Good afternoon and welcome to Telefónica's 2025 Capital Markets Day. It's a pleasure to have you here with us today, those of you joining us in person and those of you joining us online. On behalf of the entire management team, I would like to thank you for taking the time today to engage with us. Today's important opportunity for us to give you an overview of how we are positioning the company for growth and value creation. Over the next one and a half hours, you will hear from our Chairman and CEO, Marc Murtra, our COO, Emilio Gayo, and our CFCO, Laura Abasolo García de Baquedano. Marc will open the event by giving you an overview of our new strategic 2026 to 2030 plan and our long-term vision. Emilio will then give you the details of how we're going to implement this plan. Laura will give you an overview of our financials and our guidance. Marc will end the presentation with his closing remarks. We will then take your questions for around one hour, followed by a light lunch served outside of the auditorium. Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. This financial information is unaudited. This presentation, including the Q&A session, may contain forward-looking statements and information relating to the Telefónica Group. These statements may include financial or operating forecasts and estimates or statements regarding plans, objectives, and expectations regarding different matters. All forward-looking statements involve risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such statements. We encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators. If you don't have a copy of the relevant information, please contact Telefónica's investor relations team in Madrid. As a reminder, today's event is being recorded. With that, thank you once again for joining us, and let's start the event by welcoming our Chairman and CEO, Marc Murtra. Good morning. I am delighted to welcome you to Telefónica's Capital Markets Day. Today marks an important milestone in our collective journey, a moment to redefine our purpose and to present a clear path to shape the future of our company and the industry. At Telefónica, we have the capacity to take on any challenge that comes our way because we have extraordinary people and vast telecom knowledge. The crucial challenge we face is how and where to correctly prioritize our analysis and actions. We must choose what are the questions we want to answer. We do not want to just respond to what happens to us. No cheerleading or chin-stroking for us. We wish to lead with initiatives and choose our own destination. We thus have a clear present objective: to deliver the best digital experience to our customers. This session aspires to explain what the path to achieve our objective is. To do this, we will share our strategic framework. We will explain the pillars of our new business plan, and we will show you our implementation roadmap. It is a plan that will strengthen Telefónica and will help, we think, Europe in these complex times. You will see that we will make all the necessary decisions to achieve our goals. Our plan reflects a shared view and determination. Telefónica must play a leading role in Europe and Brazil. We hope our strategic plan becomes a light that is not easily dimmed. Before outlining the plan, I want to share with you my impressions of Telefónica. Telefónica is a wonderful company with great opportunities ahead. The company has very strong and hard-to-replicate assets and capabilities. The company also has specific areas of improvement. These can be addressed in a relatively short time. The Telefónica strategic plan will tackle these issues and capture many of the opportunities we have ahead. Telefónica is well set, fit, and ready to start this important race we have ahead of us. Many of you will be used to CEOs explaining what the strengths of the companies are, but I think you will find that we can all agree on what our main strengths are. We have four strong core markets with strong operations. We hold a leading position in two of those markets: Spain and Brazil. We are experts in network layouts and operations. In many places, we have a widely deployed infrastructure, for example, in Spain. We are pioneers in convergence strategy. We were the creators of the concept and its implementation at scale. Convergence improves engagement and customer value, reducing churn. Behind everything we do, we have our people. Telefónica has a wide senior team with exceptional professionalism, expertise, and commitment. We have deep know-how in many vital areas. Decades of experience in different countries have given us knowledge in marketing plans, operations, networks, pricing, legal, M&A, customer service, finance, and operations and M&A. We have a strong culture. Our people are proud of Telefónica, want Telefónica to lead the market, and have a deep sense of belonging to Telefónica. This drives commitment and high levels of professionalism. Many of you might wonder what our areas of improvement are. After a long, cold, hard look, I also have a clear idea of what is holding us back. I wanted to share with you my view. These are the areas of improvement that we have. We have had a divergence between our strategic vision and the business context. Our priorities have not always been aligned with the realities of Telefónica. In the past, Telefónica has had an aversion to make tough decisions. In my view, tough decisions are those necessary decisions that are hard to explain or will not be well received. We have a high organizational and operational complexity. Let us remember that complexity compounds and greatly affects costs and decision-making. Telefónica's financial flexibility is limited. This is well known. Our high leverage incentivizes short-term decisions, absorbs management bandwidth, does not allow us to take some acceptable risks, and dispels serendipity. Slowish speed executing. Execution must be faster. We have gained speed in the last months, for example, when exiting Hispam, but we must execute faster. There has been excessive short-termism within the group. Too often, it has operated with a short-term priority: cash flow now, worse results in the future. We must bear in mind the long term. We must drive with our full beams on. Finally, some costs. Structural items like spectrum, leases, and labor intrinsically grow at significantly faster levels than our communication revenues. If we do not change this structural asymmetry, our margins will inexorably decrease. With this understanding, I have asked the team to help me build a strategic plan that captures real market opportunities we have ahead of us. A plan that reduces complexity, improves financial flexibility, balances short-term and long-term decisions, creates measurable efficiencies, and makes tough but necessary decisions. Our strategic plan will focus on profitable growth to create shareholder value for all. It will ensure we offer the best digital experience to our customers, and it will lead us to become a European world-class telecom operator. With this ambition in mind, our plan has developed with depth. We have brought together 182 Telefónica professionals, 154 external experts, in over 5,750 hours of working sessions, organized across 27 work streams running in parallel. The ex-com and myself have been fully involved in leading and developing the plan. You all know the importance of numbers and data, but also how powerful teams can be when working together. I have to say I will miss some of the groups, and I have told them so. Creating the plan has been an effort that has combined talent, multisectoral in-house know-how, external insights, strategic vision, prioritizing, and actionable planning. The result is a plan built on evidence, data, knowledge, and PQ. It is not a plan built on intention or generic top-down objectives. We have all had our notebooks open, pens uncapped, eyebrows cocked, and elbows decidedly out. The process started bottom-up. All proposals and elements have been simplified, pruned to the essence, prioritized, and then analyzed with regards to the strategic and financial value accretion. We have then ensured homogeneous analysis, strategic coherence, and a structure that can be effectively implemented. All final decisions have been top-down. This is not the first time I lead the creation and implementation of a transformational strategic plan. You can all see that I did it with some success at Indra. Let me share with you a short video that takes you behind the scenes of how we built our plan at Telefónica. At the beginning of the year, we embarked on a strategic review, one that led us to conduct a thorough and comprehensive analysis of the entire company. Under the leadership of our Chairman and senior management, and with the full collaboration of teams across different departments, business, and countries, we work together as one organization. That was essential for us to define not only the scope. The spirit of what we were doing. Every base needed to be covered. Our teams contributed all their energy, knowledge, and understanding of the business, and something that truly defines Telefónica's people: a deep passion for what we do. [Foreign language] This development process has given us the keys to a five-year plan that will guide us in building an even stronger, more relevant company. One that is ready for the future. Today, that plan is a reality, and we are pleased to share it with our key stakeholders at this meeting. Together, we're building Telefónica's future. A strategic plan embraces the challenges of a world in transformation. Everyone here is aware of how geopolitical polarization has abruptly changed alliances and placed strategic autonomy at the center of Europe's agenda. There is today a will to strengthen Europe's autonomy. We all know how tech disruption is accelerating. Some changes happen so quickly that we do not have time to be astonished. We are all experiencing it in our lives. We need only to look at our markets, our customers of 20, 10, and five years ago. Change will not stop. I still remember my first email. My friend Pedro Ayesta sent it to me. I remember the advent of smartphones and my first dabbling with AI. Artificial intelligence is, of course, redefining processes and networks, and new products create new value pools. Tariffs and currency volatility pose a challenge to certainty and planning. The macro context will shape the telco and tech industry in which Telefónica operates. When looking at the telco market growth forecast, we can state that the European communication market is stagnating, with expected annual growth of 1.5%, which is equal or below inflation. In the telco industry, the European market is an anomaly. Europe remains fragmented, while the U.S. and China are consolidated around three scaled players. Amid these dynamics, telco customers have become more sophisticated, with 60% of them prioritizing experience over price. Hyper-personalization and digital customer relationships are necessary to achieve customer excellence. I am sure we can all empathize with our customers. On infrastructure, we can see that the asset carve-out cycle has slowed down, with a 52% drop in the number of tower deals and fiber deals in the last two years. Telcos are well positioned to play a role in cyber defense in Europe, with an estimated opportunity between EUR 10 billion-EUR 22 billion in Europe by 2035. We are all in an era where titanic tech companies have sharply driven digital change, products, and services, and will continue to do so. These giants operate as dominant players in near-monopoly markets and have deep knowledge and are more capable than they were 20 years ago. All these companies are based in the U.S. and China, and there are no technology titans in Europe today. We depend on players from other geographies for critical technologies. Europe will require more than EUR 750 billion in tech investment by 2030 to close the gap, according to the Draghi report. Digital services will continue to grow nicely, with over 10% annual