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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of October, 2017

Commission File Number: 001-09531

Telefónica, S.A.

(Translation of registrant’s name into English)

Distrito Telefónica, Ronda de la Comunicación s/n,

28050 Madrid, Spain

3491-482 87 00

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

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Telefónica, S.A.

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INTERIM MANAGEMENT STATEMENT

JANUARY – SEPTEMBER 2017

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The financial information related to January-September 2017 contained in this document has been prepared under International Financial Reporting Standards (IFRS), as adopted by the European Union, which do not differ for the purposes of the Telefónica Group, from IFRS as issued by the International Accounting Standards Board (IASB).

Telefónica’s management model, regional and integrated, means that the legal structure of the companies is not relevant for the release of Group financial information, and therefore, the operating results of each of these business units are presented independently, regardless of their legal structure. For the purpose of presenting information on a business unit basis, revenue and expenses arising from invoicing among companies within Telefónica’s perimeter of consolidation for the use of the brand and management contracts have been excluded from the operating results for each business unit. This breakdown of the results does not affect Telefónica’s consolidated earnings.

The English language translation of the consolidated financial statements originally issued in Spanish has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain omissions or approximations may subsist. Telefónica, its representatives and employees decline all responsibility in this regard. In the event of a discrepancy, the Spanish-language version prevails.

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01

CONSOLIDATED RESULTS

In the third quarter of 2017, average revenue per customer growth accelerated to 4.3% y-o-y in organic terms (+1.2 p.p. vs. April-June) while churn remained stable (+0.1 p.p. q-o-q), reflecting the continual improvement in the quality of the access base (344.5m in September; -1% y-o-y).

Thus, i) LTE customers amounted to 89.0m (1.6 times y-o-y), with quarterly net additions of 7.4m (+2% y-o-y) and a penetration of 35% (+12 p.p. y-o-y); ii) Mobile contract accesses (114.1M; +5% y-o-y), with quarterly net additions of 1.5M (1.2x vs. April-June), represented 42% of the total (+2 p.p. y-o-y); iii) Smartphones (+8% y-o-y; 156.5m) reached a penetration of 62% (+5 p.p. y-o-y) and quarterly net additions of 1.4m; iv) FTTx and cable customers (10.5m) grew by 21% compared with September 2016 after quarterly net additions of 551k (1.7x y-o-y), which is 49% of the total for fixed broadband accesses (+9 p.p. y-o-y), with coverage of 42.8m premises passed (+15% y-o-y); and v) Pay TV accesses (stable vs. September 2016) presented quarterly net additions of 101k (-25k in July-September 2016).

Exchange rate fluctuations had a negative impact on key financial indicators in the third quarter, mainly due to the strong devaluation of the Venezuelan bolivar and the depreciation of the Brazilian real, Argentine peso and pound sterling against the euro. Thus, in July-September currencies reduced y-o-y growth of revenues by 6.1 p.p. and OIBDA by 5.4 p.p. (-1.1 p.p. and -0.7 p.p. respectively in January-September).

Nevertheless, it is important to highlight that the negative impact of FX evolution at OIBDA level in the first nine months of the year has been offset in terms of cash generation, since depreciations also decreased payments in euros related to CapEx, taxes, interest and minorities.

Revenues (€12,754m) decreased 2.5% y-o-y in the quarter (€38,846m in the first nine months; +1.4%). In organic terms, however, revenue growth accelerated to 4.0% (+0.9 p.p. vs. April-June; +2.9% in January-September), driven by improved contributions from T. España, T. Deutschland y T. Hispanoamérica.

Excluding the negative impact of the regulation (accelerating to -1.3 p.p. in the quarter, primarily because of “Roam Like At Home”- RLAH), revenues would have increased by 5.3% y-o-y organic in the third quarter (+4.0% in January-September).

Moreover, service revenues improved their growth rate in the quarter to 3.3% y-o-y in organic terms (+2.7% in January-September), primarily driven by the improvement in T. España. Handset sales had a y-o-y double digit growth in the quarter (+11.8%; +6.6 p.p. vs. April-June).

Mobile data revenues increased by 16.3% y-o-y in organic terms in the quarter (+15.9% in January-September), representing 58% of the quarterly mobile service revenues (+6 p.p. y-o-y in organic terms).

