EX-99.A.1

Inversiones Telefónica Internacional Holding Limitada, a Chilean limited liability company (sociedad de responsabilidad limitada) (“Purchaser”) and an indirect wholly owned subsidiary of Telefónica, S.A. (“Telefónica,” and together with Purchaser, the “Bidders”), a publicly held stock corporation organized and existing under the laws of the Kingdom of Spain, is offering to purchase (1) any and all of the outstanding shares of Series A common stock, no par value (the “Series A Shares”) and Series B common stock, no par value (the “Series B Shares” and, together with the Series A Shares, the “Shares”), of Compañía de Telecomunicaciones de Chile S.A. (the “Company”), other than Shares currently owned by Purchaser or by Telefónica Internacional Chile S.A., the parent company of Purchaser and an indirect wholly owned Subsidiary of Telefónica (hereinafter “TICSA”), from all holders of Shares (“Shareholders”) resident in the United States (“U.S. Holders”) and (2) any and all of the outstanding American Depositary Shares (“ADSs”) of the Company, other than ADSs currently owned by Purchaser, each representing 4 Series A Shares (the “U.S. Offer”). The purchase price will be, in each case, a price in Chilean pesos payable in United States dollars based on the Observed Exchange Rate, as defined below, published in the Official Gazette in Chile on the expiration date of the U.S. Offer, or if the Observed Exchange Rate is not published on the expiration date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the expiration date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile. Through a concurrent offer in Chile, Purchaser is offering to purchase any and all of the outstanding Shares, other than Shares currently owned by TICSA or Bidders (together, the “Telefónica Group”), including Shares held by U.S. Holders (the “Chilean Offer” and, together with the U.S. Offer, the “Offers”).

On September 17, 2008, Purchaser commenced dual tender offers in Chile and in the United States (the “Initial Chilean Offer” and the “Initial U.S. Offer,” respectively, and together, the “Initial Tender Offer”) for all outstanding Shares and ADSs. In the initial Tender Offer, the Telefónica Group acquired an aggregate of 496,295,053 Shares, increasing its ownership interest in the Company to a total of 926,028,064 Shares (including Shares represented by ADSs) or approximately 96.75% of the total outstanding Shares. Chilean law requires Purchaser to commence a second tender offer, because it acquired share ownership in excess of two-thirds of the Shares with voting rights issued by the Company. The Offers are for the remaining outstanding Series A Shares, Series B Shares and ADSs not acquired by Bidders in the Initial Tender Offer or previously owned by the Telefónica Group.

Purchaser and its affiliates intend, if permitted by applicable laws and rules of U.S. authorities and the stock exchanges, to cause the Company to (1) delist the ADSs from the New York Stock Exchange, (2) suspend the Company’s obligation to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), until termination of registration thereunder, (3) terminate the registration of the Shares and ADSs under the Exchange Act and (4) terminate the Company’s ADS facility.

This transaction has not been approved or disapproved by the U.S. Securities and Exchange Commission (the “Commission”), or any state securities commission, the Superintendencia de Valores y Seguros (the “SVS”) or the securities regulatory authorities of any other jurisdiction, nor has the Commission, or any state securities commission, the SVS or the securities regulatory authorities of any other jurisdiction passed upon the fairness or merits of such transaction nor upon the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful.

The date of this Offer to Purchase is December 2, 2008.

IMPORTANT

Tenders by Holders of Shares: Any U.S. holder of Shares desiring to tender all or any portion of the Shares owned by such holder in the U.S. Offer should either: (1) complete and sign the Form of Acceptance (or a copy thereof, provided the signature is original) in accordance with the instructions in the Form of Acceptance and mail or deliver it together with the título(s) (certificate(s) of title) and a certificate from the share department of the Company or the Deposito Central de Valores (“DCV”), as the case may be, evidencing rights to such tendered Shares free and clear of liens, pledges and encumbrances and all other required documents to Santander S.A. Corredores de Bolsa, as depositary agent of Inversiones Telefónica Internacional Holding Limitada for the Shares in the U.S. Offer (the “Share Depositary”), at the address appearing on the back cover page of this Offer to Purchase, or tender such Shares pursuant to the procedures for book-entry transfer set forth in “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares,” or (2) cause such holder’s broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such holder. Any holder of Shares whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such holder desires to tender such Shares.

Tenders by Holders of ADSs: Any holder of ADSs desiring to tender all or any portion of the ADSs owned by such holder should either: (1) complete and sign the ADS Letter of Transmittal (or a copy thereof, provided the signature is original) in accordance with the instructions in the ADS Letter of Transmittal and mail or deliver it together with the American Depositary Receipts (“ADRs”) evidencing such tendered ADSs and all other required documents to Citibank, N.A., as depositary agent of Inversiones Telefónica Internacional Holding Limitada for the ADSs in the U.S. Offer (the “U.S. Depositary”), at the address appearing on the back cover page of this Offer to Purchase, or tender such ADSs pursuant to the procedures for book-entry transfer set forth in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs;” (2) cause such holder’s broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such holder; or (3) comply with the guaranteed delivery procedures set forth in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs.” Any holder of ADSs whose ADSs are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such holder desires to tender such ADSs.

Any holder of ADSs who desires to tender ADSs and whose ADRs evidencing such ADSs are not immediately available, or who cannot comply with the procedures for book-entry transfer described in this Offer to Purchase on a timely basis, may tender such ADSs by following the procedures for guaranteed delivery set forth in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs.”

Settlement of U.S. Offer Price: The purchase price for each of the Series A Shares and the Series B Shares and the purchase price for ADSs accepted for payment pursuant to the U.S. Offer will, in each case, be paid in United States dollars, with the dollar amount thereof being determined by the daily average dollar-to-peso exchange rate at which commercial banks conduct authorized transactions in Chile as determined by the Central Bank of Chile and published in the Official Gazette of Chile, pursuant to No. 6 of Chapter I of the International Exchange Rules Compendium of the Central Bank of Chile (the “Observed Exchange Rate”) on the expiration date of the U.S. Offer, or if the Observed Exchange Rate is not published on the expiration date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the expiration date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile. All tendering holders will bear exchange rate risks and costs if they wish to convert the currency received into another currency.

Copies of this Offer to Purchase, the related Form of Acceptance, ADS Letter of Transmittal, ADS Notice of Guaranteed Delivery or any other tender offer materials must not be mailed to or otherwise distributed or sent in, into or from any country where such distribution or offering would require any additional measures to be taken or would be in conflict with any law or regulation of such country or any political subdivision thereof. Persons into whose possession this document comes are required to inform themselves about and to observe any such laws or regulations. This Offer to Purchase may not be used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorized or is unlawful.

Questions and requests for assistance may be directed to D.F. King & Co., Inc. (the “Information Agent”) at the telephone number set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the related Form of Acceptance, ADS Letter of Transmittal, ADS Notice of Guaranteed Delivery and other tender offer documents may be obtained free of charge from the Information Agent or from brokers, dealers, commercial banks, trust companies or other nominees.

All references to “U.S. dollars,” “$” and “U.S.$” are to the currency which is currently legal tender in the United States and all references to “Chilean pesos,” “pesos,” and “Ch$” are to the currency which is currently legal tender in the Republic of Chile.

SUMMARY TERM SHEET

Inversiones Telefónica Internacional Holding Limitada is offering to purchase (1) any and all of the outstanding Series A Shares and Series B Shares, other than Series A Shares and Series B Shares currently owned by the Telefónica Group, from all holders of Shares (“Shareholders”) resident in the United States for 1,100 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share and (2) any and all of the outstanding ADSs, other than ADSs currently owned by the Telefónica Group, for 4,400 Chilean pesos per ADS, in each case payable in United States dollars based upon the Observed Exchange Rate published in the Official Gazette in Chile on the Expiration Date (as defined below) of the U.S. Offer (or if the Observed Exchange Rate is not published on the Expiration Date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the Expiration Date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile), net to the seller in cash and without any interest, and upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery. The Observed Exchange Rate is the daily average dollar-to-peso exchange rate at which commercial banks conduct authorized transactions in Chile as determined by the Central Bank of Chile, pursuant to No. 6 of Chapter I of the International Exchange Rules Compendium of the Central Bank of Chile. We refer to a holder of Shares resident in the United States as a “U.S. Holder,” to the American Depositary Shares of the Company as “ADSs” and to the offer made in this Offer to Purchase and the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery as the “U.S. Offer.” The following are answers to some of the questions you, as a U.S. Holder of Shares and/or a holder of ADSs, may have.

We urge you to read carefully the remainder of this Offer to Purchase, the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery because the information in this summary term sheet does not contain all of the information you should consider before tendering your Shares and/or ADSs. Additional important information is contained in the remainder of this Offer to Purchase and in the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery.

Who is offering to buy my securities?

Our name is Inversiones Telefónica Internacional Holding Limitada (“Purchaser”). We are a limited liability company (sociedad de responsabilidad limitada) organized and existing under the laws of the Republic of Chile. We are an indirect wholly owned subsidiary of Telefónica, a publicly held stock corporation organized and existing under the laws of the Kingdom of Spain. Telefónica is a diversified telecommunications and multimedia group which currently provides a comprehensive range of services mainly in Europe and Latin America through one of the world’s largest and most modern telecommunications networks. As of the date of this Offer to Purchase, the Telefónica Group owns, through TICSA and Purchaser, 845,937,574 Series A Shares (including Series A Shares represented by ADSs) and 80,090,490 Series B Shares representing, collectively, approximately 96.75% of the outstanding Shares. See “The U.S. Offer — Section 9 — Certain Information Concerning the Telefónica Group” in this Offer to Purchase.

What are the classes and amounts of securities sought in the U.S. Offer?

We are offering to purchase any and all of the outstanding Series A Shares and Series B Shares held by U.S. Holders and any and all of the outstanding ADSs not already owned by the Telefónica Group. See the “Introduction” to this Offer to Purchase.

What is the Chilean Offer?

Concurrent with the U.S. Offer, we are offering to purchase any and all of the Shares not already owned by the Telefónica Group, for 1,100 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share, net to the seller in cash and without any interest. We refer to that offer as the “Chilean Offer,” and the U.S. Offer and Chilean Offer together as the “Offers.” See the “Introduction” to this Offer to Purchase.

Why are you offering to purchase my Shares and/or ADSs?

Because Purchaser acquired more than two-thirds of the outstanding Shares in the Initial Tender Offer, Chilean law requires Purchaser to commence this subsequent tender offer for the Shares (including Shares represented by ADSs).

See “The U.S. Offer — Special Factors — Purpose and Structure of the Offers; Reasons of the Telefónica Group for the Offers” in this Offer to Purchase.

How much are you offering to pay, what is the form of payment and will I have to pay any fees or commissions?

We are offering to pay, net to you in cash and without any interest, 1,100 Chilean pesos per Series A Share, 990 Chilean pesos per Series B Share and 4,400 Chilean pesos per ADS, in each case payable in United States dollars based upon the Observed Exchange Rate published in the Official Gazette of Chile on the Expiration Date of the U.S. Offer (or if the Observed Exchange Rate is not published on the Expiration Date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the Expiration Date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile). As of December 1, 2008, the U.S. dollar equivalent was equal to approximately U.S. $1.66 per Series A Share, U.S. $1.49 per Series B Share and U.S. $6.62 per ADS, in each case based on the Observed Exchange Rate applicable on that date. If you are the record owner of your Series A Shares, Series B Shares or your ADSs and you tender your Series A Shares, Series B Shares or your ADSs to us in the U.S. Offer, you will not have to pay brokerage fees or similar expenses. If you own your Series A Shares, Series B Shares or your ADSs through a broker or other nominee, and your broker or nominee tenders your Series A Shares, Series B Shares or your ADSs on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See the “Introduction” to this Offer to Purchase.

Do you have the financial resources to make payment?

The amount of funds needed in connection with the Offers to purchase in the Offers all of the Shares and ADSs that the Telefónica Group does not already own and to pay related fees and expenses will be approximately Ch$33,904 million or US$51 million, based on the Observed Exchange Rate on December 1, 2008. Neither the U.S. Offer nor the Chilean Offer is conditioned upon any financing arrangements. Telefónica, directly or through its subsidiaries, currently intends to provide Purchaser with the necessary funds through a combination of intercompany loans and/or capital contributions. Telefónica intends to obtain such funds from available working capital. See “The U.S. Offer — Section 10 — Source and Amount of Funds” in this Offer to Purchase.

Is your financial condition relevant to my decision to tender in the U.S. Offer?

We do not believe that our financial condition, or the financial condition of Telefónica, is relevant to your decision whether to tender your Shares and/or your ADSs and accept the U.S. Offer because:


	•	the form of payment that you will receive consists solely of cash and, if you tender into the U.S. Offer and receive payment for your Shares and/or your ADSs, you will have no continuing equity interest in the Company or in Telefónica or any of its other affiliates;

	•	neither the U.S. Offer nor the Chilean Offer is subject to any financing condition; and

	•	the Offers are being commenced for all the outstanding Series A Shares, Series B Shares and ADSs not currently owned by the Telefónica Group.

See the “Introduction” to this Offer to Purchase.

Does the Company support the U.S. Offer?

As of the date hereof, the Company has not taken a position with respect to the Offers. The Company will be obligated to file a Solicitation/Recommendation Statement on Schedule 14D-9 with the Commission within ten Business Days (a “Business Day” being any day other than a Saturday, Sunday or a U.S. Federal Holiday) of the date of this Offer to Purchase. In the Schedule 14D-9, the Company is required to set forth whether it will approve or disapprove of the U.S. Offer or not take a position with respect to the U.S. Offer. See “Special Factors — Fairness of the Offers” in this Offer to Purchase.

Why is there a separate Chilean Offer?

U.S. and Chilean laws and practice relating to tender offers are different and inconsistent in several ways. We are making the U.S. Offer in compliance with U.S. law and the Chilean Offer in compliance with Chilean law. However, we are offering the same price in the U.S. Offer and the Chilean Offer. In addition, the terms and conditions relating to the U.S. Offer and the Chilean Offer are substantially the same. See the “Introduction” to this Offer to Purchase and “The U.S. Offer — Section 2 — Acceptance for Payment” in this Offer to Purchase.

Who can participate in the U.S. Offer?

U.S. Holders of Series A Shares and Series B Shares may tender their Shares into either the U.S. Offer or the Chilean Offer. Holders of ADSs must tender their ADSs into the U.S. Offer. See the “Introduction” to this Offer to Purchase, “The U.S. Offer — Section 3 — Procedure for Accepting the U.S. Offer — Holders of Shares” and “The U.S. Offer — Section 4 — Procedure for Accepting the U.S. Offer — Holders of ADSs” in this Offer to Purchase.

Who can participate in the Chilean Offer?

Non-U.S. Holders must tender their Series A Shares and Series B Shares into the Chilean Offer. U.S. Holders may tender their Series A Shares and Series B Shares into either the Chilean Offer or the U.S. Offer. Holders of ADSs may not tender their ADSs directly into the Chilean Offer but may obtain the Series A Shares represented by their ADSs and tender such Series A Shares into the Chilean Offer. See the “Introduction” to this Offer to Purchase.

What is the difference between the U.S. Offer and the Chilean Offer?

