Pablo Eguirón - Head of Investor Relations José María Álvarez-Pallete - Chief Operating Officer Ángel Vilá - Chief Financial and Corporate Development.

Nicholas Brown - Goldman, Sachs & Co.

Georgios Ierodiaconou - Citi David Wright - Bank of America Jonathan Dann - Royal Bank of Canada Mathieu Robilliard - Barclays Capital Justin Funnell - Credit Suisse Giovanni Montalti - UBS Jerry Dellis - Jefferies Mandeep Singh - Redburn Research James Ratzer - New Street Research Fabián Lares - JB Capital Markets.

Ladies and gentlemen, thank you for standing by, and welcome to Telefónica’s November 2015 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions] As a reminder, today’s conference is being recorded. I would like now to turn the call over to Mr.

Pablo Eguirón, Head of Investor Relations. Please go ahead, sir..

3-491-482-8700. Now, let me turn the call over to our Chief Financial and Corporate Development Officer, Mr. Ángel Vilá, who will be leading this conference call..

Thank you, Pablo. Good afternoon, and welcome to Telefónica’s third quarter 2015 results conference call. Today with me is José María Álvarez-Pallete, Chief Operating Officer. And during the Q&A session, you will have the opportunity to address us with any questions you may have.

Telefónica has achieved its third consecutive quarter of improving organic growth in 2015. Firmly placing the company in the new cycle of profitable growth initiated at the start of the year. We would like to highlight in particular that Spain returned to positive revenue growth this quarter for the first time since 2008.

Both revenues and OIBDA accelerated in Q3 their organic growth to close to 5% with the latter proving that we are successfully delivering on synergies in Germany and on cost efficiencies. Margin was stable throughout the year at 31% and was flat year-over-year organically. Operating cash flow have return to positive growth.

Our consistent investments in ultra-broadband led to a differential infrastructure, translating into innovative and quality commercial prepositions and allowing to increase customer value by improving year-on-year growth in average revenue per access and reducing churn.

Despite adverse currency impacts in Q3, which we will cover in further detail later on. We have achieved sequential improvement in free cash flow tax spectrum to €2.5 billion up to September combined with strong EPS increase or of 63.5% year-on-year and a reduction in our post UK sales leverage ratio to 2.32 times.

Finally, we are pleased to reaffirm that we are encourage to meet our guidelines, which we have created in the previous quarter, and dividend per share for both 2015 and 2016 are confirmed. Moving to Slide Three, let me sum up our key financials which have been very sound despite the currency turmoil in Q3.

The negative impacts of FX at OIBDA level did not leak through into free cash flow as they were offset by lower CapEx, tax interest and minorities payments both in the cumulative period to September and in the last three months. Overall, the third quarter show a steady top line and OIBDA year-over-year growth both in reported and inorganic terms.

Net debt declined by €1.5 billion in the quarter to €49.7 billion. Principally due to cash flow generation and the lower value in euros of net debt in foreign currencies. As I said before, we are reiterating our outlook for 2015 and we are fully aligned in the nine months to fulfill these.

Under our guidance criteria, revenue growth was 13.8% comfortably exceeding the guidance of higher than 9.5%. OIBDA margin erosion stood at 1.3 percentage points in line with target of around 1.2 percentage points and CapEx to sales of 15.6% is also in line with our own 17% at the year end. Leverage considering out to UK sale is within guidance.

In terms of shareholder remuneration we will pay in the coming weeks €0.35 per share in voluntary script dividend as the first tranche of the €0.75 corresponding the 2015. The second tranche will be paid in cash in the second quarter of 2016. Turning to Slide Five.

Free cash flow generation was robust in the first nine months to September reaching €1.2 billion or €2.5 billion before spectrum payments and absorbing the already mentioned FX impact.

I would like to highlight the sequential free cash flow improvement in the quarter of €2 billion to €1.4 billion leading to a solid year-on-year growth of 3.6% based on improvement in most of free cash flow metrics.

Let me remind you that year-to-date free cash flow is impacted by seasonal effects and thus free cash flow should record a better performance in the fourth quarter. Finally, EPS stood at €0.91 in January to September up 63.5% year-over-year. Moving to Slide Six.

We can see how organic performance and parameter changes have out waited the FX group division in Q3. Leading the very solid revenue and OIBDA year-on-year reported growth of 10.8% and 2.9% respectively.

The consolidation of E-Plus, GVT and DTS had a positive impact in the quarter jointly the contributing 13.5 and 7.2 percentage points respectively to revenue and OIBDA reported year-on-year changes.

In addition organic trends accelerated again in the quarter to explain the 5.4 percentage points of reported revenue growth and 5.1 percentage points of OIBDA's.

On the other hand the depreciation of LatAm currencies in general any particular Brazilian Real and Colombian Peso directing Q3 around 8% percentage points in the year-over-year revenue and OIBDA variation. On Slide Seven.

We highlight our organic revenue growth continues to perform attractively, ramping up 40 basis points versus the second quarter and with spend demonstrating a strong progress of 130 basis points reaching a positive year-on-year variation.

In addition, Telefonica's Span America posted a sequential acceleration of 220 basis points and reached 12.6% year-on-year growth. Let me also highlight the impressive evolution of data revenues up 19.3% versus Q3 2014 organically and the increasing contribution of digital services.

In addition, organic OIBDA growth ramped up 140 basis points sequentially to 4.8% boosted by the seller performance of Germany and in spite of a [gross] (Ph) macro by Brazil. Margin has remain flat throughout the year at 31% level driven by stronger efficiency synergies and simplification efforts reflected in the stable organic variation.

Let me now turn to Slide Eight. Explain how our drive to increase quality rather than quantity in our customer base is paying off.

Overall organic access are slight up, but the higher value services our performance has rocketed, as such we added over $5 million LTE customers, more than quadrupling our base year-on-year driving further adoption of Smartphones which were up 28% year-on-year.

Fiber connected and pay TV net adds also continued to grow robustly on a sequential basis, putting us in a strong position to capture further growth opportunities and increasing their base versus last year 36% and 18% respectively in organic terms.

As a reflection of these, the growth in average revenue per access, accelerated in the quarter to 2.8% year-on-year organic, which coupled with a decline of 0.7 percentage points in churn levels demonstrate the increased value and sustainability of the model.

Data monetization continued to contribute to revenue acceleration as you can see in slide number nine. Booming Smartphone penetration and data volume growth are the key levers for data monetization.

