Good morning, and welcome to Telefónica's conference call to discuss January to March 2026 results. I'm Torsten Achtmann from Investor Relations.

Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. This financial information is unaudited.

This conference call and webcast, including the Q&A session, may contain forward-looking statements and information relating to the Telefónica Group. These statements may include financial or operating forecasts and estimates or statements regarding plans, objectives, and expectations regarding different matters.

All forward-looking statements involve risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such statements. We encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators.

If you don't have a copy of the relevant press release and the slides, please contact Telefónica's Investor Relations team. Now, let me turn the call over to our COO, Mr.

Emilio Gayo.

Good morning, and thank you for joining the call. With me today are Juan Azcué, CFO; Borja Ochoa, Santiago Argelich, and Lutz Schüler, CEOs of Spain, Germany, and UK.

We are pleased to report a good start to the year. We are growing in revenue, adjusted EBITDA, and adjusted operating cash flow after leases, both in constant and current terms, with an appropriate CAPEX-to-sales ratio to deliver this growth.

At the same time, we are reducing net financial debt, despite the usual seasonality of free cash flow in Q1. Across markets, year-on-year growth rates accelerated in Spain and Brazil, with a strong commercial performance.

In Spain, we recorded the best ever churn. In Brazil, we achieved a record high mobile ARPU.

In Germany, O2 contract churn remained at a low level. In the UK, fixed line net adds continued to improve.

Revenue growth is driven by retail, with a steady growth in B2C and B2B. This performance more than offsets the loss of 1&1 revenues in Germany and the impact from the extension of wholesale agreement in Spain, which provide a more predictable and sustainable business long term.

I'd like to highlight the steady growth in service revenue, partially offsetting weaker handset markets in some European countries. On the operating model front, we are reaping the benefits for leaner operations, including the first savings for restructuring plans in Spain and our global units and the copper network shutdown in Brazil.

We are executing consistently against our transform and grow plan, making good progress. We remain confident in achieving our financial outlook for 2026 and reiterate our €0.15 dividend per share.

On slide two, let me share our progress across the strategic pillars of our plan. First, on customer experience, hyper-personalization and network quality initiatives are leading to lower churn and a sound NPS.

Second, in B2C, we are sustaining steady growth. We are fostering convergence, with a solid traction of our offering in Brazil and Germany.

At the same time, we are enhancing our ecosystems. In Spain, we have enriched our premium content offering with the FIFA World Cup rights, and we are fostering digital security.

In Brazil, we have reached more than 600,000 health subscriptions. We are also expanding the consumer electronics business, recording significant growth in Spain and Brazil.

Third, in B2B, we are seeing strong momentum, with revenue growth close to 6%. Noteworthy is the launch of Titan Connect portfolio and acquisition of Altin in Spain and the São Martinho partnership in Brazil in the agribusiness.

Four, we continue to enhance our infrastructure, expanding our fiber and 5G coverage, while improving network quality. Fifth, on simplification, we are capturing efficiencies from redundancy programs and legacy network switch-off.

At the same time, we continue to make solid progress on our Hispam exit, with six assets sold in the last 12 months. Overall, these actions reflect strong execution, positioning us well to continue delivering sustainable growth throughout the year.

On slide three, we will review our domestic business. In the first quarter of the year, Telefónica España continued to deliver strong operating and financial performance.

We recorded solid commercial KPIs, reaching the lowest churn ever, 0.7%, despite the tariff update in mid-January. This figure proves the high stickiness of our customer to our excellent service and superior network quality, our differential ecosystem, and a smart segmentation.

Such a competitive advantage is driving a positive balance in portability ratios. We have outperformed our competitors year on year, surpassing the 2025 average and three times higher year on year.

As a result, we achieved record customer base in fixed broadband and in contract mobile, a significant milestone. In B2C, convergent ARPU increased above €91.

It remains at leading levels in the market, both in absolute and in relative terms. Our premium digital ecosystem continues to support the highest customer lifetime value in the market while driving revenues up.

