CNMV communications

Clarifications in respect of the Shareholders’ Agreement in Telco.

The Board of Directors of TELEFÓNICA, S.A., at its meeting held today, has approved, upon the prior favorable report from the Nominating, Compensation and Corporate Governance Committee, the appointment of the Vice-Chairman of the Board of Directors, Mr. Julio Linares López, as member of the Innovation Board Committee of Telefónica, S.A.

Following the decisions taken by the Brazilian Administrative Council for Economic Defense -CADE- on its 04 December 2013 session (public versions recently available in its website, http://www.cade.gov.br), Telefónica considers that the remedies imposed are unreasonable and therefore is further analyzing the possibility of initiating the appropriate legal actions.

In line with such course of action, and to reinforce our strong commitment with the previous obligations undertaken by Telefónica to remain separate from Telecom Italia’s Brazilian businesses, Mr. César Alierta Izuel and Mr. Julio Linares López have decided to resign, with immediate effect, from their positions as Directors of Telecom Italia. Furthermore, Mr. Julio Linares López has decided to resign, with immediate effect, from his position in the slate submitted by TELCO S.p.A. for the potential re-election of the Board of Directors of Telecom Italia in the Shareholders Meeting of the aforementioned company, called for December 20, 2013.

For the same reasons, Telefónica, without prejudice of any of the rights recognized in TELCO S.p.A. Shareholders’ Agreement, has decided for the time being not to avail of its right to appoint or propose two Directors in the Board of Directors of Telecom Italia.

Clarification on Brazilian Antitrust Regulator announcement.

Further to the significant event filed on November 19, 2013 (registered under number 195439), it is hereby announced that on the date hereof the issuance of Undated Deeply Subordinated Reset Rate Guaranteed Securities of TELEFÓNICA EUROPE B.V., with the subordinated guarantee of TELEFÓNICA, S.A., for a nominal amount of GBP 600 million and callable after the seventh anniversary of the issue date, has settled.

TELEFÓNICA EUROPE B.V., the Dutch subsidiary of TELEFÓNICA, S.A. (“TELEFÓNICA” or the “Company”), has today finalised the pricing and the terms and conditions of an issuance of Undated Deeply Subordinated Reset Rate Guaranteed Securities, with the subordinated guarantee of TELEFÓNICA, for an aggregate nominal amount of Sterling 600 million and subject to a call option exercisable by the Issuer from the seventh anniversary of the issuance date (the “Securities”).

Detail of the Theoretical shares assigned to be delivered in the third cycle of the PIP program to each of its beneficiaries of the Group Directors and also the the maximum number possible of shares to be received in the event of fulfillment of the Co-investment requirement established on the PIP progran and of maximum achievement of the TSR objective in this cycle.

Telefónica, S.A. will hold a conference call with analysts at 2:00 p.m. (Madrid time) tomorrow, November 8th, 2013, to announce its 2013 third quarterly financial information.

Following the Significant Event published on October 15th, 2013, (under registration number 193892) Telefónica announces that it has reached an agreement to sell 65.9% of Telefónica Czech Republic, a.s. (hereinafter Telefonica Czech Republic) to PPF Group N.V. (hereinafter PPF) for, approximately, 2,467 million euro in cash (CzK306 per share). The aforementioned consideration will be paid in two tranches:

(i) 2,063 million euro in cash up front at closing of the transaction; and
(ii) 404 million euro in cash as deferred payments over a 4 year period.

Additionally, Telefonica will receive, prior to delivering the shares, an amount of 260 million euro, corresponding to the distribution to shareholders approved by the General Shareholders Meeting of Telefonica Czech Republic, to be paid on November 11th, 2013.

As a result of this transaction, Telefónica will maintain a 4.9% equity stake in Telefónica Czech Republic and will remain as a Company’s industrial and commercial partner for 4 years:
– Telefonica Czech Republic will be renamed but will continue using the O2 brand for up to four years.
– In addition, the Company will become part of Telefonica’s Business Partners Program.

In connection with this transaction, PPF will launch a mandatory tender offer. Telefónica will maintain its 4.9% but may dispose of the shares upon completion, subject to certain restrictions.

Furthermore, the agreement establishes a put/call option structure in relation to the Telefónica Czech Republic shares which Telefónica holds after 4 years. In addition, the agreement includes tag along/drags along clauses.

