Shareholder returns

"We manage the company with the aim of creating value for our shareholders" Business Principles.

After five years of consecutive rises, Telefónica's share price was unable to defy the negative performance of stock markets in 2008, and dropped 28.7% on the year to 15.85 € per share. However, the company's unique profile was reflected in the fact that its shares outperformed both their European sector benchmark (DJ Stoxx Telecommunications -37.0%) and the General Indices, the Ibex-35 and the Eurostoxx 50 (-39.4% and -44.3% respectively). In relative terms, Telefónica's shares did better than those of European operators Telecom Italia (-45.9%) and Portugal Telecom (-32.0%), and performed in line with those of Vodafone (-26.0%) and Deutsche Telekom (-28.4%).

The shares outperformed the main indices during 2008 thanks to solid quarterly results througought the year and also the market's perception of Telefónica as a defensive stock due to its growth profile, its abundant cash flow, its solid balance sheet, its highly selective expansion strategy, and its extremely attractive shareholder remuneration policy.


Telefónica maintained its commitment to gradually increase its dividend per share. 69% of the cash flow generated in 2008 was used for remunerating shareholders, amount that represents 10% of the company's market capitalisation (as on 25/02/09).

Remuneration was made up of dividend payments and share buybacks (126.7 million shares during the whole of 2008). The buyback programme introduced by the company in February 2008 (for a total amount of 150 million shares) was completed on March 31 2009.

2008 dividend payments

• On May 13 2008, the company paid a gross final dividend against 2007 earnings of 0.40 € per share, having paid out 0.35 euros per share, gross, on November 14 2007.
• In the same way, a gross interim dividend against 2008 earnings (0.50 € per share) was paid out on November 12 2008. This was then followed by a gross final dividend on 2008 earnings of 0.50 € on May 12 2009. With these two payments, the company has maintained its commitment to pay out 1 € per share before the end of the first half of 2009.
  

Increased dividend policy

The company's Board of Directors, at its meeting on April 29 2009, reiterated its commitment made in January to increase the dividend on 2009 earnings to 1.15 € per share, the payment of which is to be split into two. The proposed dividend implies a year-on-year increase of 15%. To this effect, the Board of Directors is to propose at the next General Shareholder's Meeting a gross dividend against unrestricted reserves of 0.50 € per share, to be paid out during the second half of 2009.

Since it began paying a dividend again in 2003, Telefónica has been gradually improving its shareholder remuneration policy, and is now one of the leading practioners.