Although the terms and conditions of the U.S. Offer and the Chilean Offer are substantially similar, because of differences in law and market practice between the United States and Chile, the rights of tendering holders pursuant to the U.S. Offer and the Chilean Offer are not identical. Under Chilean law, the initial offering period of a tender offer may not exceed 30 calendar days. The tender offer may then be extended one time for a period of between 5 to 15 calendar days. Thus, the maximum time period that a Chilean tender offer can remain open is 45 calendar days. Under U.S. tender offer regulations, a tender offer must remain open for at least 20 Business Days, but there is no maximum time limit. Under some circumstances (such as a change in the price offered per share or other material change in the terms of the U.S. Offer), U.S. tender offer regulations may require an extension of the expiration date of the U.S. Offer to a date later than such 45th day. Chilean laws governing the withdrawal rights of tendering holders also are different from U.S. laws governing such rights. In addition, due to requirements of applicable law or market practice, it is possible that Shareholders tendering in the Chilean Offer will be paid either before or after holders tendering Series A Shares, Series B Shares and/or ADSs in the U.S. Offer, although the price paid per share will be the same. See the “Introduction” to this Offer to Purchase and “Special Factors — Risks of Tendering Shares in the Chilean Offer Instead of the U.S. Offer” in this Offer to Purchase.

In addition, the Chilean Offer is subject to simplified disclosure requirements pursuant to applicable Chilean law and therefore the Chilean Offer disclosure consists of a notice of the Chilean Offer, published in Chile on December 1, 2008. See “Special Factors — Risks of Tendering Shares in the Chilean Offer Instead of the U.S. Offer” in this Offer to Purchase.

How long do I have to decide whether to tender in the U.S. Offer?

You will have until 3:30 p.m., New York City time (“NYT”) (the “Expiration Time”), on December 31, 2008 (the “Expiration Date”) to decide whether to tender your Series A Shares, Series B Shares and/or ADSs in the U.S. Offer, unless the U.S. Offer is extended. The Chilean Offer will expire at 5:30 p.m., Chilean time, on December 31, 2008, which corresponds to 3:30 p.m. NYT. Further, if you own ADSs and cannot deliver everything that is required in order to make a valid tender by that time, you may be able to use a guaranteed delivery procedure, which is described later in this Offer to Purchase. There is no guaranteed delivery procedure for the tendering of Series A Shares or Series B Shares into the U.S. Offer. See “The U.S. Offer — Section 1 — Terms of the U.S. Offer,” “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” and “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs” in this Offer to Purchase.

Can the U.S. Offer be extended and under what circumstances?

Yes. We expressly reserve the right, in our sole discretion but subject to applicable law, to extend the period of time during which the U.S. Offer remains open, from time to time. See “The U.S. Offer — Section 1 — Terms of the U.S. Offer” in this Offer to Purchase.

What are the conditions to the U.S. Offer?

There are no conditions to the U.S. Offer other than that the Shares and/or ADSs be validly tendered at or prior to the Expiration Time on the Expiration Date. Bidders are not obligated to purchase any Shares or ADSs if they are not validly tendered. Bidders reserve the right, at any time or from time to time, in their sole discretion, to amend the U.S. Offer to impose one or more conditions on the U.S. Offer by giving oral or written notice of the amendment to the Share Depositary and the U.S. Depositary and making public announcement thereof. See “The U.S. Offer — Section 2 — Acceptance for Payment,” “The U.S. Offer — Section 3 — Procedure for Accepting the U.S. Offer — Holders of Shares,” “The U.S. Offer — Section 4 — Procedure for Accepting the U.S. Offer — Holders of ADSs” and “The U.S. Offer — Section 12 — Conditions to the U.S. Offer.”

What are the conditions to the Chilean Offer?

The Chilean Offer is subject to the same conditions as the U.S. Offer.

How will I be notified if the U.S. Offer is extended?

If we extend the U.S. Offer, we will inform the U.S. Depositary and Santander S.A. Corredores de Bolsa, which is our depositary for the Shares in the U.S. Offer (the “Share Depositary”), of that fact. We also will make a public announcement of the extension, not later than 9:00 a.m., New York City time, on the next Business Day after the day on which the U.S. Offer was scheduled to expire. See “The U.S. Offer — Section 1 — Terms of the U.S. Offer” in this Offer to Purchase.

How do I tender my Shares and/or ADSs in the U.S. Offer?

To tender your Shares in the U.S. Offer, prior to the expiration of the U.S. Offer, either (1) you must deliver the títulos (certificates of title) representing your Series A Shares and Series B Shares, together with a properly completed and duly executed Form of Acceptance and all documents identified in the Form of Acceptance, to the Share Depositary at the address appearing on the back cover page of this Offer to Purchase; or (2) the Share Depositary must receive a confirmation of receipt of your Series A Shares and Series B Shares by book-entry transfer and a properly completed and duly executed Form of Acceptance together with all required documents. See “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” in this Offer to Purchase.

To tender your ADSs in the U.S. Offer, prior to the expiration of the U.S. Offer, the U.S. Depositary must receive the American Depositary Receipts representing the ADSs or book-entry transfer of such ADSs, together with a properly completed and duly executed ADS Letter of Transmittal or a message transmitted by The Depository Trust Company to the U.S. Depositary stating that you have expressly agreed to be bound by the terms of the ADS Letter of Transmittal, and all other required documents. If you cannot get any document or instrument that is required to be delivered to the U.S. Depositary by the expiration of the U.S. Offer, you may have a short period of extra time to do so by having a broker, a bank or other fiduciary which is a member of the Securities Transfer Agents Medallion Program or other eligible institution guarantee that the missing item will be received by the U.S. Depositary for the U.S. Offer within three New York Stock Exchange trading days. For the tender to be valid, however, the U.S. Depositary must receive the missing items within that three trading day period. See “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs” in this Offer to Purchase.

Until what time can I withdraw previously tendered ADSs or Shares of the Company?

You can withdraw ADSs or Shares from the U.S. Offer at any time until the U.S. Offer has expired and, if we have not agreed by January 30, 2009 to accept your ADSs or Shares for payment, you can withdraw them at any time after

such date until we accept your ADSs or Shares for payment. See “The U.S. Offer — Section 1 — Terms of the Offer” and “The U.S. Offer — Section 5 — Withdrawal Rights” in this Offer to Purchase.

How do I withdraw previously tendered Shares and/or ADSs?

To withdraw ADSs or Shares, you must deliver a written notice of withdrawal, or a copy of one, with the required information to the Share Depositary or the U.S. Depositary, as applicable, while you still have the right to withdraw the Series A Shares, Series B Shares or ADSs. Withdrawn ADSs and Shares may be retendered by again following one of the procedures described in this Offer to Purchase, at any time until the U.S. Offer has expired. See “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares,” “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs” and “The U.S. Offer — Section 5 — Withdrawal Rights” in this Offer to Purchase.

When and how will I be paid for my tendered Shares and/or ADSs?

Subject to the terms and conditions of the U.S. Offer, we will pay for all ADSs and Shares validly tendered and not properly withdrawn promptly after the Expiration Date of the U.S. Offer, and in any case, pursuant to applicable Chilean law or practice.

We will pay for your ADSs and/or Shares that are validly tendered and not properly withdrawn by depositing the purchase price with the Share Depositary or the U.S. Depositary, as applicable, which will act as depositary for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for tendered Shares will be made only after timely receipt by the Share Depositary of the títulos (certificates of title) representing your Shares (or of a confirmation of a book-entry transfer of such Shares as described in “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” in this Offer to Purchase), together with a completed Form of Acceptance and all documents identified in the Form of Acceptance for such Shares. Payment for tendered ADSs will be made only after timely receipt by the U.S. Depositary of certificates for such ADSs and a properly completed and duly executed Letter of Transmittal and any other required documents for such ADSs (or of a confirmation of a book-entry transfer of such ADSs as described in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs” in this Offer to Purchase). See “The U.S. Offer — Section 2 — Acceptance for Payment” in this Offer to Purchase.

Do I have statutory put rights?

No. You do not have any statutory put rights under Chilean law. See “Special Factors — Purpose and Structure of the Offers; Reasons of the Telefónica Group for the Offers” in this Offer to Purchase.

Do I have statutory appraisal rights?

Chilean corporations law does not provide for appraisal rights in connection with tender offers. See “Special Factors — Plans for the Company After the Offers” and “The U.S. Offer — Section 11 — Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration” in this Offer to Purchase.

Will the Offers be followed by a Merger?

Purchaser does not have any present plans to effect a merger following the completion of the Offers. See “Special Factors — Plans for the Company After the Offers” in this Offer to Purchase.

Will the Company continue as a public company?

Subject to applicable laws and rules of the Chilean and U.S. authorities and the stock exchanges, Purchaser and its affiliates intend to cause the Company to (1) delist the ADSs from the New York Stock Exchange, (2) suspend the Company’s obligation to file reports under the Exchange Act until termination of registration thereunder, (3) terminate the registration of the Shares and ADSs under the Exchange Act and (4) terminate the Company’s ADS facility. See “Special Factors — Certain Effects of the Offers” and “The U.S. Offer — Section 11 — Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration” in this Offer to Purchase.

What will happen to any Shares or ADSs of the Company remaining after the Offers?

Purchaser is seeking 100% of the Shares, including Series A Shares represented by ADSs, in the Offers. However, there may be Shares that remain outstanding following completion of the Offers. We do not have any current plans to effect a merger of the Company following the completion of the Offers. Purchaser may, however, from time to time seek (or cause one of its affiliates to seek) to acquire additional outstanding Series A Shares, Series B Shares or ADSs not owned by Purchaser and its affiliates, including, subject to applicable law, by means of one or more tender offers, open market purchases or negotiated transactions. See the “Introduction” to this Offer to Purchase, “Special Factors — Plans for the Company after the Offers,” “Special Factors — Certain Effects of the Offers” and “The U.S. Offer — Section 11 — Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration” in this Offer to Purchase.

If I decide not to tender, how will the Offers affect my Shares and/or ADSs?

The purchase of Shares and ADSs in the Initial Tender Offer has substantially reduced the number of Shareholders and holders of ADSs. The purchase of the remaining outstanding Shares and ADSs not owned by the Telefónica Group would further reduce the number of holders of Shares and ADSs and the number of Shares and ADSs which are still in the hands of the public may be so small that there may no longer exist an active public trading market (or, possibly, there may not be any public trading market) for the Shares and/or ADSs. The termination of the deposit agreement and the delisting and cessation of making filings described above also may occur. See the “Introduction” to this Offer to Purchase and “The U.S. Offer — Section 11 — Effect of the Offers on the Market for the Shares; Exchange Act Registration” in this Offer to Purchase.

What is the market value of my Shares and/or ADSs as of a recent date?

On November 28, 2008, the last trading day on the Santiago Stock Exchange and the New York Stock Exchange before the announcement of the Offers, the last reported sale price of the Shares on the Santiago Stock Exchange was 1,002.1 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share and the last sale price of the ADSs reported on the New York Stock Exchange was U.S.$5.98 per ADS. We advise you to obtain a more recent quotation for Shares and/or ADSs in deciding whether to tender your Shares and/or ADSs. See “The U.S. Offer — Section 7 — Price Range of ADSs; Dividends” in this Offer to Purchase.

What are the U.S. federal income tax consequences if I tender my Shares and/or ADSs?

Generally, if you are a U.S. holder (as that term is defined for U.S. federal income tax purposes, see “The U.S. Offer — Section 6 — Certain Tax Considerations” in this Offer to Purchase), you will be subject to U.S. federal income taxation when you receive cash from us in exchange for the Shares and/or ADSs you tender and you may be subject to applicable state or local law. Holders of ADSs that are not U.S. holders may be subject to foreign taxation upon receipt of cash in exchange for ADSs pursuant to the U.S. Offer. You should consult your tax advisor about the particular effect the U.S. Offer will have on you. See “The U.S. Offer — Section 6 — Certain Tax Considerations” in this Offer to Purchase.

Who can I talk to if I have questions about the U.S. Offer?

You can call D.F. King & Co., Inc., our Information Agent for the U.S. Offer, toll free at (800) 859-8511. See the back cover of this Offer to Purchase.


To	U.S. Holders of Shares of Common Stock and Holders of American Depositary Shares of Compañía de Telecomunicaciones de Chile S.A.

INTRODUCTION

Inversiones Telefónica Internacional Holding Limitada (“Purchaser”), a limited liability company (sociedad de responsabilidad limitada) organized and existing under the laws of the Republic of Chile and an indirect wholly owned subsidiary of Telefónica, S.A. (“Telefónica”), a publicly held stock corporation organized and existing under the laws of the Kingdom of Spain with its corporate seat located in Madrid, hereby offers to purchase (1) any and all of the outstanding shares of Series A common stock, no par value (the “Series A Shares”) and Series B shares of common stock, no par value (the “Series B Shares” and, together with the Series A Shares, the “Shares”), of Compañía del Telecomunicaciones de Chile S.A., a publicly traded stock corporation organized and existing under the laws of the Republic of Chile (the “Company”), other than Shares currently owned by Purchaser or by Telefónica Internacional Chile S.A., a corporation organized and existing under the laws of the Republic of Chile, the parent company of Purchaser and wholly owned by Telefónica (“TICSA”), from all holders of Shares (“Shareholders”) resident in the United States (the “U.S. Holders”) for 1,100 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share and (2) any and all of the outstanding American Depositary Shares (“ADSs”) of the Company, other than ADSs currently owned by the Telefónica Group, each representing four Series A Shares, for 4,400 Chilean pesos per ADS, in each case payable in United States dollars based upon the Observed Exchange Rate published in the Official Gazette of Chile on the Expiration Date (or if the Observed Exchange Rate is not published on the Expiration Date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the Expiration Date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile), net to the seller in cash and without interest thereon and subject to any required withholding of taxes (the “U.S. Offer Price”), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery (which, as the same may be amended and supplemented from time to time, constitute the “U.S. Offer”).

Concurrent with the U.S. Offer, Purchaser is offering to purchase (the “Chilean Offer” and, together with the U.S. Offer, the “Offers”) from all Shareholders (including U.S. Holders) any and all of the outstanding Shares, other than Shares currently owned by Purchaser or by TICSA, for 1,100 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share, net to the seller in cash and without interest and subject to any required withholding of taxes. The Chilean Offer will be made on substantially the same terms as the U.S. Offer. Except as otherwise required by applicable law and regulations, the Telefónica Group intends to consummate the U.S. Offer concurrently with the Chilean Offer.

On September 17, 2008, Purchaser commenced dual tender offers in Chile and in the United States (the “Initial Chilean Offer” and the “Initial U.S. Offer,” respectively, and together, the “Initial Tender Offer”) for all outstanding Shares and ADSs. The Initial Chilean Offer expired on October 30, 2008 and the Initial U.S. Offer expired on October 31, 2008. In the Initial Tender Offer, the Telefónica Group acquired an aggregate of 496,295,053 Shares, thereby increasing its ownership interest in the Company to a total of 926,028,064 Shares, or approximately 96.75%, of the total outstanding Shares, including Shares represented by ADSs. Chilean law requires Purchaser to commence the Offers because it acquired share ownership in excess of two-thirds of the Shares with voting rights issued by the Company. The Offers are for the remaining Series A Shares and the remaining Series B Shares not acquired by Purchaser in the Initial Tender Offer or previously owned by the Telefónica Group, including Shares represented by ADSs not acquired by Purchaser in the Initial Tender Offer.

