Supplemental Disclosure Material - Ono

Our operating expenses increased by 4.6% during the three months ended March 31, 2012, to €293 million, as
compared with €280 million during the three months ended March 31, 2011. The increase in our operating expenses mainly
reflects the increase in the cost of sales associated with our wholesale activities as well as our growing mobile business. In
addition, the increased price pressures resulting from the higher CPI level have also impacted our operating expenses.
Cost of Sales: Cost of sales principally consists of interconnection and backbone network costs for
telecommunications services, internet connectivity costs, the cost of the cable modems we sell, fiber, circuit and duct renting
expenses and programming fees for television programming services. Interconnection costs for telephony services are
generated by calls made by our customers that terminate outside our network. Internet connectivity costs mainly consist of
fees for the bandwidth used for our internet transit outside of Spain. Television programming fees consist primarily of fees
paid to television content owners to distribute their television content and fees paid to distribute movies and soccer on a
pay-per-view basis. Cost of sales increased by €13 million, or 16.9%, to €90 million in the first three months of 2012 from
€77 million in the first three months of 2011. This increase was driven mainly by increased interconnection costs related to
our increased wholesale activity as well as costs related with our growing mobile business (host, interconnection and
equipment). As a percentage of total revenues, cost of sales increased 2.3% to 23.5% in the three months ended March 31,
2012 from 21.2% in the three months ended March 31, 2011.
Staff Costs: Staff costs consist principally of expenses related to wages and salaries for our employees, employer’s
social security contributions, other employee expenses and severance payments. Staff costs remained flat in €39 million in the
first three months of 2012 compared to the first three months of 2011. In the first three months of 2012, the average number of
our employees was 2,893 compared with 3,067 in the first three months of 2011.
Other Operating Expenses: Other operating expenses consist principally of leases, local taxes, professional
services, marketing and selling expenses, network operation and maintenance, information systems, administrative overheads,
billing costs and impairments of trade receivables. Other operating expenses decreased by €3 million, or 3.5%, to €83 million
in the first three months of 2012 from €86 million in the first three months of 2011. Cost control initiatives implemented in
the organization have led to savings in other operating expenses.
Work Carried Out By the Company for Its Assets: We capitalize direct labor costs associated with the
development and construction of our network and installations carried out at our customer premises. Capitalized costs
decreased by €2 million, or 11.8%, to €15 million in the first three months of 2012 from €17 million in the first three months
of 2011.
Depreciation & Amortization: Depreciation and amortization expense is principally related to the depreciation of
our network, customer premise equipment and installation costs incurred in connection with the addition of new subscribers,
and to the amortization of intangible assets. Depreciation and amortization decreased by €1 million, or 1.1%, to €94 million in
the first three months of 2012 from €95 million in the first three months of 2011.
Operating Result
We calculate operating result as revenues minus operating expenses. Operating result in the three months ended
March 31, 2012 increased by €6 million, or 7.1%, to €90 million from €84 million in the three months ended March 31, 2011.
The increase in our revenues during the first three months of 2012 has led to the improvement in operating result. Our
operating profit margin increased to 23.5% in the first three months of 2012 as compared to 23.1% in the first three months of
2011, as result of the changes in revenues and operating expenses discussed above.
Net Financial Result
The following table sets forth our net financial result and the percentage change for the periods indicated:
For the three months
ended March 31, Percentage
2011 2012 change
(euro in millions)
(unaudited)
Financial income ...................................................... — 1 n.a.
Interest expense ....................................................... (68) (68) —
Fair value losses on financial instruments ................................... — (4) n.a.
Exchange differences ................................................... 7 13 85.7%
Impairment and results from financial instruments disposals .................... (4) — n.a.
Net financial result .................................................... (65) (58) (10.8%)
Our net financial result is mainly comprised of interest expense from our financing, offset in part by interest income
from cash balances and exchange gains in the current situation favorable to the Euro. Net financial result decreased by
€7 million, or 10.8%, to €58 million in the three months ended March 31, 2012 from €65 million incurred in the three months
ended March 31, 2011 as a result of exchange rate gains.
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