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Telefonica Moviles Posts Record Net Income of EUR 1.919 Bln in 2005; Company Closes a Year of Consolidation and Integration of the Bellsouth Operators with Strong Growth in All the Lines of Its Income Statement.

MADRID, Spain -- Telefonica Moviles (TEM)(MAD:TEM):

--Telefonica Moviles consolidates its position as one of the world leaders of the mobile phone industry.

--Managed customers totalled more than 94.4 million, with net adds of over 5.4 million in 4Q05 and 16.3 million in the year.

--Revenues continue to grow above 40%

--Consolidated revenues rose 40.5% to over EUR 16.514 billion, with an increase of 40.4% in service revenues.

--OIBDA showed strong growth of 45% in the fourth quarter.

--Consolidated OIBDA reached EUR 5.817 billion in the year, an increase of 26.8%.

--Net income grew 13.4% to EUR 1.919 billion, highest in the company's history.

--Excluding the impact of the write-down of the remaining value of IPSE 2000's UMTS license (EUR 89 million in net terms), net income would have surpassed

EUR 2 billion, for an increase of 18.7%.

--Board of Directors will propose to the Annual Shareholders' Meeting an increase of 6.2% in the gross dividend.

--The gross dividend to be charged against 2005 earnings and reserves is EUR 0.205 per share, for a total payout of EUR 888 MM.

--Increase of 19% in Consolidated Operating Cash Flow.

--Consolidated operating cash flow of EUR 3.532 billion, despite increased capex in 2005.

--Telefonica Moviles Espana delivered a solid set of results.

--Net adds reached close to 1MM, with a 20% rise in traffic (+30% between its own customers) and service revenues increasing 7%. OIBDA grew 4.4% in 4Q05 and the OIBDA margin reached 46.7%.

--Latin American operators integrated the BellSouth companies ahead of schedule and obtain higher than expected synergies.

--The Latin American operators contributed 47% to Group revenues (30% in 2004) and reported OIBDA of EUR 554MM in 4Q05 and EUR 1.755 billion in the full year. They also contributed positive operating cash flow of EUR 198MM (vs. -EUR 435MM in 2004).

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This document contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company. The forward-looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions.

Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ materially from those expressed in our forward looking statements.

Analysts and investors are cautioned not to place undue reliance on those forward looking statements which speak only as of the date of this presentation. Telefonica undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefonica Moviles's business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report as well as periodic filings filed with the relevant Securities Markets Regulators, and in particular with the Spanish Market Regulator.

The financial information contained in this document has been prepared under International Financial Reporting Standards (IFRS). This financial information is unaudited and, therefore, is subject to potential future modifications. 2004 financial results were originally prepared under Spanish GAAP and have been translated into IFRS for comparison purposes only.

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Highlights regarding comparative information and changes in the consolidated Group:

--On 23 July 2004, the company acquired 100% of Telefonica Movil Chile.

--Following the voluntary tender offers for Tele Sudeste Celular (TSD), Tele Leste Celular (TBE), Celular CRT (CRT) and Tele Centro Oeste (TCO) carried out by Brasilcel, directly and indirectly through its subsidiary Telesp Celular Participacoes (TCP) and made effective in October 2004, Brasilcel's stakes in the mentioned companies' share capital have increased.

--The capital increase carried out by Telesp Celular Participacoes (TCP) in January 2005 was fully subscribed for an amount of approximately 2,054MM reais. The stake held by Brasilcel in TCP stands at 66.1%.

--In July 2005, Brasilcel capitalized the tax credits used by TCO, CRT, Telesudeste and Teleleste resulting from the tax utilization of the goodwill in those companies. This capitalization did not entail any cash outflow for Brasilcel, but it has caused an increase in Brasilcel's shareholdings in those companies. Brasilcel's stakes in the companies' share capital have increased to: 91.0% in TSD, 50.7% in TBE, 66.4% in CRT and 34.7% in TCO.