In B2B, we also started the year with a strong traction. We are growing both in comms and IT services.

I would like to highlight the recent launch of innovative service on network resilience for business continuity, advanced cybersecurity, drones in defense, and sovereign technology. They will drive further growth in this segment.

Regarding financial, Spain is delivering a solid cash generation, with growth acceleration across all financial metrics. Growth in revenues accelerated to 2% year on year, supported by service revenue.

B2B digital services maintained robust growth. Adjusted EBITDA grew over retail revenue, delivering a 56% margin, due to revenue growth and savings from the redundancy plan.

This more than offset the anticipated lower wholesale revenues. In addition, CAPEX discipline and more stable leases led to a 2.3% growth in adjusted operating cash flow after leases.

In a nutshell, our domestic business had a strong start into the year, and we are in a strong position to continue to excel. On to slide four.

Telefónica Brasil's performance was once again remarkable. Vivo recorded solid commercial momentum in the most valuable segments and grew above inflation across all key lines.

We maintained a clear leadership position in the market, leveraging our strong commitment to quality and customer satisfaction and our continued evolution in a broader digital platform. In mobile, we reached record levels both in contract net adds and ARPU, with a sustained churn reduction.

We added 850,000 new contract customers in the quarter, the highest figure of the last five quarters. ARPU is the highest ever, driven by our value-driven growth in the increase in recharge frequency in prepaid.

In fixed, we increased fiber connection to almost 8 million. This strong performance was driven by Vivo Total, resulting in a lower churn.

Turning to financials, revenue and adjusted EBITDA grew year on year, well above inflation, and accelerated versus the previous quarters. Revenue increased by 7.4%, supported by consistent growth in mobile service revenues and continued strength in the fixed business.

In B2C, new digital businesses maintained strong momentum. Consumer electronics stand out, growing 56% in the last 12 months, thanks to the launch of new financing options.

In B2B, digital solutions were once again the main growth engine, driven by cloud and IoT. Adjusted EBITDA and operating cash flow after leases both grew 9%, boasted by solid revenue growth and continued improvements in OPEX.

Overall, Vivo delivered another strong set of results, showing growth across key financial KPIs. Moving on to slide five to discuss Germany.

Telefónica Deutschland's core business momentum showed resilience in a market with lower promotional activity. We have recently seen some positive price moves in the market, and since March, we have maintained or even increased prices across all promos, stopping O2 mobile promos at price point below €20.

This is consistent with our strategy to prioritize profitable growth, focus on value over volume, while maintaining a low churn level. This quality of our customer base is improving, with a growing number of customers with a second or third SIM card.

This strategy impacts ARPU, but supports loyalty and higher net adds. Fixed broadband accesses grew for the third consecutive quarter, with a better mix in the base, lower churn, and higher ARPU.

Notably, IoT accesses recorded another quarter of outstanding growth. Regarding financial results, the 1&1 customer migration continued to impact revenues, with the year-on-year peak of this effect in Q1.

Additionally, following a record fourth quarter last year, handsets declined in a weak German handset market. Nevertheless, MSR trends slightly improved quarter on quarter, and fixed revenue increased 4% year on year.

Adjusted EBITDA was likewise affected by the in-year peak of 1&1 impact. However, efficiencies and cost control led to an increase in the adjusted EBITDA margin year on year, showing the solid performance of the healthier part of our business.

To summarize, underlying performance remained resilient in Germany, with a high single-digit year-on-year growth in adjusted EBITDA excluding the 1&1 effect. We continue working to return to growth in 2027.

Let's move to slide six. Virgin Media O2 started 2026 making clear progress in line with its strategy.

During the quarter, we achieved several important milestones. O2 Satellite was launched, making us the first UK mobile network to switch on direct-to-device satellite connectivity.

At the same time, we continue to advance our mobile network transformation. We signed new strategic RAN upgrade agreements and completed the second tranche of a spectrum transfer from Vodafone UK.

