Good morning. Thank you for standing by, and welcome to Telefónica January to December 2021 Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Adrian Zunzunegui, Global Director of Investor Relations. Please go ahead, sir.

Thank you. Good morning. Thank you for standing by. And welcome to Telefónica's January-December 2021 results conference call. This is Adrian Zunzunegui from Investor Relations. Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. This financial information is unaudited. This conference call and 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 or statements regarding plans, objectives and expectations regarding different matters. All forward-looking statements involve risks and uncertainties, including risks related to the effect of the COVID-19 pandemic, that could cause the final developments and results to materially differ from those expressed or implied by such statements. 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 Chairman and Chief Executive Officer, Mr. Jose Maria Alvarez-Pallete. Jose Maria Alvarez-Pallete: Thank you, Adrian. Good morning, and welcome to Telefónica's fourth quarter results conference call. With me today are: Angel Vila, Laura Abasolo and Eduardo Navarro. As usual, we will first take you through the slides and then we will be happy to take any questions you may have. I would like to start by highlighting the strategic execution during 2021, which is delivering positive results. We remained focused on our core markets. We completed the biggest transaction in Telefónica’s history, the JV with Virgin Media in the UK. Whilst the acquisition of Oi mobile asset in Brazil got final regulatory approval and is expected to close in the coming months. We secured key five-year spectrum in Spain, Brazil, and the UK. Accelerated fiber deployments brought our German network quality to the highest market standards. We also continue to building a Digital Consumer Ecosystem in Spain and Brazil in areas such as connectivity, entertainment, home, wellness and finance. We further reduced our exposure to expand through portfolio simplification and data location. We're implementing a new operational model, which together with CapEx optimization allow us to reduce capital employed. At the same time, we now have a highest share of debt in local currencies accounting for 28% of the Group's total. Telefónica Tech again outperform the market increasing revenues in 2021 by over 30% year-on-year to almost €1 billion. This was achieved while strengthening capabilities through acquisitions and best-in-class partnerships. In Telefónica Infra ongoing value creation and crystallization continues, along with the creation of growth opportunities through fiber vehicles. This strategy was proven by the tower sales to American Towers at a record multiple. Finally, what is streamline and digital operating model is delivering enhance efficiencies. With 80% of our processes already digitized and implementing technology solutions such as OpenRAN, green energy, fiber and 5G. We are focused on attracting and retaining the best talent, offering agile and flexible working and is thriving to be at the forefront of innovation. Slide Number 2 shows the solid performance across our key metrics in 2021. First, our connectivity leadership was reinforced with Group accesses growing by 3% to €369 million and with some traction in strategic areas that are key to economic growth, such as ultrabroadband, fiber and mobile contract. We remain western world leaders in ultra broadband with total Ultra Broadband Premises Passes within 159 million as of 31 December. Second, in 2021 sustainable growth was restored with revenues growing organically 2% year-on-year and OIBDA growing 1.4%. Third, free cash flow generation remained robust with free cash flow excluding a spectrum reaching almost €3.8 billion or €0.66 per share, well above the dividend per share of €0.30. Our focus on smart capital allocation is reflected in the 14.2% CapEx to sales ratio comfortably below our guidance. Fourth, net financial debt has decreased by a remarkable €26.2 billion since the peak in June 2016 to €26 billion at year end, driven by completion of M&A deals and solid and steady free cash flow generation over the last years. Finally, it is worth highlighting the Group shareholders equity doubled versus 2020 to €22 billion, mainly due to capital gains booked along the year. Moving to Slide 3, our focus on delivering sustainable growth is evident in our fourth quarter performance. Starting with the financial, we posted simultaneous organic growth and OIBDA growth for the first quarter in a row – for the third quarter in a row. At the top line all business units are growing. OIBDA has proven resilient with an improving year-over-year trend in Spain. FX had a declining and minor impact in the quarter on the spot rates implied father tail winds to come. The significant reduction in net debt in 2021 