Good morning. Thank you for standing by, and welcome to Telefonica's January-December 2023 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, today's conference 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.

Good morning, and welcome to Telefonica's conference call to discuss January December 2023 results. I'm 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 Telefonica 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 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 Telefonica'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 Lopez: Good morning, and thank you all for joining us today. Reflecting on 2023, I'm proud of the progress we have made as a company and the dedication and resilience demonstrated by our teams worldwide. 2023 was a pivotal year for Telefonica, where we enhanced our networks, our operations and an overall customer experience. While there is clearly a lot more to do, I am confident that we have a solid foundation to build upon. As we continue to execute against our strategy, we delivered on our promises in 2023, and we are comfortably on track to meet the GPS plan ambitions we shared with you last November. With the GPS plan as our guide, we stand ready and eager to embrace the opportunities that 2024 holds. In 2023, we not only achieved our updated guidance, but also and importantly, over delivered in terms of free cash flow generation. We are growing revenues with B2B remaining a differential engine, growing 6.3% year-on-year in organic terms, significantly above the overall 3.7% top line organic growth. OIBDA also grew more than 3%, and we reduced CapEx by another 3%, allowing us to expand our OIBDA-CapEx margin to 19%. In turn, this higher OIBDA and lower capital intensity contributed to the very strong free cash flow of €4.2 billion, €200 million above what we guided to in July. We are delivering solid results across all our markets, driving exceptional performance in Brazil and Germany and improving trends in Spain. These successes are underpinned by our investment in the latest technologies, which have enabled significant growth in our customer base, who now enjoy the benefits of our advanced fiber and 5G networks. As we progress, our strategy of reducing exposure to legacy networks is paying dividends, allowing us to streamline operations and drive our efforts in simplifying the business. We have now reached more than 94% ownership of Telefonica Deutschland following our tender offer, reinforcing our confidence in the German market. Our journey towards simplicity and efficiency is ongoing, and you can expect us to continue to optimize our business structure. As we look ahead, our path is clear. We are seeing momentum in our business and we are ready for 2024 as the first year of our growth, profitability and sustainability plan. We remain committed to driving growth, enhancing our customer experience and leading the digital transformation that will shape the future of telecom. We will share more details on guidance. But in 2024, we will grow revenues, EBITDA and EBITDAaL-CapEx, and our capital intensity will continue to decline. Importantly, despite a stronger 2023, we expect that free cash flow will grow by more than 10% this year. This strong free cash flow generation supports our key capital allocation priorities, including our dividend, our expectation to deleverage over time and our path to creating significant shareholder value. I'm confident in the direction of our business and the opportunities that lie ahead. As you heard on our Capital Markets Day, Telefonica is on a mission to be at the forefront of the telecommunication industry. Our journey has been and is guided by three pivotal pillars in addition to sustainability. Firstly, our investment in future proof networks has been transformational. With the deployment of FTTH to an additional 10 million premises globally, increasing our footprint by 15% over 2022 and achieving 62% of 5G coverage in our core markets, we have expanded our infrastructure to revolutionize the connectivity landscape. Our networks are not merely conduits of communications. They are the backbone of innovation for the service and products of tomorrow. This provide us with new opportunities to monetize our network and enhances our ability to increase our return on invested capital. Secondly, our focus on an enhanced customer experience and being customer centric organization has generated considerable rewards. We are not just adding customers, we are fostering relationships, growing our customer base to 388 million. And our satisfaction metrics are growing. By example, our NPAs expanded by 31 this year, and we continue to be focused on improving the overall experience. Ultimately, trust, reliability and superior service are the backbone of Telefonica. Lastly, our pursuit of leaner and more efficient operations has propelled us into the new level of operational excellence. We've refined our organizational structure, stripping away complexity to reveal a more agile organization which has improved our operating levels back to 19%. At the same time, we have optimized our structure with many employees joining our redundancy program, a strategic move that aligns our workforce with our future needs. Moreover, we have made significant progress in phasing legacy networks, including the shutdown of almost 2,000 copper central switches central offices in Spain, with full retail copper network shutdown to be finished by April of this year. This shift reduced cost and reallocates investment to more advanced efficient technologies, ensuring our infrastructure needs, the evolving demands of connectivity and sets the stage for future service innovation. This is not just about cost savings. It's about crafting a business that is as resilient as it is dynamic. With a robust network infrastructure in place, a customer centric approach with a growing base and a relentless focus on efficiency, we are well positioned to be a global leader in fiber and 5G and ultimately to unlock value for shareholders. Our strategic initiatives has allowed us to deliver on our updated 2023 guidance, which we said in July in organic terms. Revenue grew by 3.7% and OIBDA grew by 3.1% year-on-year. Our capital intensity continues to decline. CapEx to sales declined year-on-year to 14%. Bottom line free cash flow ended up stronger than anticipated, reaching more than €4.2 billion above our guidance of €4 billon, in other words, we are delivering. The financial strength secures our dividend for 2023 of €0.3 per share comfortably funded by our free cash flow of €0.75 per share. And even with the updated free cash flow calculation, we maintain a healthy free cash flow per share of €0.41 more than covering our dividend payment. And whilst we deliver on organic terms, year '23 also shows our GPS plan ambitions and are already kicking in, in reported terms too. We are back to growth in reported terms in both revenue and OIBDA by between 1% and 2% year-on-year despite FX headwinds such as the Argentinian peso devaluation. This is even more pronounced in our EBITDAaL-CapEx, which grew more than 5%, demonstrating the tangible benefits of efficiency measures and declining CapEx. The driving forces behind the growth were Brazil, Germany and Spain, with the former being the biggest contributor to operating improvement. Looking forward and starting in 2024, we expect Spain to increase this contribution to EBITDA growth, adding to continued growth for Brazil and Germany. I will now hand over to Angel to give you an overview of the progress across our core business during the last quarter of 2023.