growth expected through 2030. In parallel, rising attacks on infrastructure are growing concerns over the criticality of cyber warfare and the need to have European technology. We have all read articles about cyber attacks in London, Brussels, Berlin, and Dublin airports during 2025. We can all imagine what cyber fragility implies. Let me highlight for all of us what the implications are. European consolidation is likely to happen. Timing is uncertain. There is a European need to regain technological sovereignty that will result in European investment in tech. Customer experience is a key driver for differentiation and is therefore a priority. Competitive telcos will maintain end-to-end industrial control over core infrastructure. Artificial intelligence will transform processes and networks. With this context in mind, our mission is clear: deliver the best digital experience to our customers. I myself, as a customer, have dealt with large companies that look after the customers and companies that do not and know how to tell the difference. At Telefónica, we want to provide the best connectivity, technology, and digital services for our customers, people, enterprises, and administration. Today and in the decades ahead. This, as you all know, is something we have been doing for over a century. The mission sets the current work for the group. Let me now share with you our vision. Become a world-class European telco with profitable scale. This is where we want to go. World-class sets our performance and eventually scale objectives on par with global peers. European telcos state our origin and duty. We have a clear commitment to Europe's competitiveness and strategic autonomy and to our core markets. All this while maintaining our commitment and love to Brazil. Profitable scales mean anything we do will be to deliver value to shareholders. If it does not do this, we will not do it. To achieve our ambition, our plan has been defined around initiatives required to become best in class. It is built on customer centricity, technological capabilities, operating model, and talent. Up and above this, but not as part of the plan, as a potential addition, is in-market consolidation. By executing it effectively when the opportunity arises, we can unlock the scale needed to profitably elevate Telefónica. If anybody asks me, is consolidation part of the plan, I will answer that it is an upside to our strategic plan and that the financials that we are sharing with you today will not and do not include any consolidation. Regarding a potential consolidation, I believe we do not face a dancing-in-the-rain scenario. Neither do we face a Macbeth scenario. To bring this vision to life, we have designed a strategic plan called Transform and Grow Strategic Plan. A plan that will make the necessary decisions to make it happen. Transformation and growth are interwoven. We transform to improve our services and costs. We grow because we want to make more money for our shareholders and add more value to Europe and Brazil. Let me elaborate on our plan to become ani best-in-class European telco. You will have all seen multiple business plans and are used to analyzing them. Transform and Grow is built around six strategic pillars. Three will strengthen our relationship with customers, whilst the other three are enablers. Deliver a best-in-class customer experience. Customer experience is a powerful competitive advantage, one that is difficult to replicate and central to value creation. Delivering excellence means improving every process that touches or eventually affects the customer, from network quality to interactions across physical and digital channels, from service provisioning to problem resolution. We will automate processes, use AI, develop hyper-personalization capabilities, and invest in both network infrastructure and customer equipment to deliver better customer experience. Expand the B2B offering. Telefónica was a pioneer in driving convergence at scale, a strategy that has proven to be effective in reducing churn and creating long-term value. We will continue to evolve our convergent markets where it is already established. We will accelerate adoption in those where it is not yet the primary household offering. In addition, we will increase the scope of offering to our customers. Scale B2B. We will modernize and enhance our communication services and expand our digital offering. We will double down on cybersecurity services. Evolve technological capabilities. Internally, we will continue to develop and deliver network assets while modernizing our systems and processes. Externally, we will strengthen our product innovation capabilities to better serve our customers and their evolving needs. Simplify Telefónica's operating model. We will speedily simplify our operating model to increase efficiency, sharpen focus, and enhance accountability. We have redesigned our model to accelerate decision-making and execution, and we have revisited our corporate center and global business units to better serve and fit the group's new reality of four core markets with large operations. Develop talent. To execute our plan, we must promote talent, build the right capabilities, and improve decision-making and execution. Each of our six strategic pillars is actionable and will bring positive change. Let me elaborate. Customer experience. By improving our processes, systems, offering, and hardware, we will increase our net promoter scores, NPS, by six points by 2028 on average. Spain stands out in this area where we have an NPS; we will target an NPS of 61, comparable to leading tech companies. B2C expansion. Accelerating convergence will raise convergence over fixed broadband base to 74% by 2028. We also expect to grow the ecosystem revenues by 3.4% CAGR from 2025- 2028. Scale B2B. Modernizing our communications portfolio and expanding digital services will elevate B2B revenues to 26% of group revenues by 2028. These KPIs measure the speed of our transformation and growth. The three transversal pillars of our plan are designed to enable growth and transformation. Each has projects underlined by KPIs and actions. Evolve technological capabilities. We will invest EUR 32 billion in TotEx, including CapEx and OpEx, to improve our networks in the period 2026- 2028 and reach a network optimization level of 3.75 by 2028. Simplify Telefónica's operating model. We have reviewed our operating model, and we will resize the corporate center and our business units to align them with the new reality of our group and the revisit roles, reducing OpEx from these areas by 25% by 2027. In parallel, we are launching efficiency plans to address the inflationary pressure of our industry, with gross OpEx reduction per annum at constant effects of EUR 1.51 billion by 2028 and EUR 2.0 billion per year by 2030. This is gross, not net. Develop talent. Building capabilities through reskilling and acquiring new talent is necessary. We will have more than 91% of critical roles covered yearly. In addition, we are evolving our culture to one of a more impact-driven mindset. We are fully aware that the implementation of our plan is what will determine our success. Diamonds must be unearthed and brought into the sunlight if they are to shine. We now turn to the potential upside of our strategic plan. Consolidation. I want to be clear: this is an upside to our plan. It is not part of our organic plan. In-market consolidation leads to a more efficient investment in Europe to help close the technological gap with the U.S. and China and strengthens Europe's strategic autonomy. The European telco market remains fragmented, unlike the U.S. and China where three scaled players operate. Scale enables greater investment capacity. In Europe, over-regulation and fragmentation have led to subscale operators and inefficient networks, slowing technological progress. CapEx budgets of U.S. and Chinese operators are 9x-15x larger than those of their European counterparts. U.S. companies invest EUR 11.3 billion per year on average. Chinese companies invest EUR 6.7 billion per annum, and that is in nominal euros, whilst European companies invest EUR 700 million per year on average. The result is faster technological development and deployment in the U.S. and China than in Europe. For example. Standalone availability, 5G availability, is 77% in China, 24% in the U.S., and only 2% in Europe. Europe faces huge gaping holes across the technological stack and is aware that cats do not negotiate with mice. In contrast. Similar maps for the U.S. and China show that most stacks are well- developed over there. Given our capabilities, telcos are well positioned to help close some of these gaps. For example, those in cybersecurity or sovereign cloud. In this context, there have been important changes that directly affect Europe's regulatory framework. The distance between the U.S. and Europe, the North Atlantic, is larger than it has ever been since World War II. There is a very broad acceptance of the Draghi and Leader reports in Europe. I think we can all agree that having a broad consensus in Europe is unprecedented in my lifetime. This potentially could lead to a new European regulatory framework. This new framework could support in-market consolidation with appropriate regulatory terms to generate profitable scale and synergies for telcos in efficient markets with value-accretive investments in telco core competencies and adjacent digital products as remedies. I have. Relevant, ample, and I would. Argue, successful experience dealing with authorities, brokering large complex deals, and bringing about profitable change that supports European and member states' objectives. If we believe broker research and industry experts, unlocking consolidation in our core markets would generate EUR 18 billion-EUR 22 billion in synergies from selected Telefónica-led potential transactions. These synergies would benefit buyers, sellers, customers, investment, and innovation. Also, I can confirm that we will complete our exit from Hispam. Please note that Telefónica will always follow a pragmatic approach towards portfolio rotation. Transform and Grow is a five-year organic plan focused on growth and building a best-in-class telco. It is a plan that will carry Telefónica far. As discussed, it is structured around six strategic pillars that will strengthen customer relationships and push cross-functional enablers. Each pillar includes specific actions that have been planned professionally. We have also studied and planned further ahead in all areas up to 2035. We wanted to understand what we think the future technology evolution will mean for our industry and to ensure long-term strategic coherence for our plan and decisions. Now, our CEO, Emilio Gayo, will go into the specifics of how we will implement the plans. Thank you. Good morning, everybody. Thank you, Marc. It's really a pleasure to be with you all today and to be part of this chapter in the history of Telefónica. Our Transform and Grow plan will impact every unit across the group: operating businesses, global units, and corporate center. During the next 15 minutes, I'm going to speak about the following. The importance and opportunities in our core markets. The key principles of our approach to these markets. Finally, the change to our operating model adjusted to Telefónica's new footprint. Our markets represent a significant opportunity. They have a total population of more than 400 million people. All four of them are among the 12 largest economies in the world. Three of them are among the top five largest communication and digital services markets in Europe. Brazil is the largest market in Latin America. Combined, they give us access to a telco market world of close to EUR 170 billion. Each of them has its own unique characteristics and opportunities. Spain is one of the most competitive and fragmented markets with fully deployed fiber infrastructure. However, there are great opportunities in the B2C ecosystem and B2B digital services. Brazil alone is of