2003 Final Results- Part 2

Telefonica SA 26 February 2004 Telefonica Group Market Size Unaudited figures December (Thousands) Total Weighted (*) 2003 2002 % Chg. 2003 2002 % Chg. Lines in service (1) 43,723.5 43,145.4 1.3 37,985.4 37,320.4 1.8 In Spain 19,084.1 18,705.6 2.0 19,084.1 18,705.6 2.0 In other countries 24,639.4 24,440.2 0.8 18,901.3 18,614.7 1.5 Cellular customers (2) 54,691.7 43,943.3 24.5 31,549.9 27,420.8 15.1 In Spain 19,660.6 18,412.0 6.8 18,174.3 17,018.2 6.8 In other countries 35,031.1 25,531.3 37.2 13,375.6 10,402.5 28.6 Total (3) 98,778.3 87,429.2 13.0 69,888.0 65,071.2 7.4 (*) Weighted by the equity interest of Telefonica in each of the companies. After the Via Digital-Sogecable merger, for comparison purposes, the costumers from the platform TV are not included in 2002. (1) Lines in service: includes all lines in service for Telefonica de Espana, Telefonica CTC Chile, Telefonica de Argentina, Telefonica del Peru, Telesp, CanTV, Telefonica Moviles El Salvador, Telefonica Moviles Guatemala and Telefonica Deutschland. (2) Cellular customers: includes all cellular customers of Telefonica Servicios Moviles Espana, MediTelecom, Telefonica Movil Chile, TCP Argentina, Telefonica Moviles Peru, Brasilcel (the Joint Venture with Portugal Telecom in Brazil), NewCom Wireless Puerto Rico, Telefonica Moviles Guatemala, Telefonica Moviles El Salvador, Telefonica Moviles Mexico and CanTV Celular. (3) Includes Pay TV customers of Cable Magico in Peru. Telefonica Group Selected Financial Data Unaudited figures (Euros in millions) January - December 2003 2002 % Chg. Operating revenues 28,399.8 28,411.3 (0.0) EBITDA 12,602.1 11,724.2 7.5 Operating profit 6,327.9 5,031.8 25.8 Income before taxes 3,362.5 (14,601.1) c.s. Net income 2,203.6 (5,576.8) c.s. Net income per share 0.44 (1.10) c.s. Avg. No of shares, millions (1) 4,984.6 5,057.0 (1.4) (1) Weighted average number of shares in the period adjusted by free capital increases funded by reserves, that mean a change in the number of shares that did not produce any variation of equity structure, as if they were done at the beginning of the first period presented. That relates the two capital increases funded by a charge on freely disposable reserves, recorded with the Mercantile Register on February 18, 2003 and on April 24, 2003. Moreover, the number of shares in 2003 is affected by the capital reduction by amortization of treasury stock shares, from April 11, 2003, when the AGM was held, and that was recorded with the Mercantile Register on June 10, 2003. Accordingly, there was an average number of shares outstanding at the end of the period of 4,984,615,303 Telefonica Group Results by Companies Unaudited figures (Euros in millions) REVENUES EBITDA OPERATING PROFIT January-December January-December January-December 2003 2002 % Chg. 2003 2002 % Chg. 2003 2002 % Chg. Telefonica de Espana 10,217.4 10,272.1 (0.5) 4,534.2 4,517.2 0.4 1,966.2 1,815.4 8.3 Group Telefonica 6,377.1 6,954.1 (8.3) 3,065.3 3,346.7 (8.4) 1,346.5 1,347.3 (0.1) Latinoamerica G. Telefonica Empresas 1,782.0 1,758.5 1.3 304.4 128.6 136.7 58.7 (163.5) c.s. Mobile Business 10,428.3 9,449.3 10.4 4,581.9 3,830.0 19.6 3,065.9 2,438.1 25.7 Directories Business 589.3 550.5 7.1 184.0 150.9 22.0 153.3 119.7 28.1 Terra-Lycos Group 545.1 600.0 (9.1) (39.5) (141.7) (72.1) (118.2) (284.4) (58.4) Atento Grupo 493.0 571.1 (13.7) 66.5 54.3 22.4 14.3 (21.1) (167.6) Content and Media 1,378.5 1,076.2 28.1 210.3 114.5 83.7 160.4 64.9 147.2 Business Other companies 406.4 867.8 (53.2) (208.0) (204.9) 1.5 (281.1) (288.4) (2.5) Eliminations (3,817.2) (3,688.2) 3.5 (97.0) (71.5) 35.6 (37.9) 3.8 c.s. Group 28,399.8 28,411.3 (0.0) 12,602.1 11,724.2 7.5 6,327.9 5,031.7 25.8 Telefonica Group Consolidated Income Statement Unaudited figures (Euros in millions) January-December October - December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 28,399.8 28,411.3 (0.0) 7,566.7 6,944.3 9.0 Internal expend capitalized in fixed 531.1 527.8 0.6 174.1 130.1 33.8 assets (1) Operating expenses (16,136.9) (16,773.3) (3.8) (4,442.7) (4,184.9) 6.2 Supplies (6,412.9) (7,002.8) (8.4) (1,842.0) (1,796.1) 2.6 Personnel expenses (4,641.3) (4,793.8) (3.2) (1,170.7) (1,152.2) 1.6 Subcontracts (4,558.4) (4,564.6) (0.1) (1,285.4) (1,138.2) 12.9 Taxes (524.2) (412.1) 27.2 (144.7) (98.3) 47.2 Other net operating income (expense) (191.9) (441.7) (56.5) 10.0 (94.3) c.s. EBITDA 