As used herein, the “Telefónica Group” shall mean, collectively, Telefónica, TICSA and Purchaser. The “Chilean Exchanges” (in the Spanish language bolsas de valores) shall mean, collectively, the Bolsa de Comercio de Santiago, Bolsa de Valores, the Bolsa Electronica de Chile, Bolsa de Valores and the Bolsa de Corredores, Bolsa de Valores.

The U.S. Offer is open to U.S. Holders of Shares and all holders of ADSs. Non-U.S Holders of Shares must tender their Shares into the Chilean Offer. U.S. Holders of Shares may tender their Shares into either the U.S. Offer or the Chilean Offer. Holders of ADSs must tender their ADSs into the U.S. Offer.

The purchase price for Series A Shares or Series B Shares and the purchase price for ADSs accepted for payment pursuant to the U.S. Offer will, in each case, be paid in United States dollars, with the dollar amount thereof being determined by the daily average dollar-to-peso exchange rate at which commercial banks conduct authorized transactions in Chile as determined by the Central Bank of Chile and published in the Official Gazette of Chile, pursuant to No. 6 of Chapter I of the International Exchange Rules Compendium of the Central Bank of Chile (the “Observed Exchange Rate”) on the Expiration Date, or if the Observed Exchange Rate is not published on the Expiration Date, the Observed Exchange Rate published on the first day immediately preceding the Expiration Date on which day the Observed Exchange Rate is published in the Official Gazette of Chile.

In the event that the price per Share to be paid in the Chilean Offer is increased, Purchaser will make a corresponding increase to the price paid per Share and ADS in the U.S. Offer.

The U.S. Offer is currently scheduled to expire at 3:30 p.m., NYT (the “Expiration Time”), on December 31, 2008 (the “Expiration Date”), unless and until Purchaser, in its sole discretion (but subject to the applicable rules and regulations of the Commission) shall have extended the period of time during which the U.S. Offer will remain open, in which event the term “Expiration Date” will mean the latest time and date at which the U.S. Offer, as so extended by Purchaser, shall expire.

As of the date hereof, the Company has not taken a position with respect to the Offers. The Company will be obligated to file a Solicitation/Recommendation Statement on Schedule 14D-9 with the Commission within ten Business Days of the date of this Offer to Purchase. In the Schedule 14D-9, the Company is required to set forth whether it will approve or disapprove of the U.S. Offer or not take a position with respect to the U.S. Offer. This statement will contain important information and may include certain material non-public information that the Company believes is necessary for Shareholders to make a decision with respect to the Offers. We urge all Shareholders of the Company to review this statement carefully when it becomes available.

As of November 26, 2008, there were 873,995,447 shares of Series A issued and outstanding, including 162,846,960 Shares evidenced by ADSs, and 83,161,638 shares of Series B issued and outstanding. Telefónica indirectly owns 845,937,574 Series A Shares, including Series A Shares represented by ADSs, representing approximately 96.79% of the Series A Shares and 80,090,490 Series B Shares, representing approximately 96.31% of the Series B shares, which corresponds to a total of approximately 96.75% of the issued and outstanding Shares of the Company. While five of the seven current members of the Company’s Board of Directors are appointed by the Telefónica Group, given the Telefónica Group’s 96.75% ownership interest in the Company, the Telefónica Group is currently entitled to appoint the entire Board of Directors of the Company.

Tendering U.S. Holders of Shares who have Shares registered in their own name and who tender directly to the Share Depositary will not be obligated to pay brokerage fees, commissions or stock transfer taxes on the sale of their Shares pursuant to the U.S. Offer. Tendering holders of ADSs who have ADSs registered in their own name and who tender directly to the U.S. Depositary will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the ADS Letter of Transmittal, transfer taxes on the sale of their ADSs pursuant to the U.S. Offer. Tendering U.S. Holders of Shares and tendering holders of ADSs who own Shares and/or ADSs through a broker or other nominee, and such broker or nominee tenders their Shares and/or ADSs on their behalf, may have to pay a fee to such broker or nominee. Purchaser will pay all charges and expenses of the Share Depositary and the U.S. Depositary incurred in connection with the U.S. Offer. See “The U.S. Offer — Section 14 — Fees and Expenses.”

This Offer to Purchase and the related Form of Acceptance, ADS Letter of Transmittal and ADS Notice of Guaranteed Delivery contain important information and should be read carefully in their entirety before any decision is made with respect to the U.S. Offer.

RELIEF GRANTED BY THE COMMISSION

In order to facilitate the making of the U.S. Offer, Telefónica has requested from the Staff of the Commission, and the Staff has granted, certain exemptive relief from the provisions of Rule 14d-10 under the Exchange Act (the “14d-10 Exemption”).

Rule 14d-10(a)(1) under the Exchange Act provides that no person shall make a tender offer unless the offer is open to all security holders of the class of securities subject to the tender offer. Accordingly, in the absence of exemptive relief, the application of Rule 14d-10(a)(1) would prohibit the dual structure of the Offers. The 14d-10 Exemption will permit the U.S. Offer to be open only to U.S. Holders of Shares and holders of ADSs.

SPECIAL FACTORS

Background of the Offers.

Purchaser. Inversiones Telefónica Internacional Holding Limitada was formed by means of public deed dated September 8, 1999 in Santiago, Chile, under the name of Telefónica Interactiva Chile Limitada. Its business address is Avenida Vitacura 2736, Piso 2, Las Condes, Santiago, Chile.

The representatives authorized to represent the Purchaser are Jorge Martina Aste, Luis Muñoz Vallejos, Waldo Maldonado Catalán, Claudio Contreras Villalón, Cristían Aninat Salas, Ignacio Gaspar Sintes, Juan Vidaurrazaga Guerenabarrena, Víctor Galilea Page and José María Álvarez-Pallete López. As of December 2, 2008, Purchaser is the owner of 99.99% of the shares in Terra Networks Chile S.A. Purchaser’s parent companies are Telefónica, S.A., Telefónica Internacional S.A., Telefónica Internacional Holding BV, Telefónica Chile Holding BV and Telefónica Internacional Chile S.A.

Purchases of Shares and ADSs of the Company. Telephone service in Chile commenced in 1880 with the formation of Compañía de Telefonos Edison in Valparaiso. In 1927, the International Telephone and Telegraph Corporation (“ITT”) acquired the Chile Telephone Company, which had 26,205 telephones in operation at the time. In 1930, the Company was formed as a stock company named Compañía de Telefonos de Chile S.A. In 1971, the Chilean Government intervened to take management control of the Company, and in 1974, the Chilean Government’s Corporación de Fomento de la Producción (“Corfo”) acquired 80% of the total shares issued by the Company, then held by ITT.

In August of 1987, Corfo announced that it would reduce its shareholdings and privatize the Company by selling approximately 30% of Corfo’s shares in the Company. In January of 1988, 151 million shares of Series A Common Stock of the Company were transferred to Bond Chile. After giving effect to a capital increase in an April 1988 offering and other additional purchases of Series A Common Stock and Series B Common Stock of the Company, Bond Chile owned approximately 50% of the then issued and outstanding capital stock of the Company.

In April of 1990, Telefónica Internacional, S.A., a subsidiary of Telefónica (“TISA”), indirectly acquired the stock of Bond Chile — and thus all of Bond Chile’s interest in the Company. Bond Chile then changed its name to Telefónica Internacional Chile S.A.

The Company’s July 1990 international offering of American Depositary Shares (“ADSs”) reduced TICSA’s ownership to 44.45% of the Company’s issued and outstanding capital stock. Subsequently, payments made by third parties for subscribed but unpaid shares further reduced TICSA’s ownership to 43.6% until 2003. In 1999, the Company launched its new brand name, “Telefónica CTC Chile.” Since the purchase of an additional 1.3% in July 2004, TICSA’s ownership stake in the Company remained 44.9% until the Initial Tender Offer.

On September 17, 2008, Bidders commenced the Initial Chilean Offer and the Initial U.S. Offer, which expired on October 30, 2008 and October 31, 2008, respectively. Pursuant to the Initial Tender Offer, the Bidders acquired an additional 496,295,053 Shares, including Shares represented by ADSs. After the acquisition of such Shares, the Telefónica Group’s ownership interest in the Company increased to a total of 926,028,064 Shares, including Shares represented by ADSs, or approximately 96.75% of the total outstanding Shares of the Company.

Recent Discussions and Related Events.

In recent years, Telefónica has continually sought to enhance its strategic position on a global scale. To that end, Telefónica has considered various means through which to increase its ownership stake in each of its Latin American affiliates — including, but not limited to, the Company — and across each of its lines of business.

In that regard, Telefónica launched exchange offers in 2000 to increase its ownership stake in several of its then-existing Latin American subsidiaries based in Argentina, Brazil and Peru. Because of, inter alia, the regulatory regime and market conditions in Chile at that time, the Company determined not to commence any such exchange offers with respect to its Chilean subsidiaries. Nevertheless, since the time of its series of exchange offers effected in 2000, Telefónica has, from time to time, revisited generally the possibility of increasing its ownership stake in the Company.

In February 2008, Telefónica renewed its focus on the Company and began to consider its options for increasing its position in the subsidiary’s stock. In the following months, Telefónica was approached by a number of investment banks proposing a variety of transactions, some of which involved the Company. Telefónica did not pursue any discussions with any of the investment banks regarding any of the proposals relating to the Company. Throughout February and March 2008, Telefónica began evaluating internally a potential increase in its ownership stake in the Company and informally consulted with legal counsel regarding (i) the implications of a potential dual tender offer in the U.S. and in Chile to acquire additional Shares of the Company, and (ii) the U.S. and Chilean legal and regulatory rules governing such prospective transactions.

On March 12, 2008, the management of Telefónica met to discuss the potential transaction. However, on March 13, 2008, Telefónica decided to abandon its preliminary analyses in connection with the potential tender offer.

In June 2008, Telefónica formally retained Guerrero, Olivos Novoa y Errazuriz as its Chilean legal advisor and Dewey & LeBoeuf LLP as its U.S. legal advisor in connection with the potential tender offer. During this time, Telefónica held several discussions with its legal advisors regarding the proposed transaction and consulted with PricewaterhouseCoopers Chile, its tax advisor, for advice regarding the potential tax consequences related to the proposed transaction.

Also during the month of June, Telefónica continued to evaluate internally the potential timing and structure of the proposed tender offer.

On July 1, 2008, the finance officers of Telefónica met to discuss the progress and current status of the various internal analyses. Thereafter and throughout the month of July, Telefónica continued to finalize the structure of the proposed offer and complete its internal analyses.

On July 24, 2008, Telefónica met with its Chilean legal advisor in Madrid, Spain, to further analyze the implications of Chilean law in connection with the proposed tender offer, and to discuss timing issues. On July 29, 2008, Telefónica met with its U.S. and Chilean legal advisors in New York, to discuss, among other things, the timing and structure of the proposed offer and related filings, as well as legal and regulatory issues arising in connection with the transaction, both in the U.S. and in Chile.

During the month of August, Telefónica and its legal advisors prepared drafts of the necessary documents required in connection with the proposed transaction.

On September 1, 2008, Telefónica retained Santander Investment Chile Limitada to act as its financial advisor (the “Financial Advisor”), and mainly to assist Telefónica in connection with the definitive selection and implementation of the best alternative to pursue its objective of increasing its ownership in the Company. Telefónica retained the Financial Advisor based on the Financial Advisor’s expertise, reputation and familiarity with Latin American transactions and familiarity with Chilean equity markets and investors, as the Financial Advisor is an affiliate of the largest commercial bank in Chile.

Telefónica did not request, and was not provided with, an appraisal of the assets and liabilities of the Company or an opinion with regards to the fairness, from a financial point of view, of the consideration to be paid in the U.S. Offer.

In early September, the Financial Advisor provided the management of Telefónica with certain discussion materials analyzing the proposed tender offer. Telefónica’s management continued to consider methods of achieving Telefónica’s strategic goals and conclusively decided to structure the potential transaction as a dual cash tender offer, in both the

United States and in Chile, for 100% of the outstanding Shares of the Company, other than Shares currently owned by the Telefónica Group. The reasons for structuring the acquisition as a cash tender offer included:


	•	A cash tender offer provides simplicity for the selling shareholders and the target company;

	•	The cost-effectiveness for the Bidders, in terms of relatively fast and simple execution of a tender offer; and

	•	The fairness, from a financial point of view, of the prices offered, after consideration of the different factors set forth below under “Special Factors — Fairness of the Offers.”

Accordingly, Telefónica focused on a cash tender offer structure from the outset. Other structures that could have permitted Telefónica to increase its ownership interest in the Company were deemed impractical due to legal and cost considerations.

On September 5, 2008, the Executive Committee of the Board of Directors of Telefónica (the “Executive Committee”), having consulted with management, authorized the Initial U.S. Offer and the Initial Chilean Offer, subject to satisfaction of the applicable legal and regulatory conditions. The decision to launch the transaction at that time was based upon management’s business judgment that the additional investment in the Company was attractive relative to Telefónica’s other global investment opportunities, the availability of cash to make the Initial Tender Offer and the belief that pension fund investors would be receptive to a tender offer.

On September 11, 2008, Telefónica publicly announced its intention to effect the Initial Tender Offer for all of the outstanding Shares of the Company through a press release, filed on Schedule TO-C with the Commission in the United States and with the Chilean Market Regulator (Superintendencia de Valores y Seguros, the “SVS”) in Chile.

On September 16, 2008, Telefónica filed with the SVS the documentation required in connection with the Chilean Offer.

On September 17, 2008, Telefónica launched the U.S. Offer by publishing a summary advertisement for the U.S. Offer in The Wall Street Journal and by filing with the SEC the documentation required in connection with the U.S. Offer.

On October 7, 2008, the Company held an Extraordinary Meeting of the Shareholders to vote on the certain bylaw amendments upon which the Initial Tender Offer were conditioned (the “Bylaw Amendments”). The Shareholders failed to adopt the Bylaw Amendments.

Between October 8 and October 11, 2008, Purchaser, together with its Financial Advisor, discussed with certain shareholders, namely AFP Capital S.A., AFP Cuprum S.A., Plan Vital S.A., Habitat S.A. and AFP Provida S.A., the possibility of an increase in the offer prices. On October 11, 2008, following discussions with such pension funds, Purchasers decided to increase the offer prices and extend the Initial Tender Offer until October 30, 2008, and AFP Capital S.A., AFP Cuprum S.A. and AFP Provida S.A. (collectively, the “Pension Funds”) requested that the Board of Directors of the Company call a new special meeting of Shareholders (the “Second Shareholders Meeting”). There was no written or oral agreement or understanding between the Bidders and the Pension Funds, Plan Vital S.A. or Habitat S.A. as to (i) how the Pension Funds would vote on the Bylaw Amendments at the Second Shareholders Meeting and (ii) whether the Pension Funds would tender their Shares.

On October 13, 2008, Bidders announced an increase in the offer prices of the Initial Tender Offer from 1,000 Chilean pesos per Series A Share and 900 Chilean pesos per Series B Share to 1,100 Chilean pesos per Series A Share and 990 Chilean pesos per Series B Share, respectively, and from 4,000 Chilean pesos per ADS to 4,400 Chilean pesos per ADS. Telefónica also announced that, in connection with the increase in the offer prices, the offer period would be extended to 11:00 p.m., New York City time, on October 30, 2008.