We are constantly developing initiatives to further monetize usage, launching data offers centered around in the rated packages and new roaming commercial propositions. In parallel data traffic is boosted by increasing average Smartphone usage, 21% higher year-on-year in Q3, and LTE usage 63% more than 3G.

Also there is a unique opportunity to farther incentivize data are fixed, as prepay Smartphone penetration in Hispano-America is just up 27% versus Brazil at 47%. The benefits of a Smartphone penetration expansion and LTE adoption are clear and are delivering significant ARPU accretion. We are seeing double-digit LTE ARPU up lift.

Data adoption is having a very positive impact on ARPU in Hispano-America and Brazil with a significant prepay ARPU up lift of each new data customer. An SMS drag is easing rapidly as can be seen in the acceleration of total data revenues, which already represent 44% of mobile service revenue.

Lastly, I would like to note that almost 30% of customers are using up their data allowance of which 44% buy an extra data product. To review our progress in digital services, please turn to Slide 10.

Q3 has been a milestone quarter for digital services as we surpass the €1 billion mark in quarterly revenues, largely due to the solid organic performance of our video segment with €652 million, 25.6% higher than Q3 2014. Its positive evolution is built on our increasing quantum portfolio and improved technology most notably in Brazil and Spain.

In other areas, we continue to foster key partnerships to deliver enhanced solution to our customers. In cloud, we have reached agreements with China Unicom and Equinix to expand our global data center footprint, offering a truly international solution for multinational companies.

We have also partnered with Microsoft to bring cloud migration to our SME customers. In security, we recently acquire Gesdatos, the leading platform in Spain for the management of data, now integrated into our international commercial offer.

We also launched FiLIP in Spain the first Smartwatch for children which allows parents to monitor their children’s safety. Lastly, we are proud to once again be named global leaders in machine-to-machine in Gartner’s Magic Quadrant. TCR is the enabler of our progress by strengthening the networks and simplifying operations.

In the third quarter, TCR continued with a rapid rollout of fiber and LT, key tools to capture value growth. As of September 13.4 million premises passed with fiber in Spain, and 16.6 million in Brazil. We have more than 30,000 LTE sites while 96% of 3G and our 4G mobile sites are connected with ultra-broadband technology.

Additionally, we continue to progress under deployment of all IP network innovation and Best-in-Class operations. A key step towards IT transformation in the quarter include suspension of [indiscernible] now in 15 countries.

Lastly, we continue to advancing on the commissioning applications, with using physical servers consolidating data center services and virtualization of IT. On Slide 12, we summarize Telefonica Espana trading performance.

Launched in July our new [Indiscernible] offer for Fusion Plus, enhanced with digital plus content growth on outstanding commercial turn around in quarterly net adds across services on the back of strong gross adds and curtailed churn levels. All these was achieved despite summer seasonality and the removal of locking closes since August.

Fusion Plus continue to fuel the growth in high value services such as Fiber and Pay TV, improving customer mix and driving Fusion ARPU to €75.5 and 8.4% increase year-on-year and 5.1% increase quarter-on-quarter.

In addition, we launched campaign for the high-end TV product in mid-August with access toward premium content at the promotional price until the end of the year.

By the end of September almost half of million customers had subscribed to it, which increased the weight of customers with TV add-on's over the total Pay TV base to 36%, eight percentage points more than in June.

Let me remark that commercial spends has been achieved despite not having the Champions League rights, which reflects our rational policy in content gross acquisition. Our differential assets namely ultra-broadband networks continue the roll out to secure our leadership in value.

Continuing with Spain on Slide 13, revenue returned to growth by 0.2% year-on-year for the first time since Q3 2008. And with a more favorable environment top line reflects a new revenue cycle underpinned by consistent customer base growth, higher value in the base, price repositioning and wholesale revenue.

Quarterly margin remain robust at 44.5% although higher OIBDA year-on-year erosion than in Q2 in organic terms was mostly impacted by the increased content costs as well as by higher equipment and network expenses. Importantly, let me comment on the effort we are making to increase the reach of Pay TV in Spain.

Service that up to now has not been a mass product with this purpose in mind we have launched an aggressive promotion while absorbing all the cost and this is obviously increasing margin pressure. However, once the discounted prices impact [indiscernible] we expect higher revenue flow through to OIBDA.

And more over, we will continue working on efficiency measures in the following quarter. To review Telefonica Deutschland please turn to Slide 14. We posted very solid momentum in the third quarter with strong contract methods leveraged from strong dynamism of partners.

The company enhanced its value offering strengthening its O2 premium brand and revamping the value brand Blau. Additionally, LTE continue to make progress, reaching up an attrition of 16% and demonstrating that this is strong demand for retained the market.

We've seen our O2 Blue all-in customer base 37% of new clients took a tariff above 1 gigabyte and 54% of opted-in customers had at least one automatic data extension. As a result, mobile data monetization continue to flow through to mobile service revenue, but accelerated in the quarter mainly due to the increase continuation from partner.

In addition, year-over-year growth of handset sales was lower sequentially effecting quarter-on-quarter revenue trends. Telefonica Deutschland has posted very strong profitability and an improved outlook.

Early realization of synergies after achieving important milestones along with sustain commercial savings translated into further OIBDA acceleration to 28.5% in the third quarter. With integration savings expanding more on 45% of this improvement.

These together with CapEx efficiencies as network synergies out weight the cost of LTE deployment resulted in an outstanding organic operating cash flow growth of 45% year-over-year in the first nine months of this year.

On the back of these strong performance the company updated yesterday its 2015 outlook announcing more ambitious targets and proposed a 2015 dividend of €0.24 per share stable versus last year. For a review of the performance of Telefonica Brazil turn to Slide 16.

As shown by our commercial and economic performance we are outperforming the market once again this quarter, leveraging on our differential position in value service.

In the mobile business contract gross adds reached highest ever quarterly volumes, while Smartphones and LTE adoption continue to accelerate driving data ARPUs to ramp up year-over-year to 33%. This is reflected in the fact that [Vivo] (ph) is capturing all the market growth in service revenues year-to-date.

Regarding [Technical difficulty] service in the fixed business. Telefónica Brazil attracted 100% of new Pay TV customers in the market and more than half of all high speed broadband net adds up to August. As such the company transformation towards a [billion] (Ph) fiber company is improving ARPU and churn trends.

Telefónica Brazil’s financial performance on Slide 17 shows how growth in higher value customers is flowing into the P&L. Thus revenue sustained a robust year-on-year growth of 5.2% based on booming mobile data and fixed business improvement. The later is leveraged from the business in Sao Paolo that returned to positive year-on-year growth in Q3.

