2007January-December rslts P1

Telefonica SA
28 February 2008

                                                               Quarterly results
                                                           January-December 2007
                                                           
TABLE OF CONTENTS

        TELEFONICA GROUP

            Market Size
            Financial Highlights
            Consolidated Results
            Financial Data

        RESULTS BY REGIONAL BUSINESS UNITS

            Telefonica Espan

                • Wireline Business
                • Wireless Business

            Telefonica Latinoamerica

                • Brazil
                • Argentina
                • Chile
                • Peru
                • Colombia
                • Mexico
                • Venezuela
                • Central America
                • Ecuador
                • TIWS

            Telefonica Europe

                • O2 UK
                • O2 Germany
                • O2 Ireland
                • Telefonica O2 Czech Republic

            Other Companies

                • Atento Group

        ADDENDA

            Key Holdings of the Telefonica Group and its Subsidiaries
            Significant Events
            Changes to the Perimeter and Accounting Criteria of Consolidation


The financial information contained in this document has been prepared under
International Financial Reporting Standards (IFRS). This financial information
is unaudited and, therefore, is subject to potential future modifications.

The English language translation of the consolidated financial statements
originally issued in Spanish has been prepared solely for the convenience of
English speaking readers. Despite all the efforts devoted to this translation,
certain omissions or approximations may subsist. Telefonica, its representatives
and employees decline all responsibility in this regard. In the event of a
discrepancy, the Spanish-language version prevails.

TELEFONICA GROUP

Market Size
TELEFONICA GROUP
ACCESSES
Unaudited figures (thousands)
                                                                               January - December
                                                                           2007                   2006            % Chg

Final Clients Accesses                                                225,910.3              200,700.7             12.6
    Fixed telephony accesses (1)                                       41,974.2               42,340.7            (0.9)
    Internet and data accesses                                         12,968.4               12,170.9              6.6
        Narrowband                                                      2,532.9                3,997.7           (36.6)
        Broadband (2)                                                  10,277.8                7,974.8             28.9
        Other (3)                                                         157.7                  198.4           (20.5)
    Mobile accesses                                                   169,219.7              145,125.1             16.6
    Pay TV                                                              1,748.1                1,064.0             64.3
Wholesale Accesses                                                      2,628.0                2,479.4              6.0
    Unbundled loops                                                     1,396.5                  962.2             45.1
        Shared ULL                                                        776.4                  527.7             47.1
        Full ULL                                                          620.1                  434.5             42.7
    Wholesale ADSL (4)                                                    575.5                1,288.6           (55.3)
    Other (5)                                                             656.0                  228.6             n.m.
Total Accesses                                                        228,538.3              203,180.2             12.5

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary 
access; 2/6 Access x30. Company's accesses for internal use included.
(2) ADSL, satellite, optical fibre, cable modem and broadband circuits.
(3) Remaining non-broadband final client circuits.
(4) Includes Unbundled Lines by T. Deutschland.
(5) Circuits for other operators.

Note: Mobile accesses, Fixed telephony accesses and Broadband accesses include 
MANX customers.


TELEFONICA GROUP

Financial Highlights


Key highlights of the Telefonica Group's 2007 results:

  • Revenues rose +6.7%, OIBDA jumped +19.3%, OI, +42.1% and net profit,
    +42.9% year-on-year in 2007, driven by significant geographical and business
    diversification.

      • OIBDA 2007 is heavily impacted by the personnel reorganization
        announced by the company that will boost efficiency in the coming years.
        Personnel reorganization expenses at Telefonica Group stood at 1,199
        million euros in 2007 (1,084 million euros in 2006) and 900 million
        euros in the fourth quarter of 2007 (651 million euros in 2006).

      • Additionally, in 2007 the Company has recorded other expenses related
        to operations restructuring, amounting to 199 million euros (16 million
        euros in 2006), mainly related to the cessation of the national roaming
        contract with T-Mobile.

  • Telefonica posted consolidated net profit1 of 8,906 million euros:

      • Basic earnings per share rose 43.5% to 1.872 euros (1.304 euros per
        share in December 2006), the fourteenth consecutive increase.

    ----------------------------------------------------------------------------

    1 Includes the capital gains of 1,296 million euros and 1,368 million euros
    from the disposals of Airwave and Endemol respectively.


  • Strong organic revenue growth2, up 7.4% from 2006.

      • By region, Telefonica Latinoamerica reported a 13.0% year-on-year
        revenue growth, while Telefonica Espan and Telefonica Europe reported
        increases of 4.6% and 4.5%, respectively.

    ----------------------------------------------------------------------------

    2 Assuming constant exchange rates and including the consolidation of the O2
    Group, Telefonica Telecom and Iberbanda in January-December 2006. It
    excludes the consolidation of Telefonica O2 Slovakia in January-December
    2007, the consolidation of TVA in October-December 2007, the consolidation
    of Airwave in April-December 2006 and the consolidation of Endemol in
    July-December 2006.

  • Commercial activity was boosted by the success of the Company's customer
    acquisition and retention schemes, resulting in a sharp year-on-year rise in
    total accesses (+12.5%) to 228.5 million, underpinned by wireless and
    broadband accesses:

      • The wireless customer base increased by 16.6% year-on-year to 169.2
        million.

      • The number of retail broadband accesses stood above 10.2 million at
        the end of 2007, an increase of 28.9% from 2006.

      • Pay TV customer base grew 64.3% year-on-year to 1.7 million.

  • Operating cash flow (OIBDA-CapEx) amounted to 14,797 million euros thanks
    to synergies stemming from the integrated management of operations, cost
    optimisation and growing diversification.

  • Telefonica Group's results for 2007 provide further evidence of the
    differencial profile of the Company. Once again, the Group met all its
    financial targets3:

      • Consolidated revenue growth of 9.8% versus the forecast range of
        8%-10%;

      • Operating income before depreciation and amortisation (OIBDA) growth
        stood at 12.8%, towards the top of the forecast range of 10% - 13%.

      • Operating income (OI) increased by 27.6%, above the given range of 19%
        to 23%.

      • CapEx totalled 8,087 million euros, lower than the forecast investment
        of 8,100 million euros.

    ----------------------------------------------------------------------------

    3 Base 2006 reported numbers include eleven months of O2 Group (consolidated
    since February 2006), eight months of Telefonica Telecom (consolidated since
    May 2006), six months of Iberbanda (consolidated since July 2006), three
    months of start-up losses in Slovakia, and exclude Endemol and Airwave
    results. 2007 guidance assumes constant exchange rates as of 2006 and
    excludes changes in consolidation (TVA). In terms of guidance calculation,
    OIBDA and OI exclude other exceptional revenues/expenses not foreseeable in
    2007. Personnel Restructuring and Real Estate Programs are included as
    operating revenues/expenses, with the exception of the ones decided after
    the guidance communication at the beginning of the year. For comparison
    purposes the equivalent other exceptional revenues/expenses registered in
    2006 are also deducted from reported figures. CapEx excludes investments
    related to Real Estate Efficiency Plan.

  • The Group's strong business performance allows to announce sound growth
    prospects in 2008 and to reiterate the long-term growth targets announced in
    October 2007. For 2008, the Company forecasts4:

      • Consolidated revenue growth in the range of +6.0%/+8.0%;

      • Consolidated OIBDA growth in the range of +7.5%/+11.0%;

      • Consolidated OI growth in the range of +13.0%/+19.0%;

      • CapEx is expected to stand around 8,600 million euros.

    ----------------------------------------------------------------------------

    4 2007 adjusted figures exclude Airwave and Endemol, include 3 months of
    consolidation of TVA. 2007 T. Espan revenues are adjusted for new public
    voice telephony services business model. Group revenues are also adjusted
    accordingly. 2008 figures Includes TVA, Deltax and Telemig (from April
    2008). Telefonica's CapEx excludes Real Estate Efficiency Program. Guidance
    growths assume 2007 constant FX. In terms of guidance calculation OIBDA and
    OI exclude other exceptional revenues/expenses not foreseeable in 2007 and
    2008.

    2007 Bases for Guidance purposes:

      • Consolidated revenues: 55,550 million euros;

      • Consolidated OIBDA: 20,863 million euros;

      • Consolidated OI: 11,467 million euros;

      • CapEx: 7,975 million euros.


  • The Company reinforces its shareholder remuneration policy:

      • The dividend of 1 euro per share corresponding to 2008 fiscal year
        announced back in October is now complemented with a new share buy-back
        programme, announced on February, 27th, 2008, for a total amount of 100
        million shares, representing close to 2.095% of the Company's share
        capital. The programme will be effective during 2008 and the first half
        of 2009.


TELEFONICA GROUP

Consolidated Results


Telefonica Group organizational restructuring by Regional Business Units:
Telefonica Espan, Telefonica Latinoamerica and Telefonica Europe, in accordance
with the new regional and integrated management model, defines that the
companies legal structure is not relevant for the presentation of the Telefonica
Group financial information. In this sense, operating results of each regional
business units are presented independently of their legal structure.

In line with this new structure, Telefo Group has incorporated in Telefo Espan
and Telefo Latinoame regional businesses units all the information corresponding
to fixed, cellular, cable and Internet businesses.

Likewise, Telefo O2 Europe includes O2 Group results and Telefo O2 Czech
Republic results.

In the caption Other companies and Eliminations Content and Media Business is
included, where the results of Telefonica S.A. direct stake has been integrated
in the share capital of Endemol Entertainment Holding, N.V.

For the presentation of the segment reporting, revenue and expenses arising from
the use of the trademark and that do not affect the Group's consolidated results
have been eliminated from the operating results of each Group segment.

Telefonica Group's 2007 results continue to show the differential profile of the
Company, underpinned by its strong execution of operations and its ability to
consistently meet its financial targets. The solid growth achieved in 2007
highlights the Group's potential for organic growth, the value of its geographic
and business line diversification, an efficient cost structure and the synergies
tapped through the integrated management of the Company.

In a context of a strong expansion of the customer base (+12.5%), revenues
(+6.7%), OIBDA (+19.3%), OI (+42.1%) and net profit (+42.9%) all rose sharply
compared with 2006, while operating cash flow (OIBDA-CapEx) increased by 33.0%
year-on-year to 14,797 million euros (+9.1% ex-capital gains from the Airwave
and Endemol disposals).

Once again, the Company's outstanding performance in 2007 has enabled the
Telefonica Group to meet all its financial targets1 for the year. In accordance
with the criteria applied for setting its targets for 2007:

  • Revenue growth stood at 9.8% vs. the forecast range of 8%-10%;

  • Operating income before depreciation and amortisation (OIBDA) grew 12.8%,
    in the upper part of the forecast range of 10%-13%.

  • Operating income increased by 27.6%, above the given range of 19% to 23%.

  • CapEx totalled 8,087 million euros, lower than the forecast investment of
    8,100 million euros.


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1 Base 2006 reported numbers include eleven months of O2 Group (consolidated
since February 2006), eight months of Telefonica Telecom (consolidated since May
2006), six months of Iberbanda (consolidated since July 2006), three months of
start-up losses in Slovakia, and exclude Endemol and Airwave results. 2007
guidance assumes constant exchange rates as of 2006 and excludes changes in
consolidation (TVA). In terms of guidance calculation, OIBDA and OI exclude
other exceptional revenues/expenses not foreseeable in 2007. Personnel
Restructuring and Real Estate Programs are included as operating revenues/
expenses, with the exception of the ones decided after the guidance
communication at the beginning of the year. For comparison purposes the
equivalent other exceptional revenues/expenses registered in 2006 are also
deducted from reported figures. CapEx excludes investments related to Real
Estate Efficiency Plan.

Commercial activity picked up in the fourth quarter due to successful customer
acquisition and retention campaigns, boosting total accesses by 12.5% to 228.5
million from 2006.

Telefonica Espan has 46.4 million accesses, an increase of 5.0% on 2006,
underpinned by growth in wireless and broadband customers together with the
contention of fixed lines losses, at-0.3% year-on-year, the smallest decline
since 2001.

Growth in the number of total accesses at Telefonica Latinoamerica picked up the
pace (+16.9% year-on-year to 134.1 million) thanks to the strong growth in
broadband, a robust wireless market, which registered a new record for net adds
in the fourth quarter (7.3 million customers), and an expanding Pay TV customer
base, which increases close to 75% compared with 2006.

Telefonica Europa reported growth of 8.7% in its customer base to 42 million,
driven by the strong performance of its wireless business, especially in the
contract segment.

By access type, growth in mobile accesses at the Telefonica Group accelerated to
16.6% year-on-year to 169.2 million. In Latin America, it is worth highlighting
the quarterly net adds registered in Brazil (2.2 million, close to seven-fold
increase on the same period in 2006), and in Mexico (almost 1.5 million, up 32%
year-on-year). In Spain, net adds in the quarter totalled 406,837 thousand,
exceeding the figures seen in the last three quarters and boosting the customer
base to over 22.8 million, up 6.4% compared with 2006. In Europe, the customer
base increased by 8.6% to 38.3 million, with net adds of 1.0 million customers
in the quarter.

Retail Internet broadband accesses at the Telefonica Group surged 28.9%
year-on-year to over 10.2 million at the end of December. Take-up for ADSL, TV
and voice bundles remained strong, making a significant contribution to
developing the broadband market and forging customer loyalty. In Spain, retail
broadband accesses surpassed 4.5 million (up +22.1% year-on-year), in Latin
America, 5.0 million (+33.2%) and in Europe, 670,000 (+48.3%). Net adds in the
quarter stood at 227,500 in Spain, while this figure amounted to 332,300 and
97,500 in Latin America and Europe respectively.

Pay TV accesses at the end of the quarter exceeded 1.7 million, 64.3% more than
in 2006, with operations up and running in Spain, the Czech Republic, Peru,
Chile, Colombia and Brazil.

Thanks to the sound increase in the Group's customer base, revenues in 2007
totalled 56,441 million euros, a year-on-year increase of 6.7%. Negative
exchange rate effects detracted 1.2 percentage points from top-line growth (-1.0
percentage points to September, -1.4 percentage points to June, -2.6 percentage
points to March), while changes in the consolidation perimeter contributed 0.5
percentage points to this growth (vs. +1.9 percentage points to September, +4.5
percentage points to June, +9.8 percentage points to March). Organic revenue
growth2 was 7.4%, with Telefonica Latinoamerica (4.4 percentage points) and
Telefonica Espan (1.6 percentage points) making the largest contributions. By
business, mobile services and broadband were the main revenue drivers
underpinning organic growth, up 11.1% and 22.6% year-on-year respectively.
--------------------------------------------------------------------------------

2 Assuming constant exchange rates and including the consolidation of the O2
Group, Telefonica Telecom and Iberbanda in January-December 2006. It excludes
the consolidation of Telefonica O2 Slovakia in January-December 2007, the
consolidation of TVA in October-December 2007, the consolidation of Airwave in
April-December 2006 and the consolidation of Endemol in July-December 2006.

In absolute terms, Telefonica Espan contributed most to Telefonica Group
revenues, accounting for 36.6% of the total. Telefonica Espan reported revenues
of 20,683 million in 2007, up 4.7% from 2006. Revenues at Telefonica Espan's
wireline business amounted to 12,401 million euros in the year, a year-on-year
increase of 3.7%. This was largely underpinned by strong Internet and broadband
service revenues and, to a lesser extent, data and IT services, not forgetting
the noteworthy performance of voice and traditional access revenues. Telefonica
Espan's wireless business reported full-year revenues of 9,693 million euros, up
5.4% year-on-year, driven by strong service revenues (+4.5%), which in turn were
buoyed by customer revenues (+8.0%).

Telefonica Latinoamerica (35.6% of consolidated revenues) recorded revenues of
20,078 million euros in 2007, 11.0% more than in 2006 (14.5% in constant euros).
In organic terms3, revenues grew by 13.0%. In constant currency terms, Mexico
and Venezuela contribute most to topline growth with respective contributions of
3.2 and 3.1 percentage points. Brazil continues to make the largest contribution
to Telefonica Latinoamerica's revenues (38.2%) followed by Venezuela (11.9%) and
Argentina (11.3%). TASA remains the best performing fixed operator in the
region, reporting 9.9% growth in local currency thanks to higher broadband
revenues (+45.7% in local currency) and a robust traditional business (+5.4% in
local currency). In Brazil, Vivo (revenues up 16.5% in local currency) should be
highlighted, where results reflect the impact of the management measures
implemented in 2006 and 2007 to achieve profitable growth and improved customer
satisfaction.
--------------------------------------------------------------------------------

3 Assuming constant exchange rates and including the consolidation of Telefonica
Telecom in 2006. It excludes the consolidation of TVA in October-December 2007.

Telefonica Europe contributed 14,458 million euros (25.6%) to the Telefonica
Group's total revenues in 2007. Telefonica Europe's 2006 revenues included the
O2 Group for February-December 2006, as well as Telefonica Deutschland and
Telefonica O2 Czech Republic for January-December 2006. In the UK, the continued
growth of the customer base and ARPU boosted revenues, in comparable terms, by
9.5% in local currency vs. 2006 despite the strong competitive pressure in the
market. At Telefonica O2 Czech Republic, 2007 revenues rose 2.9% year-on-year
boosted by the wireless business (+4.4% in local currency) and a stable fixed
business. At O2 Germany, in comparable terms, revenues fell by 1.9% vs. 2006 as
traffic growth failed to offset the major price cuts made over the year in a
highly competitive market.