continental scale, with a mobile market consolidated with three national players. Even so, in fixed broadband, it's still fragmented and in the development stage. Importantly, it has growth ahead in communication services across all segments. While Brazil is the largest telco market in Latin America, Germany is the largest in Europe, especially in B2B. However, it has seen a limited development in fiber deployment and in the fixed broadband market, impacted by the current regulatory framework. Last but not least, the U.K., the second biggest telco market in Europe and the largest in digital services for enterprises. Despite high competition, it's a market that presents opportunity in both fiber and convergence. As Marc mentioned before, we believe that the path to becoming a world-class telco starts by being best in class in each market. To achieve this, there are five principles to apply to all markets. First, excellence in customer service is and will be a key differentiating factor for a competitive advantage. It creates sustainable differentiation and is probably the most difficult element to replicate. For us, this means superior network quality, optimized processes, linear operation, and leveraging AI and digital in customer interactions. Telecommunication is a business based on infrastructure. We know the importance of investing in the network with maximum efficiency. Our second principle will be to continue pursuing this approach even in the countries where we do not own the infrastructure. We are committed to ensure commercial access solutions in both fixed and mobile in all markets. Third principle, our strong belief in the value and importance of convergence. This means delivering fixed, mobile, and content services to households. We have proven the growth benefits of offering both B2C ecosystem and B2B digital services. Our fourth principle is twofold. We will continue expanding the ecosystem to increase engagement with our customer. In parallel, we will further our commitment to delivering best-in-class digital services to become the preferred partner in B2B. Additionally, we will capture the business opportunities in wholesale when it generates value. Our fifth principle is one that I, as Chief Operating Officer, firmly believe in: more efficient and linear operations. All of this means nothing without the right people. To make sure that we meet these five principles, we will invest in reskilling our people and hiring top talent when needed. Let's talk now in more detail about the plans for each of our operating business units. In Spain, we are the market leader in all segments. These past years, we have achieved a differential position in service quality to sustain our leadership in the market. As part of the Transform and Grow Strategic Plan, Telefónica Spain will carry out significant investment and initiatives to hold on to this position. We will double down our focus on service quality and customer experience as a long-term differentiating factor. I would like to highlight the following initiatives. We will fully deploy 5G Standalone and upgrade the fiber network. We will reach hyper-personalization in customer service. Finally, we will refine our commercial policies, resulting in stronger and more transparent customer promises. Now, onto B2C. We will expand the existing ecosystem of services, which includes video content, devices, alarms, solar power, advertising, and financial services, among others. We will enrich the ecosystem with new services such as a Travel eSIM and device dropout. We will remain committed to differential pay-TV content, investing in sports, fiction, and in-app fiction, all with the aim to reach 45% of Spain's total B2C revenue by 2028. We will also strengthen B2B digital services by developing new capabilities with a special focus on cybersecurity, defense, and edge cloud. We will do this while keeping our focus on efficiency in OpEx and CapEx, proving our ability, once again, to be an industry benchmark. Telefónica Spain will continue delivering sustainable growth with a positive evolution in all key metrics. Now, let's talk about Brazil, a high-growth market with a lot of potential. Our priority is to continue growing by leveraging B2B's premium position and brand recognition, and by taking advantage of our unique infrastructure assets. To do so, we will continue to focus on being leaders in network quality. We will expand our networks nationwide in both mobile 5G and fiber. This will reinforce our convergence strategy. In parallel, the development of the B2C ecosystem is a priority. We will continue increasing and expanding the ecosystem with services such as content distribution, devices, financial health, and education, among others. Over 1 million customers benefiting from our financial services and the 500,000 subscribers in our health services are proof of our expertise. In B2B, we expect to grow to be boosted by the additional capabilities of digital services. In the case of Brazil, this will be mainly in cybersecurity, cloud, IoT, and Industry 4.0. On top of the revenue growth, we will also unlock efficiencies. Here, we can highlight the decommissioning of the copper network, which should be completed by 2028. In Brazil, we expect to grow above inflation in key financial metrics. Now, let's talk about Germany. O2 is an established mobile challenger in the market. We have a profitable mobile business, and we want to strengthen our position. We will leverage this mobile recognition to accelerate penetration for our convergence and family bundles. In parallel, considering our leadership in B2B, we will continue broadening the roadmap of services to stabilize and revamp the business. Additionally, we have an opportunity to leverage the relatively low development of the fiber market. This will improve our position both in fixed and in B2B, where our presence is still limited. To capture this growth, our strategic imperative is to secure competitive access to fixed infrastructure. Leveraging this access with O2, we want to drive convergence in 2028 to around 70%. Regarding the potential of B2B, we will reinforce and solidify the offering and go-to-market. We have serious ambition to become a relevant player in this segment. Germany will execute this growth plan, including simplification and more structural efficiencies to return to growth in all metrics in 2027. Finally, the U.K. We can proudly say that our joint venture, Virgin Media O2, is among the largest challengers in Europe with a unique market position. When combining content, mobile, and fixed broadband, we will build on that unique position to promote premium convergence. Virgin Media O2 will boost the B2B business both in traditional communication and in digital services. We will also continue to expand our fiber offer. Additionally, we will continue exploring new wholesale opportunities both in fixed and mobile. Finally, in common with our approach to each of the four markets, simplification and efficiency are deeply embedded in the plan for the U.K., leveraging AI to optimize both OpEx and CapEx. In the U.K., we aim to sustain and reinforce our second position in the market. Moving to our global business units, they are our engine for developing and sharing capabilities. Let me dedicate some time today to Telefónica Tech, our engine for B2B digital services. We are evolving it into a full digital services provider, expanding the portfolio with focus on sovereign cloud, IoT, Industry 4.0, and cyber services. In fact, cyber stands out as a priority in all markets where we aim to replicate the success of Spain, which has achieved close to 20% of market share. Telefónica Tech, as a product and service factory, will increase efficiency through technology and operation excellence. Now, let's talk about the group operating model. The group's new footprint, with fewer operating businesses, but now all of them of large scale. Along with our determination to accelerate execution, calls for a simplified operating model. Hence, our operating businesses will continue to focus on market growth, developing service excellence, and ensuring efficiency in the operation. Global units will serve operating businesses, leveraging scale, growth opportunities, and standardization. The corporate center will focus on providing strategic guidance, deciding capital allocation, maintaining strict control, and supporting the group in areas such as people, legal, finance, and M&A, among others. This new operating model means that we are going to simplify our organization, the way we operate, and the projects we invest in. Ensuring that we focus on what is key for the group. For example, our innovation unit will have fewer projects and greater financial discipline. It will continue to evaluate emerging technology, but concentrate efforts on the strongest opportunities. This simplification will deliver close to a 25% reduction in the OpEx-related operating model. As Marc mentioned before, these are difficult decisions to make, but they have to be addressed, and we are committed to doing so. So far, I have mentioned several times efficiency and simplification. Efficiency initiatives are at the core of our plan. They will help us fund the journey to faster growth and operate more dynamically and effectively in the markets. Most of the initiatives are recurring and will be implemented across the group. They will provide a gross run rate reduction in our TotEx base of EUR 2.3 billion by 2028 to offset part of the growth expected. EUR 1.5 billion of those efficiencies are in recurring OpEx and sales. To highlight, we will launch a structural program across the group. We will enhance automation of the network. We will transform the supply chain end-to-end. We will redesign group processes by leveraging advances in technology. We will simplify operation, and we will complete copper network decommissioning. This is not a closed list. We will continue to identify additional opportunities to deliver value on top of what is already included in the plan. Growth is the major driver of the plan, especially in B2C and in B2B, with moderate decline in from wholesale and others. In B2C, both communication and ecosystem revenues are showing strong growth. Looking at B2B, on top of the higher comms revenues, our effort in digital services is paying off. Above all, service excellence will be key for our growth ambitions. In summary, this plan will help us to become a best-in-class European telco and its maximized growth opportunities. Simplification is at the core. We'll be obsessed with identifying and capturing efficiencies. Finally, strict and fast execution is a must for all of us. Now, let me hand over to Laura. Thank you very much. Thank you, Emilio, and good afternoon, everyone. I will now take you through the financial and our capital allocation framework, as well as the targets that underpin this plan. We have broken down our targets in two periods, following the balance between short and long-term undertaking in our review. Our guidance is at constant effect, at constant perimeter, which is our core operations and remaining business. In Hispam. During the first three years, 2025- 2028, we will deliver solid growth across our economic KPIs. We expect revenue to grow at a compounded annual rate of 1.5%-2.5%. EBITDA will also grow at 1.5%-2.5%, those margins previously stable. CapEx over revenue will decrease from 12.5% in 2025 to 12% in the first three years of the plan, and the decline starts from the beginning of this plan. As a result, operating cash flow after leases will grow at a compounded annual rate of 1.5%-2.5%. From 2028- 2030, we expect to accelerate the pace, targeting an additional point of growth so that revenue, EBITDA, and operating cash flow after leases will grow at a compounded annual rate of 2.5%-3.5%. As transformation progress matures and efficiency gains materialize, CapEx over revenue will further decline to 11% in 2030. This guidance is supported by the operational levers shared earlier today. Revenue growth, as explained by