was achieved mainly through capital gains from M&A transactions totaling €11 billion. In addition, free cash flow ex-spectrum costs improved sequentially in the last quarter to almost €3.8 billion in 2021. We remain a customer-centric group. Commercial momentum improved during the quarter driven by products and services with superior connectivity. Outstanding digital experiences are highly efficient networks. We also remain efficient in capital allocation with CapEx allocated to next-generation networks been approximately 45% and committed to promoting inclusive connectivity. And we continue to deliver on ESG which is a core part of our strategy, including how we contribute to the economy in terms of GDP, employment and fiscal contribution. Moving to Slide 4 for our financial summary. Our full year reported figures were impacted by capital gains changing the perimeter of consolidation and in the last quarter by restructuring provision of €1.4 billion in OIBDA mainly in Spain and an impairment in Peru. Revenues reached €9.7 billion in the fourth quarter growing 3.1% organically, while OIBDA increased by 0.4% underlying OIBDA totaled €3.2 billion, while net income for the full year was over €8.1 billion despite restructuring charges and impairment mentioned earlier. Net financial debt for the year was €26 billion, 26% lower than the previous year. And free cash flow reached almost €2.7 billion. Slide Number 5 highlights that we successfully achieved our recently upgraded 2021 guidance. Our gross revenues, OIBDA and CapEx to sales ratio. We are also confirmed today they payment of the second tranche of the 2021 dividend of €0.15 per share, which will be paid in June through a voluntary scrip dividend. The first tranche €0.15 per share was paid last December, with 65% of shareholders opting to receive shares. In addition, we will propose to the shareholders meeting the adoption of the corresponding corporate resolution for the cancellation of 2.41% of shares held as treasury stock as of 31 December, 2021. At Telefónica we are committed to sustainability, we align and measure our progress across our ESG pillars against the United Nations Sustainable Development Goals. We are reducing our environmental impact by using cleaner energy and shifting to more efficient technologies. We are taking our customers on a journey towards decarbonization by providing them with products and services, such as Eco Rating and Eco Smart that enable them to monitor and reduce their environmental impact. On the social side, we are committed to connecting the unconnected and bringing high speed internet to as many as many people as possible. For example, we have now connected 2.4 million people in remote communities with mobile broadband in Peru. We also continue to innovate internally through our new innovation and talent hub, and externally to new programs to scale up startups. Furthermore, we're ensuring that our workplaces are more inclusive. We continue to make progress on governance. Our Board of Directors has been restructured. And we now have a leaner and more diverse Board of Directors with 15 board members, nine of which are independent, with female representing 33%. Finally, I would like to highlight that our progress has been recognized externally. We have been included on the prestigious CDP A-List for the eighth consecutive year for our world leadership in climate action, and we have been ranked first worldwide in the World Benchmarking Alliance’s Digital Inclusion Benchmark. Telefónica has set robust targets to underpin our ESG commitments. And we have summarized the main ones on this slide. We will reduce our carbon footprint by becoming net zero in Scope 1 and 2 emissions in our main markets by 2025. And across our whole footprint on our value chain by 2040. By 2030, we will be using 100% renewable energy in every market we operate. We have made tangible commitments to become a zero-waste company by 2030. We plan to reuse 90% of customer premise equipment by 2024, recycle 98% of waste and introduce eco design criteria in all of our brand and equipment by 2025. We have also set objectives to monitor how we are contributing to de-carbonization of other sectors by enabling our customers to avoid emissions via digital services and use sustainable products and services. We will bridge the digital divide by promoting digital inclusion with 90% to 97% connectivity in rural areas in the main markets by 2024. And we have committed to train at least 100,000 people every year in new digital skills. We will promote gender equality by eliminating the pay gap by 2050 and achieving parity at the highest level of all of the business by 2030. Finally, we align our remuneration to ESG metrics, accounting for 20% of all employees’ annual variable pay and an additional 10% of senior executive’s long-term incentives. I will now hand over to Angel to go with a detailed review of our business performance.