As a result, O2 now has the largest 5G stand-alone footprint in the UK, reaching 86% of the population, 86% of the population. From a commercial perspective, we continue to show improvements in Q1.

In fixed, we reduced losses supported by commercial initiatives, while ARPU remains impacted by the high promotional intensity in the market. In mobile, contract churn decreased quarter on quarter, while ARPU remained broadly stable year on year.

In wholesale, we maintained our leading position in the MVNO market and continued to strengthen our wholesale fixed credentials. Regarding financials, both service revenue and adjusted EBITDA trends are on track with our 2026 guidance.

Service revenue decreased mainly driven by consumer revenue, too, due to prior-year customer losses and continued pressure on fixed ARPU. Business revenue declined, largely reflecting lower margin products.

This was partly offset by a strong performance in wholesale, supported by growth in MVNO revenue. Total revenues are also affected by reduced nexfibre build activity compared with the year before.

Adjusted EBITDA decreased mainly due to the evolution of service revenue. Finally, we continue to progress as expected with the Netomnia acquisition, which, together with our targeted network investment, further strengthens Virgin Media O2 foundation for 2026.

Now, I would like to hand it over to Juan, who will cover financial results with more detail.

Thank you, Emilio, and good morning to all. Moving to slide seven, we show how the strong underlying momentum that Emilio explained translates into tangible financial results, with growth both in constant and current FX terms for the second quarter in a row.

Our growth in current is supported by the strengthening and well-performing Brazilian real. Revenue reached €8.1 billion, growing 0.8% year on year in constant terms, underpinned by a 1.0% increase in service revenue.

B2B continues to be the growth driver, with an outstanding growth of 5.7%, alongside a consistent B2C increase of 1.5%. Adjusted EBITDA and adjusted operating cash flow after leases came in at €2.8 and €1.4 billion respectively, 1 .8% and 2.4% higher than a year ago.

As such, operating leverage in the business is the main driver behind the higher adjusted operating cash flow after leases margin, 0.3 percentage points more year on year. CAPEX to sales stood at 10.7%, declining by 0.2 percentage points year on year.

Current free cash flow is €333 million, affected by the usual seasonality. Net financial debt decreased to €25.3 billion, primarily due to the receipt of proceeds from Colombia and Chile this quarter.

After the sale of Chile in February 2026 and the agreement to sell Mexico in April '26, both companies are classified as discontinued operations in the first quarter. Slide eight shows free cash flow performance in the first quarter of the year.

Our performance remains solid and fully on track. We are committed to our free cash flow trajectory and our ability to meet our full-year free cash flow guidance of around €3 billion.

Consistent with prior years, our free cash flow generation of €333 million reflected the usual seasonality of the quarter, mainly due to working capital and its back-ended loaded profile. As such, we anticipate acceleration through the year.

With this behind us, we are delivering a constant execution towards a de-risked free cash flow, as operational efficiency drives us to our target over the year. As such, we are progressing in a stronger position due to, first, a more predictable free cash flow following the successful execution of the sale of six Hispam countries over the last 12 months, with a total firm value above €4 billion; second, a solid free cash flow thanks to the execution of our efficiency plan, with the workforce restructuring in Spain and global units already in place, among other initiatives; third, a growing free cash flow, with upgraded guidance for 2026 after exceeding it in 2025.

On slide nine, you can see that net financial debt has decreased by €1.5 billion in the first three months of the year, mainly due to the disposal of our subsidiaries in Colombia and Chile. Our net debt to EBITDAaL ratio has decreased to 2.72 times from the 2.78 times in December last year.

Deleveraging is on track towards our 2.5 target in 2028. Telefónica has demonstrated an excellent refinancing execution this year.

We have been active in the capital markets, raising €3 billion long-term financing at the group ahead of recent market volatility, while maintaining an ample liquidity position. Finally, the average cost of debt has been reduced year on year from 3.30% in March '25 to 2.81% in March 2026.

Turning to slide 10. In Telefónica, sustainability is a driver of competitiveness and resilience.