Thank you, Jose Maria. Starting with Slide 6, you can see momentum has strengthened in the fourth quarter of the year. Most notably, we saw sequential acceleration in growth across our six key financial metrics. Organic revenue growth stood at 4.1% year-on-year in the quarter, 1.7 percentage points more than in Q3, driven by better service revenue performance and again strong B2B, a truly differentiating factor of Telefonica. OIBDA ramped up 1.5 percentage points to +4.5% year-on-year with all geographies growing, Spain reaching stabilization and Brazil and Germany seeing robust growth. Worth noting the sharp improvement in operating leverage in Q4 '23, with OIBDA-CapEx up by 19% year-on-year in organic terms, adding more than two percentage points to our operating cash flow margin. This all fits into our strong free cash flow generation in the quarter of more than €1.5 billion more than €400 million higher than in the previous quarter. Moving to Slide 7, Telefonica Espana confirmed its commercial and financial recovery path in 2023. The improvement in commercial trading was consolidated. And for the first time in four years, we have posted two consecutive quarters with net adds in all accesses. We did this in face of industry competition. This is thanks to our superior platforms and smart commercial strategy, adapted to changing market dynamics. Moreover, whilst continuing to show benchmark low churn, the lowest in a decade and industry leading ARPU. All of these continued to fuel retail revenue growth to +2.7% year-on-year in the fourth quarter. As we had committed, OIBDA stabilized in Q4, even showing slight year-on-year growth, supported by solid retail revenue and further efficiencies in network transformation, digitalization and energy consumption. In Q4, we recognized a €1.4 billion provision associated with the announced restructuring plan, which will generate around €285 million of direct savings in personnel costs from 2025 with positive impact on cash generation from day 1. 2023 CapEx increased slightly as we remain focused on the rollout of fiber and 5G to reach the target of switching off retail copper network by April this year. Despite this, OIBDA-CapEx margin remained at benchmark levels and above that of the same quarter previous year. Telefonica Espana is hence stronger, better positioned and ready to capture growth opportunities ahead. Moving to Brazil on Slide 8, where we review how Vivo keeps up with strong commercial, operating and financial momentum. Vivo ended 2023 with a clear leadership position. Its differential value proposition, superior network quality and the growing demand for bundles led to the highest mobile ARPU in four years. In addition, Vivo's fiber is now present in 443 cities, with 26.2 million premises passed, resulting in a 13% year-on-year increase in fiber connections. Revenue grew by 6.9% and OIBDA by 8.9% year-on-year in the quarter, both well above inflation. Thanks to our strong commercial activity, price adjustments and ongoing operating efficiencies. And this operating leverage further improves down the line, with OIBDA-CapEx margin reaching an all-time high in 2023 of 27%, as CapEx intensity declined. Moving to Germany on Slide 9, which overachieved the fiscal year '23 outlook, driven by robust commercial performance on value over volume focus and its successful return to low churn levels. O2 Postpaid ARPU grew +1.9% year-on-year in Q4, reflecting customer demand for high value tariffs. Telefonica Deutschland made steady progress with the densification and further rollout of its 5G network, with pop coverage already at around 95% at year end, up from more than 80% last year and well on track for nationwide 5G coverage by year-end 2025. Furthermore, Telefonica Deutschland's O2 network has been awarded a very good rating for a fourth year in a row by Connect Magazine, reflecting the continuous investments into network quality. At the same time, CapEx intensity declined to 13% in 2023. Stronger and more advanced networks allowed for strong operating performance. In Q4 '23, revenue accelerated to +4.6% year-on-year growth, while the OIBDA grew by 3.7% year-on-year, driven by on brand momentum, another record quarter of handset sales and successful cost management. We now move to Slide 10, to the U.K. and our joint venture Virgin Media O2, which delivered resilient trading performance, expanding its fixed mobile and convergent base throughout the year, despite a challenging macroeconomic backdrop. The fixed network rollout progressed at an unprecedented pace, reaching 17 million premises passed, with a record 833,000 increase in 2023. In mobile, the target of 50% U.K. outdoor 5G coverage has been reached. In Q4 '23, revenue grew by 3.7% year-on-year, while OIBDA growth accelerated to 10.6% underpinned by the realization of synergies, price rises and cost efficiencies. We expect to reach full run rate synergies of £540 million by mid-2026. Slide 11 reviews Telefonica Tech, the cornerstone of our B2B transformation. Telefonica Tech has completed its first three year cycle with a consistent over delivery, its revenue growth double that of the market. Revenue grew by 27% year-on-year in 2023, or 22% in constant perimeter to reach around €1.9 billion on strong foundations, a highly skilled workforce and a well established reputation for delivering with a sizable scale advanced IT services for B2B digital transformation. Momentum is robust, as qualified commercial Funnel & Bookings are growing double-digit versus 2022. Its new organizational model continues to progress and Tech has expanded cybersecurity capabilities in the U.K. over the Q4. As such, Telefonica Tech faces a new growth cycle well positioned to deliver additional value. This will be underpinned by its strong sales pipeline, enhanced capabilities and the realization of operational synergies. Telefonica Tech has proven to be a strong player in the IT market and a key engine for the superior growth of Telefonica's B2B revenue. Moving now to Slide 12. Telefonica Infra strengthening Telefonica's infrastructure to support growth and efficiency. We are accelerating fiber deployment with around 60% year-on-year growth to 21 million premises passed, with a target in 2026 year-end of 30 million approximately 30% of Telefonica's group future fiber to the premise deployment. The portfolio of joint ventures across our footprint are advancing in their deployments and delivering value. As such, Telefonica Infra is allowing us to maintain Telefonica Group differentiation. Telxius, with more than 100,000 kilometers of international fiber to grow to more than 110,000 in 2026, maintained a high profitability, boosting an OIBDA margin above 50% in 2023 and is joining Fermina subsea cable providing three redundant routes to connect U.S., Brazil and Argentina. I will now hand over to Laura, who will guide you through Hispam performance and the main financial topics.