Thank you, Jose Maria. Moving to Spain on Slide 8. Commercial activity improved in Q4, supported by a year-on-year improvement in churn to its lowest level since the second quarter of 2017. And record level of customer satisfaction. Convergent ARPU improved sequentially to €90.4 leading to an ARPU in the second half of the year €1.4 higher than that of the first half. We further strengthened our market positioning during the quarter. We acquired La Liga content for the coming seasons at a lower cost and launched Fusión Digital Pymes, a digitalization solution that enable capitalizing on the European Recovery Funds in the SME segment of the B2B sector. On financials, Q4 revenue growth improved year-on-year to plus 2.5%. And OIBDA annual decline was reduced to minus 3.4 on captured efficiencies mitigating higher energy costs, and higher cost from strong sales in IT and handsets. Worth to note is the voluntary redundancy plan implying a provision of €1.4 billion in Q4, personnel expenses with a positive impact on cash flow from 2022 at an annual run rate of savings of around €200 million from 2023 onwards. Once again, cash conversion stands out with an organic or OIBDA minus CapEx margin of 27% in 2021. Finally, we are announcing today that Telefónica Spain is ready to launch in conjunction with Telefónica Infra, the process to create a FibreCo focused on lower density areas, targeting more than 5 million Premises Passed and open a substantial minority stake to potential investors. Moving to Germany, we continue to have strong commercial momentum underpinned by, sorry, underpinned by the auto free portfolio and network parity resulting in over half a million contract net additions in ARPU growth in the quarter. The 3G switch-off was completed in 2020 and the energy efficiency ratio of the network improved by 78% compared to 2015. The 5G network over 30% of the German population by the end of the year. Looking at the financials, this commercial momentum has driven continued top line growth of 3.1% year-on-year with OIBDA expanding by 4% year-on-year on 2021. The company's three-year investment for growth program past its CapEx peak in fiscal year 2021, resulting in our OIBDA minus CapEx margin of 14.7% in 2021. Moving to Virgin Media-O2 which completed its gigabit rollout on time across its 15.6 million premises past during Q4 and is now the biggest contributor to the government's broadband target. 5G is also now available in more than 300 towns and cities and remains on track for 50% population coverage in 2023. As part of VMO2 – as part of VMO2 ambition to rollout fibre further and faster across the UK, Liberty Global and ourselves have initiated discussions with a number of potential financial partners regarding the creation of a network to build joint venture. The focus of the entity will be on building a full fibre network of up to 7 million premises in new greenfield areas by the end of 2027. Commercial momentum remains strong with a total base growing 5% year-on-year to reach 56 million at the end of 2021. Driven by fixed broadband access is growing by 3% year-on-year to 5.6 million and the mobile contract base growing by 2% year-on-year to 15.9 million. Looking at the financials revenue was broadly stable in the fourth quarter. While its OIBDA growth has slowed due to the return of some sales and marketing costs as well as increased investment in growth drivers. In 2022 VMO2 expects to deliver mid-single digit growth in performance transaction adjusted EBITDA before cost to capture supported by improved top-line growth and the delivery of synergies, so that the cash distribution to shareholders is anticipated to be £1.6 billion. Moving to Brazil on Slide 11, Vivo finished the year with outstanding commercial and financial results. In mobile contract accesses grew 8% year-on-year improving the customer mix and lifetime value. In fixed fibre-to-the-home reach – fibre-to-the-home reach 4.6 million connections, an increase of 36% year-on-year as we expanded our fibre coverage in the most valuable areas across the country through organic deployment via FiBrasil. Looking at the financials we posted simultaneous year-on-year growth in revenues and OIBDA, with fixed revenues growing for the second consecutive quarter and efficiencies offsetting high levels of inflation. On ESG, we continue to make good progress this quarter, demonstrated by the integration of our first biogas facility and being ranked as a top Telco in the Latam within the Dow Jones Sustainability Index. Finally, after receiving the final approvals, the acquisition of Oi mobile asset is almost complete and will allow us to further improve the quality of our mobile network and reinforce Vivo's market leading position. Moving to Slide 12, Telefónica Tech, our sustainable focused fast growing technology company delivers superior revenue growth throughout 2021. Revenue almost reached €1 billion in 2021 as growth accelerated to plus 50% year-on-year in Q4 driven by improving organic trends and further enhanced by M&A operations along 2021. Telefónica Tech is a leading integrator of technology with strong operational capabilities is already benefiting from the recovery of economic activity, and digitization projects post COVID-19 proven on the better revenue performance in the second half of 2021. Telefónica Tech has deliver on its priorities, outperform the market enhance its capabilities and scale, and improved its growth profile towards higher value services. Looking forward, a solid increase in sales well above revenue growth makes us predict a strong performance for 2022. Moving now to Slide 13, throughout 2021 Telefónica continue to focus on pursuing value creation opportunities and enlarging its influence portfolio. In Germany, who UGG launched operations in six federal states and in Q4 accelerated the MoU signed with municipalities, representing more than 170,000 Premises Passed. FiBrasil is on track to reach its deployment target with 2 million Premises Passed in 2021. ON*NET Fibra Chile continued its accelerated rate of deployment, reaching 1 million additional Premises Passed in 2021. And in Colombia InfraCo received all necessary regulatory approvals and the transaction closed in January 2022. We continue to explore alternatives to crystallize the value of our infra assets and look for growth opportunities well assessing our optionality across all asset classes. This was demonstrated by the acquisition together with Pontegadea of KKR's stake in Telxius Cable at the beginning of the month, reinforcing our ownership in an extremely relevant asset. And as I previously stated, we have initiated processes for the establishment of FibreCo vehicles in the UK and Spain. I will now hand over to Laura to take you through our Hispam operations and financial position.

