Telefonica and Lucent Technologies Reach Strategic Agreement to Support Telefonica’s IPTV Service Rollouts Worldwide

* Lucent to develop and market Telefonica’s IPTV middleware globally; establishes IPTV R&D Centers in Spain and Latin America, linked to Bell Labs

* Lucent Worldwide Services to provide network integration, deployment and maintenance services for Telefonica’s end-to-end, multivendor IPTV “ecosystem” in all markets

Madrid, April 19, 2006 – Lucent Technologies (NYSE:LU) and Telefonica Group today announced that the two companies have reached a strategic agreement under which Lucent will support Telefonica’s IPTV service rollouts worldwide. The agreement was signed today (Wednesday, April 19) in Miami, Florida by Telefonica’s Chairman and CEO Cesar Alierta and Lucent’s Chairman and CEO Patricia Russo.

Under the agreement Lucent will assume responsibility for the future development and deployment of Telefonica’s ”Imagenio” IPTV middleware platform, including the ongoing introduction of new features and capabilities; Lucent also will market the platform to the broader, global service provider community. In support of this effort Lucent will establish IPTV research and development centers -- linked to Bell Labs – in the Spanish cities of Madrid and Huesca (Aragon), as well as in the Brazilian city of Sao Paulo for Latin American markets. In addition, Lucent Worldwide Services, the company’s services arm, will serve, as the prime network integrator for Telefonica’s end-to-end, multivendor IPTV solution, initially in markets including Brazil, Chile, the Czech Republic and Spain. The project will be extended to include additional countries in the future.

“This comprehensive agreement will help Telefonica remain a leading provider of innovative IPTV services,” said Vicente San Miguel, general director of Infrastructure and Information Systems, Telefonica Group. ”Lucent has proven to be an exceptional partner as we launched and expanded our ‘Imagenio’ IPTV service in Spain, where we are now supporting more than 250,000 customers. We look forward to continuing this fruitful relationship as we take this successful service to additional market and introduce innovative new multimedia features, leveraging the power of the IP Multimedia Subsystem, IMS.”

Telefonica’s Imagenio IPTV service is one of the world’s leading commercial IPTV service offerings, providing all-digital, DVD-quality delivery of TV and audio content to subscribers in Spain. Imagenio’s interactive video-on-demand service enables subscribers to watch movies, documentaries, concerts, TV shows and newscasts at any time of day, and features DVD-like controls (including play, stop, fast forward, rewind, pause, automatic language selection).

“Lucent is thrilled to expand our collaboration with Telefonica, a clear leader in the IPTV industry, and we appreciate the opportunity to help Telefonica build on its successes to date and bring enhanced IPTV and other multimedia services to its customers in Europe and Latin America,” said Rob Piconi, vice president and general manager, Broadband Solutions, Lucent Technologies. “Lucent also is excited to bring this successful IPTV offering to customers around the world, helping Telefonica and others offer subscribers truly compelling, personalized services that go beyond simple TV, creating an exciting new multimedia experience for end-users.”

IPTV Middleware Development
Under the agreement, Lucent will assume responsibility for Telefonica’s IPTV middleware platform – originally developed by Telefonica -- that currently powers its Imagenio service. Lucent will help expand and enhance the Imagenio middleware, developing and testing new features, including new IP Multimedia TV services that leverage the strengths of IMS. IP Multimedia TV services “blend” traditional TV and video capabilities with telephony and Web features to create interactive applications such as Web browsing, video conferencing and personal, portable TV services that can be delivered to subscribers anytime, anywhere. Lucent also will integrate the middleware platform into its portfolio and market the platform to service providers worldwide.

As part of this initiative, Lucent will establish several IPTV research and development centers that will be the focal point for the development activity, will serve as interoperability labs to provide testing and integration services, and also will serve as “customer showcases” to highlight the latest IPTV service offerings for Telefonica, its partners and customers and other service providers. These centers also will help facilitate IPTV service development, integration and delivery for Telefonica subsidiaries around the world.

End-to-End, Multivendor Solution Integration
Lucent Worldwide Services will serve as the master network integrator for Telefonica as it introduces its Imagenio service in additional markets, and enhances the service with new capabilities and features. Lucent will support Telefonica with every aspect of its IP Multimedia TV service launch, from the design of its video network to the integration of the multivendor solution, to the deployment, maintenance and management of its end-to-end solution.

“Lucent has a vast depth of experience and expertise in the integration of multivendor networks, and has a comprehensive suite of end-to-end network integration, deployment and maintenance capabilities that will ensure that Telefonica is able to quickly launch new and enhanced IPTV services in each of its markets,” said Ashok Shah, vice president of Professional Services, Lucent Worldwide Services. “We are looking forward to leveraging the strength of Lucent’s entire services organization to help Telefonica deliver a service that its competitors can’t match.”

Marketing Support Programs
Lucent will not only be supplying Telefonica with software development and services support, but also will partner with the company to successfully bring new services to market. As part of the agreement, Lucent will provide Telefonica with a comprehensive marketing support service package through the Lucent Market Advantage Program (MAP), an initiative which helps service providers generate demand from their business and consumer customers for new service offerings. The Lucent Market Advantage Program offers a comprehensive set of support tools, information and consulting services including market data, sales training and co-marketing plans designed to help Telefonica accelerate revenue, differentiate and enhance its offers, and ultimately deploy services more quickly.

About Telefonica
Telefónica is one of the largest telecommunications companies in the world in terms of market capitalization. Its activities are centered mainly on the fixed and mobile telephony businesses with broadband as the key tool for the development of both.

The company has a significant presence in 19 countries and a customer base that amounts more than 180 million accesses around the world. Telefonica has a strong presence in Europe and Latin America, where the company focuses its growth strategy.

Telefónica is a 100% listed company, with more than 1.5 million direct shareholders. Its share capital currently comprises 4,921,130,397 ordinary shares traded on the Spanish Stock Market (Madrid, Barcelona, Bilbao and Valencia) and on those in London, Paris, Frankfurt, Tokyo, New York, Lima, Buenos Aires and São Paulo. http://www.telefonica.es

About Lucent Technologies
Lucent Technologies designs and delivers the systems, services and software that drive next-generation communications networks. Supported by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent’s customer base includes communications service providers, governments and enterprises worldwide. For more information on Lucent Technologies, which has headquarters in Murray Hill, N.J., USA, visit http://www.lucent.com

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