--Following the acquisition of 100% of the BellSouth Group's stake in the mobile operators in Colombia, Ecuador, Guatemala, Nicaragua, Peru, Uruguay and Venezuela, these companies have been integrated within the Telefonica Moviles' consolidation perimeter since November 2004 through the full consolidation method.

--In January 2005 the acquisition of 100% of BellSouth Chile and BellSouth Argentina (Movicom) was completed. Since January 2005, these companies have been integrated within the Group's consolidation perimeter through the full consolidation method.

--Following the tender offer launched for 0.1516% of Comunicaciones Moviles del Peru, S.A.'s share capital in April 2005, and concluded in May, Telefonica Moviles's stake in the company increased to 99.89%.

In June 2005 the merger between Comunicaciones Moviles Peru, S.A. and Telefonica Moviles Peru, S.A.C. was carried out. Telefonica Moviles's stake in the resulting company, Telefonica Moviles Peru, S.A., stands at 98.03%.

--During 2005, TES Holding, S.A., fully-owned by Telefonica Moviles, S.A., acquired an additional stake in Telefonica Moviles El Salvador, S.A. Following the acquisition, TES Holding, S.A.'s stake increased to 99.03%.

--Following the acquisition of an additional 0.40% stake in Telefonica Moviles Panama in 2005, as a result of the tender offer launched in 2004, Telefonica Moviles' stake increased to 99.98%.

--In November 2005 the company acquired 2.07% of Telefonica Moviles Argentina, S.A., increasing Telefonica Moviles, S.A.'s stake to 100%. .

--In December 2005, Telefonica Moviles acquired 8% of Telefonica Moviles Mexico, S.A. de C.V. for EUR 177.3MM, raising its stake to 100%.

The financial statements for fiscal year 2004 and 2005, and the corresponding comments regarding our operations included herein, reflect the current composition of the Telefonica Moviles Group at each point in time. As a result, given the changes in the consolidation perimeter over the last 12 months, the consolidated results and those of some of our operators are not comparable between each period.

As a consequence of the performance of the Venezuelan economy throughout the year, Telefonica Moviles has suspended the inflation adjustment of its subsidiary Telcel's financial statements, with retrospective application since January 1, 2005. This decision is in line with the consensus reached by the main auditing firms indicating that Venezuela should not be considered as a hyperinflationary economy.

For an easier understanding of Telefonica Moviles' financial statements, the economic stakes held by the Company in each of its subsidiaries, along with the consolidation method used in its consolidated financial statements in each period, are provided below.

THIS PRESS RELEASE CONTAINS A NUMBER OF TABLES WHICH WE ARE UNABLE TO DISPLAY HERE. Full a full version of the release please visit the company's website at: www.telefonicamoviles.com

Madrid, 28 February 2006.- Telefonica Moviles posted net income of EUR 1,919 MM in 2005 (+13,4%), the highest in its history, during a year marked by the integration of the 10 operators acquired from BellSouth in Latin America, technological migration in eight countries and stiff competition in its main markets of operation.

Excluding the impact of the write-down of the remaining value of the UMTS license of IPSE 2000, (EUR 89 million in net terms) net income would have been over EUR 2,000MM in 2005, an increase of 18.7% over 2004.

The Board of Directors will submit a proposal for approval at the General Shareholders' Meeting to pay a gross dividend of EUR 0.205 per share charged to 2005 earnings and reserves. The dividend implies a total payment of EUR 888MM and an increase of 6.2% over the 2004 dividend. The proposed payment date is 21 July 2006.

At the same time, the Company has consolidated its position as one of the leading operators in the industry worldwide, with over 94.4MM managed customers at the end of December 2005 (+27% vs. 2004). With over 5.4MM new customers in 4Q05, Telefonica Moviles obtained net adds of 16.3MM for the whole of 2005, driven primarily by the sharp growth in the Latin American markets.

By geographical areas, 19.9MM of the total customer base corresponded to TME (+5% vs. 2004), 71MM to the Latin American operators (+34%) and over 4MM corresponded to the Moroccan operator, Medi Telecom (+47%).