In 2007, Telefonica Group's operating expenses grew 7.0% vs. 2006 to 37,431
million euros. These higher costs are mainly due to changes in the consolidation
perimeter, higher commercial efforts carried out in Latin America and Europe and
the impact of operational and personnel reorganization plans announced by the
Company that will boost efficiency in the coming years.

Supplies rose 7.7% year-on-year in 2007 to 17,907 million euros (up 9.0%
excluding the exchange rate effect). Stripping out also changes to the
consolidation perimeter, supplies would have risen 9.2%, mainly due to higher
interconnection expenses at Telefonica Latinoamerica and O2 UK.

Personnel expenses rose 3.6% year-on-year to 7,893 million (+4.6% in constant
euros). The average number of employees in the period was 244,052, 16,915 more
than the previous year, due to net hires at the Atento Group and the inclusion
of new companies in the consolidation perimeter. Excluding the Atento Group
workforce, the average number of employees at the Telefonica Group would have
been virtually flat year-on-year at 127,102 employees. Personnel reorganization
expenses at Telefonica Group stood at 1,199 million euros in 2007 (1,084 million
euros in 2006):

  • Telefonica Espan: 667 million euros, including the 2003-2007 redundancy
    programme and a new personnel reorganization programme for 2008 started in
    2007;

  • Telefonica Latin America: 318 million euros booked for personnel
    reorganization programmes carried out in different companies of the Group
    corresponding to plans implemented in 2007 and in force throughout 2008;

  • Telefonica Europe: 158 million euros relating to personnel reorganization
    programmes implemented in Germany, the UK and Ireland.

External service expenses (9,991 million euros) grew by 8.2% year-on-year (+9.5%
in constant currency), partly due to the cessation of the roaming agreement in
Germany with T-Mobile in the fourth quarter. In organic terms, this increase was
mainly due to increased commercial activity at Telefonica Latinoamerica and in
Telefonica Espan's wireline business.

Also, gains on sale of fixed assets in 2007 totalled 2,766 million euros due to
the recognition in the second quarter of 1,296 million euros in capital gains
from the sale of Airwave and in the third quarter of 1,368 million euros in
capital gains from the disposal of Endemol. Meanwhile a capital loss of 45
million euros was recorded in the second quarter in connection with the disposal
of the Group's 6.9% stake in CANTV.

At the end of 2007, operating income before depreciation and amortisation
(OIBDA) stood at 22,825 million euros, up 19.3% from 2006. Stripping out gains
from the sale of Airwave and Endemol, OIBDA growth would have been 5.4%
year-on-year. Organic OIBDA growth4 would have stood at 20.8% (+6.8% stripping
out both capital gains). The OIBDA margin in 2007 was 40.4% (35.7% excluding the
Airwave and Endemol capital gains vs. 36.2% the previous year).
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4 Assuming constant exchange rates and including the consolidation of the O2
Group, Telefonica Telecom and Iberbanda in January-December 2006. It excludes
the consolidation of Telefonica O2 Slovakia in January-December 2007, the
consolidation of TVA in October-December 2007, the consolidation of Airwave in
April-December 2006 and the consolidation of Endemol in July-December 2006.

Telefonica Espan (46.9% of consolidated OIBDA) reported OIBDA of 9,448 million
euros in 2007, up 9.3% from 2006. The OIBDA margin stood at 45.7%, 1.9
percentage points higher than one year ago.

OIBDA at Telefonica Latinoamerica (7,121 million euros) represented 35.3% of
consolidated OIBDA for 20075, a year-on-year increase of 8.4%. In organic terms6
OIBDA growth was 10.6%. In constant currency terms, OIBDA growth in Latin
America was 11.5%. By country, Venezuela contributed most to OIBDA growth (5.2
percentage points), followed by Mexico (3.1 percentage points). In absolute
terms, Brazil was the largest contributor to Telefonica Latinoamerica's OIBDA,
accounting for 43.1% of the total, followed by Venezuela (14.9%) and Argentina
(11.1%). Telefonica Latinoamerica's OIBDA margin in 2007 amounted to 35.5%, 0.9
percentage points lower than in 2006, affected by the personnel reorganization
provisions outlined above. Excluding these provisions, the margin would have
been 37.1% (0.3 percentage points higher than the one recorded in 2006).
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5 2007 OIBDA for Telefonica Group does not consider the capital gains of 1,296
million euros and 1,368 million euros from the disposals of Airwave and Endemol
respectively.

6 Assuming constant exchange rates and including the consolidation of the O2
Group, Telefonica Telecom and Iberbanda in January-December 2006. It excludes
the consolidation of Telefonica O2 Slovakia in January-December 2007, the
consolidation of TVA in October-December 2007, the consolidation of Airwave in
April-December 2006 and the consolidation of Endemol in July-December 2006.

Telefonica Europe generated OIBDA7 of 4,977 million in 2007 including the 1,296
million euro capital gain from the sale of Airwave recorded in the second
quarter, a contribution of 18.3% to total Group OIBDA7. In 2006 Telefonica
Europe reported OIBDA of 3,708 million euros; this figure reflected the
consolidation of the O2 Group in February-December and Telefonica O2 Czech
Republic and Telefonica Germany for the full twelve months. The OIBDA margin
excluding the Airwave capital gain was 25.5% vs. 28.2% in 2006.
--------------------------------------------------------------------------------

7 Excluding the capital gain from Airwave (1,296 million euros) from Telefonica
Europe and from Group OIBDA the Airwave capital gains and the capital gain of
1,368 million euros from the disposal of Endemol.

In the fourth quarter O2 UK's OIBDA fell by 4.9% year-on-year in local currency
due to a 20.5 million euros charges, mainly due to personnel reorganization
costs at its IT and technology business aimed at achieving future efficiencies.
Stripping out this expense, OIBDA would have been almost flat vs. 2006. At O2
Germany, fourth-quarter OIBDA fell by 77.9% year-on-year due to non-recurrent
charges of 151 million euros. Most of these were accounted for by the early
cancellation of the roaming agreement in Germany with T-Mobile mentioned earlier
and the personnel reorganization plan initiated in the second quarter of the
year. Telefonica O2 Czech Republic recorded a fall of approximately 1.1
percentage points in its OIBDA margin partly explained by the negative
contribution of its operations in Slovakia.

Depreciation and amortisation in 2007 totalled 9,437 million euros, 2.8% lower
than 2006 figure. Both Telefonica Espan and Telefonica Latinoamerica contributed
the most to lower depreciation and amortisation (6.0% and 3.0% less
year-on-year, respectively). Telefonica Europe recorded a decrease (0.4%
year-on-year) owing to the purchase price allocations in the O2 Group
acquisition (802 million euros) and the Telefonica O2 Czech Republic acquisition
(158 million euros). In organic terms8, depreciation and amortisation for the
Telefonica Group fell 3.7% in 2007 year-on-year, with Telefonica Espan and
Telefonica Europe chiefly responsible for this decline.

The sharp rise in OIBDA and fall in depreciation and amortisation drove
operating income (OI) 42.1% higher in the year to 13,388 million euros.
Stripping out the impact of the Airwave and Endemol disposals, OI would have
increased by 13.8%. Organic growth8 was 47.0% (+18.1% excluding the capital
gains from the disposals of Airwave and Endemol).
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8 Assuming constant exchange rates and including the consolidation of the O2
Group, Telefonica Telecom and Iberbanda in January-December 2006. It excludes
the consolidation of Telefonica O2 Slovakia in January-December 2007, the
consolidation of TVA in October-December 2007, the consolidation of Airwave in
April-December 2006 and the consolidation of Endemol in July-December 2006.

Profit from associates jumped 83.3% in 2007 to 140 million euros. The bulk of
the increase was due to Portugal Telecom and Lycos Europe, which in April sold
its investment in the Czech-based IP provider Seznam, c.z. The improvement was
also underpinned by the fact that Sogecable and The Link have not been
consolidated under the equity method since the fourth quarter of 2006.

Net financial results at the end of 2007 amounted to 2,844 million euros, 4.0%
above those of the same period of 2006. This variation arises mainly from the
increase in the average cost of debt for Telefonica Group due to higher interest
rates in Europe and higher percentage of debt in Latinoamerica, that drives
financial expenses up by 207 million euros. The increase in the average cost of
debt is offset by the 200 million euros reduction due to the decrease of average
total debt in 2007. Management of the present value of pre-retirement plan
commitments and other positions associated to marked-to-market positions, have a
positive impact of 84 million euros, 42 million euros behind the figure reported
for 2006. The average cost calculated on average total net debt for 2007 is
5.59% and 5.61% when excluding FX results.

Free cash flow generated by the Telefonica Group in 2007 amounted 8,847 million
euros of which 2,113 and 3,076 million euros were assigned to Telefonica's share
buyback program and dividend payment respectively, and 781 million euros to
commitment cancellations derived mainly from the pre-retirements plans. Due to
the fact that financial divestitures for the period amounted to 2,512 million
euros, mainly due to Airwave and Endemol disposals and TELCO participation, net
financial debt decreased in 5,389 million euros. Also, net debt was reduced by
an additional 1,472 million euros because of FX impact, changes in the
consolidation perimeter and other effects on financial accounts. All this has
been translated in a decrease of 6,861 million euros in respect to the net
financial debt of the fiscal year 2006 (52,145 million euros), reaching the net
financial debt of Telefonica Group at 2007 45,284 million euros.

The tax provision for 2007 totalled 1,565 million euros, a tax rate of 14.65% in
the year. However, the cash outflow for the Group will be lower as it offsets
loss carryforwards generated in previous years and which have not yet been used.

In 2007 the tax rate was affected by several issues that resulted in it being
significantly reduced. Chief among these were the disposal of Endemol, which
generated a fiscal loss, the tax reforms in the UK, which resulted in a
reduction in deferred liabilities, and the disposal of Airwave, which had no
fiscal impact.

Minority interests substracted 213 million euros in 2007, a 38.5% year-on-year
decrease mainly due to the merger by absorption of Telefonica Moviles by
Telefonica S.A. in July 2006. Minority stakes in Telesp and Telefonica O2 Czech
Republic accounted for the bulk of profit attributable to minority interests.

In all, consolidated net profit to December totalled 8,906 million euros, up
42.9% year-on-year. Basic earnings per share jumped 43.5% to 1.872 euros. In the
fourth quarter, net profit amounted to 1,058 million euros, up 2.3%
year-on-year, while earnings per share stood at 0.224 euros compared to 0.213
euros per share in the fourth quarter of 2006.

CapEx in 2007 totalled 8,027 million euros, an increase of 0.3% year-on-year.
Exchange rate effects detracted 1.4 percentage points.

2008 FINANCIAL TARGETS

In accordance with the criteria used to establish its financial targets for
20089, Telefonica Group expects:

  • Annual growth in consolidated revenues to be in the range of 6.0%-8.0% for
    2008 (2007 Base for guidance purposes: 55,550 million euros). By regions:

    o Telefonica Espan : +2.0%/+3.5% (2007 Base for guidance purposes: 20,536
    million euros);

    o Telefonica Latinoamerica: +11.0%/+14.0% (2007 Base for guidance purposes:
    20,078 million euros);

    o Telefonica Europe: +4.0%/+7.0% (2007 Base for guidance purposes: 14,358
    million euros).

  • Annual OIBDA growth in 2008 to be in the range of 7.5%-11.0% (2007 Base
    for guidance purposes: 20,863 million euros). By regions:

    o Telefonica Espan : +6.0%/+8.0% (2007 Base for guidance purposes: 9,635
    million euros);

    o Telefonica Latinoamerica: +12.0%/+16.0% (2007 Base for guidance purposes:
    7,408 million euros);

    o Telefonica Europe: +2.0%/+6.0% (2007 Base for guidance purposes: 3,974
    million euros);

  • Annual operating income (OI) growth in 2008 to be in the range of
    13.0%-19.0% (2007 Base for guidance purposes: 11,467 million euros).


  • CapEx in 2008 will stand around 8,600 million euros (2007 Base for
    guidance purposes: 7,975 million euros).

--------------------------------------------------------------------------------

9 2007 adjusted figures exclude Airwave and Endemol, include 3 months of
consolidation of TVA. 2007 T. Espan revenues are adjusted for new public voice
telephony services business model. Group revenues are also adjusted accordingly.
2008 figures Includes TVA, Deltax and Telemig (from April 2008). Telefonica's
CapEx excludes Real Estate Efficiency Program. Guidance growths assume 2007
constant FX. In terms of guidance calculation OIBDA and OI exclude other
exceptional revenues/expenses not foreseeable in 2007 and 2008.



TELEFONICA GROUP

Financial Data


SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
                                                                                              January - December
                                                                                              2007        2006     % Chg

Revenues                                                                                    56,441      52,901       6.7
Operating income before D&A (OIBDA)                                                         22,825      19,126      19.3
Operating income (OI)                                                                       13,388       9,421      42.1
Income before taxes                                                                         10,684       6,764      58.0
Net income                                                                                   8,906       6,233      42.9
Basic earnings per share                                                                     1.872       1.304      43.5
Weighted average number of ordinary shares outstanding during the period (millions)        4,758.7     4,779.0     (0.4)
Note: Figures are presented considering the Purchase Price Allocation of O2 as of February 2006.
Note: For the basic earnings per share calculation purposes, the weighted average number of ordinary shares outstanding
during the period have been obtained applying IFRS rule 33 'Earnings per share'. Thereby, there are not taking into
account as outstanding shares the weighted average number of shares held as treasury stock during the period.


TELEFONICA GROUP
RESULTS BY REGIONAL BUSINESS UNITS
Unaudited figures (Euros in millions)
                                          REVENUES                       OIBDA                   OPERATING INCOME
                                     January - December            January - December           January - December
                                     2007      2006    % Chg       2007     2006    % Chg        2007     2006    % Chg

Telefonica Espan                   20,683    19,750      4.7      9,448    8,647      9.3       7,067    6,113     15.6
Telefonica Latinoamerica           20,078    18,089     11.0      7,121    6,571      8.4       3,562    2,900     22.8
Telefonica Europe (1)              14,458    13,159      9.9      4,977    3,708     34.2       1,591      309     n.m.
Other companies and                 1,221     1,903   (35.8)      1,278      200     n.m.       1,168       99     n.m.
eliminations (2)
Total Group                        56,441    52,901      6.7     22,825   19,126     19.3      13,388    9,421     42.1

Note: Figures are presented considering the Purchase Price Allocation of O2 as 
of February 2006.

Note: OIBDA for wireline operations in Latin America is presented after 
management fees.

(1) Telefonica Europe includes in 2006 Telefonica O2 Czech Republic 
(January-December), T. Deutschland (January-December), O2 Group 
(February-December) and O2 Germany (February-December). OIBDA figures exclude 
brand fee.
(2) OIBDA and Operating Income exclude the variation in investment valuation 
allowances accounted by Telefonica, S.A.


CAPEX BY REGIONAL BUSINESS UNITS
Unaudited figures (Euros in millions)
                                                                                        January - December
                                                                                       2007        2006       % Chg

Telefonica Espan                                                                      2,381       2,304         3.4
Telefonica Latinoamerica                                                              3,343       2,811        18.9
Telefonica Europe (1)                                                                 2,125       2,552      (16.7)
Other companies and eliminations                                                        178         336      (47.1)
Total Group                                                                           8,027       8,003         0.3

Note: Group CapEx in 2006 at cumulative average exchange rate.

(1) Telefonica Europe includes in 2006 Telefonica O2 Czech Republic 
(January-December), T. Deutschland (January-December), O2 Group 
(February-December) and O2 Germany (February-December).


TELEFONICA GROUP
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
                                                                 January - December              October - December
                                                                   2007      2006   % Chg        2007     2006      % 
Chg
Revenues                                                         56,441    52,901     6.7      14,426   14,196    1.6
Internal exp capitalized in fixed assets (1)                        708       719   (1.5)         211      195    8.3
Operating expenses                                             (37,431)  (34,995)     7.0    (10,381)  (9,992)    3.9
    Supplies                                                   (17,907)  (16,629)     7.7     (4,653)  (4,645)    0.2
    Personnel expenses                                          (7,893)   (7,622)     3.6     (2,578)  (2,421)    6.5
    Subcontracts                                                (9,991)   (9,230)     8.2     (2,771)  (2,578)    7.5
    Bad Debt Provisions                                           (666)     (609)     9.4       (130)    (125)    3.5
    Taxes                                                         (974)     (905)     7.7       (249)    (224)   11.4
Other net operating income (expense)                                358       346     3.3         192      127   51.2
Gain (loss) on sale of fixed assets                               2,766       236    n.m.         132       12   n.m.
Impairment of goodwill and other assets                            (17)      (81)  (79.2)         (4)     (66) (94.5)
Operating income before D&A (OIBDA)                              22,825    19,126    19.3       4,577    4,472    2.3
Depreciation and amortization                                   (9,437)   (9,704)   (2.8)     (2,452)  (2,510)  (2.3)
Operating income (OI)                                            13,388     9,421    42.1       2,125    1,962    8.3
Profit from associated companies                                    140        77    83.3          34       16   n.m.
Net financial income (expense)                                  (2,844)   (2,734)     4.0       (749)    (805)  (7.0)
Income before taxes                                              10,684     6,764    58.0       1,409    1,172   20.2
Income taxes                                                    (1,565)   (1,781)  (12.1)       (294)     (64)   n.m.
Income from continuing operations                                 9,119     4,983    83.0       1,115    1,108    0.6
Income (Loss) from discontinued ops.                                  0     1,596    n.m.           0        0   n.m.
Minority interest                                                 (213)     (346)  (38.5)        (57)     (73) (22.5)
Net income                                                        8,906     6,233    42.9       1,058    1,035    2.3
Weighted average number of ordinary shares                      4,758.7   4,779.0   (0.4)     4,718.5  4,853.6  (2.8)
outstanding during the period (millions)                                                                       
Basic earnings per share                                          1.872     1.304    43.5       0.224    0.213    5.2

Note: Figures are presented considering the Purchase Price Allocation of O2 as 
of February 2006.

