Good morning. Thank you for standing by, and welcome to Telefónica's January-December 2022 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. Adrián Zunzunegui, Global Director of Investor Relations. Please go ahead, sir. Adrián Zunzunegui: Good morning, and welcome to Telefónica's conference call to discuss January-December '22 results. I'm Adrián Zunzunegui from Investor Relations. Before proceeding, let me mention that the financial information contained in this document has been prepared and the 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 -- regarding plans, objectives and expectations regarding the different matters. All forward-looking statements involve risks and uncertainties that could cause the fiscal developments, 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. José María Álvarez-Pallete. Jose María Alvarez-Pallete: Thank you, Adrián. Good morning, and welcome to Telefónica's fourth quarter and annual results conference call. With me today are as Ángel Vilá, Laura Abasolo, Eduardo Navarro and Lutz Schüler. As usual, we will first talk you through the slides, and we'll then be happy to take any questions. I would like to start looking at the strategic plan we shared with you back in November 2019. We then said, we were to focus on our key markets where we intended to be more relevant and aim for sustainable growth. We also wanted to reduce capital employed exposure to Spain whilst addressing efficiency, to promote growth opportunities through the launch of Telefónica Tech and Telefónica Infra, and at the same time, leverage value of our infrastructures, all under the new operating model in which best and digitized networks anchored everything. We could not anticipate the challenges we have faced since then, but we overcame them through execution we have addressed and adapted to difficulties proven our resilience and managed to deliver under difficult circumstances. Let me run you through this progress on the next few slides. As you can see on Slide 3, we delivered on our commitments and have met or exceeded our guidance for the past 6 years. Through consistent financial performance and steady execution quarter after quarter, Telefónica returned back to growth. We are proactively addressing the headwinds the business faces. We are mitigating inflationary pressures through price actions in all markets based on the pricing power we built. We are constantly optimizing our cost structure and have a very focused investment strategy. This shows the resilience of our business. We are shaping the regulatory debate to bring rationality back into the sector. Recent spectrum auctions show a more rational approach from us, industry players, and now jointly pursue a more reasonable regulatory environment. In this respect, the first share consultation process just to be opened by the European Commission, hence a potential change in the playing field. And finally, we continue capitalizing on the opportunities that the business has. We completed in-market consolidation in the U.K. and Brazil. We are actively embracing the industry transformation by sharing the GSMA and by joining forces with other operations to develop network-as-a-service, whilst continuing to build on our leading position in ESG. Moving to next slide. We continue building customer focus networks of the future. We further strengthened digital infrastructure and platforms across our markets. We have already launched 5G in our core markets, and we are leaders in fiber to the home with 64.5 million premises passed. We are pioneers in building stronger networks via alternative deployment models. And we are also pioneers in switching off legacy networks. We'll be the first telco worldwide to fully shut down a copper network, our case in Spain in 2024. We are also shutting down our legacy mobile networks and have, so far, turned off 3G networks in Germany and expect to do it in 2025 in Spain. This network modernization improved the rate of digitized processes, 14 percentage points in December 2019, while traffic per customer multiply by 2x in fixed broadband and mobile broadband. At the same time, we continue to be pioneers in the telco cloud paradigm. Moving to the next slide. This stronger and transformed Telefónica lies on a strong financial foundation as shown on Slide 5. A growing base of high-value and low-value customers is the driver for revenue growth, revenue that, along with our digital transformation, has evolved significantly over the last few years. The weight of revenue coming from broadband and services beyond connectivity over total service revenue increased to 73% versus 64% in 2019. While voice and access rate declined to 27% versus 34% in 2019. Organic revenue growth that is profitable and sustainable, we are already above pre-pandemic growth rates. Throughout the same period, our capital intensity has come down and will come down further in the future, which will continue fueling free cash flow growth. We continue optimizing capital allocation. Between 2019 and 2022, we generated cumulative free cash flow of €18 billion, which allow us to reduce debt over this period by €11 billion and to improve shareholders' equity as much as 46% higher than in 2019. Our focus strategy drives performance and better outcomes, and ultimately allow us to remunerate our shareholders to whom we have devoted more than €9 billion since 2019. Organic revenue growth that is profitable and sustainable, we are already above pre-pandemic growth rates. Throughout the same period, our capital intensity has come down and will come down further in the future, which will continue fueling free cash flow growth. We continue optimizing capital allocation. Between 2019 and 2022, we generated cumulative free cash flow of €18 billion, which allow us to reduce debt over this period by €11 billion and to improve shareholders' equity as much as 46% higher than in 2019. Our focus strategy drives performance and better outcomes, and ultimately allow us to remunerate our shareholders to whom we have devoted more than €9 billion since 2019. Moving to Slide 6. You can see that the proof points achieved in 2022 are the result of our successfully executed strategy. During the year, revenue, OIBDA and OIBDA minus CapEx organic growth has steadily progressed, which allow us to fulfill our updated guidance despite a challenging macro environment. Cost containment and cost efficiencies were key to offset inflationary headwinds and to achieve a stable organic margin year-on-year. Prudent capital allocation has been crucial supporting our robust free cash flow, a well-covered dividend and a high liquidity cushion. Across our four core markets, we strengthened our competitive position. Spain has posted top line growth for seven consecutive quarters. In Brazil, we have reinforced our market leadership after integrating the Oi mobile base and achieved double-digit revenue and OIBDA growth. In Germany, record commercial traction supported by state-of-the-art network translated into healthy revenue and EBITDA growth. Whilst in the U.K., we made good operational progress, and synergy realization ensure some profitability. Looking ahead, we remain excited about the opportunities. At Telefónica Tech, we continue to build new capabilities that will support the sustainability of growth. At Telefónica Infra, we continue to execute on the fiber rollouts, building optionality for the future. In Telefónica Hispam, the sustainable profitable growth increases optionality as well. B2B will, in turn, benefit from a digitalization boost. Lastly, we have an outstanding sustainability record and contribute more than €95 billion of positive impact toward the SDGs annually. Moving to Slide 7. Revenue grew 4% year-on-year in organic terms, with growth in all business lines, supported by service revenue and B2B growth. Commercial momentum improved for high-value accesses through our right commercial approach and active churn management. This, coupled with a continuous cost focus approach, helped OIBDA to grow 3% year-on-year, proving our resilience in a challenging year. 2022 is the first year with reported year-on-year revenue growth since 2015. Revenue grew 1.8% to almost €40 billion while underlying OIBDA reached almost €13 billion and was broadly stable. Operating performance translated into sound-free cash flow growth that reached €4.6 billion for the year, or €0.8 free cash flow per share, more than comfortably exceeding the 2022 dividend. We maintained as well our prudent debt management during these complex times. In 2022, we have reduced the leverage ratio to 2.54x. We have covered maturities over the next 3 years with more than 80% of total debt fixed and an average debt life of 13.1 years with the average cost of debt being down year-on-year at 3.76% despite rising rates. Slide 8 shows we deliver upon our full year updated guidance of high end of low single-digit organic growth in revenue, mid- to high end of low single-digit organic growth in OIBDA and up to 15% in CapEx to sales ratio. We are also confirming today the final dividend for 2022 of €0.3 per share in cash. The first tranche of €0.15 per share was paid in December and the second tranche, €0.15 per share will be paid next June. Again, this dividend is more than covered with a strong free cash flow per share, which stood at €0.8 in 2022. Moving to Slide 9. We review our progress on ESG priorities. We have a clear action plan on renewables, emissions and energy efficiency to become net zero by 2040. We have reduced energy consumption by 7.2% since 2015 despite traffic on our network growing 7.4x. And we are well on track to achieve our 100% renewable electricity target by 2030 with six markets already across the line. On the social pillar, we continue to expand coverage to underserved communities and ensure affordable connectivity. Within our progress on diversity and inclusion, we have increased the proportion of women directors in the group by more than 40% over the last 5 years and brought the adjusted pay gap down to 0.7% in 2022. Looking ahead, we have committed to deepening our talent pool by doubling the number of employees with disabilities. Finally, we remain committed to best practice in corporate governance, ethics and compliance and across our value chain. We are proud to be the largest issuer of sustainable financing in the sector, reflected the market confidence in our ESG performance. And we are gratified to have received external validation and the highest recognition from some of the most prestigious rankings, such as the carbon disclosure project, World Benchmarking Alliance and ranking digital rates. Across the most prominent ESG analysts, Telefónica is federally rated as one of the top-performing telcos in ESG. I will now hand over to Ángel to give you an overview of the progress across the operating businesses.

