Supplemental Disclosure Material - Ono

In addition, we offer mobile voice and broadband services to residential customers. As of March 31, 2012, we had
approximately 189 thousand residential mobile lines.
Business Services
Spain.
We also provide telecommunication services to SMEs, large accounts and corporations and the wholesale market in
SME: We provide voice and data telecommunication services to small and medium-sized enterprises. As of
March 31, 2012, we had over 95 thousand SME customers taking 185 thousand services from us.
Large Accounts & Corporations: We provide a range of customized solutions (voice, internet, data and
equipment) to corporations, institutions and public sector entities.
Wholesale & Other: We provide carrier services, voice traffic services, leased and dedicated lines and circuits and
ISP solutions to other telecommunications operators. In addition, we provide intelligent network services.
Our History
Formation
Before commencing operations in 1998, we participated in a number of competitive public bids further to the
adoption of Spain’s Law 42/1995 on Cable Telecommunications. Between 1996 and 1998, we were awarded licenses to
provide cable television and telecommunications services in the following nine regions: Valencia, Alicante, Castellón,
Murcia, Cádiz, Huelva, Cantabria, Mallorca and Albacete. In 2003, we were awarded a license to operate in Castilla-La
Mancha. In 2004, we acquired the telecommunications operator Retecal, covering the Castilla y Leon region.
In November 2005, we acquired Auna Telecommunications, S.A.U. (“Auna”), a wireline and cable operator. The
acquisition consolidated our presence in Spain and extended our coverage to seven additional regions, which included Spain’s
largest cities, Madrid and Barcelona. Following the Auna acquisition, we continued to pursue an expansion strategy of
extending our network and acquiring new customers. Between 2006 and 2008 we invested substantially in expanding the
footprint of our network infrastructure, with the number of homes released to marketing increasing by 1.2 million to over
7 million.
Transformation Process
Towards the end of 2008, faced with weakening international economic conditions, we commenced a
transformation process. The transformation focused on adjusting our business model to the changed economic environment
and stabilizing our operations following a period of rapid expansion, with the aim of creating a more efficient platform for
future growth. This process also coincided with significant changes in our senior management. Largely completed by the end
of 2009, the transformation process included a wide range of initiatives focused on maximizing cash flow, implementing cost
efficiencies, reshaping our organization and attracting and retaining high-quality customers. As a result of the transformation,
we believe we have become a more resilient and efficient company. Our EBITDA increased from €645 million (Spanish
GAAP) in 2007 to €748 million in 2011, our EBITDA margin increased from 39.9% (Spanish GAAP) in 2007 to 50.4% in
2011 and operating free cash flow increased from €91 million (Spanish GAAP) in 2007 to €456 million in 2011. During the
transformation process, we focused primarily on:
Optimizing returns from assets: Having already invested to establish a network reach of over 7 million homes, we
ceased our network expansion activities and focused on maintaining and enhancing our existing network. We have undertaken
several platform upgrades, such as our implementation of Docsis 3.0 (deployment completed in February 2012), the
improvement of our next generation television service (TiVo) with almost 62% of our network upgraded as of March 31,
2012, and the ongoing upgrade and outsourcing of our voice platform. Other initiatives included improving our receivables
collection cycle.
Reshaping our organization: We centralized our business operations, eliminating duplicate regional functions and
reducing headcount. A shift towards internet sales and other more cost efficient sales channels led to a reduction of our direct
sales force. In the first quarter of 2012, 30% of our sales were through the internet, compared to 0.2% in 2007. The average
number of our employees has declined from 4,618 for 2007 to 2,893 for the three months ended March 31, 2012. In addition,
in April 2010 we sold our loss-making content aggregator, Teuve.
Cost efficiencies: We implemented a wide range of cost efficiency initiatives, resulting in our cost of sales, staff
costs and other operating expenses (less capitalized costs) declining from €971 million (Spanish GAAP) in 2007 to
€737 million in 2011, or 24%. In addition to the organizational changes described above, other key initiatives included
selective outsourcing, a new procurement model, continued renegotiation of contracts and migrating our customers to an
e-billing system.
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