About Telefónica

Telefónica, S.A. (Telefónica) operates as a telecommunications service provider with its footprint in some markets in Europe and Latin America. The company primarily offers its customers the connectivity they need to interact and live in the markets where it operates through simple products and services while protecting their data and managing it in a responsible way. Telefónica is a telecommunications service provider with its footprint in some markets in Europe and Latin America. The company primarily offers its customers the connectivity they need to interact and live in the markets where it operates through simple products and services while protecting their data and managing it in a responsible way. The company is a diversified telecommunications group which provides a comprehensive range of services through one of the world's largest and most modern telecommunications networks; are focused on providing telecommunications services; and operate principally in Europe and Latin America. Fixed Networks The company owns fixed networks in Spain, Latin America and Europe, having an incumbent role in Spain, Argentina (the greater Buenos Aires metropolitan area and the southern portion of the country), Brazil (São Paulo), Chile, Peru and Colombia. The company has upgraded its networks in recent years through the following: progressive deprioritization of broadband technologies over copper wires (ADSL, ADSL2+, VDSL2, etc.) in recent years, in order to focus efforts on the deployment of fiber networks and to facilitate DSLAM and copper switch-off programs; deployment of fiber access technologies (xPON) focused on fiber to the home (FTTH) deployment, currently delivering customer access speeds of up to 1 Gbps; service support based on powerful Internet Protocol/ Multiprotocol Label Switching (IP/MPLS) backbones, providing full connectivity to the rest of the network layers, such as access and control, to support services for business and customer market segments (fixed and mobile); migration of the legacy time division multiplexing (TDM) switching networks (PSTN and ISDN) to new generation network (NGN) over all-IP packet networks; migration from legacy transport technologies, such as asynchronous transfer mode (ATM), frame relay (FR), low-rate leased lines, plesiochronous digital hierarchy (PDH) and synchronous digital hierarchy (SDH), to the new generation of optical transport ones, such as dense wavelength division multiplexing (DWDM), coarse wavelength division multiplexing (CWDM) and new generation-synchronous digital hierarchy (NG-SDH); introduction of IMS (Internet Multimedia Subsystem) to simplify the control of the network and ease the deployment of new services over the all-IP converged network; empowerment of the intelligence of the network to better manage its use, to avoid saturations and frauds and to identify new business opportunities; convergence of fixed and mobile networks, services and support systems from both technological and operational points of view; and deployment of services such as Pay TV, to customers connected through broadband accesses in Spain, Chile, Argentina, Brazil, Peru and Colombia. Mobile Networks The company operates mobile networks in Spain, the United Kingdom (through VMO2), Germany, Brazil, Argentina, Venezuela, Chile, Peru, Colombia, Mexico, Ecuador and Uruguay. Telefónica also provided these services in Guatemala (until January 24, 2019), Nicaragua (until May 16, 2019), Panama (until August 29, 2019), Costa Rica (until August 9, 2021) and El Salvador (until January 13, 2022). In addition, Telefónica entered in 2019 into an agreement with AT&T to access AT&T's last mile wireless capacity in Mexico. Through this agreement, Telefónica gains access to capacity on AT&T's 3G and 4G access network and any future access network technologies nationwide, while maintaining its transport network and all of its platforms in such country. The migration of the traffic to the AT&T access network was completed during 2022. The company uses a number of mobile technologies in the countries in which it operates, namely: GSM, UMTS, LTE and 5G. 5G is being used in Spain, the United Kingdom, Germany, Brazil, Chile, Mexico and Uruguay. The company continues the work of upgrading its mobile networks in line with market trends, the demand of new services from customers and the evolution of technologies. The main steps the company is taking include: evolution of broadband in mobile access using the latest LTE standards (LTE-A, MIMO and carrier aggregation) to improve network capacity and user experience; deployment of 5G networks following different approaches in order to give the company's customers the best experience for this new access technology. Together with the main vendors and sharing experience with other operators, the company is exploring the opportunities that the new 5G standards can offer by providing higher capacity at a lower relative cost by user/traffic unit; deployment of new services, such as mobile television (OTT) and distribution services for next generation music, video and games; and convergence of fixed and mobile networks, services and support systems from both technological and operational points of view. Satellite Communications The services provided using satellite platforms include television contribution signal to feed cable and IPTV head ends, DTH television, VSAT mainly for mobile telephony and Internet access in rural areas, emergency solutions, corporate communications and international communications. Submarine Cables The company is one of the world's largest submarine cable infrastructure companies, through its subsidiary, Telxius Telecom, S.A. (Telxius). Telxius is a leading global connectivity provider that combines submarine and terrestrial networks with digital hubs worldwide. Its extensive ecosystem includes eight next-generation fiber optic submarine cables and terrestrial backhauls together spanning more than 100,000 kilometers, plus almost 100 points of presence (PoPs) in 17 countries and 25 landing stations and communications hubs. As of December 31, 2023, Telefónica held a 70% beneficial interest in Telxius following the completion of the transaction with Taurus Bidco S.