Mobile data traffic in the quarter maintained a strong pace of growth (+75% y-o-y), backed by LTE customer traffic, which accounted for 54% of the total (+17 p.p. y-o-y) with higher average use (+67% in the quarter) and ARPU around 10% higher in the first nine months. The average traffic per customer has thus reached 1.7GB per month (+61% y-o-y).

Operating expenses (€8,884m in July-September; -3.2% y-o-y) increased by 3.7% y-o-y in organic terms. Compared with the previous quarter, y-o-y organic growth accelerated by 2.5 p.p. because of increased supplies (+3.1% y-o-y; higher handset consumption and the impact of RLAH on European operations) and other operating expenses (+4.4% y-o-y; inflationary pressure and a stronger USD against some Latin American currencies). Personnel expenses (+3.4% y-o-y in the quarter) increased because of inflation despite the savings from redundancy programmes. The average headcount in the first nine months stood at 125,900 employees (-5.6%).

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In the third quarter, provisions for restructuring costs amounted to €21m (€21m in T. Deutschland) and affected “personnel expenses” items by €9m and “other net income/expense” by €12m.

Operating income before depreciation and amortization (OIBDA) totalled €4,095m in the third quarter (-1.9% y-o-y) and €12,274m in the first nine months (+2.9% y-o-y).

In organic terms, OIBDA grew 2.8% y-o-y in July-September (+3.8% in January-September), reflecting the positive revenue performance, costs containment efforts, synergy capture and efficiencies from the transformation process. Compared to the previous quarter, OIBDA slowed down its y-o-y growth by -4.4 p.p., primarily due to a tougher comparison in some countries of T. Hispanoamérica and the strong RLAH impact on T. UK and T. Deutschland. Excluding the impact of regulation, -2.3 p.p. in the quarter, OIBDA would have increased by 5.2% y-o-y in organic terms in the quarter (+5.3% in January-September).

Underlying OIBDA (€4,116m), which excludes restructuring expenses, dropped by 2.7% vs. July-September 2016.

OIBDA margin stood at 32.1% in the third quarter, reporting a y-o-y expansion of 0.2 p.p. (-0.4 p.p. in organic terms). In January-September, OIBDA margin totalled 31.6% and expanded by 0.5 p.p. (+0.3 p.p. in organic terms).

Depreciation and amortisation (€2,322m) reduced by 5.5% y-o-y in the quarter (-2.0% in organic terms; -1.4% in January-September).

Thus, operating income (OI) (€1,773m) increased by 3.2% y-o-y in July-September (+9.4% in organic terms), while in the first nine months (€5,143m) OI grew by 7.1% (+11.2% in organic terms).

Net financial expenses in January-September (€1,729m) decreased by 6.6% compared with the same period in the previous year, primarily due to the reduction in the cost of debt in European and Latin American currencies. In the third quarter, net financial expenses amounted to €532m (+0.2% y-o-y) and included €67m associated to a contingency in Argentina arising from a court decision regarding a historic lawsuit.

Third quarter Corporate Income Tax rose to €347m (€193m for the same period in 2016, which included extraordinary factors). This figure amounted to €867m in January-September, which, over an income before taxes of €3,419 million euros, implied an effective tax rate at 25.4% (25.2% for the same period in 2016).

Profit attributable to minority interests in the third quarter (€57m) was greater than the same period last year (€11m), primarily due to the improved profit attributable to T. Deutschland and T. Brasil.

In this regard, the profit attributable to ordinary equity holders of the Parent in January-September reached €2,439m (€3,073m underlying), growing by 9.6% y-o-y (+9.5% underlying). This figure amounted to €839m (€1,021m underlying) in the quarter and declined 14.7% y-o-y (-17.7% underlying).

Basic earnings per share stood at €0.44 in January-September (+8.7% y-o-y; €0.56 in underlying terms, +8.6%) and at €0.15 in the third quarter (-17.5% y-o-y; €0.19 in underlying terms, -20.3%).

CapEx in the first nine months (€5,962m; -0.9% reported; -2.3% in organic terms) continued to focus on expanding 4G and UBB networks, and the simplification and digitalisation of processes and systems, also reflecting integration synergies and including €502m in spectrum and licences.

In January-September of 2017, free cash flow reached €3,226m, increasing by 39.2% y-o-y:

i)    Operating cash flow (OIBDA-CapEx), excluding the spectrum, in the first nine months (€6,815m) maintained its strong pace of growth (+8.9% y-o-y reported; +9.2% in organic terms), resulting from good business performance and lower CapEx intensity.