Thank you, Angel. Moving to Hispam on Slide 13. We continue to move towards an asset light model in the region, resulting in a decline in the average invested capital of 37% since December 2019. Following the regulatory approval of the mobile network JV between Movistar and Millicom in Colombia, the two companies obtained 80 megahertz in the 3,500 megahertz band last December. On top of that, we expect to obtain the regulatory approval of Pangea deal in Peru later in the year. We continue growing in high value customers, whilst continuing in our efforts to cool down competitive intensities in more -- in most markets. OIBDA-CapEx fell 5% year-on-year in 2023, a significant sequential improvement on improving OIBDA and full-year CapEx over revenue ratio, reducing 1 percentage point year-on-year to 9.4%. On Slide 14, we wanted to briefly address our bottom line performance. Our ongoing transformation process implies non-cash one-off charges. As you know well, we have completed a workforce reduction program in Spain and carry on less sizable restructuring programs in several other countries. This coupled with goodwill impairment change in the U.K., led to reported losses in 2023. Nonetheless, and once adjusting for all these non-cash items, underlying net income grows by more than 17% year-on-year to almost €2.4 billion. And once we continue canceling own shares, underlying EPS grows even further, but as much as 19% to €0.30. Moving to our balance sheet. We feel comfortable with the strength of it. Telefonica has demonstrated robust financial help this year, as evidenced by the solid free cash flow, which was comfortably covered shareholder remuneration and employee commitments. The increase in net financial debt from €26.7 billion in December '22 to €27.3 billion in December 2023 was mainly due to our strategic decision to increase our stake in Telefonica Deutschland. Excluding such impact, net debt to OIBDA ratio would have decreased from 2.54x in December 2022 to 2.52x in December '23. Despite the temporary uptick, we remain on track to align outlying leverage target for 2026. We maintain a strong liquidity position of €19.5 billion, which together with the line maturity profile, allow us to cover debt maturities over the next three years. Simultaneously, we have reduced our debt related interest costs from 3.96% to 3.80%. Thanks to the active refinancing exercise undertaken in previous years and the robust position at fixed interest rate in strong currencies, allowing immunization to raising rates environment. Telefonica maintains over 80% of its debt linked to fixed rates, primarily in Europe with an average life or 11.6 years, which puts us in a comfortable position to navigate in any market environment. Overall, we have a very strong balance sheet that allows us to support our key capital allocation priorities. And our capital allocation priorities are underpinned by the strong balance sheet as well as our focus on reducing capital intensity, as we have previously discussed. Early on, we saw the potential of fiber and invested in int when it wasn't a popular choice. Today, we are beginning to see the substantial benefits of these early investments. To reiterate, peak CapEx is well behind us. Capital intensity has consistently decreased in 2017 from 17% then down to 13.3% in 2023. Looking ahead, we are looking for a further drop to up to 13% in 2024 and for it to continue to fall below 12% by 2026. This reduction in capital intensity is one of the main drivers behind free cash flow on growth of more than 10% CAGR between 23% and 26%. But it's not the only lever behind free cash flow expansion. EBITDA growth will also play a major role. Thanks to the flow through of top line growth as well as realizing efficiencies, the biggest component of which we now have certainty on. Around €285 million annual EBITDA savings from the Spanish workforce reduction program are now secured. Hence, a very relevant part of the needy delta to move free cash flow from a slightly more than €2 billion in '23 to around €3 billion in 2026 makes us feel even more comfortable than last November that will meet our commitments. Our capital allocation priorities are crystal clear. Even as we bring down CapEx, we are continuously investing in our networks, enhancing our fiber and 5G capabilities to stay ahead of the curve. We are committed to putting our Board in a great position to pay the dividend with €0.30 per share asset floor. And I want to stress that our dividend are well supported by growing free cash flow. At the same time, we remain on track to deleverage to 2.2x to 2.5x net debt to EBITDA range by 2026. And lastly, any excess cash in the future will be carefully evaluated for opportunities such as share buybacks. To summarize, we have a robust balance sheet. We are committed to our investment grade credit rating, and our capital allocation priorities are clear. I will now hand back to Jose Maria, who will wrap up. Jose Maria Alvarez-Pallete Lopez: Thank you, Laura. Turning to Slide 17. We maintain our commitment to sustainability as a key part of our business. On the environmental side, I am proud to report that we have been included on the CDP Climate A-List for the 10th