Thank you, José María. Moving to Slide 10 for our financial summary during the fourth quarter. Growth, sequentially, accelerated year-on-year in organic terms to plus 3.9% in revenue, plus 3.5% in OIBDA and plus 4.7% in OIBDA minus CapEx. This was well supported by accelerating service revenue and B2B growth in Q4 to 4.1% and 7.9% year-on-year, respectively, including service revenue growth in Spain. On a reported basis, this has been the third consecutive quarter of revenue growth, plus 5.4% year-on-year and the second one in underlying OIBDA, plus 6% year-on-year. FX continued to be a tailwind in the quarter, adding €0.5 billion and €0.2 billion to revenue and OIBDA year-on-year. Fourth quarter free cash flow was the strongest in the year, surpassing the €2 billion mark and growing plus 77.7% year-on-year. This figure reflected the tax refund of €1.3 billion, but also dividends from VMO2 and solid operating cash flow. Debt declined €2 billion versus September, mainly due to the tax refund just mentioned and the sale of 45% stake in Bluevía. Finally, financing on ESG continued with the issuances of last November and last January of up to €1.75 billion. On Slide 11, we detail how we are structurally well positioned to offset inflationary pressures. We have been operating in a high inflationary countries for decades and know how to manage these environments. Despite the high inflation we are currently experiencing, we are growing in reported revenue in underlying OIBDA and reported free cash flow, as mentioned. This is the result of successfully managing the following items. First, our top line through pricing power and inflation pass-throughs along with our strong position in wholesale and B2B, improving customer metrics like NPS and churn are key in this respect. Secondly, our OpEx with lower weight of personnel expenses of our revenue versus peers, significant long-term hedging on energy, positive environmental impact from fiber and 5G and lower energy consumption puts us already in a comfortable position. Overall, we continue to generate for efficiencies through simplification and digitalization. And third, on CapEx as we are more advanced versus in terms of fiber-to-the-home deployment and new partner models, along with legacy switch-off allows us to be more flexible. And now let me start with a review of our businesses on Slide 12. Before reviewing the quarterly performance, let me take a step back and give an overview of our Spanish operation along the last 2 years. In a complex environment, and whilst taking action to pull down the competitive environment, Telefónica Spain managed not only to defend, but reinforce its leading position. Some claimed our ARPU was difficult to be sustained. Through our differential value proposal, increased fiber connections, premium customer care, along with a rational pricing strategy, we have been able to improve NPS and churn and maintain our ARPU while stabilizing our conversion and contract customer base over this period, all widening our competitive advantage versus competition. Revenue returned to growth, not only fueled by handset sales, but also by stabilizing service revenues. Progress in both B2B and B2C allowed retail revenue to show a recovery path and deliver plus 0.9% year-on-year growth in the fourth quarter of 2022 for the first time since 2019. At the same time, OIBDA trend improved on revenue flow and savings from cost efficiency programs, which helped to offset inflationary headwinds. Finally, committed to our network excellence strategy, we continue to enlarge our fiber and 5G coverage to build future growth while maintaining a benchmark CapEx intensity to preserve our strong cash generation. Moving to Slide 13, we can see that throughout 2022, commercial performance in Spain has improved across all access segments, driven by our strategy to provide our customers enhanced value and flexibility under the new conversion portfolio of Mi Movistar. Despite the reduction of promotional activity to almost none, Telefónica Spain's commercial activity continued to improve in the quarter across all KPIs. Fixed broadband and postpaid accesses continued to grow sequentially. NPS increased significantly by 7 percentage points year-on-year to 42. In conversions, full year ARPU grew 1.3% year-on-year and churn achieved its best level since the first quarter of 2018 at 1%. Revenue grew year-on-year for the seventh quarter in a row despite lower wholesale TV revenue due to reduced direct ownership of football content. Service revenue grew year-on-year in the fourth quarter by plus 0.6% for the first time since the outbreak of the pandemic. This turnaround, which we expect to maintain in the coming quarters, was underpinned by better trading, a strong performance in B2B, mobile and broadband wholesale revenue. OIBDA trend improved by 0.7 percentage points sequentially to minus 2.1% year-on-year in the fourth quarter on a lower energy drag, LaLiga cost deflation and ongoing cost efficiencies, while OIBDA minus CapEx margin remained at benchmark levels. Following a 6.8% average increase in tariffs since mid-January, we faced 2023 with optimism, hoping to bring the best from our strong position and tailwinds ahead. Moving