.

Our last question comes from the line of Fernando Cordero from Santander. Please go ahead.

Hello. Good morning, and thanks for taking my two questions. The first one is regarding Latin America. In that sense, we have seen in network sharing deals, mobile network sharing deals here in Europe in the recent weeks. And I would like to know, which is planned and what could be just your thoughts, particularly thinking on Latin America and ahead of the potential [capacity cycle] [ph] to come from 5G. And the second question is related with your balance sheet. And at which stand, after seeing the disposals of Central America businesses as well as the disposal of some of your represented assets, I would like to know how far are you from your desired capital structure in terms of leverage or should we expect any further asset disposals? Thank you. Ángel Vilá: Thank you, Fernando. I'll take the first question. And of course, Laura second one. On network sharing, we are firm believers in network sharing. 80% of CapEx and 20% of OpEx in network are due to infrastructure sites, transmission rentals. So network sharing is an opportunity to reduce network costs, while maintaining the objectives of coverage and quality. And therefore, improve the return on capital employed, which is a critical objective for us, and I would say, should be for the industry. We think that this will be especially relevant in the incoming deployment of 5G technology, due to the pressures coming from a much denser network, both in radio access and in transport. We're already sharing in several of our geographies. You asked specifically for Hispanoamérica or Latin America. But we're sharing in many of our geographies where we have sharing of infrastructure, of transport, of fixed access, of mobile access in different degrees and different flavors in different countries. But we have sharing of infrastructure in Brazil, in Argentina. We have sharing in Chile. We have also in Colombia very significantly with Tigo. We have sharing of transport as well in mobile, which probably is what you're focusing. Already, we have some experiences of 3G, 4G around sharing with Oi, with TIM and with Claro. In Argentina, we are sharing 3G and 4G with Claro in some cities. We have signed an agreement also in sharing in Colombia with Tigo, and in Central American assets that we are now in the process of divestment. We had also shared agreements with Millicom. Willingness to explore sharing in 5G, of course, without [indiscernible], but it takes two to tango. So we will approach partners in due course. It's early days for 5G and especially in Hispanoamérica. But, yes, we are ready. We recently announced in the U.K. the extension of our sharing agreement with Vodafone to 5G, and we will explore opportunities if they create value, and they do not erode a competitive position in every other geography.

Thank you, Fernando, for your question. It is worth mentioning that after the disposals of Central America and the data center, we have accelerated the net debt reduction substantially. And today, we are at €38.7 billion after post-closing events. Let me highlight the evolution, because we have decreased €2.4 billion just since the beginning of the year. And if we look at since June 2016, we have almost reviewed our net debt by €14 billion in 11 quarters. That's more than €1 billion per quarter, and that has been done on the back of many levers. The most important being a strong free cash flow coming from operations, but also optimization of our tax and interest payment in organic measures. As you mentioned, we'd have been return on capital driven, despite having a very strong CapEx intensity these past years and also despite having spectrum payment every single year. From that point, our intention is to continue reducing debt and leverage going forward on the back of a strong cash flow generation. And we could consider in organic measures, always based on return on capital employing and with no need to sell anything in a rush that does not create a strategic value. I definitely think we are approaching the moment when net debt will be less of a concern for the investment community and that gives us flexibility. But I also want to say that we are fully committed to maintaining a solid investment grade credit rating, and we will keep taking debt down organically and also inorganically.

Okay, very clear. Thank you.

Thank you, Fernando.

At this time, no further questions will be taken. Ángel Vilá: Thank you very much for your participation. And we certainly hope that we have provided some useful insights. Should you still have further questions, we kindly ask you to contact the Investor Relations department. Good morning and thank you.