In addition, costs remain controlled driving OIBDA growth acceleration to 2% year-on-year maintaining profitability roughly, stable year-on-year, despite a tougher macro environment.

On Slide 18, we review our performance in Hispano-America where commercial momentum is driving a solid organic revenue acceleration, the strong trading in mobile contract resulted in almost 0.5 million net adds in the quarter, quadrupling year-on-year, while at the same time the growing as option of bundled services in fixed business, led to solid fix broadband and Pay TV networks.

Strong commercial activity resulted on the one hand in topline growth with year-on-year rates ramping up to modern 12% or 9% excluding Venezuela, while on the other hand it was a main driver behind the two percentage points decline in profitability this quarter.

In Mexico as shown on Slide 19, we are gradually increasing both our scale and profitability. Thus the continued strong commercial activity is reflected in outstanding contract performance and is driving year-on-year accesses growth to 14% and Smartphones to 87%.

It is also the main driver behind the sustained double-digit topline year-on-year growth, which in the third quarter reached 17.9% year-on-year. At the same time, the ongoing profitability expansion is also remarkable this quarter, almost reaching the 30% mark, four percentage points more than one year ago.

In the rest of Hispano-America as we show in Slide number 20, we are also capturing market value with better commercial traction with specially remarkable performances in Argentina, Colombia, Chile and Peru.

These has translated into consistent regional market outperformance in revenue growth and it is also the main driver behind the acceleration in OIBDA year-on-year growth.

Turning now to Slide 21, Telefónica UK posted strong customer growth for the six quarter in a row outperforming the market, with total mobile customer base reaching 25 million at the end of September. Quarterly net adds were consistent and strong versus prior quarters with record market leading contract churn at 0.9%.

LTE continue to gain traction, reach a penetration of 30% with increasing demand for higher subscription bundles, as no more than 65% of new adds on average adopting for tariffs of one gigabyte or more.

As a result, mobile service revenue performance continued to improve for the 12 consecutive quarter and grew 4.2% year-on-year excluding the impact of O2 Refresh.

OIBDA margin surpassed 26% and expanded 1.7 percentage points year-on-year excluding a non-current impact of €34 million in the third quarter last year, thanks to the optimization of commercial costs. Let me now move to the financial slides, starting on Slide 22.

In Q3, debt has been reduced by €1.5 billion to €49.7 billion mainly driven by €1.4 billion free cash flow and €1.2 billion savings in LatAm debt when translated into euros due to FX depreciation. Leverage has been brought down to 2.84 time OIBDA while it could be a 2.32 times post UK sale.

We expect to continue progressing on leverage improvement on first audited free cash flow generation in Q4 2015, second growing OIBDA on an organic basis and also benefiting from the acquisition of E-Plus GVT and third closing our two UK divestment in 2016.

Moving to Slide 23, I would like to highlight that our effective interest cost is 54 basis points lower than in the same period of 2014.

We have continued to benefit from the [indiscernible] rate reduction, this improvement was enable by an intentionally decreased fixed rate debt in euros and lower refinancing costs, leading to 61 basis points savings, partially mitigate by higher debt in Latin American currencies, allowing for a reduction in the financial cost to 4.91%.

We have improved our robust liquidity position to exceed €16 billion covering our maturities beyond 2016, we have continued with our productive financing activity and thus we have raised our €13 billion of long-term funding by tapping diversified sources of financing.

To recap, we have presented today a very solid set of results that reinforce our profitable growth profile and strengthen our position to capture future growth. We continue to demonstrate and improving organic performance across all metrics, driven by market momentum on value services.

We are obtaining encouraging results from integration activities in Germany with Brazil to follow in the coming quarters. We are delivering network quality upgrades based on our superior infrastructure, which allow us to respond to data factory growth when demand is rocketing.

We are leaders in major markets with a superior competitive position backed by strong investments and we are fully delivering on commitments for this year and also confirming the shareholder remuneration policy in place for 2015 and 2016. Thank you for your attention, we are now ready to take your questions..

Ladies and gentlemen [Operator Instructions] We are going to take our first question from Nick Brown from Goldman Sachs. Please go ahead..

Thanks. First the EBITDA margins in Spain have been flat at about 44.5% for last three quarters, should we expect that to fall in Q4 with the full quarter of La Liga cost and should we then expect EBITDA to grow from the first quarter of 2016 once a Fusion premium TV commercials you mentioned roll off in January.

And secondly, can you remind all the revenue and EBITDA from Digital Plus TV customers being reported in other eliminations or are you now reporting the content cost in the Spanish business without all of the revenues? Thank you..

Well thanks for thanks for all your question. First on the OIBDA Spain a few message.

First message being is that content cot is here to stay and therefore you have now an idea of a full quarter of the cost of having the most complete TV offering in Spain, which has been the reason behind a very, very strong commercial momentum mainly on the Pay TV market.

And we have proven that we are rational, because we have been able to do so with the limited inflation on some of these fixing in cost like La Liga and but not having orders like the European champions because of too high cost.

And that's why the impact on margins in Telefonica Espana this quarter has been reflected by having the full amount of the content cost and yet probably [indiscernible] of activity I would say.

On the upside buffers that we have for the future mainly promotions, I mean remember that we are having that impact of content we have promoted price of €9.9 on the package, promotional will be progressively expiring even in the first quarter of 2016.

We have roughly a 600,000 customers on the debt promotion that would move out on that along that period and they will have any impact on OIBDA. Also Pay TV penetration in Spain is one of the lowest in Europe we are now in 29% it use to be 22% just two years ago so we have been gaining seven percentage point of Pay TV penetration in just two years.

And that's why we are investing on the market and then also remind that we keep doing extra efforts on the other part of the cross function of Telefonica Espana distribution. So you should see that keep going to the direction of preserving efficiency in Spain we don’t guide on a specific margin going on.

You have an idea of what's the impact of content but also remember that these quarter’s OIBDA is impacted by the promotion that would be expiring all on next years and that the extra customer base that we are capturing so those would start to pay back during that period. So that's what I can tell you in terms of the margin in Spain.

In terms of how the integration of Telefonica Espana and DTS has worked this quarter, first of all, in terms of the wholesale revenues they are part of the wholesale revenues that are reflected on DTS accounts.

And therefore not consolidated to Telefonica Espana and that’s basically applied for the football rights, the football La Liga rights are based on digital plus on the former DTS.

