In 2015 (year one in the integration schedule), we already expect to achieve a run-rate of around 250 million Euro Operating Cash Flow (OIBDA minus CapEx) synergies, which is approximately 30% of the target run-rate of OpCF synergies (800 million Euro) expected after five years. In line with our vision to become the Leading Digital Telco in Germany, in 2015 we will put an even stronger focus on the development of our customer base. We will continue to be the value-for-money choice for our customers and partners while keeping a strong view on data monetisation. As a result, we expect mobile service revenues in 2015 to remain broadly stable over 2014 combined1) figure (5,528 million Euro). The fixed business will continue to play an important role, leveraging increased demand for high-speed access and flexible propositions to facilitate our customers' digital journey. We expect a gradual progression of improvement in OIBDA throughout 2015 driven by the capture of synergies from the integration of organisations and initial projects for the combination of networks, the focus on operational excellence with increased scale of the business and a higher contribution from mobile data. From a 2014 combined1) base of 1,461 million Euro, we expect Operating Income before Depreciation and Amortization (OIBDA)3) to grow more than 10% year-on-year. The fourth quarter of 2014 reflected the start of a new investment cycle for the new Telefónica Deutschland, and for 2015 we expect synergies to outweigh the additional investments to be made to accelerate the deployment of the LTE network and the initial works for the consolidation of the two networks. As a result, we expect that CapEx4) in 2015 will show a high single digit percentage decline year-on-year from a combined1) base of 1,161 million Euro. With regards to shareholder remuneration, it is our intention is to suggest to the general shareholders' meeting a cash dividend of at least 700 million Euro for the year 2014, payable in May 2015. In line with our publicly stated dividend policy, the Company intends to maintain a high pay-out ratio in relation to Free Cash Flow while keeping the leverage ratio5) below 1.0x over the medium term. With regards to the integration of the E-Plus Group, synergies expected to be realized in the near future might be considered when making a dividend proposal for future years. For further details on KPIs and developments as well as the dividend policy, please see the IR section at www.telefonica.de.

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