Thank you, Angel. Moving to Hispam on Slide 14. Our strategy continues to bear fruit. Firstly, we accelerate value growth throughout the year with outstanding performance in contract ultra broadband and Pay TV. Secondly, we are implementing incremental and progressive operational synergies, thanks to the utilization and simplification of our new operational model creating a leaner and more efficient company. Thirdly, we continue to modulate our exposure to the region, reducing capital employed by 22% year-on-year. And finally, despite the tough macron and competitive environment revenue or OIBDA and OIBDA minus CapEx increased in both reported and organic terms. Turning to Slide 15, our net debt has been reduced by €9.2 billion year-on-year to €26 billion at the end of December 2021 or €26.3 billion including post closing events. Thanks to receiving free cash flow generation of €2.6 billion coupled with the completion of the strategic and inorganic initiatives namely the sale of Telxius Towers and the VMED O2 UK JV. Net debt-to-OIBDA ratio is now 2.59 times, 0.2 below the 20 ratio. Looking ahead, we are well covered. Our liquidity cushion amounts to €24.6 billion, and the average debt life is up to 13.6 years, placing us in a comfortable position given maturities are covered beyond 2024. We have remained active as well in managing our debt. Refinancing activity of €12.80 billion in 2021 and 2022 year-to-date, including the financing of JVs such as German fiber, VMO2, FiBrasil and Cornerstone Operations. We remain committed to ESG financing, which we plan to increase to over €10 billion in the coming years, have recently completed the refinancing of our main syndicated facility of €5.5 billion, which is now linked to sustainability objectives. I will now hand back to Jose Maria, who will wrap up. Jose Maria Alvarez-Pallete: Thank you, Laura. Moving to Slide 16, we are ready to commit for 2022. Our guidance includes 50% of VMO2 in the UK as it better reflects the reality of the group and provides a more comprehensive evolution of the Telefónica's managed business. UK is a core market for us, and as such we devote resources to this core unit. We guide for low sales digit growth in both revenues and OIBDA. I stepped forward from the 2021 upgraded guidance in spite of added inflationary pressure. In terms of investment, and even including the JV in the UK, we stick to our guidance of up to 15% CapEx to sales. Investment peak remains behind. We will push for revenue growth in all our geographies with main growth drivers in Spain and Brazil stemming from lower margin activities such as IT, new digital services and equipment. OIBDA performance will on top be more back-end loaded. In some regions, inflationary pressures will be more evident in the first half of the year, such as energy costs in Spain, though we will continue to accelerate efficiency generation to offset those. Additionally, synergy realization in the U.K. and Brazil would add to OIBDA growth as they ramp through the year. We will continue to closely monitor the macro situation and to manage our resource according to the evolution of the pandemic and potential new restrictions, but we think we have left behind the worst economic impact. On dividends, we had announced €0.50 per share for 2022, payable in cash in two tranches, December 2022 and June 2023. We believe reason that justified the voluntary scrip dividend implemented in 2020 have been mostly left behind, whilst we are confident in our free cash flow sustainability. As I said before, we are proposing to cancel 2.41% of treasury stock held as of December 2021, and we may as well consider using excess free cash flow to tactically buy on stock. To recap, please turn to Slide 17. First, in 2021 we delivered successfully against our strategic priorities, reinforcing our position in overall markets, reducing exposure to Telefónica Hispam, creating value and capturing growth opportunities to Telefónica Infra and Telefónica Tech, and significantly reducing debt by streamlining our operations and delivering robust free cash flow. Second, we successfully met our full year targets, which were upgraded at our second quarter results. Third, investment during the last year have allowed us to deliver best-in-class CapEx to sales ratio with enhanced ultra-broadband experience whilst promoting inclusive connectivity. Fourth, positive momentum continued in the fourth quarter with growth in revenues and OIBDA and sequential improvement in free cash flow. Looking forward, we are confident in the outlook for 2022, and we are pleased to announce a dividend of €0.3 per share in cash. Thank you very much for listening. We are now ready to take your questions.

