DGAP-Adhoc:Telefónica Deutschland Holding AG: Telefónica Deutschland Holding AG sets the conditions for the cash capital increase for the partial financing of the acquisition of E-Plus - subscription period is expected to start on September 10, 2014

Telefónica Deutschland Holding AG / Key word(s): Capital Increase 08.09.2014 21:17 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.

Telefónica Deutschland Holding AG sets the conditions for the cash capital increase for the partial financing of the acquisition of E-Plus - subscription period is expected to start on September 10, 2014 THIS AD HOC RELEASE AND THE INFORMATION CONTAINED HEREIN ARE NOT BEING ISSUED AND MAY NOT BE DISTRIBUTED IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA; SOUTH AFRICA OR JAPAN. Telefónica Deutschland Holding AG is beginning with the implementation of the cash capital increase for the partial financing of the cash consideration for the acquisition of E-Plus resolved upon by the general meeting on May 20, 2014. To this end, the management board, with the consent of the supervisory board, today set the subscription price and further details of the execution of the cash capital increase with subscription rights. It is intended to raise gross issue proceeds of approximately EUR 3.62 billion. These are intended to be used to pay the cash consideration for the acquisition of E-Plus. In total, Telefónica Deutschland Holding AG is issuing 1,116,945,400 new shares in the rights issue, which are endowed with full dividend rights as of January 1, 2014. The subscription price of the new shares is EUR 3.24 per share, which implies a discount to TERP (the theoretical ex-rights price) of 28.32%. The new shares will be offered to the shareholders in the ratio 1 to 1. This means that one outstanding share entitles the holder to subscribe for one new share. The subscription period is expected to start on September 10, 2014 and run until (and including) September 23, 2014. From September 10, 2014 to September 19, 2014, the subscription rights will be traded on the regulated market of the Frankfurt Stock Exchange (ISIN DE000A12UKL4 / WKN A12UKL). The new shares are expected to be included in the stock exchange trading of the shares in the Company on the regulated market of the Frankfurt Stock Exchange (Prime Standard) on September 25, 2014. The Company will publish a securities prospectus following the approval by the German Federal Financial Supervisory Authority expected for September 9, 2014 which will form the basis of the subscription offer. This securities prospectus will include a description of the dividend policy for the combined entity and the intention of the management board to propose a cash dividend in the amount of at least EUR 700 Mio for the financial year 2014, payable in 2015 resolved today. Telefónica S.A. which indirectly holds 76.83% of the equity capital has undertaken to cause its subsidiary Telefónica Germany Holdings Ltd., Slough, UK, to exercise its subscription rights in full. The consortium banks underwriting the offering have undertaken to assume all shares not allotted or purchased upon closing of the offering at the issue price. The envisaged offering proceeds are guaranteed through the indirect subscription obligation of Telefónica, S.A. and the hard underwriting commitment of the bank consortium. The bank consortium is headed by the joint global coordinators Citigroup Global Markets Limited, London, HSBC Trinkaus & Burkhardt AG, Duesseldorf, Morgan Stanley & Co. International plc., London, and UBS Limited, London. Joint Bookrunners are BofA Merrill Lynch, London, and J.P. Morgan Securities plc, London, and the joint co-leads Banco Santander, S.A., Santander, Bayerische Landesbank, Munich, Banco Bilbao Vizcaya Argentaria S.A., Bilbao, BNP Paribas, Paris, COMMERZBANK Aktiengesellschaft, Frankfurt, Mediobanca -Banca di Credito Finanziario S.p.A., Milan, Société Générale, Paris and UniCredit Bank AG, Munich. In connection with the acquisition of E-Plus, Telefónica Deutschland Holding AG intends to issue further 740,664,193 new shares stemming from a capital increase against contribution in kind with regard to which subscription rights of existing shareholders are excluded. This publication is not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption therefrom. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to conduct a public offering of any securities in the United States. This publication constitutes neither an offer to sell nor a solicitation of any offer to buy securities. The offer will be made solely by means of, and on the basis of, a securities prospectus which is to be published. The securities prospectus will be available free of charge within the European Economic Area, inter alia, at the offices of the Company at Georg-Brauchle-Ring 23-25, 80992 Munich, Germany and at the offices of HSBC Trinkaus & Burkhardt AG, Koenigsallee 21/23, 40212 Duesseldorf, Germany, and UBS Limited, c/o UBS Deutschland AG, Bockenheimer Landstraße 2-4, 60306 Frankfurt am Main, Germany or on the website of the Company. 08.09.2014 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de

Language: English Company: Telefónica Deutschland Holding AG Georg-Brauchle-Ring 23-25 80992 München Germany Phone: +49 (0)89 24 42 0 Fax: E-mail: Internet: www.telefonica.de ISIN: DE000A1J5RX9 WKN: A1J5RX Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart TecDAX End of Announcement DGAP News-Service