'Bad debt provisions' have been reclassified from 'Other net operating income 
(expense)' to 'Operating expenses'.

(1) Including work in process.

Note: For the basic earnings per share calculation purposes, the weighted
average number of ordinary shares outstanding during the period have been
obtained applying IFRS rule 33 'Earnings per share'. Thereby, there are not
taking into account as outstanding shares the weighted average number of shares
held as treasury stock during the period.


TELEFONICA GROUP
CONSOLIDATED BALANCE SHEET
Unaudited figures (Euros in millions)
                                                                                        January - December
                                                                                     2007           2006          % Chg
Non-current assets                                                                 87,395         91,269          (4.2)
    Intangible assets                                                              18,320         20,758         (11.7)
    Goodwill                                                                       19,770         21,739          (9.1)
    Property, plant and equipment and Investment property                          32,469         33,888          (4.2)
    Long-term financial assets and other non-current assets                         9,007          6,183           45.7
    Deferred tax assets                                                             7,829          8,702         (10.0)
Current assets                                                                     18,478         17,713            4.3
    Inventories                                                                       987          1,012          (2.4)
    Trade and other receivables                                                     9,662          9,666          (0.0)
    Current tax receivable                                                          1,010          1,555         (35.0)
    Short-term financial investments                                                1,622          1,679          (3.4)
    Cash and cash equivalents                                                       5,065          3,792           33.6
    Non-current assets classified as held for sale                                    132              9           n.s.
Total Assets = Total Equity and Liabilities                                       105,873        108,982          (2.9)
Equity                                                                             22,855         20,001           14.3
    Equity attributable to equity holders of the parent                            20,125         17,178           17.2
    Minority interest                                                               2,730          2,823          (3.3)
Non-current liabilities                                                            58,044         62,644          (7.3)
    Long-term financial debt                                                       46,942         50,675          (7.4)
    Deferred tax liabilities                                                        3,926          4,700         (16.5)
    Long-term provisions                                                            6,161          6,287          (2.0)
    Other long-term liabilities                                                     1,015            982            3.4
Current liabilities                                                                24,974         26,337          (5.2)
    Short-term financial debt                                                       6,986          8,382         (16.7)
    Trade and other payables                                                        8,729          8,533            2.3
    Current tax payable                                                             2,157          2,841         (24.1)
    Short-term provisions and other liabilities                                     7,102          6,580            7.9
Financial Data
Net Financial Debt (1)                                                             45,284         52,145         (13.2)

Note: Figures are presented considering the Purchase Price Allocation of O2 as 
of February 2006.

(1) Net Financial Debt = Long term financial debt + Other long term liabilities
+ Short term financial debt - Short term financial investments - Cash and cash
equivalents - Long term financial assets and other non-current assets.




TELEFONICA GROUP
FREE CASH FLOW AND CHANGE IN DEBT
Unaudited figures (Euros in millions)
                                                                               January - December
                                                                               2007        2006    % Chg

I                          Cash flows from operations                        20,132      18,824      6.9
II                         Net interest payment (1)                         (3,097)     (2,296)
III                        Payment for income tax                           (1,457)     (1,100)
A=I+II+III                 Net cash provided by operating activities         15,578      15,428      1.0
B                          Payment for investment in fixed and              (7,205)     (6,828)
                           intangible assets
C=A+B                      Net free cash flow after CAPEX                     8,373       8,600    (2.6)
D                          Net Cash received from sale of Real Estate           129          24
E                          Net payment for financial investment               2,383    (21,574)
F                          Net payment for dividends and treasury stock     (5,496)     (5,542)
                           (2)
G=C+D+E+F                  Free cash flow after dividends                     5,389    (18,492)     c.s.
H                          Effects of exchange rate changes on net            (819)       (511)
                           financial debt
I                          Effects on net financial debt of changes in        (653)       4,097
                           consolid. and others
J                          Net financial debt at beginning of period         52,145      30,067
K=J-G+H+I                  Net financial debt at end of period               45,284      52,145   (13.2)

(1) Including cash received from dividends paid by subsidiaries that are not
under full consolidation method.

(2) Dividends paid by Telefonica S.A. and dividend payments to minoritaries from
subsidiaries that are under full consolidation method and treasury stock.




RECONCILIATIONS OF CASH FLOW AND OIBDA MINUS CAPEX
Unaudited figures (Euros in millions)
                                                                         January - December
                                                                    2007                  2006      % Chg
OIBDA                                                             22,825                19,126       19.3
- CapEx accrued during the period                                (8,027)               (8,003)
- Payments related to commitments                                  (781)                 (830)
- Net interest payment                                           (3,097)               (2,296)
- Payment for income tax                                         (1,457)               (1,100)
- Results from the sale of fixed assets                          (2,766)                 (236)
- Invest. in working cap. and other deferred income and            1,676                 1,939
exp
= Net Free Cash Flow after CapEx                                   8,373                 8,600      (2.6)
+ Net Cash received from sale of Real Estate                         129                    24
- Net payment for financial investment                             2,383              (21,574)
- Net payment for dividends and treasury stock                   (5,496)               (5,542)
= Free Cash Flow after dividends                                   5,389              (18,492)       c.s.

Note: The concept 'Free Cash Flow' reflects 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.

                                                            Jan-Dec 2007          Jan-Dec 2006
Net Free Cash Flow after CapEx                                     8,373                 8,600
+ Payments related to cancellation of commitments                    781                   830
- Ordinary dividends payment to minoritaries                       (307)                 (514)
= Free Cash Flow                                                   8,847                 8,916
Weighted average number of ordinary shares outstanding           4,758.7               4,779.0
during the period (millions)
= Free Cash Flow per share                                         1.859                 1.866



NET FINANCIAL DEBT AND COMMITMENTS
Unaudited figures (Euros in millions)
                                                                                      December 2007
                        Long-term debt                                                             47,269
                        Short term debt including current maturities                                6,986
                        Cash and Banks                                                            (5,065)
                        Short and Long-term financial investments (1)                             (3,906)
                      A Net Financial Debt                                                         45,284
                        Guarantees to IPSE 2000                                                       365
                      B Commitments related to guarantees                                             365
                        Gross commitments related to workforce reduction (2)                        5,437
                        Value of associated Long-term assets (3)                                    (676)
                        Taxes receivable (4)                                                      (1,472)
                      C Net commitments related to workforce reduction                              3,289
              A + B + C Total Debt + Commitments                                                   48,938
                        Net Financial Debt / OIBDA (5)                                               2.3x
                        Total Debt + Commitments/ OIBDA (5)                                          2.4x

(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. 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.
(5) Calculated based on December 2007 OIBDA, excluding results on the sale of 
fixed assets.




TELEFONICA GROUP
EXCHANGES RATES APPLIED
                                        P&L and CapEx (1)               Balance Sheet (2)
                                  Jan - Dec 2007 Jan - Dec 2006    December 2007  December 2006

USA (US Dollar/Euro)                       1.368          1.255            1.472          1.317
United Kingdom (Sterling/Euro)             0.685          0.682            0.733          0.672
Argentina (Argentinean Peso/Euro)          4.263          3.857            4.636          4.033
Brazil (Brazilian Real/Euro)               2.661          2.728            2.608          2.816
Czech Republic (Czech Crown/Euro)         27.756         28.338           26.620         27.495
Chile (Chilean Peso/Euro)                714.637        665.336          731.472        701.262
Colombia (Colombian Peso/Euro)         2,837.126      2,949.853        2,965.928      2,949.853
El Salvador (Colon/Euro)                  11.974         10.977           12.881         11.524
Guatemala (Quetzal/Euro)                  10.502          9.548           11.234         10.004
Mexico (Mexican Peso/Euro)                14.953         13.664           15.996         14.330
Nicaragua (Cordoba/Euro)                  25.229         22.031           27.827         23.703
Peru (Peruvian Nuevo Sol/Euro)             4.282          4.108            4.409          4.205
Uruguay (Uruguayan Peso/Euro)             32.101         30.183           31.724         32.201
Venezuela (Bolivar/Euro)               2,942.254      2,695.418        3,165.015      2,832.861

(1) These exchange rates are used to convert the P&L and CapEx accounts of the 
Group foreign subsidiaries from local currency to euros.
(2) Exchange rates as of 31/Dec/07 and 31/Dec/06.



RESULTS BY REGIONAL BUSINESS UNITS

Telefonica Espan

Telefonica Espan successfully bolstered its position in an extremely active and
competitive market, meeting all the financial targets announced for 2007.

Revenues grew by 4.7% in 2007 to 20,683 million euros, beating the growth target
of 3.5% - 4.5%. Operating income before depreciation and amortisation (OIBDA)
jumped by 9.3% to 9,448 million euros, putting the OIBDA margin at 45.7%. For
purposes of comparison with the OIBDA growth target for 2007 of between 9% and
11%, factoring in the factors taken into consideration when this target was set,
OIBDA growth stood at 11.6%, meeting the target upgraded in July 2007.

CapEx amounted to 2,381 million euros, an increase of 3.4% from 2006. CapEx
target for 2007, which excluded investments related to Real Estate Efficiency
Plan, was set at keeping the figure below 2,400 million euros in 2007.
Investment effort has been mainly devoted to growing the Internet and Broadband
businesses, with significant investments related to ADSL and IP services
(Imagenio). Worth to highlight is the launching of the mobile and fixed network
transformation processes.

Operating Cash Flow (OIBDA-CapEx) for the year amounted to 7,067 million euros,
growing by 11.4% compared to the January-December 2006 period.

As with regards to the Redundancy Plan (E.R.E. 2003-2007) at the Wireline
Business, it should be noted its conclusion after registering 1,102 sign-ups in
the final year of the programme, with a related provision of 345 million euros.

During the last quarter of 2007, Telefonica took decisions of organizational
nature aiming to foster a structure to ease technological convergence and
services delivering in the businesses where the company operates. With this
objective, and within the integration model adopted, ongoing efforts on
personnel reorganization are being implemented. This has resulted in a new
personnel reorganization programme approved, which by December 31st 2007 had
already been initiated. The estimated cost of this programme amounts to 322
million euros (168 million euros at the Wireline Business and 154 million euros
at the Wireless Business), with the corresponding provision already included in
2007 accounts.

Total personnel reorganization costs for year 2007 amount to 667 million euros
at Telefonica Espan, of which 551 million euros where accounted for in the last
quarter.

Highlights of Telefonica Espan's Wireline Business:

  • Sustained topline growth (+3.7% in 2007) underpinned by the good
    performance of Internet and broadband services and, to a lesser extent, data
    and IT services.

  • Strong competitive position in the Broadband market, maintaining its
    estimated market share above 56%. At the end of December Telefonica's retail
    broadband accesses reached 4.6 million.

  • Losses in the number of fixed telephony lines were contained at just 0.3%
    year-on-year (December 2007 vs. December 2006) after posting 32.801 net adds
    in the fourth quarter. Net losses for the year 2007 stood at 51,901 lines,
    the best year-on-year performance since 2001.

  • 5.1% underlying OIBDA growth in 2007 (stripping out specific effects such
    as personnel reorganization costs, the Real Estate Programme and subsidies
    among others).

  • Conclusion of the Redundancy Plan (2003/2007), to which a total of 13,870
    employees signed up during the five years it was in force.


Highlights of Telefonica Espan's Wireless Business include:

  • Solid service revenues growth of 4.5% in 2007, driven by the strong
    performance of customer revenues (+8.0%).

  • The customer base grew by 6.4% year-on-year to 22.8 million lines, with
    growth in the contract segment jumping 12.4%. Contract customers now account
    for almost 60% of the total customer base.

  • Churn remained flat at 1.8% in the face of increased competitive pressure,
    similar to the 2006 figure, with a slight reduction in contract churn
    achieved down to 1.0%.

  • Increasing contribution from data revenues (+12.4% in 2007 vs. 2006), with
    connectivity revenues posting the best performance, up over 70% in 2007.

  • 6.5% increase in OIBDA under guidance criteria in year 2007 (excluding
    costs related to personnel reorganization). OIBDA reaches 4,395 million
    euros in 2007, with an OIBDA margin over revenues of 45.3%.




RESULTS BY REGIONAL BUSINESS UNITS

Telefonica Espan

WIRELINE BUSINESS

Revenues in 2007 amounted to 12,401 million euros, with growth reaching 3.7%
year-on-year in the fourth quarter. Cumulative growth to December stood at 3.7%,
slightly exceeding the growth target of between 2.5% and 3.5%.

This rise was underpinned by growth in Internet and broadband services and data
and IT services, not forgetting the noteworthy performance of traditional voice
and access revenues, with the former falling slightly and the latter remaining
stable.

Traditional access revenues amounted to 2,772 million euros, a year-on-year
increase of 0.1%, led by the 2.0% increase in the PSTN line monthly fee and
fewer losses of fixed telephony accesses relative to 2006.

  • The Spanish wireline access market grew by an estimated 1.9% over the
    course of the year. The Company's fixed telephony accesses totalled
    15,897,966 at the end of 2007 in the wake of fourth quarter net line gains
    of 32,801, stemming the pace of the year-on-year decline to 0.3% (-0.7% at
    September 2007). The strong performance during the fourth quarter, the best
    figure since the first quarter of 2001, means that net line losses in 2007
    were contained at 51,901, down substantially on those recorded in 2006
    (-185,696 net access losses). These figures make 2007 the best year since
    2001 in terms of net adds.

  • Telefonica's share of the wireline access market remained stable vs.
    September 2007 at 81%.


Voice service revenues continued to follow the positive trend seen in previous
quarters, and fell by 1.6% in 2007 (-2.1% in the first nine months of the year).
Voice service revenues remained flat in year-on-year terms in the fourth
quarter, underpinned by a 12.5% jump in interconnection revenues, driven by
higher incoming international and carrier traffic and falls in outgoing traffic
(-1.4%) and handset sales (-6.1%).

  • The number of pre-selected lines fell further, declining by 110,859 in
    2007 to 1,795,660 at the end of December.

  • In line with the positive revenue trend, Telefonica Espan's estimated
    share of wireline traffic remains stable at around 65%.


Internet and broadband revenues surged by 11.9% in the fourth quarter, boosted
by revenues in the retail broadband segment which were 17.4% higher
year-on-year. Internet and broadband revenues increased by 15.5% in 2007 from
2006.

Retail broadband service revenues were up +24.2% in December, accounting for 3.8
percentage points of the revenue growth registered by Telefonica Espan's
Wireline Business. Growth in these revenues slowed through the year, to post a
growth of 17.4% in the last quarter, due to the decline in retail broadband net
adds in 2007 vs. 2006 (-19.0%).

At the same time, wholesale broadband service revenues fell 11.3% in 2007,
mainly on account of the migration of wholesale ADSL to unbundled loops.

  • Estimated net adds in the fixed broadband Internet access market amounted
    to 0.4 million in the fourth quarter, resulting in estimated net adds of
    around 1.4 million for the entire year, 18.9% down on 2006. The total
    estimated market in Spain in December 2007 stood at 8.1 million accesses.

  • Telefonica's retail Internet broadband accesses net adds in the fourth
    quarter came to 227,480, taking total accesses to 4,571,599 at the end of
    December. This gave Telefonica continued segment leadership with an
    estimated market share of over 56%, slightly higher than in 2006.

  • The estimated share of unbundled loops in the broadband Internet access
    market increased to almost 17% (14% in 2006). Net adds during the fourth
    quarter amounted to 116,088 loops, down 29.3% on that recorded in the same
    quarter of 2006. Total unbundled loops at the end of December amounted to
    1,353,940, of which 57.3% were shared access loops.

  • The wholesale ADSL service continued to lose steam during the fourth
    quarter due to the lower number of migrations to unbundled loops. In the
    wake of net fourth quarter losses of 13,658, total wholesale accesses
    amounted to 499,263 at the end of December.

  • Telefonica continues to spearhead the development of the pay TV market in
    Spain, achieving an estimated market share below 13% (10% by December end
    2006) after adding 42,020 new customers in the fourth quarter. As a result
    its customer base had risen to 511,087 by the end of December 2007.

  • The total number of Duo and Trio bundles stood at 3,792,002 units at the
    end of December 2007. It is worth highlighting that over 80% of the
    Company's retail Internet broadband accesses are included in a double or
    triple play bundle (over 70% by December 2006 end).


Data service revenues grew sharply in the fourth quarter to 14.1% from 5.6% in
the nine months to September 2007. This increase in the pace of growth is
underpinned by the 12.0% increase in revenues from Virtual Private Networks
(VPNs) in the fourth quarter of 2007, driven by the strong uptake in fibre and
ADSL VPNs. Wholesale services also posted an impressive 22.8% growth in the
fourth quarter, compared with growth of 6.8% in the January-September 2007
period.

IT service revenues grew 11.6% in 2007 versus 2006.