now to Germany on Slide 14. It, again, delivered a quarter of robust commercial traction, leading to a consistent financial momentum across the year. The company successfully completed its 3-year investment for growth program within the planned CapEx envelope, achieving more than 80% 5G population coverage at the end of 2022, aiming for around 19% coverage by year-end 2023 and well on track to offer nationwide 5G coverage by no later than year-end 2025. Revenue and OIBDA growth accelerated to more than 6% year-on-year in Q4 '22 with continued own brand momentum driving improved operational leverage, while handset sales had a record year of plus 13.9% year-on-year growth in fiscal year '22. OIBDA benefited from further efficiency gains throughout the year offsetting cost headwinds. Furthermore, Telefónica Deutschland is pursuing a more-for-more pricing strategy from 2023 across brands and portfolios. It's backed by its widely acknowledged network products and services quality and extended ESG leadership. We now move on to Slide 15 to the U.K. and our joint venture Virgin Media O2, which improved growth and made the strong operational progress. The company expanded the U.K.'s largest gigabit network, which now covers a total of 16.1 million premises, passing more than 0.5 million new premises in 2022, while progressing in its fiber upgrade activity and making 5G services available in over 1,600 towns and cities. In the fourth quarter, VMO2 returned to revenue growth with accelerating OIBDA trends to plus 9.9% year-on-year, underpinned by the realization of synergies and cost efficiencies. For the full year 2022, the revenue base was broadly stable and OIBDA grew by 6.3% year-on-year. Moving to Brazil on Slide 16. Vivo ended the year with very good commercial and financial KPI momentum. Commercially, Telefónica Brazil strengthened its leadership in mobile, mainly in contract and increased its market share by 6 percentage points in the last 12 months to 43.5%. In fixed, Vivo accelerated fiber to the home deployment through different network deployment models and already reached 23 million premises passed, which makes us the leader in fiber in Latin America. On financials, revenue grew plus 10.1% year-on-year in the fourth quarter of 2022, well above inflation for the second quarter in a row. OIBDA margin remained comfortably above 40% once again despite the higher weight of low margin revenues and inflationary pressures. OIBDA minus CapEx grew 5.1% compared with 2021 despite a high CapEx spend during 2022. In this year, 2023, CapEx is expected to come down to below BRL 9 billion. Moving to the next slide to review the performance of Telefónica Tech. Telefónica Tech delivered a strong year-on-year revenue growth of plus 57% in 2022 to close to €1.5 billion, 27% annual growth in constant perimeter, outperforming its market once again. A strong product portfolio, value-accretive M&A and increased geographic diversity drives this consistent outperformance. Telefónica Tech has become a next-generation tech provider with a unique profile differentiated by, first, having 6,000 professionals, 80% of them located in Europe, highly skilled in professional and managed services. Second, by offering a differentiated customer journey based on quality and a wide range of solutions in cloud, cybersecurity, IoT and big data easily integrable with our best-in-class partner services and backed by our strong security and IoT platforms, which offer a trustful path to business digitalization. And third, by having an EcoSmart portfolio that helps our customers to fulfill their sustainability targets. Commercial activity remains healthy in both cyber and cloud and IoT and big data with bookings growing by 50% year-on-year and supporting a sustainable revenue flow going forward. Turning to Slide 18. Telefónica Infra continued developing its leading portfolio of infra cost, passing 13 million premises as of December '22. In Spain, Lubia launched operations in December with an initial footprint of 3.9 million fiber-to-the-home premises passed. Uebigau in Germany has signed MOUs to deploy over 720,000 premises. Next fiber in the U.K. transaction closed in mid-December, is already in operation. FiBrazil accelerated its rollout to 3.3 million premises passed, having added 1.3 million in 2022. And due to the accelerated rates of deployment, on-net FIBRA Chile and on-net FIBRA Colombia have both become market leaders in their respective countries with 3.7 million and 2.4 million premises passed, respectively. Value creation wise, as shown by recently closed transactions, show very attractive valuations for our infrastructure assets. Lubia, where Telefónica retains a 55% stake, was valued at 27x OIBDA. In addition, Telxius maintained its strong commercial momentum which, together with good cost management, has fueled a year-on-year OIBDA growth of 17.2% organically and 30.3% on a reported basis to €218 million during 2022, reaching a 52% margin. Earlier this year, Telxius announced the deployment of a new subsea cable, Tikal, in partnership with America Movil, which will link Guatemala and the U.S. I will now hand it over to Laura, who will review -- operations and the group financial results.