On the environmental side, we continue to enhance operational efficiency by decoupling traffic growth from energy consumption and supporting our customers in meeting their environmental goals. On the social front, we keep bridging the digital divide and promoting STEAM talent.

Moving to governance, we have a balanced and diverse board. We also uphold the highest standards of fiscal transparency.

Lastly, we are proud to report positions across prestigious markets. Now, I hand over to Emilio for the final remarks.

Thank you, Juan. To summarize, let me share with you some key takeaways.

Telefónica's performance in the first quarter of 2026 demonstrated consistent execution as we continue to deliver against our transform and grow plan. We reported a good set of results to start the year, with KPIs firmly on track to achieve our full-year 2026 guidance across all key metrics, including free cash flow.

We are building a company that is more focused, more efficient, and more profitable. Thank you very much for your time.

Now, we are ready to take your questions.

Good morning, everyone. I had two questions.

One was on the sustainability or outlook for Spanish growth through the year. Then secondly, just on Germany cost-cutting.

On Spain, remarks suggested you think that the growth delivered in the first quarter is at least sustainable. I'm also conscious that there's obviously some lumpiness in the wholesale revenue trends.

What is it that gives you the confidence that you can sustain or improve the Spanish growth through the year? Are you seeing improving markets?

Is competition going been better than expected as we ran into Q2? Just any help on that would be really useful.

Then just secondly, on Germany, cost-cutting, it looked like the cost-cutting accelerated in the first quarter. I wonder if you could just talk through that a little bit, that'd be helpful.

Thanks.

Andrew, thank you very much for your question. Regarding Telefónica España, first of all, I will say that we are very happy with the results of the first Q.

This result, I have to say that probably are slightly above our expectation. We are happy for that.

These results are based on fundamentals, in our commercial strategy, in our efficiency program, in our ecosystem, and our B2B revenues growth. For the next quarter, we are seeing similar trends.

I would say that for the rest of the year, we are seeing in H2 even better than H1. Then our result is that we can confirm our outlook, that is to grow above 2025.

Regarding Germany, I have to say that in Germany, we are a best-in-class company managing the efficiencies. We have launched several cost efficiency programs that results in an underlying EBITDA growing, and it is based in different elements of the company: everything around channels, cross-channel, everything around energy, everything about the operating model.

All the aspects are reviewing, and as a result of everything is a good performance in this kind of efficiency programs.

Thank you. Can I just follow up on the Spanish side of things?

Are you seeing any improvement in market dynamics? You've done the price rises this January.

Are they holding better than last year, or is it more company-specific efforts that's driving that improvement?

I would say that we feel more comfortable still than other years in our commercial trends. Again, the fundamentals that we are managing in Spain are key fundamentals.

Our segmented offer demonstrates that is the right approach in this market. The manage of the ecosystem really is performing very well, with a very strong position in everything around the consumer electronics, of the financial options, in the alarm market, that we have reached more than 600,000 clients at this moment.

Everything demonstrated that the main elements of the offer and of the main effects that we need that happen in the market is on the table. In the case of B2B, we are growing at the same level than that what we're doing the last years and demonstrated that Telefónica España is the best in terms of IT services in as a telco in Spain and I would say in Europe.

Thank you.

Good morning. Thank you for the presentation.

I had a question on Germany. We see that there's a step-down in the mobile ARPU trends in Q1, and I wanted to understand what was behind that and what we could expect for the rest of the year, and whether that reflects more competition or you see a similar competition.

Then coming back to the question from Andrew, you're saying that you didn't really comment, I think, or at least I didn't get that, about the competitive environment in Spain, and so if you could clarify if you think it has improved a bit since the beginning of the year or it's pretty stable. Thank you.

Thank you for your questions. About the ARPU in Germany, let me say first of all that the ARPU is the result of different effects.

One of these effects, for example, is the change in our strategy. We think that we are launching a more successful strategy in terms of two and third SIMs bundles.

