Telefónica earns €5,596 million to September and confirms all growth forecasts for 2008

MADRID — During the third quarter of 2008 Telefónica (Madrid and NYSE: TEF) maintained the intense commercial activity registered since the beginning of the year, which has led to a sharp growth in accesses across all businesses and regions, bringing the total customer base at the end of September 2008 to 252 million (up 15.2% on the first nine months of 2007). The growth in mobile telephony (+19.0%), broadband (+24.5%) and Pay TV (+54.0%) accesses was particularly noteworthy.

Pay TV accesses stood at over 2.1 million at the end of the third quarter, up 54.0% on the prior year, driven by net adds of 130,000 accesses in the third quarter (year-on-year growth of 14.4%) and approximately 410,000 in January-September (up 21.4% year-on-year). By September the Company offered Pay-TV services in Spain, the Czech Republic, Peru, Chile, Colombia and Brazil, whereas in October Telefonica launched its Pay TV services in Venezuela.

                            January - September
                            -------------------
                                2008       2007   % Chg
                            --------   --------   -----
Global Pay TV Subscribers    2,158.1    1,401.7    54.0

Telefónica España (Spain)

In the Pay TV business, Telefónica’s estimated market share stood at around 13.5% at the end of September 2008, with 12,993 new customers added in the third quarter and 78,464 in the first nine months. Pay TV customers totalled 589,551 (up 25.7% year-on-year).

The total number of Duo and Trio bundles reached 4.4 million units. This means that more than 84% of the Company’s retail broadband accesses were part of a double or triple offer bundle.

Spain subscribers (thousands):

                  2007                         2008
          --------------------  -------------------------------
          September   December      March       June  September  % Chg y-o-y
          ---------  ---------  ---------  ---------  ---------  -----------
Pay TV        469.1      511.1      554.0      576.6      589.6         25.7

Telefónica Latinoamérica

Telesp (Brazil)

Telesp ended September 2008 with 15.9 million accesses, 4.0% more than a year earlier: 11.9 million fixed line accesses, nearly 2.5 million broadband connections (+26.9% year-on-year) and 426,123 Pay TV customers.

In the Pay TV segment, Telesp strengthened its position as a key player in the market with 79,229 new accesses in the third quarter, the largest quarterly net adds in 2008.

Telefónica Chile

Pay TV accesses registered year-on-year growth of 27.2% following net adds of 10,049 in the third quarter and 30,934 in the first nine months, and consolidated their role as a key element in the differentiation of our commercial offer, with an estimated market share of 17.6%.

Telefónica del Perú

Total accesses managed by Telefónica del Perú stood at 4.3 million at the end of September 2008, up 6.0% year-on-year underpinned by the increases in wireline telephony accesses (up 4.7% year-on-year), primarily driven by the expansion of fixed-wireless telephony, broadband accesses (up 20.5% year-on-year) and Pay TV which benefited from the good performance of cable customers, to total 645,974 accesses (up 2.9% year-on-year).

Telefónica Telecom (Colombia)

Telefónica Telecom reported 2.8 million total accesses at the end of September, up 10.2% year-on-year, being noteworthy the increased achieved by broadband (+112.0%) to 355,068 accesses, and Pay TV that almost tripled in the year to 137,508 accesses.

Thanks to the bundling and broadband expansion strategy, the strong pace of broadband and TV customer acquisition continued the positive trend in the third quarter. Pay TV net adds amounted to 24,893 in the quarter (up 38.8% vs. the third quarter of 2007), bringing the figure for the first nine months to 64,578 new accesses (up 39.8% from the first nine months of 2007).

Latin America Pay TV Subscribers (thousands):

                  2007                         2008
          --------------------  -------------------------------
          September   December      March       June  September  % Chg y-o-y
          ---------  ---------  ---------  ---------  ---------  -----------
Brazil          8.5      230.9      282.3      346.9      426.1         n.m.
Chile         197.3      219.9      231.6      240.8      250.9         27.2
Peru          628.0      640.0      633.4      653.2      646.0          2.9
Colombia       46.2       72.9       93.0      112.6      137.5        197.6
 Total        880.0    1,163.8    1,240.4    1,353.6    1,460.5         66.0

Telefonica Europe

Telefónica O2 Czech Republic

The total number of O2 TV customers increased by 10,143 to reach 108,061 at the end of September.

Europe Pay TV Subscribers (thousands):

                        2007                         2008
                --------------------  -------------------------------
                September   December      March       June  September  % Chg y-o-y
                ---------  ---------  ---------  ---------  ---------  -----------
Czech Republic       53.0       73.2       87.2       97.9      108.1        103.8

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