Thank you, Angel. Moving to Telefónica Hispam. We continue progressing in the region. Contract accesses grew plus 4% year-on-year after adding 1 million accesses in 2022. In fixed, FTTH premises passed reached 17 million accelerating versus last year, mainly driven by the Chilean and Colombia InfraCo. This growth in high-value subscribers led to mobile and fixed broadband ARPU year-on-year growth despite tough competition in main markets. Revenue continued to grow by plus 2.8% year-on-year while EBITDA declined by minus 1.5%. The OIBDA decline was mainly driven by our new operational model in which we replaced CapEx for OpEx. OIBDA minus CapEx increased plus 2% year-on-year in 2022, showing a clear upward trend in the last 3 years. Finally, Telefónica Hispam continues to promote inclusive connectivity and social progress based on digitization, leaving no one behind an "internet para todos", "Internet for all", is a very good example with 3 million people already connected. Turning to Slide 20. Leverage ratio has been reduced for the third consecutive year despite M&A activity in 2022. Net debt-to-EBITDA ratio stands at 2.54x while net financial debt was €26.7 billion of December. And considering post-closing events, they will decline to 2.51x and €26.4 billion, respectively. As of December, we lowered an interest cost to 3.76% versus 3.86% in December last year. Our debt is about 80% linked to fixed rates, mainly in euro, and has an average life of 13.1 years, which is a strong position to face the uncertainty around internet rates movements going forward. We maintained a solid liquidity position of €21.4 billion that, together with the live maturity profile, allows us to cover the maturities over the next 3 years. It is to note that Telefónica reinforced its position as a leader in ESG financing. Beyond launching the industry's first green bond in 2019, the company stands as the leading telco globally in terms of issuance with more than €6.6 billion of funds raised in the capital markets. In 2022, Telefónica has extended its portfolio with a sustainable link syndicated facility, sustainability-linked committed credit bilateral lines and the first sustainability-linked bond at Telefónica issued in Brazil. All in all, we have completed ESG financing for an amount close to €17 billion. I will now hand back to José María, who will wrap up. Jose María Alvarez-Pallete: Thank you, Laura. Our 2023 guidance reflects our expectations about the undergoing transformation of our company, and we feel well positioned to continue on our profitable growth path. We continue to simplify our company and focus our investment on differentiated connectivity projects. We will, of course, maintain a disciplined capital allocation adapted to market context. As such, we are guiding for a low single-digit growth in both revenues and OIBDA year-on-year organic, and around 14% CapEx to sales organic and ex-spectrum. Whilst our growth ambition is a continuation of 2022 guidance, in a complex macro environment, our declining CapEx to sales ratio proves investment peak is behind for Telefónica. On dividends, we are announcing €0.3 per share for 2023 to be payable in cash in December 2023 and June 2024. In addition, we will propose to the next Annual Shareholders Meeting the amortization of 0.4% shares in treasury stock. All this shows our commitment to provide our shareholders with attractive and sustainable returns. Slide 22 shows our framework and ambitions for the year. We have aligned our strategy along five strategic pillars. First, on core markets, we will continue to drive profitable growth as a leading player in attractive at-scale markets. Second, Telefónica Tech will sustain its growth and crystallize value by focusing to be a digital B2B specialist. Third, Telefónica Infra will unlock value from Telefónica's digital infrastructure, accelerating deployment and enabling further monetization. Fourth, Telefónica Hispam, as a sustainable regional player, provides optionality for the group. And fifth, as a group, we add value by having a clear focus to drive shareholders' value and simplicity. And now to conclude, I'd like to leave you with a few takeaways from today's results. First, in 2022, we delivered on our updated guidance, which demonstrated our resilience and ability to manage macro challenges while we continue to execute our strategy. We are growing organically and in euro terms with a sound-free cash flow generation, and we see this growth as sustainable. We continue to transform our company and are at the forefront of developing new digital capabilities to build our Network-as-a-Service business. Second, Q4 posted sequentially improving growth in our main financials, while we generated record free cash flow, which allow us to reduce net debt further. And finally, we are announcing a positive outlook for 2023 and a dividend of €0.3 per share in cash, which signals the confidence we have in our business and our strategy. Thank you very much for listening. We are now ready to take your questions.