12,602.1 11,724.2 7.5 3,308.0 2,795.2 18.3 Depreciation and amortization (6,274.2) (6,692.4) (6.2) (1,571.5) (1,569.0) 0.2 Operating profit 6,327.9 5,031.7 25.8 1,736.5 1,226.3 41.6 Profit from associated companies (212.6) (527.9) (59.7) (51.2) (112.4) (54.5) Financial net income (expense) (1,060.7) (2,221.6) (52.3) (310.1) (210.8) 47.1 Amortization of goodwill (442.5) (665.4) (33.5) (116.5) (162.4) (28.3) Extraordinary net income (expense) (1,249.7) (16,217.9) (92.3) (1,197.3) (9,861.6) (87.9) Income before taxes 3,362.5 (14,601.1) c.s 61.4 (9,121.0) c.s. Income taxes (913.4) 3,228.7 c.s 204.7 3,022.4 (93.2) Net income before minority interests 2,449.1 (11,372.4) c.s 266.2 (6,098.6) c.s. Minority interests (245.5) 5,795.6 c.s (77.0) 5,557.8 c.s. Net income 2,203.6 (5,576.8) c.s 189.2 (540.7) c.s. Average shares (millions) (2) 4,984.6 5,057.0 (1.4) 4,955.9 5,057.0 (2.0) Net income per share 0.44 (1.10) c.s 0.04 (0.11) c.s. (1) Including work in process. (2) Weighted average number of shares in the period adjusted by free capital increases funded by reserves, that mean a change in the number of shares that did not produce any variation of equity structure, as if they were done at the beginning of the first period presented. That relates the two capital increases funded by a charge on freely disposable reserves, recorded with the Mercantile Register on February 18, 2003 and on April 24, 2003. Moreover, the number of shares in 2003 is affected by the capital reduction by amortization of treasury stock shares, from April 11, 2003, when the AGM was held, and that was recorded with the Mercantile Register on June 10, 2003. Accordingly, there was an average number of shares outstanding at the end of the period of 4,984,615,303 Telefonica Group Consolidated Balance Sheet Unaudited figures (Euros in millions) December 2003 2002 % Chg. Subscribed shares not paid-in -- 292.5 n.d. Long-term assets 45,003.9 50,008.8 (10.0) Start up expenses 543.6 496.5 9.5 Intangible net assets 7,673.2 7,629.6 0.6 Fixed net assets 24,315.8 27,099.7 (10.3) Investment 12,471.4 14,783.1 (15.6) Goodwill on consolidation 6,053.9 6,364.0 (4.9) Deferred expenses 535.0 802.3 (33.3) Current assets 10,482.4 10,573.7 (0.9) Inventories 401.0 449.8 (10.9) Accounts receivable 6,218.3 6,029.1 3.1 Short-term investments 3,199.6 3,031.7 5.5 Cash and banks 336.4 543.9 (38.1) Others 327.1 519.1 (37.0) Assets = Liabilities 62,075.2 68,041.3 (8.8) Shareholder's equity 16,756.6 16,996.0 (1.4) Minority interests 4,426.2 5,612.9 (21.1) Badwill on consolidation 11.4 11.4 0.6 Deferred income 658.0 880.5 (25.3) Provisions for risks and expenses 7,688.2 8,014.9 (4.1) Long-term debt 17,693.8 20,096.7 (12.0) Accrued taxes payable 801.6 1,629.5 (50.8) Short-term debt including current maturities 5,587.1 6,409.3 (12.8) Interest payable 376.5 409.5 (8.1) Other creditors 8,075.8 7,980.6 1.2 Financial Data Consolidated net debt (1) 19,235.3 22,533.1 (14.6) Consolidated debt ratio (2) 45.9% 47.3% 1.4 p.p. (1) Net debt: Long-term debt + Short-term debt including current maturities - Short-term and Long-term finantial investments - Cash and banks (2) Debt ratio: Net debt / (Shareholders' equity + Minority interests + Deferred income + Accrued taxes payable + Net debt) Telefonica Group Free Cash Flow and Change in Debt Unaudited figures (Euros in Millions) January - December 2003 2002 % Chg. I Cash flows from operations 11,974.8 11,757.5 1.8 II Extraordinary payments related to operating (1,006.4) (1,139.1) activities and commitments III Net interest payment (1,496.9) (1,558.3) IV Payment for income tax (277.7) (226.6) A= I+II+III+IV Net cash provided by operating activities 9,194.0 8,833.5 4.1 B Payment for investment in fixed and intangible (3,458.7) (4,311.8) assets C= A+B Net free cash flow after CAPEX 5,735.3 4,521.7 26.8 D Cash received from sale of Real State 399.1 88.1 E Net payment for financial investment (2,115.1) (1,564.0) F Dividends paid (1,474.5) (63.4) G=C+D+E+F Free cash flow after dividends 2,544.9 2,982.4 (14.7) H Effects of exchange rate changes on net debt (859.4) (3,044.0) I Effects on net debt of changes in consolidation 106.4 (382.1) and others J Net debt at beginning of period 22,533.1 28,941.6 K=J-G+H+I Net debt at end of period 19,235.3 22,533.1 (14.6) Telefonica Group Reconciliation of Cash Flow and EBITDA minus CAPEX Unaudited figures (Euros in Millions) January - December 2003 2002 % Chg. EBITDA 12,602.1 11,724.2 7.5 - CAPEX accrued during the period (EoP exchange rate) (3,727.1) (3,789.0) - Extraordinary payments related to operating activities and (1,006.4) (1,139.1) commitments - Net interest payment (1,496.9) (1,558.3) - Payment for income tax (277.7) (226.6) - Investment in working capital (358.8) (489.5) = Net Free Cash Flow after Capex 5,735.3 4,521.7 26.8 + Cash received from sale of Real Estate 399.1 88.1 - Net payment for financial investment (2,115.1) (1,564.0) -Dividends paid (1,474.5) (63.4) = Free Cash Flow after dividends 2,544.9 2,982.4 (14.7) Note: At the Investor Conference held in October 2003, the concept expected 'Free Cash Flow' 2003-2006 was introduced to reflect the amount of cash flow available to remunerate Telefonica S.A. Shareholders, to protect solvency levels (financial debt and commitments), and to accomodate strategic flexibility. The differences with the caption 'Net Free Cash Flow after Capex' included in the table presented above, are related to 'Free Cash Flow' being calculated before payments related to commitments (workforce reductions and guarantees) and after dividend payments to minoritaries, due to cash recirculation within the Group. Net Free Cash Flow after Capex 5,735.3 4,469.1 +Payments related to cancellation of commitments 818.3 505.7 - Dividend payments to minoritaries (241.2) (10.8) = Free Cash Flow 6,312.4 4,964.0 Telefonica Group Net Financial Debt and Commitments Unaudited figures (Euros in millions) December 2003 Long-term debt 17,693.8 Short term debt including current maturities 5,587.1 Cash and Banks (336.4) Short and Long-term financial investments (1) (3,709.2) A Net Financial Debt 19,235.3 Guarantees to IPSE 2000 555.2 Guarantees to Sogecable 80.0 Guarantees to Newcomm 48.3 B Commitments related to guarantees 683.5 Gross commitments related to workforce reduction (2) 5,226.8 Value of associated Long-term assets (3) (676.9) Taxes receivable (4) (1,360.3) C Net commitments related to workforce reduction 3,189.6 A + B + C Total Debt + Commitments 23,108.4 Net Financial Debt / EBITDA 1.53 x Total Debt + Commitments/ EBITDA 1.83 x (1) Short term investments and certain investments in financial assets with a maturity profile longer than one year, whose amount is included in the caption 'Investment' of the Balance Sheet. (2) Mainly in Spain, except 69.9 million euros related to the provision of pension fund liabilities of corporations outside Spain. This amount is detailed in the caption 'Provisions for Contingencies and Expenses' of the Balance Sheet, and is the result of adding the following items: 'Provision for Pre-retirement, Social Security Expenses and Voluntary Severance', 'Group Insurance', 'Technical Reserves', and 'Provisions for Pension Funds of Other Companies'. (3) Amount included in the caption 'Investment' of the Balance Sheet, section 'Other Loans'. Mostly related to investments in fixed income securities and long-term deposits that cover the materialization of technical reserves of the Group insurance companies. (4) Net present value of tax benefits arising from the future payments related to workforce reduction commitments. Telefonica Group Exchange Rates Applied to P&L December 2003 2002 US Dollar / Euro 1.129 0.942 Argentinean Peso / Euro 3.324 2.982 Chilean Peso / Euro 670.174 676.896 Brasilian Real / Euro 3.454 2.752 Peruvian Nuevo Sol / Euro 3.910 3.311 Mexican Peso / Euro 12.681 9.714 Note: These exchange rates are used to convert the P&L accounts of the Group foreign subsidiaries from local currency to euros. P&L accounts for subsidiaries that use inflation adjusted accounting criteria (Mexico, Chile, Peru, Colombia and Venezuela), are first converted to US dollars at the closing exchange rate, and then the conversion into euros is made according to the average exchange rate. Telefonica Group Exchange Rates Applied to Balance Sheet and CapEx December 2003 2002 US Dollar / Euro 1.263 1.049 Argentinean Peso / Euro 3.701 3.534 Chilean Peso / Euro 749.969 753.606 Brasilian Real / Euro 3.649 3.705 Peruvian Nuevo Sol / Euro 4.375 3.686 Mexican Peso / Euro 14.191 10.815 Note: exchange rates as of 31/12/03 and 31/12/02 Telefonica de Espana Group Selected Operating Data Unaudited figures (Thousands) December 2003 2002 % Chg. Lines in service 19,084.1 18,705.6 2.0 PSTN lines 15,061.0 15,470.2 (2.6) ISDN equivalent basic access 1,827.0 1,752.1 4.3 ISDN