TDE.L Regulatory News (TDE)

3 May 2007 10:53

Telefonica SA03 May 2007 As provided in article 82 of the Spanish Stock Market Act (Ley del Mercado deValores), TELEFONICA, S.A. hereby reports the following SIGNIFICANT EVENT Pursuant to the notice filed in April 28th in relation to TELEFONICA'sindirect holding in the share capital of TELECOM ITALIA, it is hereby reportedadditional information with regard to this transaction, which is similar to thatfiled with the supervisory authority in the Italian securities market, CONSOB,by the Italian partners of TELEFONICA for this transaction -ASSICURAZIONIGENERALI, INTESA SANPAOLO, MEDIOBANCA and SINTONIA S.A. (BENETTON Group)- : - TELEFONICA confirms that its pre-emptive right on the TELCO sharesheld by abovementioned Italian shareholders will be subordinated to thepre-emptive rights in favour of the latter. Furthermore, Italian shareholders,before TELEFONICA may exercise its pre-emptive right, may indicate newprimary Italian investors, for whom TELEFONICA's approval is provided for. - Furthermore, it is hereby confirmed that the governance of TELCO willbe articulated according to proportionality criteria; it sets forth qualifiedmajorities- the achievement of which implies also the assent of TELEFONICA-for certain specific, particularly significant transactions, among which thosewhich may change the shareholder structure (spin-offs, mergers and reservedincreases in share capital); should such qualified majorities not be reached, a"deadlock" will occur and the relative resolutions will be taken with themajority of votes, without prejudice to the right of dissenting shareholders toexit the shareholder base of TELCO via the relevant spin- off. A qualified majority is also required for the determination of TELCO's dividendpolicy (and not of the dividend policy of the TELECOM ITALIA Group) which if notreached will not cause a "deadlock". If TELECOM ITALIA intended making divestments abroad exceeding 4 billion euro orclosing significant strategic alliances with telecom players, TELEFONICA, ifdissenting, will have the right to exit the shareholder base of TELCO via therelevant spin- off. - As concerns the price for OLIMPIA's entire share capital indicated in4.1 billion euro, it is confirmed that such price is provisional since OLIMPIA'snet financial position must be considered at the date of the closing of thetransaction, which, as already disclosed, will occur after the authorisationsand approvals of the competent authorities. Lastly, the stakes in the capital of TELCO as a result of the transaction willbe the following: ASSICURAZIONI GENERALI 28.1%, INTESA SANPAOLO 10.6%,MEDIOBANCA 10.6%, SINTONIA, S.A. (BENETTON Group) 8.4% and TELEFONICA, 42.3%. Madrid, May 2nd, 2007 This information is provided by RNS The company news service from the London Stock Exchange