Operating expenses at Telefonica Espan's Wireline Business totalled 7,337
million euros in 2007, 4.0% less than in 2006. This fall relates to lower
personnel reorganization costs (513 million euros in 2007 vs. 980 million euros
in 2006), which fell by 47.7%. These costs are broken up into 345 million euros
in connection with the E.R.E. 2003-2007 (Redundancy Plan) to which 1.102
employees have joined in 2007, the ending year of the program, plus 168 million
euros of the new personnel reorganization programme initiated in 2007 and to be
implemented through 2008.

Stripping out personnel reorganization costs in 2006 and 2007 and the actuarial
review, operating expenses grew 2.5% in 2007. This growth was due to: i) the
8.5% rise in external services expenses to 1,413 million euros due to increased
commercial activity and PUT (Public Use Telephony) expenses; ii) the 1.2%
increase in supply expenses to 3,008 million euros, especially expenses
associated with Internet and Imagenio; and iii) the 0.2% growth in personnel
expenses, once stripped out personnel reorganization costs, amounting 2,129
million euros. Personnel expenses fell by 14.9% in the year as a whole to 2,642
million euros due to the impact of the above mentioned lower personnel
reorganization costs.

Topline growth outpaced expenses excluding personnel reorganization costs. This,
together with the decline of personnel reorganization costs, boosted operating
income before depreciation and amortisation (OIBDA) by 14.8% to 5,249 million
euros in 2007.

OIBDA in October-December 2007 totalled 1,181 million euros, substantially
higher than the figure reported in the same period of 2006 (+47.1%). This was
due primarily to the higher personnel reorganization costs accounted for in the
last quarter of 2006 (588 million euros vs. 397 million euros in the fourth
quarter of 2007).

Stripping out specific items such as the redundancy provision (E.R.E.
2003-2007), the new personnel programme, the real estate programme, subsidies,
the fine imposed by the EU and recognised in the second quarter, and others,
underlying OIBDA rose 5.1% in 2007, having grown by 3.5% in the fourth quarter
of 2007. For purposes of comparison with the stated financial targets, if a
total provision of 630 million euros had been booked for personnel
reorganization costs (compared with the actual provision of 513 million euros),
and capital gains from property sales and others stood at 162 million euros
(compared with the reported amount of 163 million euros), OIBDA growth would
have been 15.8%, at the top end of the growth target of 13.5% -16% (the 151.9
million euro fine imposed by the European Union is considered a unforeseeable
expense and consequently is not included as part of the financial targets).

The OIBDA margin in 2007 stood at 42.3%. Excluding the effect of personnel
reorganization programmes and the actuarial review in both years, along with the
fine imposed by the European Union in the second quarter of 2007, the OIBDA
margin would have expanded by 1.3 percentage points year-on-year to 47.7%.





RESULTS BY REGIONAL BUSINESS UNITS

Telefonica Espan

WIRELESS BUSINESS

The Spanish wireless market surpassed the 50.7 million-line mark by the end of
2007, with an estimated penetration rate of 111% (an increase of more than 6
percentage points vs. December 2006).

Against this backdrop, Telefonica Espan's Wireless Business achieved net adds of
406,837 customers in the fourth quarter (426,235 in the fourth quarter of 2006),
beating the figures recorded in the first three quarters of the year. In
cumulative terms, Telefonica Espan's net adds stood at 1,380,596 lines
(1,556,027 in 2006), with a noteworthy number of customer gains in the contract
segment (1,501,800, up 4.3% on 2006). This made Telefonica Espan clear leader in
contract adds in the Spanish market, improving its share of net adds in this
segment in an increasingly competitive market.

Commercial activity grew by 4.4% in the final quarter in year-on-year terms,
with a total of more than 11.9 million commercial actions in the year, a 2.9%
increase on 2006. Customer base now totals more than 22.8 million (+6.4% vs.
December 2006), underpinned by growth in the contract segment (+12.4% vs.
December 2006), which accounted for almost 60% of the total customer base at the
end of 2007 (up more than 3 percentage points on December 2006).

In portability, lines balance was positive in the fourth quarter of 2007,
underpinned by the strong performance of the highest value segment, specifically
36,593 net contract adds. In the year as a whole, the net portability balance
was positive (494 lines), with net adds in the contract segment of 238,320
lines.

Strong gross adds (+3% in 2007 vs. 2006) and stable churn were key to the
positive outcome of the company's commercial strategy. Particularly noteworthy
was the growth in contract adds, which rose 12.0% year-on-year. Churn in 2007
stood at 1.8%, the same rate as in 2006 despite increased pressure from
competition, and the company even achieved a slight reduction in contract churn
(-0.03 percentage points) to 1.0%. Prepay churn in the final quarter of the year
was lower than in the third quarter of 2007 (-0.3 percentage points) and than in
the final quarter of 2006 (-0.1 percentage points). Handset upgrades once again
played a key role in churn performance. Driven by loyalty campaigns, these grew
by 7.8% versus the fourth quarter of 2006 and rose 7.4% in year-on-year terms.

In terms of usage, the volume of traffic carried in the final quarter grew by
6.2% year-on-year (more than 15,500 million minutes) and by 11.5% in the year as
a whole (over 63,300 million minutes). On-net traffic rose 7.4% in the fourth
quarter and by 14.0% in the year . MoU amounted to 161 minutes in 2007 (+3.0%
vs. 2006). The drop in MoU in the fourth quarter of 2007 vs. the fourth quarter
of 2006 was due to the different types of promotions carried out in the two
periods.

Voice ARPU reached 26.7 euros in the final quarter of the year, 4.5% lower than
in the same quarter of 2006. The main causes of this decrease were the April and
October cuts in interconnection rates (14.9% in cumulative terms) and the
regulation of roaming tariffs in the European Union. Year-on-year voice ARPU
terms falls 2.8% to 27.6 euros. Outgoing voice ARPU in 2007 fell slightly to
22.9 euros (-1.0%), declining by 2.9% in the fourth quarter of 2007 to 22.3
euros.

Meanwhile, data ARPU reached 5.0 euros in the fourth quarter, with year-on-year
growth of 1.8% (with an increase of +2.6% in outgoing data ARPU), and full-year
growth of 4.8% (5.2% in outgoing data ARPU) to 4.8 euros. The lower data ARPU
growth in the fourth quarter was due to the slowdown in content services, driven
by the restructuring process affecting the sector and the regulatory uncertainty
(although this was recently resolved). Stripping out content revenues both in
the fourth quarter of 2007 and the year as a whole, data ARPU would be growing
at a rate of over 6%, underpinned by connectivity revenues (over 70% growth
versus the fourth quarter of 2006).

At the end of December Telefonica Espan's customers held more than 3.5 million
UMTS/HSDPA handsets, representing a penetration of 16% excluding M2M, up 10
percentage points from 2006.

As a result, total ARPU in the fourth quarter of 2007 was 31.8 euros, 3.6% lower
than in the fourth quarter of 2006 and down 1.8% in the full year at 32.3 euros.
Outgoing ARPU in 2007 remained at a similar level to 2006 (27.1 euros).

With regard to data roaming, on January 14th the Wireless Business of Telefonica
Espan and Telefonica Europe announced a range of new Internet roaming rates for
users travelling in Europe. These will be between 42% and 61% lower than at
present.

Revenues rose 5.4% in 2007 to 9,693 million euros vs. 2006 and by 3.2% in the
fourth quarter to 2,407 million euros. It is worth noting that since January 1st
2007 the way prepay sales and top-up commissions are accounted has changed.
Instead of being recognised as a decrease in revenues, they are now reported as
costs. Also, revenues/costs of portability transit routing are now reported at
the net amounts. The net effect of this change is neutral at OIBDA level,
although revenues would have risen 2.9% in the fourth quarter and 5.1% in 2007
excluding these accounting changes. Highlights by revenue item:

  • Service revenues grew by 2.6% in the fourth quarter and by 4.5% in 2007 to
    8,509 million euros, within the target of between 4.0% and 5.0% growth
    respectively. Growth was primarily driven by customer revenues, which surged
    8.0% in 2007 (+5.8% in the quarter, impacted by the regulation of roaming
    tariffs in the EU from September 2007) to 6,861 million euros.

  • Interconnection revenues fell 8.6% in 2007 (-10.8% in the fourth quarter),
    due to the reduction in interconnection rates. Roaming-in revenues fell by
    12.4% over the year due to the downward trend in wholesale prices (-6.3% in
    the fourth quarter).

  • Revenue from handset sales totalled 1,184 million euros, a year-on-year
    rise of 11.9% and of 7.6% in the fourth quarter.

  • During the last quarter of 2007, Telefonica took decisions of
    organizational nature aiming to foster a structure to ease technological
    convergence and services delivering in the businesses where the company
    operates. With this objective, and within the integration model adopted,
    ongoing efforts on personnel reorganization are being implemented. This has
    resulted in a new personnel reorganization programme approved, which by
    December 31st 2007 had already been initiated. The estimated cost of this
    programme amounts to 154 million euros, with the corresponding provision
    already included in 2007 accounts.

  • Operating costs amounted to 5,541 million euros in 2007, up 7.6% on the
    2006 total, underpinned by greater cost efficiency and impacted by the
    provision mentioned. In the fourth quarter, operating costs were 13.1% up
    year-on-year, totalling 1,531 million euros. Excluding this provision, the
    operating costs would have amounted to 5,387 milion euros in 2007 (1,378
    million euros in the fourth quarter), up 4.6% vs. 2006 (+1.8% in the
    quarter).


Operating income before depreciation and amortisation (OIBDA) grew by 2.8% in
2007 in relation to 2006 to 4,241 million euros. Fourth-quarter OIBDA amounted
to 902 million euros, a year-on-year decline of 10.0%.

Excluding the aforementioned provision, the OIBDA would have increased by 6.5%
vs. 2006 amounting 4,395 million euros comfortably beating the target of between
4.0% and 5.0% growth. In the fourth quarter, the OIBDA excluding the provision
reached 1,056 million euros, up 5.3% year-on-year. The OIBDA margin stood at
43.9% in the fourth quarter (43.0% in the same period of 2006), and 45.3% in
cumulative terms vs. 44.9% in 2006, despite increasing commercial activity in a
highly competitive market.


TELEFONICA ESPAN
ACCESSES
Unaudited figures (thousands)
                         2006                      2007
                        December      March     June September December       % Chg
                                                                              y-o-y

Final Clients Accesses  42,620.8   43,115.8 43,508.2  43,885.2 44,514.9         4.4
    Fixed telephony     15,949.9   15,920.3 15,906.2  15,865.2 15,898.0       (0.3)
accesses (1)
    Internet and data    4,842.0    4,963.2  5,048.4   5,131.3  5,279.3         9.0
accesses
        Narrowband       1,040.5      916.0    798.1     736.5    660.8      (36.5)
        Broadband (2)    3,742.7    3,992.7  4,198.4   4,344.1  4,571.6        22.1
        Other (3)           58.8       54.4     52.0      50.7     47.0      (20.1)
    Mobile accesses     21,446.0   21,813.7 22,102.7  22,419.7 22,826.6         6.4
        Pre-Pay          9,303.0    9,283.8  9,182.9   9,158.0  9,181.8       (1.3)
        Contract        12,142.9   12,529.9 12,919.8  13,261.7 13,644.7        12.4
    Pay TV                 383.0      418.6    450.9     469.1    511.1        33.4
Wholesale Accesses       1,531.8    1,640.8  1,707.8   1,757.2  1,859.2        21.4
    Unbundled loops        939.0    1,071.2  1,170.0   1,237.9  1,353.9        44.2
        Shared ULL         527.7      605.2    664.5     713.5    776.4        47.1
        Full ULL           411.3      466.0    505.5     524.4    577.6        40.4
    Wholesale ADSL         586.4      561.7    530.5     512.9    499.3      (14.9)
    Other (4)                6.4        7.8      7.4       6.5      6.0       (5.4)
Total Accesses          44,152.6   44,756.6 45,216.0  45,642.5 46,374.2         5.0

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary
access; 2/6 Access x30. Company's accesses for internal use included.
(2) ADSL, satellite, optical fibre, cable modem and
broadband circuits.
(3) Leased lines.
(4) Wholesale circuits.
Note: Does not include Iberbanda's accesses



TELEFONICA ESPAN
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in
millions)
                          January - December       October - December
                           2007     2006  % Chg     2007    2006   % Chg

Revenues                 20,683   19,750    4.7    5,222   5,030     3.8
Internal exp                220      215    2.5       59      65   (9.3)
capitalized in fixed
assets (1)
Operating expenses     (11,505) (11,429)    0.7  (3,366) (3,328)     1.2
Other net operating        (71)       48   c.s.        8      25    n.m.
income (expense)
Gain (loss) on sale of      137       80   72.6      145     (3)    c.s.
fixed assets
Impairment of goodwill     (17)     (17)    1.1      (3)     (5)  (41.7)
and other assets
Operating income          9,448    8,647    9.3    2,064   1,783    15.7
before D&A (OIBDA)
Depreciation and        (2,382)  (2,533)  (6.0)    (587)   (619)   (5.1)
amortization
Operating income (OI)     7,067    6,113   15.6    1,476   1,164    26.8

Note: 'Bad debt provisions' have been reclassified from 'Other net
operating income (expense)' to 'Operating expenses'.
(1) Including work in process.



TELEFONICA ESPAN: WIRELINE BUSINESS
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
                                                 January - December                       October - December
                                               2007         2006        % Chg           2007         2006        % Chg

Revenues                                     12,401       11,964          3.7          3,183        3,070          3.7
OIBDA                                         5,249        4,572         14.8          1,181          803         47.1
OIBDA margin                                  42.3%        38.2%     4.1 p.p.          37.1%        26.1%    11.0 p.p.
CapEx                                         1,614        1,555          3.8            552          506          9.2



TELEFONICA ESPAN: WIRELINE BUSINESS
SELECTED REVENUES DATA
Unaudited figures (Euros in millions)
                                     January - December                October - December
                                     2007       2006     % Chg        2007      2006      % Chg

Traditional Access (1)              2,772      2,768       0.1         688       689      (0.2)
Traditional Voice Services          4,792      4,868     (1.6)       1,203     1,203        0.0
    Domestic Traffic (2)            2,921      3,014     (3.1)         729       740      (1.4)
    Interconnection (3)               952        907       5.0         237       211       12.5
    Handsets sales and others         918        947     (3.1)         237       252      (6.1)
(4)
Internet Broadband Services         2,775      2,403      15.5         716       640       11.9
    Narrowband                         95        143    (33.4)          18        26     (30.2)
    Broadband                       2,679      2,260      18.6         698       615       13.6
        Retail (5)                  2,361      1,901      24.2         624       532       17.4
        Wholesale (6)                 318        359    (11.3)          74        83     (10.2)
Data Services                       1,160      1,076       7.8         309       270       14.1
IT Services                           437        392      11.6         133       136      (2.0)

Note: Telefonica de Espan parent company's operating revenues includes Terra
Espan's revenues as of the first quarter 2006.

(1) Monthly and connection fees (PSTN, Public Use Telephony, ISDN and Corporate
Services) and Telephone booths surcharges.

(2) Local and domestic long distance (provincial, interprovincial and
international) fixed to mobile traffic, Intelligent Network Services, Special
Valued Services, Information Services (118xy), bonusses and others.

(3) Includes revenues from fixed to fixed incoming traffic, mobile to fixed
incoming traffic, and transit and carrier traffic.

(4) Managed Voice Services and other businesses revenues.

(5) Retail ADSL services and other Internet Services.

(6) Includes Megabase, Megavia, GigADSL and local loop unbundling.




TELEFONICA ESPAN: WIRELESS BUSINESS
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
                                                  January - December                        October - December
                                                 2007         2006        % Chg           2007         2006        % Chg

Revenues                                        9,693        9,199          5.4          2,407        2,333          3.2
OIBDA                                           4,241        4,128          2.8            902        1,002       (10.0)
OIBDA margin                                    43.8%        44.9%   (1.1 p.p.)          37.5%        43.0%   (5.5 p.p.)
CapEx                                             767          750          2.4            257          341       (24.5)


TELEFONICA ESPAN: WIRELESS BUSINESS
SELECTED REVENUES DATA
Unaudited figures (Euros in millions)
                                                  January - December                        October - December
                                                 2007         2006        % Chg           2007         2006        % Chg

Service Revenues                                8,509        8,142          4.5          2,111        2,058          2.6
    Customer Revenues                           6,861        6,353          8.0          1,718        1,623          5.8
    Interconnection                             1,372        1,500        (8.6)            333          373       (10.8)
    Roaming - In                                  220          251       (12.4)             44           47        (6.3)
    Other                                          57           38         49.5             17           15         13.2
Handset                                         1,184        1,058         11.9            296          275          7.6




TELEFONICA ESPAN: WIRELESS BUSINESS
SELECTED OPERATING DATA
Unaudited figures
                                                     2006                          2007
                                                     December         March      June September  December          % Chg
                                                                                                                   y-o-y

Mobile customer (thousands)                          21,446.0      21,813.7  22,102.7  22,419.7  22,826.6          6.4
Pre-pay                                               9,303.0       9,283.8   9,182.9   9,158.0   9,181.8        (1.3)
Contract                                             12,142.9      12,529.9  12,919.8  13,261.7  13,644.7         12.4

                                                           4Q            1Q        2Q        3Q        4Q          % Chg
                                                                                                                   y-o-y

MoU (minutes)                                             157           160       159       168       156        (0.8)
Pre-pay                                                    66            74        67        89        64        (2.8)
Contract                                                  228           224       225       223       218        (4.4)
ARPU (EUR)                                               33.0          31.7      32.8      33.1      31.8        (3.6)
Pre-pay                                                  15.9          14.9      15.7      16.5      15.0        (5.7)
Contract                                                 45.7          44.3      45.1      44.8      43.2        (5.6)
Data ARPU                                                 5.0           4.6       4.6       4.9       5.0          1.8
%non-P2P SMS over data revenues                         45.3%         48.1%     49.5%     48.4%     47.7%     2.4 p.p.