Among the key aspects of full year 2005 results, we would highlight that all the growth targets established for the Group for the year were met.

The company posted solid growth in revenues of 40.5% vs. 2004, to over EUR 16,514MM. Organic growth of consolidated revenues (including the consolidation of Telefonica Movil Chile and the assets acquired from BellSouth from 1 January 2004 and excluding exchange rate fluctuations) stood at 14.2%.

By components, service revenues in 2005 rose 40.4% to EUR 14,354MM vs. 2004 while handset sales rose 41.4% to EUR 2,160MM.

Consolidated revenues registered year-over-year growth of 29.1% in 4Q05, compared to 45.3% in 9M05, affected by the consolidation of eight of the operators acquired from BellSouth since November 2004.

By geographical areas, Telefonica Moviles Espana registered year-over-year growth in revenues of 7.6% in 2005, making it one of the European operators with the highest domestic market growth. Service revenues grew by 7% vs. 2004 (+8.2% excluding the impact of loyalty points).

The consolidated Latin American operators recorded 116.9% growth in revenues vs. 2004, (before remainder and intra-group eliminations) representing 47% of the Group's total revenues (30% in 2004). Year-over-year organic growth for these operators' revenues was 23.5%.

Assuming constant exchange rates vs. 2004, and excluding changes in the consolidation perimeter except the acquisitions of BellSouth Chile and BellSouth Argentina in January 2005, consolidated revenues grew 37.4% on 2004, beating the Company's guidance, which pointed to growth of 33%-36%

Consolidated OIBDA in 2005 of EUR 5,817MM, 26.8% higher than in 2004. Year-over-year growth of consolidated OIBDA in 4Q05 was 45%, a sharp acceleration from previous quarters (+21% in 9M05).

Year-over-year growth of OIBDA at Telefonica Moviles Espana rebounded in 4Q05 (+4.4% vs. -2.3% in 9M05), driven by the positive performance of service revenues and control over commercial costs. OIBDA at TME for the full year 2005 stood at EUR 4,128MM, virtually unchanged vs. 2004, despite the increased commercial activity and the costs related to the re-branding. The OIBDA margin in 2005 stood at 46.7%, in line with the Company's targets.

The consolidated Latin American operators contributed EUR 554MM to Group OIBDA in 4Q05 and EUR 1,755MM in the full year 2005 (+218.4% vs. 2004). In organic terms, OIBDA from these operators increased 28.6% vs. 2004 and represented 30% of total OIBDA for the Group (12% in 2004).

In 4Q05 the OIBDA margin of the Latin American operators improved significantly, increasing 11.9 pp vs. 4Q04, due mainly to lower SACs. Therefore, in 2005 the OIBDA margin was 22.8% vs. 15.5% in 2004. In all, the consolidated OIBDA margin stood at 35.6% in 4Q05 (+3.9 p.p. vs. 4Q04) and 35.2% in the full year 2005.

Assuming constant exchange rates compared to 2004 and excluding other unforeseen extraordinary charges/revenues when calculating our forecasts, year-over-year of growth of consolidated OIBDA was 23.4%, in line with the Company's targets (23%-26%).

The year-over-year increase in depreciation was 56%, primarily due to changes to the Group's consolidation perimeter and to the impact of EUR 298MM of amortisation of allocated intangible assets related to the acquisition of Telefonica Movil Chile and the 10 Latin American operators acquired from BellSouth in 2004 and early 2005.

Allocated intangible assets from these acquisitions related to customers and software stood at EUR 164MM and 21MM, respectively, at year-end.

Assuming constant exchange rates compared to 2004 and excluding other unforeseen extraordinary charges/revenues in calculating our forecasts, consolidated operating income would have been 10.8% in 2005, within the range forecast by the Company (10%-13%).