consecutive year. We have reduced our total emissions by 51% in the last eight years. Furthermore, in 2023, we helped our customers to avoid 86.1 million tonnes of CO2 in the last year through our connectivity and EcoSmart services. In terms of social impact, our latest SDG report shows our total annual contribution to society of more than €100 billion. Internally, we strive for gender equality against solid targets achieving 33% women executives and equal pay for equal work. Regarding governance, our Board composition shows our commitment to best practices, with 40% women and 67% independents. Our rigorous measures in business ethics continue to uphold a zero tolerance of corruption. Finally, we remain leaders in our sector in sustainable financing with an additional green bond already issued in 2024. Following our strong 2023, we have even more conviction in our journey and are looking to continue to make strong progress in 2024. The massive transformation we have undergone, improving our networks, increasing customer engagement, making our operations more efficient and ensuring business sustainability, place us in a considerably improved position. Thanks to the increased relevance and loyalty from our customer base, the differential capabilities of our networks. We are prepared to enlarge our addressable market. We are focused on reaching 70% 5G coverage in key markets by 2026 with some markets approaching 90% or beyond. Importantly, we are committed to increasing our return on capital, which is a key metric for our business. At the same time, we are looking to grow convergent customers to more than 60% and use more AI to support customer engagement as appropriate. We are also leveraging the transformation to double down on efficiency and boost customer experience. Fully benefiting from massive legacy switch off, streamlining our business model. We will be realizing the advantages of our proactive investment in platforms and artificial intelligence, which will manifest as highly automated operations and content managed, autonomous network management and cutting edge customer engagement strategies. We will have rolled out a fully programmable network infrastructure that will reduce operating costs and introduce a new wave of personalized and real time services to our customers. This is opening up a new avenue for monetization and strengthening our value proposition, while reinforcing our ability to increase our return on invested capital. We have a clear strategy to enhance the growth of Telefonica, making us faster and more efficient. As we think about this year, we remain confident that the momentum that we have built in 2023 will continue in 2024. Importantly, our guidance for this year shows our high degree of confidence, not only in the medium term, but also in year one of the GPS plan. Despite 2023 successes setting a higher bar, we expect free cash flow to grow by more than 10%, even with a higher starting point. That growth is driven by reported revenue growth of around 1%, EBITDA and EBITDAaL-CapEx growth of between 1% and 2% and lower capital intensity of up to 13%. The 2024 dividend in cash of €0.3 per share will be paid in two tranches of €0.15 in December '24 and June '25. As we shared at the Capital Markets Day, our ambitions going forward are even higher with revenue growth around 1%, EBITDA growth of around 2% and EBITDAaL-CapEx growing further to around 5%. Thanks to further decline in capital intensity to below 12% by 2026. Free cash flow will grow by a compounded rate of more than 10%, helping to reduce our leverage ratio to between 2.5x and 2.2x in 2026. And again, allowing us to commit to a floor dividend of €0.30 per annum in cash with improved dividend coverage. So to recap the key takeaways for the year. In 2023, we delivered again on our guidance for the sixth year on a row. This is on a guidance we upgraded midyear and furthermore, we overdelivered in terms of free cash flow generation. Despite the stronger free cash flow in 2023, we reiterate our guidance of more than 10% free cash flow growth in 2024, showing our degree of confidence. This put us on track with our GPS plan to grow more than 10% CAGR between 2023 and 2026. Our markets, our healthier plan than ever. We turn around Spain, where EBITDA is already growing. Brazil performance remains stellar. These two alone make for 67% of our consolidated EBITDA. Germany, that makes for another 20% has again guided for EBITDA growth in 2024. And Spain is more and more self-sustained. This momentum will last as we continue to smartly invest in best-in-class next generation networks, while we streamline our operations for the best customer experience. Remember, our Spanish workforce program has been successfully completed and have now full certainty of around €295 million run rate of EBITDA savings from 2025. This is close to 50% of the €600 million group efficiency we guided for in the GPS plan, not a small detail. And you can count on us remaining disciplined on capital allocation and prudently managing our balance sheet so we can continue to increase coverage of our dividend, while deleveraging remains our focus as capital intensity comes down. We are now ready to take your questions.