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ii) Interest payments in the first nine months (€1,322m) declined by 24.3% y-o-y, primarily because of the lower cost of the debt in European and Latin American currencies. Payments in the third quarter of the year totalled €346m (-6.0% y-o-y). The effective cost of interest payments in the last 12 months stood at 3.23% as of September, 71 basic points less than the 3.94% at December 2016.

iii) Tax payments totalled €713m vs. €365m in January-September of 2016 because of the lower refund from final declarations from previous years and higher payments in advance in Spain. The effective cash tax rate stood at 20.9%.

iv) Working capital consumed €923m in January-September 2017, affected by CapEx seasonality, payments of taxes and rentals, partially offset by the execution of factoring measures on receivables and the extension of payment terms with suppliers or with the factoring company where those had been discounted. This consumption was €185m less than the same period in 2016 (€1,109m), primarily because of the regularisation of payments in foreign currency in Argentina in 2016 and the seasonal impact from the term extension to liquidate VAT in Spain. Working capital in the third quarter contributed with a cash flow generation of €428m.

v) Operations with minority shareholders in the first nine months (€349m; -1.5% y-o-y) were mainly associated with the payment of dividends in T. Deutschland and T. Brasil.

Net financial debt at September (€47,222m) was reduced by €1,265m in the third quarter, primarily due to free cash generation (€1,600m). Compared with December 2016, net financial debt was reduced by €1.373m, driven by free cash flow generation (€3,226m) and the lower value in euros of the net debt in currencies (€514m). These factors were partially offset by shareholder remuneration (€1,321m, including the dividend and coupons of capital instruments), payment of labour-related commitments (€507m) and other factors (€540m, mainly the extension of payment terms with suppliers or with the factoring company).

It is important to mention that the capital increases in Colombia in the third quarter of 2017 increased consolidated net financial debt by €32m at September 2017, since the positive impact from the pre-payment of PARAPAT obligations, which were fully consolidated in the financial statements of the Telefónica Group, was offset with the cash outflow for paying the arbitration award and the integration of subsidiaries.

During the first nine months of 2017, the Telefónica’s financing activity amounted to approximately €8,227m equivalent (without considering the refinancing of commercial paper and short-term bank loans) and focused on maintaining a solid liquidity position, and refinancing and extending debt maturities (in an environment of very low interest rates). Therefore, as of the end of September, the Group has covered debt maturities for around the next two years. The average debt life stood at 7.85 years (compared with 6.77 years in December 2016).

Among the main financial operations in the quarter outstood in September an issuance of €1,250 million bond for a term of 10 years and a coupon of 1.715%.

In the first nine months, the Telefónica Group obtained funding by means of extending payment terms with suppliers or the factoring company where those had been discounted, for a total of €609m equivalent (€11m equivalent in the third quarter). In January-September 2016, this financing rose to €867m equivalent (€79m in the third quarter).

Moreover, Telefónica S.A. and its holding companies continued their issuance activity under the Promissory notes and Commercial Paper Programmes (domestic and European), maintaining an amount outstanding balance of approximately €2,935m at the end of September.

At the end of September, Telefónica maintained undrawn, committed credit lines with different credit institutions for an approximate amount of €12,486m (€11,751m maturing in more than twelve months) which, combined with the cash equivalents position and current financial assets (excluding Venezuela) placed liquidity at €18,517m.

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Definitions:

Organic growth: Assuming constant exchange rates (average in 2016), excluding hyperinflationary accounting in Venezuela in both years and considering a constant perimeter of consolidation. At OIBDA and OI levels, write-downs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts are excluded. CapEx excludes spectrum investments.

Underlying growth: Reported figures excluding the impact on net profit of write-downs, capital gains/losses from companies’ disposals, tower sales, restructuring costs material non-recurring impacts, and depreciation and amortisation charges arising from purchase price allocation processes.

Digital Services

(y-o-y changes in organic terms)

Telefónica continued to make headway in generating new sources of revenues and in digital transformation. In this regard, digital services generated revenues of €1,307m in the quarter, and y-o-y growth accelerated sequentially to 8.1% due to the improved revenue performance from Video, Cloud and M2M. Digital revenues in the first nine months of year amounted to €3,864m (+4.6%).