This is an example of how to move from volume to value, and that have a impact in the ARPU in this case, but we think this is the right way. Anyway, I'm going to hand over to Santiago Argelich in order to give you more color about this.

Yes,

Mathieu. When looking at the ARPU, it is impacted by the success of family plans, which naturally result in a dilution of ARPU.

We have a higher share today on second and third SIMs, which consolidate our household and convergence strategy. The market overall has largely embraced the family plans.

The O2 ARPU performance is in line and even slightly better than the competitor's ARPU in this sense. What's more important is that our household ARPU is growing year on year.

Okay.

Andrew.

I guess the follow-up to that is we don't really see the net adds accelerating in Q1, I wonder how I can reconcile better SIM cards, which obviously has to be the case, with the fact that net adds are not really moving up.

The net adds results is, again, a mix of different strategies. One is the SIM card bundling, but other strategy is to move from volume to value, or even to reduce promotional activity.

Then the results in KPIs is an effect of this aspect, but at the end, we believe that this permit us to have a more profitable way to growth in Germany. Secondly, regarding, again, about Spain competitive environment, we don't see important change in front of us.

We are seeing a rational market in the high-value market, and our expectation that everything following the same in the same way. In the case of the low end, it's a more competitive market, but we think that we are not expecting a special change in this market, too.

Anyway, we think that our O2 strategy, our segmented strategy permit us to be very resilient at the most of the movements that can happen in the market. Remember, for example, that in the first quarter, we have increased the prices, but we have reached the lowest churn ever.

Thank you very much.

That's great. Thanks very much.

I wanted to ask firstly on expectations for Other EBITDA going forward. Other was the biggest absolute beat versus consensus in today's results at EBITDA.

If I go back a few years before Hispam was included in an Other, Other EBITDA used to be broadly flat to slightly negative. Obviously, Other now includes Hispam, but then you've sold most of those assets.

I was just wondering if you could help us with what we should be expecting for Other going forwards. Should we expect it to revert to the broadly flat EBITDA we had seen a few years ago, or has something structurally changed meaning that today's kind of circa 50 million positive a quarter result is sustainable going forwards?

Then secondly, I just wanted to ask a bit about why we're seeing such differences in mobile handset trends in different markets. In Germany, you've seen 15% handset decline, and you're citing launch cycles and availability of devices as well as lower demand.

Then in Spain, handset revenues are up 7%. Why have launch cycles impacted Germany but not Spain?

Thank you.

Carl. I will take the first one on Other.

As Other is a group of bits and pieces. In the last quarter, we included here the Hispam units, but as we have kept on selling and discontinued them, there's been quite a lot of movement.

Right now, the only Hispam assets here are Venezuela and the holding company and some other minor assets there. What we've seen this quarter is a positive performance from Telefónica Tech, offsetting the weakness of other global units.

By being more specific on that, as a result of the sales in Hispam, these are affecting, for instance, our procurement units, and those are the ones having a small negative. All in, we expect this to be rather stable during the year, but as we don't guide for this line.

Regarding the the handset revenues, I have to say that the the market has different situation. In in some markets, clearly in in Spain and Brazil, we have a range of consumer electronics that we are selling in the market wider than in in other countries, and permit us to be more resilient in the change that the market can have due to the the different facing of the launch or due to the some shortage in the supply supply chain.

In the case specifically of Germany, we we have a a less revenues handset revenues due to this less range of product that we sell. The results of the Q4, Q4 in in handset sales was very strong, and and then the comparison with Q1 is is worse for Q1.

Even in the case of Germany, we have reduced sales in in some specific channels due to the supply chains situation. Anyway, this kind of sales are at a very low margin sales.

That's great. Can I just ask a clarification.

On Other, when you said stable, does that mean zero, or does it mean the same as Q1 through the rest of the quarters of the year?

Stable versus what you've seen in this quarter.

That's great. Thank you.

Hi, guys. Thank you for taking the questions today.