Note: MoU and ARPU calculated as monthly quarterly average.



RESULTS BY REGIONAL BUSINESS UNITS

Telefonica Latinoamerica

In accordance with the Group's new structure, Telefonica Latinoamerica's results
include Telefonica Group's fixed line and wireless operators' results in the
Latin American region. Furthermore, figures for the Telefonica Latinoamerica
Group also include the results of Telefonica Telecom, from the 1st of May 2006.

At the end of December 2007, Telefonica Latinoamerica managed 134.1 million
accesses, a year-on-year increase of 16.9%, boosted by growth of 22.4% in
cellular customers to almost 102 million. Net adds during the fourth quarter
amounted to 7.3 million, the Group's best ever figure.

Growth rates were high in almost all the countries in the mobile business, with
customer growth especially robust in Mexico (+46.6% year-on-year to over 12.5
million customers), Argentina (+22.6%, 13.7 million customers), and Peru
(+58.5%, 8.1 million customers).

Wireline telephony accesses reached 23.9 million, in line with those managed a
year earlier, with significant growth in Peru (+11.3% year-on-year) which offset
the lower number of lines in service in other countries. Growth in retail
internet broadband accesses remained strong, up 33.2% year-on-year to over 5.0
million accesses, reflecting the sales and marketing efforts made by all the
operators. Telefonica Latinoamerica now has close to 1.2 million pay TV
customers, with operations in Peru, Chile, Colombia and, since the third quarter
of 2007, Brazil, where Telesp's satellite TV licence was complemented in the
fourth quarter of 2007 with the incorporation of TVA .

The currencies of the countries in which Telefonica operates depreciated against
the euro in year-on-year terms, with the exception of the Brazilian real and the
Colombian peso, whose average exchange rates appreciated by 2.5% and 3.7%
respectively. This detracted 3.5 and 3.2 percentage points from revenue and
OIBDA growth in 2007 respectively, although less than in previous quarters
(currency effects reduced revenue and OIBDA growth by 3.7 and 3.5 percentage
points in the first nine months, respectively, and by 5.0 and 4.9 percentage
points respectively in the first half of 2007).

Revenues at Telefonica Latinoamerica in 2007 rose 11.0% year-on-year in current
euros to 20,078 million euros. In constant euros revenue growth was 14.5%,
within the growth range communicated to the market of +13% to +16%1. Changes in
the consolidation perimeter contributed 1.5 percentage points to constant
currency revenue growth. In constant currency terms, the countries contributing
most to top line growth are Mexico and Venezuela with respective contributions
of 3.2 and 3.1 percentage points. Brazil continues to make the largest
contribution to Telefonica Latinoamerica's revenues (38.2%) followed by
Venezuela (11.9%) and Argentina (11.3%).
--------------------------------------------------------------------------------

1 T. Latam base reported figures include eight months of Telefonica Telecom
(consolidated since May 2006). 2007 guidance assumes constant exchanges rates as
of 2006. All figures exclude changes in consolidation. In terms of guidance
calculation, OIBDA excludes other exceptional revenues/expenses not foreseeable
in 2007. Personnel reorganization plans and Real Estate Programs are included as
operating revenues/expenses, with the exception of the ones decided after the
guidance communication at the beginning of the year. For comparison the
equivalent other exceptional revenues/expenses registered in 2006 are also
deducted from reported figures.




Operating income before depreciation and amortisation (OIBDA) jumped 8.4% in
current euros in 2007 to 7,121 million euros. In constant currency terms,
Telefonica Latinoamerica's OIBDA growth increased to 11.5%. Changes in the
consolidation perimeter contributed 1.0 percentage points to constant currency
OIBDA growth. By country, Venezuela contributed most to OIBDA growth (5.2
percentage points), followed by Mexico (3.1 percentage points). In absolute
terms, Brazil is the largest contributor to Telefonica Latinoamerica's OIBDA,
accounting for 43.1% of the total, followed by Venezuela (14.9%) and Argentina
(11.1%).

Telefonica Latinoamerica's OIBDA growth slowed in the fourth quarter of 2007
(+13.8% in constant euros to September) as a result of a provision of 258
million euros in the quarter for personnel reorganization plans in several group
companies, after the company decided to accelerate the implementation of plans
already in place, and the launching of new ones. Personnel reorganization costs
stood at 318 million euros in 2007, with the departure of 1,684 people in the
year accounting for 105 million euros of this sum. The company's plans for 2008
account for the remaining 213 million euros, affecting Telesp, Telefonica del
Peru, Telefonica de Argentina, Telefonica Telecom and Telefonica Moviles
Colombia. Regarding the objectives communicated to the market, OIBDA grew by
15.5%, within the range of 14% to 17%2 forecast by the company, which did not
factor in the personnel reorganization expenses recorded in the fourth quarter
of 2007.
--------------------------------------------------------------------------------

2 T. Latam base reported figures include eight months of Telefonica Telecom
(consolidated since May 2006). 2007 guidance assumes constant exchanges rates as
of 2006. All figures exclude changes in consolidation. In terms of guidance
calculation, OIBDA excludes other exceptional revenues/expenses not foreseeable
in 2007. Personnel reorganization plans and Real Estate Programs are included as
operating revenues/expenses, with the exception of the ones decided after the
guidance communication at the beginning of the year. For comparison the
equivalent other exceptional revenues/expenses registered in 2006 are also
deducted from reported figures.




Telefonica Latinoamerica's OIBDA margin in 2007 amounted to 35.5%, 0.9
percentage points lower than in 2006, affected by the personnel reorganization
provisions outlined above. Excluding these provisions, the margin would have
been 37.1% (0.3 percentage points higher than the one recorded in 2006).

Telefonica Latinoamerica's CapEx in 2007 stood at 3,343 million euros, up 18.9%
year-on-year (+23.0% in constant euros). This increase was driven by stronger
commercial activity at its wireline business, both in broadband and TV, the
increased coverage and capacity of its GSM networks and the acquisition of
spectrum in Venezuela, Brazil and Panama to expand coverage and guarantee
service quality in areas where traffic is heaviest.

In 2007 Telefonica Latinoamerica generated operating cash flow (OIBDA-CapEx) of
3,778 million euros, growth of 0.5% in current euros (+3.0% in constant euros).

BRAZIL

Telefonica Latinoamerica managed close to 49 million accesses in Brazil at 31
December 2007, 9.5% more than a year earlier. This growth reflects a 15.2%
year-on-year increase in Vivo's customer base and, to a lesser extent, the
expansion of Telesp's broadband business and the incorporation of TVA's MMDS pay
TV customers. This is offset by a reduction in the number of wireline accesses
at Telesp and the changes to the accounting criteria used to record narrowband
internet accesses made in the second quarter of 2007.

In 2007, Telefonica Latinoamerica in Brazil reported revenues of 7,662 million
euros, up 3.2% in local currency vs. 2006 thanks to the sharp increase in Vivo's
sales, which offset Telesp's lower revenues. Operating income before
depreciation and amortisation (OIBDA) totalled 3,026 million euros, down 3.8% on
2006 due to the fall in earnings at Telesp, partly related to tax reversals
booked in 2006 and the higher provisions made in 2007 for personnel
reorganization (explaining 0.8 percentage points of this reduction) which were
not offset by the significant improvement in Vivo's results. Meanwhile CapEx
amounted to 1,087 million euros, an increase of 3.1% year-on-year in local
currency, driven by the larger investments carried out by Telesp in its growth
businesses (broadband and television).

TELESP

At the end of December, Telesp managed 15.5 million telephony, broadband and TV
accesses, 1.2% less than in 2006, due both to the reduction in the number of
wireline accesses, in a context of a strong growth in the cellular business in
the country, and the implementation of more restrictive accounting criteria
(based on activity) for narrowband Internet accesses. The company ended the year
with just under 12 million wireline accesses (-1.2% year-on-year), of which
approximately 22% were prepay or lines with consumption limits. A total of
196,300 MMDS TV accesses from TVA (acquired recently) were added in December
2007 to the 34,600 satellite TV (DTH) subscriber base. This latter service was
launched in August 2007.

The broadband market continued to grow strongly in 2007 (+36% vs. 2006). Telesp
accounted for around 56% of this growth, increasing its retail broadband
customer base by 28.7% vs. 2006 to over two million accesses. A number of
significant milestones were achieved in 2007. These included: the launch of the
Trio Telefonica triple play bundle on 12 August, with different connection speed
options and a range of TV content choices, on 1 October the company included
GloboSat content in its TV offer, and in the fourth quarter the acquisition of
TVA's MMDS operations was completed.

Telesp carried slightly more (+1.5%) traffic in 2007 (71,140 million minutes)
than a year earlier, due mainly to growth in long distance traffic by SMP mobile
accesses (+36.2%) as a result of the joint marketing strategy rolled out with
VIVO. Local traffic levels were similar to those recorded in 2006 despite the
reduction in the number of wireline accesses. Fixed-mobile traffic fell a
noteworthy 4.4% year-on-year as a result of heavy migration to wireless
networks.

Telesp is focusing on the sale of traffic bundles, both bundled lines (monthly
fee + unlimited local calling) and traffic packages (long distance, fixed-mobile
and narrowband Internet traffic).

Telesp reported revenues of 5,619 million euros in 2007, down 1.5% year-on-year
in local currency. This slight drop in revenues was due to the fall in
traditional business revenues (-3.1% vs. 2006 in local currency), attributable
to the loss of basic telephony billable lines, the change in customer mix with a
higher percentage of lines with consumption limits, the negative tariff
adjustment made in July 2006 and the 20% reduction in local interconnection
tariffs in January.

The increase in broadband revenues (+16.2% in local currency), lagged access
growth due to more intense competition and was not sufficient to fully offset
the fall in traditional revenues. Nonetheless, the operator readjusted ADSL
tariffs in mid October to coincide with the launch of an improved range of
speeds for new ADSL services. The pace of growth marked by Internet revenues
(narrowband + broadband + TV) picked up (+14.1% year-on-year in local currency
vs. +10.3% to September) and these now account for 9.9% of the company's
revenues (8.5% in 2006) due to the increase in broadband revenues and the
incorporation of TVA's revenues in the fourth quarter.

Operating expenses rose 5.9% in local currency in 2007, affected by a higher
level of bad debt, leading to higher provisions (+65.5% in local currency vs.
2006). The ratio of bad debt to revenues was 3.6%, lower than the figure of 3.9%
reported in September, due to the implementation of various measures adopted to
stem this ratio. These include stricter entry filters and more actions to
recover bad debts. Another factor behind the rise in operating expenses is the
higher external service expenses (+5.4% in local currency) caused by stronger
commercial activity. Supply costs rose by 3.2% in local currency despite the 20%
reduction in the local interconnection tariff, due mainly to the rise in
interconnection traffic (especially SMP).Personnel expenses rose by 5.0% in
local currency due to the provisions associated with personnel reorganization
programmes, which affected 800 employees in 2007. Total provisions amounted to
54 million euros, of which around 22 million euros correspond to plans that will
be implemented in the first months of 2008. Personnel costs excluding these
provisions decreased 1.0% vs. 2006 in local currency.

Telesp reported Operating income before depreciation and amortisation (OIBDA) of
2,438 million euros in 2007, down 9.7% year-on-year in local currency due to the
loss of traditional business revenues, higher bad debt provisions and higher
personnel reorganization costs. The comparison is further affected by the fact
that in September 2006 Telesp recorded tax reversals (PIS/COFINS). The OIBDA
margin stood at 43.4%, 3.9 percentage points lower than in 2006, impacted by the
two factors mentioned above. Stripping out personnel reorganization expenses,
Telesp's OIBDA would have fallen by 8.7% vs. 2006 in local currency, with a
margin of 44.3%.

CapEx in 2007 was 729 million euros in local currency, 11.2% higher than the
figure reported a year earlier due to greater investment in broadband and pay TV
and higher cable theft recorded in the last three quarters.

VIVO

Vivo's strong earnings in 2007 reflect the management measures implemented in
2006 and 2007 to achieve profitable growth and increase customer satisfaction,
resulting in a significant increase in the customer base and the ARPU growth.

Momentum remained strong in the fourth quarter, with the Christmas campaign
launched in November resulting in fierce competition on the market. Also, Vivo
has been involved in convergent offer campaigns since October, with minute
combinations for cellular, wireline and Internet calls and two mobile-fixed
packages. Vivo maintained its leadership in the quarter in terms both of market
share and adds in its operating area.

The company reported 4.2 million gross adds in the final quarter of the year,
1.7 million more than in the same quarter last year (+66.5%), one of the highest
figures in recent years. Factors contributing to this strong performance include
the wider range of handsets, Vivo's leadership in terms of commercial reach,
ongoing incentive campaigns for prepay traffic and the improved capacity to
attract contract customers with the 'Vivo Escolha' plans. It is worth
highlighting that Vivo achieved net adds close to 2.2 million new customers in
the fourth quarter, enjoying a position of market leadership in terms of
customer acquisitions in December (1.4 million customers, a net gain market
share above 38% in its operating area). As a result, Vivo's net adds for the
year stood at over 4.4 million customers.

By the end of 2007, 42% of the contract segment had subscribed to a Vivo Escolha
plan, significantly enhancing the market's perception of Vivo's commercial
offer. Contract gross adds rose 39.7% in the fourth quarter year-on-year and by
47.2% year-on-year for the full year. These plans also helped to increase
customer loyalty, with total churn in the fourth quarter standing at 2.1% (0.4
percentage points less than in the same quarter a year earlier) and at 2.3% in
the year (compared with 2.9% in 2006).

Also noteworthy was the market's positive reaction to Vivo's GSM network. Vivo
obtained 85% of gross GSM adds in the quarter, putting its GSM customer base at
the end of December at 11.3 million, 34% of its total customer base.

Vivo ended December with a total of 33.5 million customers (+15.2% vs. December
2006) in a market with an estimated penetration rate of 65.6%, up more than 10
percentage points year-on-year in the company's area of activity. This figure
reflects the high levels of commercial activity, especially in the fourth
quarter.

Revenues for the year totalled 2,396 million euros, a year-on-year increase of
+16.5% in local currency, with growth further accelerating in the final quarter
(+15.8% year-on-year in local currency in the first nine months of 2007).
Service revenues grew 18.4% year-on-year in local currency, vs. 2006, largely
driven by higher interconnection revenues after the elimination of the Bill &
Keep rule in July 2006. Stripping out this impact, service revenues would have
grown 10.2% (vs. +8.1% in the first nine months of the year). In the contract
segment, the Vivo Escolha plans remain the main tool for attracting and
retaining the most valuable customers; leading to outgoing ARPU rise of 8.9%.

The prepay segment also continued to fare well in the fourth quarter, with
outgoing ARPU up 22.9% year-to-date as a result of successful traffic incentive
campaigns, leading to a 22.7% year-on-year increase in MoU.

Total MoU rose by 3.9% compared with the same period in 2006, with cumulative
total ARPU up 14.5% year-on-year at 11.9 euros.

Vivo recorded Operating income before depreciation and amortisation (OIBDA)
through to December of 588 million euros, an increase of 30.8% on 2006 in local
currency. Contributing factors include strong topline growth combined with
control over customer management costs, notably the 49.3% year-on-year reduction
in bad debts in local currency. This in turn evidences the strict control
exercised over new customer acquisitions in the campaigns. These controls were
sufficient to offset higher commercial expenses.

The OIBDA margin in 2007 was 24.5%, up 2.7 percentage points on 2006, improving
by 5.6 percentage points year-on-year in the final quarter to 25.6%. Excluding
the impact of the elimination of the Bill&Keep rule, OIBDA growth in 2007 would
have been 30.6%, with a margin of 27.4%.

In 2007 the company achieved full national coverage, winning thirteen of the
fifteen 1900 licences auctioned in September, and the entirety of the J band in
the 3G licence auction carried out by Anatel last December. This means it can
now guarantee service quality in the areas with heaviest traffic. Also, Vivo is
awaiting the final green light from Anatel to acquire Telemig, although the
company agreed the sale of the Amazonia shares to Telemar in December.

ARGENTINA

Telefonica maintained its leadership in its operating area in 2007, to reach
19.5 million accesses, a year-on-year growth of 15.8%. This increase was
underpinned by the sharp growth in cellular customers, up by 22.6% vs. December
2006 to more than 13.7 million, and by broadband accesses, which totalled
819,000, 58.3% more than in 2006. This strong operating performance is reflected
in the financial data, with revenues rising by 15.7% in local currency vs. 2006
to 2,264 million euros. Operating income before depreciation and amortisation
(OIBDA) rose 8.0% year-on-year in local currency to 773 million euros in 2007,
reaching an OIBDA margin of 32.9%. CapEx stood at 289 million euros (243 million
euros in 2006). This higher investment is due to the development of broadband
and new businesses, as well as the increase in wireless network capacity.