And therefore have not consolidated into a Telefonica Espana accounts, while other sports like the MotoGP or the Formula 1 are accounted into a wholesale revenues of Telefonica Espana.

Those revenues or those trends will be consolidated and we will try to give you full color of both units being consolidated probably starting in this quarter in order to avoid confusion on where each of the cost component is relying.

So as a result, they are part of the wholesale revenues mainly on the La Liga rights that are accounted on the DTS accounts and therefore not consolidated in Telefonica Espana and a minor part of this sports rights namely Formula 1 and MotoGP that are on the cost rights of Telefonica Espana..

Thank you..

[indiscernible] next question please..

We are going to take our next question from Georgios Ierodiaconou from Citi. Please go ahead. Your line is open..

Good afternoon. I have two questions please.

The first one on Spain and you mentioned earlier 600,000 subscribers could move out from the current promotion in January, could you give us an indication of what kind of ARPU up lift you would expect given that profile? And basically what I’m trying to understand if I’m not mistaken, last January, you raised prices in mobile, later in May you raised prices and to Fusion, do you think that will be enough inflation on TV and another areas this year to make up for annualizing some of these benefit, in 2016.

And my second question is on two of your Hispano-American assets Colombia and Mexico. The first on Colombia you seem to be underperforming key goal quite materially and I know there is an impact given if adjust for that there is quite a pickup.

Is that because you are responded late to the mixed price comp, is there something last for a while or would it be fixed relatively, quickly.

And similarly in Mexico you have a big tailwind right now, you seem to be benefiting a lot on the margin, will you balance it with more in the future, essentially more commercially active any indications on your strategy in Mexico would be great? Thank you..

Okay. Thanks for your questions on the customer that are currently under the promotion of €9.9 Spain and potential uplift years we have no idea of what could be the movement outwards, but as you might imagine we do not share that because its commercially very sensitive.

They are enjoying our product for nominal €65 for €9.9 most of them or part of them were coming from the basic product.

So we are analyzing the customer base and we are preparing the offer that will we put to then in the different add-ons, TDs, sports and orders in order to make sure that they move outwards on the value chain once this promotion is expiring.

So yes, we are anticipating uplift, significant uplift but we’re not sharing how much, because we are specifically analyzing those ledgers of customers and preferring their offer whenever the promotional will be expiring.

On the price movements in Spain, we like to talk about up selling, we have been up selling our customers, we have been giving more value for [indiscernible] more money, the average price on megabyte or for gigabyte has been decreasing and therefore we are giving more value for [indiscernible] of money.

We have been executing that consistently during these year, we have started in January for the [indiscernible] play products and we did a big move in April on the Fusion product.

And that's why Fusion ARPU year-on-year has been moving outwards 8%, which proves that we are able to make a value proposition for our customers that all are going to enjoy more value for a better ARPU.

And you need to score that into a situation in way to have been suffering an inflation strikes on the sub contractors, and we have been able to move back on the commercial side and to post a quarter of very, very solid commercial momentum.

So that proves that we can move outwards ARPU by proposing more value or [indiscernible] price and I think that's a trend that we will like to continue going forward. If you remember finally that is your benchmark, the commercial, performance of this quarter, even considering that we have August.

And therefore seasonality in the meantime, you benchmark the absolute amount of net adds that we have been gaining all across the board with the first quarter of this year. You would see that we have not only been regaining momentum, but we have been out beating our first quarter performance.

So commercially speaking, very strong market and we think that we can keep having both in at the same time, expanding our customer base and moving outwards the value preposition for our customers.

In terms of Colombia, this is probably a order in which we are regaining market momentum, we thought that the market will be more rational, but subsidies have been back into the market, namely the gross [indiscernible] player and therefore we have been waiting for last two quarters to see the market was becoming more rational, it didn’t.

So we went back to commercial aggressiveness and we have been regaining market momentum and off course that has been affected OIBDA. But work commercially for jointly with the fact that we keep investing significantly in our networks [indiscernible] that going forward, we will have better trends mainly in terms of revenues.

And then finally on Mexico it is true that for the first time in 10-years we have the relation mainly on interconnection [indiscernible] support our efforts.

But it is also through the [indiscernible] interconnection is lower this quarter than in the previous quarter, because interconnection rates has been decreasing from ₱0.51 to something between ₱0.23 and ₱0.24 and therefore this impact is being a slightly or progressively diluted.

The reason behind our strong momentum in Mexico is commercial we have been successful on the prepay for sustainable time by this quarter for the first time we have been successful or more successful I would say on the cost paid part of the market and that's very encouraging.

It has a lot to do with the expansion of LTE that we are doing the improvement in 3G coverage as we are also doing on to the market.

And therefore, the fact that we are reinvesting in terms of CapEx a significant part of the cash flow that we are generating commercially and thanks to [Indiscernible] pretty positive about the future of our Mexican asset, much better trends and not just relying on prepaid, but this quarter is one of the first quarter, in which we are more satisfied about the word postpaid entering Mexico..

Fantastic..

Thanks you, [indiscernible] next question please..

We are going to take a next question from David Wright from Bank of America. Please go ahead. Your line is open..

Hello guys. Thank you for taking the call. And if I could just ask for a little more clarity on the cost allocation in Spain, so you have taken wholesale revenues in DTS, but you've taken all of the cost in Telefonica España is that correct.

So when you do then consult a DTS, we should assume some EBITDA growth recovery just on that the natural sort of revenue that’s question.

And then my question two is it a full - when you say a full quarter of cost in Q3, but only marginal sort of revenue uplift from the football promotions, is that correct so we've taken effectively the La Liga cost and divided by four for full quarter we put that in, put then we've only got revenues to sort of 1.5 months I'm just trying to understand the exact cost allocation.

Thanks..

Well. Thanks for your question. Let me try to be a little bit more specific on the wholesale revenues.

The La Liga cost that is in the neighborhood of close to 600 million the owner of those right is DTS and therefore this is not consolidated in Telefonica Espana and therefore DTS is billing Telefonica Espana with the proportional part of the billing right for the customer base and for the market share.

The other revenue is coming from the La Liga rights, the wholesale revenues are going to the other parties to the third-parties depending on the market share and therefore those are not consolidated into Telefonica Espana.

And therefore summarizing in La Liga you are seen La Liga as an example you will have on Telefonica Espana the cost of the part of the proportional part of the La Liga cost and that revenue is coming from the pass through the customers even though it's has been promoted and therefore you will have - when we will be consolidating DTS revenues into Telefonica Espana revenues the third-party wholesale revenues are creating to Telefonica Espana revenues.