Increased losses at companies consolidated by the equity method, impacted by the write-down of the remaining value of the UMTS license of IPSE, accounted for a gross amount of EUR 137 MM in 4Q05. Excluding this effect, the contribution of these companies to Group results would have improved, with a decline of 54% in their losses compared to 2004, due to the improved results of Medi Telecom. It should be noted that this asset write-down does not imply any cash outflow.

There was a year-over-year decrease of 5% in negative net financial results, despite the larger increase in the average net debt balance for the period (+59.0%).

Consolidated operating cash flow in 2005 was EUR 3,532MM, 19% higher than in 2004 despite the increase in capex in 2005.

Consolidated capex in 2005 excluding licenses was EUR 2,285MM. EUR 45.2MM were recorded in the full year 2005 for the acquisition of licenses in Mexico. Assuming constant exchange rates compared to 2004, total capex would have been EUR 2,023 MM, in line with the Company's guidance.

Telefonica Moviles reduced its consolidated net debt from EUR 9.487MM following the acquisition of BellSouth's operators in Argentina and Chile, and having paid a dividend of EUR 836MM in June, thanks to strong cash flow generation. At the end of 2005, consolidated net debt stood at EUR 8,659MM (vs. EUR 8,442MM in 2004), 8% lower than at the end of September. Proportionate net debt at the end of the year stood at EUR 8,759MM.

As has been indicated in previous communications, if IPSE were forced to disburse the deferred payments on its UMTS license acquisition, consolidated net debt would increase by the amount of the deposits made by Telefonica Moviles to guarantee a part of IPSE's deferred payments with the Italian government. This amount totalled EUR 335MM at the end of 2005.

The effective tax rate was 33.4% in 2005, mainly affected by the application of certain allowances for export activities in 2Q05, although the fact that there is no tax consolidation in various countries in Latin America detracts from this benefit, increasing the marginal rate. In this regard, Brazil has begun a process of corporate restructuring, (see significant events after the close of the year) which will reduce the impact of unifying these companies.

SIGNIFICANT EVENTS

On 22 February 2006, approval was given at the respective Shareholders' Meetings of Telesp Celular Participacoes S.A. ("TCP"), Tele Centro Oeste Celular Participacoes S.A., ("TCO"), Tele Sudeste Celular Participacoes S.A. ("TSD"), Tele Leste Celular Participacoes, S.A. ("TBE") and Celular CRT Participacoes S.A. ("CRTPart") for a corporate restructuring in order to carry out the exchange of TCO shares for TCP shares, thereby making TCO a 100%-owned subsidiary of TCP, and for the merger and takeover of TSD, TBE and CRT Part by TCP.

On 31 January 2006. the Italian government informed Ipse 2000 Spa, in which Telefonica Moviles indirectly holds a 45.59% stake, of its decision to withdraw the UMTS license granted to this company in 2000. Telefonica Moviles, S.A. is analyzing the convenience of taking the appropriate legal action against this decision.

In January 2006, Antonio Viana Baptista, Chairman and CEO of Telefonica Moviles, S.A. was appointed a member of the Board of Directors of O2 plc.

SPAIN

During 2005, the Spanish mobile phone market featured more intense competition, reaching over 43MM lines, equivalent to an estimated penetration rate of 97%.

In this context, Telefonica Moviles Espana recorded net adds of nearly 260 thousand in 4Q05 and almost one million lines in the full year 2005 (+48% vs. 2004). As a result, the Company ended December with nearly 20MM customers, a year-over-year increase of 4.8%.

We would point out the strong commercial activity carried out during the year. Including gross adds, migrations and handset upgrades, TME carried out 2.7MM commercial initiatives in 4Q05 (+9.4% vs. 4Q04) and 10.7MM in the full year 2005 (+19% vs. 2004), marking the highest figures in the Company's history.

Against a competitive backdrop characterised by a large volume of number portability actions, TME's gross adds grew 23% vs. 2004, with a 41% year-over-year increase in number portability gross adds.