Thank you. [Operator Instructions]. We will now take the first question from the line of Andrew Lee from Goldman Sachs. Please go ahead.

Yes. Good morning, everyone. So I wanted to ask a question about how you feel European authorities are supporting your pursuit for digital infrastructure investment and high returns. We've obviously had a lot of news flow this week from the EU. And so I just wanted to get your response to that. And specifically, if you think about the spectrum, if you think about the remedies in general, you think about the spectrum, remedy for Digi, do you think that's providing a platform to have a new full nationwide network competitor to Telefonica in Spain? And then on the wholesale side, what is your confidence that you will retain your wholesale agreement with Digi? Thank you. Jose Maria Alvarez-Pallete Lopez: Let me take the first part of your question and then I hand it over to Angel for the second part. In terms of the remedies out of the Orange/MasMovil transaction, no change on the final approved remedy package versus the expectation that we had at the time of the Capital Markets Day and that we shared with you were implicit in our guidance. So on that regard, no further news. Telefonica Espana, as you know is back to revenue growth. And as committed, we have been able to stabilize EBITDA during the fourth quarter of last year, proving that Spain, our operation in Spain is becoming stronger and stronger. We have the stronger network in Spain. We have record levels of customer satisfaction, record low levels of churn and efficiencies are flowing through. So we feel strong to compete in this market, even though honestly, we consider what has happened is a missed opportunity, it's a lost opportunity to send another message. So in summary, we feel prepared to keep building on the positive trends of our Spanish unit, and as stated on our Capital Markets Day. And we feel that Telefonica Espana is in a strong position, and we are fully confident on its future.

Yes. And on the specifics of the remedies, with respect to spectrum, probably there is not enough spectrum in the high bands and none in the low bands, which do not allow to build a full-fledged national network. It would be a partial network, given the size and the frequencies of the spectrum blocks. These are 60 megahertz with an absence of low band frequencies. Consider, for instance, that Yoigo itself found more than as part of mass mobile 140 megahertz and didn't have this network. So Digi, we need in addition to the network, they may want to build a national roaming agreement and probably a run sharing arrangement for the rest of the footprint. We are clearly in a position to negotiate with Digi on these fronts. Regarding the roaming agreement, the remedy is an option for Digi, not an obligation. Our partnership with Digi is assured under a long-term wholesale agreement. We believe that Digi is satisfied on the deal that we have now and the service that we are providing. We are in permanent discussions with Digi and with other existing and potential wholesale customers on this type of topics. And bear in mind that in our recently shared 23, 26 spend and in the implied financial guidance that we are putting forward today for 2024, we are already assuming certain pricing pressure in our wholesale activity in Spain over the next periods, which probably is a realistic assumption with respect to the dynamic that we expect to see in the market. We have the best network, the best infrastructure assets and these are and a very long established relationship with contractual commitments and contractual penalties. So we believe that this puts us in a good position to renegotiate with this year win-win arrangement for the two companies. Jose Maria Alvarez-Pallete Lopez: And getting back to the overall question on the European landscape and the European regulatory environment, we think that the recent white book issued or by the commission is a very good call to action. We think things are starting to change. We think it's just the beginning, but it's a step into the right direction. We fully agree with the diagnose. I mean, it highlights digital infrastructure are key. It highlights that the networks are going to evolve towards full IP, fully programmable and autonomous network. So and it also points out an unbalanced relationship between the Internet traffic generators. And therefore, it also points out in terms of the fragmentation of the market. So overall, we think it's the right diagnose. We think it sets the tone for the future commission to act. We think some of the measures should go even further. But overall, we think it's a very good call to action and are stepping to the right direction.

Thank you very much.

Thank you. We will now take the next question from the line of Mathieu Robilliard from Barclays. Please go ahead.

Yes, good morning and thank you for the presentation. If I follow-up on the question from Andrew, is it fair to say that this deal between Orange and MasMovil that was approved with the remedy is not going to materially change the competitive environment in Spain going forward. And then the second question had to do with Telefonica Deutschland, I think you mentioned in your presentation that you now own 94% of the company. And I was wondering if you could share with us what are the following steps, if it makes sense to completely take out the company and if there would be any benefits to do that? Thank you. Jose Maria Alvarez-Pallete Lopez: Thank you, Mathieu for your questions. On the evolution of the Spanish market approval of Orange/MasMovil, of course, it's a dynamic and competitive environment. The landscape is shifting in Spain with this consolidation having been approved with certain remedies that we continue to believe it should have been without remedies, but we are where we are and this was in a scenario that we were anticipating by the term of the Capital Markets Day and we have been working on contingency actions for this type of situation. Yes, the market will continue to be competitive. The market will continue to be a segmented market between the premium segments and the medium and low cost, which is much more dynamic and we don't expect that segmentation and the competitiveness of the market to change. But we have very strong levers. We have been in this type of situations before. We have seen consolidation among players before. We continue to have the best assets. We have been adapting our commercial offer to provide flexibility and modularity for our customers. We have the highest NPS, we've had in Q3. We continue to see and post in the last quarter ARPU growth with a record minimum churn. This creates the best customer lifetime value compared to the rest of our competitors. So we expect the market to continue to be dynamic, not to be disruptive. One has to bear in mind that Orange/MasMovil starts its new situation as a joint venture highly levered and this does not lead to thinking that they would want to be disruptive. And still pending to be approved. Vodafone Zegona is also a very highly levered transaction with back book that the players need to defend. So we think we have strong, we have experience of reformulations of the Spanish market and we have very strong assets that allow us to compete and to stay confident with the outlook that we're giving for 2024 and beyond.