Closing of the transaction is subject to obtaining the relevant regulatory authorisations.

Among the accounting impacts arising from the transaction, it is worth mentioning the positive effect of the reduction of Telefónica Group indebtedness estimated in, approximately 2,685 million euro, due to the present value of the amount to be paid by PPF and the amount to be received as a result of the distribution to shareholders.

Furthermore, the transaction will generate a capital loss of about 56 million euros in its third quarterly financial information for the year 2013.

With this transaction, Telefónica continues executing on its strategy of focusing on its core markets and optimizing financial flexibility.

Following the Significant Event published on September 25, 2013, (under registration number 193172) in relation with the decision adopted by the Board of Directors and the resolution adopted by the Annual General Shareholders’ Meeting of Telefónica, S.A., at its meeting held on May 31, 2013, we hereby inform all shareholders that on November 6, 2013, the Company will pay a dividend to be charged to Unrestricted Reserves, of a fixed gross amount of 0.35 euro for each Company share issued, in circulation and carrying entitlement to this dividend. (Record Date: November 5, 2013). This payment will be made as follows, in all events subject to the provisions of the applicable tax legislation:

Gross dividend (Euros per share) 0.35
Withholding tax rate (21%) (Euros per share) 0.0735
Net dividend (Euros per share) 0.2765

The payment of this dividend shall be executed from November 6, 2013, by Banco Bilbao Vizcaya Argentaria, S.A., through the participating entities in IBERCLEAR (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.), the Spanish securities registrar, clearing and settlement company.

Regarding the issue of unsecured debentures of Telefónica (ISIN code ES0278430998 – the “Debentures”) subscribed for and paid on November 29, 2012 related to the purchase of preferred securities of Telefónica Finance USA LLC and pursuant its right to partially or fully redeem the Debentures at each interest payment date as provided for in the Securities Note approved and registered on the Spanish National Securities market Commission (Comisión Nacional del Mercado de Valores, CNMV) on October 31, 2012, Telefónica announces that on November 29, 2013, it will carry out a partial redemption through a reduction in the nominal value of all the 1,941,235 Debentures issued to 300 euros each. The maturity of the issue is unchanged at 10 years.

In relation to the news published today, Telefónica states that it is considering strategic alternatives regarding its stake in Telefónica Cezch Republic, including conversations with investor group PPF, not having certainty with respect to the feasibility of reaching an agreement, nor with respect to the eventual terms and conditions of such agreement.

The Board of Directors, at its meeting held today, and pursuant to the resolution adopted by the Shareholders’ Meeting of Telefónica, SA, held on May 31, 2013, has set November 6, 2013 as the date for the dividend distribution charged to Unrestricted Reserves, of a fixed gross amount of 0.35 euro for each Company share issued, in circulation, and carrying entitlement to this distribution.

The payment of this dividend shall be executed from November 6, 2013 through the participating entities in IBERCLEAR, (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.), the Spanish securities registrar, clearing and settlement company.

This payment is part of the commitment announced by the Company of paying a dividend of 0.75 euro per share for 2013. The second tranche of this dividend will be paid in the second quarter of 2014.

Telefónica and the remaining shareholders of the Italian company Telco, S.p.A. (which holds a capital stake of 22.4 % of the voting share capital of Telecom Italia S.p.A.) have reached an agreement by virtue of which:

– As of today, Telefónica has subscribed for and paid out a capital increase in Telco, S.p.A., through the contribution of 323,772,468 euros in cash, receiving in return non-voting shares of Telco, S.p.A. As a result of this capital increase, the interest held by Telefónica in the voting share capital of Telco, S.p.A. remains unchanged (i.e. 46.18 %, as Telefónica currently holds), although its interest in the total share capital of Telco, S.p.A. is increased to 66%. The current governance at Telco, S.p.A.’s level remains unaffected, including the obligation by Telefónica of abstaining from participating or influencing in any decisions which could affect the markets in which both Telefónica and Telecom Italia S.p.A. are present.

Telco, S.p.A. will use the proceeds received from the capital increase to reduce its banking debt.