On October 27, 2008, Bidders announced an extension of the Initial U.S. Offer to 12:00 midnight on October 31, 2008.

On October 28, 2008, the Second Shareholders Meeting was held and the Shareholders approved the Bylaw Amendments.

The Initial Chilean Offer and the Initial U.S. Offer expired on October 30, 2008 and October 31, 2008, respectively, and pursuant to the Initial Tender Offer, the Telefónica Group, directly or indirectly, acquired 496,295,053 Shares, including Shares represented by ADSs, validly tendered in the Initial Tender Offer. As a result, the Telefónica Group

currently owns 926,028,064, or approximately 96.75%, of the total outstanding Shares, including Shares represented by ADSs. Chilean law requires Purchaser to commence the Offers for the Shares and ADSs not acquired by Purchaser in the Initial Tender Offer.

Fairness of the Offers.

The Telefónica Group believes that the Offers are fair to holders of Shares and ADSs other than the Telefónica Group. In making this determination, the Telefónica Group considered the following factors:


	•	*Premium to Market Price.* The premium represented by the difference between the U.S. Offer Price and recent trading prices of the Shares and ADSs gives holders of Shares and ADSs the opportunity to sell all or a portion of their Shares and ADSs at:


	•	a premium of approximately 9.8% over the closing price of Ch$1,002.1 per Series A Share and a premium of 0% over the closing price of Ch$990 per Series B Share on the Santiago Stock Exchange on November 28, 2008 (the last trading day on the Santiago Stock Exchange prior to the announcement of the Offers), a premium of approximately 14.0% and 14.6% for Series A and Series B Shares, respectively, calculated according to the applicable Chilean regulations (the volume-weighted average of the daily VWAP (volume weighted average price) of the three Chilean Exchanges, for the period between the 30th and 90th day before the Expiration Date). The average prices, calculated according to this methodology, are Ch$965 per Series A Share, and Ch$863.8 per Series B Share;

	•	a premium of approximately 37.3% over the closing price of Ch$801 per Series A Share and a premium of approximately 41.4% over the closing price of Ch$700 per Series B Share on the Santiago Stock Exchange on September 11, 2008 (the last trading day on the Santiago Stock Exchange prior to the announcement of the Initial Tender Offer);

	•	a premium of approximately 38.5%, based on the Observed Exchange Rate published on September 11, 2008, over the closing price per ADS of U.S.$5.98 on the New York Stock Exchange (the “NYSE”) on September 11, 2008 (the last trading day on the NYSE prior to the announcement of the Initial Tender Offer); and

	•	a premium of approximately 10.7%, based on the Observed Exchange Rate published on December 1, 2008, over the closing price per ADS of U.S.$5.98 on the NYSE on November 28, 2008 (the last trading day on the NYSE prior to the announcement of the Offers).


	•	*Premium to Net Book Value.* The U.S. Offer Price represents a premium of approximately 11.3% over the net book value per Series A Share of Ch$988.33 as of October 31, 2008 and a premium of approximately 0.2% over the net book value per Series B Shares of Ch$988.33 as of October 31, 2008.

	•	*Opportunity for Liquidity.* As of the date of this Offer to Purchase, 957,157,085 million Shares are issued and outstanding, including 162,846,960 Shares evidenced by ADSs. Of these outstanding Shares, 926,028,064 Shares are owned by the Telefónica Group. This means that only approximately 3.25% of the outstanding Shares are not owned by the Telefónica Group. The Offers will provide holders with the opportunity for liquidity by permitting them to sell all or a portion of their Shares and/or ADSs for cash, without the usual transaction costs associated with open-market sales.

	•	*Timing of the Offers.* The anticipated timing of consummation of the Offers, including the structure of the transaction as a tender offer, allows holders of Shares and ADSs an opportunity to consider the Offers and have withdrawal rights during the period prior to the Expiration Date and decide whether to tender into the Offers, unlike a possible alternative form of transaction in which bidders would place unconditional and irrevocable purchase orders on the Chilean Exchanges for a short duration, during which any subject securities offered for sale on such stock exchanges would be purchased.

	•	*All Holders of Each Series Will Receive the Same Price.* Negotiated and/or open market purchases of Series A Shares, Series B Shares and ADSs from holders would not have enabled all holders to participate in those purchases at the same price. Since the Offers are structured as an offer for any and all of the outstanding Series A Shares, Series B Shares and ADSs, all holders will be entitled to participate in the Offers with the same price per Series A Share, Series B Share or ADS being offered to all holders.


	•	*Uncertainties of the Company’s Prospects and Future Operating Results.* The Company’s prospects and future operating results are subject to risks, uncertainties and other factors, including, but not limited to:


	•	*Chilean Economic Conditions.* Nearly all of the Company’s customers are Chilean companies or individuals, and substantially all of the Company’s operations are located in Chile. For these reasons, the results of the Company’s operations and its financial condition are sensitive to, and dependent upon, the level of economic activity in Chile. Historically, growth in the Chilean telecommunications industry has been tied to the state of Chile’s economy, particularly levels of consumer spending and demand. An economic slowdown may negatively affect the Company’s business through a decrease in demand and higher customer nonpayment levels.

	•	*Changes in Interest Rates.* Chile has experienced changes in interest rates in the past, which could adversely affect the Company’s financial condition and results of operations.

	•	*Changes in Inflation Rates.* Chile has experienced high levels of inflation in the past. High levels of inflation in Chile could adversely affect the Chilean economy and the Company’s financial condition and results of operations.

	•	*Increased Competition and Behavior of Other Market Participants.* The Company faces intense competition in every aspect of its business, ranging from existing operators and consolidation to new entrants.

	•	*Changes in Technology.* The telecommunications industry as a whole has traditionally been, and is likely to continue to be, subject to rapid and significant changes in technology and the related introduction of new products and services. There can be no assurance as to the effect of such technological changes on the Company or that the Company will not be required to expend substantial financial resources on the development or implementation of new competitive technologies.

	•	*Changes in Regulation.* Tariff regulation may have a significant impact on the Company’s revenues and its ability to compete in the marketplace, as the Company is required to charge the same tariff to all clients in a designated tariff area. New regulations or changes in other existing regulatory model may also adversely affect the Company’s businesses.

	•	*Changes in Currency Valuation.* Volatility of the value of the Chilean peso against the U.S. dollar could adversely affect the Company’s financial condition and results of operations. Currency devaluations and fluctuations in exchange rates, in particular the Chilean peso and other currencies in which the Company’s assets, liabilities and operating results are denominated, including U.S. dollars, may adversely affect the Company’s business.

The Bidders considered all of the above risks and uncertainties applicable to telecommunications companies conducting business in Chile without attributing greater weight to one above the others. Based on the foregoing considerations, the Bidders believe that, although they will receive all or substantially all of the benefits of any actual improvements in the earnings of the Company in the future if the Offers are completed, the Bidders will also bear all or substantially all of the risk of the Company going forward, including the risk that improvements in the Company’s earnings will not materialize as a result of new conditions or developments affecting the Company and the continued severe volatility of general market and economic conditions. In particular, there has been significant uncertainty in financial markets generally and a substantial decline in the equity markets, both in the United States and in Chile. Accordingly, by extending the Offers at this time, the Bidders believe that they are offering Shareholders a fair price considering the premiums being offered and the uncertainty for Shareholders as to whether maintaining or increasing a current investment in the Company would prove in the future to be their optimal investment strategy.


	•	*Current Market Prices.* The prices offered for the Series A Shares and for the Series B Shares represent premiums of 9.8% and 0%, respectively, over the closing prices on the Santiago Stock Exchange on November 28, 2008 (the last trading day on the Santiago Stock Exchange prior to the announcement of the Offers).

	•	*Historical Market Prices.* A premium of approximately 14.0% for the Series A Shares and 14.6% for the Series B Shares was applied to the share price, calculated according to the applicable Chilean regulation: the volume-weighted average of the daily VWAP (volume weighted average price) of the three Chilean Exchanges, for the period between the 30th and 90th day before the acceptance of the tendered Shares. The average prices, calculated according to this methodology, are Ch$965 per Series A Share and Ch$863.8 per Series B Share. The Shares and


		ADSs frequently traded at prices above the U.S. Offer Price in 2007 and 2006. However, over the 24-month period ended on September 16, 2008 (the day preceding the commencement of the Initial Tender Offer) the Series A Shares, Series B Shares and ADSs have declined 16.10%, 17.16% and 15.5%, respectively, and, in the last 12-month period ended September 16, 2008, 27.4%, 30% and 28%.


	•	*Going-Concern Value.* A wide range of analyst reports were considered to reflect the market expectations for future cash flows.

	•	*Prior Purchase Prices.* The prices offered are identical to the prices offered in the Initial Tender Offer.

In evaluating the fairness of the offer prices to be offered pursuant to the Offers, the Telefónica Group did not take into account the following factors, for the reasons explained below:


	•	*Financial Advisor Materials.* Financial Advisor discussion materials prepared in advance of the Initial Tender Offer were not considered by Telefónica with regard to the fairness of the Offers because the Financial Advisor’s role in the transaction is mainly to assist in maximizing acceptance of the Offers by investors and not to evaluate or give an opinion regarding the fairness of the Offers.

	•	*Net Book Value.* The net book value of the Company was not considered because the Telefónica Group does not deem this factor to be reflective of the real market value of the Company. The book value of the assets does not reflect the expected future cash flows.

	•	*Liquidation Value.* The liquidation value of the Company was not considered because the Company will continue to operate as a going-concern and its future prospects are positive, and therefore the liquidation price is not a relevant figure.

The Telefónica Group is not aware of any firm offers by unaffiliated persons with respect to the Company in the past two years.

The Telefónica Group did not find it practicable to, and therefore did not, quantify or otherwise attempt to assign relative weights to the factors considered in reaching its conclusion as to the fairness of the Offers.

The foregoing discussion of the information and factors considered by the Telefónica Group is not intended to be exhaustive but is believed to include all material factors considered by the Telefónica Group.

Upon completion of the Offers, Bidders will own a minimum of approximately 96.75% and a maximum of 100% of the issued and outstanding Shares of the Company. Former holders of Shares and ADSs that have been tendered and purchased pursuant to the Offers would not have the opportunity to participate in the future earnings, profits and growth of the Company and will not have the right to vote on the Company’s corporate matters. However, former Shareholders will not face the risk of losses generated by the Company’s operations or a decline in the value of the Company after the completion of the Offers. Further, unaffiliated Shareholders who do not tender their Shares and/or ADSs may encounter a reduced public market for their Shares and/or ADSs for the following reasons: (i) upon completion of the Offers, the number of Shares available and publicly traded will likely be further reduced, which could further adversely affect the liquidity and market value of the remaining Shares and (ii) if permitted by applicable laws and rules of U.S. authorities and the stock exchanges, the Telefónica Group intends to cause the Company to (a) delist the ADSs from the NYSE, (b) suspend the Company’s obligation to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), until termination of registration thereunder, (c) terminate the registration of the Series A Shares and ADSs under the Exchange Act and (d) terminate the Company’s ADS facility, which may result in the ADSs ceasing to trade even in the over-the-counter market and quotations therefor may not be obtainable. See “The U.S. Offer — Section 6 — Certain Tax Considerations” for a discussion of the tax consequences of the U.S. Offer.

As of the date hereof, the Company has not taken a position with respect to the Offers. The Company will be obligated to file a Solicitation/Recommendation Statement on Schedule 14D-9 with the Commission within ten Business Days of the date of this Offer to Purchase. In the Schedule 14D-9, the Company is required to (i) make a recommendation, (ii) state that it is neutral or (iii) state that it is unable to take a position with respect to the Offers in the Schedule 14D-9. This statement will contain important information and may include certain material non-public information that the Company believes is necessary for Shareholders to make a decision with respect to the Offers. We urge all shareholders of the Company to review this statement carefully when it becomes available.

The Chilean Offer is subject to simplified disclosure requirements pursuant to applicable Chilean law. See “Special Factors — Risks of Tendering Shares in the Chilean Offer Instead of the U.S. Offer.” Pursuant to such simplified procedure of the Chilean Offer, and according to the applicable laws of the Republic of Chile, individual opinions of the members of the Board of Directors of the Company as to whether tendering into the Chilean Offer is in the best interests of Shareholders are not required.

As of this date, to the Bidders’ knowledge, a majority of directors who are not employees of the Company has not retained an unaffiliated representative to act solely on behalf of unaffiliated security holders for purposes of negotiating the terms of the transaction and/or preparing a report concerning the fairness of the Offer.

Purpose and Structure of the Offers; Reasons of the Telefónica Group for the Offers.

Chilean law requires any person, after acquiring two-thirds or more of the voting power of a company, to commence a subsequent tender offer for all remaining shares of a company within 30 days following the acquisition of such control. As Bidders increased their ownership of Shares, including Shares represented by ADSs, to approximately 96.75% of the issued and outstanding Shares of the Company in the Initial Tender Offer, Bidders are required by Chilean law to engage in these subsequent Offers.

The purpose of the Offers is to comply with Chilean law and to enable Bidders to acquire the remaining approximately 3.25% equity interest in the Company not already owned by the Telefónica Group.

The Telefónica Group intends, if permitted by applicable laws and rules of U.S. authorities and the stock exchanges, to cause the Company to (a) delist the ADSs from the NYSE, (b) suspend the Company’s obligation to file reports under the Exchange Act, until termination of registration thereunder, (c) terminate the registration of the Shares and ADSs under the Exchange Act and (d) terminate the Company’s ADS facility. However, the Telefónica Group does not intend, within the next 12-month period, to cancel the registration of the Shares with the SVS and to cease being subject to the reporting requirements applicable to publicly traded companies in Chile, nor to delist the Shares from the Chilean Exchanges. The acquisition of Shares and ADSs not owned by TICSA through a cash tender offer provides public holders of Shares and ADSs with cash for their Shares and ADSs as promptly as practicable.

In addition, the Telefónica Group currently intends to retain all of its Shares and ADSs, including those tendered pursuant to the Offers. However, the Telefónica Group reserves the right to make any changes it deems necessary or appropriate in light of its review or in light of future developments. See “Special Factors — Plans for the Company after the Offers.”

The Offers do not require approval of the Board of Directors of the Company or any committee thereof. No such approval is required under Chilean law and no such approval was sought.

The Telefónica Group does not have any present plans to effect a merger of the Company or similar transaction following completion of the Offers. See “Special Factors — Plans for the Company after the Offers.”

Because the Offers are structured as tender offers, they provide Shareholders who are considering a sale of all or a portion of their Shares and/or ADSs the opportunity to sell those Shares and/or ADSs for cash without the usual transaction costs associated with open-market sales.

Certain Shares and ADSs Held by Affiliates of the Company.

Based on information provided by the Company, as of November 28, 2008, all of the executive officers and directors of the Company combined hold less than 1% of the outstanding Shares.

Plans for the Company After the Offers.