Essentially a higher level question. There was a lot of discussion last year following the change in management around scale in the business across Telefónica Group.

Now, obviously, we've seen where there is lack of scale, perhaps in LatAm, we've seen the rapid divestment there. Apart from that, not really too much change.

I guess when I now look at Germany, there is a clearer strategy, there is an accelerated cost-cutting. Is Germany okay here, or does Germany need either more customer scale or perhaps less capital allocation?

Could you look to change that business at all, or are you very happy with where it is right now? If I might also ask the same question in Spain, you have a very strong position in the premium market, but I think how can I say this, it's sort of half a toe in the water in the lower end with O2.

Do you need more scale in the lower end of Spain? Do you have an ambition to have more scale in the lower end of Spain, or again, are you happy where you are?

The reason I ask the questions is there was a lot of talk from your chairman about scale, but so far, we haven't seen too much action. Thank you.

Let me say that we are happy, of course, with the scale that we have. We have developed a transform and grow plan based in the assets that we have.

We are pretty sure, and we feel comfortable, confident that we are able to reach our targets, our guidance in the plan with the scale and with the operations that we have. Of course, we have talked and we talked a lot during the last months about the opportunity to more scale related to create or to invest in technology in Europe and related to be more profitable.

Of course, scale in telco business is provide better profits, but we feel that with the decided operation that we have, we are able to compete in the markets in the right way in a profitable way.

Let me answer your second subdued question, which is asking about M&A, without mentioning M&A. We don't comment on specific transactions or rumors.

In this case, what I would say is our business plan is organically based. We have a plan to organically grow in Germany and Spain and grow scale organically.

That doesn't mean that we would not consider opportunities where it makes sense, as we have seen done, for instance, in the UK and Netomnia, and opportunities may happen in Germany, is that the case, or even in Spain. We will consider them as long as they fit on our M&A criteria, which was four markets, core business, clear and measurable synergies, and right terms.

I appreciate that. Thank you, guys.

Hi, morning. Chaps, hope you can hear me.

It was a couple of questions, please. The first on German ARPU to come back to Mathieu's question, please.

How much more can ARPU benefit from the removal of promotions and the price rises that you talked about towards the end of the quarter, and with the value strategy, is it sensible to assume that you're going to at least maintain ARPU at this level from here through the year, even with the family SIM cards added in? The second one was, funnily enough, coming back to David's point just there on M&A.

Is that you've seen the draft merger guidelines now. Is there anything in there that slows you down on this gaining of scale if you want to do it?

Is there anything that you object to, or where concern wasn't addressed, please? Thank you.

Nick. Thank you for the question.

For the first one, I'm going to hand over to Santiago. Just only to remember that ARPU is not the only KPI related to value.

Anyway, I'm going to hand over to Santiago to give you more color about that.

We are seeing an increasing mature market with lower commercial activity. The core business momentum in Germany remained resilient, and the customer postpaid mobile service revenue was sluggish, okay?

That creates an outlook in Germany of a potential stability, and that would create a base of a, let's say, positive outlook on the ARPU evolution in the next periods. The quality of the citizen customer base is steadily improving.

For us, we are constantly growing the number of customers with multi-SIM and converged contracts supported by customer loyalty and the overall mobile service revenue trends. We are looking to an ARPU that will be impacted by the success of family plans, which naturally result in higher share of second and third SIM cards in the base.

In a market that has largely embraced family plans, the O2 consumer ARPU performance is in line or even slightly better than the competitor's ARPU.

Related the second question about the mergers guidelines, I will say that from the point of view of theoretical analysis of the new guidelines, we think that this guidelines are more close to our vision. I think this guideline are opening the option to consider other reasons in order to evaluate the mergers and talking about investment and talking about the creating technology and so on.

Then again, from the theoretical point of view, we are happy with the evolution in the reasons that are behind these guidelines. Anyway, again, it's theoretical.

We have to see if really the change is a real change when we see a new operation that can be analyzed under this new umbrella.

Understood. Thanks very much.