Taking your question on Germany, we are really happy with the outcome of the tender offer. We think it was a firm value proposition to minority shareholders. There was and there is no specific stake needed for us to achieve our strategic objective in Germany. And as a result, we are happy with the outcome. Let me say that we currently do not plan to support dividend payments beyond the already confirmed €0.80 per share for the fiscal year 2023 and we intend to evaluate Telefonica Deutschland dividend policy over time because we currently do not see any need to pay dividends at the current level for the future. Beyond that, we keep analyzing all options, and we'll keep you posted.

Thank you very much.

Thank you. We will now take the next question from the line of Jakob Bluestone from BNP Paribas Exane. Please go ahead.

Hi, good morning. Thanks for taking the questions. I had two questions. One, firstly on leases. If I look at your OIBDA organic, it was about 4.5% growth in Q4, but OIBDA after leases was about 1.6%. So there's a sort of 300 basis point spread between the two. Could you maybe just comment on what is the outlook for leases for next year? And then secondly, if you can maybe just give a little bit of color around your expectations for the other segment, given it tends to be a little bit volatile. So what do you expect for EBITDA as a sort of run rate going forward? Thank you.

Thank you, Jakob for your questions. On leases, as we know, we don't give a public target, but we will continue working on achieving efficiencies. Important to say our free cash flow is fully loaded and includes the leases. So despite leases evolution, we are targeting a +10% growth in 2024, even starting for a higher basis. So you should expect us to keep on focusing on this and that should have a more linear evolution as macro stabilize and as it's linked more to the ROU additions. Having said that, there will be some increases basically linked to the build-to-suite obligations and site expansion in Germany. In Brazil, it was explained yesterday, we incorporated Oi's Samoa [ph] leases although we have been very active in shutting down sites and towers. We also have regulatory obligations related to 5Gs in Brazil and some renovation of contracts. Spain should be broadly flat. Espana is showing decline in leases as we are turning the network off in Mexico. So no doubt we are really, really focused on this. This is part of the free cash flow. So, the free cash flow is still strong despite this evolving having some increase. I explained the reasons behind and you will be able to see the lease impact on a quarterly basis as we report the results. On the others, this is usually difficult to track. I know that because it has many bits and pieces for it includes the headquarters and the global units, which has some restructuring costs this year. Therefore, that is impacting the negative OIBDA in this line. However, as part of the GPS plan, we are driving efficiencies at the headquarters and global units. So that should be moving in the right direction. We also have Telefonica Infra with Telxius is slightly below last year EBITDA in euro. Telefonica Tech, yes, the opposite, which is going to drive this line in 2024, which will I'll explain later, Telefonica Tech improving margins. And then we have what we call instrumental companies. Some of them are operational like our supply company. And as we have reduced CapEx that should be decreasing their impact over time. We have the roaming, which is basically stable. We also have financial like insurance and those are usually insignificant figures. So you should expect this not being negative, the negative being linked to the restructuring. I mentioned it should be a positive balance and it should be Telefonica Tech driving growth and also a headquarters being more efficient driving growth. And on the other -- on the opposite direction, some operational companies like the supply company reflecting our lower CapEx and CapEx peak being behind.

Thank you. That's very clear.

Thank you. We will now take the next question from the line of David Wright from Bank of America. Please go ahead.

Yes, thank you very much guys. Just a little bit of a step through from the kind of operating cash flow, the EBITDAaL-CapEx down to free cash flow. Please Laura, maybe just a little bit of guidance if you could give us on working capital, cash tax, just the moving parts essentially below the operating free cash through to the free cash flow guidance that would be really useful? Thank you.

Thank you, David. I understand you are talking more about going forward rather than the free cash flow bit we had.

Yes, ma'am.