TELEFONICA DE ARGENTINA

Telefonica de Argentina had 5.7 million accesses at the end of 2007, up 2.1% on
2006. This figure was underpinned by the 58.3% growth in retail broadband
accesses to 819,000, which offset the slight fall in wireline accesses (-1.3%).

Total voice traffic remained stable year-on-year despite the sharp growth in the
company's cellular business in the country. The falls in local (-5.6% vs. 2006)
and interconnection (-4.8% vs. 2006) fixed-to-fixed traffic were offset by the
healthy performance of mobile-to-fixed interconnection traffic (+27.4% vs.
2006). Intelligent network traffic improved throughout 2007 (+51.1% vs. 2006)
while public use telephony traffic fell by -20.8% vs 2006.

Revenues in the fixed line business came to 984 million euros in 2007, a
year-on-year growth of 9.9% in local currency terms, with the traditional
wireline business contributing 45% of this growth, the Internet business
contributing 40%, and data and IT businesses accounting for the remainder.

Traditional revenues rose 5.4% in local currency in 2007, reflecting the strong
uptake of flat rate plans, strong traffic (mobile to fixed interconnection) and
momentum in value added services and the sale of equipment. Bundle revenue
growth was underpinned mainly by local fixed-to-fixed calling plans on the back
of strong uptake for the flat-rate per call plan launched in mid-2006, whose
performance in 2007 exceeded all expectations. Higher interconnection revenues
were driven primarily by traffic generated by mobile operators and incoming
international traffic.

Internet and broadband revenues were up by 34.8% vs. 2006, accounting for 14% of
total revenues. The broadband business was the main growth driver in 2007 with
revenues up 45.7% in local currency and 819,000 accesses at the end of December,
1.6 times the number in December 2006; this offsets the fall in narrowband
revenues. Broadband was boosted by the launch of the DUO plan (a flat rate plan
bundling voice and broadband) in the last quarter of 2006 with 34% of broadband
users currently using this plan.

Thanks to higher revenues from virtual private networks, turnkey projects and
satellite services, data and information technology business lines continued to
make heavy inroads (20.8% in local currency vs. 2006).

Operating expenses grew 30.6% year-on-year in local currency in 2007. This was
largely due to the increase in personnel expenses (+68.5% in local currency)
caused by salary rises and payments in connection with the personnel
reorganization plan launched during the second half of 2006, which gathered pace
in the second half of 2007. Personnel reorganization costs stood at 90 million
euros in 2007 (67 million euros in the fourth quarter of 2007), with the
departure of 741 personnel in 2007 accounting for 50 million euros of this sum;
remaining 40 million euros correspond to reorganization to be executed in the
coming months. Stripping out these personnel reorganization costs, operating
expenses would have grown by 14.3% vs. 2006 and personnel costs by 18.7%. Supply
costs rose 22.3% in local currency in 2007, driven up by higher equipment rental
and higher purchases of equipment for resale. External service expenses rose
7.7% year-on-year in local currency due to the rise in activity (customer
services, advertising, commissions and logistics and distribution), as well as
price increases across various services including rents, energy and supplies,
which do not offset other cost savings (general costs and temporary works).

The ratio of bad debt to revenues stood at 0.9%, 0.4 percentage points higher
than in 2006 due to the impact of the strike action which meant lower collection
activity during the troubles. However, sound management over this period
permitted a reduction in the ratio of 1.1% reported in September 2007. Prepay
and controlled consumption segments accounted for 25% of the total, down
slightly compared with previous quarters.

Telefonica de Argentina's operating income before depreciation and amortisation
(OIBDA) fell 13.3% year-on-year in local currency in 2007 to 356 million euros.
This fall was chiefly attributable to the higher personnel expenses detailled
earlier. Stripping out the personnel reorganization expenses, OIBDA would have
grown by 6.2% vs. 2006 in local currency. The 2007 OIBDA margin stood at 30.9%
(39.0% in 2006). Stripping out the impact of these expenses, the OIBDA margin
would have reached 38.7% in 2007 (39.9% in 2006).

CapEx amounted to 165 million euros, a 30.3% increase in local currency on 2006.
Investment was primarily earmarked for the development of broadband and new
businesses.

TEM ARGENTINA

The Argentine cellular market continued to grow at a strong pace in 2007,
boosting estimated penetration to over 97% at December 2007 (+20 percentage
points higher than at December 2006), ending the year with the highest
penetration in Latin America.

Net adds in TEM Argentina in the fourth quarter of 2007 stood at 656,269 new
customers. Over the year as a whole, churn was down on 2006 (1.7%, -0.3
percentage points vs. 2006), boosting net adds in the year to more than 2.5
million (compared with almost 2.9 million in 2006). It is noteworthy the strong
focus in contract customer acquisition during 2007 and the fourth quarter of
2007, adding along the year 1.1 million customers (+68.5% vs. 2006), weighting
the contract net adds in the fourth quarter 2007 more than 58% of the total. The
company ended the year with almost 13.7 million customers, a 22.6% increase vs.
the customer base at year-end 2006. GSM customers now account for 86.5% of the
total customer base (+13.3 percentage points from December 2006).

Revenues hit the 1,353 million euro mark in 2007, an 18.7% year-on-year increase
in local currency. The sound performance of service revenues, up 21.4% in local
currency vs. 2006, drove growth.

Revenue growth, coupled with lower unit commercial costs and customer management
expenses as well as lower network expenses, translated into an increase in
operating income before depreciation and amortisation (OIBDA) of 36.5%
year-on-year in local currency to 418 million euros. This left the OIBDA margin
in 2007 at 30.9%, 4.1 percentage points higher than the previous year's figure.

CapEx in 2007 totaled 123 million euros, an increase of 33.2% in local currency
from 2006 due to the increase of the network capacity.

CHILE

At the end of 2007 Telefonica Latinoamerica managed a total of 9.4 million
accesses in Chile, 9.6% more than in December 2006, underpinned by growth in
cellular accesses (+10.6% to 6.3 million), and, to a lesser extent, an increase
in retail broadband Internet accesses (+30.6% to 646,000) and pay TV (+133.4% to
220,000), while wireline telephony accesses fell 1.5% to 2.2 million.

Telefonica Latinoamerica's revenues in Chile totalled 1,814 million euros in
2007, a year-on-year increase of 14.3% in local currency. Revenues were fostered
by the strong growth in the cellular telephony, broadband and TV businesses,
which offset the decline in the traditional wireline telephony business.
Operating income before depreciation and amortisation (OIBDA) in 2007 totalled
716 million euros, up 8.2% in local currency vs. 2006 due to higher OIBDA in the
cellular business which offset the drop in the results of the wireline business.

Telefonica Latinoamerica continues to invest heavily in Chile. CapEx in 2007
totalled 418 million euros, an increase of 32.3% in local currency from 2006.
Main investments continue concentrating into the fastest growing businesses:
mobile telephony, ADSL and pay TV.

TELEFONICA CHILE

At the end of 2007 Telefonica Chile managed a total of 3.1 million accesses,
7.5% more than in 2006. Telefonica Chile's wireline accesses fell by 1.5% from
2006, though the quarterly loss in wireline accesses has notably decreased (just
300 accesses in the fourth quarter compared with almost 29,000 in the first,
3,000 in the second and 1,700 in the third). Telefonica Chile remains the market
leader with an estimated share of 65% in lines.

Broadband and pay TV accesses continued to grow. The commercial focus was on
customer loyalty by pushing the DUO and TRIO bundles, packages which
additionally increase ARPU. Telefonica Chile managed 646,000 retail broadband
Internet accesses at the end of 2007, maintaining its leadership of the Chilean
broadband market with an estimated 50% market share.

Telefonica Chile is still growing the pay TV business, reaching 220,000
subscribers by the end of 2007. After eighteen months of operations, Telefonica
Chile has established itself as the second ranking pay TV operator in the
country with an estimated market share of 17%. In June 2007 the company launched
its IPTV service in certain areas of Santiago, becoming the first company to do
so in Latin America. In addition, new services on the DTH platform, such as new
decoders equipped with personal video recorders, were launched in the final
months of the year.

The competitive landscape in telephony in Chile is marked by a significant fixed
to mobile substitution effect. Triple play is the cornerstone of Telefonica
Chile's strategic focus, aiming to increase the number of services per customer
and accordingly, ARPU. In this way the operator continued to offset the
contraction of its traditional telephony business with revenue growth in
broadband and pay TV services. Revenues in 2007 totalled 974 million euros, a
year-on-year increase of 4.0% in local currency. The launch of TV services in
June 2006 and the increased broadband penetration drove a 79.7% increase in
Internet and broadband revenues in local currency, offsetting the lower revenues
from its traditional business (-5.8% in local currency). Internet and broadband
accounted for 18.5% of the operator's total revenues in 2007, 7.8 percentage
points more than in 2006, while the weighting of its traditional business fell
to 75% (-7.8 percentage points from 2006).

Operating expenses grew 8.9% in local currency vs. the same period in 2006. The
highest increases were in external services (+19.3%), driven by higher
commercial activity and improved service quality and customer services.
Personnel expenses rose by 4.4% in local currency, primarily as a result of the
enactment of the new Chilean Subcontracting Law. Stripping out personnel
reorganization expenses, which fell by 65.1% in local currency, personnel
expenses rose by 13.8% due to the impact of this law. Supply costs were up 2.1%
in local currency, with the increase in expenditure on TV content and satellite
capacity offset by lower interconnection costs, especially in fixed-mobile
traffic. Bad debt provisions over revenues ratio in 2007 was 2.9%.

Operating income before depreciation and amortisation (OIBDA) fell 5.3% in local
currency in 2007 to 368 million euros.

CapEx totalled 198 million euros, an increase of 30.1% in local currency from
2006, driven mainly by sharp growth in satellite TV services (DTH), the launch
of IPTV, growth in the ADSL access base and initiatives designed to enhance
network quality.

TEM CHILE

The Chilean market grew strongly again during 2007 with estimated penetration up
8 percentage points to 90%.

Telefonica Moviles Chile remains market leader with over 6.3 million customers
at the end of 2007, boosted by net adds of 602,457 customers over the year.
Growth in the customer base was driven by net adds to the GSM service, which
accounted for 89% of the total, 17 percentage points more than in December 2006.
The number of contract customers rose by 31.4% year-on-year to 1.5 million,
accounting for more than 60% of net adds in the year, though growth in the
prepay customer base picked up in the final quarter (+5.2% year-on-year vs +2.2%
to September ). The customer base increased 10.6% year-on-year (+7.7% to
September). A highlight in December 2007 was the launch of the 3G network.

Revenues for 2007 totalled 930 million euros, a year-on-year increase of 25.5%
in local currency. Service revenues jumped 23.0% in local currency compared to
2006, driven by growth in ARPU, which rose 12.7% in local currency, and
continues increasing its growth rate quarter after quarter (+8.4%, +10.5% and
+11.6% in local currency in the first, second and third quarters respectively.
This trend is underpinned by migration to GSM technology, growth in the contract
customer base (24.5% of the customer base in December 2007 vs. 20.6% in December
2006), plan upgrades and the sale of minute bundles and value added services.

Operating income before depreciation and amortisation (OIBDA) rose 27.3% in
local currency in 2007 to 348 million euros, fuelled by the strong growth in
revenues. Thanks to this operating efficiency, the OIBDA margin jumped 0.5
percentage points to 37.5% in 2007 despite increased commercial efforts in light
of the market aggressiveness and despite the initiatives towards technology and
segment migration.

CapEx in 2007 totalled 220 million euros, an increase of 34.5% in local currency
from 2006.

PERU

At the end of the year, accesses in Peru stood at 12.2 million, an increase of
39.8%, year-on-year driven by the 58.5% increase in mobile accesses, 8.1 million
accesses at the end of the period, especially in the prepay segment. Also
noteworthy is the growth in accesses from the IRIS project, collaboration
between wireline and wireless operators launched in March 2007, with the aim of
boosting the penetration of wireline telephony, and the growth in broadband and
TV accesses.

Telefonica's revenues in Peru hit the 1,513 million euros mark in 2007, a 10.5%
year-on-year increase in local currency. This strong revenue growth was
primarily driven by outgoing revenues in the prepay segment of its wireless
business and broadband services and by television in its wireline business.

Operating Income before depreciation and amortisation (OIBDA) stood at 469
million euros at the end of 2007, down 15.6% year-on-year in local currency due
to the decline in OIBDA in the wireline business (-28.6%) resulting from the
registration of 104 million euros in the fourth quarter in provisions for the
personnel reorganization that was started in 2007 and will be implemented along
2008. In 2007, the total provision for the personnel reorganization programme
amounted to 105 million euros. OIBDA margin in 2007 stood at 31.0% compared to
40.6% in 2006. Stripping out the impact of the reorganization programme, the
OIBDA would have grown 3.2% year-on-year in local currency and the OIBDA margin
would have been 37.9%, 2.7 percentage points lower than previous year's margin.

CapEx in 2007 totalled 281 million euros, an increase of 35.8% in local currency
from 2006. Particularly noteworthy is the major investment in the expansion of
the mobile network due to higher traffic levels. As a result, the wireless
business accounted for 55% of CapEx.

TELEFONICA DEL PERU

Telefonica del Peru had total accesses of 4.0 million in 2007, an increase of
13.0% year-on-year, thanks to the surge in fixed wireless telephony and
broadband accesses. Fixed telephony accesses, which stood at 2.8 million in
December (+11.3%), grew over the year as a result of the strength of fixed
wireless telephony accesses, which totalled 228,584 lines. Broadband accesses
grew by 22.1% to 572,088 users. In addition, TV accesses totalled 640,045 users
recording a growth of 14.9% primarily due to satellite subscribers.

Voice traffic advanced by 7.2% in 2007, slightly below the cumulative growth
figure to September 2007 (+8.7%). This deceleration was due to the slight fall
in fixed-to-fixed traffic (-0.4%), which was partially offset by the increase in
fixed-to-mobile traffic resulting from the greater penetration of wireless
telephony; the fall in domestic long distance traffic (-7.4%) resulting from the
abolition of pre-selection by default in October and the decline in public
telephony traffic which fell further (-34.5%) due to the competition from
wireless telephony and informal public call centres. In contrast we highlight
the sharp growth in incoming traffic (+39.2%), both wireless and international.

Revenues totalled 1,031 million euros, down 2.0% in local currency from 2006.
This is primarily due to the fall in public telephony revenues (-28.6%) and to
the lower revenues from the basic telephony service, affected by the cut in
tariffs following the agreements made with the government in 2006 and by the
decline in revenues from long distance traffic due to the abolition of
pre-selection by default in October. In contrast, revenues from broadband
(+24.9% in local currency) and television (+24.0% in local currency) continued
to rise sharply. Internet and broadband (broadband + narrowband + TV) revenues
accounted for 25.2% of total revenues in 2007 (20.2% in 2006).

Operating expenses grew by 19.9% in local currency, due to higher personnel
expenses resulting from the registration of the 105 million euros provision
related to the personnel reorganization that was started in 2007 and will be
implemented along 2008. Stripping out the impact of this reorganization, total
operating expenses would have grown by 2.5% year-on-year in local currency. The
higher expenses relating directly to the increased commercial activity were
offset, by the lower growth in personnel costs excluding those related to
personnel reorganization and in interconnection supply and media rental
expenses. However, it is also worth highlighting the rise in the bad debt
provision (1.8% of revenues) for services provided to the lowest income bracket
groups.

Operating Income before depreciation and amortisation (OIBDA) in 2007 was 311
million euros, a year-on-year decline of 28.6% in local currency due to higher
spending on the personnel reorganization and higher commercial expenses and
costs associated with labour and fiscal eventualities. The 2007 OIBDA margin
stood at 30.2%. Stripping out the impact of personnel reorganization expenses,
OIBDA would have fallen 4.7% year-on-year in local currency and the OIBDA margin
would have been 40.3%, 1.1 percentage points lower than previous year's margin.

CapEx in 2007 totalled 126 million euros, a decrease of 0.2% in local currency
from 2006.

TEM PERU

The pace of growth of the Peruvian mobile market accelerated in 2007, with an
estimated penetration of 48% at the end of December (+16 percentage points
compared to December 2006).

At the year end Telefonica Moviles Peru's customer base stood at 8.1 million, an
increase of 58.5%, year-on-year, with the prepay segment growing by more than
66% year-on-year. Migration to GSM technology continued during the year. At the
end of December, GSM customers accounted for 77% of the total, up from 42% at
year-end 2006. Telefonica Moviles Peru's intense commercial activity translated
into significant 74.5% year-on-year growth of gross adds in 2007. Additionally,
gross adds and net gain achieved during the quarter reached a record level of
1.6 million and 908,230 accesses respectively.

Revenues totalled 603 million euros in 2007, up 40.5% in local currency.
Particularly noteworthy was the significant growth in service revenues. Boosted
by the outstanding performance throughout the year of outgoing revenues in the
prepay segment (+129.9% in local currency in 2007), their growth comfortably
outstripped that of the average customer base, showing high elasticity to the
promotions made in the prepaid cards top-ups with 'Double' and 'Triple' play
campaigns. Outgoing revenues in the contract segment also grew, although less
sharply (+14.6%).

Operating income before depreciation and amortisation (OIBDA) amounted to 158
million euros, a year-on-year rise of 27.3% in local currency, despite the
increase in commercial costs due to commercial and marketing campaigns to
increase the customer base. The OIBDA margin stood at 26.2%, a drop of 2.7
percentage points compared to 2006.