Yes, thank you very much, indeed. Good morning.

Thanks for taking the questions. I had two questions, please.

The first one, if we can, let's just stick with Germany again for a moment. Maybe you can help us to be a bit more kind of specific on the numbers.

Because I think in Q1, mobile service revenues were down 8.5%. Obviously, that's very influenced by the 1&1 migration.

You don't disclose the underlying revenues excluding 1&1. Now, I estimate that might be around -2% year on year.

Really, I suppose first question is, do you think that's a fair estimate? It looks to me like that trend's been stable for the last few quarters.

As we go through the year, do we see service revenues kind of improve, but we're exiting the year at a kind of -2% run rate? I'd just love to kind of hear a bit more about where you see the underlying overall revenue growth and how that might develop through the year.

Then secondly, it's widely reported that you are leading a consortium to bid for one of the AI gigafactories, and in particular, the kind of Spanish government-backed project in Spain. If you were to win that contract, could you kind of give us an order of magnitude of how much capital you think Telefónica might have to deploy into this AI gigafactory project?

Can you then talk us through how you'd expect to make a return on that capital as well and what kind of IRR you think is feasible? Thank you.

Thank you for your questions. It's right we don't disclose the underlying revenues, but we can say that we are really stable as other quarters.

We don't see critical change in this evolution. The total service revenues of this quarter is very impacted, as I mentioned during the conference call, due to the 1&1 effect peak.

Then answering without figures because we don't give the figures, answering you again, we see the underlying being very resilient in revenues and very positive even in EBITDA. This is the first.

Regarding the second question, just clarify, we are at the beginning of the process. I'm going to hand over now to Borja Ochoa to explain a little bit more the process.

Anyway, the investment that Telefónica can do here is always limited. Of course, in the parameters that we consider that are value accretive for the group.

I'm going to hand over to Borja in order to give you more color.

Yeah. Thank you, James.

Exactly. We are participating in the process of building a gigafactory network all around Europe.

We are leading the Spanish consortium, and right now, we are concentrated in all the works behind the preparation of the final offer. In terms of timeframe, the offer has to be presented between June and July, and we are expecting outcome by the end of the year.

We cannot give any further information apart from that.

Okay. It sounds like the kind of potential capital size would be limited, i.e., only a few hundred million euros, or is that even too much?

Let me take that one. Leaving from an operational level, but as Borja said, from an investment level, we're talking about a minority.

When I talk minority, I'm talking about between 10 and 15% or something around that. It's below.

It's definitely below the amount you're saying, because you have to remember that around two-thirds of that, if not more, is financed via debt, the rest is equity, and it's a consortium with the state, and we're only taking an amount of that size. Therefore, the amount is way lower than the figures you put, and the returns that you've mentioned will be consistent with returns in the infra-digital world.

That's clear. Thank you very much.

Hi, guys, and thank you for taking the question. There were reports in the press earlier in the year around potential German consolidation and some suggestion that from a Telefónica perspective, 1&1's network quality might be an issue in any future negotiations.

I'm not expecting you to comment on that specifically, but could you maybe give us a high-level view of how you think about the value in any potential consolidation deals, be that Germany, Spain, UK, and then perhaps more specifically, how you view the importance of the network quality of competitors? The reason I'm asking is I think a lot of people view consolidation upside as really a debate around market repair, potential cost synergies, rather than network complementarity.

I'd love to hear a view on that. Thanks very much.

Let me start answering you about the network, and I'm going to hand over to Juan to talk about the M&A options. We are very happy with the evolution of the network in Germany.

We have reached a second position in terms quality in the market, and this perhaps or not can be important in any potential merger in the future or not, but it's sure that is critical in the performing of Telefónica Germany in the next coming years. Then I think this is not the key reason for the quality to develop a very high quality network.

It's not mergers or acquisitions. It's the quality of services.

Now, I hand over to Juan in order to give you more color about the M&A process.