Okay. Thank you for clarifying. Okay. So on free cash flow expectations, first, this is an absolute priority to us. This was obviously reemphasized in our Capital Markets Day and prior in the year when we for the first time committed to a 4 billion bar that we have surpassed comfortably. And that surpass means our dividend is better coverage and we can improve the deleverage path. And you saw that that was improved before the Telefonica, Deutschland minority is purchased. So very confident on our levers around free cash flow evolution. So the free cash flow growth, it will be very much anchored in the EBITDAaL-CapEx performance. EBITDA is growing. The guidance is between 1% to 2% and CapEx is decreasing. We are putting a threshold of well, no a maximum of 13% and we will keep on working on all the items below. Working capital will continue to have a positive balance, but in line with what it has been in '23 and '24 -- sorry '23 and '22. Working capital sometimes is not easy to follow, because we have a spectrum impacts as we don't pay all spectrum at once in some cases. But excluding that, it has follow a very business as usual. It's been very much linked to the CapEx needs to the commercial. We had an acceleration on commercial revenue on handsets in this year. We don't do any supply financing, so it's pretty clean and it's all linked to the operations and the business as usual, and it will have a positive contribution, but not differential from '23 or '22. Financial payments, you are seeing how we are optimizing this. We continue with a very strong liquidity position. Our 80% fixed rate of the debt and 100% in euro that's filled in us and that figure has been decreasing in the net related financial payments. For tax payments similar guidance to the Capital Markets Day. We continue with a normalized rate of 20% to 25%. And BMO2 dividends are confirmed. There's been guidance of €850 million that includes proceed of CTIL, no recaps. And I guess the free cash flow guidance embedded in that €850 million is €500 million and that was guided by the OV earlier, I mean, last week. Dividend paid of minorities obviously a positive contribution for the lower leakage from Telefonica Deutschland. And in all leases I mentioned in the previous question a slight increase, commitments also an increase. But despite that and that's linked to the latest restructuring in Spain. Despite that increase, we are increasing more than 10% and hybrid coupon payments very, very stable. I mean, a slight increase you saw from the previous, but very stable around the €0.3 billion per year. So I go through every line, because in fact there's work around every line. And the combination of everything, anchored with EBITDAaL-CapEx, a strong performance plays us very comfortable to give this guidance and confirm this guidance today.

Yes, that's everything. Thank you.

Thank you. We will now take the next question from the line of James Ratzer from New Street Research. Please go ahead.

Yes, good morning. Thank you very much indeed for taking the questions and congratulations on all the kind of free cash flow beat in the guidance. I was wondering if I could just focus on the EBITDA guidance though you've given for this year of 1% to 2%. Now within that you've guided that in Spain the savings from the new restructuring program should add about €200 million to EBITDA for this year. So that alone should be around 1.5% growth for Telefonica Group EBITDA. So right in the middle of the guidance range, which would seem to imply if I'm doing my math right that excluding that new benefit, the rest of the group would be flat. So what's guiding that? I mean is that conservative? Could we expect to see you move the EBITDA guidance up as we go through the year? And then the second question I had was regarding Virgin Media O2. So your co controlling shareholder Liberty Global, gave a big presentation last Friday in which they talked about the creation of a new Virgin Media NetCo. So as a joint shareholder in the entity, would just love to get your thoughts on what your views are for that NetCo? Would you be interested in potentially selling a stake in that NetCo going forward? And I also see you've changed your valuation of VMO2 on the balance sheet. Could you just give us the new details you were using of the cost of capital and the revenue assumptions? I think previously you were using 6.9% and zero to 3% revenue growth. So just love to get the updated parameters you're using for the new balance sheet valuation? Thank you. Jose Maria Alvarez-Pallete Lopez: Thanks for your question. I'll start taking part of the first one, and I'll hand it over to Angel to contribute on a business-by-business point of view. In terms of EBITDA guidance, I mean, for 1% to 2%, primarily, but we are starting from a stronger, I mean figure in 2023, which is good news, with stronger traction in the businesses in terms of revenue B2C, B2B and wholesale. And remember as well that we are guiding in reported terms and we are embedding a devaluation of the Argentinian peso that was not there at the time of the Capital Markets Day. And in spite of that, we stick to the commitment that we have been given. Also, you were right in mentioning the impact of workforce reduction in Spain, that will be incremental over the year jointly with the switch-off of copper. So you will see an accelerated trend in EBITDA overall the year, and we are fully committed to the guidance that we gave at the time of the Capital Markets Day.

Yes. And to elaborate a bit more on the outlook by [indiscernible], Spain expects for full-year both revenue growth and EBITDA growth for the first time since 2019. Germany's guidance as issued yesterday is slightly positive revenue growth and low -- to low mid-single digit EBITDA growth. Brazil's intention is to maintain both a strong revenue growth and EBITDA growth. So here you can see that the hard currency revenues and EBITDAs are guided or have an outlook of growth and Brazil ex FX, but the Brazilian reais is behaving very nicely, should be showing growth above at least aligned or above the group guidance. In Hispam, which is an EBITDAaL-CapEx story, Jose Maria already commented on some FX pressures that we are experiencing and we are reporting from this year onwards on reported basis. By the way, just to complete the outlook, CapEx intensity, CapEx on sales, we're guiding for the group for declining intensity. In Spain will be declining intensity, in Germany the guidance, as issued yesterday, in a range of 13% to 14%. Brazil also indicated that they will reduce capital intensity. Hispam will maintain the same levels than in 2023.

And Angel, do you expect it hard to grow in 2024, excluding the new 200 gigabytes gain from the accounts savings?

Sorry, I didn't get the question. Could you repeat it, sorry?