– Subject to receiving any required anti-trust and telecommunications approvals (including in Brazil and Argentina), Telefónica will subscribe for and pay out a second capital increase in Telco, S.p.A., through the contribution of 117,227,532 euros in cash and receiving in return non-voting shares of Telco, S.p.A. As a result of this second capital increase, the interest of Telefónica in the voting share capital of Telco, S.p.A. will remain unchanged (i.e. 46.18 %, as Telefónica currently holds), although its interest in the total share capital will be then increased to 70%.

Telco, S.p.A. will use the proceeds received from the second capital increase to partially repay its notes.

– Starting from January 1, 2014, subject to receiving any required relevant anti-trust and telecommunications approvals (including in Brazil and Argentina), Telefónica may convert all or a portion of the non-voting shares in Telco, S.p.A. held by Telefónica, reaching a maximum of 64.9 % of the voting share capital of Telco, S.p.A.

– The Italian shareholders of Telco, S.p.A. have granted to Telefonica a call option to acquire all of their shares in Telco, S.p.A., whose exercise is subject to receiving any required anti-trust and telecommunications approvals (including in Brazil and Argentina). The call option may be exercised by Telefonica starting from January 1, 2014 while the Shareholders Agreement remains in effect, except (i) between June 1,2014 and June 30, 2014 and between January 15, 2015 and February 15, 2015, and (ii) during certain periods, in case the Italian shareholders Telco, S.p.A. request the demerger of Telco, S.p.A.

The purchase price of the shares, payable in cash, will be based on the equity of Telco, S.p.A. at the end of the month prior to the closing. For this purpose, the value of the shares in Telecom Italia S.p.A. held by Telco, S.p.A. will be valued at the higher of: (i) 1,10 euros per share of TI, and (ii) the average closing trading price of the 30 days prior to the call option exercise notice.

– As of today, Telefónica will acquire from the remaining Telco, S.p.A.’s shareholders 23.8% of the non-convertible notes issued by Telco, S.p.A., in exchange of 39,021,411 Telefónica’s treasury shares, which represent 0.9 % of its share capital. In this respect, the remaining Telco, S.p.A.’s shareholders have committed: i) to refrain from selling the aforementioned shares during the next 15th business days, and ii) to assume some restrictions that, in case of sale, ensure an orderly sale of such shares.

– Telefónica has assumed a standstill obligation under which Telefónica commits not to buy shares in Telecom Italia S.p.A. except if a third party acquires a relevant stake (10% or higher) in the aforementioned company.

Further to the significant event announced on 11 September 2013 it is hereby announced that on the date hereof the two issuances of Undated Deeply Subordinated Reset Rate Guaranteed Securities of TELEFÓNICA EUROPE B.V., with the subordinated guarantee of TELEFÓNICA, S.A., have been issued and paid-up, with a face value of 1,125 million euros in the case of the 5 Year Non-Call Securities and 625 million euros in the case of the 8 Year Non-Call Securities.

TELEFÓNICA EUROPE B.V., the Dutch subsidiary of TELEFÓNICA, S.A., has today finalised the pricing and the terms and conditions of two issuances of Undated Deeply Subordinated Reset Rate Guaranteed Securities, with the subordinated guarantee of TELEFÓNICA, one of them for an aggregate nominal amount of 1,125 million euros subject to a call option exercisable by the Issuer from the fifth anniversary of the issuance date (the “5 Year Non-Call Securities”) and the other for an aggregate nominal amount of 625 million euros subject to a call option exercisable by the Issuer from the eighth anniversary of the issuance date (the “8 Year Non-Call Securities”), together with the 5 Year Non-Call Securities, the “Securities”.

In relation to the agreement entered into on July 23, 2013 by and between Telefonica, S.A., its German subsidiary Telefónica Deutschland Holding AG and the Dutch company KPN for the acquisition by Telefónica Deutschland of the German subsidiary of KPN, E-Plus, Telefonica, S.A.confirms that América Móvil, S.A. de C.V. (reference shareholder of KPN) has irrevocably committed to vote in favour of the transaction at the Extraordinary Shareholder Meeting of KPN.

Telefónica, S.A. will hold a conference call with analysts at 2:00 p.m. (Madrid) tomorrow, July 25th, 2013, to announce its 2013 First Half Yearly Report.