And then in terms of the cost the La Liga rights are divided into the different quarters and therefore are located and remember that a significant part of the gross amount of the La Liga rights is pass through [Indiscernible] that want to have access to these premium content mainly with our foreign [indiscernible].

Therefore you need to consider when running your numbers that close to a 30% of that amount is going slow into a wholesale market to third-parties and therefore not into the Telefonica's accounts..

Okay that's much clear and can I just obviously there is an assumption that the ARPU cannot rest beyond the promotional period at the beginning of next year, but you are also seeing quite strong promotions from your competitors right now.

So are you confident that you will see sort of a wider market reaction or is there a risk to your competitors also with some Champions League Football might continue to push..

Well market is very competitive, but it has been very-very competitive not just on the content part but also on the pure triple play before [indiscernible] for the last two years and we have been able to move forward to our customers, because we have significant, I would say differential assets namely our coverage, our fiber coverage.

Now with the DTSC Corporation, we have a satellite platform that is covering 100% of the Spanish territory and therefore we are also able to sell our bundled product to the regions of Spain, which we don't have coverage of fiber out of VDSL.

Then on top of that, I think that we saw some [indiscernible] that we are doing cross selling on the different customer base of the former DTS base into with Telefónica as our product.

And then I would also like to mention one specific issue which is at 56% of our Pay TV base is now with some kind of add-ons; which basically means that the value preposition that we are doing and the segmentation that we are doing with the market with a different ledgers of products on the TV side, is gaining traction.

And finally let me add in terms of the advantages that we think we have is that on top of the network in terms of the contents we also have in terms of the features that we are able - the technological features that we have been able to embed in our platform. TV on demand, cloud storage and more than 74 high definition channels.

So I think that we have enough strength on our value preposition on our product allow us to think that we can up lift over our customer base going forward.

A final point that I would like to mention, the over the top platform that we have been incorporating from Digital Plus allow us to have yet one quarter more than 500,000 customers that has now downloaded and more than 70,000 of those are recurrently using the app.

So I think that overall when you put everything into consideration and you consider also the strength of our fiber and the strength of our network, I think that we should be able to uplift our customers going forward..

And DTS is fully consolidated Q4 is that correct?.

We will do our best to do - it already fully consolidated, I mean but we’ll make more [indiscernible] consolidating to Telefonica Espana, so we avoid confusion going forward..

Thank you..

[indiscernible] next question please..

We are going to take our next question from Jonathan Dann from Royal Bank of Canada. Please go ahead. Your line is open..

Hi there. Two questions please, one is looking at some of the listed subsidiaries, some various, I mean, I think Brazil and Germany, with tax changes in Brazil and I guess the pace of improvement in Germany.

Is there are a moment to improve the capital structure either less equity or more debt? I mean and completely, separately are you looking at unbundling in Mexico?.

Hi Jonathan, this is Ángel. Regarding the first question.

We have group wide approach to the capital structure, which allows us to comply with our overall leverage commitments group wide and also with some other criteria like what amount of that pushdown we can have to subsidiaries, regarding [indiscernible] issues and some other considerations that for instance rating agencies would be looking at.

Also we are managing taking into account the different commitments taken to the market in the case of Telefónica Deutschland at the time of the year and perspective there was some commitment to leverage that we have been complaining with.

And also regarding, all other major subsidiary, which is Brazil we’re continuously monitor in market conditions, cost of that on macroeconomic situation of the country to optimize from a group perspective, what would be the financial cost. This is a dynamic exercise that we are continuously assessing.

And there could be variations overtime, but we feel that we are in a good position now..

Taking your question about Mexico, we’re analyzing access to selling infrastructure on the mobile site.

Those are the current regulatory framework that as forced the incumbent to retire prepare wholesale offer by having indirect access to their passive network infrastructure and therefore on towers on the CTOs we’re analyzing not on the wired line side, we need to make sure that we have fixed our situation on the mobile site.

And namely that our prepay traction is in good shape that our postpaid traction keeps improving which was an issue till this quarter.

So before considering any other movement, we’re totally focused on our mobile business in Mexico in order to try to accelerate our CapEx deployment and to make them as efficient as possible by having access is possible and [indiscernible] prices to indirect infrastructure of the incumbent in Mexico.

So not on the wired line side, yet we are analyzing option on the wireless side..

Thank you very much..

Thank you Jonathan. Next question please..

We are going to take our next question from Mathieu Robilliard from Barclays Capital. Please go ahead. Your line is open..

Yes, Thank you. Good afternoon. Two questions please first with regards to this process of the start of Telefonica UK if you can maybe give us the bit of color in terms of how you are conversation are progressing and what is the timetable should we expect, something should be close by Q2 next year.

And then coming back to Mexico, actually obviously one of the new entrants there is planning spend quite a bit of CapEx over the next few years, much more than current run rate success.

Do you think that at some point you will have to ramp up CapEx there to catch up with that or you think you already have the head start in Mexico compared to the new entrants? Thank you..

Hi Mathieu. Regarding the O2 UK process, as you know this process is being lead by [Indiscernible] and we are supporting them and participating in the meetings with the European Union what they call the form COS was filed on September 11 as expected on October of 30.

The commission moved the file to Phase 2 [Indiscernible] expected and did not refer the file to the UK CMA. There was an initial dead line set by the commission on March 16, these can be a extended to the request of the commission or voluntarily by request from Hutchison.

They want to stress that there is an ongoing constructive and continuous dialogue with the competition of [indiscernible].

Our base case this scenario continues to be that the deal gets approved with remedies, regarding timing we expect the deal to close in the second quarter of 2016 provided that the European union that's not significantly stop the clock now. So we remain optimistic and confident in the success of the deal..

Can you just confirm if there is a backup team this year?.

[Indiscernible] is confidential, but I would assume that if there was a significant break up deal we would have had to disclose it..

Thank you..

Taking your question on Mexico yes as we have as you might imagine, we have been monitoring very closely announcements from the brand new competitor in the Mexico market about their future CapEx intention and we have scored that in our model.

Let me remind you that throughout things we have employed, we have invested more than €10 billion of CapEx in Mexico in the last years.

Thanks to that we have the second best network after [Indiscernible] and that's precisely why the other the previous contenders mainly [indiscernible] and Nextel had national roaming agreements on our network and they were relying mostly on our network folks in the second part.

So we can easily understand that AT&T will like to have their own network and therefore they will need to catch up significantly in the next quarters, because they will need to basically build significant part of the network which we have already done.