equivalent primary access 426.6 413.9 3.1 2/6 Accesses for PBX and Ibercom 109.0 112.3 (2.9) ADSL connections 1,660.5 957.2 73.5 Employees (units) 35,216 40,659 (13.4) Traffic (millions of minutes) 138,174.0 143,345.0 (3.6) Note: PSTN (including Public Use Telephony) (x 1) - ISDN Basic access (x 2) - ISDN Primary access (x 30) - 2/6 Accesses (x 30) - ADSL Lines (x1). Telefonica de Espana Operating Revenues (Individual) Unaudited figures (Euros in millions) January - October-December December 2003 2002 % Chg. 2003 2002 % Chg. Traditional Services 7,510.7 7,791.4 (3.6) 1,873.7 1,966.1 (4.7) Client network access (1) 2,957.1 2,873.9 2.9 727.5 718.4 1.3 Voice usage (Net total) (2) 3,382.7 3,682.6 (8.1) 831.1 907.0 (8.4) Local 820.9 900.8 (8.9) 214.8 233.8 (8.2) Provincial 268.6 292.8 (8.3) 66.4 74.3 (10.6) Domestic long distance 464.1 515.9 (10.0) 119.9 129.7 (7.6) International long distance 244.7 246.8 (0.9) 53.8 58.7 (8.5) Fixed to mobile 1,256.1 1,388.0 (9.5) 312.3 334.6 (6.7) IRIS and others (3) 328.3 338.3 (3.0) 64.0 75.8 (15.6) Handsets sales and maintenance 706.3 731.4 (3.4) 182.8 199.5 (8.4) Leased circuits and TV broadcasting 145.4 162.9 (10.7) 37.6 43.6 (13.9) Other business lines (4) 319.3 340.6 (6.3) 94.7 97.6 (3.0) Internet and Broadband Services 849.7 642.3 32.3 238.7 185.4 28.7 Narrowband 292.1 378.0 (22.7) 75.6 92.0 (17.9) Broadband (retail) 557.6 264.3 111.0 163.1 93.4 74.6 Wholesale Services 1,437.6 1,473.0 (2.4) 380.6 351.4 8.3 National interconnection 368.0 386.4 (4.8) 101.3 89.9 12.6 Wholesale ADSL (Megabase and 168.5 97.4 72.9 51.1 32.2 58.5 GigADSL) International operators services 291.1 297.6 (2.2) 71.2 50.0 42.5 Other national operators services 610.0 691.5 (11.8) 157.0 179.3 (12.4) (5) Total operating revenues 9,798.0 9,906.7 (1.1) 2,493.0 2,503.0 (0.4) (1) Revenues derived from monthly and connection fees (PSTN, Public Use Telephony, ISDN and Corporate Services), public telephone booths and network services. (2) Voice usage net of discounts, foreign participation (international long distance) and payments to Intelligent Network providers. (3) Services included: Intelligent Network services, Special Valued Services and others. (4) Special Projects, Services agency and others. (5) Services included: Commercial wholesale services (access, carrier and maintenance), wholesale leased circuits, other IP services and ULL. Telefonica de Espana Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 10,217.4 10,272.1 (0.5) 2,624.1 2,587.2 1.4 Internal expend capitalized in 158.7 179.2 (11.5) 51.1 54.3 (5.9) fixed assets (1) Operating expenses (5,795.6) (5,868.6) (1.2) (1,492.1) (1,493.4) (0.1) Other net operating income (46.4) (65.5) (29.2) 3.4 (0.9) c.s. (expense) EBITDA 4,534.2 4,517.2 0.4 1,186.5 1,147.2 3.4 Depreciation and amortization (2,568.0) (2,701.8) (5.0) (625.9) (665.1) (5.9) Operating profit 1,966.2 1,815.4 8.3 560.6 482.1 16.3 Profit from associated companies (0.9) (2.4) (64.0) (0.1) (1.1) (89.1) Financial net income (expense) (450.1) (398.5) 13.0 (109.9) (106.8) 2.9 Amortization of goodwill (0.3) (8.2) (96.2) (0.1) (0.8) (90.8) Extraordinary net income (expense) (1,373.1) (373.7) 267.4 (1,396.2) (126.6) 1,002.6 Income before taxes 141.8 1,032.7 (86.3) (945.7) 246.6 c.s. Income taxes 36.3 (224.7) c.s. 338.0 (58.9) c.s. Net income before minority 178.1 808.0 (78.0) (607.7) 187.7 c.s. interests Minority interests (0.0) (0.1) (41.7) (0.0) 0.0 c.s. Net income 178.1 807.9 (78.0) (607.7) 187.8 c.s. (1) Including work in process Telefonica Latinoamerica Group Companies Financial Data Unaudited figures (Euros in millions) January-December 2003 2002 % Chg Telesp Operating revenues 3,483.0 3,700.3 (5.9) EBITDA 1,662.8 1,903.2 (12.6) EBITDA margin 47.7% 51.4% (3.7) p.p. Telefonica de Argentina Operating revenues 805.3 784.2 2.7 EBITDA 478.7 393.7 21.6 EBITDA margin (1) 59.4% 50.2% 9.2 p.p. Telefonica CTC Chile Operating revenues 1,029.1 1,149.2 (10.5) EBITDA 448.7 472.2 (5.0) EBITDA margin 43.6% 41.1% 2.5 p.p. Telefonica del Peru Operating revenues 1,088.1 1,273.2 (14.5) EBITDA 480.9 590.5 (18.6) EBITDA margin 44.2% 46.4% (2.2) p.p. Note: EBITDA before management fees. Data for Telefonica de Argentina include the ISP business of Advance, while those of Telefonica CTC Chile (in 2002) and Telefonica del Peru include Sonda and CableMagico, respectively. (1) Net of fixed to mobile interconnection. Telefonica Latinoamerica Group Selected