Video revenues (€742m in the quarter) improved in trend and increased 6.8% y-o-y (+5.4% in the first nine months) thanks to the higher growth in the customer base in Hispanoamérica (+2.3% y-o-y vs. +1.9% in June), and in particular in IPTV technology, which grew to weigh 40% over the total (+4 p.p. vs. June), as well as the continuous growth of ARPU (mainly in Spain and Colombia). Pay TV accesses stood at 8.4M, practically stable y-o-y, despite the decrease in the satellite TV base (-9%; especially in Brazil and Spain).

Cloud revenues (€155m in July-September) increased by 25.0% vs. the same period in 2016, reverting the decrease reported up to June (-1.6% in January-September 2017) thanks to a positive performance in Spain, in IaaS and SaaS, and in Brazil due to the launch of new projects.

M2M (€68m in the quarter) posted a strong revenue growth of 41.0% vs. the third quarter of 2016 (+34.3% in the first nine months) on the traction of the group of IoT services, primarily from the Smart M2M managed connectivity service.

Security revenues in July-September (€68m) decreased 14.7% y-o-y (-5.1% in the first nine months) affected by the B2C security business. However, it is important to highlight the growth of B2B revenues (+17.8% in the third quarter and +21.1% in the first nine months).

Telefónica Global Resources

Telefónica Global Resources maintained its focus on accelerating the digital transformation of the Company to contribute improving its efficiency and growth to the maximum.

In order to increase the value of network and connectivity, UBB rollout continued at a strong pace, 42.8m premises passed with FTTx and cable (+15% y-o-y); 18.0m in Brazil (FTTx and cable), 18.6m in Spain (FTTH) and 6.2m in Hispanoamérica (FTTx and cable); allowing the management of total fixed broadband traffic growth in the quarter (+39% y-o-y), boosted by video consumption. 4G coverage increased to 69% (+11 p.p. y-o-y), with a total of 68,293 sites, and 4G traffic grew +157% y-o-y, representing 54% of the total.

Telefónica continued to move forward with network virtualisation to increase its agility, flexibility and scalability, leveraging on the UNICA project, which defines and provides the Group operators with a common cloud-based network/service architecture and functional features required to virtualise service and network platforms with deployments in Spain, Germany, Peru, Argentina and Colombia.

It was remarkable in the quarter the commercial launch of the VoLTE technology in Brazil, which it is added to Colombia, Peru, Germany and the United Kingdom (along with VoWiFi in the latter two countries).

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Likewise, Telefónica continued working on the 5G development in its own labs (Almagro Lab or STONIC), and in particular on more than 10 5G PoC tests and concrete use cases, and involved in more than 30 5G European projects on the network evolution towards this technology (core, transport, services and radio).

Regarding E2E digitalisation, which allows the progress towards “real time”, it is highlighted the development of “Full Stack” projects with 19% of customers migrated by the end of September (+6 p.p. y-o-y; +1 p.p. q-o-q). The migrated accesses in Mexico (100% contract consumer customers), Peru (40% consumer mobile accesses), Argentina (74% fixed consumer accesses) and Spain (new commercial application system launched in 13 provinces), should be noted.

With regards to the digitalisation of channels and data, it should be mentioned the progress in consolidating tariff calculator systems towards a single one (OCS) in Mexico, Central America and Spain; the increase of functional features on mobile applications in Brazil, Germany, Argentina, Peru, Colombia and Ecuador; and the launch of new websites for business customers in Chile and Peru.

Thus, digital capabilities of the Company were increased to 55%, +3 p.p. compared to June.

In the first nine months of the year, there were reductions of 4% in servers, 294 in applications, 5 in data centres and virtualisation increased by 1.2 p.p. compared to September 2016.

Telxius

(y-o-y changes in organic terms)

In the third quarter of 2017, Telxius registered a solid set of results, with revenues (€177m) increasing by 7.5% y-o-y (€547m in January-September; +8.0% y-o-y), driven by the positive performance in both cable business (€99m in the quarter; €316m in January-September) and tower business (€78m in the third quarter; €231m in January-September).

OIBDA amounted to €82m in July- September (€261m in the first nine months) and OIBDA margin stood at 46.5% (47.8% in January-September), reflecting certain seasonal expenses (taxes) in the quarter, and the refitting of towers affected by the hurricanes in the Caribbean. OIBDA y-o-y comparison does not reflect the actual business performance as it was affected by the progressive establishment of activities over the course of 2016, as well as the non-recurrent negative impacts associates with the formation of the company.