Subject to certain matters described below, it is currently expected that, initially following the Offers, the business and operations of the Company will generally continue as they are currently being conducted. Telefónica currently intends to cause the Company’s operations to continue to be run and managed by the Company’s existing executive officers. Nevertheless, Telefónica will continue to evaluate all aspects of the business, operations, financial condition, prospects, capitalization, corporate structure, assets properties, policies, management and personnel of the Company, as well as conditions in securities markets generally, general economic and industry conditions and other factors after the

consummation of the Offers, and will take, or cause to be taken, such further actions as it deems appropriate under the circumstances then existing. In particular, following the Offers, Telefónica may, or, subject to applicable law, may cause other parties to:

(a) change the Company’s Board of Directors by electing new persons as directors of the Company as a consequence of Telefónica increasing its stake in the Company;

(b) take actions to achieve cost savings through potential scale efficiencies;

(c) from time to time seek (or cause one of its affiliates to seek) to acquire additional outstanding Shares or ADSs not owned by the Telefónica Group, including by means of one or more tender offers, open market purchases or negotiated transactions subject to Chilean legal requirements; or

(d) from time to time seek (or cause one of its affiliates to seek) to sell or otherwise dispose of some or all of the holdings of Shares or ADSs of the Telefónica Group through open market sales or one or more negotiated transactions subject to Chilean legal requirements.

There are no plans to sell or otherwise transfer any relevant portion of the Company or any of its subsidiaries. A “relevant” portion of the Company shall be intended to mean a sale or other disposition of assets of the Company or of any of its subsidiaries representing more than 5% of the assets of the Company or its subsidiaries, as applicable.

Telefónica expressly reserves the right to make any changes that it deems necessary or appropriate in light of its review or in light of future developments.

Except as set forth above or elsewhere in this Offer to Purchase, the Telefónica Group does not have any present plans or proposals that would result in (a) any extraordinary corporate transaction, such as a merger, reorganization, liquidation, or purchase, sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (b) any change in the current Board of Directors or management of the Company (including any plans or proposals to change the number or term of directors, to fill any existing vacancy on the Board of Directors or to change any material term of the employment contract of any executive officer) (except any change of the Board of Directors resulting from Telefónica increasing its stake in the Company after the offer) or (c) any other material changes to the Company’s current dividend rate or policy, indebtedness, capitalization or corporate structure or business.

Certain Effects of the Offers.

Participation in Future Growth. Upon consummation of the Offers, holders of Shares and ADSs that are purchased pursuant to the Offers will not have the opportunity to participate in the future earnings, profits and growth of the Company and will not have any right to vote on the Company’s corporate matters. To the extent that the Telefónica Group’s percentage ownership of the Company is increased pursuant to the Offers, its interests in the net book value and net earnings of the Company will increase correspondingly (to 100% if all the outstanding Shares and ADSs are purchased pursuant to the Offers). As a result, the Telefónica Group will have a greater benefit from any income generated by the Company’s operations and any increase in the value of the Company following the Offers. Similarly, the Telefónica Group will bear a greater portion of the risk of any losses generated by the Company’s operations and any decrease in the value of the Company after completion of the Offers and holders of Shares and ADSs that are purchased pursuant to the Offers will not face the risk of losses that could be generated by the Company’s operations or the risk of a decline in the value of the Company after completion of the Offers.

Although Telefónica’s current economic interests in the net book value and net earnings of the Company is 96.75%, for accounting purposes, in accordance with International Financial Reporting Standards (“IFRS”), Telefónica consolidates the Company by the full integration method. Therefore, there will not be a significant effect on Telefónica’s books from a reporting perspective. However, to the extent that the Telefónica Group’s interest in the Company could increase up to 100%, there will be a corresponding increase in the Telefónica Group’s economic interest in the net book value* of the Company from, approximately, U.S.$1,057.6 million up to 1,093.1 U.S. million (calculated in accordance with IFRS figures as of September 30, 2008 and with the exchange rate on September 30, 2008).

* This amount does not include the goodwill that could arise from the transaction.

Effects on Market for Shares and Registration of Shares in the Chilean Securities Registry. The purchase of Shares pursuant to the Offers will reduce the number of Shares that might otherwise trade publicly and could reduce the number of holders of Shares which could adversely affect the liquidity and market value of the Shares held by the public.

The Shares and the Company are currently registered with the Securities Registry kept by the SVS. They also are listed and traded on the Chilean Exchanges. According to Chilean law, the SVS may cancel the registration of the shares of any company in the Securities Registry if the shares or the company do not comply with the registration requirements. In addition, a company may voluntarily request that the SVS cancel the registration of its shares with the Securities Registry. Such application may be made to the SVS if (a) for a period of six months, (1) there are fewer than 100 holders of such shares who, taken together, hold at least 10% of the issued capital of the company, excluding those who individually, or through other individuals or corporations, exceed that percentage, and (2) there are fewer than 500 holders of shares, and (b) two-thirds of the shareholders of the company vote in favor of the company ceasing to be a public company and ceasing to be a company registered with the SVS. Any shareholders who dissent from such shareholder approval or abstain from voting for such resolution would be entitled to statutory appraisal rights. If the above-mentioned conditions are met, the board of directors of such company would file an application with the SVS requesting the cancellation of its shares from registration. It also may request the cancellation of the company from the Securities Registry, provided there are no outstanding securities of the company held by the public. In addition, once the cancellation of registration is granted by the SVS, the company may request that the relevant stock exchanges delist its shares from such exchanges. Once the foregoing steps are taken, Chilean law generally does not require any additional shareholder approval in order for a Chilean company to delist.

However, the Telefónica Group is not planning, within the next 12-month period, to cancel the registration of the Shares with SVS and to cause the Company to cease being subject to the reporting requirement applicable to publicly traded companies in Chile, nor to delist the Shares from the Chilean Exchanges.

Effects on Market for ADSs. The purchase of ADSs pursuant to the U.S. Offer will further reduce the number of ADSs that might otherwise trade publicly and could reduce the number of holders of ADSs which could adversely affect the liquidity and market value of the ADSs held by the public.

The ADSs are listed on the NYSE. Depending on the number of ADSs purchased pursuant to the U.S. Offer and the aggregate market value of any ADSs not purchased pursuant to the U.S. Offer, the ADSs may no longer meet the requirements for continued listing on the NYSE and may be delisted from the NYSE. The NYSE does not currently have a formal policy with respect to the delisting of ADSs. Even if after the consummation of the Offers the ADSs still meet the NYSE requirements for continued listing, the Telefónica Group intends to cause the Company to seek to have the ADSs delisted from the NYSE pursuant to the rules of the NYSE for voluntary delistings.

Termination of Deposit Agreement. In addition to the deregistration of the Shares and ADSs under the Exchange Act as discussed below, the Telefónica Group also intends to cause the Company to give notice to the ADS Depositary to terminate the Deposit Agreement. Under the Deposit Agreement, the ADS Depositary will terminate the Deposit Agreement by mailing notice of such termination to the holders of all ADRs then outstanding at least 30 days prior to the termination date specified in such notice. If any ADRs remain outstanding after the termination date, the ADS Depositary thereafter will discontinue the registration of transfers of ADRs, will suspend the distribution of dividends to the holders thereof, and will not give any further notices or perform any further acts under the Deposit Agreement, except that the ADS Depositary will continue to collect dividends and other distributions pertaining to the Series A Shares, will sell rights, and will continue to deliver the Series A Shares, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for ADRs surrendered to the ADS Depositary. At any time after the expiration of one year from the date of termination, the ADS Depositary may sell the Series A Shares then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it thereunder, without liability for interest, for the pro rata benefit of the holders of ADRs which have not theretofore been surrendered. It is possible that after the termination of the Deposit Agreement the ADSs will not continue to trade even in the over-the-counter market and quotations therefor may not be obtainable.

Registration of Shares and ADSs Under the Exchange Act. The Series A Shares and ADSs are currently registered under the Exchange Act. The Telefónica Group intends to cause the Company to terminate these registrations. Such registration may be terminated if (i) the ADSs or the Series A Shares are not listed on a national securities exchange and

(ii) the ADSs or the Series A Shares are (a) held of record (as defined in Rule 12g5-1 under the Exchange Act) by fewer than 300 persons resident in the United States or (b) the average daily trading volume in the United States of the Shares (including Shares represented by ADSs) for a recent 12-month period has been no greater than 5 percent of the average daily trading volume of that class on a worldwide basis.

The termination of registration of the Series A Shares and the ADSs under the Exchange Act would make certain provisions of the Exchange Act, such as the requirements of Rule 13e-3 under the Exchange Act with respect to “going private” transactions and the reporting obligations under Section 13(d) and the rules relating thereto, no longer applicable to the Series A Shares or the ADSs. Furthermore, “affiliates” of the Company and persons holding “restricted securities” of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). If registration of the Series A Shares and the ADSs under the Exchange Act were terminated, the Company would no longer be required to file periodic reports with the Commission and the ADSs would no longer be “margin securities” under the rules of the Board of Governors of the United States Federal Reserve System (the “Federal Reserve Board”) or eligible for listing on the NYSE.

Margin Regulations. The ADSs are currently “margin securities,” as such term is defined under the rules of the Federal Reserve Board, which has the effect, among other things, of allowing brokers to extend credit on the collateral of such securities. Depending upon factors similar to those described above regarding listing and market quotations, following the Offers it is possible that the ADSs would no longer constitute “margin securities” for purposes of the margin regulations of the Federal Reserve Board, in which event such ADSs could no longer be used as collateral for loans made by brokers. See “The U.S. Offer — Section 11 — Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration.”

Appraisal Rights.

As the Bidders have acquired more than two-thirds of the total number of voting Shares, including ADSs representing Shares, the Bidders are now able to approve the following actions: (a) the transformation, spin-off or merger of the Company; (b) the sale of 50% or more of the Company’s assets, whether or not such sale includes the Company’s liabilities, as well as the formulation or modification of any business plan that contemplates the sale of assets for an amount exceeding the above-mentioned percentage (for such purposes, all such operations executed by means of one or more acts related to any corporate property shall be understood as a same sale operation during any period of 12 consecutive months); (c) the creation of guarantees or liens in an amount in excess of 50% of the Company’s assets guaranteeing third parties’ obligations other than guarantees or liens of subsidiaries (in which case the decision by the Board of Directors will suffice); (d) the decision to make public corporation rules no longer applicable to the Company; (e) the curing of technical defects in the constitutive documents of the Company or any amendment thereto that would otherwise render such documents voidable; (f) the creation of a series of preferred shares or a change to the preferences of an existing series of shares; (g) an amendment to the term or duration of the Company or its early termination; (h) change of the domicile of the Company; (i) the reduction of its equity capital; (j) approval and valuation of capital contributions made in property other than cash (unanimous shareholder approval would be required to avoid the statutory obligation of having experts to estimate capital contributions not made in cash); (k) amendments to the rights of the shareholders meetings; (l) reduction of the number of members of the Board of Directors of the Company and amendments to the limitations of the powers of the Board of Directors; (m) the manner upon which the Company’s profits will be distributed (except that unanimous shareholder approval would be required for the Company not to distribute dividends of at least 30% of its net profits in any fiscal year); (n) the Company’s acquisition of its own Shares under certain circumstances; (o) the approval of related party transactions under certain circumstances; and (p) other actions expressly provided for in the bylaws of the Company.

Chilean corporate law provides for statutory appraisal rights for minority shareholders that are opposed to any of the resolutions set forth in clauses (a) through (f) and in clause (p) above (excluding the spin-off of the company). Dissenting shareholders must state their opposition in the corresponding shareholders’ meeting. Shareholders that did not attend the shareholders’ meeting may state their opposition within 30 days from the date of the meeting. The Bidders have no plans currently to take any of the actions listed above which would provide for appraisal rights to any objecting shareholders.

The board of directors of the Company may convene another shareholders’ meeting to reconsider the resolution that triggered appraisal rights. If the board of directors does not call a second meeting of the shareholders or the resolution is

not revoked at such meeting, all dissenting shareholders that stated their opposition would have the right to compel the Company to purchase their shares. The purchases would be made at a price determined based on the weighted average trading price on stock exchanges in Chile during the two months prior to the date of the shareholders meeting at which the relevant resolution was approved. If no such weighted average trading price is available, the price at which the shares must be purchased would be book value.

Interests of Certain Persons in the Offers.

Except as described elsewhere in this Offer to Purchase: (1) none of the Telefónica Group or, to the best of its knowledge, any of the persons listed on Schedule I to this Offer to Purchase or, to the best of its knowledge, any associate or majority-owned subsidiary of the Telefónica Group or any of the persons listed on Schedule I beneficially own or have any right to acquire, directly or indirectly, any equity securities of the Company; and (2) to the best of the Telefónica Group’s knowledge, none of the persons listed in Schedule I to this Offer to Purchase has effected any transaction in such equity securities during the past 60 days. In the Initial Tender Offer, which expired in Chile on October 30, 2008 and in the United States on October 31, 2008, Purchaser acquired approximately 51.85% of the issued and outstanding Shares of the Company (including Series A Shares represented by ADSs), bringing the Telefónica Group’s total interest in the Company to approximately 96.75% of the issued and outstanding Shares.

Except as described elsewhere in this Offer to Purchase, since January 1, 2006, there have been no negotiations, transactions or material contacts between the Telefónica Group or any of its respective subsidiaries or, to the best of the Telefónica Group’s knowledge, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or any of its affiliates, on the other hand, concerning a merger, consolidation, acquisition, tender offer for or other acquisition of any class of securities of the Company, an election of directors of the Company or a sale or other transfer of a material amount of assets of the Company.

Five of the seven current directors of the Company are affiliates of Telefónica. These five directors are: (1) Emilio Gilolmo Lopez, (2) Narcis Serra Serra, (3) Andres Concha Rodriguez, (4) Fernando Bustamante and (5) Marco Colodro, all of whom were appointed at the 2007 annual meeting of the Company’s Shareholders except for Andres Concha who was appointed by Telefónica at the April 23, 2008 meeting of the Board of Directors of the Company. Five of the seven alternate directors of the Company are affiliates of Telefónica. These five alternate directors are José María Álvarez-Pallete, Manuel Alvarez-Tronge, Mario Eduardo Vasquez, Alfonso Ferrari Herrero and Raul Morodo, all of whom were appointed at the 2007 annual meeting of the Company’s Shareholders, except for Raul Morodo who was appointed by Telefónica at the April 23, 2008 meeting of the Board of Directors of the Company. It is expected that such persons will retain their respective positions at the Company following completion of the Offers. In addition, according to the information provided by the Company in its Form 20-F, as of March 2008, the following directors of the Company own Shares or ADSs: Marco Colodro (2 Series B Shares) and Alfonso Ferrari (1 Series B Share). Each of Messrs. Colodro and Ferrari holds Series B Shares to comply with the legal requirements for Series B directorship. See “Special Factors — Certain Shares and ADSs held by Affiliates of the Company.”

The Company does not have any employment agreements, severance agreements or other arrangements with any of its current executive officers that have any change of control provisions or similar provisions that would be in any way affected by the successful completion of the Offers.

Transactions and Arrangements Concerning the Shares and ADSs.

For a discussion of acquisitions of Shares and ADSs by the Telefónica Group, see “Special Factors — Background of the Offers — Purchaser” and “Special Factors — Background of the Offers — Purchasers of Additional Shares and ADSs.” The Telefónica Group’s aggregate percentage beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of the outstanding Shares (including Shares represented by ADSs) as of the date of this Offer to Purchase is approximately 96.75%.