Operating Data Unaudited figures (Thousands) December 2003 2002 % Chg. Telesp Lines in Service (1) 12,781.3 12,839.2 (0.5) PSTN Lines 11,171.5 11,174.5 (0.0) ISDN equivalent accesses 29.9 37.5 (20.3) 2/6 Accesses for PBX and Ibercom 1,095.6 1,293.9 (15.3) ADSL connections 484.4 333.3 45.3 Employees (units) (3) 7,134 9,515 (25.0) Traffic (millions of minutes) (2) 84,399.9 79,882.7 5.7 Telefonica de Argentina Lines in Service (1) * 4,238.2 4,216.7 0.5 PSTN Lines 4,088.5 4,100.4 (0.3) ISDN equivalent accesses 6.4 6.1 3.9 2/6 Accesses for PBX and Ibercom 73.9 75.7 (2.4) ADSL connections 69.3 34.4 101.5 Employees (units) (3) 8,007 8,284 (3.3) Traffic (millions of minutes) (2) 35,870.5 33,052.5 8.5 Telefonica CTC Chile Lines in Service (1) * 2,542.0 2,740.9 (7.3) PSTN Lines 2,272.5 2,546.0 (10.7) ISDN equivalent accesses 89.2 90.2 (1.1) 2/6 Accesses for PBX and Ibercom 55.1 50.5 9.2 ADSL connections 125.3 54.2 131.3 Employees (units) (3) 3,202 3,150 1.7 Traffic (millions of minutes) (2) 24,207.3 26,139.2 (7.4) Telefonica del Peru Lines in Service (1) 2,060.0 1,850.0 11.4 PSTN Lines 1,934.8 1,780.9 8.6 ISDN equivalent accesses 34.5 34.7 (0.4) 2/6 Accesses for PBX and Ibercom - - - ADSL connections 90.7 34.4 163.7 Employees (units) (3) 4,769 4,668 2.2 Traffic (millions of minutes) (2) 13,215.8 13,031.8 1.4 Telefonica Latinoamerica Group Lines in Service (1) * 21,621.6 21,646.7 (0.1) PSTN Lines 19,461.1 19,600.9 (0.7) ISDN equivalent accesses 164.1 166.0 (1.2) 2/6 Accesses for PBX and Ibercom 1,226.7 1,423.6 (13.8) ADSL connections 769.7 456.2 68.7 Employees (units) (3) 23,112 25,617 (9.8) Traffic (millions of minutes) (2) 157,693.5 152,106.2 3.7 (1) PSTN (including Public Use Telephony) (x 1) - ISDN Basic access (x 2) - ISDN Primary access (x 30) - 2/6 Accesses (x 30) - ADSL Lines (x1) and Cablemoden (in Peru). * In 2002, number of lines is affected by internal reclassification in line with 2003 criteria, homogeneous within the operators. (2) Including total invoiced incoming and outgoing traffic: Local, PUTs (except at Telesp in 2002, not available), DLD and ILD. January-December accumulated data. (3) Calculated with the wireline company staff of the fixed telephone operator (OTF) and the subsidiaries that are consolidated by the full integration method. Telefonica Latinoamerica Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 6,377.1 6,954.1 (8.3) 1,727.2 1,519.9 13.6 Internal expend capitalized in fixed 46.2 63.4 (27.0) 13.2 10.9 21.0 assets (1) Operating expenses (3,215.0) (3,407.5) (5.7) (882.8) (771.1) 14.5 Other net operating income (expense) (143.1) (263.3) (45.7) (23.6) (48.0) (50.7) EBITDA 3,065.3 3,346.7 (8.4) 834.0 711.6 17.2 Depreciation and amortization (1,718.8) (1,999.4) (14.0) (446.7) (419.9) 6.4 Operating profit 1,346.5 1,347.3 (0.1) 387.2 291.8 32.7 Profit from associated companies 3.7 (4.3) c.s. 1.7 0.4 379.5 Financial net income (expense) (182.6) (1,181.1) (84.5) (146.3) (79.5) 84.0 Amortization of goodwill (83.1) (89.7) (7.4) (20.3) (22.5) (9.6) Extraordinary net income (expense) (141.3) (317.2) (55.5) (41.8) (207.7) (79.9) Income before taxes 943.3 (245.0) c.s. 180.5 (17.6) c.s. Income taxes (168.8) 103.7 c.s. 102.5 51.2 100.2 Net income before minority interests 774.5 (141.3) c.s. 282.9 33.6 743.0 Minority interests (97.3) (41.3) 135.6 (39.9) (20.5) 94.6 Net income 677.2 (182.6) c.s. 243.0 13.1 n.s. (1) Including work in process Telefonica Data Group Selected Financial Data Unaudited figures (Euros in millions) January - December 2003 2002 % Chg. Telefonica Data Espana Operating revenues 815.9 769.8 6.0 EBITDA 238.8 188.8 26.4 EBITDA margin 29.3% 24.5% 4.7 p.p. Telefonica Data in Latin America Incumbent Market (1) Operating revenues 362.2 344.5 5.1 EBITDA 64.5 54.7 17.9 EBITDA margin 17.8% 15.9% 1.9 p.p. Telefonica Deutschland & Telefonica UK (2) Operating revenues 382.7 400.5 (4.4) EBITDA 22.3 25.1 (11.2) EBITDA margin 5.8% 6.3% (0.4) p.p. Telefonica Data in Latin America Expanding Market (3) Operating revenues 67.7 47.4 42.9 EBITDA (13.0) (30.3) 57.1 EBITDA margin (19.2%) (63.9%) 44.7 p.p. Telefonica Data Group Operating revenues 1,626.6 1,652.6 (1.6) EBITDA 294.4 192.9 52.6 EBITDA margin 18.1% 11.7% 6.4 p.p. (1) Brazil, Argentina, Peru and Chile (2) Germany and United Kingdom (3) Mexico, USA and Colombia. For 2002, Uruguay is also included. Telefonica Empresas Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 1,782.0 