Marc and Emilio, will come from B2C and B2B, with richer convergence and digital ecosystems in B2C and B2B demand for digital services continuing to scale. This growth will be partly offset by a declining wholesale revenue, mainly driven by the extension of key contracts in Spain and the loss of the contract on 1&1 in Germany. Moving to EBITDA, efficiency programs are fully embedded, allowing us to protect profitability, even as the business makes shifts toward digital and despite inflationary trends. Finally, appropriate CapEx execution remains key while ensuring the ability to capture growth opportunities and securing network quality. Overall, this translates into sustained operational momentum underpinning the path to a stronger cash generation. Having detailed how we deliver operating targets, let's now focus on our capital allocation framework. Our approach builds on two key pillars: a degreased, more predictable free cash flow profile and disciplined capital allocation. We are operating with a less volatile perimeter, with improved currency mix, supported by healthier core operations and underpinned by gross efficiencies and appropriate CapEx for growing. About the perimeter, we have streamlined our footprint, exiting five geographies. This reduces macro volatility and improves our currency mix. Free cash flow is anchored on a group-wide efficiency program. Importantly, this is not tactical cost-cutting. This is a structural transformation on how we operate. Finally, we are investing with disciplined CapEx allocation. Important as well, this does not rely on consolidation or M&A upside. Any such opportunities could be incremental. Free cash flow is the base. I will include the investment we need for growth. What do we do next? We protect our rating. We will anchor our investment grade rating with a more flexible and appropriate balance sheet. We will propose the dividend aligned with free cash flow generation growth. Finally, we'll pursue value-accretive M&A selectively, only in core markets and core businesses, where synergies are clear and returns meet our financial discipline. Let's look now at how we are defining the free cash flow we are going to use to guide you. Our objective is to provide the most recurring free cash flow base. Free cash flow base is on continued operations. We continue including hybrids like any other financial payments. We continue excluding spectrum. It's not possible to guide on it. Amounts, payment terms, and timing are unknown. We are excluding two elements: U.K. dividends, which we cannot guide about as they are decided on an annual basis based on the local business-owned free cash flow and its leverage. Employee commitments, which have been frequent in the past and we have indeed factored new efficiencies in these projections, are being excluded. We believe excluding them provides a clearer view of our recurring operational cash flow and long-term free cash flow trajectory. These commitments, after the expected increase in 2026, they start decreasing in 2027, with a material decline from 2030 and fading away from 2035. On this new basis, we expect free cash flow base for guidance to grow in the range of 2.5%-3%- 5% in 2025-2028. We are also committing to an absolute amount of EUR 2.9 billion-EUR 3 billion in 2026. Free cash flow is our focus. In the bridge from operating cash flow after leases to free cash flow guidance, we will work on every single item. You can expect some increase in financial and tax payments, and we do not project a significant working capital impact along the plan. We will, of course, continue giving actuals on both U.K. and commitments, as free cash flow, including both, will be the base we use to propose our dividend. This provides you, we believe, with all the pieces to understand our cash generation potential. Moving to our next use of capital. This plan will improve our financial flexibility. Removing our debt constraint will make us stronger. We are firmly committed to maintain an investment grade rating. Furthermore, we plan to reduce net debt to EBITDA to 2.5x in 2028. This leverage reduction is driven by growing operating cash flow after leases and excess free cash flow, which will be partially offset by items such as spectrum payments, contributions to our infra vehicles, and then our dividend. Net debt amounts and ratios cannot be seen in isolation. They have to be evaluated together with how we manage our balance sheet and our financial resources. Our debt maturity profile remains smooth, with an average debt life of 10.5 years and average gross maturity of EUR 3 billion per year, which enables us to manage refinancing at ease. We hold a comfortable and ample liquidity position above EUR 16 billion, which is made of cash, current financial assets, and enrolled credit lines and long-term committed credit facilities. Finally, we enjoy deep access markets to source our financing, so we can decide when to access the market, reducing volatility from FX and interest rates. The next use of capital is our dividend. We propose a dividend that is a result of a disciplined capital allocation among investment for growth, leverage, and shareholder remuneration. Today, we reiterate the EUR 0.30 dividend per share for 2025, EUR 0.15 to be paid in December 2025 and EUR 0.15 in June 2026. We expect to distribute EUR 0.15 as dividend in 2026 in one tranche in June 2027. In the midterm, in years 2027 and 2028, our target is to pay out a percentage of our free cash flow base for dividend that will be in the 40%-60% range. Dividend is a result and will be aligned with our growing free cash flow profile. Our last building block is the M&A framework. We are clear on our priorities to maximize value for our shareholders. First, we will only execute accretive transactions in our core markets and core business areas, targeting deals that enable us to achieve meaningful cost and network synergies, and ensuring favorable terms and conditions. We continue working on completing our exit from Hispam. Second, we will exercise this without putting an investment grade at risk. That remains an action for us. Third, we have ample strategic flexibility. Since our financial plan is entirely organic, any potential transaction could be an upside. Therefore, we can engage in different ways of consolidation, for example, analyzing both traditional M&A deals, but also infrastructure sharing vehicles. We will take a pragmatic approach towards portfolio rotation, either value crystallization opportunities. We will not chase scale at any price. We will invest only where we have a clear visibility of value creation. These slides summarize our full guidance. It is a comprehensive set of KPIs, both economic and financial. It gives you a mid and long-term view, but also visibility with free cash flow and dividend commitments for 2026. It reflects how we will allocate capital and is fully aligned with our Transform and Grow plan. Let me end by remarking on the key points of our financial plan. This financial plan is anchored on the robust operating strategy explained by Marc and Emilio, and will improve our financial flexibility. Free cash flow is our focus. We will only execute value-accretive M&A, which will be an upside to this plan. We will improve financial flexibility, and we are committing to a sustainable dividend policy aligned to free cash flow generation. I will now hand over to Marc for the closing remarks. Thank you. Thank you, Laura. The plan we have before us is exciting, ambitious, and demanding. We are well set, fit, and ready to start the important race we have ahead of us, with very strong and hard-to-replicate assets and capabilities, supported by a wide senior team with exceptional professionalism, expertise, and commitment. The plan addresses tough issues, makes necessary decisions, and sets a clear capital allocation strategy that ensures the investment needed to transform and grow the company. The appropriate leverage level to allow us the needed flexibility defines our dividend policy as an outcome of our free cash flow after investment and financial flexibility. The strategic plan embodies the joint vision of the management team and the board, and has been unanimously approved with the backing of our strategic shareholders. Transform and Grow is the plan Telefónica needs to capture the opportunities ahead, improve our financial flexibility, and generate sustainable value for all shareholders. I am here to lead Telefónica on this fabulous journey, transform and grow the group, and make any necessary tough decisions to execute this plan. The plan has my full and undivided commitment. As an additional upside to the plan, we will pursue in-market telco consolidation to unlock profitable scale and enable value-accretive investments. This plan defines our direction and our future to make our mission a reality: deliver the best digital experience to our customers. We have spat dirt, wiped the sweat from our eyes, wiped our arms, and are now going for it. Now this is the time for implementation. We all have our marching orders, and we all know what to do. This is not the first time I do this, and I am looking forward to doing it. Thank you all for being here today, and thank you for your time. Thank you to everyone across Telefónica who is making this plan reality. Thank you. We believe today is the start of a new era for Telefónica. We believe that growth begins with a vision We believe in our plan. Our mission is to deliver the best digital experience to our customers. We believe in the power of simplicity and focusing on what truly has an impact. In open networks, the think connect lives and ideas and will raise new possibilities for all. In talent, which combined with technology, will usher in a new era. We believe in courage, courage to go beyond the expected, to innovate with new products, to lead when the path is narrow. We believe in the future of Europe. We believe we can help to build its technological autonomy. Because growth is alive, moving, evolving, becoming. Transforming. We believe Telefónica will transform and grow. Thank you very much, Marc, Emilio, and Laura, for this insightful presentation. Today's event reflects Telefónica's commitment to transparency, accountability, and an open dialogue with all stakeholders. With the conclusion of the formal remarks, we now progress to the Q&A session. The purpose of this section is to give you an opportunity to have a deeper look at any of the topics discussed and address any open questions you might have. To ensure an efficient Q&A session, we kindly ask all virtual attendees to submit their questions to our inbox, cmdquestions@telefonica.com. For all in-person attendees, please raise your hand. We'll hand you the microphone when it's your turn. We kindly ask you to state your name and institution before asking your question. Please limit any queries to a maximum of two questions per participant. For the Q&A session, we are joined by our previous presenters, Marc, Emilio, and Laura, as well as Bocha Ochoa, CEO of Telefónica Spain, Christian Gebara, CEO of Telefónica Brazil, Lutz Schüler, CEO of Virgin Media O2, and Markus Rolle, CFO of Telefónica Deutschland. Please welcome them onto the stage with me. Thank you once again for your attention and your continued interest in Telefónica. We'll start with the in-person attendees with a question. I can see, I think this time the first one was Emmett on the back on the right-hand side here. Emmett, please, if you take the microphone, thank you. State your name and institution. Yes, good afternoon. Thank you for taking the questions. This is Emmett Kelly from Morgan Stanley here in the middle. I've got two questions, please. The first question is on the outlook for consolidation, specifically for Telefónica. The consolidation point is made first on your main implications slide, so it's clearly front and center of your strategy. I guess the consensus view is that you are present in two markets that already have consolidated, that have shrunk down to three players. That is