In line with the Company's focus on value, especially noteworthy is the increase in contract gross adds (+30%). As a result of this and ongoing efforts to encourage prepaid to contract migrations (nearly 1MM in 2005), the contract segment represented nearly 54% of TME's total customer base (+5 p.p vs. 2004).

The commercial initiatives targeting high-value customers were also reflected in number portability, with TME showing a positive net balance of 71 thousand lines in the contract segment in 4Q05 (+22% vs. 4Q04) and 180 thousand lines in the full year 2005. In all, including prepaid and contract, the accumulated net balance for the year was a loss of 116,000 lines. This was also the result of TME's greater focus on acquiring prepaid clients through generic campaigns, rather than through number portability.

Also worth highlighting are the efforts made by the Company in retention activities, launching campaigns to reward customer loyalty and offering favourable conditions for handset upgrades to encourage greater commitment from our customers. Telefonica Moviles Espana upgraded nearly 1.1MM handsets in 4Q05 and more than 4.5MM for the whole of the year (+23.2% vs. 2004).

These activities and commercial initiatives such as "Ya te llamo yo" (I'll call you) or the "100x1" promotion have proven to be an important loyalty tool, enabling TME to control the churn rate at a 1.8% level in 2005 despite competitors' commercial aggressiveness.

The new commercial offers have also boosted customer usage. Telefonica Moviels Espana carried more than 13,000MM minutes of traffic in 4Q05 (+21.5% vs. 4Q04) and more than 50,000MM minutes in the full year 2005 (+20.3% vs. 2004). Despite the increase, TME networks' quality indices improved relative to previous years.

Particularly significant is the growth of on-net traffic (+30% vs. 2004), which now represents 43% of total traffic. In unit terms, MOU reached 152 minutes in 4Q05 (+12.6% vs. 4Q04) and 150 minutes in the full year 2005 (+15.9% vs. 2004).

We would also highlight the launch in December 2005 of "Mundo Movistar" (Movistar world), the first multi-country product and service supply and distribution scheme. It complements the "Mi Favorito Internacional" (My favourite international number) and "Mis Cinco Internacional" (My five international numbers) products already offered by the Company. This new service, which sets TME apart from competitors, allows customers to buy a handset or prepaid card at any sales point in the movistar network in Spain and have them made available for pickup by a customer in Ecuador or Colombia the next day. Plans are to extend this service gradually to other markets in Latin America and Morocco.

Thanks to the positive performance of MOU and despite cuts to tariffs and lower termination rates, Telefonica Moviles Espana posted voice ARPU (excluding the impact of promotions) of EUR 28.5 in 4Q05 (+0.8% vs. 4Q04) and EUR 28.7 for the full year 2005 (+2.6% vs. 2004).

Moreover, throughout 4Q05 Telefonica Moviles Espana introduced new data transmission price schemes, with concepts similar to flat rate plans, enabling the Company to boast the most comprehensive and competitive offer in the data transmission market, with prices of EUR 30/month for 1 Giga and EUR 58/month for 5 Gigas.

Telefonica Moviles Espana's data ARPU (excluding the impact of promotions) stood at EUR 4.7 in 4Q05 (+7.1% vs. 4Q04) and EUR 4.4 in the full year 2005 (+7.6% vs. 2004). We would point out the role of non-SMS data services as a growth driver. In fact, revenues from this data services increase to represent 38% of the Company's total data revenues vs. 29% just 12 months earlier.

As a result, Telefonica Moviles Espana's total ARPU stood at EUR 33.2 in 4Q05 (+1.6% vs. 4Q04) and EUR 33.1 in the full year 2005 (+3.3% vs. 2004).

Highlights of the company's financial results include revenues of EUR 2,213MM in 4Q05 (+5.8% vs. 4Q04) and EUR 8,834MM in the full year 2005 (+7.6% vs. 2004).

The sharp growth in revenues which should be seen in the European context and despite substantial cuts in prices, was driven by the positive performance of service revenues, which totalled EUR 1,975MM in 4Q05 (+6.8% vs. 4Q04) and EUR 7,794MM in the full year 2005 (+7.0% vs. 2004).