The tower business added 304 towers acquired in Argentina from Telefónica Argentina into the Telxius perimeter and the net increase of 9 additional towers, primarily in Spain, consolidating a total portfolio of 16,220 towers. The tenancy ratio stood at 1.31x in September (+0.01x in the third quarter, mainly due to the additional towers in Argentina and a co-locations increase in the rest of the portfolio).

In the cable business, the international traffic demand managed by Telxius maintained strong y-o-y growth in IP traffic (+28% y-o-y in the first nine months) and bandwidth in capacity services (+63% y-o-y in Jan-Sep).

The marine wet plant deployment of the new cable MAREA (cable that will connect the USA with northern Spain) was completed in September as scheduled and it is expected to entry into service at the beginning of next year. BRUSA (cable that will connect the USA with Brazil) continued its rollout as scheduled and it is expected to entry into service in the first half of 2018.

CapEx totalled €136m in the first nine months, impacted by the rollout of the new cables mentioned above. Therefore, operating cash flow (OIBDA-CapEx) amounted to €126m in January-September.

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TELEFÓNICA

ACCESSES

Unaudited figures (thousands)

TELEFÓNICA

MOBILE ACCESSES

Unaudited figures

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TELEFÓNICA

CONSOLIDATED INCOME STATEMENT

Unaudited figures (Euros in millions)

Notes:

TELEFÓNICA

GUIDANCE 2017

2016 adjusted base excludes:

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TELEFÓNICA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited figures (Euros in millions)

Notes:

TELEFÓNICA

NET FINANCIAL DEBT PLUS COMMITMENTS

Unaudited figures (Euros in millions)

Notes:

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TELEFÓNICA

CONSOLIDATED CASH FLOW STATEMENT

Unaudited figures (Euros in millions)

Notes:

1) Includes issuance and coupons of undated deeply subordinated securities.

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TELEFÓNICA

FREE CASH FLOW AND CHANGE IN DEBT

Unaudited figures (Euros in millions)

TELEFÓNICA

RECONCILIATIONS OF CASH FLOW AND OIBDA MINUS CAPEX

Unaudited figures (Euros in millions)

Notes:

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TELEFÓNICA

EXCHANGES RATES APPLIED

NET FINANCIAL DEBT STRUCTURE BY CURRENCY

Unaudited figures

TOTAL FINANCIAL LIABILITIES BREAKDOWN

Unaudited figures

CREDIT RATINGS

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02

TELEFÓNICA ESPAÑA

(y-o-y changes in organic terms)

In the third quarter of 2017, Telefónica España’s service revenues returned to y-o-y growth (+0.4%) driven by the improved performance of all the segments vs. the previous quarter.

Commercial activity has progressively improved in the last three months, reflecting the focus on value and the results of the two new “Fusión+” options launched in July (“Fusión Series” for €60 and “Fusión #0” for €45), which incorporated the TV service and its functions to the entire convergent portfolio.

“Movistar Fusión” customers grew 2% y-o-y and penetration stood at 85% in broadband and TV, and 78% in contract mobile, after posting net quarterly additions of 10k customers, due to the improvement in gross additions (+22% q-o-q; +16% y-o-y). The quarterly ARPU (€87.6) accelerated its y-o-y growth up to 7.1% on the updated tariffs and the improved value mix, which is reflected in the greater weight of Fusión customers with UBB fibre (39%; +4 p.p. y-o-y), with TV (73%; +5 p.p.) and high-value bundles (26%; +2 p.p. q-o-q).

Mobile accesses grew for a third quarter in a row, with 130k net additions, the highest since the fourth quarter of 2010, reflecting the success of the “totalisation” strategy, the positive performance of portability, and the lower prepay net loss. In contract, total accesses grew 5% y-o-y (225k net additions, the highest in the last ten years) and churn decreased to 1.3% (-0.1 p.p. q-o-q).

Fixed telephony accesses (-4% y-o-y) sustained their improving trend (-76k vs. -121k in the second quarter) primarily supported by the larger volume of gross additions. Fixed broadband accesses remained virtually stable (-2k) as did the quarterly churn. However, net additions in August and September turned positive again due to the aforementioned increase in “Fusión” gross additions. Fibre accesses represented 55% of the total broadband base (+8 p.p. y-o-y) with two thirds of these in higher speeds. Premises passed with fibre to the home totalled 18.6m at the end of September (+545k vs. June).