the U.K. market and also Brazil. You're still in markets that have had consolidation but still have four players, specifically Germany and Spain. Could I maybe just drill into Spain, please, if you could maybe talk about what consolidation opportunities you might see in Spain? Clearly, we've already had the merger of MasMóvil and Orange last year, which leaves Vodafone and Digi as your two big competitors. Can you talk about how you view both of those potential targets. How things might play out there from an antitrust perspective, and any thoughts you might have there, please? My second question is really for Marc on the Venn diagram, the crossover between telecoms and technology. Obviously, you have a background in technology. You've talked a lot today about data sovereignty and cloud. Can you talk about how you look at this market from perhaps a data center perspective? If I look at the European market, it's clearly controlled by the hyperscalers and private equity. There's a lack of pure European cloud providers and data center operators. Is this an area you'd like to move into? Obviously, rolling out data centers is extremely expensive. Could you look at potential partnerships, for example, with the likes of STC or other partners? Thank you. Thank you, Emmett. I'll answer both questions. We, of course, don't discuss specifics. You were saying that some people, or many people, argue that Brazil and the U.K. have gone down to three. I would say we're down to 3.5, or we could argue potato potato if it's 3.7 or 3.4. We do think there's still a long way and a lot of value to be added in consolidation in Brazil and in the U.K. With regards to Spain and Brazil—sorry, to Spain specifically, we won't comment any. You do know that we don't comment on any particular operation till it's done and closed. I think it would be correct for investors to assume that we're always having ongoing conversations in each one of our core markets. I don't want to become a bore, but any operation we do will go through three conditions, which Laura mentioned: cost and network synergies, appropriate terms and price with a potential seller, and appropriate terms and remedies with regulators. If we can't properly tick these three boxes, we won't do it. We do see huge potential upside there, but there is, of course, uncertainty, and it's not done till it is done. With regards to our telecom and technology opportunities, to ensure that there is no misunderstanding, and I do think I have been clear, our plan is an organic plan. We've only included organic operations and changes in the numbers and in the plan. We do see a potential upside that has to do with M&A. With regards to the potential of the organic plan, we have included some data centers and some potential work there. It does require huge investments, and the returns are quite specific and stable and aren't huge, which is appropriate to infrastructure investments. What we do see is that there could be a potential transformation in the next cycle in Europe. We do see that European authorities are not comfortable with having all data centers in the hand of three U.S. hyperscalers. What we say is telecom operators could help there, but only a s part of a consolidation and only as part of potential remedies, Emmett. Thank you. Let's maybe go down from Emmett and then go through the room. I can see, I think, David is, I think, the next. And then we take Kiel and then Carl, and then probably switch over. Hello, everyone. It's David Wright from Bank of America. Thank you very much. Nice to see you all again. A couple of questions. The dividend cut. Obviously aligned with the new free cash flow profile, but the cut to just 50% of payout. Is that essentially preempting the balance sheet for M&A? You've made the dividend cut. You could now issue equity in quite significant volume without cutting dividend again. Is that kind of what we've done here? We've preempted the ability to absorb M&A into the balance sheet. And then just onto the U.K., might be one for you, Lutz. So we know that there has been this sort of frozen debate in the U.K. around the netco and the possible spin-off of infrastructure. Could you give us any indication of whether that's now back on the table as a potential consolidation vehicle? And a question that's related to that, this is 2.5 tossed in, don't worry, is. Laura, you were given that real gift, I think, from S&P last year when they took the U.K. consolidation away from the group. Have you had a—I think their assumption at the time was that it would never come back, and maybe that's now a little bit more in debate. Have you had an assurance that they're not going to bring that back into the S&P adjusted multiple? Thank you, everyone. Thanks for those 2.5 questions, David, I'll ask Laura to answer the first one and the last 0.5, and Lutz to answer the second. Thanks. Thank you, David, for your 2.5 questions. Regarding the dividend. The dividend is aligned to the plan we are presenting today, which is a plan without M&A, with value in itself, and where M&A is an upside. So dividend now is not related to whatever M&A may happen. It reflects our capital allocation, in which we have three priorities very clear and in a very clear order as well. First, invest for growth. Second, deliver some protected rating, and then have dividend as a percentage of the free cash flow we generate every year. And that's how it comes, the proposal, and not related to M&A, as M&A is an upside to this entire plan. And the S&P one, maybe you want to—you want me? Yeah. I think you should ask S&P, but we have very frequent conversations with the credit-rated agencies. They excluded the proportional consolidation for the U.K. that we think is the right thing to do, and we expect that to continue to be the case. Obviously, I think the ratios are part of the rating. S&P takes many other things under consideration. And this perimeter, being less volatile, with less macro and FX risk, and being very resilient in our core markets, are two elements that are part of the ratio beyond the specific numbers. Yeah, thank you for the question, David. You're right. We have stopped the approach to carve out the netco out of Virgin Media O2. However, I perceive both of my shareholders being committed to consolidation. You can do this in different ways. You don't necessarily need to carve out a network operation, which is very complex and not always successful. We have also our Nexfibre sister company, so there are possibilities. I think, assume that we are committed to the consolidation in the fiber market in the U.K., and both shareholders are supporting VMO2 here. Yeah, just to add that we don't disclose the plan of the U.K., but we want to say that the plan that we have is fully funded, without any kind of netco, with any kind of operation. Netco will be, in any case, a vehicle that we can use, depending on our objective in terms of deployment and connection. Thank you. Thank you. Good afternoon. It's Kiel from JP Morgan. Marc, maybe I could address two of the philosophical points you made at the beginning of your presentation around strategy and what you're trying to achieve. The first question is, you mentioned the need to take tougher decisions and be bolder. Just to maybe challenge that and understand exactly how we should think about it, when we look at the guidance you've given for the next three years, the EBITDA guidance you're targeting is the same as the last three-year period, and the cash flow growth is lower than the last three-year period. It's hard maybe for us to see at this stage the output of that tougher decision-making. Is it that that is still part and parcel of what you still need to do? If it is, can you maybe talk us through what needs to be done? What does it take for Telefónica to grow faster? I guess that's really the first question. The second question, you mentioned your, let's say, criticism of the balance sheet historically and the decision and the need to take a more prudent view going forward. How does that square with the M&A strategy? I guess what I'm trying to understand is, Laura mentioned the deleveraging you'll now achieve the next few years. Is that something you're looking to ensure even in the event of M&A? Therefore, will M&A inevitably require a capital raise, as has been discussed quite heavily in the press? Thanks a lot. Okay, thanks. Thanks, Kiel. I wouldn't want to peg the specifics of tough decisions on anything specifically, but I think you can see that we have made an adjustment to our capital allocation, and that sort of decision is different. To what Telefónica has done in the past. I think you have seen the targets we have with regards to simplification, CapEx, and OpEx reductions. These are the results of our calculations. With regards to growth in market, we live in the market. We live with the growth that we see. We think that the right way to approach growth within this market, and I think you implicitly said it, we are going to grow faster than was expected. That is the first tough battle fighting—maybe the term isn't fighting—working. With regards to the market, and then getting those revenues and transforming them into cash flows. There are some decisions that can make that transformation quick, but impact the mid and the long term. There are some decisions that slow the transformation into cash flows and that impact in the creation of cash flow in the short term but create higher cash flow in the long term. That would be my philosophical answer, Kiel, to your first question. The second, you used the term criticism. I don't think what I tried to do is give you my strategic framework and my analysis. The business plan is fully funded. The U.K. business plan is fully funded. The Transform and Grow Strategic Plan is fully funded. We think it is better that we gain some strategic flexibility and move away from the levels of leverage that we have because that allows one to capture serendipity. One allows one to focus more on the midterm and the long term. I think most of us here are over 50, and we know that three to five years might seem a long way away, but one day you wake up and, oh my God, those three to five years have come. With regards to your question, we are not creating a war chest. If there was a relevant M&A operation ahead of us, we would look at the different ways of funding that operation. If the operation, as I said, had cost and network synergies—the right terms and price, the right terms and remedies. One way to fund such an operation would be a capital increase, but not as part of the business as usual. I think I've answered, Kiel. Yeah, yes. Just a very quick clarification, which is, I guess what I'm trying to understand is, is the leverage target you're getting to where you aspire to be going forward, given your point about wanting more flexibility, or is that not a prerequisite? That's what I'm trying to understand. Sorry, your question is, if we did a, I don't know, relevant or transformational M&A operation, would we aspire to reach 2.5? Is that the question? Correct. Is that maybe your aspirational level of where you feel you've got flexibility to do what you want organically and organically going forward? I have to be careful with how I answer that because we're talking of hypotheticals. For business as usual, that is the sort of financial flexibility we would want. For business as usual in this sort of organic terms, that is the sort of financial flexibility we would want. If there was an operation that changed things, we would have to look at it, but it would be under what we've called here strict financial discipline or a financial discipline of steel and far away from any investment-grade frontier. Thank yo u. Carl, please, after you, then hand the microphone back. That's great. Thank you very much, Torsten. It's Carl Murdock Smith from Citi. I wanted to dig into some of the operational KPI targets that you've put in the slides, specifically the convergence over fixed broadband base. You're targeting an 8 percentage point