CapEx stood at 155 million euros at the end of 2007, up 92.3% in local currency
compared to 2006, being the bulk of this invested in expanding the network
capacity.

COLOMBIA

At the end of December 2007, Telefonica reached 11.0 million accesses in
Colombia which translates into growth of 7.7% compared to December 2006.

During the year, revenues from the fixed and mobile businesses reached 1,569
million euros, up 27.9% on 2006 in constant currency, reflecting the first time
consolidation of Telefonica Telecom in May 2006 and strong growth in Internet
and Broadband revenues and service revenues at the mobile business.

Operating income before depreciation and amortisation (OIBDA) rose 42.5%
year-on-year in local currency to 485 million euros. Telefonica Telecom is
consolidated in these figures from May 2006. The OIBDA margin for the period
stood at 30.9% (+3.2 percentage points from December 2006).

TELEFONICA TELECOM3

Telefonica Telecom reached a total of 2.6 million accesses at 31 December 2007,
up 7.1% year-on-year, with an almost three-fold increase in the number of
broadband users since December 2006 (a total of 200,271 accesses at 31 December
2007); which offsets the drop in wireline accesses (-1.3% year-on-year).
--------------------------------------------------------------------------------

3 T. Telecom has been fully consolidated in the Telefonica Group from May 2006.
Published variations are based on proforma 2006 figures.




The Satellite TV product was launched at the start of the year. This key
product, which enables Telefonica Telecom to launch 'Trio' triple play bundles
(voice, broadband and TV), had 72,930 TV customers at the end of December 2007.

Revenues for the wireline telephony business reached 739 million euros in 2007,
representing 8.1% growth in local currency, driven mainly by Internet and
Broadband growth (+ 100.3% year-on-year in local currency). The contribution
from this business to total revenues increased to 8.8% in 2007 from 4.7% in
December 2006. The strong growth in broadband revenues (+165.4% year-on-year in
local currency) offset the drop in the narrowband business (-22.8% in revenues
in local currency) due to the migration to broadband. The company extended
broadband coverage to new towns and cities in 2007 and cemented its position in
areas where it maintains a leadership position. The broadband business was also
boosted by marketing bandwidth upgrades to corporate customers.

Operating expenses in 2007 rose 16.0% year-on-year in local currency, pushed up
by increases in supplies and bad debt provisions. Personnel expenses increased
by 17.4% in local currency impacted by a provision of 3.2 million euros
registered due to the personnel reorganization of the company initiated in 2007
and in force throughout 2008. Excluding the impact of this provision, personnel
expenses would have rose by 13.4%.

Operating income before depreciation and amortisation (OIBDA) amounted to 299
million euros, which represents year-on-year growth of 16.0% in local currency,
driven largely by the strategic commitment to broadband. Excluding the impact of
the personnel reorganization provision, OIBDA would have rose by 16.9%.

CapEx to 31 December 2007 stood at 180 million euros. The bulk of this was
invested in deploying broadband and a series of regional systems projects.

TEM COLOMBIA

The Colombian cellular market ended 2007 with 32.3 million customers, although
growth is slowing, reaching an estimated penetration of 75% on December 2007, up
8 percentage points from 2006.

In 2007 the company focused on its commercial restructuring, registering sharp
increases in its capillarity and higher productivity, screening and reactivating
customers and expanding its GSM coverage. Also, the company continued to work on
a commercial offering with similar price schemes regardless of call destination.

Gross adds increased by 61.1% in the fourth quarter of 2007 compared with the
same period a year earlier and fell by 8.4% over the year. This was a result of
the cut in subsidies from the final quarter of 2006 following the aggressive
commercial campaigns carried out until then. Churn in 2007 stood at 3.7% , 0.6
percentage points up year-on-year, due to the disconnection of low value
customers who were signed up in the aggressive campaigns carried out in 2006.
Churn in the fourth quarter was 2.5%, -1.0 percentage point compared to the
fourth quarter of 2006. As a result, net adds in 2007 totalled 820,532
customers, leaving the customer base at 8.4 million at 31 December 2007 (up 7.9%
compared to December 2006). Of this total, 81.4% were GSM customers (+21.8
percentage points on 2006).

Revenues in 2007 amounted to 869 million euros, up 7.4% year-on-year in local
currency. Service revenues climbed 13.4% in local currency compared to 2006,
which is above the growth of the average customer base despite the impact of the
reduction in interconnection rates from December 2007.

Operating income before depreciation and amortisation (OIBDA) rose 30.0%
year-on-year in local currency to 186 million euros in 2007. The OIBDA margin
stood at 21.4% in 2007, up 3.7 percentage points from 2006. Telefonica Moviles
Colombia made a provision of 2.5 million euros in the fourth quarter of 2007 for
personnel reorganization initiated in 2007 and in force throughout 2008.
Excluding the impact of this provision, OIBDA growth would have stood at 31.7%
and OIBDA margin would have reached 21.7%.

CapEx in 2007 stood at 180 million euros.

MEXICO

Growth in the Mexican market accelerated yet again, with the penetration rate
reaching an estimated 64% by December 2007 (up 11 percentage points vs. December
2006).

The focus of Telefonica Moviles Mexico's commercial activity in the fourth
quarter was its Christmas Campaign, with the company again launching innovative
products to make up a competitive commercial offer that met customer
expectations. In addition, the development of its commercial network and ongoing
improvements to the quality of its network, enabled the company to maintain
robust growth in its commercial activity.

The customer base of Telefonica Moviles Mexico stood at 12.5 million at the end
of December 2007 (of which 700,000 were contract customers), an increase of
46.6% from December 2006. This growth was underpinned in the fourth quarter by
the introduction of a competitive and flexible commercial offer in the prepay
segment, 'Movistar Pagamenos' ('Movistar pay less'), which enabled the company
to achieve over 2.3 million gross adds in the period, a 30.8% increase on the
same period in 2006. Gross adds totalled almost 7.3 million in 2007, up 42.7% on
2006.

With regard to churn, the significantly higher quality of the gross adds
acquired in 2007 along with the introduction of lower top-up amounts, led to a
year-on-year improvement in churn to reach 2.5% in the fourth quarter of 2007
(-0.4 percentage points vs. the fourth quarter of 2006), and in line with the
figure recorded in the third quarter of 2007.

As a result of the strong customer gross adds and improved churn, net adds in
the fourth quarter were approximately 1.5 million, signalling year-on-year
growth of 32.0%. Cumulative net adds for 2007 totalled almost 4.0 million, 1.8
times the figure recorded in 2006.

With regard to usage, although more than a year has passed since the launch of
the commercial offer that introduced the new concept of 'Fixed rate per call',
traffic growth remains buoyant. Outgoing and on-net traffic have grown
substantially compared to the fourth quarter of 2006, albeit at slower rates
than in previous quarters. As a result, fourth quarter MoU reached 164 minutes,
a year-on-year increase of 56.6%, and fourth quarter 2007 ARPU grew by 5.4% in
local terms year-on-year to 9.2 euros. ARPU growth in local currency for the
full year stood at 15.8%.

The company's strong business momentum fuelled a 56.4% year-on-year increase in
revenues in local currency in the fourth quarter of 2007 to 420 million euros
and a 58.5% year-on-year increase in 2007 to 1,431 million euros. This growth
was underpinned by strong service revenues, both in the fourth quarter of 2007
(+55.9% year-on-year) and in 2007 as a whole (+65.4% vs. 2006). This outstripped
growth of the company's customer base (+46.6%) in both periods, underscoring the
higher quality of its customers and increased usage.

The strong performance of service revenues was fuelled by higher outgoing and
incoming revenues, both underpinned by the introduction of the national calling
party pays service in November 2006. Growth in outgoing revenues in local
currency slowed in the fourth quarter to 67.7% year-on-year, while cumulative
growth stood at 82.1% due to the steady year-on-year growth in on-net traffic.
Meanwhile, the launch of the national calling party pays service drove a 31.4%
increase in incoming traffic revenues in the fourth quarter vs. the fourth
quarter of 2006 and a rise of 42.9% in 2007 compared with 2006.

Operating income before depreciation and amortisation (OIBDA) in the fourth
quarter reflected both solid revenue growth and the efficiency gains achieved
thanks to economies of scale. Despite the intense commercial activity in the
fourth quarter, OIBDA totalled 66 million euros compared with the figure of 22
million euros reported in the fourth quarter of 2006. As a result, the OIBDA
margin increased by 8.3 percentage points to 15.7% in the fourth quarter. OIBDA
in 2007 stood at 179 million euros, a margin of 12.5% compared with an operating
loss of 11 million euros in 2006.

CapEx in 2007 amounted to 230 million euros compared with 180 million euros in
2006, as a result of the capacity expansion carried out to manage increases in
traffic. Operating cash flow (OIBDA-CapEx) came to -51 million euros in 2007, a
significant improvement on the 2006 figure of -191 million euros.

VENEZUELA

Penetration in the Venezuelan cellular market stood at an estimated 85% in
December 2007, up 15 percentage points from December 2006.

Telefonica Moviles Venezuela's commercial strategy during the fourth quarter was
designed around broadening the range of handsets on offer vs. its competitors,
offering certain models on an exclusive basis. The operator also launched new
plans in the prepay segment. These so-called 'A tu medida' personalised plans
enable customers to adapt the package to their specific needs. Customers can add
on to the basic usage plan additional plans, such as higher on-net traffic
plans, calls to other operators, flat rate text messages or data download
packages, depending on their individual preferences.

As a result, Telefonica Moviles Venezuela's customer base stood at over 10.4
million (+18.2% year-on-year) at the end of 2007, recording net adds of over 1.6
million new lines in the year. Since the GSM network was launched at the
beginning of the year, GSM gross adds have accounted for 61% of the total and
GSM customers made up over 35% of the total cellular customer base at December
2007.

This rapid migration of the customer base to GSM technology is behind the 0.6
percentage point increase in churn to 2.6% in the fourth quarter of 2007 vs. the
fourth quarter of 2006.

Revenues in 2007 totalled 2,392 million euros (+27.8% vs. 2006 in local
currency), driven by higher growth in service revenues (+27.1% year-on-year)
than in the customer base. It is noteworthy the 1.4% increase in ARPU,
underpinned by the 4.1% growth in outgoing ARPU, which offsets the 34% cut in
interconnection rates implemented last July.

Operating income before depreciation and amortisation (OIBDA) reached 1,060
million euros in 2007, 42.0% higher than the 2006 figure in local currency,
owing to growth in revenues and to lower unit costs for GSM handsets. This
enabled the OIBDA margin to rise by 4.4 percentage points year-on-year to 44.3%.

CapEx totalled 370 million euros in 2007 (232 million euros in 2006) as a result
of the major investment in the roll-out of the GSM network and the acquisition
of a licence to provide service on the 1900 MHz band for 88 million euros.

CENTRAL AMERICA

Telefonica Moviles de Centroamerica (Panama, Guatemala, El Salvador and
Nicaragua) substantially stepped up its commercial activity in 2007 compared to
2006, once again especially in Guatemala.

At the end of 2007, estimated penetration of the Central American market stood
at 69% (up 23 percentage points on 2006). Against this backdrop, Telefonica
Moviles de Centroamerica's customer base rose 37.8% year-on-year to 5.3 million
(268,186 fixed wireless and 381,230 contract customers). Growth was fuelled by
the effectiveness of commercial campaigns carried out throughout the year,
focused on traffic promotions and flat tariff plans (with a very competitive
average charge per minute) that increase usage. Also, the Christmas campaigns
and Mother's Day campaign (in Panama) drove a 25.0% year-on-year increase in
gross adds in the fourth quarter. As a result, net adds in the fourth quarter
stood at 400,681 customers, up 51.4% on the same quarter in 2006. Net adds in
2007 stood at 1,448,530.

At the operating level, traffic growth was once again robust, especially
outgoing, buoyed by the promotional plan which encourages prepay usage and the
application of a very economical flat-rate tariff for customers. Consequently,
outgoing MoU increased by 18.5% year-on-year in 2007 to 86 minutes.

As a result of the company's healthy commercial performance, revenues in 2007
totalled 585 million euros, up 15.9% year-on-year in constant terms. Service
revenues (up 10.3% compared to. the fourth quarter of 2006) continued to follow
the positive trend marked in previous quarters, growing by 16.9% in constant
currency on. 2006. This strong performance of service revenues in 2007 was
chiefly underpinned by higher outgoing revenues (+28.9% in constant terms on
2006), which in turn were buoyed by the robust growth in on-net traffic (+76.3%
compared to the same period in 2006).

Despite the increase in commercial activity, Operating income before
depreciation and amortisation (OIBDA) reached 236 million euros in 2007, a 26.7%
year-on-year increase in constant terms. The OIBDA margin stood at 40.3% in
2007, an improvement of 3.5 percentage points from 2006.

In 2007, CapEx totalled 133 million euros, a 35.0% year-on-year increase in
constant currency. The bulk of this investment was allocated to boosting the
capacity and coverage of the region's wireless network.

ECUADOR

The Ecuadorian cellular market experienced strong growth in 2007, with an
estimated penetration of 70% by the end of the year, 9 percentage points higher
than a year earlier.

Telefonica Moviles Ecuador's customer base at the end of December 2007 stood at
2.6 million. Of this number, 70.3% were GSM customers (+18.8 percentage points
on 2006). Especially noteworthy is the sharp growth in the number of customers
on the 'movistar tariff' and 'multicolour' (preferential tariffs for on-net and
off-net calls respectively), which totalled around one million in December 2007
(a ten-fold increase on the beginning of the year).

Revenues at December 2007 stood at 291 million euros, up 9.5% in local currency
compared to 2006. Service revenues rose 0.2% in local currency year-on-year,
showing a shift in the previous trend (14.1% growth in the fourth quarter of
2007 compared to the year-on-year fall of 3.9% reported in September 2007)
largely attributable to the improvement in outgoing revenues in the contract
segment (+8.8% on 2006).

Operating income before depreciation and amortisation (OIBDA) rose 24.8%
year-on-year in local currency to 73 million euros in 2007. The 2007 OIBDA
margin stood at 25.1%, 3.1 percentage points higher than in 2006.

CapEx in 2007 totalled 60 million euros, up 36.8% in local currency compared to
the previous year in order to service the sharp increase in traffic being
carried by the operator.

TELEFONICA INTERNATIONAL WHOLESALE SERVICES

Telefonica International Wholesale Services (TIWS) again put in a strong
performance in the fourth quarter, reporting significant growth in its key
operating and financial figures in the year. Revenues in 2007 totalled 275
million euros, a year-on-year increase of 22.4% in constant euros.

Of the company's main business lines, International IP capacity revenues grew
18.0% year-on-year in constant euros, underpinned by the growth of Telefonica
Group's broadband business in the region, to 137 million euros (50% of TIWS'
total revenues). Revenues from the sale of international bandwidth capacity also
grew sharply (+46.5% in constant euros), VPNs (+32.1%) and satellite services
(+27.3%).

The growth in revenues pushed up Operating income before depreciation and
amortisation (OIBDA) to 88 million euros (+13.9% in constant euros); the OIBDA
margin stood at 31.9%.


TELEFONICA LATINOAMERICA
ACCESSES
Unaudited figures (thousands)
                                 2006                        2007
                                December        March      June September  December       % Chg
                                                                                          y-o-y

Final Clients Accesses         114,604.4    116,905.7 121,773.0 126,423.0 134,041.8        17.0
    Fixed telephony accesses    23,916.9     23,810.9  23,894.7  24,027.4  23,946.3         0.1
(1)
    Internet and data            6,723.7      6,757.6   6,467.8   6,803.4   6,954.8         3.4
accesses
        Narrowband (2)           2,813.5      2,615.3   1,989.8   2,000.6   1,815.6      (35.5)
        Broadband (3) (4)        3,780.3      4,045.6   4,380.4   4,703.5   5,035.9        33.2
        Other                      130.0         96.7      97.6      99.3     103.4      (20.4)
    Mobile accesses             83,298.4     85,637.0  90,610.9  94,712.1 101,976.9        22.4
        Contract                67,329.9     69,112.7  73,654.3  77,117.4  83,162.9        23.5
        Pre-Pay                 14,705.4     15,208.7  15,582.9  16,210.8  17,379.3        18.2
       Fixed Wireless            1,263.1      1,315.5   1,373.7   1,384.0   1,434.7        13.6
    Pay TV                         665.3        700.1     799.6     880.0   1,163.8        74.9
Wholesale Accesses                  65.9         64.6      64.5      64.1      62.6       (5.1)
Total Accesses                 114,670.3    116,970.3 121,837.5 126,487.1 134,104.4        16.9

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary
access; 2/6 Access x30. Company's accesses for internal use included.
(2) Includes narrowband ISP of Terra Brasil and Terra Colombia.
(3) Includes broadband ISP of Terra Brasil, Telefonica de Argentina, Terra
Guatemala and Terra Mexico.
(4) Includes ADSL, optical fiber, cable modem, broadband circuits and Telefonica
de Argentina ISP in the North part of the country.