Having said that we are accelerating CapEx in Mexico and because we think that the growth opportunity that lies ahead of us, we need to take advantage and therefore we cannot miss the opportunity, but we are not in the need of precisely emerging what the AT&T is going to do.

At the same time, we are analyzing and I would say previously if any option that would help us we facilitate the way to do that in a more efficient manner by having access to sites if those were to be at reasonable pricing compared to deploying our network.

So to make a long story short, we feel that we have a good base on our network, we also feel that we need to accelerate, because there is a future opportunity ahead of us and the time is now, because of the asymmetry of the drug relation.

We don’t feel that such of this advantage like AT&T might be filling, but yes we are going to be accelerating and we are accelerating and we have not changed our CapEx because of the announcement done by AT&T..

So I may ask you, is the project of the government are on the 700 megahertz spectrum part of the options are considering or that’s a no go for you?.

If not, why not the most attractive play that we are analyzing that we are keeping everything on top of the table that we are analyzing in other place we have better return..

Thank you very much..

Thank you Mathieu, next question please..

We are going to take our next question from [Indiscernible] from Deutsche Bank. Please go ahead..

Thank you. I have got two questions please. Firstly, on Spain at the start of the year [Indiscernible] ambition to grow revenues in Spain on a cumulative basis in 2015.

And in the first nine months the Spanish revenues are down 1.5% and Q3 and do you think Q4 we will see a growth to [indiscernible] are growing revenues for the full-year and if not what's gone worse.

And what you expected at the start of the year and then second Brazil and you have been doing a great job out from the market, but do you think the current one is growth rate sustainable as we look to 2016.

Do you expect any further impacts from the macro environment and how do you feel about the recent [indiscernible] Brazil in particular? Thank you..

Taking your question on Spain, we already discuss in previous calls that it was not a guidance. Having said that it have been already having five months of growth in Spain.

And we think that the performance that we see in this quarter, are going also into that direction, whether that's going to be enough to match or to surpass the previous year revenues, it’s still to be seen, but again that's not a guidance and therefore we will keep working into that direction.

And allow me to remind you that again we have already had five months in a row of growth in Spain.

It seem that were unexpected that you were mentioning, first the approval process of digital plus, took two months longer than we expected initially, second the sub contractor strike was not scored into the model at the beginning of the year and that have an impact on the second quarter and that is also effecting the performance.

So we’ll keep you posted, but allow me just to highlight that we have already had five months in a row of revenue growth in Spain.

And in terms of our Brazil, macro, its affecting the business in terms of bad debt mainly, therefore it is true that we have had a significant impact in terms of bad debt that is started to be control and that's why we have been significantly upgrading our creative scores for new apps.

In spite of that we have been able to maintain the growth rate of almost say compare with the second quarter, in terms of revenue growth and we have been able to accelerate in terms of OIBDA performance.

Thanks to the fact that we have been basically driving more than 50% of the contract net adds of the market that we have been able to capture mostly 100% of the mobile service revenue growth of the market, and also because of the fact that we have been able to grab a 100% of the Pay TV net adds on the quarter, which means that the products that we have in Brazil are very strong [indiscernible] and that we are replacing the growth that is not coming from the macro environment, with market share with having more competitive.

So a very strong quarter commercially speaking in Mexico and even the south on the back of the synergies yet flowing through our accounts, remember that we are starting to see significant traction in terms of synergies in Germany, three quarters after or four quarters after the approval process, we had just one quarter after the approval process in Brazil.

So pretty confident on the future of our Brazilian subsidiary. Very satisfy by the commercial research especially if you take into consideration the fact that we were just in the middle of the integration process of both teams and therefore rather than losing focus on the market.

We have been able to accelerate over our market aggressiveness and therefore capture a significant part of the value of the market in the quarter. So yes the macro is affecting us bad debt, in the cost of energy and in other supplies, in spite of that we have been able to accelerate OIBDA growth because of the first signs of the synergies.

We have been able to preserve revenue generation, revenue growth compared with the previous quarter, because we have been driving most of the value of the market in this quarter. so very satisfy with the performance of the Brazilian unit during this quarter..

That's very clear. Thank you..

Thank you [indiscernible] next question please..

We are going to take our next question from Justin Funnell from Credit Suisse. Please go ahead. Your line is open..

Thank you. Just two quick questions, on Spain and fiber, the competitive dynamics, I think Orange announced couple of days ago they were going to extended their footprint. I don't see they have taken time to do that.

So I was just wondering what’s going on when you are competing against Orange and I guess what Vodafone builds in fiber, when you are going head-to-head with them? What sort of market share you get, I presume is pretty high, but any visibility on that would be useful? And then just generally - going into this LatAm down cycle, you relatively expose as a group, has its led to any new thinking about, how you want be exposed long-term is there an argument back to Europe at some points? Thank you..

Well, taking your question on our competitors expansion in terms of coverage on fiber in Spain. Yes, Orange announced this week that looks like they have announced that they will be expanding their coverage from 10 million to 14 million from here till 2020.

We have already almost 40 million households covered passing Spain, if regulation doesn’t change, if the regulatory environments are stable to go significantly above that level in the next year. So coverage which is one of the factors that we are using in order to accelerate our value preposition.

We take into account what they are doing but we are significantly ahead of them. So allow me to say also that coverage is one of the elements is not the only one, I mean the content this essential and we think we have the best overall content in the marketing spend.

In spite of not having the European Championship, we have a very good and very competitive product in terms of series a very outstanding product in terms of movies and now extending product in terms of other sports and in terms of football rights.

And we have also our platform that is providing features that they are hard to match by the others like video-on-demand, VDR, cloud storage last seven days of programming, high definition channels. So whenever we find them on a building so to say it is hard for them to compete with us, because we have a very good product and a very good bundle.

So we acknowledge we were already accelerating and I think it is the right approach, competition base infrastructure is the right approach for fiber and I think that's precisely why Spain in the middle of their crises has passed on being the sixth country Europe in terms of fiber customer.

I'm not talking about royalties or a percentage I'm talking of absolute number of fiber connected homes from being the sixth in 2011 to being the leader in 2015. So I think this is the way to go, the more competition on the infrastructure base competition is better for the country, so we deeply encourage that..

And regarding the second question on geographical diversification.

What they would like to point out is that if you look at metrics like free cash flow or some of the bars value, we remain a European centric company and given the high expected growth in EBITDA and operating cash flow that we will achieve in Germany these will probably continue to be so.

So in our cash and value metrics we continue to be a European centric company..

