Senior Management Changes at Telefónica O2 Europe

Telefónica S.A. today announced that Peter Erskine is to step down as Chairman and Chief Executive Officer of Telefónica O2 Europe with effect from 31 January 2008. He retains his position on the Board of Telefónica S.A., moving to the role of Non-Executive Director from 1 February 2008. He has also been invited to join Telefónica’s Comisión Delegada (the executive commission of the Board)

Matthew Key (44), currently CEO of O2 UK, the largest business within Telefónica O2 Europe and the second largest wholly-owned subsidiary of Telefónica S.A., is appointed as the new Chairman and CEO of Telefónica O2 Europe. Matthew has overseen a transformation of O2 UK’s performance over the past three years and today the company is the country’s leading operator in terms of revenues, subscribers and customer satisfaction. In recent months, he has overseen the introduction of iPhone into the UK market and the successful launch of O2 Broadband.

Announcing the changes, Executive Chairman of Telefónica S.A., César Alierta, said: “In the course of the last six years, Peter has built a business and brand of exceptional value. Since the acquisition of O2 by Telefónica two years ago, he has worked closely with me and has been instrumental in ensuring the success of the merger of the two businesses, whilst contributing to a significant increase in shareholder value and the
growth of Telefónica as one of the world’s leading telecommunications companies. I personally hold Peter in the highest regard and value both his extensive industry experience and his frank advice. It is for this reason that I am delighted Peter will continue to play a vital role in the management of Telefónica as a member of the Comisión Delegada and Board.

“Under Matthew’s leadership, O2 UK has grown its revenue and profitability more than all of its competitors combined and has become a partner of choice in the UK market, with highly successful collaborations with world-leading brands such as Tesco and Apple. He has also masterminded, with AEG, the delivery of The O2 – the ultimate entertainment complex in London. In his new role, I am confident that he will continue to build on the strong position of Telefónica in the highly competitive European markets.”

Jaime Smith, who was appointed CEO of O2 Germany in June 2007, having previously led the integration and turnaround of Telefónica’s businesses in the Czech Republic, will also become Chairman of the Supervisory Board of Telefónica O2 Czech Republic, an independent company that is 70 percent owned by Telefónica and listed on the Prague Stock Exchange. This position has been held to date by Peter Erskine.

A further statement, announcing the appointment of the new CEO of O2 UK, will be made in the coming weeks.