increase across Spain, Brazil, and Germany by 2028. In the slides, you talk about a 6 percentage point increase in Germany and a 6 percentage point increase in Brazil as well. To average 8, I'm therefore thinking that Spain has to be 9 or 10. The first part is just clarifying, is that correct? The second follow-on from that is that figure is currently 75%. That would take you up to about 85%. It's currently going down because your broadband ads are growing faster than your convergent ads. A 10 percentage point improvement in three years on a broadband base of 6 million implies about 200,000 convergent ads a year, which is a massive increase on the 21,000 you've just done in Q3, which is the best you've done in six years. Just wanting to make sure that I understand those operational KPI targets correctly. Thank you. Thanks, Carl. That's one question with two parts, I'd say. Now, Emilio, would you? Yes. To understand well the KPIs that we are looking for, convergence for us is a key factor of success. Of course, we have proven in Spain, and we want to increase our convergence and strategy both in Brazil, where we are proving that we have a successful strategy in this way. In the case of Germany, we will do the same. We are going to increase this level of convergence because we think it's the right way in order to protect our revenues. It means that we have to secure access to fixed broadband access in this market, especially in Germany. We are secure that this access is positive, not only for Telefónica, it's for the German market. We fully believe that it's going to happen. With this access and with the deployment that we are able to do, we think we are able to increase our convergence. Anyway, the figures that we are seeing are based in the current condition we have for the whole buy business. If. The condition improves, we were able probably here to improve, and then we can even increase the convergent dimension. The percentage—the percentage can be the same—but the total amount of convergent quantity in Germany. Sorry, just to follow up. In Spain—yeah. I know I am going to hand over anyway to CEO to explain a little bit more about this question. Christian, just start. I do not know if you want to talk about Brazil or Spain. If you want to talk about Brazil, I can give you some information. Yeah, absolutely. It was more trying to back out the German and Brazilian figures to understand what. Okay. The figures are based on the fiber client. What is the percentage of convergent over the fiber? In Brazil, we have two ways to improve it. First is to—now it is around 62%. We believe it can be—and I think in the plan, we reach 75%. I think we are the leading one in prepaid and postpaid. I think there is room to grow, and we have been growing. Now we have what we call a single plan, that it is only one plan for fixed and mobile, and it is growing a lot. In the last quarter we presented, we have more or less like 40% already in this plan, and the other 22% have both plans, mobile and fixed. We are also growing with more fiber deployment. Now, today, we have 31 million home pass with a penetration of or take-up of 25%. We envision to grow more the network and, of course, also the take-up. Both combined with this offer that has mobile and fixed together, we are pretty sure that we can raise this number from 62% to close to 75% very soon. In the case of Spain, Bocha. Yeah, in case of Spain. As you know, Spain got a really high level of convergence right now. We are specifically—in fiber, we are around 88%, and in contracts, we are around—regarding B2C, around 84%. We had, during the last quarter, the best net gains in convergence. We also have the best quarterly churn regarding this kind of offering in the last 12 years. I mean, there is in Spain still room to grow, but we really think that our level of convergence is pretty, pretty high. Okay. Thank you, Carl. If you could hand it back. I think it is probably a good time to take two questions from the online community. First question comes from Victoria Arderiu from Barclays. She asks if we could please provide more details on the leverage trajectory through 2028 and if we should assume that leverage will remain above 2.5 in the meantime. Her second question would be related to capital raise. Would you be open to raising equity as a means to fund potential M&A, which we have partly already answered, but I think also that is something from the credit side as well? Okay. Thank you. I'll ask Laura to answer the first question, and I would answer the second question. Thank you, Victoria, for your question. Our target is to start decreasing our leverage. Ratio net debt to EBITDA to 2.5 in 2028, and it's a path. You should expect that it will be above 2.5 in these years. You have to take into account we are starting from 2.89 as of today, and that decreases with the post-closing event. It is a journey. It has a target at the end of 2028, but it will be slightly higher in the in-between years. The main lever and the most sustainable is free cash flow generation. That free cash flow generation is based on operational cash flow after leases growth because regarding the other below items, there will be a slight increase in both financial and tax payments, and also working capital is not going to have a material contribution in the next three years. The main lever is free cash flow, but also take into account that we are having a pragmatic approach to portfolio rationalization. That could also be part of that. On the positive side, also to say that there are not large spectrum auctions or no spectrum auctions from now to 2028. Maybe 6G in Brazil, but nothing else. That will also be. It won't be a headwind in order to reach that delivery target. Regarding a capital raise, I think I have addressed it, but I think it's worth addressing again. The Transform and Grow Strategic Plan is fully funded. If there were a relevant operation under the three conditions I have mentioned during the presentation and in this Q&A session, we would analyze the option of a capital raise for the operation, but not as part of the business as usual. For a large relevant M&A operation, we would contemplate that option to finance the operation. Thank you. We'll take the second question from the online community. That's from Ottavio Adorizio from Bernstein. I will read the question. It's for Laura. Based on guidance for midterm growth in EBITDA and net debt to EBITDA in 2028, it looks as Telefónica might record either limited debt reduction over the next three years and/or significantly increase in lease charges, which may reduce growth in EBITDA. As a result, my question is, can we please have some color on the cash costs booked below free cash flow, including cash costs for employee commitments, the growth in P&L lease cost management expect to incur during the midterm period? Many thanks. Yeah. Please, Laura. Yeah. Thank you, Ottavio. Maybe I answered it partially already with the answer to Victoria, but to touch upon some of the other items you say in your question. The main deleverage lever is operating cash flow after leases. There we are including leases that will increase, but low single digits. You shouldn't expect a large increase in that line. Obviously, we are deploying our mobile networks, and that will make leases go up. Also, those contracts are linked to inflation, but inflation is more stabilized thereafter. There's not a large increase in leases. We will apply the same discipline we apply to CapEx. That's what it's leading to, that operating cash flow after leases growth in the first three years of the plan of 1.5-2.5. On the other items, I already gave some outlook about financial tax, also a spectrum not having auctions in the near term. The specific question about commitments, we have our best estimation as we speak, as we still need more clarity. Our idea is that commitments should increase in 2026, but from that point, they start decreasing. They will decrease all the way to 2030. In 2030, there's a very sharp decrease. From 2035, they will be really negligible. I think I cover most of it with the two questions. Just a sec, Torsten. Emilio, you wanted to mention something. Yes. One answer to Carl's question about the convergent, because to be honest, we didn't understand very well your question. I understand now that in your calculation, you missed to put U.K. U.K. is included, but I think you did the average of the other three countries. If you include U.K., the result is the result we include in the page. Carl, I would suggest if it's not clear, when we finish, I'm not sure where Carl is, but okay, when we go here, why don't we take it offline and clear it out? We'll take it offline. Okay. Thank you. Next question. I can see there's a question very much in the back, which is too much in the darkness. Yep, I think is it. James? Yeah. Hello. Antonio Rodríguez from JB Capital. Thank you very much. Just wanted to touch upon a couple of things. The first one, catching up on working capital from before. You have $0.9 billion so far in 2025. I wanted to know exactly what are you expecting for 2026, if possible. You mentioned that the deterioration is coming from the fact of being a smaller company. I struggle to see how that can worsen in itself, like for working capital to this magnitude. I can see some, but if you can provide some color on the magnitude and what should happen over the next few quarters because of that very reason, it would be useful. The second one would be on OpEx. You're talking about OpEx reduction until 2028, $1.5 billion. Two things there. The first one would be, what are the implementation costs that you are forecasting for some of that CapEx, if any? The second one would be, that $1.5 billion is a lot of money for having an impact on margins, and yet you are forecasting revenue growth and EBITDA growth similar. In your guidance. I guess the question is. Are you expecting otherwise significantly higher OpEx growth, like for like, than revenue growth on the one hand? On the other hand, would you be expecting that those areas in which you expect to grow on revenues have a much lower margin in themselves? Thank you very much again. With regards to the working capital question, I'll hand over to Laura. Regarding working capital, we have to distinguish between 2025, and the question has to do with the previous Q3 results presentation for those who did not attend to that. For 2025, we indeed have less working capital contribution than we initially expected. That has to do with a lower working capital management capacity in some countries of Eastman. That has to do with 2025. Going forward, we are talking about the free cash flow trajectory of 2026 to 2028. In that trajectory, we are not counting with a major contribution of working capital. Of course, there will be ups and downs that are business-related. For instance, as an example, in 2026, we have a new season of football rights, and that will have some payment terms that may affect 2026, and then they revert in 2027. Fairly aligned to business as usual and the market dynamics, deferred payments, CapEx seasonality, and so on. We should distinguish. There's an explanation regarding 2025 with many bits and pieces. Part of that explanation has to do with less capacity to do working capital in Eastman. Then it's our new future projections. In the new future projections, there will be variation of working capital as usual, but it's not a major contribution in the guidance of 3%-5% we are giving. In the EUR 2.9 billion-EUR 3 billion free cash flow guidance we are giving in 2026. I hope it's more clear now. Yes. Emilio? Yes. Regarding the second question and the cost of capture, this cost of capture is mainly one of investment to capture AI and IT efficiencies. It accounts for less than 5% of the savings expected in the first year of the plan. It's not included in this cost of capture anything that can be related to people. Related to the second question, we are expecting to grow in different lines of business, but digital services