Except as set forth in this Offer to Purchase, neither the Telefónica Group or, to the best knowledge of the Telefónica Group, any person listed in Schedule I hereto, is a party to any contract, agreement, arrangement, understanding or relationship with any other person with respect to any securities of the Company (including, without limitation, any contract, agreement, arrangement, understanding or relationship concerning the transfer or the voting of any such

securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, divisions of profits or losses, or the giving or withholding of proxies, consents or authorizations).

Neither the Company nor the Telefónica Group has made any underwritten public offering of the securities of the Company during the past three years.

Related Party Transactions.

For the purposes of this section, all references to the “Telefónica Group” refer to Telefónica and its Latin American subsidiaries.

Transactions between Telefónica and the Company or any of its Affiliates

According to Chilean Law, all public corporations with a stock exchange market capitalization greater than 1,500,000 Unidades de Fomento (an Unidades de Formento being an inflation-indexed Chilean peso-denominated monetary unit determined by the Central Bank of Chile), approximately US$48.3 million based on the Observed Exchange Rate and the Unidad de Fomento value as of December 1, 2008, must appoint a directors committee composed of three directors, the majority of whom must be independent from the controlling shareholder. The main functions of the directors’ committee are among others (i) to review the account inspectors’ report and the external auditors’ report, (ii) to propose external auditors, and (iii) to examine all applicable transactions involving directors and related parties. The Directors’ Committee examines, proposes and makes recommendations to the Board of Directors that are not binding upon the Board.

According to publicly available information about the Company, in the ordinary course of its business, the Company engages in a variety of transactions with certain of its affiliates, primarily for the purchase, at fair market prices negotiated on an arm’s-length basis, of goods or services that may also be provided by other suppliers. The Directors’ Committee is informed of all transactions involving directors and related parties in advance, and such transactions are approved by the Board of Directors.

Below are descriptions of such transactions with affiliates that are material to either the Company or the related counterparty. Financial information concerning these transactions is also set forth in Note 6 to the Audited Consolidated Financial Statements of the Company for the period ended December 31, 2007, is included in the Company’s annual report on Form 20-F for the period ended December 31, 2007. As of December 31, 2007, the receivables from related parties amounted to Ch$119,781 million (US$39.8 million) and the accounts payable to related parties amounted to Ch$33,449 million (US$67.3 million). The income and expenses from related party transactions resulted in a net expense to the Company of Ch$68,160 million (US$137.2 million).

According to publicly available information about the Company, on December 31, 2007, the report regarding the commercial operations between the companies of the Telefónica Group and the Company and its affiliates was approved as of such date. The total amount involved in such operations was Ch$20,165 million, of which Ch$9,700 million was with companies related to the Company and Ch$10,384 million with companies related to Telefónica.

According to the publicly available information of the Company, below is a detailed list of related party transactions between the Company and the Telefónica Group.

Transactions with Terra Networks Chile S.A.

On April 30, 1998, the Company entered into an agreement with Terra Networks Chile S.A., a subsidiary of Telefónica, pursuant to which the Company provided collection services to Terra Networks Chile. Furthermore, on June 1, 1999, the Company entered into an agreement with Terra Networks Chile pursuant to which Terra Networks Chile provides Internet access to certain Chilean schools, the costs of which are to be paid by the Company to Terra Networks Chile. The Company also has an agreement to purchase online advertising from Terra Networks Chile for itself and its subsidiaries. In January 2007, the Company and Terra Networks Chile signed a three-year agreement to outsource the provision of Internet access to the Company’s broadband customers. The Company recorded net income of Ch$4,720 million and Ch$5,813 million in the years 2005 and 2006, respectively, and net expense of Ch$9,512 million (US$19.1 million) in 2007, under these agreements. The Company had balances receivable from Terra Networks Chile of Ch$422 million (US$0.8 million) and Ch$2,034 million as of December 31, 2007 and 2006, respectively. Balances

payable to Terra Networks Chile from the Company under these agreements amounted to Ch$2,407 million (US$4.8 million) and Ch$5,731 million as of December 31, 2007 and 2006, respectively.

Transactions with Correspondents of Telefónica Group

In 2004, correspondent agreements were entered into with members of Telefónica Group. These members are Telefónica Argentina, Telefónica Sao Paulo, Telefónica Guatemala, Telefónica Peru, Telefónica Puerto Rico and other mobile companies within Telefónica Group such as Telefónica Movil El Salvador. These agreements generated net income of Ch$178 million (US$0.4 million) and Ch$279 million for the years ended December 31, 2005 and 2006 respectively, and a net expense of Ch$833 million (US$1.7 million) for the year ended December 31, 2007. The outstanding balances payable by the Company as of December 31, 2007 and 2006 were Ch$1,235 million (US$2.5 million) and Ch$1,167 million, respectively. The outstanding balances in favor of the Company as of December 31, 2007 and 2006 were Ch$3,433 million (US$6.9 million) and Ch$2,367 million, respectively.

Transactions with Telefónica Moviles de Chile S.A.

After the sale of Telefónica Movil de Chile S.A in 2004, this company changed its name to Telefónica Moviles de Chile S.A. As of December 31, 2007 and 2006, respectively, the Company recognized a balance in favor of Ch$7,077 million (US$14.2 million) and Ch$9,838 million, mainly related to access charges and rental of capacity. As of December 31, 2007 and 2006, respectively, the Company recognized a balance payable of Ch$14,006 million (US$28.2 million) and Ch$18,838 million, mainly related to mobile interconnections (CPP). Transactions with Telefónica Moviles de Chile for the years ended December 31, 2005, 2006 and 2007 generated net expenses of Ch$31,248 million, Ch$30,188 million and Ch$27,089 million (US$54.5 million), respectively.

Transactions with Telefónica Moviles Chile Affiliates

As a result of Long Distance contracts with Telefónica Moviles Chile Inversiones S.A., Telefónica Moviles Chile S.A. and Telefónica Moviles Chile Larga Distancia S.A., the Company recognized a total balance in favor of Ch$380 million (US$0.8 million) and Ch$412 million as of December 31, 2007 and 2006, respectively, and a total balance payable of Ch$44 million and Ch$5 million as of December 31, 2007 and 2006. For the years ended December 31, 2005 and 2006, these contracts generated total net expenses of Ch$10,706 and Ch$8,121, respectively, and generated income of Ch$1,052 million (US$2.1 million) for the year ended December 31, 2007.

Transactions with Telefónica International Wholesale Services Group

The Company has an agreement with companies belonging to the Telefónica International Wholesale Services Group (“TIWS”) for international data traffic services. The agreements with the TIWS companies were all effective during 2007 and have different expiration dates, depending on the nature of each specific contract. These agreements generated net expenses of Ch$3,007 million, Ch$4,135 million and Ch$8,320 million (US$16.7 million) for the years ended December 31, 2005, 2006 and 2007, respectively. The outstanding balances under the agreement in favor of the Company as of December 31, 2007 and 2006 were Ch$778 million (US$1.6 million) and Ch$945 million, respectively. The Company had balances payable of Ch$7,702 million (US$15.5 million) and Ch$5,485 million in 2007 and 2006, respectively.

Transactions with Atento Chile

In 2007, the Company extended several of its agreements with Atento Chile, an affiliate of Telefónica, including: (i) its maintenance agreement, ensuring the maintenance of the supplier’s productivity, quality and capacity, with an average price reduction of 19%, (ii) its tele-sales agreement for inbound tele-sales platforms for the residential segment to secure the deal’s efficiency, maintaining the same prices as under the current agreement; (iii) its tele-service and inbound sales agreement for the residential sector to November 30, 2007, maintaining current prices; and (iv) its inbound tele-sales agreement for the residential segment has been extended with Atento Chile to April 2007, consistent with the conditions of current agreements.

In addition, the Company’s subsidiary, Telemergencia, entered into an agreement with Atento Chile for post-sale and monitoring platforms service, totaling more than 32,000 monthly calls and occupying some 140 positions, at an annual value of Ch$780 million. The Company also entered into an agreement with Atento Chile for the outbound tele-sales platforms service for the Pequeñas y Medianas Empresas (small and mid-sized companies) segment, at the previous year’s

pricing schedule, for a period of one year. The Company awarded the following service platforms to Atento Chile for periods of one and two years: (i) Publiguias queries (level 103 platform); (ii) residential commercial service and businesses (level 105-107 platforms); (iii) technical service (level 104 platform); (iv) residential and commercial customer loyalty and business; (v) inbound business tele-sales, with prices calculated in accordance with volumes and traffic; (vi) consolidation and reconnection; (vii) securing of residential sales; (viii) securing of business segment sales; (ix) back office; and (x) web-center, with prices calculated in accordance with volumes and traffic.

Transactions with Movistar

In 2007, the Company entered into a resource lease agreement with Movistar, an affiliate of Telefónica, to replace external plant wiring to customer residences, as a wireless network solution to address wiring theft. This agreement, which is for a fixed monthly sum of 5,000 Chilean pesos for active clients with use of the 22.3 mErl mobile network (220 minutes of traffic), replaces the final mile of external plant wiring enabling wireless use by the Company’s customers, using the GSM network. This product, which includes fixed and mobile services packaged by the Company, provides through Movisar and its affiliates, a fixed-mobile private data network, for a flat fee. This data network depends on the quantity of equipment contracted by the client and is non-exclusive.

Transactions with Terra Chile

In 2007, the Company entered into an Internet access agreement with Terra Chile, an affiliate of Telefónica, as a result of the conversion of the business model to an outsourcing model, which has a term of three years, beginning January 1, 2007. The prices of this agreement, calculated by volume, range from Ch$2,000 to Ch$950 per client, depending upon the monthly fleet. In addition, the Company authorized and paid to Terra Chile Ch$199 million in commissions for broadband sales in 2006.

Transactions with Casiopea Re

In 2007, the Company renewed its asset insurance policy with Casiopea Re, the Telefónica Group’s reinsurance company, for the period from March 31, 2007 to March 31, 2008. The policy was issued by Mapfre Seguros Generales and insures against risks relating to fire, natural disaster, theft and assault, remittance of securities, employee loyalty, cyber-risk and other items, for a total of US$2.6 billion, including buildings, internal plant equipment, external plant facilities (excluding aerial wiring), inventory, office furniture and equipment, computer equipment, radio and broadcasting equipment and operating income. The premium amount is US$873,986, which amount is significantly lower than the average market rate, with a maximum indemnity of US$400 million. In 2008, the Company again renewed its asset insurance policy with Casiopea Re, for the period from March 31, 2008 to March 31, 2009. The renewed policy was issued by Chilena Consolidada and insures against risks relating to fire, natural disaster, theft, assault, remittance of securities, employee loyalty, cyber-risk and other items, for a total of US$2.669 billion, including, but not limited to, buildings, internal plant equipment, external plant facilities (excluding aerial wiring), inventory, office furniture and equipment, computer equipment, radio and broadcasting equipment and operating income. The premium amount is US$971,071, with a maximum indemnity of US$400 million.

Transactions with Telefónica Ingenieria y Seguridad (“TIS”)

The Company entered into a framework agreement with TIS, which provides for the maintenance and installation of electronic security systems, including maintenance and security services.

Transactions with Telefónica Internet Empresas (“TIE”)

In September, 2007, in connection with the implementation of Terra Chile’s new business model, the Company acquired 100% of the shares of TIE, an internet services provider, at book value.

Transactions between Telefónica Multimedia Chile and Telefónica Servicios de Musica (“TSM”)

In October, 2007, Telefónica Multimedia Chile and TSM entered into an agreement, to provide 20 theme audio channels, at a fee of US$0.18 per subscriber, and assuming the investment in equipment, which permits flexibility in channel programming and content.

Transactions with Telefónica I+D

The Company awarded Telefónica I+D the new development for expansion of the “Sigres” Project to address growth in such sector. The “Sigres” project (the Company’s new services management platform) was developed with a view towards expanding the management platform by increasing total equipment resources and incorporating new networks and systems, at a cost of US$4.2 million during the 2007-2009 period.

Transactions with Telefónica International Wholesale Services Chile

The Company renewed its International Services Agreement with Telefónica International Wholesale Services Chile in June, 2007. The agreement relates to the provision of international business services between Telefónica Empresas Chile and Telefónica International Wholesale Services Chile and was renewed in order to offer international end-user services corresponding to IP MPLS, Frame Relay, Clear Channel and ATM, which allows the provision of a complete offering of international links (end-to-end) to large local clients.

The Company entered into an international internet access services agreement with Telefónica International Wholesale Services Chile to provide the following services: (i) international internet access, allowing interconnection to the Company’s backbone in the United States, using the underwater fiber optic connections between Valparaiso and Miami, at a price of US$7.5 million in 2007 and a range of US$15.6 to US$21.2 in 2008, depending upon actual consumption during the year, and (ii) maintenance, supervision and replacement and repair management for the capacity purchased by Telefónica Larga Distancia, totaling US$800,000 per year in 2007 and US$720,000 per year for 2008.

In December, 2007, the Company entered into a voice business administration agreement with Telefónica International Wholesale Services Chile. The agreement relates to the Company’s international voice business, including termination of incoming international traffic, distribution of outgoing international traffic and transit and resale of international traffic, at a fixed and variable price depending upon the incoming international traffic business margins.

Transactions with Bidders

Bidders completed tender offers for 100% of the outstanding Shares of the Company, including Shares represented by ADSs, in Chile and in the United States on October 30, 2008 and October 31, 2008, respectively. Pursuant to those offers, Telefónica increased its indirect ownership interest in the Company to approximately 96.75% of the outstanding Shares of the Company.

Related Companies Reports

Report on transactions with related companies, as at December 31, 2007. The report on the status of existing commercial relations between companies of the Telefónica Group and the Company and its subsidiaries was approved as at December 31, 2007. Transactions totaled Ch$20.165 billion, of which Ch$9.7 billion were between the Company and/or any of its subsidiaries and Ch$10.384 billion with companies related to the controlling shareholder.

Report on transactions with related companies, as at June 30, 2007: the report on the status of existing commercial relations between companies of the Telefónica Group and the Company and any of its subsidiaries was approved as at June 30, including transactions in amounts less than U.S.$250,000. Transactions totaled Ch$19.7 billion, of which Ch$9.1 billion were between the Company and/or any of its subsidiaries and Ch$10.6 billion with companies related to the controlling shareholder.

Significant Corporate Events

As of the date of this Offer to Purchase, the Telefónica Group owns 926,028,064 Shares, including Series A Shares represented by ADSs, representing approximately 96.75% of the outstanding Shares. At the Company’s 2007 (and 2008) Annual Meeting of Shareholders, seven directors were elected to the Board of Directors of the Company. Five of the seven directors elected to the Company’s Board of Directors and five of seven alternate directors were appointed by Telefónica. The Chief Executive Officer of the Company, Mr. Jose Moles Valenzuela, is also an officer of Telefónica.

At the special meeting of Shareholders of the Company held on April 14, 2008, the Shareholders approved a capital reduction of Ch$39,243 million (US$74.6 million), or Ch$41 per share. Payment of this capital reduction was made on June 13, 2008.

