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Relevant information 2014

Telefónica's total accesses experienced a 5.5% year-on-year growth after incorporating E-Plus customers in Telefónica Deutschland and registering substantial growth in Telefónica Latin America, Telefónica Brazil and Telefónica UK. Excluding E-Plus accesses from the 2014 base, as well as accesses from Telefónica Czech Republic and Telefónica Ireland, from the 2013 base, organic growth is approximately 2%. In terms of services, sales activities stand out, with particular focus on high-value clients, as proven by the continued growth in mobile contracts (smartphones and LTE), fibre-optics and pay-per-view TV. 

Revenues fell 11.7% on a year-on-year basis, affected by the negative impact of exchange rates and changes in the scope of consolidation. The move to SICAD II in Venezuela had a particularly negative impact (-2.187 billion euros) on fourth-quarter revenues. Regarding services, mobile data continues to be one of the main platforms for the Company's growth; having experienced a 9.9% organic growth in 2014, it now represents 41% of mobile service revenues, which is 3 p.p. more than in 2013. 

Investment grew by 0.6% on a year-on-year basis and includes 1.294 billion euros in spectrum purchases. The Company has continued to make progress in modernising and differentiating its networks, dedicating 75% of the year's total investments –excluding spectrum purchases– to transformation and growth, 6 p.p. more than in 2013, in organic terms.

Reported OIBDA declined by 18.7% in 2014, affected by the evolution of exchange rates, changes in the scope of consolidation and other, non-recurring factors. Nonetheless, it grew 0.2%, organically, on a year-on-year basis, reflecting the growth in revenues and the benefits yielded by the efficiency measures implemented, despite the increased commercial and network-related expenses mentioned above. By regions, Telefónica Latin America stands out, with 16.4% year-on-year organic growth, which is 2.1 p.p. more than in 2013, and contributes 4.8 p.p to OIBDA growth, levering growth acceleration in Mexico and Colombia. Excluding the regulation's negative impact, OIBDA grew, in organic terms, by 1.3% in 2014.

Net profits reached 3.001 billion euros in 2014 (4.462 billion euros in underlying assets); basic net profits per share were 0.61 euros (0.93 euros underlying). It should be noted that net profits are effected by extraordinary allocations, among which the impact of adopting the SICAD II exchange rate in Venezuela (-399 million euros), the provision for restructuring expenditures (-405 million euros) and adjustments in the valuation of Telco, S.p.A. (-257 million euros) are worth mentioning.

Total staff at the close of 2014 fell by 2.4%. This decrease in numbers was caused by corporate transactions which resulted in the businesses in Ireland, Czech Republic and Slovakia leaving the Company's scope, but were balanced, for the most part, by the incorporation of E-Plus in Germany.

 

In 2014 Telefónica hired services from 12,442 different providers, of which 83.8% were local providers from the different communities where Telefónica has a presence. The total amount of allocations, in euros, was also negatively influenced by the evolution of exchange rates.

Debt was reduced by 294 million euros when compared to December 2013. Excluding the impact of the evolution of exchange rates in Venezuela, debt would thus be reduced to 2.635 billion euros. The debt ratio (net debt over OIBDA) at the close of 2014 was approximately 2.74x. This ratio would be 2.15x if the planned sale of O2 UK were taken into account.

Telefónica shares experienced a revaluation of 0.7% and a total return to shareholders of 7.0%, once the dividends distributed in 2014 were included. The year ended with shares costing 11.92 euros.