Telefonica and its German listed subsidiary Telefónica Deutschland Holding AG have signed an agreement with Koninklijke KPN NV, under which Telefónica Deutschland will acquire the German subsidiary of KPN, E-Plus Mobilfunk GmbH & Co. KG. KPN will receive a stake of 24.9% in Telefónica Deutschland and a cash consideration of 3,700 million Euros.

Subsequently, Telefónica will acquire a 7.3% of Telefónica Deutschland from KPN for a total price of 1,300 million Euros, and the ownership of KPN in Telefónica Deutschland will be reduced to 17.6%.

With reference to the speculation about possible transactions in Germany, TELEFONICA confirms that negotiations are taking place, not having reached any agreement in this respect yet.

Following the Significant Event published on April 30, 2013, related to the agreement reached between Telefónica, S.A. (hereinafter, Telefónica) and Corporación Multi Inversiones (“CMI”), for the sale of the 40% of Telefónica´s stake in Guatemala, El Salvador, Nicaragua and Panama, Telefónica informs that the conditions to which the transaction was subject have been met.

In this regard, it is expected that in accordance with the provisions of the aforementioned agreement, the transaction will be completed in the coming days.

Telefónica, S.A. announces the date of publication of the quarterly results January-June 2013.

Telefónica S.A. has reached an agreement with Hutchison Whampoa Group, for the sale of its 100% participation in Telefónica Ireland, Ltd.

In relation to press rumors published today, Telefónica states that it has not received any approach, nor any indication of interest, neither verbal nor in written form, from any party.

The Annual General Shareholders’ Meeting of TELEFÓNICA, S.A. held at second call today, May 31, 2013, with the attendance, present or represented, of shareholders holding shares representing 54.47 % of the share capital of the Company, has approved by a majority of votes all the resolutions submitted by the Board of Directors for deliberation and vote by the General Shareholders’ Meeting.

The Board of Directors of TELEFÓNICA, S.A., at its meeting held today, upon the prior favorable report of the Nominating, Compensation and Corporate Governance Committee, has adopted the resolutions listed below:

– To re-elect the Directors Mr. José María Abril Pérez and Mr. Javier de Paz Mancho members of the Executive Commission.

– To appoint the Director Mr. Ignacio Moreno Martínez member of the Audit and Control Committee; Service Quality and Customer Service Committee; and Regulation Committee.

– To appoint the Director Mr. Julio Linares López member of the Strategy Committee.

– To accept the resignation of the Director Mr. Pablo Isla Álvarez de Tejera as member of the Service Quality and Customer Service Committee and to appoint the Director Mr. Javier de Paz Mancho member of the aforesaid Committee.

– To create a Institutional Affairs Committee, which will be composed by the Directors: Mr. Javier de Paz Mancho, Mr. Alfonso Ferrari Herrero, Mr. Gonzalo Hinojosa Fernández de Angulo, Mr. Antonio Masanell Lavilla, Mr. Fernando de Almansa Moreno-Barreda and Mr. Julio Linares López, who will assume its presidency.

– To eliminate the International Affairs Committee and the Human Resources, Corporate Reputation and Responsibility Committee.

Finally, the Board of Directors of the Company, as requested by the Nominating, Compensation and Corporate Governance Committee, has resolved to appoint the Director Mr. Alfonso Ferrari Herrero, Coordinating Independent Director (“Lead Director”), in accordance with article 32 of the Corporate Bylaws approved by the Annual General Shareholders’ Meeting held today.

Today, TELEFÓNICA, S.A., through its wholly- owned subsidiary TELEFÓNICA EMISIONES, S.A.U., under its Guaranteed Euro Medium Term Note Programme (EMTN Programme) filed with the Financial Services Authority (FSA) in London on June 12th, 2012, has launched an issue of Notes guaranteed by TELEFÓNICA, S.A. in the Euro market amounting 750 million euro.

These Notes, due on May 29th, 2019, pay an annual coupon of 2.736% and have a reoffer price of 100%. Settlement and closing date is scheduled for execution on May 29th, 2013.

Telefónica, S.A. will hold a conference call with analysts at 4:00 p.m. (Madrid) tomorrow, May 8th, 2013, to announce its 2013 first quarterly financial information.