[Operator Instructions]. We will now take the first question. It comes from the line of Yemi Falana from Goldman Sachs.

A couple from me. Firstly, on Spain. Clearly, you're continuing to deliver improved dynamics within that market. Could you perhaps comment on the run rate of competitive intensity that you're seeing in 1Q relative to 4Q, and potentially talk about kind of the churn dynamics in light of the price rise? Secondly, on capital allocation, forgive me if it's too early, but given we're past peak CapEx at Telefónica now and the U.K. business is guiding to a strong dividend stream, stronger than most had expected, I would argue, how far are we from dividend growth at the group level? Jose María Alvarez-Pallete: Thank you for your questions. I'll take the first one on Spain. What we see in terms of competitive intensity is that although it's, of course, complex and competitive environment, market rationality is now a confirmed reality. Noticeable step forward towards this rationality was taken in Q4 when cooling of the market was quite visible, and there are significant proof points on this. Conversion promotions were gradually reduced in all the main brands during Q4 to banish almost entirely since early December. Promotions in stand-alone products such as fixed broadband or postpaid were also withdrawn. Main brands announced price increases for the first quarter of 2023 to offset inflationary pressures. This lever has been applied by most players and by all those brands that have grown on value and quality, not so possible for brands that were capturing subscribers under a price-sensitive approach. Both Black Friday and Christmas campaigns were extremely soft. The Christmas campaign was almost nonexistent for the first time. And second, brands, such as O2, Lowe's, [indiscernible] are increasing prices on the value entry-level products. We are seeing, in this beginning of the quarter in 2023, so far, following last -- the fourth quarter, we are seeing strong commercial performance. We continue to see market rationality. And what we see, at least for our figures, is the January churn is staying below the four quarter levels in spite of the price increase in mid-January. So we expect in Q1 to continue growing year-on-year in total revenues and also in service revenues. And we are in the trend of improving sequentially the year-on-year trend of OIBDA versus the last quarter of 2022.

Taking your question on the capital allocation and dividends. As you know, we don't guide for long term, and therefore, we are just issuing the overview for the dividend for 2022. But allow me to elaborate on why we feel confident, and why we feel that this level of [indiscernible] is very well covered. In 2022, we posted a very strong free cash flow generation. For 2023, we expect free cash flow to continue exceeding shareholders' remuneration, labor commitments and hybrid equipments. And at the same time, as you know, we preserve and we maintain a very high commitment to investment-grade rating. In the -- as we speak, we are growing revenues in all business units. We are guiding, in the U.K., for revenue growth and OIBDA growth. We are guiding in -- at the group level the same. Germany has guided yesterday. So all in all, in terms of the guidance of the group, revenue growth and OIBDA growth with contained CapEx, allow us to think that OIBDA minus CapEx should fuel a strong free cash flow generation. So overall, considering that all lines below operational free cash flow, we continue proactively managing working capital. Our JV is going to deliver a very strong dividend. Lease payments should not change much year-on-year. Interest cost remains under control. So overall, we think that we should prove, along the year, that the dividend is very well covered and that we are in a well-covered position. So we'll retake the questions at year-end.

We will now take the next question. It comes from the line of David Wright from Bank of America.