Thank you. [Operator Instructions] Your first question comes from the line of Georgios Ierodiaconou of Citi. Please ask your question.

Good morning and thank you for taking my question. I had a couple around Spain. The first one is around the [indiscernible] during 2022. And I know in the third quarter it had an impact. And then of course, you manage pricing in the fourth quarter. But given the development, yes, we'd be interested if you could [indiscernible]? Jose Maria Alvarez-Pallete: Georgios, sorry, I mean, we hear you quite badly. I don't know whether you can adjust your mine?

Is it better now? Is it better now? Jose Maria Alvarez-Pallete: Slightly better, yes.

Perfect. I'll start again, because you haven't been able to listen to question earlier. So in terms of the OpEx phasing in Spain for 2022, you gave some indications of the negative impact in the third quarter. You seem to have managed it better in the fourth. I think it would be great if you can give us an indication of how we should think about it in 2022 in light of the movements we're seeing in the energy markets as well? And the second question linked to that is more on the top line in Spain. You mentioned during the presentation that Telefónica Tech is getting some of the benefit from what I understood in the European carbon fund. But I'm just curious if you can give us an update on what to expect on that part during 2022 with regards to Spain, and carbon Tech? I know one of your competitors are optimistic about the impact they expect to see? So I'm curious to hear from you.

Thank you, Georgios. This is Angel. Let me take you a little bit on how we see 2022 in the OpEx phasing that you were talking about, but also a little bit on the outlook. As always, this should not constitute the guidance because we do not guide on specific geographies, but yes, we can give you some color on the trends we see now. First of all, in terms of how we see the market, we think it will continue to remain competitive in the low-end, but rationale in the high end. We expect our commercial traction to continue sequentially improving, as you have seen in this fourth quarter. A little bit less so in the first quarter because we just increased a bit more for more movement that always comes with a more muted commercial activity. But later on in the year the commercial trend, we expect to continue moving forward. And accordingly, we aim for slightly growing revenues in Spain. The main growth drivers, and this partially is linked to your second question, would be B2B where we see continued momentum in IT growth. And as I was saying in my speech, we are launching specific project – products of digitalization of SMEs, which is a substantial part of what we expect to be European recovery funds dispersed in 2022 and so on in Spain. Also handset sales or equipment in general, we see that they should have traction in 2022 based on our new offer of mobile Fusión with handset. ARPU erosion should be lower in 2022 year-on-year and continuing the trend that we're seeing quarter-on-quarter and clear growth in digital services. This revenue growth when you look at equipment and you look at some of the digital and IT services, comes with a lower margin. So we estimate that the margins in Spain to be in the high-30s for the year 2022. And it would be, and this links clearly with your question on OpEx phasing, we expect it to be a better performance in the second half than in the first half. Several things are underpinning this expectation from a commercial standpoint, as I was saying a tariff repositioning in the first quarter will imply that we could have muted quarter, but then this will improve the second half. The margin will be under pressure from energy bases. We are factoring in the first half significant or relevant impact on this that will annualize from the second half in geopolitical situation. Allowing efficiencies in personnel will start from February onwards. The second – or final part of the year we'll have also the benefit from the new La Liga deflation in the content cost. So we expect the second half to be – with better traction in the first half and with respect to CapEx, you should expect a similar term to 2021. I hope I've covered the moving parts that you were interested in the OpEx and also a little bit on the top line in B2B.

Perfectly. If I could ask one quick follow-up; I know you don't give guide balance, but assuming no major shift in the market, and I appreciate there's uncertainty around energy prices, is it realistic to expect EBITDA to be flattish before the end of this year? Is that achievable under some type of circumstances?

Well, I commented that, we expect slightly growing revenues and margins in the high-30s. So you can do the multiplications.

Thank you.

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

Yes. Good morning guys and thanks for the very comprehensive presentation on ESG. Just on your comments Jose Maria, on excess free cash flow to buy back or to potentially consider buybacks. You've obviously got the VMO2 recapitalization due earlier than expected, I think. That was announced a few days ago, and obviously that would benefit your free cash flow this year. Is that the kind of excess free cash flow that you're defining here? Or could we be talking about excess free cash flow from asset sales, for instance? When you talk about excess free cash flow, could you just elaborate a little on what that comprises? Thank you.

David, I will take the question, if you don't mind? I think it's more a conceptual point of view. I mean, we are comfortable with our balance sheet. We have reinforced equity significantly. We have reduced net financial debt. We are fully committed to maintain our solid investment grade. But within all of that is there a free cash flow, which is in excess and it could be well from dividends, from our JVs, it could be from potential tax impact upside, it could be for inorganic deals. Although, as you know, inorganic deals have not moved by net debt reduction, but more for strategic value creation, we could be bought that as a complement to our shareholder remuneration. So that would be the point. So far in the previous years, and mainly in 2020 and 2019, with a scrip dividend, free cash flow has been devoted mostly to – or all of it to deleverage. So that would be the message behind.