Sorry. That Spanish EBITDA for this year will grow, but would it grow if you didn't do the headcount savings of €200 million, which I suppose is a new benefit for this year?

Yes. We expect the Spanish EBITDA growth for the year. We see also that trend building out across the quarters. It will be progressing along the year because we have several elements that kick in at different moments in the year. So the capital -- the people reduction plan kicks in from the 1st of March, because employees will be exiting on the 29th of February. Price increases that we are putting forward also don't kick in for the full first quarter, but they gradually built up across the quarter. We switch-off the retail corporate network in April and this will accelerate savings across the year. But for the full-year, EBITDA growth is the outlook that we have and with growing momentum quarter-on-quarter. Going to the second question, which was on the NetCo that we are building in the U.K. Alongside our partners, it's all about focus and optionality. Focus, we are creating a 100% owned NetCo under Virgin Media O2 that will be able to provide more emphasis, more focus on the fiber upgrade and the wholesale revenue through a dedicated team, through having a dedicated strategy and a dedicated balance sheet. So focus on this fiber migration and upgrade. And second, optionality, this vehicle can give us with our partners, optionality to accelerate this upgrade and both passing and connecting if needed. It gives us optionality to find new financing options and to raise money in order to and also gives us optionality to consolidate. This can create a currency for consolidation in the space. So it's a project that we clearly obviously support. We are very excited about and it's about focusing on this fiber upgrade and giving us optionality going forward. All of these, by the way, without affecting the financial commitments of the joint venture to its shareholders.

And finally, on the James, on the question on balance sheet impacts, as you know, we carry out the annual goodwill impairment test at the end of the year. The future cash flows used in the value for this calculation is the business plan approved by the Board of Directors of VMO2. On that business plan, we have guided on 2024 already. We do not provide longer-term guidance, but we have positioned 2024 as a transitional year, better prospects from 2024 onwards. The impairment is a consequence of this new business plan, but even more of the increase in the discount rate. We have applied a discount rate of 7.5% after taxes compared to 7.3% the previous year. We are reflecting the macroeconomic conditions, competitive environment in the U.K. and also the increase in the financial rates. Growth to perpetuity remains the same at 1%. You have all the detail in our annual accounts. And I just wanted to point it out that this is very sensitive to WACC. So should that 7.5% WACC decrease, which I think it could be definitely the case in the midterm, that implied valuation could improve significantly. Just for -- I think you have all the sensitivities in our annual accounts, but a 50 basis points improvement in WACC, it could imply a higher valuation just at Telefonica's side of €1.4 billion. So extremely sensitive and this is the main reason behind the balance sheet impact that you have seen.

Great. Thank you so much.

We have time for one last question, please.

Thank you. One moment please. Our last question comes from the line of Keval Khiroya from Deutsche Bank U.K. Please go ahead.

Thank you. I've got two questions, please. So firstly, you've had a bit more time to think about your plan for Germany once one-on-one leaves your network. TAFTA yesterday suggested a retail centric approach in '25 and '26 would be key. But what gives you the confidence that such an approach won't be disruptive to the wider German market? And secondly, you implemented 4 percentage point lower price rise in Spain than the prior year. Can you comment on whether this should lead to lower revenue growth than the 1.6% service revenue growth seen in Spain in 2023? Or are there any other offsets which should be mindful off? Thank you. Jose Maria Alvarez-Pallete Lopez: Thank you, Keval for your questions. In Germany, we are completely focused in the recovery plant, what we call our accelerated growth and efficiency plan. This has several elements. We have an element of using the capacity of the network that has been or will progressively be freed by one-on-one. And here, we are going to work once we are not bound by the remedies of that arose from the A plus transaction. We can grow both on retail and yes, we are aiming to retain our own -- to grow our own customer base and also deepening some wholesale partnership relationships that we already have. We are doing this and you have seen last year we were the only ones to propose price increases in mobile. The market did follow. So we have been looking at value over volume approach. And now we are seeing also opportunities with the family plans to grow in convergence. We have always been rational, but we aim to grow and this is behind the guidance that was given yesterday by Telefonica Deutschland of slight growth in revenues. Regarding the price rises in Spain, we are increasing slightly below inflation, 3.1%. Our revenues -- our prices for the Movistar bundles, not the O2 bundles and some of the components. So it's a lower price increase than last year. But we are seeing and we are experiencing very strong commercial momentum. We are growing in all accesses, all type of accesses. We're getting net adds with higher ARPU, better NPS, record low churn. This is in a big part the result of how we modified the offer and made it more flexible with Movistar compared to the previous fusion packages. And it's when you look at Slide 7 in our presentation in Spain, if you look at the trend of retail revenues and acceleration that we achieved 2.7% growth in the last quarter. But this has been accelerating over the last quarters. This is what underlies our expectation of revenue growth to continue in Spain for 2024.

That's clear. Thank you. Jose Maria Alvarez-Pallete Lopez: Thanks.

Thank you. At this time, no further questions will be taken.

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 Relationship department. Good morning, and thank you.

Telefonica's January-December 2023 results conference call is over. You may now disconnect your line. Thank you.