Hello, guys, can you hear me okay? Jose María Alvarez-Pallete: Yes, we can hear you, David.

Sorry, apologies with my mute function. Two very quick questions. The first is perhaps just for Laura. Just if you could give us a little guidance on where you expect cash tax and working capital to trend through 2023, please? And then secondly, my question is a little bit more strategic, perhaps for Lutz and maybe also for José María and Angel. But on VMO2, it seems quite an aggressive recapitalization that seems more predicated on the synergies. The actual revenue growth of VMO2, I think, is -- continues to labor, and there doesn't seem to be any monetization of the price rises in the U.K. And it also seems like you are very, very behind the curve on your 2028 rollout ambitions. So I think even with the Q4 run rate, you would only manage about 750,000 lighting lines, and you obviously need a run rate of €3 million a year to make that target. So is there not a likelihood of an increased CapEx? And therefore, I come back to my original question, why would you relever so aggressively when the fundamentals remain a little bit more unproven and there is a CapEx hike ahead? And of course, that higher leverage doors come into the group leverage from the agency. So it just seems a little back to front to me. So if you could explain that thinking.

Thank you, David. Taking the first question on tax -- cash tax and working capital. I used to say that cash tax was more predictable. But these days, with a super positive tax refunds and payments in advance we have to do in Spain is less, is less so. But looking at '23, '24, we see that our tax cash rate could be along 23% more or less. Obviously, then we may have some one-offs but that should be the structural cash tax payment. In working capital, we continue doing our usual activities. I mean working capital sometimes is affected by the spectrum because we do not pay all of it and it continues flowing through working capital. In the past, we also have a positive impact from the UDCL review in Brazil. But excluding that, we -- it's just CapEx seasonality and deferred payments. We are not doing any supply financing. We have some handset financing, but very, very low numbers. So -- and I would tell, we still expect working capital to contribute positively to the free cash flow, but not in huge amounts, and we are not seeing worsening conditions in the actions along working capital. So I would say quite business as usual and similar trends what you've seen, excluding spectrum and the Brazilian tax recovery in 2022 and 2021. Lutz Schüler: Should I answer the Virgin Media O2 question? Okay, David. So first of all, on the revenue side, although it's flat for the year, the underlying service revenue is actually growing, and therefore, the underlying gross margin is growing. So it's not really flat. And as you can see from our guidance, we are more positive for '23. So we are -- from a flat year in overall revenue, we are guiding revenue growth into '23. From your CapEx investment assumption, I'm not so sure if I can follow that because we have actually disclosed lighting numbers for fiber rollout but we are not behind because we have not disclosed so far the cable fiber upgrade numbers. So we have upgraded to fiber more than 1 million homes this year, and we will upgrade to fiber, including network expansion next year, 1.5 million homes. So therefore, we are obviously not guiding a longer-term CapEx investment over the year '23. But I'm not so sure if you take the right assumptions in the model. So therefore, we see a sustainable EBITDA growth coming also from revenue in the midterm. And we also don't -- we are not behind in fiber rollout at all. We're not talking about it because our customers today are buying our 1 gigabit speed solution based on the coax network. Hopefully, that helps.

David, if I may complement with the capital structure and the dividends. As you rightly mentioned, we are anticipating a strong dividend of GBP 1.8 billion to GBP 2 billion, including both free cash flow and recapitalization. The leverage, it is true. It is what we have decided at the shareholder level. It's 4% to 5% net leverage range but this is a cash-generating business with organic and synergy-driven opportunities, and it will continue growing. Having said that, let me remind you that the debt tenor is 6.5 years, excluding vendor finance, and the average cost of debt is 4.7%. Its financing strategy means it's not forced to go into debt at opportunity times, and we will continue to optimize this based on market conditions. Right now, we are seeing the markets are going to open. So I think we are being proactive and prudently managing, tapping the markets at the JV level as well.

We will now take the next question. It comes from the line of Carl Murdock-Smith from Berenberg. Carl Murdock-Smith: Almost following up on David's question and slightly on Slide 18, when you're looking at infra and the opportunities in the rollout progress there. I was wondering if you could talk slightly, both at the group level, but also again potentially look on the U.K. level, how you think about organic versus acquisitive opportunities regarding infrastructure, given potentially struggling smaller old net given higher inflation and interest costs?