Revenues from handset sales totalled EUR 1,040MM in 2005, up 11.8% year-over-year vs. 2004 and representing 11.8% of total revenues.

Given the sharp increase in commercial activity throughout the year, the percentage of commercial costs (including SAC, SRC and advertising) over service revenues ex-loyalty points stood at 15.4% in 2005 vs. 11.7% in 2004. These figures include the costs of re-branding, incurred in 2Q05.

Year-over-year growth of OIBDA at Telefonica Moviles Espana rebounded in 4Q05 (+4.4% vs. -2.3% in 9M05), driven by the positive performance of service revenues and control over commercial costs. OIBDA at TME for the full year 2005 stood at EUR 4,128MM virtually unchanged year-over-year vs. 2004 despite the increased commercial activity and the costs related to re-branding. The OIBDA margin in 2005 stood at 46.7%, in line with the Company's targets.

Telefonica Moviles Espana continues with the deployment of its UMTS network and investment to increase network capacity in order to meet the sharp growth in usage during 2005. Capex in 2005 totalled EUR 727MM, a year-over-year increase of 15.8%. At the end of 2005, TME's UMTS network had more than 5,000 base stations, providing coverage to areas in which over 70% of the population lives.

MOROCCO

At the end of 2005 Medi Telecom's customer base stood at 4.023MM (+47.4% vs. 2004). Net adds in 4Q05 stood at 185 thousand, 17% more than in 4Q04.

Regarding financial results, revenues in 2005 totalled EUR 397MM (+21% vs. 2004), driven by growth in the customer base throughout the year.

Operating income before depreciation and amortisation (OBIDA) stood at EUR 153 MM, bringing the OIBDA margin for the year to 39% (46% in 2004), affected by the increased commercial activity (+40.4% vs. 2004). OIBDA in 2005 increased by 2% vs. 2004.

LATIN AMERICA

BRAZIL

In the last quarter of the year, the Brazilian market continued showing a solid performance despite slowing its pace of growth. At the end of the year, the total market stood at 86.2MM customers (+31.4% the end of 2004), equivalent to a penetration rate of 46.6% (49.6% in Vivo's areas of operation).

In 4Q05, against a backdrop of continued intense competition, less commercial pressure was seen in the prepaid segment, with the main operators targeting their commercial initiatives at high-value segments. In this context, Vivo's customer base stood at 29.8MM at the end of December (+12% vs. 4Q04), with net adds in 4Q05 of nearly 1MM.

Vivo continues to target its commercial initiatives at the acquisition and retention of high-value customers and fostering prepaid to contract migration.

In terms of customer usage and traffic, MOU in 4Q05 was 74 minutes while ARPU in 4Q05 was 29.0 reais, an increase of 2.5% compared to 3Q05, driven by higher contract ARPU.

Regarding Vivo's financial results, service revenues grew 5% in local currency vs. 2004, fuelled by outgoing revenues (+17%) in both the prepaid and contract segments, which in part offset the decline in incoming revenues (-7%).

The decrease in commercial activity led to a 2% year-over-year fall in revenues from handset sales vs. 2004, leading to a 4% increase in total revenues. Higher entry barriers compared to the 2004 Christmas campaign and the decrease in commercial activity led to lower commercial costs (SAC, SRC and advertising) in 4Q05 compared to 4Q04, although higher allowances for communications not attributable to customers (EUR 33MM in 4Q05) caused the OIBDA margin after management fees to fall, standing at 21.0% in 4Q05 and 26.3% in the full year 2005. The Company is implanting detection systems in the short term to limit this risk.

Excluding the impact of these allowances on the year, the OIBDA margin would be 26.9% in 4Q05 and 28.8% in the full year 2005.

Finally, capex in 2005 totalled EUR 400MM, driven primarily by the increased capacity of Vivo's networks.