The last dividend distributed to Shareholders by the Company was on May 14, 2008. The dividend distribution made to Shareholders equaled Ch$5,050 million (US$9.6 million), or Ch$5.27606 per share, and was paid out of and charged to, the 2007 net income. The sum of this dividend and the interim dividend paid in November 2007 equaled 100% of the Company’s 2007 net income. However, in a Form 6-K filed on November 24, 2008, the Company announced that the Board of Directors has decided to pay interim dividend no. 176 amounting to Ch$5,742,942,510 (or Ch$6.0 per share) out of the profits of the fiscal year ending on December 31, 2008. Interim dividend no. 176 will be paid beginning December 10, 2008.

On October 28, 2008, in connection with the Initial Tender Offer, the Shareholders of the Company voted to amend the Bylaws of the Company to eliminate, among others, the restriction that no person, directly or indirectly, could own or vote more than 45% of the outstanding voting capital stock of the Company.

During the last three years, the Company has not participated in any merger or acquisition activities material to the business, except for (i) being the subject of the Initial Tender Offer and (ii) the sale of the assets and client portfolio of Telefónica Asistencia y Seguridad S.A., a wholly owned subsidiary of the Company, to Prosegur Cia de Seguridad, for the total amount of Ch$15,562,789,930 on October 14, 2008. However, during 2006 and 2007, the Company entered into the following internal restructuring transactions:


	•	In January 2006, TIE contributed 100% of its ownership interest in Tecnonautica to the Company, pursuant to which, Tecnonautica became a wholly owned subsidiary of the Company. Following this transfer of interest, Tecnonautica changed its name to Telefónica Multimedia and expanded its line of business to pay television services.

	•	In January 2006, Telefónica Empresas contributed its ownership interest in TIE to the Company, pursuant to which TIE became a wholly owned subsidiary of the Company.

	•	In March 2006, CTC Equipos was merged with and into the Company, with the Company as the surviving entity.

	•	Also, in March 2006, the Company’s long-distance service provider subsidiaries, Telefónica Mundo and Globus, merged to form a new subsidiary, Telefónica Larga Distancia.

	•	In November 2006, TIE sold its ownership interest in Telepeajes de Chile S.A. to Telefónica Gestion de Servicios Compartidos de Chile, S.A. (“t-gestiona”), a subsidiary of the Company. On the same date, t-gestiona purchased a third party’s ownership interest in Telepeajes de Chile S.A, resulting in 99.99% ownership of Telepeajes de Chile S.A. by t-gestiona. Subsequent thereto, Telepeajes de Chile S.A. changed its name to Instituto Telefónica Chile and changed its corporate business purpose.

	•	In September 2007, the Company acquired all of the outstanding stock of TIE not owned by the Company.

	•	At a meeting of the Board of Directors held on December 20, 2007, the Board of Directors authorized the dissolution of TIE, pursuant to which all of TIE’s assets and liabilities were assigned to and assumed by the Company, which is its legal successor.

Negotiations or Contacts Between Affiliates of the Company or Between the Company and any Interested Person

Except for the Initial Tender Offer, which expired in Chile on October 30, 2008 and in the United States on October 31, 2008, and as described elsewhere in this Offer to Purchase, since January 1, 2006, there have been no negotiations, transactions or material contacts concerning a merger, consolidation, acquisition, tender offer for or other acquisition of any class of securities of the Company, an election of directors of the Company, or a sale or other transfer of a material amount of assets of the Company, between (1) any affiliates of the Company and any other affiliates of the Company or (2) between the Company or any of its affiliates, on the one hand, and any unaffiliated person who would have a direct interest in such matters, on the other hand.

Agreements involving the Company’s Securities

There are no voting agreements between Telefónica or any of its officers and directors and any other persons regarding the securities of the Company.

Risks of Tendering Shares in the Chilean Offer Instead of the U.S. Offer.

U.S. Holders of Shares may elect to tender their Shares into the Chilean Offer instead of the U.S. Offer. ADSs may only be tendered into the U.S. Offer. Although the terms and conditions of the U.S. Offer and the Chilean Offer are substantially similar, because of differences in law and market practice between the United States and Chile, the rights of tendering holders pursuant to the U.S. Offer and the Chilean Offer are not identical.

While Bidders intend to have the Offers expire at the same time, due to differing regulations under Chilean and U.S. regulatory schemes, it is possible that the Offers could expire at different times. Chilean laws governing the withdrawal rights of tendering holders also are different from U.S. laws governing such rights. Tenders of Shares and ADSs made pursuant to the U.S. Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after January 30, 2009, unless theretofore accepted for payment as provided in this Offer to Purchase, or at such later time as may apply if the U.S. Offer is extended beyond that date. See the discussion in the section of entitled “The U.S. Offer — Section 5 — Withdrawal Rights.” Under Chilean law, statutory withdrawal rights are granted throughout the term of the tender offer, including any extension, up to the expiration of the Chilean Offer, and thereafter such withdrawal rights terminate. U.S. Holders intending to tender their Shares into the Chilean Offer should refer to Annex C to the Offer to Purchase for the procedure for tendering into the Chilean Offer, which differs from the procedures for tendering Shares into the U.S. Offer, and should refer to Article 211 of the Chilean Securities Act (Ley No. 18.045) for information regarding withdrawal rights in the Chilean Offer. There are no appraisal rights in the Chilean Offer.

Pursuant to SVS Rule 1514, a simplified tender offer procedure is available if the following criteria are present: (i) the tender offer is made for not more than 5% of the total amounts of shares outstanding; (ii) the transaction is made on a stock exchange; (iii) the acquisition is effected pro rata among the tendering shareholders; and (iv) the percentage sought will not allow the bidder to gain control of the target company. If the aforementioned criteria are met, the bidder is not required to file a prospectus or to publish an advertisement announcing the results of the tender offer. Similarly, the directors of the target company are not required to issue individual opinions as to whether tendering into the offer is in the best interests of the shareholders. The Chilean Offer meets the criteria of SVS Rule 1514; accordingly the Chilean Offer will be subject to a simplified tender offer procedure, and the disclosure for the Chilean Offer will consist of a notice published in the Chilean newspapers El Mercurio de Santiago and La Tercera on December 1, 2008 (the “Chilean Notice”). An English translation of the Chilean Notice is attached as Exhibit (a)(11) to the tender offer statement on Schedule TO/13E-3, but such translation, as is the case with respect to any and all translated documents filed pursuant to the U.S. Offer, is for informational purposes only and U.S. Holders who wish to tender their Shares into the Chilean Offer should consult the original Spanish documents provided to the SVS in Chile. Further, press releases and announcements may be made in Chile but not made in the U.S. and may not be translated into English and filed with the Commission. Furthermore, the Chilean Offer is not subject to U.S. tender offer rules and the benefits thereof would not be available to U.S. Holders tendering Shares into the Chilean Offer.

Bidders are offering to pay to U.S. Holders who tender into the U.S. Offer the U.S. dollar equivalent of Ch$1,100 per Series A Share, Ch$990 per Series B Share and Ch$4,400 per ADS. Shares tendered pursuant to the U.S. Offer and accepted for payment will be converted into U.S. dollars using the Observed Exchange Rate published on the Expiration Date (or if the Observed Exchange Rate is not published on the Expiration Date of the U.S. Offer, the Observed Exchange Rate published on the first day immediately preceding the Expiration Date of the U.S. Offer on which day the Observed Exchange Rate is published in the Official Gazette of Chile). However, U.S. Holders who tender into the Chilean Offer will be paid the above-referenced purchase price in Chilean pesos and not U.S. dollars. Furthermore, it is possible that, due to requirements of applicable law or market practice, holders of Shares tendering in the Chilean Offer will be paid either before or after holders tendering Series A Shares, Series B Shares and/or ADSs in the U.S. Offer, although the price paid per Share will be the same. In addition, it is recommended that U.S. Holders wishing to tender in the Chilean Offer consult their tax advisor as there may be different tax consequences in the Chilean Offer not contemplated in this Offer to Purchase.

THE U.S. OFFER

1. Terms of the U.S. Offer. Upon the terms and subject to the conditions of the U.S. Offer (including, if the U.S. Offer is extended or amended, the terms and conditions of any extension or amendment), Purchaser will accept for payment and pay for all Shares and ADSs that are validly tendered prior to the Expiration Date and not properly withdrawn as provided in “The U.S. Offer — Section 5 — Withdrawal Rights.”

Subject to the applicable rules and regulations of the Commission, Purchaser reserves the right, at any time or from time to time, in its sole discretion, to extend for any reason the period of time during which the U.S. Offer remains open by giving oral or written notice of such extension to the Share Depositary and the U.S. Depositary and making public announcement thereof. During any such extension, all Shares and ADSs previously tendered and not withdrawn will remain subject to the U.S. Offer, subject to the rights of a tendering holder to withdraw its Shares and/or ADSs. There can be no assurance that Purchaser will exercise its right to extend the U.S. Offer.

If Purchaser makes a material change in the terms of the U.S. Offer or the information concerning the U.S. Offer, Purchaser will extend the U.S. Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of or information concerning an offer, other than a change in price or a change in the percentage of shares sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information.

Any extension, delay, termination, waiver or amendment of the U.S. Offer will be followed as promptly as practicable by a public announcement thereof. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes in the information published, sent or given to any holders of Shares and holders of ADSs in connection with the U.S. Offer be promptly disseminated to such holders in a manner reasonably designed to inform them of such changes), and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a press release to the Dow Jones News Service. In the case of an extension of the U.S. Offer, Purchaser will make a public announcement of such extension no later than 9:00 a.m., New York City time, on the next Business Day (a “Business Day” being any day other than a Saturday, Sunday or U.S. Federal Holiday) after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act.

The Company will make available its Shareholder registry and security position listings to Purchaser and will cause the ADS Depositary to provide Purchaser with the list of record holders for ADSs and security position listings, as required by Chilean Law, for the purpose of disseminating this Offer to Purchase to U.S. Holders of Shares and holders of ADSs. This Offer to Purchase and the related Form of Acceptance, ADS Letter of Transmittal, ADS Notice of Guaranteed Delivery and other relevant documents will be mailed to record U.S. Holders of Shares and holders of ADSs and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on such list of holders of Shares and holders of ADSs or, if applicable, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of Shares and/or ADSs.

2. Acceptance for Payment. Upon the terms and subject to the conditions of the U.S. Offer, Purchaser will accept for payment and pay for the Shares and ADSs validly tendered prior to the Expiration Date and not properly withdrawn, promptly after the Expiration Date, and in any case pursuant to applicable Chilean law or practice. In addition, subject to the applicable rules of the Commission, Purchaser reserves the right, in its sole discretion, to delay the acceptance for payment or the payment for the Shares and ADSs pending receipt of any regulatory approval. For a description of Purchaser’s right to terminate the U.S. Offer and not accept for payment or pay for Shares and ADSs or to delay the acceptance for payment or the payment for Shares and ADSs, see “The U.S. Offer — Section 1 — Terms of the U.S. Offer.”

For purposes of the U.S. Offer, Purchaser shall be deemed to have accepted for payment tendered Shares and ADSs when and if Purchaser gives oral or written notice to the Share Depositary and the U.S. Depositary, as applicable, of its acceptance of the tenders of such Shares and ADSs. Payment for Shares and ADSs accepted for payment pursuant to the U.S. Offer will be made by deposit of the purchase price with the Share Depositary, which will act as agent for the tendering holders of Shares, or the U.S. Depositary, which will act as agent for the tendering holders of ADSs, as applicable, for the purpose of receiving payments from Purchaser and transmitting such payments to tendering holders of Shares and holders of ADSs, as the case may be. In all cases, payment for Shares accepted for payment pursuant to the U.S. Offer will be made only after timely receipt by the Share Depositary of (a) either (1) título(s) (certificates of title) and a certificate from the share department of the Company or the DCV as the case may be, evidencing such Shares or (2) a confirmation of book-entry transfer of such Shares and (b) a properly completed and duly executed Form of Acceptance (or a copy thereof, provided the signature is original) and all other required documents. Payment for ADSs accepted for payment pursuant to the U.S. Offer will be made only after timely receipt by the U.S. Depositary of ADRs evidencing such tendered ADSs or book-entry transfer of such tendered ADSs, together with a properly completed and duly executed ADS Letter of Transmittal or an Agent’s Message (as defined in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs”) confirming transfer of such tendered ADSs into the U.S. Depositary’s account at the Book-Entry Transfer Facility (as defined in “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs”). Payment may be made to tendering holders at different times if delivery of the Shares and ADSs and other required documents occur at different times. For a description of the procedure for tendering Shares and ADSs pursuant to the U.S. Offer, see “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” and “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs.” Under no circumstances will interest be paid by Purchaser on the purchase price paid for Shares and ADSs pursuant to the U.S. Offer regardless of any delay in making such payments or extension of the Expiration Date.

If Purchaser increases the purchase price to be paid for Shares pursuant to the Chilean Offer, Purchaser will pay such increased consideration for all Shares and ADSs purchased pursuant to the U.S. Offer, whether or not such Shares and ADSs were tendered prior to such increase in consideration.

Purchaser reserves the right to transfer or assign, in whole or, from time to time, in part, to one or more of its affiliates the right to purchase all or any portion of Shares and ADSs tendered pursuant to the U.S. Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the U.S. Offer or prejudice the rights of tendering holders of Shares and tendering holders of ADSs to receive payment for Shares and ADSs validly tendered and accepted for payment.

If any tendered Shares and/or ADSs are not purchased pursuant to the U.S. Offer for any reason pursuant to the terms and conditions of the U.S. Offer, or if certificates are submitted for more Shares and/or ADSs than are tendered, certificates for such unpurchased or untendered Shares and/or ADSs will be returned (or, in the case of Shares and ADSs tendered by book-entry transfer, such Shares and ADSs will be credited to the appropriate account), without expense to the tendering holder, promptly following the expiration or termination of the U.S. Offer.

3. Procedure for Accepting the U.S. Offer — Holders of Shares. Any U.S. Holder who holds Shares and who desires to accept the U.S. Offer in respect of all or any portion of such holder’s Shares should complete Boxes 1 and 3 and, if appropriate, Box 4 and sign Box 2 of the Form of Acceptance in accordance with the instructions printed thereon. An accepting holder of Shares should submit a properly completed and duly executed Form of Acceptance (or copy thereof, provided the signature is original), together with the following documents to the Share Depositary at the address set forth on the back cover of this Offer to Purchase:

(a) título(s) evidencing ownership of Shares, if Shares are held in certificated form;

(b) a certificate from the Share department of the Company or the DCV evidencing the number of Shares, if any, held on deposit at the DCV, the number of Shares and original issued Shares, if any, held by the holder, and indicating the liens or encumbrances that affect the Shares;

(c) duly signed traspaso(s) (deed of transfer) indicating the number of Shares and the number of original issue Shares, if any, to be tendered, with the date of such traspaso(s) in blank;

(d) in the case of Shares held on deposit at the DCV, a letter to the DCV instructing the DCV to perform a book-entry transfer in favor of Purchaser;

(e) in the case the U.S. Holder is an individual, a copy of the U.S. Holder’s passport or photo identification card;

(f) in the case the U.S. Holder is an entity, (1) a secretary’s certificate certifying the name, title and specimen signature of an officer authorized to execute the transfer documents and a copy of the entity’s organizational documents, and (2) a copy of the passport or photo identification card of the authorized officer; and

(g) any other documents requested by the U.S. Depositary to evidence the authority of the U.S. Holder to tender and sell its Shares.

