Telefonica (O2 Parent) Statement

Total mobile customer base (excluding Tesco Mobile) increased 4.5% year-on-year to reach 21.6 million customers at the end of June, 2010, driven by the strong expansion in the contract segment (+11.7% year-on-year). At the end of June 2010, 47% of the mobile customer base was in contract.

First half of 2010 saw continued improvement in financials, with revenue growth of 4% year-on-year in local currency to reach 3,416 million euros (+6% year-on-year in local currency in the second quarter, accelerating over the 2.1% year-on-year growth posted in the first quarter).

Operating income before depreciation and amortization (OIBDA) totalled 883 million euros in the first half of 2010, recording a 7.7% year-on-year growth in local currency (+8.1% year-on-year in local currency in the second quarter).

CapEx increased 30.7% year-on-year in local currency in the first half of 2010 to 347 million euros, reflecting the continued investment in the mobile network to give customers the best user experience. Operating cash flow (OIBDA-CapEx) for the first half of 2010 totalled 536 million euros.