TELEFÓNICA O2 UK

The Company’s total mobile customer base (excluding Tesco Mobile) at the end of September 2010 reached 22 million customers, up 4.8% year-on-year (+4.5% year-on-year in the first half), with net additions of 352 thousand in the third quarter, an increase of 20.4% year-on-year and 658 thousand in the first nine months of the year. The majority of the growth (67% of total net additions in the quarter) continued to come from the contract segment (base grew 10.4% year-on-year), with contract segment being 47% of the total customer base at the end of September 2010.

Telefónica O2 UK’s wireline retail broadband Internet accesses stood at 0.7 million lines at the end of September 2010, an increase of 25.9% year-on-year.

For the first nine months of 2010, revenues increased 5.6% year-on-year in local currency to reach 5,317 million euros. Revenue growth accelerated in the third quarter to 8.5% year-onyear in local currency (+6.0% year-on-year in the second quarter). This growth performance was mainly driven by the improvement in mobile service revenue and the success of handset sales, reflecting the increased demand for smartphones from new and existing customers.

Operating Income before depreciation and amortization (OIBDA) stood at 1,365 million euros for the first nine months of 2010, a growth of 8.3% year-on-year in local currency terms (+9.4% year-on-year in the third quarter). OIBDA margin for the first nine months of 2010 was 25.7%.

CapEx increased 15.3% year-on-year in local currency terms for the first nine months of 2010 to 506 million euros. The already mentioned evolution of the OIBDA allowed operating cash flow (OIBDA-CapEx) to increase 4.5% year-on-year in local currency in the first nine months of the year, reaching 858 million euros.