Thank you for that, Laura. And if I could ask just a second question, I think you also – again, Jose Maria just in your concluding remarks, you talked about some synergy impact from Brazil and the UK to support growth through the year. So just to clarify, there's no sort of synergy from Brazilian consolidation in the guidance? I'm pretty sure there is not. And then when could you expect that deal to be complete? And should we expect you to come out and amend guidance on the back of that? Thank you. Jose Maria Alvarez-Pallete: Hi. David, I will frame out the question and I will hand it over to Angel for more detail. But the answer is, yes, we are including synergies coming from the Oi acquisition in Brazil as well as we are included in the guidance, the synergy realization in the UK. For more detail in Brazil, I hand it over to Angel.

Yes. We finally managed to align all those stars that have to be aligned, and we got all the approvals necessary for the Brazilian deal. We expect to close the deal in – we say, the first half of the year. We expect it to be as soon as possible within what is left of the first half of the year. As our colleagues in Brazil stated in the conference call yesterday, we will provide the full detail on the synergies estimations once we have closed the deal. And now the process of the split of the Oi mobile asset into three sub-assets, one to be acquired by each one of the players is taking place. So we prefer to have the final full detailed picture of the assets to be bought. Also, there are customer reprice adjustments to what we pay. So when we have the full detail picture, which again, we'll do as fast as possible within what is left of the first half of the year, we'll provide. I should say that we have had in the past substantial cases in Brazil where we have announced, delivered and over-delivered the synergies that we announced. It was in the GBT transaction also when we combined Vivo with LSP after acquiring the 50% of Portugal Telecom. So the track record of delivering synergies and in the previous cases that I mentioned, over-delivering the synergies are already in our track record.

I'm sorry, could I just clarify. I'm maybe misunderstanding and I apologize, but your guidance sets constant perimeter of consolidation. What you're telling us that there are synergies for Brazilian deal in the guidance? Jose Maria Alvarez-Pallete: Yes, because we are not changing the perimeter within Vivo. I mean, we are acquiring customers, and we are acquiring spectrum. We are not acquiring a company.

Okay. Thank you.

Thank you. Our next question comes from the line of Luigi Minerva of HSBC. Please go ahead.

Yes, good morning. Thanks for taking my question. The first one is on the – your announcement about the FiberCo in Spain. And I just wanted to just understand in principle, whether you think that there is value in setting up these frameworks with minority investors only when there is new footprint to deploy? So essentially, what is the rationale in focusing it on the rural areas? Is that because you want to deploy more there, and that's why you are welcoming minority investors? And more broadly, I was wondering what is the end game with these fiber structures that you are putting in place? Do you expect eventually to be completely out of these fiber vehicles? Or perhaps medium-term, you would like to buy out the – your co-investors? I presume the answer is different depending on the markets, but I leave it to you.

Hi, Luigi. We are setting the FiberCo in Spain in the format of a regional FiberCo in low-density areas and not proceeding with other fiber project in Spain. We are doing this because we think it's what – it would create the most attractive project for Telefónica and for potential investors. It's an industrial project, not a financial engineering one. It's a project that aims for growth. So this would be a growing FiberCo, which is targeting steel and built areas. In these areas, there is a lower or even absolutely low risk of overbuild. And as a result, the FiberCo should have higher percentages of take-up of premises. It's also a project that would be eligible for fiber subsidies from the European funds and others. Of course, it will benefit from Telefónica Spain know-how in building and operating fiber networks, also Telefónica Spain being the anchor customer of this company. We are building it with a partial brownfield contribution and then a greenfield build to reach in excess of 5 million premises passed. With this initial brownfield contribution, the company has a cash flow profile that will allow potential investors to leverage their upstream bit cost while keeping control level of debt at the FiberCo itself, because we plan to continue to consolidate accounting wise that FiberCo and we do not want to contaminate the parents balance nor the ratings. And very importantly, this FiberCo will be born with the ambition to trigger consolidation and rationalization of the unmet FiberCo space in Spain. So we think that this alongside with the FiberCo that we're launching with Liberty and VMO2 in the UK these are the two most attractive projects for infrastructure investors nowadays in Europe. As you were asking our FiberCos that we have in Germany that we have in Brazil, in Chile, in Colombia, now in the UK and Spain are aiming for growth and investing in areas that are still uninvested, because we think that it's the way to continue progressing in our infrastructure. We are the absolute leaders in fiber in Europe and Jose Maria was explaining our position globally of leadership in fiber. But we also are mindful of the return on capital employed. Regarding the end game, you saw in the slide in the presentation, the portfolio we have, or we are building of different FiberCos. And for us fiber is technology of the future. All options will be open. But these are very attractive, valuable FiberCo assets whereby third-party investors will have put objective level of valuation for each one of them. So, we are creating value, we are creating growth and at the same time we are doing it very mindful of the return on capital employed.