Telefónica S.A. has reached an agreement today with Corporación Multi Inversiones (“CMI”), to sell the 40% of Telefonica´s stake in Guatemala, El Salvador, Nicaragua and Panama.

Further to the notice sent on April 24th, 2013, and because of the official calling of the Annual General Shareholders’ Meeting of the Company to be held on May 30th and May 31th, 2013 (on first and second call respectively), the following documents are hereby enclosed to this report:

– Full text of the official calling.

– Full text of the proposals to be submitted for approval of the Annual General Shareholders’ Meeting.

The aforesaid proposals, together with the additional information, (detailed in the official calling), are available to shareholders, for examination, at the Company’s registered office.

The Board of Directors of TELEFÓNICA, S.A., (hereinafter, “the Company”), at its meeting held today, has approved, upon the prior favorable report from the Nominating, Compensation and Corporate Governance Committee, the appointment as member and Chairman of the Audit and Control Committee of its independent Director Mr. Carlos Colomer Casellas, to replace (having completed its legal term) the independent Director Mr. Gonzalo Hinojosa Fernández de Angulo, who remains as member of the aforementioned Committee.

Likewise, the Company’s Board of Directors has resolved to appoint Mr. Gonzalo Hinojosa Fernández de Angulo as member and Chairman of the Regulation Committee, to replace the independent Director Mr. Pablo Isla Álvarez de Tejera, who remains as member of the aforementioned Committee.

The Board of Directors of TELEFÓNICA, S.A., has resolved to call the Ordinary General Shareholders’ Meeting, to be held in Madrid, at the premises of IFEMA (Feria de Madrid), Campo de las Naciones, Parque Ferial Juan Carlos I, Pabellón 9, on May 30, 2013 at 1:00 p.m. on first call, or, in the event that the legally required quorum is not reached and therefore the Meeting cannot be held on first call, on May 31, 2013 at 1:00 p.m. on second call, at the same place.

On January 10, 2013, a significant event was filed, reporting that Telefónica de Contenidos, S.A.U., a wholly-owned company by Telefónica, S.A.:

(i) had transferred to Abertis Telecom, S.A. 23,343 shares of Hispasat, S.A. for a total price, in cash, of €68 million, and

(ii) had signed a contract with Eutelsat Services & Beteiligungem, GmbH for the sale to this company of its remaining stake in Hispasat, S.A., subject to approval of foreign investment, in accordance with Royal Decree 664/1999, of April 23, on the Legal Regime of foreign investment (Régimen Jurídico de las Inversiones Exteriores);

After obtaining the aforementioned authorization of foreign investment, Telefónica de Contenidos, S.A.U., has transferred today its remaining stake in Hispasat, S.A. to Eutelsat Services & Beteiligungen, GmbH, that is, 19,359 shares of that company for a total price of €56 million, which have been received in cash.

The capital gain for both transactions will be €47 million (of which, €26 million correspond to the sale of the shares of Hispasat to Abertis Telecom, S.A., and have been already registered in the results for the year 2012).

Yesterday, TELEFÓNICA, S.A., has launched an issue of Notes guaranteed by TELEFÓNICA, S.A. in an aggregate principal amount of 2,000 million US dollars.

This issue was split into two tranches. The first tranche, amounting up to 1,250 million US dollars, due on April 27, 2018, with a coupon of 3.192%, payable semi-annually, issued at par. The second tranche, amounting up to 750 million US dollar, due on April 27, 2023, with a coupon of 4.57%, payable semi-annually, issued at par.

The settlement date is scheduled to be on April 29, 2013.

Following the Significant Event published yesterday in connection with the launch of an accelerated bookbuilding offer process, Telefónica, S.A. announces that the process has finished today, and the underwritten placement of 90,067,896 treasury shares of the company, representing 1.979% of its share capital, to qualified and professional investors has taken place. This amount represents the company’s current total treasury shares. The Placing Agent has placed such shares at 10.80 euros per share.

Telefónica is undertaking today the underwritten placement of 90,067,896 shares of the Company, representing 1.979% of Telefónica’s share capital, to qualified and professional investors. These shares are the total of the treasury shares position of Telefónica, S.A. The terms and conditions of this sale and the final sale price will be duly notified by the Company to the Comisión Nacional del Mercado de Valores (Spanish National Securities Market Commission).

