Telefonica And Chilean Subs Outlooks Revised To Positive On Improved Operating Performance; 'BBB' Ratings Affirmed

We expect Telefónica will further strengthen its recent operating improvement, reflecting progressive stabilization in Spain and sound organic dynamics in Latin American markets. We think the close of the group's disposal of its U.K. business O2, if successful, and management's commitment to leverage disposal proceeds to revert to its stated financial policy guidelines will likely contribute to a marked improvement in the group's financial profile and key metrics. We are therefore revising our outlook on Telefónica and related subsidiaries Telefónica Moviles Chile S.A. and Telefónica Chile S.A. to positive from stable and affirming our 'BBB' long-term ratings on these companies. The positive outlook mainly reflects the potential of a one-notch upgrade of Telefónica within the next two years, if the

...+ We expect Telef=nica will further strengthen its recent operating improvement, reflecting progressive stabilization in Spain and sound organic dynamics in Latin American markets. + We think the close of the group's disposal of its U.K. business O2, if successful, and management's commitment to leverage disposal proceeds to revert to its stated financial policy guidelines will likely contribute to a marked improvement in the group's financial profile and key metrics. + We are therefore revising our outlook on Telef=nica and related subsidiaries Telef=nica Moviles Chile S.A. and Telef=nica Chile S.A. to positive from stable and affirming our '###' long-term ratings on these companies. + The positive outlook mainly reflects the potential of a one-notch upgrade of Telef=nica within the next two years, if the U.K. sale successfully closes and our anticipation of sustained operating and credit metrics improvement is validated over 2015-2016 PARIS (Standard & Poor's) May 28, 2015--Standard &...

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