à r.l. In addition, Telefónica owns around 20 submarine domestic cables in Spain. There are submarine cable connections linking Europe, the Americas and Africa which are jointly owned by the company and other telecom operators. The SAm-1 cable, fully owned by Telxius, has a length of approximately 25,000 kilometers and links different countries such as the United States, Puerto Rico, Ecuador, Guatemala, Peru, Chile, Brazil, Argentina and Colombia. Next-generation submarine cable systems are already in service to help meet the capacity demand in the future. The Brusa cable links Brazil and the United States, while the Marea and Dunant cables links the United States and Europe. Additionally, the 7,300 km Mistral cable serves the entire Pacific coast of South America with the highest levels of service, reliability and security. The 2,000 km next generation Tannat system (Santos-Las Toninas) adds to the Brusa (Virginia Beach - Rio de Janeiro) and Junior (Rio de Janeiro - Santos) cables on the Atlantic coast of Latin America to deliver modern and diverse end-to-end connectivity between the United States, Brazil and Argentina. Services and Products Connectivity is the company's ally in reducing the digital divide and, due to its fixed and mobile network infrastructure and the services it develops around it, it can aid progress in the communities in which the company operates. At Telefónica, the company works on three basic fronts: Providing access to technology through digital inclusion, in other words, by means of network roll-out and an accessible and affordable offer for all sectors of the population. Developing innovative services that add value to the company's connectivity and which it develops through innovation: Big Data, the Internet of Things (IoT), eHealth, digital education and eFinances. Incorporating sustainability principles across all of the company's product development processes. Mobile Business Telefónica offers a wide variety of mobile and related services and products to personal and business customers. Although they vary from country to country, Telefónica's principal services and products are as follows: Mobile Voice Services: One of the main Telefónica's services in all of its markets is mobile voice telephony. Value Added Services: Customers in most of the markets have access to a range of enhanced mobile calling features, including voice mail, call on hold, call waiting, call forwarding and three-way calling. Mobile Data and Internet Services: Current data services offered include Short Messaging Services, or SMS, and Multimedia Messaging Services, or MMS, which allow customers to send messages with images, photographs, sound recordings and video recordings. Customers may also receive selected information, such as news, sports scores and stock quotes. Telefónica also provides mobile broadband connectivity and Internet access. Through mobile Internet access, customers are able to send and receive e-mail, browse the Internet and access real-time available entertainment services (such as video and audio streaming), download games, purchase goods and services in m-commerce transactions and use Telefónica's other data and software services. Wholesale Services: Telefónica has signed network usage agreements with several MVNOs in different countries. Corporate Services: Telefónica provides business solutions, including mobile infrastructure in offices, private networking and portals for corporate customers that provide flexible online billing. Roaming: Roaming agreements allow Telefónica customers to use their mobile handsets when they are outside their service territories, including on an international basis. Fixed Wireless: Telefónica provides fixed voice telephony services through mobile networks in Brazil, Venezuela, Argentina, Peru, Mexico and Ecuador. Trunking and Paging: Telefónica provides digital mobile services for closed user groups of clients and paging services in Spain and most of the regions in which it operates in Latin America. Fixed-Line Telephony Business The principal services Telefónica offers in its fixed businesses in Europe and Latin America are: Traditional Fixed Telecommunication Services: Telefónica's traditional fixed telecommunication services include PSTN lines; ISDN accesses; public telephone services; local, domestic and international long-distance and fixed-to-mobile communications services; corporate communications services; supplementary value added services (including call waiting, call forwarding, voice and text messaging, advanced voicemail services and conference-call facilities); video telephony; business oriented value-added services; intelligent network services; leasing and sale of handset equipment; and telephony information services. Internet and Broadband Multimedia Services: The principal Internet and broadband multimedia services include Internet provider service; portal and network services; retail and wholesale broadband access through ADSL, narrowband switched access and other technologies. Telefónica also offers high-speed Internet services through fiber to the home (FTTH) in certain markets (primarily Spain, Brazil, Chile and through VMO2- the United Kingdom) and VDSL-based services (primarily Spain and Germany). Telefónica also offers VoIP services in some markets. Data and Business-Solutions Services: The data and business-solutions services principally include leased lines; virtual private network, or VPN, services; fiber optics services; the provision of hosting and application, including web hosting, managed hosting, content delivery and application, and security services; outsourcing and consultancy services, including network management, or CGP; and desktop services and system integration and professional services. Wholesale Services for Telecommunication Operators: The wholesale services for telecommunication operators principally include domestic interconnection services; international wholesale services; leased lines for other operators; and local loop leasing under the