TELEFONICA LATINOAMERICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
                                               January - December                            October - December
                                              2007          2006     % Chg             2007           2006        % Chg
Revenues                                    20,078        18,089      11.0            5,402          4,847         11.4
Internal exp capitalized in fixed assets       105           109     (4.3)               36             37        (4.1)
(1)
Operating expenses                        (13,422)      (11,814)      13.6          (3,783)        (3,128)         20.9
Other net operating income (expense)           363           227      59.9              163             42         n.m.
Gain (loss) on sale of fixed assets            (3)            13      c.s.              (6)             14         c.s.
Impairment of goodwill and other assets          0          (53)      n.m.                0           (52)         n.m.
Operating income before D&A (OIBDA)          7,121         6,571       8.4            1,812          1,761          2.9
Depreciation and amortization              (3,559)       (3,671)     (3.0)          (1,010)          (919)          9.8
Operating income (OI)                        3,562         2,900      22.8              802            841        (4.7)

Note: 'Bad debt provisions' have been reclassified from 'Other net operating 
income (expense)' to 'Operating expenses'.
(1) Including work in process.

TELEFONICA LATINOAMERICA
ACCESSES BY COUNTRIES (I)
Unaudited figures (Thousands)
                                       2006                      2007
                                      December      March     June September December                         % Chg
                                                                                                              y-o-y
BRAZIL
    Final Clients Accesses            44,716.9   44,599.1 45,344.4  46,607.3 48,963.1                           9.5
        Fixed telephony accesses      12,107.1   12,033.6 12,031.3  12,019.0 11,960.0                         (1.2)
(1)
        Internet and data accesses     3,556.8    3,535.2  3,072.6   3,259.5  3,288.6                         (7.5)
            Narrowband                 1,856.6    1,786.3  1,201.1   1,262.3  1,155.9                        (37.7)
            Broadband (2)              1,608.2    1,690.8  1,813.0   1,937.3  2,069.6                          28.7
            Other                         92.0       58.1     58.6      59.9     63.1                        (31.4)
        Mobile accesses               29,053.1   29,030.3 30,240.5  31,320.2 33,483.5                          15.2
            Pre-Pay                   23,543.4   23,377.0 24,549.4  25,456.8 27,236.4                          15.7
            Contract                   5,509.6    5,653.2  5,691.1   5,863.5  6,247.1                          13.4
            Pay TV                         0.0        0.0      0.0       8.5    230.9                          n.m.
    Wholesale Accesses                    38.4       38.9     38.1      37.4     37.4                         (2.6)
Total Accesses                        44,755.3   44,638.0 45,382.5  46,644.7 49,000.5                           9.5

ARGENTINA
    Final Clients Accesses            16,809.4   17,464.1 18,112.1  18,812.2 19,462.1                           0.2
        Fixed telephony accesses       4,636.3    4,627.9  4,633.5   4,633.1  4,578.2                         (0.0)
(1)
        Internet and data accesses       973.7    1,023.2  1,069.5   1,101.3  1,149.9                           0.2
            Narrowband                   439.2      418.0    392.9     363.6    312.2                         (0.3)
            Broadband (2)                517.7      588.1    659.0     719.7    819.3                           0.6
            Other                         16.8       17.1     17.7      18.1     18.4                           0.1
        Mobile accesses               11,199.4   11,813.0 12,409.1  13,077.8 13,734.0                           0.2
            Pre-Pay                    7,315.8    7,753.1  8,112.8   8,553.1  8,836.0                           0.2
            Contract                   3,742.9    3,925.8  4,169.9   4,410.4  4,793.7                           0.3
            Fixed wireless               140.7      134.2    126.3     114.3    104.3                         (0.3)
    Wholesale Accesses                     7.3        7.6      8.7       8.9      9.3                           0.3
Total Accesses                        16,816.6   17,471.7 18,120.8  18,821.2 19,471.4                           0.2

CHILE
    Final Clients Accesses             8,538.4    8,670.5  8,909.3   9,077.8  9,361.7                           0.1
        Fixed telephony accesses       2,206.2    2,177.4  2,174.4   2,172.7  2,172.4                         (0.0)
(1)
        Internet and data accesses       557.7      597.3    636.0     656.0    686.8                           0.2
            Narrowband                    53.3       59.0     52.5      40.1     31.8                         (0.4)
            Broadband (2)                494.5      528.2    574.1     606.9    646.0                           0.3
            Other                         10.0       10.0      9.5       9.0      8.9                         (0.1)
        Mobile accesses                5,680.2    5,766.8  5,927.5   6,051.9  6,282.7                           0.1
            Pre-Pay                    4,507.6    4,515.7  4,557.9   4,591.4  4,742.2                           0.1
            Contract                   1,172.7    1,251.1  1,369.6   1,460.5  1,540.5                           0.3
            Pay TV                        94.2      129.1    171.4     197.3    219.9                           1.3
    Wholesale Accesses                    19.9       17.6     17.2      17.3     15.4                         (0.2)
Total Accesses                         8,558.3    8,688.1  8,926.5   9,095.1  9,377.2                           0.1

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN 
Primary access; 2/6 Access x30. Company's accesses for internal use included.

(2) Includes ADSL, optical fiber, cable modem and broadband circuits.




TELEFONICA LATINOAMERICA
ACCESSES BY COUNTRIES (II)
Unaudited figures (Thousands)
                                      2006                      2007
                                     December      March     June September December                     % Chg
                                                                                                         y-o-y
PERU
    Final Clients Accesses            8,710.9    9,303.2 10,152.5  11,199.0 12,173.8                       0.4
        Fixed telephony accesses      2,498.5    2,531.2  2,605.7   2,742.1  2,781.9                       0.1
(1)
        Internet and data accesses      525.5      547.4    581.8     608.4    623.1                       0.2
            Narrowband                   47.8       40.3     44.2      42.4     40.3                     (0.2)
            Broadband (2)               468.5      497.7    527.8     555.9    572.1                       0.2
            Other                         9.2        9.4      9.7      10.2     10.7                       0.2
        Mobile accesses               5,129.8    5,663.5  6,365.0   7,220.5  8,128.7                       0.6
            Pre-Pay                   4,353.3    4,882.3  5,570.7   6,389.7  7,238.1                       0.7
            Contract                    705.2      711.0    724.4     763.2    829.2                       0.2
            Fixed wireless               71.3       70.2     70.0      67.7     61.5                     (0.1)
        Pay TV                          557.2      561.1    600.0     628.0    640.0                       0.1
    Wholesale Accesses                    0.4        0.4      0.5       0.5      0.5                       0.1
Total Accesses                        8,711.4    9,303.6 10,153.0  11,199.5 12,174.3                       0.4
COLOMBIA
    Final Clients Accesses           10,190.0    9,995.9 10,095.6  10,105.5 10,973.8                       0.1
        Fixed telephony accesses      2,359.4    2,346.5  2,330.5   2,340.3  2,328.5                     (0.0)
(1)
        Internet and data accesses       70.9       94.3    125.0     167.5    200.3                      n.m.
            Narrowband                    2.9        0.0      0.0       0.0      0.0                      n.m.
            Broadband (2)                68.0       94.3    125.0     167.5    200.3                      n.m.
            Other                         0.0        0.0      0.0       0.0      0.0                      n.m.
        Mobile accesses               7,759.7    7,545.2  7,611.8   7,551.5  8,372.1                       0.1
            Pre-Pay                   5,960.5    5,734.6  5,887.0   5,867.4  6,612.9                       0.1
            Contract                  1,799.2    1,810.6  1,724.8   1,684.1  1,759.2                     (0.0)
        Pay TV                            0.0       10.0     28.3      46.2     72.9                      n.m.
    Wholesale Accesses                    0.0        0.0      0.0       0.0      0.0                      n.m.
Total Accesses                       10,190.0    9,995.9 10,095.7  10,105.5 10,973.8                       0.1
MEXICO
    Mobile accesses                   8,553.2    9,319.6 10,232.8  11,072.7 12,537.6                       0.5
        Pre-Pay                       8,017.8    8,775.0  9,655.2  10,446.9 11,833.7                       0.5
        Contract                        533.4      542.4    574.8     622.6    700.4                       0.3
        Fixed wireless                    2.0        2.2      2.8       3.2      3.6                       0.8
Total Accesses                        8,553.2    9,319.6 10,232.8  11,072.7 12,537.6                       0.5
VENEZUELA
    Mobile accesses                   8,826.2    9,100.3  9,746.6   9,840.0 10,429.9                       0.2
        Pre-Pay                       7,520.2    7,724.2  8,345.1   8,392.2  8,900.3                       0.2
        Contract                        469.4      495.4    474.7     510.3    533.7                       0.1
        Fixed wireless                  836.6      880.7    926.8     937.5    995.9                       0.2
Total Accesses                        8,826.2    9,100.3  9,746.6   9,840.0 10,429.9                       0.2

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary 
access; 2/6 Access x30. Company's accesses for internal use included.
(2) Includes ADSL, optical fiber, cable modem and broadband circuits.



TELEFONICA LATINOAMERICA
ACCESSES BY COUNTRIES (III)
Unaudited figures (Thousands)
                                 2006                     2007
                               December      March     June September  December                           % Chg
                                                                                                          y-o-y
CENTRAL AMERICA (3)
    Fixed telephony accesses      109.4       94.4    119.4     120.3     125.3                             0.1
(1)
    Internet and data accesses     26.0       26.0     22.3      22.2      22.0                           (0.2)
        Broadband (2)              24.1       24.0     20.2      20.0      19.8                           (0.2)
        Other                       1.9        2.0      2.1       2.2       2.2                             0.2
    Mobile accesses             3,829.5    4,042.1  4,469.4   4,877.4   5,278.1                             0.4
        Pre-Pay                 3,303.1    3,472.5  3,856.6   4,240.8   4,628.6                             0.4
        Contract                  315.6      342.8    366.6     376.7     381.2                             0.2
        Fixed Wireless            210.9      226.7    246.2     259.8     268.2                             0.3
    Pay TV                         14.0        0.0      0.0       0.0       0.0                            n.m.
Total Accesses                  3,978.9    4,162.5  4,604.1   5,019.8   5,425.3                             0.4
ECUADOR
    Mobile accesses             2,490.0    2,481.7  2,645.0   2,653.2   2,582.4                             0.0
        Pre-Pay                 2,133.0    2,116.8  2,275.2   2,272.1   2,177.5                             0.0
        Contract                  355.3      363.3    368.2     379.6     403.6                             0.1
        Fixed Wireless              1.7        1.6      1.5       1.5       1.3                           (0.2)
Total Accesses                  2,490.0    2,481.7  2,645.0   2,653.2   2,582.4                             0.0
URUGUAY
    Mobile accesses               777.3      874.6    963.1   1,047.0   1,147.8                             0.5
        Pre-Pay                   675.3      761.4    844.3     907.0     957.0                             0.4
        Contract                  102.0      113.2    118.8     140.0     190.8                             0.9
Total Accesses                    777.3      874.6    963.1   1,047.0   1,147.8                             0.5

(1) PSTN (including Public Use Telephony) x1; ISDN Basic access x1; ISDN Primary 
access; 2/6 Access x30. Company's accesses for internal use included.
(2) Includes ADSL, optical fiber and broadband circuits.
(3) Includes Guatemala, Panama, El Salvador and Nicaragua


TELEFONICA LATINOAMERICA
SELECTED FINANCIAL DATA (I)
Unaudited figures (Euros in millions)
                                                             January - December
                                                      2007        2006       % Chg % Var Local Cur

BRAZIL                    Revenues                   7,662       7,238         5.9        3.2
                          OIBDA                      3,026       3,068       (1.4)      (3.8)
                          OIBDA margin               39.5%       42.4%  (2.9 p.p.)
                          CapEx                      1,087       1,028         5.7        3.1
    Telesp                Revenues                   5,619       5,565         1.0      (1.5)
                          OIBDA                      2,438       2,632       (7.4)      (9.7)
                          OIBDA margin               43.4%       47.3%  (3.9 p.p.)
                          CapEx                        729         639        14.0       11.2
    Vivo                  Revenues                   2,396       2,005        19.5       16.5
                          OIBDA                        588         438        34.1       30.8
                          OIBDA margin               24.5%       21.9%    2.7 p.p.
                          CapEx                        358         389       (8.0)     (10.2)

ARGENTINA                 Revenues                   2,264       2,163         4.7       15.7
                          OIBDA                        773         792       (2.3)        8.0
                          OIBDA margin               32.9%       35.1%  (2.2 p.p.)
                          CapEx                        289         243        19.0       31.5
    Telefonica de         Revenues                     984         989       (0.6)        9.9
Argentina
                          OIBDA                        356         453      (21.5)     (13.3)
                          OIBDA margin (1)           30.9%       39.0%  (8.1 p.p.)
                          CapEx                        165         140        17.9       30.3
    TEM Argentina         Revenues                   1,353       1,260         7.4       18.7
                          OIBDA                        418         339        23.5       36.5
                          OIBDA margin               30.9%       26.9%    4.1 p.p.
                          CapEx                        123         102        20.5       33.2

CHILE                     Revenues                   1,814       1,706         6.4       14.3
                          OIBDA                        716         711         0.7        8.2
                          OIBDA margin               39.5%       41.7%  (2.2 p.p.)
                          CapEx                        418         339        23.2       32.3
    Telefonica Chile      Revenues                     974       1,006       (3.2)        4.0
                          OIBDA                        368         417      (11.8)      (5.3)
                          OIBDA margin               37.7%       41.4%  (3.7 p.p.)
                          CapEx                        198         163        21.1       30.1
    TEM Chile             Revenues                     930         796        16.8       25.5
                          OIBDA                        348         294        18.5       27.3
                          OIBDA margin               37.5%       36.9%    0.5 p.p.
                          CapEx                        220         176        25.1       34.5
OIBDA is presented after management fees.
(1) Margin over revenues includes fixed to mobile interconnection.



TELEFONICA LATINOAMERICA
SELECTED FINANCIAL DATA (II)
Unaudited figures (Euros in millions)
                                                               January - December
                                                      2007       2006       % Chg % Var Local Cur

PERU                      Revenues                   1,513      1,428         6.0            10.5
                          OIBDA                        469        579      (19.0)          (15.6)
                          OIBDA margin               31.0%      40.6%  (9.6 p.p.)
                          CapEx                        281        216        30.3            35.8
   Telefonica del Peru    Revenues                   1,031      1,097       (6.0)           (2.0)
(2)
                          OIBDA                        311        454      (31.5)          (28.6)
                          OIBDA margin               30.2%      41.4% (11.2 p.p.)
                          CapEx                        126        132       (4.3)           (0.2)
    TEM Peru              Revenues                     603        447        34.8            40.5
                          OIBDA                        158        129        22.1            27.3
                          OIBDA margin               26.2%      28.9%  (2.7 p.p.)
                          CapEx                        155         84        84.5            92.3

COLOMBIA                  Revenues                   1,569      1,182        32.8            27.9
                          OIBDA                        485        328        47.9            42.5
                          OIBDA margin               30.9%      27.7%    3.2 p.p.
                          CapEx                        360        333         8.3             4.3
    Telefonica Telecom    Revenues                     739        417        n.c.            n.c.
(3)
                          OIBDA                        299        189        n.c.            n.c.
                          OIBDA margin               40.4%      45.4%  (5.0 p.p.)
                          CapEx                        180        140        n.c.            n.c.
   TEM Colombia           Revenues                     869        779        11.5             7.4
                          OIBDA                        186        138        34.9            30.0
                          OIBDA margin               21.4%      17.7%    3.7 p.p.
                          CapEx                        180        192       (6.4)           (9.9)

MEXICO (TEM Mexico)       Revenues                   1,431        988        44.8            58.5
                          OIBDA                        179       (11)        c.s.            c.s.
                          OIBDA margin               12.5%     (1.1%)   13.7 p.p.
                          CapEx                        230        180        27.8            39.9

VENEZUELA (TEM Venezuela) Revenues                   2,392      2,041        17.2            27.8
                          OIBDA                      1,060        815        30.1            42.0
                          OIBDA margin               44.3%      39.9%    4.4 p.p.
                          CapEx                        370        232        59.1            73.6

CENTRAL AMERICA (4)       Revenues                     585        556         5.3            n.c.
                          OIBDA                        236        205        15.3            n.c.
                          OIBDA margin               40.3%      36.8%    3.5 p.p.
                          CapEx                        133        108        22.5            n.c.

ECUADOR (TEM Ecuador)     Revenues                     291        290         0.4             9.5
                          OIBDA                         73         64        14.4            24.8
                          OIBDA margin               25.1%      22.0%    3.1 p.p.
                          CapEx                         60         48        25.4            36.8
OIBDA is presented after management fees.
(2) Telefonica del Peru includes Cable Magico.
(3) Data for Telefonica Telecom (formerly Colombia Telecom) only include results 
for May-December 2006 period, including Telefonica Data Colombia.
(4) Includes Guatemala, Panama, El Salvador and Nicaragua


TELEFONICA LATINOAMERICA
SELECTED FINANCIAL DATA (III)
Unaudited figures (Euros in millions)
                                                               January - December
                                                      2007       2006       % Chg % Var Local Cur

URUGUAY (TEM Uruguay)     Revenues                     104         77        34.4            42.9
                          OIBDA                         28         18        51.9            61.6
                          OIBDA margin               26.6%      23.5%    3.1 p.p.
                          CapEx                         15         13        12.6            19.7

TIWS                      Revenues                     275        232        18.4            22.4
                          OIBDA                         88         79        10.9            13.9
                          OIBDA margin               31.9%      34.0%  (2.1 p.p.)
                          CapEx                         54         45        21.4            21.4
OIBDA is presented after management fees.




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