1,758.5 1.3 473.7 440.5 7.5 Internal expend capitalized in fixed 12.7 9.9 28.0 5.0 3.6 39.5 assets (1) Operating expenses (1,487.0) (1,626.4) (8.6) (370.3) (377.8) (2.0) Other net operating income (expense) (3.3) (13.4) (75.0) (3.5) (5.1) (31.7) EBITDA 304.4 128.6 136.7 104.9 61.2 71.4 Depreciation and amortization (245.7) (292.1) (15.9) (63.2) (65.7) (3.8) Operating profit 58.7 (163.5) c.s. 41.7 (4.5) c.s. Profit from associated companies (2.8) (40.2) (93.1) (1.2) (12.0) (90.1) Financial net income (expense) (31.5) (151.7) (79.2) 5.7 (22.4) c.s. Amortization of goodwill (49.8) (69.1) (27.9) (12.5) (7.9) 58.8 Extraordinary net income (expense) (32.6) (892.9) (96.3) 1.5 (159.0) c.s. Income before taxes (58.0) (1,317.5) (95.6) 35.2 (205.9) c.s. Income taxes (10.7) 541.1 c.s. (15.5) 125.6 c.s. Net income before minority interests (68.7) (776.4) (91.2) 19.7 (80.3) c.s. Minority interests (6.0) 48.1 c.s. (2.3) 10.8 c.s. Net income (74.7) (728.2) (89.7) 17.4 (69.5) c.s. (1) Including work in process Telefonica Moviles Group Selected Operating Data Unaudited figures (Thousands) CELLULAR CUSTOMERS December 2003 % Chg. 03/02 Weighted (1) T Moviles Espana 19,661 6.8 19,661 Brasilcel 20,656 50.3 5,714 TCP Argentina 1,824 12.8 1,786 T Moviles Peru 1,507 21.6 1,476 TEM El Salvador 248 7.2 224 TEM Guatemala 157 61.6 157 NewCom Wireless Puerto Rico (2) 175 3.3 0 Telefonica Moviles Mexico 3,454 42.8 3,178 Medi Telecom 2,060 28.7 663 Telefonica Movil Chile (3) 2,270 22.7 0 Total Managed 52,011 25.7 32,858 (1) Number of lines weighted for the Telefonica Moviles Group's stake in each company. In 2003 proportional clients from TCO are included. (2) Managed by TEM. (3) Managed by TEM and part-owned by the Telefonica Group. Telefonica Moviles Espana Selected Operating Data Unaudited figures (Thousands) December 2003 2002 % Chg. Cellular subscribers 19,661 18,412 6.8 Contract 7,930 6,475 22.5 Prepaid 11,731 11,937 (1.7) Subscribers net adds in year to date (1) 1,249 1,619 (22.9) Contract 1,455 1,176 23.7 Prepaid (206) 443 c.s. Total airtime minutes (millions) (1) 37,657 31,869 18.2 SMS (millions) 9,302 8,375 11.1 Employees (units) 4,441 4,371 1.6 (1) January-December accumulated data. Telefonica Moviles Group: Participated Companies Selected Operating Data Unaudited figures (Thousands) December (1) 2003 2002 % Chg. Spain and Mediterranean area customers 21,721 20,013 8.5 Contract 8,059 6,589 22.3 Prepaid 13,661 13,423 1.8 Latin America customers (2) 27,846 19,346 43.9 Contract 6,064 4,868 24.6 Prepaid 21,781 14,478 50.4 Total airtime minutes (millions) (3) 63,219 43,574 45.1 (1) Includes total customers from all operators in which Telefonica Moviles holds an economic participation. (2) 2003 includes subscribers of Brasilcel, the Joint Venture with Portugal Telecom in Brazil (from May 2003, TCO is also incorporated). Chile and Puerto Rico are excluded. (3) January-December cumulative air minutes of TEM fully consolidated companies. Telefonica Moviles Group Selected Financial Data Unaudited figures (Euros in millions) January - December 2003 2002 % Chg. Telefonica Moviles Espana Operating revenues 7,495.5 6,770.0 10.7 EBITDA 3,940.8 3,490.3 12.9 EBITDA margin 52.6% 51.6% 1.0 p.p. Brazilian Companies (1) Operating revenues 1,377.8 1,160.3 18.8 EBITDA 506.8 425.8 19.0 EBITDA margin 36.8% 36.7% 0.1 p.p. Telefonica Moviles Mexico (2) Operating revenues 540.0 465.0 16.1 EBITDA (108.7) (14.7) n.s. EBITDA margin (20.1%) (3.2%) (16.9) p.p. TCP Argentina Operating revenues 240.1 194.8 23.2 EBITDA 64.4 48.3 33.3 EBITDA margin 26.8% 24.8% 2.0 p.p. Telefonica Moviles Peru Operating revenues 247.4 282.5 (12.4) EBITDA 87.4 95.0 (7.9) EBITDA margin 35.3% 33.6% 1.7 p.p. T. Moviles Guatemala and El Salvador Operating revenues 163.5 188.9 (13.4) EBITDA 29.1 38.5 (24.4) EBITDA margin 17.8% 20.4% (2.6) p.p. (1) 2003 figures reflect consolidation by proportional method for Brasilcel, the Joint Venture with Portugal Telecom (from May 2003 TCO is incorporated). 