Following the Significant Event filed by Telefónica, S.A. (“Telefónica”) on March 14, 2013 (registry number 183763, the “Initial Notice”), Telefónica reports that, on March 27, 2013, 605,050,000 euros of notes corresponding to the instrument due March 26, 2021, issued by Telefónica Emisiones S.A.U. and guaranteed by Telefónica on March 27, 2013 (ISIN Code XS0907289978).

Telefónica, S.A. has filed with the U.S. Securities and Exchange Commission its annual report on form 20-F for the year ended December 31, 2012.

Today Telefónica, S.A., through its wholly-owned subsidiary Telefónica Emisiones, S.A.U., under its Guaranteed Euro Medium Term Note Programme (EMTN Programme) filed with the Financial Services Authority (FSA) in London on June 12, 2012, has launched an issue of Notes in the Euro market, guaranteed by Telefónica, amounting 1,000 million euro.

As a result of its participation in the spectrum auction conducted in the United Kingdom, Telefónica UK Limited (hereinafter O2 UK) has been granted two blocks of 10 Mhz in the 800 MHz spectrum band.

The total investment in new frequencies by O2 UK is 550,000,000 pounds sterling.

Following the decision taken by the Government of Venezuela on February 8, 2013, in connection with the devaluation of the bolivar from 4.3 bolivars per dollar to 6.3 bolivars per dollar, the Company announces the effects of this devaluation for the Telefónica Group.

As required by International Financial Reporting Standards (IFRS), the devaluation is a subsequent event to 2012 year-end that does not require modifying the exchange rate used to translate the financial information of 4.3 bolivars per dollar.

In this regard, the decision adopted by the Venezuelan Government only affects the estimations made by the Group on the liquidation value of the net foreign currency position related to the investments in Venezuela, whose impact on the 2012 financial year amounts to an approximate pre-tax loss of 438 million euros, with no impact on debt.

The new exchange rate of 6.3 bolivars per dollar will be used from 2013 in the translation of the financial information of the Venezuelan companies, being the main aspects to consider the following:

– The decrease in the net assets of the Telefónica Group in Venezuela as a result of the translation to euro using the new exchange rate to be recognized in equity of the Group, for an approximate amount of 1,000 million, based on the net assets as of December 31, 2012.

– As part of the aforementioned decrease, there will be a reduction on the euro value of the net financial assets denominated in bolivars, for approximately 873 million euros, considering the existing balance as of December 31, 2012.

– The results and cash flows from Venezuela will be translated at the new devalued exchange rate from January 1, 2013.

The credit rating agency Japan Credit Rating Agency Ltd.(JCR), published its decision to lower the long-term credit rating of Telefónica, S.A. from A outlook negative to A- outlook negative.

On February 21, 2012, a significant event was filed, reporting that Telefónica de Contenidos, S.A.U., a wholly-owned company by Telefónica, S.A., had reached an agreement with Abertis Telecom, S.A. to sell the stake of Hispasat S.A. owned by Telefónica de Contenidos, S.A.U.

Following the exercise of the preferential right of acquisition by the German company Eutelsat Services & Beteiligungem, GmbH, and after obtaining the necessary authorizations by the Council of Ministers on 28 December 2012, Telefónica de Contenidos, S.A.U., as of today:

– Has transferred to Abertis Telecom, SA 23,343 shares of Hispasat, S.A. for a total price of €68 million, which has been received in cash, and

– Has signed a contract with Eutelsat Services & Beteiligungem, GmbH for the sale of its remaining stake in Hispasat, SA, that is 19,359 shares of that entity, for a total price of €56 million, subject to approval of foreign investment, in accordance with Royal Decree 664/1999, of 23 April, on the Legal Regime of foreign investment (Régimen Jurídico de las Inversiones Exteriores).

The capital gain, for both transactions is estimated to amount to approximately €47 million.

Today, TELEFÓNICA, S.A., through its wholly- owned subsidiary TELEFÓNICA EMISIONES, S.A.U., has launched an issue of Notes guaranteed by TELEFÓNICA, S.A. in the Euro market amounting 1,500 million euro. These Notes, due on January 23rd, 2023, pay an annual coupon of 3.987% and have a reoffer price of 100%. Settlement and closing date is scheduled for execution on January 22nd, 2013.