Brazil becomes Telefónica's largest market by revenue, with year-on-year growth rates of +3% in local currency, while profitability improves in Spain for the second consecutive quarter.

The Executive Chairman of the company, César Alierta, highlighted the advances achieved in the transformation process of Telefónica, which translate into a progressive business stabilisation and a greater degree of diversification, while at the same time maintaining a constant improvement in the financial position. The evolution of the first quarter, in line with internal estimates, makes it possible to reiterate the operating and financial targets set for 2013.

Telefónica maintains a high level of profitability as a result of the transformation strategy of the Group, the improvements in efficiency, the benefits of scale and the sustained containment of costs. Thus, for the second consecutive quarter and, in organic terms, the OIBDA remained stable and the OIBDA margin grew (+0.5 percentage points), to 32.3%.

At the end of March, revenue stood at 14,141 million euros, the OIBDA reached 4,567 million euros and the operating result was 2,066 million euros. In reported terms, the year-on-year performance of these items was strongly impacted, among others, by exchange rates, especially the devaluation in Venezuela, and the deconsolidation of Atento. Not counting those impacts, i.e. in organic terms, their evolution compared to the first quarter of 2012 was -1.6%, -0.1% and -2.9%, respectively.

Telefónica Digital plays a fundamental role in driving sustainable, differential growth in revenue. Thus, between January and March, it made significant advances in the creation of innovative solutions that will be translated into new businesses for the Company: the initiatives around Firefox OS devices (which will go on sale in the third quarter of the year), the launch of an integral M2M platform or the advances in comprehensive eHealth services in Brazil, among others, are clear examples of this.

In Spain, as a result of the progress in the transformation of the Company and the focus on efficiency, year-on-year OIBDA margin grew for the second consecutive quarter. Movistar Fusión’s convergent offer consolidates its position as a commercial lever in the country, it maintains a strong commercial momentum in the quarter, with 47%, of gross adds incorporating new services, and reached 1.7 million customers at the end of March. In addition, this offer is generating stabilisation in the evolution of revenues (excluding the sale of handsets).

In operating terms, at the end of March the Telefónica Group had a customer base of almost 316 million accesses (+2%), over 78% of whom are mobile customers. There was acceleration in the growth of the contract mobile accesses to +8% in the quarter, with year-on-year increases reaching +13% in Latin America, where Telefónica consolidates its position as the leader in this segment. Smartphones accounted for 20% of the total mobile access base (+6% pp year on year).

In the first quarter of 2013, Telefónica's net financial debt was negatively impacted by exceptional effects, specifically the devaluation of the Venezuelan bolivar (€873M) and the payments for spectrum auctions (€701M) as well as the recurrent first quarter´s seasonal effect. Nonetheless, the Company continued to undertake proactive management of its portfolio of assets with the aim of accelerating its deleveraging process. Thus, Telefónica's net debt would stand at 51,156 million euros, having been reduced by 653 million euros after the close of the quarter.

Since January, Telefónica has executed funding operations to a total value of around 7 billion euros, which makes it possible to achieve a debt maturity profile which is covered beyond 2014.

Telefónica invested 1,941 million euros in the first quarter of the year, including the acquisition of spectrum in the United Kingdom and Uruguay. 82% of the total investment was in growth areas, specifically 3G, 4G and fibre networks.Telefónica ended the first quarter of 2013 with a 20.6% growth in net profit to 902 million euros, while basic net profit per share increased by 22.2% to 0.20 euros per share. In the presentation of the figures of the Company corresponding to the period January-March, the Executive Chairman of Telefónica, César Alierta, highlighted the advances made in the execution of the Company’s transformation process, already producing visible results which translate into "a progressive stabilisation of the business and a greater degree of diversification, together with the constant improvement in the financial position.”In the first quarter of the year, the results continued to put in value the growing diversification of the Group. In fact, for the second consecutive quarter, Latin America generated over 50% of the consolidated revenue (which totalled 14,141 million euros) and for the first time Brazil became Telefónica's biggest market in revenue generation. Equally, the results also reflect the benefits of the scale and scope of the Company and the new commercial model based on quality and differential offers in each one of the markets. All of this, together with the considerable effort to simplify and save costs, enables Telefónica to maintain a high level of profitability, with stability of the OIBDA in organic terms (4,567 million euros, -0.1%) and year-on-year growth of the OIBDA margin (+0.5 percentage points) and the operating cash flow (OIBDA-CapEx), which increased by almost double digits year on year. At the same time, Telefónica continues to advance in the launch of new businesses through Telefónica Digital and the projects led by Telefónica Global Resources keep improving operating and commercial processes globally.With all of this, the results of the first quarter, in line with the company's estimates, make it possible to reiterate the operating and financial targets set for 2013.Growth in mobile customers with contracts accelerates by up to +8%Telefónica managed 315.7 million accesses at the end of March, up 2% year-on-year driven by sustained growth in mobile contract, especially in smartphones. Mobile accesses stood at 247.3 million at the end of the quarter (+3% year-on-year), with the contract segment continuing to drive the Company's commercial activity. Contract customers year-on-year growth accelerated by one percentage point from December 2012 to 8% year-on-year, already accounting for 33% of total mobile accesses (+2 percentage points year-on-year). Quarterly contract net additions totalled 1.4 million (excluding the disconnection of 114 thousand contract mobile accesses in the Czech Republic).Mobile broadband accesses -accesses with a data tariff attached- posted a solid 34% year-on-year growth to surpass 55 million at the end of March 2013 and accounted for 22% of mobile accesses (+5 percentage points year-on-year). One quarter more, it is worth highlighting the strong commercial momentum of smartphones, with net additions of 2.6 million, reaching a penetration rate of 20% of mobile accesses (+6 percentage points year-on-year).By region, Telefónica Latinoamérica (67% of the total accesses) consolidated as the main contributor to access growth, increasing 3% year-on-year (despite the application of more restrictive accounting criteria for prepay customers), and continued to reinforce its regional leadership in contract customers (+13% year-on-year to 40.7 million), reflecting the better quality of our customer base in the region. Net contract additions in the quarter stood at 1.3 million accesses, 1.5 times more than in the same period of 2012, strengthening the growth in high-value customers.Telefónica SA