Thank you very much.

Thank you. Our next question comes from the line of Pilar Vico of Credit Suisse. Please go ahead.

[Foreign Language] I have two on my side, please. So first I had questions on the customer mix in Spain. You have previously given a number for the mix of low-mid, high-end customers in your retail base. Can you please provide an update on that? And could you tell us how much is O2 out of this mix and the impact of the 16 Fusión product? So, what would be the percentage of convergent customers now in O2? And second, you announced the creation of the FiberCo in Spain for low density area. So, what is your thinking regarding the creation of a FiberCo for your entire Spanish business? Is this now off the table with today's announcement, or is still something that you would consider? Thank you. Jose Maria Alvarez-Pallete: Thank you, Pilar. On the mix of the convergent portfolio, we stopped disclosing this mix because we realized that what we were qualifying as high, medium, and low value would not correspond to what would be the corresponding ARPUs with respect to our competitors. So, what we would be calling medium or low value would be the average ARPU of our following competitors. So, we were kind of creating first giving some commercially sensitive information to the market and also creating a categorization, which was not consistent with the rest of the players. What I can say is that the convergent value mix is being supported by our strategy of combining more products in the bundle, including, for instance, the handset offering, the fiber speed, the data, the content, also with new B2C digital services that we are including as an ecosystem. There is, yes, some polarization in the market. So, you should assume that the higher end where we are having, we continue to have higher traction compared to the rest of players and the low end, which is very competitive, are polarizing more, compared to the medium. But in the end, the result, you can see the blended the sequential increase in ARPU. The reduction in churn, we have 1.37%. It's the lowest since 2017. We have the highest Net Promoter Score, and we have widened the gap with our competitors. I can give you some figures regarding O2, yes. O2 has been contributing in the base positively in both fixed broadband and in mobile postpaid. So, this is increasing our weight in what we used to call before the lower end of the spectrum. With respect to the big FiberCo, I don't know, Jose Maria, if you want to comment on that one? Jose Maria Alvarez-Pallete: Yes. The FiberCo that we are announcing today is the FiberCo we are executing in Spain, although the projects are finalized or postponed. So, this is the fiber project in Spain.

Thank you.

Thank you. Our next question comes from the line of Fernando Cordero of Banco Santander. Please go ahead.

Hello. And thanks for taking my two questions. The first one is more on the, let's say, in the short term. And I would like to understand how do you see the wholesale revenue flow evolving in the Spanish market, and you have already given some guidance on the whole Spanish operations? But just to understand how the wholesale has and could be evolving considering there is some deceleration that we have seen in the fourth quarter? And also, the second question we have a more longer-term view and coming back to the discussion on the end game on the different fiber costs. You're already carrying right now, let's say, different EVs or different potential dividend sources in the future. And I will like to understand, although it is not going to be a fact in the short term, given the capacity effort. But what is your outlook or what is your petition regarding the potential dividend flow to come from the different fiber costs that you are having right now in Chile, and Colombia, in Brazil, in Germany? So, in that sense, trying to understand what could be the potential contribution to the free cash flow, also considering the increasing relevance of dividends from EVs? Thank you.