Let me first -- this is Angel, let me take first the view from the group, and then I'll also hand over to Lutz to complement. Fiber costs are very efficient alternative infrastructure investment vehicles because they allow us to accelerate fiber deployment, putting together infrastructure money, infrastructure funds with our strategic view. And we have been pioneers in doing, through Telefónica Infra, this type of vehicles. We already have -- we are covering through the fiber vehicles that you have on Slide #18, 30 million homes passed by the end of 2022. We are aiming to cover 25 million by 2026. It's critical that all these infra fiber costs have our local operating businesses as anchor client. And this is differential versus all net fiber cost because this gives the best prospect for critical ratio of homes connected to homes passed, which is critical for the return on investment. In some markets, the gap, not in the case of Spain, but in some markets, lower deployment of fiber has resulted in the creation of several all net. And again, some of this, given the increasing cost of construction, because of inflation or the increased cost of funding and some pressure on wholesale prices, sometimes from regulation, sometimes from the behavior of certain players, are stressing the business plan of these all nets that do not enjoy as our fiber costs do, the benefit of having an anchor client in our OBs. So we think that this may lead to potential consolidation in the all-net fiber cost space in several geographies. We do not comment on any specific name, but we see such opportunities in most of the markets, and we have already consolidated one asset in Brazil. Our FiberCo in Chile is consolidating another asset. This always done in a return on capital employed, very effective way. I don't know, Lutz, if you want to complement? Lutz Schüler: Yes. Thanks, Angel. Obviously, Virgin Media O2 is not a shareholder of next fiber. So we are building the network, the shareholder of Virgin Media. It's Virgin Media. It's Telefónica, Liberty Global and InfraVia. But I can reassure that we keep accelerating the rollout from this year to -- from '22 into '23. So obviously, we have been doing that from '21 into '22, and we will continue doing that. And your question concerning possible consolidation in the market. I mean, Altnets have now built 7.6 million fiber homes in the U.K. You see that the penetration of these Altnets is around 15% to 18%, so very low. And therefore, with increased capital cost, it is indeed a question, how many will be long-term sustainable. And of course, we will -- the shareholders I just mentioned will have an opportunistic view on it, and we will be open for consolidation, as you can expect.

We will now take the next question. It comes from the line of Georgios Ierodiaconou from Citi.

Yes. I had one follow up on Spain from the first question. I think Angel, you mentioned you gave us a lot of color on the KPIs. I was wondering if you could also clarify your comment about EBITDA improvement, whether that space for the whole year or just for the start of the year? Because I understand the comps on the labor cost, in particular, are a bit favorable initially, maybe not so favorable later in the year. So if you could perhaps give us a bit of an idea whether we should look at the much better 2023 or just the start of it. And also on that, if you could comment also on whether the promotional environment, obviously, is better, whether you are seeing any downtrading in Mi Movistar? Or whether on that respect, you are also seeing your behavior exceeding your expectations? And then my second question is more on an industry-wide, and I appreciate as an area that there's probably going to be some statements coming out from the commissioners in the coming days. I'm just curious, you've mentioned earlier the spectrum terms improving across Europe. What else are you expecting to see over the course of the next couple of years? And when do you think we get some clarity on the support that the industry may be getting from regulation and maybe other actions that are taken?

Georgios, I'll take the first questions on Spain. You were asking about OIBDA, let me give you a wider view on the outlook, which is not guidance, as I always have to say for Spain in 2023. We expect for the year, the revenues to continue showing year-on-year increase. We have very good momentum. We have now several quarters in a row of growth. We are already growing in service revenue. And we believe that the service revenue will keep on growing in 2023, in the year, leveraging on several levers. First, the trading recovery, the tariff upgrade and the evolution of NPS and churn leads us to expect a solid conversion ARPU. We are getting revenues from new digital services ecosystem, clearly, B2B, in communications and IT is growing. The impact from European Union recovery funds should be more notable. And despite some headwinds of lower wholesale TV revenue because we have this content. Now we keep expecting, and we see service revenue continue to grow year-on-year. Handset sales could decline. But all in all, the full revenues will continue to expect, year-on-year, will continue to show a year-on-year increase. This behavior of revenues, combined with strict cost management, will contribute to continue the year-on-year recovery trend that we have seen in OIBDA in 2023. As you can see in the second Spanish slide, every quarter, the year-on-year evolution has improved, and we expect that to continue to be the case in 2023, reaching at some point in the second half, we don't know in which quarter, stabilization of year-on-year OIBDA when we are in the second half. We expect margins to stand in the mid-high 30s for the Spanish operation. You saw the margin in the fourth quarter, very strong. And then for CapEx, we expect it to be in line in terms of CapEx intensity as in 2022. You were also asking about downtrading. We're not seeing that be the case. And the proof point is the ARPU performance. We have seen convergent ARPU in the fourth quarter at €90.3, showing year-on-year, very good progress. And this is the result of several moving parts. We had some more for more in February. We have, as I was saying, in at the beginning, almost none promotions in the fourth quarter. So the dilutive promotions effect has been helping. The SME portfolio has been also supporting this. And the stickiness that we are seeing in the price increases that were already put in place by mid-January gives us a good expectation for the ARPU going forward into 2023. Jose María Alvarez-Pallete: Taking your question on regulation globally or more broadly. Well, the starting point, I mean the European sector, as a telecom sector, has a very low growth return on capital employed -- barely has a return on capital employed, barely beating cost of capital. And that's because of the sector is too fragmented. The average European mobile operator covers 5 million people, where the average U.S. operator -- mobile operator covers 107 million people. I think the situation is unsustainable and data volumes are growing 30% year-on-year. So the networks need to be there. And the overall problem is that the current framework for the regulation was designed at the time of copper incumbent monopolies. And now we are fiber companies, and there is a huge fragmentation in number of competitors. It was thought at the time of voice and is now the time of data. As a result, the overall competitive -- competition policy and the rules have become obsolete. And I think they are going to evolve. I think that the move is for an evolution because in other regions of the world, they have evolved. We think that Europe is starting to evolve in that regard, and we see the commission more open to this kind of debate. More specifically, keep in mind that 56% -- roughly 60% of data volumes today in Europe, in all networks, are being generated by six players, which are not contributing to the huge investment need for deploying that amount of capacity. European companies, we invest in the neighborhood of €30 billion to €35 billion adjusting capacity of the network, and we need to take -- we are taking the hit on that. So there is a debate ongoing that I think is going to be heated in the next few days around the need for a fair share compensation of that effort among the different parties. And I think that the debate is fair. The debate is needed, and the debate is very dynamic, I would say. So I think that -- and in terms of consolidation for the avoidance of doubt, in the case of Spain, we are in favor of the Orange Masmovil transaction, and we think it should be approved without remedies because I think it proves the situation of our sectors. So we are not -- we are stating the same thing when we are not part of the consolidation process and in fact, it's going to be affecting us here in our home market, but time has come for a more rational approach. Adrián Zunzunegui: We have time for one last question, please.

