TELEFÓNICA O2 UK (Q4 2010)

The Company’s total mobile customer base (excluding Tesco Mobile) reached 22.2 million at the end of 2010 (+4.3% year-on-year), driven by a robust 9.8% year-on-year increase in the contract segment. Mobile net additions stood at 912 thousand in 2010, with 254 thousand in the fourth quarter. At the end of 2010, contract customers represented 47% of the base (+2.4 percentage points year-on-year).

Telefónica O2 UK’s wireline retail broadband Internet accesses reached 0.7 million lines at the end of December 2010 (+13.5% year-on-year).

Revenue growth accelerated in the fourth quarter to 9% year-on-year in local currency (+8.5% and +6.0% year-on-year in the third and second quarter, respectively) to reach 7,201 million euros in 2010 (+6.5% year-on-year in local currency). Mobile service revenues stood at 6,513 million euros in 2010, with a solid 5.6% year-on-year increase in local currency, which ramped up to 7.9% year-on-year in local currency in the fourth quarter. The continued growth of non-P2P SMS data revenues should be highlighted, with growth of 31.7% year-on-year in local currency in 2010. As a result, total data revenues as a proportion of mobile service revenues stood at 40% in 2010.

Operating income before depreciation and amortization (OIBDA) increased 4.9% year-onyear in local currency to 1,830 million euros in 2010. OIBDA margin reached 25.4% for the year.

CapEx increased 14.7% year-on-year in local currency in 2010 to reach 717 million euros, as the Company continued to further enhance its mobile network capacity and coverage, including the recent refarming of the 900MHz spectrum, to give its customers the best user experience. Operating cash flow (OIBDA-CapEx) reached 1,113 million euros in 2010.