Hello Fernando. With respect to the wholesale revenues, we expect them to remain rather stable in 2022. We have growing VMO. We continue to see traction in the fiber wholesale. Important with pandemic becoming an endemic, there should be further roaming activation. And on the contrary, we will have the same way that we have lower content cost. And from La Liga, we will have lower resale of TV revenues compared to the season where we had the full La Liga content to be resolved. And with respect to the cash flow profile of the different FibreCos, now they are in the investment phase. And second, as you can see in the slide that we have described the fiber cost, and let me go, it's Slide Number 13. We have different levels of ownership of this fiber cos. So [indiscernible], which is 50% owned by Allianz and 50% owned by Telefónica, split between Telefónica, Infra Telefónica Deutschland. This is fully ring-fenced from the parent, financially, rating-wise and so on, and it's in the investment phase. So, it's a company in which we are still for some time in investment phase. FiBrasil, which is 50% CPQ and the other 50% split equally between Telefónica Brazil and Telefónica Infra, is a company that was created with the contribution of brownfield, partially did an acquisition and the rest is being financed mostly from then contributed by CDPQ and leverage and Telefónica Group contribution was in the brownfield we did initially. So, again, it's ring-fenced. It's not cash consuming. For us, we should not have additional contribution. On the Chilean and Colombia FibreCos, KKR is leading those companies. We are a minority shareholder. And with respect to the Spanish fiber co we are announcing today, as I said, it will start with significant brownfield contribution that with cash generation from the beginning. And it will be able to access fiber development subsidies. So, this is not going to be cash consuming for the group in any significant way. And in the greenfield JV fifty-fifty in the UK, it's early days, we need to see in the discussion with potential investors, what will be. But in the scenarios that we are designing the – sorry – the equity ticket is quite limited for the promoters, and Liberty Global and ourselves. These will be assets that we'll need to develop over the coming years. Here, we are looking at this stage to capture growth and to improve even further the leadership positions that we have [indiscernible] in several of these markets. So, it’s still early to say and to project cash flow distribution from these companies.

Okay, thank. Very clear.

Thank you. And our next question comes from the line of Stan Noel of Bernstein. Please go ahead.

Good morning. I've got two questions. The first one is about your portfolio strategy in the presentation. You showed quite a long menu of infra optionalities. You had a slide on recent CapEx. I assume you're still working on reducing exposure in Hispam. Maybe can you remind us what is your portfolio strategy? And what are your top priorities? And the second question is about the open letter that you published in the Financial Times last week, along with the other European Telcos, along with other CEOs. In this letter, you're asking for the network investment burden to be shared in a more proportionate way with the few digital content platforms who account for the majority of traffic on your network. I was wondering what kind of – what specific business model do you have in mind to implement? And what's the likelihood that regulators will allow you to go ahead? Thank you. Jose Maria Alvarez-Pallete: On the strategy, we remain very focused on the five pillars of action that we announced back in November 2019. The first one, focus on our four core markets being Spain, Brazil, the UK and Germany, reducing capital or optimizing our capital exposure to Latin America, the third one being Telefónica Infra, the fourth Telefónica Tech, and the fifth being a leaner and more digitized operational model. So, we stick to what we announced back in November 2019. And everything we do, you should framework that on those five pillars of action. And therefore, we have been accelerating the execution over the last two years in spite of COVID, and we are really, really focused on that. And in terms of the overall regulatory situation of the overall regulatory view, COVID has accelerated the utilization everywhere. And in fact, volumes, data volumes have been growing 50% recurrently year-on-year. Out of that growth, more than 70% of that growth is coming from video streaming and is coming from social networks. And therefore, what we are saying is that in Europe, mainly, the pressure on investment, the pressure on returns and the pressure on cost of capital needs an urgent decision, Europe needs an industrial policy. And therefore, I think, that the way to measure relevant markets is wrong. I think that now we are no longer competing with traditional ecosystem. We are competing with an enhanced and amplified ecosystem. And I'm going to give you an example. In the case of Spain, we are supposed to be a dominant player in the pay TV market because according to the local regulator, there are roughly six point something million pay TV customers in Spain, and we have more than 50% of the market share. The reality of the Spanish market is that there are more than eight additional pay TV customers coming from streaming platforms. And therefore, the total market size is not six point something million, it's more than 15 million. And therefore, we are no longer the dominant player. And we have some restrictions, several restrictions on our commercial offer. So, our position is that time has come for a change, that we need to be aware that the European sector needs a revamp. And that revamp means that this famous consolidation of four to three is no longer four to three, it might be 100 to 99. So that's our position. And I think that the COVID and the pandemic has accelerated this controversy, has accelerated this anomaly on the market. So that's our position, and that's where we see regulators' mindset evolving.

Thank you.

Okay thank you. It’s done. I’m sorry; we have no time for further questions. I will now hand over to Jose Maria for closing remarks. Thank you. Jose Maria Alvarez-Pallete: I hope we have been able to provide you enough information through the slides and through the Q&A Session. In any case, if you have further questions, please contact our IR department. And thank you very much for your interest in our company. Thank you.