TDE.L Regulatory News (TDE)

16 Jan 2007 13:07

Telefonica SA16 January 2007 Press Release 16/01/2007 TELEFONICA BRINGS CAPEX FORWARD TO MEET INCREASING DEMAND IN THE BROADBAND MARKET • The significant growth in the ADSL and wireless telephony businesses has led the Company to increase CapEx in 2006 of just under €8 billion • The increase in demand, as evidenced by higher than forecast growth in the customer base, traffic and services, has enabled the Company to raise its revenue growth guidance (from a range of 34%-37% to above 37%(1)) for 2006 • Telefonica's 2009 target for broadband accesses is between 5.6 and 6.1 million in the retail market in Spain alone, compared to the 3.4 million registered as of 30 September, 2006 Madrid, 16 January, 2007.- The speed with which broadband has been developingin Spain and Latin America and the mobile telephony coverage requirements ofEurope and Latin America have led Telefonica to bring its planned CapEx forwardin time, as part of its strategic focus on customers and their needs.Accordingly, Telefonica plans to end 2006 with CapEx (primarily investment ininfrastructure) of just under €8 billion, an increase of over 50% on theprevious year's figure and above the CapEx forecast for 2007. This additional CapEx corresponds primarily to greater investment in broadbandnetworks in Spain and Latin America in response to the need to bring highercapacity and new services to households, triggered by higher than forecastcustomer and market growth. In addition to the investment opportunity in fixed and wireless broadband, thereasons for bringing CapEx forward also lie with a faster roll out of thirdgeneration networks, mainly in Germany. In order to meet growing traffic andcustomer needs investments have also been made in second generation networks(GSM) in Latin America (mainly Brazil), which have in turn translated intohigher than forecast revenues for 2006 for Telefonica Group. At September 2006, Telefonica had 196 million customers worldwide, of which 138million were mobile telephony customers and 7.3 million were retail broadbandusers, 45% more than in the same period the year earlier. Broadband accesses inSpain and Brazil are particularly noteworthy, standing at 3.4 million and 1.5million, respectively. As for Latin America, the total number of broadbandaccesses amounted to 3.5 million. In Spain alone, Telefonica aims to have between 5.6 and 6.1 million retailbroadband users by 2009, compared to the 3.4 million registered as of 30September, 2006. As part of the Telefonica Group's commitment to the developmentof broadband access in its operating markets, it is worth highlighting theannouncement of investment in both fixed broadband and wireless - in Spain alone- of €9 billion between 2006 and 2009. TELEFONICA RETAIL BROADBAND CONNECTIONS At 30 September 2006 Millions Yoy change, % Total SPAIN 3.41 + 42.3%Total LATIN AMERICA 3.47 + 43.3%Total EUROPE 0.37 +103.8% Total 7.2 +45% In line with this commitment and as part of the company's goal to remain leaderin the digital era, the effort to provide an increasing number of value addedservices over broadband is noteworthy. At 30 September 2006, Telefonica deEspana had over 2.9 million operative services, of which ADSL Solutions standsout with over 328,967 units. Imagenio, another service that has underpinned thespread of broadband in Spain, has over 304,000 active customers. The investment effort by Telefonica is equally the result of its leadershipposition in the overall telecommunications industry thanks to its large businessand geographical scale, which in turn enables the company to leverage the growthopportunities provided by the sector. With its customer-centric focus,Telefonica is seeking to make its service offering tailored, easy to use andreliable. One year ago, the Company announced a CapEx forecast of approximately €7.2billion(2) . The result of the acceleration of the investment plan is to raisethis figure to an estimate of €7.700-7.750 billion2. Factoring in real exchangerates and the consolidation of the Colombia Telecom and Iberbanda businesseswill bring the final total investment figure of just under €8 billion. _____________________________________________________________________ DISCLAIMER This document contains statements that constitute forward looking statements inits general meaning and within the meaning of the Private Securities LitigationReform Act of 1995. These statements appear in a number of places in thisdocument and include statements regarding the intent, belief or currentexpectations of the customer base, estimates regarding future growth in thedifferent business lines and the global business, market share, financialresults and other aspects of the activity and situation relating to the Company.The forward-looking statements in this document can be identified, in someinstances, by the use of words such as "expects", "anticipates", "intends","believes", and similar language or the negative thereof or by forward-lookingnature of discussions of strategy, plans or intentions. Such forward-looking statements are not guarantees of future performance andinvolve risks and uncertainties, and other important factors that could causeactual developments or results to differ materially from thos expressed in ourforward looking statements. Analysts and investors are cautioned not to place undue reliance on thoseforward looking statements which speak only as of the date of this document.Telefonica undertakes no obligation to release publicly the results of anyrevisions to these forward looking statements which may be made to reflectevents and circumstances after the date of this document, including, withoutlimitation, changes in Telefonica's business or acquisition strategy or toreflect the occurrence of unanticipated events. Analysts and investors areencouraged to consult the Company's Annual Report as well as periodic filingsfiled with the relevant Securities Markets Regulators, and in particular withthe Spanish Market Regulator. -------------------------- (1) Assuming constant 2005 exchange rates and excluding changes to the consolidation perimeter with the exception of O2 Group (included in February-December 2006) (2) Assuming constant 2005 exchange rates and excluding changes to the consolidation perimeter with the exception of O2 Group (included in February-December 2006) This information is provided by RNS The company news service from the London Stock Exchange