and ecosystem really brings less margin than the traditional business based on communication. It means less margin, but it's less intensive in OpEx. Due to this, we are expecting to grow in cost and license, but basically in direct costs. In the rest of the OpEx and leases, we are explaining the declining of this number. Thank you. I think let's try James again. Thank you. Yes, thank you very much indeed. It's James Ratzer from New Street Research. Two questions, please. The first one for you, Marc, was more a kind of philosophical question about growth in our industry. Across your markets, I think the kind of weighted average inflation at the moment is around 3%. Yet the kind of medium and longer-term guidance you're giving for revenues and EBITDA suggests you don't really see organic opportunities to grow above inflation. Why is this? What needs to be done, do you think, to get industry growth as a whole above inflation? Actually, when you look at your organic opportunities and you're setting this guidance, do you see longer-term opportunities for CapEx to sales to be higher than the 11% in return for longer-term growth to actually be in excess of inflation? The second question, really, I think probably maybe for you, Laura, but you made an interesting comment in your presentation that U.K. dividends would now actually be driven by leverage, I think, were the words you used. In the past, I think the U.K. dividend strategy has been based on recaps to keep leverage constant. Does that mean your positions, Telefónica and the Virgin Media O2 board, that you'd be pushing for the U.K. dividend to be cut to reduce leverage at Virgin Media O2? Thank you. Thanks, James. I wouldn't qualify the first question as philosophical, but we could have a philosophical debate of what that means now. You were mentioning the average inflation across your countries is around 3%. I'd say it's lower because inflation in Brazil has gone down and is expected to go down. The reality is that the inflation in our countries is and will be a given. Also, the reality is that the growth in the communications markets that we have is what it is. We think we can grow faster than the market in the ways we've explained, by driving convergence, by increasing, improving customer experience, by improving scale in B2B, that is, go-to-market on more products, and via enablers. Of course, digital services are growing at over 10%. They have a lower margin, but it's also that they don't have CapEx. This is our organic plan as we see it. Regarding transformational situations in the next—sorry, you were asking also, do we see any—I think you were saying any increase of CapEx that could create transformational results? Our analysis for the next three to five years is the one we've given you. We are monitoring potentially disruptive technologies that could change things dramatically, but we don't see that we are there now. We think the way to drive transformation and growth in the European market is for us to be allowed to consolidate it. Laura, if you want to address the U.K. dividend. Thank you, James. I'm glad you made the question so I can clarify. The dividend in the U.K. will be decided on a yearly basis, and it will be linked to the local free cash flow of the JV. I added the leverage because obviously, markets are dynamic, and we need to monitor the leverage of the JB versus the market conditions at the time we decide the dividend. The current capital structure of the JB is sustainable, but we will always monitor that balance of the capital structure and the situation of the capital market. That was my comment more than saying that it will be. The policy will change. On the recap, I have to clarify as well that we haven't had recaps in the dividend this year, and we didn't have a recap in the dividend last year either. Last year, we did have the dividend from the free cash flow, and on top of that, we have some proceeds from the CTIL percentage we sold. We haven't done recaps in the last two years at the JB. Basically, it will be the free cash flow of the JB. Of course, we have to be prudent and see the leverage situation each time, depending on market conditions that so far are still very positive. We have been able to refinance very prudently at the JB our next year maturities. Thank you very much. We got another question from the online community, which I'm going to quickly take, and that is from NextGen Research from Justin Funnell. Justin would like to know if we would be willing in Germany, if we're willing to give up share or ownership to control Germany or to get for or control to get to a four to three deal done. The second question would be on Germany as well, on the fiber networks in Germany, Brazil, and actual Spain. Are we interested in them, and would we consider buying fiber networks in these markets? Okay. With regards to. I think the question was, would we be willing to cede control of Germany in exchange of going from four to three? My answer would be. Our strategy is the one we've laid, where we have four markets. Four core markets, and our specific strategy, organic strategy to Germany, is the one we've discussed that includes working on access to profitable broadband. Any operation that we do, any relevant M&A operation will be under the three conditions I have mentioned. With regards to the logic of what we're saying, we believe Germany is a core market, and that is a market that we should have control on. However, there is always a caveat, but that's applicable to anything we do. We have a pragmatic approach to asset rotation. We have a pragmatic approach. With regards to our strategy, Germany is a core market, and I think I've said that in the past. Germany is a core market, but we have to see returns on investment. We are never going to invest anywhere where the returns or investment don't happen. We think they're going to happen. We think it is unimaginable that in the next five to ten years, the telco market in Germany deteriorates further. Thank you. With regards to fiber infrastructure, our position is that we are an industrial operator. We're going to want to have our infrastructure near to us. I think you were referring on the question—Justin's question was referring to M&A? Correct. Yeah. We will look at any—I can't really add anything specific. Our plan does not include M&A, and if there are—and we will look into any relevant consolidation, maybe a large operation, a medium operation, or a small operation. Unfortunately, we will only be able to communicate any operation once it is done. Thank you. Let's go back to the audience. I think, how do we go through? Let's take Josh and Mathieu and then go back to the right side, and maybe in the middle can Andrew and then move back to Fernando, and then we are literally done with time. Thank you, Torsten, and thank you for the presentation. I have two questions. First one, just being a bit more specific on M&A—sorry, on the free cash flow bridge, rather. Secondly, coming back to M&A. Could we just walk through the building blocks to get to the 2026 real underlying free cash flow number, and then how we get from there to the 2028 guidance? Because the 2.9 billion-3 billion excludes restructuring. You've said that restructuring will be more than a billion. Presumably, you've called that out because it's potentially meaningfully more than a billion. Are we talking here about 1.2 billion, 1.3 billion, 1.4 billion that we need to take off the 2.9 billion-3 billion guidance to start with? Secondly, going back to the slide in the Q3 presentation, is it right to think that the guidance for next year includes about 300 million for the tax refund, which we should also adjust for? If I do that math, I think we end up with real recurring free cash flow for next year of about 1.4 billion-1.5 billion. A 2028 number, if I take the 3 billion guide, less a billion restructuring, of about 2. How do you go from real recurring free cash flow in 2026 of about 1.5 billio- 2 billion is the very long first question. The second question, just going back to the comments on M&A, is you've talked about the importance of owning infrastructure, but you've also said that Nexfibre is a vehicle you can use as an off-balance sheet JV to pursue M&A. If infrastructure ownership is so important to Telefónica, why not reconsolidate that asset rather than hand over half of the exposure to InfraVia? Thank you. Okay, thanks. I'll hand the first question over to Laura. Thank you, Josh. Free cash flow guidance for EUR 2.9- EUR 3 billion is indeed a higher growth rate than what we have in the guidance of 3%-5%. That higher growth rate has to do, as you mentioned, because we are seeing now that the tax refund will be cash in 2026 rather than in 2025. That is, as you mentioned, about EUR 300 million. If you exclude that, it gets more into the overall trajectory we gave for the next three years. Free cash flow for 2026 first is built on the operating cash flow after leases for 2026 that we will give you a specific guidance when we close the results for 2025. For the three years, we have talked about EUR 1.5 billion-EUR 2.5 billion. Let me clarify that we are excluding employee commitments, and we are excluding, and that is how we do the restructuring in the case of Spain, in the case of the Spanish operation. Any other cost to capture, it is included in the free cash flow. The free cash flow we have given you and the trajectory, it is a fully fledged free cash flow and is aligned with every operational lever you have seen in the different levers that Emilio shared with us. It is all in there. The employee commitments, in the case of Spain, I explained why we think they will be provided, but in a different line. You will have all the bits and pieces, but we are not putting them in the way we guide to you going forward. That will be the first explanation. Also, in that, you have to see there will be a CapEx decline already in 2026, and that also helps the growth trajectory. When you talk about underlying free cash flow in free cash, first, you also have to take into account FX impact, which we are foreseeing a depreciation in Brazil. Once we close the free cash flow, we do tactical hedges around that, but the initial FX impact flows through the free cash flow as well. The free cash flow always has the operational performance and then many bits and pieces that I would not consider not to be underlying. When we have a refunding tax, it is because we pay more taxes in the past. I do think it is managing every single line of the free cash flow and bringing as much as possible cash flow generation. In your analysis, and we are very happy to run you through with more detail with the investor relation team, the only thing you could exclude or in order to see how that compares versus the rest of the free cash flow trajectory will be the tax refund. Everything else will be aligned without the 3%-5% long-term trajectory for the first three years of the plan. Regarding the second question, see if I understood it correctly, is why would we use Nexfibre as a potential vehicle in the U.K. Rather than do it directly because we are an industry state, we are an industrial operator. The truth is we have not done anything yet. We want to simplify operations. We want to keep core operations near us, but we also want to consolidate. The extra complexity that we have in the U.K., which is, I think, a reality of having Nexfibre and having just 50% of Virgin Media O2 with a partner, goes against simplicity, but also gives us more flexibility. Unfortunately, I have to answer that we will take it on a case-by-case basis. If something happens, we will be able to explain it under our logic. Yeah. I think what Emilio was saying is that Nexfibre could be an instrument. The important thing would be the objective, and there are many ways to skin a cat. Thank you. I think I said Mathew getting the next one. Yes, good afternoon. Thank you. Mathew Biafre from Barclays. I had two questions. The first one was on Germany. Obviously, you talked about the need to