1. Can carriers deliver content and not just capacity? Julien Lehmann Telefónica Global Delivery Services Product and Marketing Director

2. Contents The best position to face the future The strategy to add value and not just “provide capacity” The Telefónica Global Delivery Services Example Conclusion

3. 3 The best position to face the future 01 Telefónica, S.A.

4. Numbers 4 Staff Services Finances Clients 1989 Geographies 2000 2010 (1) EPS: Earnings per share Integrated ICT solutions for all customer segments Basic telephone and data services Wireline and mobile voice, data and Internet services About 12 million subscribers About 288 million customers About 68 million customers Spain Operations in 25 countries Operations in 16 countries About 71,000 professionals About 270,000 professionals About 149,000 professionals Revenues: 4,273 M€ EPS (1) : 0.45 € Revenues: 60,737 M€ EPS (1) : : 2.25 € Revenues: 28,485 M€ EPS (1) : 0.67 €

5. Telefónica is today a leader in the Latin American Telco market … 5 Argentina: 22.6 million Brazil: 79.8 million Central America: 7.3 million Colombia: 12.3 million Chile: 12.4 million Ecuador: 4.5 million Mexico: 21.2 million Peru: 17.5 million Uruguay: 1.8 million Venezuela: 10.4 million Data as of June 2011 Wireline market rank Mobile market rank Notes: - Central America includes Guatemala, Panama, El Salvador, Nicaragua and Costa Rica - Total accesses figure includes Narrowband Internet accesses of Terra Brazil and Terra Colombia, and Broadband Internet accesses of Terra Brazil, Telefónica de Argentina, Terra Guatemala and Terra Mexico 21 12 22 11 2 2 11 2 2 3 Total Accesses (as of Jun11) 190.4 Mill.

6. … enjoys a significant footprint in Europe … 6 Data as of June 2011 Spain: 47.4 million UK: 22.9 million Germany: 24.0 million Ireland: 1.7 million Czech Republic: 7.7 million Slovakia: 1.0 million 2 21 11 4 2 Wireline market rank Mobile market rank Total Accesses (as of Jun11) 104.7 Mill. 4 3

7. … and it is widening its horizons for growth through strategic, industrial and business alliances 7 The largest worldwide strategic alliance in the industry. Combined accesses nearly 625 million (June 2011), which is about 10% of world’s population 2nd integrated operator in China with a countrywide 3G licence (European standard) Mutual investment agreement Telefónica: 9.7% in China Unicom China Unicom: 1.37% in Telefónica Joint cooperation in different areas such as service provisioning, equipment & devices acquisition, R&D+i, sharing of best practices … Strategic & Industrial alliances Largest Telecom alliance in Europe, with ~18.5% market share (1) Combined presence in 7 European countries Combined accesses in Europe in June 2011 (millions of customers): Telefónica …………………………………….. 104.7 Telecom Italia …..………….………………… 62.3 Total industrial alliance..……….… 167.0 Business alliances RCS-e … (1) Market share in Western Europe+Czech Republic+Slovakia Telco market as of Pyramid Research’s Global Market Data Forecast Q4 2010

8. The long term value of Telefónica’s business is recognised by the markets, so placing it within the Top 5 in the global Telco sector 8 Telco sector worldwide ranking by market cap (US$ bn) European integrated Telcoby marketcapitalisation 1 st Among the 50 largest companiesin the world bymarketcapitalisation Source: Bloomberg 07/31/2011

9. 9 A strategy to keep on our successful track record 02 Telefónica, S.A.

10. The world is today a Networked Society, and it will get more and better connected every day … 10 And telecommunications are the basis and the enabling factor for the Networked Society Increasingly powerful devices Social networking Huge increase of digital contents User Generated Contents Hundreds of thousands of applications e-World: e-Health, e-Learning, e-Financial Services, e-Travel M2M : smart metering, e-Car, e-Logistics, vending Everybody and everything connected The new environment which drives demand The great digital opportunity From Internet of People to Internet of Things Devices 50 5 0.5 Bn 50,000 M 18751925195020002025 1975 1900 0 People PlacesMachines Customers Apps. & Services Devices Traffic

11. … because Telcos have a key role to play in the ICT ecosystem 11 Revenue sharing Payment for segmented bundles of services Payment for distribution and additional services Content, advertising, on- demand services & apps Third PartiesEnd Users Partners complementing our capabilities Demand unified and simple services Telco as Service Platform Beyond Applications: Advanced platforms for quality service delivery Adding comprehensive connectivity & service management

12. 12 The Telefónica Global Delivery Services Example 03 Telefónica, S.A.

13. The evolution of the CDN market Content Provider Content Provider CDN Provider CDN Provider Telco Consumer Content delivery disconnect QoS disconnect Content Provider Content Provider Telco CDN Enabled Consumer Content delivery connected End-to-End QoS

14. CDN 14 Offering new opportunities to content providers for monetization, B2C and CRM

15. Telefónica Global Delivery Services Improve the experience of your customers Increase the visibility of your content Flexibility and availability guaranteed in any conditions Offload your origin server and reduce your infrastructure cost Web Dynamics Video Smart Download Private Delivery Advanced analytics

16. What makes us different ? 16 Deep network control High granularity and proximity to the end users Integration of the CDN control within the network control unit Reach to up to 730 million users Global & local sales force Next generation technologies Based on the past experience of other CDN actors New technologies oriented to video optimization Open APIs A network of trusted partners

17. Telefónica’s CDN Position in the market 17 Source: Player public information Number of PoP’s CDN Investment Throughput (Tbps) ContinentCountryCity Level 2011 2012

18. Capacity deployment: 2011-2012E TGDN Deployment on 2011 TGDN Deployment on 2012

19. Do you want to be part of the CDN of the future? Telefónica is opening its technology to you To decrease time-to-market thanks to experience To get revenue from day 1 thanks to existing clients To get better performance thanks to existing POPs

20. 20 Conclusion 04 Telefónica, S.A.

21. No it’s NOT just capacity ! Telefónica keeps on investing heavily in added value services that keep on changing the way we live, work and socialize The Telefónica Global Delivery Services are set to be the leading online experience optimizer The Telefónica Global Delivery Services are set to be the leading online experience optimizer It is not just about us, you have an opportunity to be part of it for the benefit of the whole value chain

22. 22 Telefónica, S.A Telefónica Global Delivery Services Thank you Julien Lehmann Julien.lehmann@telefonica.es