Alright. Thank you..

Thank you Justin. Next question please..

We are going to take our next question from Giovanni Montalti from UBS. Please go ahead. Your line is open..

Hello, hi. Two quick questions first one on your expectations in terms of inflation of the content for football, there should be an option short-term, I mean we haven’t seen much inflation last time around. So wondering what are your thoughts about this.

Second, if you can give us any color about the current trading in terms of net additions [Indiscernible] Pay TV in Spain? Thanks so much..

Well in terms of our content it’s hard to say, but so far the we have been able to send signals to the market that we want to get rational in terms of building the market and that's why it was a very limited inflation on the La Liga right this year.

And we have decided for the time being that we were not ready to pay the amount that was required to have champions in Europe. So we will try to do our best to make sure that content cost keeps under rational terms.

Also taking into consideration that we are the fact that again let me see that Spain get a 29% Pay TV penetration compare with an average of 61 in Europe and there is way to go on the approximately site. So I think that if the price in scheme is rational we could try to create on stable environment here in Spain.

So hard to see, we will see there is La Liga option coming shortly so we will keep you posted on that but for the time being we are trying to send rational signals to the market.

Also take into consideration the fact that the remedies that were imposed to us, because of the acquisition of DTS in terms of premium contents that we need to have available for our competitors made that underway, those are being shared in terms of fix versus valuable component.

Means that part of the fix component of those premium right is shared among the different players. So I think that the infrastructure based players will incentivize to pay crazy pricing for - because all of us will need to bear our significant part of the fix cost.

And in terms of net additions in fiber, what we have seen so far and we are with October recently a closed, is that the good trends that we were seeing keeps going, so we think that it should be another quarter of good net adds overall in the Spanish market..

Thanks so much..

Thank you Giovanni. Next question please..

We are going to take our next question from [Indiscernible]. Please go ahead. Your line is open..

Thanks very much. I have a couple. I just want to take, I think as much easier question on the UKs [indiscernible] step further I mean if you are unable to tell the UK business if the European commission doesn’t approve [indiscernible] remedies are too severe.

Could you maybe just discuss, in that scenario what you believe your options are given the sort of leverage that the group would have after that decision and obviously the LatAm devaluation that we’ve seen so far would helpful to talk to your options in that scenario? And then secondly, obviously a big part, the debate today has been about accounting cost and the promotion that you are running in Spain.

I mean from what I can see the basic Fusion offer that people are taking €59 on the promotional stuff that cost €65, so basically €10. So in January the price for people on that promotion is going to jump from €69 into €124, which is obviously a huge jump.

I just want to understand how exactly you are going to manage that promotional roll off, presumably you will try and encourage consumers to take one of the add-on bundles, but just how is that going to work and how you are going to manage that when you hit that point in January? Thanks..

Regarding the first question, I would like to infuse that we remain confident in the deal being approved with remedies and closing in the first half of 2016.

And then likely situation that this was not the case, there would be several alternatives regarding our UK asset, which should be reasonably easy to execute, either through M&A, capital markets, strategic or financial investors doing the complete or a partial deal, there are several alternatives that one could think of.

And in addition and irrespective of the UK deal outcome, we have several alternatives regarding other assets, for instance we are strategically reviewing in depth how our portfolio [indiscernible] structure assets, we seek opportunities to free capital realize value while maintaining operational control and this would include things like tower, cables, backhaul, data center, et cetera.

Q - Unidentified Analyst Okay. Thank you..

Taking your question on the customers that are right now under this €9.9 promotion and assuming which is an assumption, it is not totally great, but for the sake of the analysis, let assume that they are all under basic Fusion offer of €59.

If they were to move, and they have right now they have premium extra TV offer which is nominally €65 and is now being promoted to €9.9 we will not need to assume that all those customers have not tried to move to these nominal price of €65. And allow me to remind you that we have several add-on package that they could decide to move some of those.

For example, right now you have the football package, and the football add-on, which is a pure football package for 25 years on top of the €59, you have the other sports with this €20, you have the movies, which is just €9 and you have the series which is just €5.

So we have try to create flexibility for them to accommodate in the content that they will like to have and they will like to choose.

One they have tasted the full blended product of everything, they can decide, they move in to that, if that is affordable for them, but if not, they can decide to staying with at least one of the contents, or two of the contents.

So we have try to create a scalability, on our product range to make sure that after the promotion, they would be attracted. Sheer part of their disposable income, once they have tasted for that.

So that’s a word assumption and again allow me to remind that one of the basic assumption is that not all of them are on the €59 promotion, on the €59 Fusion package..

Okay. That’s clear. Thank you..

Thank you [indiscernible]..

We are going to take our next question from Jerry Dellis from Jefferies. Please go ahead your line is open..

Yes good afternoon, thank you for taking my questions.

First question is around DTS please, last year DTS disclose an EBITDA margin of around 4.5%, there are now La Liga cost within - La Liga rights within the DTS parameter, but how has the detail margin changed significantly since 2014? And then secondly in Brazil, now you have Tim taking advantage of folding MTRs to bring off-net calls into the bundle.

Do you expect a short-term impact from that and would you be able to give us any guidance as to how much of your Brazilian revenue is derived from call-by-call off-net calls please? Thank you..

Well taking your question on DTS. We have issued a numbers of DTS for the five months that are already being consolidated, basically in terms of OIBDA we are close to breakeven.

If you put into consideration their wholesale cost that has been transfer from our Telefonica Espana on the other sports with this 4.5% OIBDA margin right now is flat, is breakeven in terms of OIBDA for taking out positive extraordinary adjustment, because of the merger.

So I think that close to zero percent OIBDA margin when we put everything into consideration, and when we score the wholesale cost being transferred to digital to DTS from Telefonica Espana. In terms of Brazil we do not disclose the OIBDA exposure, because of interconnection.

It has been significantly decreased over the last five years, because we knew the deal was coming so it used to be a very high exposure, now it's a pretty limited one, because we have been bundling significantly our tariffs in Brazil during the last quarters.

Yes it's our new future on the market, we knew it was coming sooner or later, we have tried to prepare also for that and as [indiscernible] stating on the call yesterday, everything in the quarter has been facing, because we are dealers of the market grinding further a much more aggressive promotions from our customers.

And so far we have been able to overcome them, because we have - as I was stressing before in Spain, significant differential attributes in Brazil as well.

We have the best brand, we have the best quality, the best coverage, we have the business division channels, the business division network and the integration is providing as with amazingly high cross selling opportunities among their customer base of former GVT and among the customer base of the former Vivo.