unbundled local loop regulation framework. It also includes bit stream services, wholesale line rental accesses and leased ducts for other operators' fiber deployment and other agreements to provide wholesale access to the company's fixed infrastructure. Digital Services The main digital services offered by Telefónica are: Video/TV Services: Interactive TV services in High Definition (HD) or Ultra High Definition (UHD), using several technologies (IPTV, DTH, CATV and OTT) on various types of networks (Fiber, Satellite, Cable or Mobile Networks). These services can be provided through a variety of devices (TV with STBs, SmartTVs, PCs, Smartphones, Tablets, and streamers, etc.), allowing also the Multiroom function (customers can watch different TV channels in different rooms or different devices simultaneously). The service allows the access to lineal TV content with advanced functions, such as Restart TV (which allows a viewer to watch any content from the beginning), Last 7 days (recordings of content for the last seven days), cPvR (recordings using cloud computing) and Download to Play (downloading the content on the device). Customers also have access to the content on demand catalog (Video on Demand or VoD), in Subscription Video on Demand (SVoD), Transactional Video on Demand (TVoD) or Pay per View options, as well as access to content of third parties, such as Netflix, Amazon, Disney+, YouTube and HBO, among others. In addition, Telefónica offers accessible content in several different languages (original or translated to Spanish or Portuguese) with subtitles or not, audio descriptions and sign language functionalities through the Movistar+ 5s service, which aims to contribute toward the inclusion of disabled people across the country. IoT (Internet of Things): Telefónica's Global IoT portfolio includes: Smart Connectivity: connectivity services for machines, mainly handled through the Kite platform. Smart Services: End-to-end solutions that include device + connectivity + application. These business to business solutions are mainly aimed at the mobility management of vehicles, assets and/or people, the support of the retail and industrial sectors and the efficient management of energy consumption in buildings. Consumer IoT: Products focused on the B2C segment, including end-to-end services around the person (e.g., connected cars, trackers). Financial Services and Other Payment Services: These services provide customers with access to consumer credit and payment facilities in the check out process. Security Services: Digital acceleration is a process that creates multiple opportunities but also increases challenges for the security ecosystem of the business. Therefore, in a world where cyber threats are inevitable, as managed security services providers, it focus on prevention, detection, and appropriate response to reduce attacks, protect digital services, and thus promote the cyber security resilience of the company's clients' businesses. All of this is supported by a team of multidisciplinary security professionals and a portfolio that includes the following services: network security, managed security, data protection, Cloud security, IoT/OT security, identity and access management and professional services. Cloud Services: Telefónica offers a wide range of Cloud solutions, mostly through Telefónica Tech, designed according to the needs of each client accelerating their journey to the Cloud. The value proposition includes Secure Cloud Connectivity: services that increase the performance and security of the business connectivity (SD-WAN, SD-BRANCH, SDLAN - Cloud Wifi, SASE); Hybrid Cloud: improves IT workloads, data and, applications management (from on-premises data centers to VDC, public cloud or hybrid solutions); Future of Workplace: secure digitization of the workforce (productivity, unified comms, business apps, virtualization, terminal management); and consultancy, professional services and managed services. Advertising: A portfolio of marketing channels that third-party brands can use to acquire and engage with customers. Traditional channels, such as SMS/MMS messaging may be used alongside with new channels like programmatic display and sponsored connectivity. All of which leverage on the Group's customer data in order to send messages to the correct target as well as to generate post-campaign brand analysis. Big Data: Includes products and services designed to enable companies and governments to make AI-powered data-driven decisions. The Group's Big Data offer comprises three main categories: business insights, which provides information for decision-making based on analysis from advanced analytical products developed on top of data generated in the Group's network and systems; consulting and analytics, which includes specialist professional services focused on data strategy, data science, data architecture and data engineering; and tools and infrastructure, which provides advanced technology for data management, storage and exploitation. Customer Digital Products: Refers to the omnichannel digital experience, guiding the Telefónica customer through life cycle, adapting the digital experience to every moment's needs, with three main pillars: Digitalize Telefónica customers, turning its digital channels into the main point of contact for Telefónica clients with Telefonica in all of the company's main markets. Maximize customer engagement with the digital channel by aiming to provide an outstanding customer experience in order to increase customer lifetime value. Provide tools so that Telefónica's operating subsidiaries can create autonomously personalized digital experiences in a fast (time-to-market), reliable and scalable way. Aura: Aura is an Artificial Intelligence (AI) ecosystem designed to improve communication between the Telefónica Group and its customers. Its aim is to address customer needs and provide them with relevant information related to the company, potentially in any area where Telefonica offers services, such as answering questions about telecommunications services, offering financial service proposals, or making