continue to grow in different verticals. You are also going to push on convergence. We have clearly noted that the competitive environment as a whole has deteriorated for probably a year or more. I was wondering, what would it take in your view for the market to become more rational? Is it you getting to your right scale? Is it other players changing their strategy? Is it M&A? What makes Germany look good again, so to speak? I had a question about leverage. Very clearly, you said your leverage is going to decline from 3- 2.5. Obviously, that, I think, excludes hybrids, which is how the rating agencies look at it. As an equity investor, for me, it is half a turn higher. My point is you are cutting dividend, you are going to grow, but the leverage is going to remain quite high even in three years' time if I compare it to your peers because they will be deleveraging too. I was wondering why you did not take something a bit more drastic in terms of steps to reduce the leverage. Thank you. I will ask Emilio to answer the first question. Regarding the second one, I will give the first part of the answer and see if Laura wants to complement. Yes. Related to the German market, just first of all to remember that we are facing a challenging situation due to two factors. The first one is that we have not finished the migration of 1&1. If we exclude this migration, the underlying performance that we are seeing is a right underlying performance. In terms of how the market is working at this moment, I will say that there are some signals of rationalism. Some movement in prices can show changes that can be very profitable for all the players. At this moment, we are not able to b e sure that this is a new trend. Again, our underlying results show our resilience, a good way to compete in a challenging market. So Mathew, with regards to the second point, which my understanding is, why were not you more drastic with regards to a dividend cut to deliver? Our analysis on our strategy is the plan is fully funded, and we want to have enough financial flexibility to implement this business plan. To go down to 2.5 in 2028 gives us enough flexibility to fund the business plan in the next three years. Could we have been more drastic? Of course, and maybe we could have been less drastic. We think that the new capital allocation policy is a big difference to what it was in the past. It ensures us that we finance the Transform and Grow Strategic Plan, and it leaves us far or comfortably far from a limit. You did mention hybrids, and we, of course, monitor the way S&P looks into this, and the way Moody looks into this, and the way Fitch IPCA looks into this. We think we strike the right balance to move away from the growth and be comfortable with regards to flexibility for the organic plan. I think we move at a nice speed. Thank you. I think next to Mathew, there is Nick. Hello there. Nick Lyall from Berenberg, please. Just back on M&A, please. Can I check? I mean, maybe it is my misunderstanding of the situation, but on cost and network, I am assuming you understand the costs very, very well in each of the scenarios. On remedies, you are not going to get to know the remedies until you have put your M&A proposal in, I am assuming, unless you tell us different. Prices are also moving against you. What gets easier from here to do the M&A, given the prices have moved against you? Or is it that I have just understood the process and now you have finished the strategic plan, or maybe shareholders have agreed and given you the green light to it now? What has changed? Can you help us with the process, please? Then secondly, on value accretion, how are you going to measure that on M&A? Is it return-based, free cash flow per share? What is the criteria for the board, please? Okay, thanks. Thanks, Nick. We do understand cost networks, and we do understand CapEx synergies very well. Therefore, we also understand what set of remedies would be acceptable and what sort of remedies would not be acceptable. You have mentioned something that we would defer, and I think I know exactly what you are thinking about, but you are saying prices moved against us. We are not forced to accept any specific price, of course. Any potential deal would have to be an agreement with regards to the target, but with regards to us, all right? Any potential. Relevant deal would be complex, and we would only do it under the conditions we see fit for our shareholders. These things usually do not move in 24 hours, like sometimes like a potential news cycle. We are going to keep our cool. We are going to focus on what we want to do. That is why we very specifically say, look, any relevant M&A deal or consolidation is up and above our plan. Everybody should understand that. We should be having conversations in all the deals regarding potential remedies. We do think things have moved, and we do think things should move even more. Let me answer rhetorically. If nothing has moved, there will not be any more movement. If any potential remedies for an operation is to create a fourth player once again, we would be at point zero. That is why I keep insisting in how we would do it. With regards to value accretion, there are many ways to calculate it, and we would calculate it in all ways, but we must see a clear net present value, positive net present value, and focused on cost synergies and infrastructure synergies, not so much revenue synergies, which are like the proverbial pot of gold at the beginning of a rainbow. You think you see them, and so often you do not find them. With regards to cost and network synergies, we have a lot of experience, and I think we can pinpoint them very neatly. This would be a combination of various things. The price and the terms should be some that are appropriate for us, not for somebody to impose on us. Thank you. In the middle, Andrew there, if you could wave and make yourself visible. Thank you. It is Andrew Lee from Goldman Sachs. I just wanted to ask a question just to go a bit deeper on the structural growth outlook. I think what has become clear is what a lot of people are trying to get their head around is in your guidance, you obviously include the benefits of the employee commitments, but you do not include the cost explicit in your guidance. I think we can understand why that might be. I am just going to ask two questions on it. Firstly, in terms of those employee commitments, you have been clear that they go up in 2026 and then come down. During the span of your guidance out to 2028, do those employee commitments go below where they were in 2025? Any kind of clarity on that would be really helpful. Secondly, probably more importantly, can you help us understand the contribution from the employee commitments to your growth guidance, your EBITDA growth guidance out to 2028, so we can just get a better idea of what the structural growth is, the underlying growth beneath that? For the group, it would be great. Even better would be for Spain, but kind of a better understanding of what's actually going on in terms of your structural growth rather than the one-off or the more temporary boost from cost cutting. Thank you. Both questions to Laura. Thanks, Andrew. Thank you, Andrew. On the employee commitments, as we said, we are not including them because we are not guiding on them so specifically. I will not share with you the specific trend for the three next years, just to tell you that it increased in 2026, and then it will start decreasing. There are EBITDA benefits, but I could not get into underlying impacts, taking one thing out or in, because it all has to be managed. We also have other inflationary trends and deflationary trends. What we are doing with these lower employees in Spain is to act in a more agile, simple way, and it is something which is not tactical. It is structural. If I were to take a piece out to see the underlying performance of Spain, I would have to take many other things that may be playing in the other direction. It is true that we have the benefits in EBITDA, and we have the employees' commitments thereafter, but this is the way we have our programs in Spain. Any other peer company will have all the benefits and the cost of capture upfront. The trends will be very similar to what we are showing. I think you still need to see the operational trends of Spain and how that is growing. Of course, a lever to grow that EBITDA in Spain has to do with being more efficient, being more efficient in many aspects, in channel, in employees, in many aspects. I would not focus so much on that specific line. It is just being more efficient and doing all the operational transformation that Emilio shared earlier today. To highlight that, of course, we have some levers of growth. We expect to grow both in B2C and B2B. B2C, both in communication and ecosystem, and B2B, both in communication and in digital services where we see a high opportunity. We have a highlight. We expect a declining in the wholesale revenues, but offset for the growth in the other segments. Thank you. We have already passed the hour, so let's take the last question from Fernando, which I indicated before. Fernando, if you could make yourself visible so you get the microphone. Can someone pass Fernando the microphone? Perfect. Thank you. Thank you. Fernando Cordero from Santander. Two questions, if I may. The first one on the Spanish market and on the mid-term dynamics, because today we are seeing a quite nice volume growth, particularly in fixed profile in Spain. I would like to understand at which extent you expect that pace to continue. What could be the scenario when that pace will start to decelerate, particularly considering the disruptive pricing of the challenger in the Spanish market? The second question is on consolidation, but on the organic side, not in the inorganic side. I would like to understand what kind of potential network sharing opportunities you may see in the different regions where you are already present. You are already sharing mobile in the U.K., some fixed sharing in Spain, just to understand where you see incremental opportunities here. I will hand over the first and second question to Emilio, but just to mention that in the numbers you see in the organic plan, there is no consolidation in general or specifically the one you are indicating. That would be up and above. Emilio? Yes. Related to the Spanish market, we expect to maintain the performance, even taking account that we know that there are different strategies of our competitors, but the truth is that in the last quarter, last year, we have demonstrated that we have a superior positioning in terms of networks, price, and excellence in the service. We have mentioned several times, but we really believe that the differential positioning in the service excellence is really a competitive advantage, sustainable, and will be key for the future of Telefónica Spain. As long as, of course, the network upgrade that we think permits us to have this better position, at the same time to create new opportunities. In the case of the, again, our competitors and the competitors that are reducing pricing sometimes, again, we have been with this situation for the last years, and we have been demonstrating our ability to create value even in these conditions. The second one about the network. In terms of network, we have a very practical approach. If the conditions are more adequate, we can consider a different approach. We believe to own the control of our infrastructure, but it is true that we have to be practical and to find the best way in order to develop the best network in each country. Thank you very much. That concludes our Q&A session. Thank you very much for all of you for participating. We truly value your time and your interest in today's discussion. As we would now like to invite all in-person attendees to a cocktail lunch following this session immediately being served outside of the auditorium. Thank you very much again, and we are looking forward to engage with you in the future. Thank you.