NORTHERN REGION

MEXICO

In 4Q05 Telefonica Moviles Mexico (TMM) continued to focus on developing a quality distribution network and enhancing its processes, making changes to its commercial offering and reinforcing attention to its customers and the quality of its services. In this context, in a quarter marked by higher commercial activity, TMM posted net adds in 4Q05 of 392 thousand, compared to 129 thousand in 3Q05, bringing the total customer base at the end of December 2005 to 6.37MM (+13% vs. 4Q04).

This commercial effort should be seen in the context of the remodelling of the distribution network, with 190 distributors' contracts cancelled in the year and 47 new ones incorporated, in order to increase the quality of customer acquisition.

In terms of customer usage, MOU in 4Q05 stood at 50 minutes, while ARPU was 124 Mexican pesos, unchanged compared to 3Q05. MOU in the full year 2005 was 51 minutes and ARPU was 136 Mexican pesos.

Regarding financial results, revenues grew by 9.9% year-over-year in 2005 in local currency. In 4Q05, revenues grew 10.2% vs. 3Q05, driven by higher revenues from handset sales and 6.7% growth in service revenues. Data revenues continue to post stronger growth, accounting for 12.3% of service revenues in 4Q05. Year-over-year revenue growth in 4Q05 was affected by lower handset sales (-7% in local currency), as well as by the impact of the 10% reduction in interconnection tariff in service revenues and the introduction of mandatory charge information on voice mail introduced by the regulator in April.

Despite the increase in commercial activity in 4Q05 compared to 3Q05, the higher revenues in the quarter have reduced OIBDA losses to EUR 28.5MM in 4Q05 (vs. EUR 33.6MM in 3Q05) and stand at EUR 159MM in the full year 2005, in line with the level of 2004, in local currency terms.

By the end of December 2005, the coverage of TMM's GSM network represented 90% of the urban population. Capex in 2005, in local currency, declined by 54% year-over-year, leading to a sharp reduction in negative operating cash flow (-33% vs. 2004). The auction of additional spectrum in the 1900 MHz band, which took place in April, has been recorded as capex licences for EUR 45.2MM.

ANDEAN REGION

VENEZUELA

Commercial activity in the Venezuelan mobile telephony market remained intense in 4Q05, leading to solid growth and an estimated penetration rate at the end of 2005 of 48%, nearly 17 p.p. higher than in 2004.

TM Venezuela's customer base ended December at over 6.2MM (+42% vs. December 2004), with net adds of 841 thousand in 4Q05 (doubling the amount in 4Q04) and more than 1.8MM lines in the full year 2005.

As for financial results, the strong growth in the customer base, coupled with higher traffic and the steady improvement in data revenues, led to 21.3% growth in service revenues in 4Q05 compared to 3Q05 in local currency, and 22.1% in total revenues, which in the full year 2005 stood at EUR 1,438MM.

We would point out the performance of OIBDA, which totalled EUR 178MM in 4Q05 (+14% vs. 3Q05 in local currency terms) and EUR 585MM in the full year. This led to a solid OIBDA margin of 40.7%, despite the increase in commercial activity.

Finally, the Company's innovation in the Venezuelan market led to the commercial launch of EV-DO services at the end of December and of new mobile e-mail services. Capex in 2005 totalled EUR 145.7MM.

COLOMBIA

The Colombian cellular market showed the strongest growth in the region in 2005, with an increase of close to 25 p.p. in the estimated penetration rate to over 48% in December.

Following the commercial launch of its GSM service in 3Q05, TM Colombia further accelerated its rate of growth in commercial activity, with net adds of over 862 thousand in 4Q05, double the figure in 3Q05. Thus, at the end of December 2005 TM Colombia's customer base stood at 6MM, an increase of 83% compared to 2004.

The success of the Christmas campaign, targeting GSM customer acquisition, led to a high percentage of gross adds in this technology, with a weight of 88% over total gross adds in 4Q05. In just five months after its launch, the GSM customer base surpassed 1.6MM (27% of the total customer base).