We will now take the last question. It comes from the line of Fernando Barreira from Grupo Santander.

Thanks for taking my two questions. The first question is regarding on the lifting in the strategic guidance like you have updated and particularly on Telefónica Tech and are we -- you understanding the capitalization opportunities in that sense, you have mentioned in the past that the M&A trend in order to enlarge the business what already made. So in that sense, do you believe that you're already prepared to incorporate some financial partners there? Or what is, let's say, the meaning of the capitalization process? And the second question is coming back to Spain, I agree on the fact that the operational projects regarding the decommissioning of the copper network might be the one. I believe also that you are starting to have some visibility on the endgame in terms of OpEx and CapEx savings on the front, just willing to understand in the reasoning in terms of quantifying the impact of decommissioning of the copper network, particularly in terms of finance?

Thank you, Fernando. On Telefónica Tech, I understand there were two parts to your question. One, our M&A strategy, so far, with the company; and second, crystallization of value. Let me start with the M&A strategy of Telefónica Tech. We have been expanding our scale and capabilities with very selective acquisitions, which are now mostly completed. We wanted to expand our service offering. And for this, we acquired, for instance, in Spain, a company called Altostratus, which is specialized in multi-cloud services and Google Cloud premier partner for Southern Europe and or Geprom also in Spain, small acquisition, which reinforced our capabilities in Industry 5.0. But we also wanted to expand and strengthen our geographic presence, most notably in European markets where we were more consumer-facing. So in the U.K. which accounts for a small part of Telefónica Tech's total addressable market, we have made two significant acquisitions. The former CANCOM UK&I has now renamed Telefónica Tech UK&I. And then we acquired -- that was in 2021, and then we acquired in March 2022, a company called Incremental. Thanks to these acquisitions, we have now nationwide coverage with cloud cybersecurity, data capabilities, more than 1,000 highly skilled professionals. And we are with extensive accreditations in Microsoft solutions. And for the rest of Europe, and a special focus in Germany, we made the acquisition of BE-terna. And thanks to this, we enriched our situation in Germany and in the [indiscernible] market. With this Telefónica Tech continues to show a very strong growth momentum. I was through the presentation talking about the revenue growth with and without the change of perimeter. And we continue progressing in the plan that we had which, at some point, may entail crystallization of the value through different methods. We are trying to give you more and more visibility of this unit in our presentations and reports so that hopefully, at some point, you can reflect it in our sum of the parts. Second question, I think, were regarding the benefits from copper network shutdown, which is planned for 2024. We should say that dismantling the copper network brings both OpEx and CapEx savings. Because running a fiber network is much cheaper than running a copper network, less maintenance, much more efficient in terms of energy consumption. Fiber is 85% more efficient than copper. Some of these benefits are already being captured either in revenues through sales of copper, sale of real estate. Also, in OpEx and CapEx, we are already experiencing lower cost of maintenance, energy consumption, less filler rates, less call center attentions. So in 2023, we will continue gradually be capturing those. And then the process will continue when, in 2024, as was said in the presentation, we would be the first telco globally to switch off the copper network. Due to regulatory obligations, we will need to maintain the wholesale services for extra 6 months after switch off, but that will be the case. So network transformation efficiencies will continue increasing year-on-year until this transformation is completed and structural benefits will remain, clearly, reduced OpEx, be it lower network costs and lower recurrent investments.

At this time, no further questions will be taken. Jose María Alvarez-Pallete: Well, thank you very much for your participation, and we certainly hope that we have provided some useful insights for you. Should you still have further questions, we kindly ask you to contact our Investor Relations department. Good morning and thank you.

Telefónica's January-December 2022 results conference call is over. You may now disconnect your line. Thank you.