The Company’s growth once again above its peers, while it continues to show a
better geographical and business mix. In addition, it is reaping economies of scale thanks to the rapid integration of the assets acquired.

• Telefónica reported a 46.4% increase in 1H06 revenues vs. 1H05 to more than
25,100 million euros, driven by growth in all business lines
• OIBDA and OI continued to rise, up 40.9% and 40.8% y-o-y, respectively
• The Company consolidated its global leadership, with a 32.6% increase in total accesses to 191.7 million, the result of strong commercial efforts in fixed line and broadband telephony
• The Group now has 134 million wireless accesses and 6.8 million residential ADSL subscribers (+48.2% y-o-y)
• Organic growth remains strong, with revenue, OIBDA and OI up 7.7%, 7.4% and
16.5%, respectively
• Continued operational efficiency drove free cash flow generation (OIBDA-CapEx) to 6,220.8 million euros in 1H06, up 33.4% y-o-y
• Capex in the first six months surpassed 3,000 million euros (+59.5%) reflecting the inclusion of O2 and Telefónica O2 Czech Republic and the push to expand the broadband business.

Madrid, July 27th 2006.- Telefónica´s Group results corresponding to the first half of 2006 recorded a strong growth in both net income (a 40.3% increase year-on-year, to 2,574 million euros) and in basic earnings per share (+45.6%).
On the one hand, this impressive evolution was due to the solid growth in revenues (+46.4%) supported by the expansion of the customer base (+32.6%) and the consolidation of the last acquisitions, and, on the other hand, by the efficiency achieved through the management of operations, which allowed OIBDA to grow at a 40.9% rate, and operating free cash flow (OIBDA-CapEx) at 33.4%. In addition to all of this, the efficient management of non-operating results enabled net income to grow at the same rate as OIBDA and OI.
The Company’s consolidated figures show once again the highest performance in
the sector, while it continues to show a better geographical and business mix. In addition, it is reaping economies of scale thanks to the rapid integration of the assets acquired.
A leading position by number of accesses Due to the strong commercial activity during the second quarter, both in mobile telephony and in broadband, Telefónica Group’s total number of accesses continued increasing at a very fast pace, with 191.7 million accesses by the end of the first half, or
32.6% more above last year figure. This strengthens Telefonica’s international leading position and it firmly places it as the third telecommunications operators in the world by number of accesses (only behind China Mobile and China Telecom). 22.4% of the total accesses belong to Spain, 55.9% to Latin America and 19.6% to Europe.
Telefónica Group’s cellular accesses stood at 134.6 million (90.9 million at June 30, 2005), with 75.0% coming from the Telefónica Móviles Group and the rest from Telefónica O2 Europe. The Telefónica Móviles Group’s customer base reached 101.0 million (+16.8% year-on-year) and the number of gross adds in the second quarter increased 8.2% over the second quarter of 2005, despite the high level of commercial activity in the operating markets during that period due to the launch of the movistar brand.
Telefónica O2 Europe’s customer base rose to 33.6 million, including 28.8 million in Group O2 (+17.1% year-on-year) and 4.8 million (+7.9% year-on-year) in Telefónica O2 Czech Republic.
As of the end of June, retail broadband Internet accesses amounted to 6.8 million, a 48.2% increase from the figure reported twelve months ago. In the Telefónica de España Group, net adds of 177,394 for the quarter brought the total to 3.2 million (2.2 million in June 2005) and in the Telefónica Latinoamérica Group to 3.2 million (2.2 million a year ago).

Solid growth across all business lines.