So yes brand new future on the market something that was anticipated and therefore confident that we will be able to preserve our commercial attraction..

Thank you..

Thank you Jerry. Next question please..

We are going to take our next question from Mandeep Singh from Redburn Research. Please go ahead. Your line is open..

Hi. Thank you for taking the question. Just want to dig a bit more into a Spanish revenue growth. I appreciate this year was never official guidance it was really an ambition, but do you think that next year 2016 is a cumulative your revenue growth is actually positive and sustainable for the whole year.

Second question I have is really digging into the Spanish revenues in a bit more detail, as a category of revenues called others, which grew very significantly year-over-year excluding that your revenues in Spain are declining by 2%.

So if you could just sort of try and explain what that other category is? Is it accretive or dilutive to margins and just a bit of a revenue picture in Spain beyond just Fusion where you do give us a little disclosure? Thank you..

Well. Try to ask is that it was not the guidance and therefore we have tried to express that is not the guidance for 2016 in order to avoid confusion going forward, but for sure, we are already having or really having five month on a row of revenue growth, we think we can continue into that direction.

I mean it took us almost seven years to think Spain back into growth, it took us seven years to build the attributes to make sure that was sustainable with significant CapEx effort, with significant price cuts, with significant bundling and therefore with significant discounts, significant effort in terms of quality.

Allow me to stress the fact that one of the most important features of this quarter that has been almost unnoticed, churn reduction we are back to historical levels of churn, low levels of churn in Spain.

So if you put on top of the table, also the technological improvements or upgrades that we have been doing to our platforms and their expansion that we are doing in LTE and in fiber. Definitely we are doing that because we think we can be a growing company, but again we are not guiding and we will just keep you posted on a quarter-by-quarter basis.

And in terms of the orders lag, it’s a very lower margin line it's basically carriers and orders for the detail please keep in touch with Pablo and the IR team. And remember also the fact that the [indiscernible] revenues in the traditional way of Spain between [Indiscernible] is having less and less sense because of the Fusion and the bundles.

So deeply encourage you to the overall numbers of revenues in Spain. And for further details on this orders please contact Pablo and the IR team they will give you more color on that..

Thank you very much..

Thank you Mandeep. Next question please..

We are going to take our next question from James Ratzer from New Street Research. Please go ahead. Your line is open..

Yes. Thank you very much. Indeed two questions, please.

First of that consumers to come direct pull out from Mandeep one just now regarding that you have made a numbers of previous statements about aspiration for revenue growth in Spain now that has been achieved do you have an aspiration for EBITDA growth in Spain, and if so when might that be able to be achieved.

And secondly, please why don’t you give us an update on the situation around cash repatriation from Argentina is that something you've been able to do and if not how much cash is in Argentina at the moment? Thank you..

Thanks for your questions and now that have been able to cross the lines of revenue growth in Spain for sure. We want as soon as possible to cross the line of OIBDA as well.

We will try to give you more color on that during the fourth quarter conference call, in terms of the efforts that we are doing not just because of the end of the promotion, but also all that efforts that we are doing by attacking the cost function spend, distribution and others.

So I hope that by during the fourth quarter we’ll be able to give you more color on the cost structure of Telefonica Espana going forward. I guess you might imagine after revenue would all for five months in a row and the platform that we have been able to build now we are targeting to get back to OIBDA growth as soon as possible.

So allow me to postpone this for the fourth quarter conference call, because I think during that we’ll probably, would be able to give you more color on the extra cost therefore that we’ll be running Telefonica Espana..

And regarding Argentina, we have not repatriated any amount this year, the cash position is equivalent of €203 million, which is the decomposed in the equivalent of €105 million and pesos and €98 million equivalent in foreign currencies..

All right..

Thank you James. We have time for one final question, please. Thank you..

Thank you. Our last question comes from Fabián Lares from JB Capital Markets. Please go ahead. Your line is open..

Hi good afternoon. Thanks for taking my questions.

First of all could you can you give additional information, now that the European Union has finally decided on the outlook for roaming, can you give us some information on how much that ways on your consolidated basis both in Spain and Germany and how much of this would be affected with the change in regulation, in April and in 2016 and during 2017? And second, with regards to ruling both the statement by Standard & Poor’s or hybrids, I’m not sure if this was asked, but if it was, I’m sorry, because I joined late.

Could you give us some information as to what your strategy might be with hybrid given now that they count 100% of debt, whether you would retire these earlier, replace them with more senior, cheaper senior debt, et cetera? Thanks..

Well thanks for your question in terms of our roaming exposure in terms of net exposure and after the third quarter of this year is 1.5% of revenues. So this is what we have right now.

Allow me to remind you that we are already preparing our company for that we have all the players , where namely Telefónica has been putting together on our own network, and significantly attractive tariffs for roamers that are coming from the UK into Spain and from Germany to Spain or the other way around.

So we are already as - we were discussing before on Brazilian interconnection question, we are also trying to anticipate that and to accommodate the impact on our accounts as we move forward the end of 2017.

But right now to be precise on the answer, 1.5% of our net revenues, this is a net exposure to - and finally allow me also to say that we have been growing 4.8% in revenues organic at the group level, this is cumulative so far this year, nine months.

Regulation is lagging 1.2 percentage points of that growth, I mean if regulatory situation would have been exactly the same in the previous years we would have been growing 5.4%.

So we are used to those regulatory affects, they are getting less and less relevant, because regulation still thinks in the previous century, but the impacts are getting less and less relevant..

And regarding the hybrid, S&P has revised the equity content signed to several hybrid capital instruments to minimal from intermediate. In our case all our hybrids have been impacted by the this change.

This provision of the equity content has been triggered by review of the rating event provisions in certain hybrid recommendations, which allow the issuer to call the hybrids upon a reclassification link to change in the rating previously assigned to the issuer.

Confronted with the situation which wasn’t unexpected, our main target is to regain the equity content. To keep this financial flexibility we aimed at the times of the several issuances and also to maintain a good market access.

We are currently reviewing the recommendation with legal counsel, we are reviewing our options and we are in dialogue with S&P about courses of fraction in order to regain expeditiously the equity content and we will update the market in due course..

This was a final question. I’ll pass now to operator for closing the call..

Well. Thank you very much for your participation. And we certainly hope that we have provided some useful insights for you. Should you still have further questions, please contact our Investor Relations department and good afternoon..

Telefónica’s November 2015 results conference call is over. You may now disconnect your lines. Thank you..