Pay TV net additions (100k) are worth noting, doubling the figure of the previous quarter, fostered by the new Fusión bundles launched in July.

Wholesale accesses amounted to 4.3m and slowed their decline (-6% y-o-y) because of NEBA Fibre accesses, which accelerated their growth in the quarter (132k accesses vs. 114k in Q2 17) to 672k accesses.

Revenues in the third quarter amounted to €3,184m (-0.3% y-o-y) and notably improved vs. the previous quarter (+1.6 p.p.) thanks to the return to growth of service revenues (€3,089m; +0.4% y-o-y, +1.2 p.p. quarter-on-quarter) and the improved performance of handset sales (-18.9%, +12.9 p.p. q-o-q). Total revenues in the first nine months (€9,410m) and service revenues (€9,151m) declined 1.6% and 0.6% y-o-y respectively.

Consumer revenues in the quarter (€1,677m) upheld their growth trend (+2.1% y-o-y), an improvement of 1.0 p.p. q-o-q, driven by the update of Fusión tariffs and the improved performance of mobile data revenues, partly due to the “Roam Like At Home” effect (RLAH). Fusión revenues continued to post solid progress (+9.7%, in line with to April-June) and non-convergent revenues continued to improve their trend (-11.4%; -13.0% in Q2 17).

Business revenues (€826m) decreased 1.1% y-o-y, in line with the previous quarter (-1.3%). Communications revenues improved their performance (-2.6%;-3.9% in April-June) while IT revenues moderated their pace of growth (+5.0%; affected by seasonality, +8.4% in April-June).

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Other revenues (€586m) limited their decline to -2.0% y-o-y, substantially improving their performance vs. the second quarter (+3.2 p.p.), due to the improved comparison of wholesale TV revenues (sale of the same rights for “La Liga” from mid-August) and the positive effect on roaming-in from RLAH. The y-o-y decline was due to lower MVNO revenues (higher in the second half of 2016 than in the first half) and regulatory impacts (NEBA, ORLA, etc.).

Quarterly operating expenses stood at €1,954m, virtually stable y-o-y (+0.2% vs.-1.2% in the previous quarter). In January-September expenses totalled €5,935m, declining 1.5% y-o-y.

Supplies (€867m in July-September) grew by 4.2% and changed their trend vs. previous quarter (-2.4%) because of the lower decline in mobile handset consumption, the increased roaming-out expenses (RLAH) and the higher growth in football content costs due to the start of the 17/18 season. However, the net content cost of wholesale TV revenues, increased 10% y-o-y in the quarter, in line with the previous quarter (+11% in April-June).

Personnel expenses (€505m) decreased 4.5%, affected by y-o-y savings from the employment suspension plan (€29m), and accelerated its decline vs. the second quarter, which was affected by an extraordinary expense. Headcount at the end of September totalled 27,759 employees (-4.9% y-o-y).

Other operating expenses (€582m) reduced by 1.1% y-o-y (+1.0% in the previous quarter).

OIBDA stood at €1,306m in the quarter and €3,731m in January-September, though the y-o-y variation was affected by capital gains from the sale of real estate assets in the third quarter of 2016 (€38m) and in the second quarter of 2017 (€8m).

Excluding those capital gains, quarterly OIBDA decreased by 0.6% y-o-y (-1.7% in January-September), which is an improvement of 1.5 p.p. vs. the previous quarter driven by the better revenue performance. Thus, OIBDA margin expanded to 41.0% in the quarter (+0.7 p.p. quarter-on-quarter and -0.1 p.p. y-o-y excluding capital gains).

CapEx up to September totalled €1,097m (-14.5% y-o-y), reflecting the reduced pace of deployment in fibre and 4G networks compared to 2016 and the capture of efficiencies, and operating cash flow grew solidly to €2,634m (+4.7% y-o-y, excluding capital gains).

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TELEFÓNICA ESPAÑA

CONSOLIDATED INCOME STATEMENT

Unaudited figures (Euros in millions)

Notes:

TELEFÓNICA ESPAÑA

ACCESSES

Unaudited figures (Thousands)

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TELEFÓNICA ESPAÑA

CONSUMER ACCESSES (Fusión + non-Fusión)

Unaudited figures (thousands)

TOTAL MOBILE ACCESSES

Unaudited figures