The Company reiterates guidance for 2009, and maintains target of distributing €1.15/share in 2009, in line with its commitment to prioritise dividends to shareholders

The solid performance of organic growth in income (+2.8%), OIBDA (+2.5%), and operating income (+3.9%) confirms Telefónica's differential profile in the sector, which is characterised by its highly diversified operations, both in terms of businesses and geographies.

Telefónica totalled 261.4 million customers worldwide (+11.9%) thanks to a business strategy that focuses on capturing growth potential in expanding businesses. There has been growth in mobile access (+15.4%), broadband (+17.5%) and pay TV (+24.8%)

In line with its objective to increase earnings, operating cash flow (OIBDA-CapEx) grew 4.5% in organic terms, reaching 4,154 million euros

At the close of the third quarter, the efficiency ratio rose to 75.3%, a result of Telefónica's ability to manage its costs and investment in a flexible way

In reported terms, the evolution of income (-1.4%) and OIBDA (-0.4%) is basically affected by exchange rate fluctuation, whereas operating income (OI) grew 2.9%

Telefónica maintains its financial strength, with a ratio of net financial debt plus commitments to OIBDA of 2.1x at the end of March

By geographical areas, Telefónica Latin America continues to drive the Group's growth (with organic revenue growth of 8.7%). In Europe -- where organic revenue grew by 4%-, the business has shown resilience, driven by solid results in the United Kingdom (+7%) and Germany (+3.6%). In its domestic market, Telefónica has complied with its strategy to maximise income and maintain solid operating cash flow (+0.2% in comparable terms)

In the current economic context, the sound performance of the Telefónica Group in the first quarter of 2009 reflects the success of the Company's strategy, focused on capturing the growth potential in expanding businesses while increasing the cash flow generation, leveraging the advantages of the high diversification of the Group's operations, both by businesses and by geographies. This strategy has allowed Telefónica to consolidate its differentiated profile in the sector, showing a notable revenue and OIBDA year-on-year growth in organic terms1, being this positive performance reinforced with a strong cash flow generation.

The Company reiterates its 2009 guidance for all metrics, announced in February 2009, and maintains its target of paying a dividend of 1.15 euros per share for 2009 fiscal year, in line with Telefónica's commitment to prioritize shareholder remuneration for the use of the free cash flow and to progressively increase its dividend per share.

Positive evolution of revenue and OIBDA, thanks to business diversification

Revenue stood at 13,703 million euros in the first quarter of 2009, showing a solid 2.8% year-on-year growth in organic terms1, boosted mainly by the strong performance posted by the businesses at Telefónica Latinoamérica, contributing with 3.3 percentage points to revenue growth and, to a lesser extent, by the positive behaviour of revenue at Telefónica Europe, with a contribution of 0.9 percentage points in the period. By services, it is noteworthy the positive performance of broadband connectivity revenue, both fixed and mobile, together with the high acceptance and growing contribution to revenue of value added services, showing the successful commercial strategy of the Company.

Operating income before depreciation and amortization (OIBDA) reached 5,354 million euros at the end of March, advancing 2.5% year-on-year in organic terms2. The strong performance of Telefónica Latinoamérica's OIBDA (+4.9 percentage points) and Telefónica Europe (+1.2 percentage points), offset the lower OIBDA coming from T. España, demonstrating the value of the high diversification of the Group.

The Telefónica Group's ability to flexibly manage OpEx and CapEx is reflected in the efficiency ratio3, +0.9 percentage points year-on-year to 75.3%, enabling to increase the operating cash flow (OIBDA-CapEx) significantly to 4,154 million euros till March, up 4.5% year-on-year in organic terms2. As a result, organic2 operating cash flow growth exceeded revenue growth by 1.7 percentage points, basically as a result of the strong growth achieved by Telefónica Latinoamérica (+14.3% in organic terms2; 1,606 million euros) and Telefónica Europe (+11.7% in organic terms2; 527 million euros), together with the stability of the cash flow generated by Telefónica España in comparable terms4 (2,068 million euros).

Totalling over 261 million accesses

At the same time, the Company is focusing its commercial strategy on capturing growth in expanding markets. This led to an 11.9% rise in the total number of accesses for the Telefónica Group compared to the first quarter of 2008, to over 261.3 million. The increase was underpinned by the expansion in wireless accesses (+15.4%), broadband (+17.5%) and pay TV (+24.8%) accesses. By region, it is worth highlighting the contribution by Telefónica Latinoamérica, with over 159 million accesses across the region at the end of March (up +15.8% on March 2008).

By type of access, the Telefónica Group's wireless accesses exceeded 198 million at the end of March, with net adds in the first quarter of around 2.4 million and around 22.5 million customers5 compared to the end of March 2008. The main drivers of the net adds in the first quarter of the year were Brazil (0.7 million), Germany (0.3 million), Mexico (0.2 million) and Argentina (0.2 million).