2002 figures reflect full consolidation of TeleSudeste Celular, TeleLeste Celular and CRT Celular. (2) Due to the consolidation of Telefonica Moviles Mexico financial statements after the integration of the northern Mexican operators and Pegaso Telecomunicaciones Group, 2003 and 2002 figures are after intragroup adjustments between these operators. Telefonica Moviles Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 10,070.3 9,139.8 10.2 2,766.5 2,310.8 19.7 Operating expenses (5,660.5) (5,364.8) 5.5 (1,707.0) (1,327.5) 28.6 Other net operating income 53.1 (39.2) c.s. 34.7 (86.3) c.s. (expense) EBITDA 4,462.9 3,735.8 19.5 1,094.2 897.0 22.0 Depreciation and amortization (1,420.6) (1,316.4) 7.9 (348.4) (327.6) 6.4 Operating profit 3,042.3 2,419.4 25.7 745.8 569.4 31.0 Profit from associated (80.7) (159.5) (49.4) (23.8) (41.3) (42.3) companies Financial net income (expense) (378.1) (316.2) 19.6 (119.2) (115.0) 3.6 Amortization of goodwill (101.7) (87.1) 16.8 (27.4) (25.9) 5.8 Extraordinary net income (4.5) (12,075.9) n.s. (10.4) (7,187.5) n.s. (expense) Income before taxes 2,477.3 (10,219.3) c.s. 565.0 (6,800.3) c.s. Income taxes (890.5) 2,130.8 c.s. (223.8) 2,738.2 c.s. Net income before minority 1,586.8 (8,088.5) c.s. 341.2 (4,062.1) c.s. interests Minority interests 21.1 4,364.0 n.s. 9.1 4,260.8 n.s. Net income 1,607.9 (3,724.5) c.s. 350.3 198.7 76.3 Mobile Business Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 10,428.3 9,449.3 10.4 2,888.9 2,401.2 20.3 Internal expend capitalized in 90.1 75.3 19.7 34.3 9.6 259.6 fixed assets (1) Operating expenses (5,881.3) (5,600.3) 5.0 (1,785.7) (1,458.2) 22.5 Other net operating income (55.2) (94.3) (41.5) (6.9) (28.0) (75.3) (expense) EBITDA 4,581.9 3,830.0 19.6 1,130.6 924.5 22.3 Depreciation and amortization (1,516.0) (1,391.9) 8.9 (380.1) (349.3) 8.8 Operating profit 3,065.9 2,438.1 25.7 750.5 575.2 30.5 Profit from associated companies (80.7) (159.5) (49.4) (23.8) (41.3) (42.3) Financial net income (expense) (416.6) (364.1) 14.4 (130.6) (126.7) 3.1 Amortization of goodwill (116.4) (101.5) 14.6 (32.0) (30.0) 6.9 Extraordinary net income (expense) (7.5) (12,077.8) n.s. (13.0) (7,189.0) n.s. Income before taxes 2,444.7 (10,264.8) c.s. 551.0 (6,811.7) c.s. Income taxes (889.0) 2,130.4 c.s. (222.3) 2,734.4 c.s. Net income before minority 1,555.7 (8,134.4) c.s. 328.7 (4,077.4) c.s. interests Minority interests 38.6 4,389.9 n.s. 16.2 4,269.4 n.s. Net income 1,594.3 (3,744.5) c.s. 344.9 192.0 79.6 (1) Including work in process TPI - Paginas Amarillas Group Operating figures in Spain Unaudited figures January - December 2003 2002 % Chg Books Published Yellow Pages* 105 78 White Pages 62 61 (Euros in millions) Revenue Breakdown (1) 445.3 402.3 10.7 Advertising 394.5 373.9 5.5 Publishing 361.2 347.4 4.0 Yellow Pages 291.1 285.7 1.9 White Pages 66.1 60.6 9.0 Building Directory 3.1 - n.d. Europages 0.9 1.1 (19.0) Internet 26.7 22.8 17.0 Operator Assisted Yellow Pages 4.0 3.4 18.1 Others 2.7 0.4 645.3 Telephony Traffic 23.9 2.0 1,074.4 Operator 24.6 24.2 1.3 Others 2.4 2.2 8.5 * Includes a breakdown by residential/business services and pocket guides. (1) TPI Espana includes Telefonica Publicidad e Informacion S.A. and 11888 Servicio de Consulta Telefonica S.A.U. results. Goodman Business Press is not included. TPI-Paginas Amarillas Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 570.8 532.8 7.1 149.1 123.9 20.3 Operating expenses (391.2) (382.7) 2.2 (107.6) (90.8) 18.5 EBITDA 179.6 150.1 19.6 41.5 33.1 25.3 Depreciation and amortization (30.0) (30.1) (0.3) (10.9) (9.7) 12.7 Operating profit 149.6 120.1 24.6 30.5 23.4 30.5 Profit from associated companies (1.2) (1.8) (34.9) (0.2) (0.7) (76.1) Financial net income (expense) (2.6) (1.8) 43.4 0.1 (5.9) c.s. Amortization of goodwill (3.0) (3.0) 0.0 (0.8) (0.7) n.s. Consolidation adjustments 0.6 1.8 (67.8) 0.0 0.7 n.s. Extraordinary net income (0.8) (7.9) (89.4) 0.3 (7.4) c.s. (expense) Income before taxes 142.5 107.3 32.8 30.0 9.4 218.2 Income taxes (48.9) (36.0) 35.7 (10.9) (4.0) 171.3 Net income before minority 93.7 71.3 31.4 19.1 5.4 253.1 interests Minority interests (3.6) 4.1 c.s. (0.1) 5.8 c.s. Net income 90.1 75.4 19.4 19.0 11.2 69.8 Directories Business Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 589.3 550.5 7.1 163.5 134.9 21.2 Internal expend capitalized in fixed 0.0 0.0 n.s. 0.0 0.0 n.s. assets (1) Operating expenses (375.9) (361.5) 4.0 (111.4) (91.3) 22.0 Other net operating income (expense) (29.4) (38.1) (23.0) (6.5) (9.3) (30.1) EBITDA 184.0 150.9 22.0 45.6 34.3 33.2 Depreciation and amortization (30.8) (31.2) (1.3) (11.1) (9.9) 12.1 Operating profit 153.3 119.7 28.1 34.5 24.3 41.8 Profit from associated companies (1.2) (1.8) (34.9) (0.2) (0.7) (76.1) Financial net income (expense) (6.6) (5.0) 31.8 (0.6) (9.1) (93.3) Amortization of goodwill (2.5) (1.3) 95.3 (0.8) (0.0) n.s. Extraordinary net income (expense) (1.7) (8.4) (79.7) 0.2 (7.6) c.s. Income before taxes 141.4 103.2 36.9 33.1 6.9 378.6 Income taxes (48.9) (36.0) 35.7 (10.9) (4.0) 171.3 Net income before minority interests 92.5 67.2 37.6 22.2 2.9 n.s. Minority interests (3.7) 4.3 c.s. (0.2) 5.7 c.s. Net income 88.8 71.6 24.1 22.0 8.6 155.3 (1) Including work in process. Terra Lycos Group Selected Operating Data Unaudited figures (Thousands) December 2003 2002 % Chg. Total Pay Subscribers 5,032.5 3,127.0 60.9 Access 1,672.0 1,399.1 19.5 Narrowband 1,028.4 1,020.6 0.8 Broadband 643.6 378.5 70.0 OBP (CSP/Portal) 3,360.5 1,727.9 94.5 Broadband Access Subscribers by Country 643.6 378.5 70.0 Spain 165.9 125.3 32.4 Latin-America 477.7 253.2 88.7 Employees (units) 2,255 2,494 (9.6) Terra Lycos Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 545.1 600.0 (9.1) 155.0 134.5 15.3 Internal expend capitalized in fixed 0.9 1.7 (45.0) 0.2 0.9 (74.6) assets (1) Operating expenses (577.8) (741.5) (22.1) (145.7) (174.3) (16.4) Other net operating income (expense) (7.7) (1.8) n.s. (1.9) 13.6 c.s. EBITDA (39.5) (141.7) (72.1) 7.6 (25.4) c.s. Depreciation and amortization (78.7) (142.7) (44.8) (21.6) (32.3) (33.2) Operating profit (118.2) (284.4) (58.4) (14.0) (57.7) (75.8) Profit from associated companies (34.7) (148.9) (76.7) (19.7) (88.7) (77.8) Financial net income (expense) 57.7 63.5 (9.1) 30.7 14.2 115.8 Amortization of goodwill (82.3) (252.6) (67.4) (19.9) (61.5) (67.6) Extraordinary net income (expense) 4.5 (1,046.3) c.s. (12.9) (1,047.2) (98.8) Income before taxes (173.0) (1,668.7) (89.6) (35.8) (1,240.8) (97.1) Income taxes (0.3) (342.6) (99.9) (0.0) (435.4) n.s. Net income before minority interests (173.2) (2,011.3) (91.4) (35.8) (1,676.1) (97.9) Minority interests 0.5 2.4 (77.8) 0.1 (0.6) c.s. Net income (172.7) (2,008.9) (91.4) (35.7) (1,676.7) (97.9) (1) Including work in process Atento Group Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 493.0 571.1 (13.7) 136.3 135.5 0.6 Operating expenses (429.0) (513.9) (16.5) (111.8) (112.4) (0.5) Other net operating income 2.5 (2.9) c.s. 1.0 0.7 42.1 (expense) EBITDA 66.5 54.3 22.4 25.5 23.8 7.3 Depreciation and amortization (52.2) (75.4) (30.7) (11.5) (15.2) (24.5) Operating profit 14.3 (21.1) c.s. 14.0 8.6 63.9 Financial net income (expense) (30.3) (85.6) (64.6) (6.2) (18.0) (65.4) Amortization of goodwill (6.9) (8.3) (17.0) (1.6) (1.9) (16.0) Extraordinary net income 2.9 (3.5) c.s. 1.0 (2.5) c.s. (expense) Income before taxes (20.0) (118.5) (83.1) 7.2 (13.9) c.s. Income taxes 4.6 18.3 (75.1) (3.7) (2.7) 37.0 Net income before minority (15.5) (100.2) (84.6) 3.4 (16.6) c.s. interests Minority interests (0.8) 1.1 c.s. (0.4) 0.5 c.s. Net income (16.2) (99.1) (83.6) 3.0 (16.1) c.s. Content and Media Business Consolidated Income Statement Unaudited figures (Euros in millions) January - October - December December 2003 2002 % Chg. 2003 2002 % Chg. Operating revenues 1,378.5 1,076.2 28.1 341.8 352.0 (2.9) Internal expend capitalized in fixed 0.1 0.5 (73.6) (0.0) 0.1 n.s. assets (1) Operating expenses (1,179.7) (964.4) 22.3 (287.8) (316.1) (9.0) Other net operating income (expense) 11.4 2.2 412.5 (4.5) 0.9 c.s. EBITDA 210.3 114.5 83.7 49.5 36.9 34.3 Depreciation and amortization (49.9) (49.6) 0.7 (10.5) (9.8) 6.1 Operating profit 160.4 64.9 147.2 39.0 27.0 44.5 Profit from associated companies (95.2) (191.3) (50.2) (22.9) (13.0) 75.8 Antena 3 TV (2) - (17.1) n.d. - 15.9 n.d. Via Digital (55.4) (116.6) (52.5) - (16.2) n.d. Others (39.9) (57.7) (30.9) (22.9) (12.7) 80.4 Financial net income (expense) (61.5) (133.5) (53.9) (14.4) (19.6) (26.4) Amortization of goodwill (102.5) (94.5) 8.4 (32.1) (25.1) 27.9 Extraordinary net income (expense) 327.9 (530.2) c.s. 367.9 (361.8) c.s. Income before taxes 229.0 (884.7) c.s. 337.6 (392.5) c.s. Income taxes (105.1) 217.0 c.s. (63.8) 97.3 c.s. Net income before minority interests 123.9 (667.7) c.s. 273.8 (295.2) c.s. Minority interests (4.2) (1.5) 192.2 0.0 0.3 (86.4) Net income 119.7 (669.1) c.s. 273.8 (295.0) c.s. (1) Including work in process. (2) Antena 3, and its subsidiary Onda Cero, is consolidated by the full consolidation method in the first half of 2003, being de-consolidated from the financial statements afterwards. This information is provided by RNS The company news service from the London Stock Exchange

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