Regarding financial results, accumulated revenues totalled EUR 750MM in full year 2005. The growth in revenues in 4Q05 vs. 3Q05 in local currency was due to higher revenues from handset sales as a result of stronger commercial activity in 4Q05 and to the positive performance of service revenues (+7.3%).

Against a backdrop of high commercial activity, we would point out the positive evolution in the OIBDA margin in 4Q05 (+0.4 p.p. vs. 3Q05) due to control over commercial costs and growth in revenues. Thus, the accumulated OIBDA margin for the year was 14.7%, but in 4Q05 reached 23.4% leading to an OIBDA of EUR 50MM in 4Q05 and of EUR 110MM in full year 2005.

Total capex in the year was over EUR 272MM, reflecting the rollout of the GSM network, with coverage of 68% of the population as of December.

PERU

The Peruvian market saw an increase in competition in the year's last quarter. In this context, TM Peru's customer base stood at 3.5MM at the end of December (+20% vs. December 2004), with a sharp increase in net adds to 256 thousand (+82% vs. 3Q05) in 4Q05 and 585 thousand in full year 2005.

Regarding financial results, quarterly growth in revenues in local currency remained solid (13.2% vs. 3Q05), driven by the growth in customers and outgoing traffic, which offset the impact of the decline in incoming traffic and the reduction in interconnection rates in 3Q05 (-19%).

We would point out the solid performance of the OIBDA margin, which remained at 32% in 4Q05 despite the increased commercial activity. OIBDA stood at EUR 33MM in 4Q05 (+12% vs. 3Q05 in local currency) and EUR 118MM in the full year 2005.

TM Peru began the deployment of its GSM network in 4Q05, with the first gross add registered at the beginning of February 2006.

SOUTHERN CONE REGION

ARGENTINA

The strong advance of the Argentine cellular market continued in 4Q05, with the pace of growth accelerating throughout 2005 thanks to the favourable macroeconomic climate in the country and an increasingly competitive environment. The estimated penetration rate at the end of 2005 stood at 55%, nearly 21 p.p. higher than at the end of 2004.

In this context, the commercial efforts of Telefonica Moviles in Argentina have been positive, with net adds in the full year 2005 of 2.6MM, leading to a growth of more than 45% in the customer base to 8.34MM at the end of December. GSM customers now represent 51% of the total. The Company recorded net adds of over 940 thousand in 4Q05.

We would highlight the solid growth of service revenues in local currency (+11.1% in 4Q05 vs. 3Q05), driven by the increase in the customer base (+12.7% vs. 3Q05) and ARPU. Also worth highlighting is the increasing contribution of data revenues, which in the full year 2005 represented 15% of service revenues (18% in 4Q05).

In line with the strong commercial activity in the quarter, which featured the year's two most important campaigns (Mother's Day and Christmas), the operating margin declined vs. 3Q05, however, the full year 2005 margin stood at 15%.

As for the rollout of the GSM network, coverage at the end of the year stood at 95% of the population, with capex in the full year totalling EUR 132MM. In spite of the strong investment effort, the operator posted positive operating cash flow, with OIBDA for the full year totalling EUR 151MM.

CHILE

Despite the penetration levels at the beginning of the year, the Chilean cellular market remained extremely buoyant in 2005, with an increase of over 10 p.p. in the estimated penetration rate to over 71%.

In this context, Telefonica Moviles Chile ended 2005 with 5.28MM customers, recording net adds for the full year of 525 thousand. GSM customers now represent 51% of the total.

With regard to financial results, revenues totalled EUR 661.2MM in the full year 2005 and EUR 202MM in 4Q05 (+11.3% vs. 3Q05 in local currency), driven by a positive performance in service revenues (+12.9% in 4Q05 vs. 3Q05). The company posted an OIBDA margin of 35.5% for full-year 2005.

Total capex in 2005 was EUR 177MM, boosted by the deployment of the GSM network, with coverage of 96% of the population as of December, 2005.
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