Deutsche Post World Net and Telefónica sign €350m pan-European telecoms services agreement

· Telefónica to provide all mobile, fixed voice and data services to 125,000 staff, 2,400 sites in 28 European countries

· Deutsche Post World Net expects to save over 150 million euros by streamlining telecommunications services

· Telefónica’s biggest pan-European combined fixed and mobile contract worth nearly 350 million euros

Bonn/Madrid, 7 January 2009: Deutsche Post World Net, the No. 1 global express and logistics provider with its DHL brand, has selected Telefónica to manage its communications services across 28 European countries over the next five years. Telefónica will become Deutsche Post World Net’s primary fixed and mobile telecommunications provider in Europe and is expected to help the logistics group save over 150 million euros in costs over the period.

Deutsche Post World Net, the No. 1 global express and logistics provider with its DHL brand, has selected Telefónica to manage its communications services across 28 European countries over the next five years. Telefónica will become Deutsche Post World Net’s primary fixed and mobile telecommunications provider in Europe and is expected to help the logistics group save over 150 million euros in costs over the period.

Telefónica will provide secure telecommunications services for 125,000 employees and 2,400 sites in Europe, and will transform Deutsche Post World Net’s Internet Protocol (IP) network services. The service will be delivered by Telefónica in Spain, its O2 businesses in UK, Ireland, Czech Republic and Slovakia as well as new operations and partnerships in 23 other Western European countries. The European service will be managed by a dedicated 24×7 Service Management Centre in Prague and is expected to go live in early summer of 2009, subject to the usual approval by the competition authorities and the completion of the transaction.

“Deutsche Post World Net has grown through acquisitions and in some countries we operate multiple networks with multiple standards,” said John Allan, Deutsche Post World Net’s Chief Financial Officer and Head of Global Business Services. “We are delighted that Telefónica will manage and transform our network services across Europe over the next five years and help us pave the way for more cost efficiency throughout our operations.”

Julio Linares, COO and Managing Director of Telefónica SA, said: “This contract reflects Telefónica’s strategic commitment to the multi-national corporate market and its ability to deliver integrated communications to global leaders like Deutsche Post World Net. Telefónica’s position as the world’s leading converged communications provider enables us to quickly develop and deploy the most suitable fixed and mobile solutions as well as IP managed services for global corporates anywhere in the world.”

Telefónica will reinforce and extend its global IP backbone in Europe to provide services in 28 countries, including wide area network connectivity, centralized Internet access, local-area network (LAN) services such as wireless LAN, fixed voice, mobile voice and data as well as IT services such as managed security, web conferencing, unified messaging and fixed mobile convergence. The contract comprises more than 100,000 LAN Ports, more than 60,000 fixed voice devices and 80,000 mobile connections including 24,000 mobile and smartphone devices.

The agreement includes a commitment to continuous innovation in addition to strict service level agreements in order to assure further optimisation and cost savings over the lifetime of the contract. There are no job cuts planned at Deutsche Post World Net as part of the telecommunications streamlining.

Deutsche Post World Net has been seeking to reduce costs and derive more value from its businesses as part of its Roadmap to Value capital markets programme. The Group is also seeking to optimise its telecommunications services in the United States, Latin America, Asia-Pacific as well as emerging markets, which is expected to lead to additional cost savings in 2009. As already announced, the Group aims to cut 1 billion euros in costs by the end of 2010.

This agreement, with a total contract value of nearly 350 million euros, is Telefónica’s largest pan-European combined fixed and mobile contract, and will span Deutsche Post World Net’s Freight / Global Forwarding, Supply Chain / Corporate Information Solutions, Express, Global Mail as well as Global Business Services business divisions in the 28 European countries, excluding Germany.