Joshua, not sure how much color I'm going to give you because in real terms, as I've said, we will pursue transactions that are value accretive and, therefore, that have clear, measurable synergies, and that's quite plain vanilla in telco. That's mostly cost and network.

That's what you can quantify. Yes, there's always revenue synergies, but then those you have to believe in them.

It's cost and network synergies, and this changes between market to market, different deals, and different structures, no? Netomnia, there is some revenue synergies, but it's mostly a CAPEX synergy, no, of us having access in fiber.

That can be different depending on the transaction.

Great. Thank you.

Hello. Good morning, and thanks for taking my two questions.

The first one is in Spain, and I would like to zoom a little bit more in the wholesale revenue line performance. After falling mid single digit last year in year-to-year basis, we have seen a material deceleration on that fall pace, and I would like to understand what has been the driver and what should we expect for coming quarters from wholesale in Spain.

The second question is coming back to Germany, but now on an organic point of view. One of the key messages that you have shared in your capital markets day was your push for convergence in Germany.

I would like to understand which kind of steps are you pursuing on that front. Thank you.

Fernando, thank you for your question. In the case of the wholesale revenues in Spain, you have to know that the line is wholesale and others.

In this case, there are some non-linear effects that improve this line. We are seeing the impact of the wholesale new agreements for the next quarter, and probably sure the peak of this effect will be in the second quarter of the year.

Again, the first quarter is impacted by some non-linear impacts and some comparison with the last year. Anyway, the evolution of the wholesale is a absolutely expected evolution.

It was included in our expectation, and then it's included in the outlook that we are giving to you that we are expecting to improve H2 compared with H1. Related to German question, we said, and this is our strategy, to develop the convergence in Germany.

We are working hard in order to develop our fixed business, that is the part of the convergence that we have to do more effort. In this case, we can't explain so much about the negotiations that we have, but we are working in order to have a better access to the infra networks of our providers in this case and in Germany.

If you allow me to complement, This is Santiago. Just to complement the answer from Emilio, we are working on realigning our offer portfolio to increase our attractiveness in multi-lines at the household level.

You have seen the accelerated traction in the fixed in Q1, which will also help us to combine better mobile and fixed. Additionally, we're planning to sell and combine digital services for the home, be TV or other services that we already commercialize in other markets.

Thank you.

Operator, time for one last question.

Hello. Thank you for taking my questions.

In Spain, a couple, please. In Spain, just to confirm, Emilio, when referring to improving momentum in H2, were you referring mainly to top-line trends rather than EBITDA?

Also, linked to this, how much of the restructuring savings were already captured in Q1, and how much remains to come through over the rest of the year? Second question on guidance.

Q1 performance was already within the guidance range. However, Germany appears to have bottomed out, Brazil remains quite strong, and you also mentioned this, that restructuring savings should also have a greater impact through the year, no?

My question is, am I missing any relevant headwinds for the remaining of the year, or is just simply conservative guidance? Thank you.

Fernando, thank you for your question. Regarding the first question about the redundancy program in Spain, it's true that the impact in the Q1 is limited because we started the last month of the quarter.

It's around €20 million, €20 million, and around €250 million during the whole year. EBITDA that we are seeing for the H2, the same improvement that I mentioned for the rest of the financial KPIs is a result of several impacts.

Redundancy program is one, the prices increase is other, the cost increase is other, the salary increase is other, the wholesale agreements is other, the ecosystem is other, the B2B develop is other. The results of everything is that we are seeing a better H2 compared with H1 in the financial metrics.

In the case of Germany, The guidance. Yes.

In the case of Germany, we are seeing better results in the H2 compared with H1. This is our expectation for Germany for the rest of the year.

Regarding the guidance of the group, we are pretty confident to reach our targets. The headwinds and the tailwind are based on the improvement in Germany, improvement in Spain, and the solid performance in Brazil.

Okay. Thank you, Emilio.

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, we kindly ask you to contact our Investor Relations department.

Good morning, and thank you. Thank you for joining today's conference call.

You may now disconnect. Everyone, have a great day.