recommendations about television or connection offerings. To foster a relationship with customers, Aura offers the creation of conversational bots and other interfaces that use natural language capabilities, using its own infrastructure, with a private and transparent data approach by design. Additionally, to generate useful information, Aura provides its own AI model execution platform with the goal of enhancing the information provided to customers. Movistar Home: Telefónica launched Movistar Home in Spain on October 18, 2018, a new device designed around the functionality of Aura and targeted at the company's Movistar and Pay TV customers. Movistar Home is designed to strengthen Telefónica's position by enabling highly-converged services and experiences that differentiate the Group from its competitors. Movistar Home aims to provide the Group's customers with an enhanced TV experience on IPTV, increased landline functionality (which enables videoconferences), the Group's smart home package and games in addition to third-party services. Open Gateway: GSMA-led initiative in the telco sector that aims to transform communications networks into programmable digital platforms by providing the same APIs for all operators. APIs are deployed under the framework of the CAMARA standard (for service delivery) and TM Forum (for operation, administration and management). APIs can be commercialized through channel partners that bring access to developers, including hyperscalers, aggregators and integrators. Living Apps: A platform that allows Telefónica's business units and partners to create relevant home experiences for the company's users, beyond the consumption of TV content, adding value to core businesses and growth to Telefónica, opening new business opportunities. Smart Wi-Fi: An advanced home connectivity platform and key lever in the premium connectivity strategy, that enables key capabilities like intelligent Wi-Fi connectivity management or web browsing protection (Conexión Segura). NT: A micro-rewards program in Spain to reward customers with Tokens for their digital behavior. Tokens are awarded when customers make use of the company's digital channels, products and services and can be exchanged for a given catalog of company products. Solar 360: In March 2022 Repsol and Telefónica Spain created a joint venture to develop the solar self-consumption business. The new company started to operate in June 2022 launching Solar360, offering a comprehensive self-consumption solution to private customers, communities of neighbors and companies, SMEs, and large companies, through solar panel installation. The offer will be customized for each type of customer according to their level and habits of consumption, seeking to maximize savings on their current electricity bill. It will include a mobile application for the control of the installation and the continuous optimization of energy expenditure, personalized financing for each type of consumer and other value-added services linked to the solar panel installation. Phoenix: A digital sales platform that allows customers to receive personalized offers to renew their devices and process purchases in a simple and fully digital checkout. When customers are eligible to renew their devices or expand their devices ecosystem with Telefónica, a customized offer is sent to them via the usual communication channels (SMS, MMS, emailing, Novum/Digital experience app). Once the customer chooses among the selected proposed portfolio a number of payment and logistics options can be chosen to complete a convenient few-clicks device renewal. Strategy The key elements of the company's strategy include making its world more human, by connecting lives in a sustainable way as it continues to leverage opportunities in its markets and deliver towards its strategy focused on value creation; offering good connectivity, for which its infrastructure management and its continuous investment in network and platforms are key; and focusing on customers' needs, making their life and digital experience easier through customized offers. Telefónica provides a wide range of services over connectivity through a fixed and mobile bundled offer which includes video and digital services. The company offers its customers additional data in order to amplify services through unique, simple and clear offers. Sales and Marketing The company's sales and marketing strategy is aimed toward reinforcing its market position, generating brand awareness, promoting customer growth and achieving customer satisfaction. The company uses a variety of marketing initiatives and programs, including those that focus on customer value, with in-depth market segmentation; programs to promote customer loyalty; pricing initiatives aimed toward stimulating usage, including segmented packages and innovative tariff options; and initiatives that are responsive to the latest market trends, including those aimed toward boosting demand for its fixed and mobile Internet and mobile broadband offerings. In connection with these and the company's other sales and marketing initiatives, it markets its products through a broad range of channels, including television, radio, billboards, telemarketing, direct mail and Internet advertising. The company also sponsors a variety of local cultural and sporting events in order to enhance its brand recognition. Research and Development The total research and development (R&D) expense in the company for 2023 amounted to 741 million euros. Competition In Europe, the company's largest competitors include Vodafone, Orange, Deutsche Telekom and British Telecom, among others. In Latin America, the company's main regional competitor is America Móvil, along with other smaller multi-country players (such as Entel, Milicom and WOM) and purely local players. Newer competitors, including handset manufacturers, MVNOs, Internet companies and software providers, are also entering the market and offering integrated communications services. History Telefónica, S.A. was founded in 1924, The company was incorporated in 1924 under the laws of the Kingdom of Spain.