References in this section to a holder of Shares shall include references to the person or persons executing a Form of Acceptance and, in the event of more than one person executing a Form of Acceptance, the provisions of this section shall apply to them jointly and severally.

Book-Entry Transfer. The Share Depositary has established an account with respect to the Shares at DCV for purposes of the U.S. Offer. Shares held in book-entry form may be tendered by sending or submitting by hand to the Share Depositary at its address set forth on the back cover of this Offer to Purchase a properly completed and duly executed Form of Acceptance, together with items (b) through (g) above, as applicable, and effecting book-entry delivery of the Shares to the above-mentioned account of the Share Depositary.

Certificates of Title and/or Other Document(s) of Title. If the título(s) have been issued but have been lost or destroyed, the Form of Acceptance should nevertheless be completed, signed and returned to the Share Depositary as soon as possible and the título(s) should be forwarded as soon as possible thereafter but in no event later than the Expiration Date. If the título(s) are lost or destroyed, the holder of Shares should follow the procedures set forth in Article 21 of the Rules of Law 18.046 of the Chilean Companies Law and thereupon request the Shareholders’ Registry of the Company at Huérfanos 770, Piso 22, Santiago, Chile, telephone (+56) 26 91-3869 to issue substitute título(s). When completed, the new título(s) must be submitted to the Share Depositary, in accordance with the above-described procedure, in support of the Form of Acceptance.

The method of delivery of título(s) for Shares and all other required documents is at the option and risk of the tendering holder of Shares and the delivery will be deemed made only when actually received by the Share Depositary. In all cases, sufficient time should be allowed to ensure timely delivery. Registered mail with return receipt requested, properly insured, is recommended for Shares sent by mail.

Form of Acceptance. Each holder of Shares by whom or on whose behalf a Form of Acceptance is executed irrevocably undertakes, represents, warrants and agrees to and with Purchaser (so as to bind the holder and the holder’s personal representatives, heirs, successors and assigns) to the following effect:

(a) that the execution of a Form of Acceptance shall constitute: (1) an acceptance of the U.S. Offer in respect of the number of Shares identified in Box 1 of the Form of Acceptance; and (2) an undertaking to execute all further documents and give all further assurances which may be required to enable Purchaser to obtain the full benefit of this section and/or perfect any of the authorities expressed to be given hereunder, on and subject to the terms set out or referred to in this document and the Form of Acceptance and that, subject only to the rights set out in “The U.S. Offer — Section 5 — Withdrawal Rights,” each such acceptance shall be irrevocable;

(b) that the Shares in respect to which the U.S. Offer is accepted or deemed to be accepted are fully paid and non-assessable, sold free from all liens, equities, charges and encumbrances and together with all rights now or hereafter attaching thereto, including voting rights and the right to all dividends, other distributions and interest payments hereafter declared, made or paid;

(c) that the execution of the Form of Acceptance constitutes, subject to the accepting holder not having validly withdrawn his or her acceptance, the irrevocable appointment of the Share Depositary acting on behalf of Purchaser, its directors and agents as such holder’s attorney and/or agent (the “Attorney”) and an irrevocable instruction to the Attorney to complete and execute his or her signed traspaso(s) and all or any form(s) of transfer and/or other document(s) at the discretion of the Attorney in relation to the Shares referred to in paragraph (a) above in respect of which the accepting holder of Shares has not validly withdrawn acceptance in favor of Purchaser or such other person or persons as Purchaser may direct and to deliver such form(s) of transfer and/or other document(s) at the discretion of the Attorney together with the título(s) and/or other document(s) of title relating to such Shares and to do all such

other acts and things as may in the opinion of the Attorney be necessary or expedient for the purpose of, or in connection with, the acceptance of the U.S. Offer and to vest in Purchaser or its nominee(s) the Shares as aforesaid;

(d) that the execution of the Form of Acceptance constitutes, subject to the accepting holder of Shares not having validly withdrawn its acceptance, an irrevocable authority and request (1) to the Company, its Gerente General (General Manager) or its agents to procure the registration of the transfer of the Shares pursuant to the U.S. Offer and the delivery of the new título(s) and/or other document(s) of title in respect thereof to Purchaser or as Purchaser may direct; and (2) to Purchaser or its agents to record and act upon any instructions with regard to notices and payments which have been recorded in the records of the Company in respect of such holder’s holding(s) of Shares;

(e) that the holder of Shares will deliver to the Share Depositary at the address shown on the back page of this Offer to Purchase such holder’s título(s) and/or document(s) of title in respect of the Shares referred to in paragraph (a) or an indemnity acceptable to Purchaser in lieu thereof, as soon as possible;

(f) that this section shall be incorporated in and form part of the Form of Acceptance, which shall be read and construed accordingly; and

(g) that the holder agrees to ratify each and every act or thing which may be done or effected by Purchaser or any of its directors or agents or the Company or its agents, as the case may be, in the proper exercise of any of its power and/or authorities thereunder.

U.S. Receiving Agent. Citibank, N.A. has agreed to act as U.S. receiving agent for the Share Depositary and as such will accept tenders of Shares in the U.S. on behalf of the Share Depositary and will transfer the documents so received to the Share Depositary promptly upon receipt at the risk of the tendering holder.

Partial Tenders. If fewer than all of the Shares delivered to the Share Depositary are to be tendered, the holder thereof should so indicate in the Form of Acceptance by filling in the number of Shares which are to be tendered in Box 1 of the Form of Acceptance. In such case, a new título for the remainder of the Shares represented by the old título will be sent to the person(s) signing such Form of Acceptance (or delivered as such person properly indicates thereon) as promptly as practicable following the date the tendered Shares are purchased.

All Shares delivered to the Share Depositary will be deemed to have been tendered unless otherwise indicated. See Instruction 1 of the Form of Acceptance.

Guaranteed Delivery. There is no guaranteed delivery procedure for the tendering of Shares into the U.S. Offer.

Acceptance of U.S. Offer Through a Power of Attorney. If a holder of Shares wishes to accept the U.S. Offer but is away from home or if the Form of Acceptance is being signed under a power of attorney, the holder’s appointed attorney should send the Form of Acceptance by the quickest means to the holder for execution or, if the holder has executed a power of attorney, have the Form of Acceptance signed by the attorney. The completed Form of Acceptance together with the required documents should be delivered to the Share Depositary at the address set forth on the back cover of this Offer to Purchase and accompanied by the power of attorney (or a duly certified copy thereof). Any power of attorney must have been granted before a notary public in Chile or before a competent Chilean General Consul. The power of attorney (or a duly certified copy thereof) will be submitted for registration by the Share Depositary and returned as directed. No other signatures are acceptable.

Acceptance of U.S. Offer and Representations by Holder. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering holder’s acceptance of the U.S. Offer, as well as the tendering holder’s representation and warranty that (a) such holder owns the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act, (b) the tender of such Shares complies with Rule 14e-4, (c) such holder is a U.S. Holder, and (d) such holder has the full power and authority to tender and assign the Shares tendered, as specified in the Form of Acceptance. Purchaser’s acceptance for payment of Shares tendered pursuant to the U.S. Offer will constitute a binding agreement between the tendering holder and Purchaser containing the terms of the U.S. Offer.

tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of Purchaser’s counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of the Telefónica Group or the Share Depositary or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification.

Appointment as Attorney-in-Fact and Proxy. By executing the Form of Acceptance as set forth above, the tendering holder of Shares irrevocably appoints each designee of Purchaser set forth therein as attorney-in-fact and proxy of such holder, with full power of substitution, to vote the Shares as in such manner as each such attorney-in-fact and proxy (or any substitute thereof) will deem proper in its sole discretion, and to otherwise act (including pursuant to written consent) to the full extent of such holder’s rights with respect to the Shares (and any and all securities or rights issued or issuable in respect of such Shares on or after December 2, 2008 (collectively, the “Share Distributions”)) tendered by such holder and accepted for payment by Purchaser prior to the time of such vote or action. All such proxies and powers of attorney will be considered coupled with an interest in the tendered Shares and will be irrevocable and are granted in consideration of, and are effective upon, the acceptance for payment of such Shares and all Share Distributions in accordance with the terms of the U.S. Offer. Such acceptance for payment by Purchaser will revoke, without further action, any other proxy or power of attorney granted by such holder at any time with respect to such Shares and all Share Distributions and no subsequent proxies or powers of attorney may be given or written consent executed (or, if given or executed, will not be deemed effective) with respect thereto by such holder. By executing the Form of Acceptance as set forth above, the tendering holder of Shares further agrees that effective from and after the date Shares are tendered thereby: (a) Purchaser shall be entitled to direct the exercise of any votes attaching to any Shares in respect of which the U.S. Offer has been accepted or is deemed to have been accepted and any other rights and privileges attaching to such Shares, including any right to call a meeting of the Shareholders; and (b) the execution of the Form of Acceptance and its delivery to the Share Depositary will constitute (1) an authority from the tendering holder of Shares to send any notice, circular, document or other communications which may be required to be sent to such holder to Purchaser at its registered office, (2) an authority to Purchaser to sign any consent to execute a form of proxy in respect of the Shares in respect of which the U.S. Offer has been accepted or is deemed to have been accepted appointing any person nominated by Purchaser to attend general meetings of Shareholders of the Company and to exercise the votes attaching to such Shares on behalf of the tendering holder of Shares and (3) the agreement of the tendering holder of Shares not to exercise any of such rights without the consent of Purchaser and the irrevocable undertaking of the tendering holder of Shares not to appoint a proxy for or to attend general meetings of Shareholders.

Backup U.S. Federal Income Tax Withholding. Under U.S. federal income tax law, the Share Depositary may be required to withhold and pay over to the U.S. Internal Revenue Service a portion of the amount of any payments made pursuant to the U.S. Offer. To avoid backup withholding, unless an exemption applies, a holder of Shares that is a U.S. Holder (as defined for U.S. federal income tax purposes, see “The U.S. Offer — Section 6 — Certain Tax Considerations” of this Offer to Purchase) must provide the Share Depositary with the holder’s correct taxpayer identification number (“TIN”) and certify under penalties of perjury that the TIN is correct and that the holder is not subject to backup withholding by completing the Substitute Form W-9 in the Form of Acceptance. If a U.S. Holder does not provide its correct TIN or fails to provide the certifications described above, the U.S. Internal Revenue Service may impose a penalty on the holder, and any payment made to the holder pursuant to the U.S. Offer may be subject to backup withholding. All U.S. Holders surrendering Shares pursuant to the U.S. Offer should complete and sign the Substitute Form W-9 included in the Form of Acceptance to provide the information and certifications necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Share Depositary).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from payments made to a U.S. Holder may be refunded or credited against the U.S. Holder’s federal income tax liability, if any, provided that the required information is properly furnished to the U.S. Internal Revenue Service.

Purchaser’s acceptance for payment of the Shares tendered pursuant to the U.S. Offer will constitute a binding agreement between each tendering holder of Shares and Purchaser upon the terms and subject to the conditions of the U.S. Offer. If you are in any doubt about the procedure for tendering your Shares into the U.S. Offer, please telephone the Information Agent at its telephone number set forth on the back cover of this Offer to Purchase.

U.S. Holders who hold Shares may, at their option, tender their Shares into the Chilean Offer instead of the U.S. Offer. Any U.S. Holder of Shares who desires to accept the Chilean Offer should follow the procedures for

tendering Shares into the Chilean Offer described in Annex C hereto. However, there are many important aspects to consider for a U.S. Holder considering whether to tender into the Chilean Offer rather than into the U.S. Offer. See “Special Factors — Risks of Tendering into the Chilean Offer.”

4. Procedures for Accepting the U.S. Offer — Holders of ADSs. To tender ADSs pursuant to the U.S. Offer:

(a) (1) a properly completed and duly executed ADS Letter of Transmittal (or copy thereof, provided the signature is original) and all other documents required by the ADS Letter of Transmittal must be received by the U.S. Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and (2) ADRs for the ADSs to be tendered must be received by the U.S. Depositary at one of such addresses by the Expiration Date;

(b) a holder’s ADSs must be delivered pursuant to the procedures for book-entry transfer described below (and a properly completed and duly executed ADS Letter of Transmittal (or copy thereof, provided the signature is original), unless an Agent’s Message (as defined below) confirming such delivery is received by the U.S. Depositary) by the Expiration Date; or

The term “Agent’s Message” means a message, transmitted by the Book-Entry Transfer Facility (as defined below) to and received by the U.S. Depositary and forming a part of a book-entry confirmation which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant tendering the ADSs which are the subject of such book-entry confirmation that such participant has received and agrees to be bound by the terms of the ADS Letter of Transmittal and that Purchaser may enforce such agreement against such participant.

Book-Entry Delivery. The U.S. Depositary will establish an account with respect to the ADSs at The Depository Trust Company (“Book-Entry Transfer Facility”) for purposes of the U.S. Offer within two Business Days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of ADSs by causing the Book-Entry Transfer Facility to transfer such ADSs into the U.S. Depositary’s account in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of ADSs may be effected through book-entry transfer, a properly completed and duly executed ADS Letter of Transmittal or an Agent’s Message and any other required documents must, in any case, be received by the U.S. Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the ADS Letter of Transmittal and any other required documents or instructions to the Book-Entry Transfer Facility does not constitute delivery to the U.S. Depositary. If tender is made by Book-Entry Transfer Facility, the ADS Letter of Transmittal must be delivered by means of an Agent’s Message.

Partial Tenders. If fewer than all of the ADSs evidenced by ADRs delivered to the U.S. Depositary are to be tendered, the holder thereof should so indicate in the ADS Letter of Transmittal by filling in the number of ADSs which are to be tendered in the box entitled “Number of ADSs Tendered” in the ADS Letter of Transmittal. In such case, a new ADR for the untendered ADSs represented by the old ADR will be sent to the person(s) signing such ADS Letter of Transmittal (or delivered as such person properly indicates thereon) as promptly as practicable following the date the tendered ADSs are accepted for payment.

All ADSs delivered to the U.S. Depositary will be deemed to have been tendered unless otherwise indicated. See Instruction 4 of the ADS Letter of Transmittal.

Signature Guarantees. Except as otherwise provided in the next sentence, all signatures on an ADS Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a participant in the Security Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program (each, an “Eligible Institution”). Signatures on an ADS Letter of Transmittal need not be guaranteed (a) if the ADS Letter of Transmittal is signed by the registered holder(s) of the ADSs tendered therewith and such holder(s) have not completed the box entitled “Special Issuance Instructions” on the ADS Letter of Transmittal or (b) if such ADSs are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the ADS Letter of Transmittal.

Guaranteed Delivery. If a holder of ADSs desires to tender ADSs pursuant to the U.S. Offer and cannot deliver such ADSs and all other required documents to the U.S. Depositary prior to the Expiration Date, or such holder of ADSs

cannot complete the procedure for delivery by book-entry transfer on a timely basis, such ADSs may nevertheless be tendered if all of the following conditions are met:

(a) such tender is made by or through an Eligible Institution;

(b) a properly completed and duly executed ADS Notice of Guaranteed Delivery substantially in the form provided by Purchaser is received by the U.S. Depositary (as provided below) prior to the Expiration Date; and

(c) the ADRs for such ADSs, together with a properly completed and duly executed ADS Letter of Transmittal (or a copy thereof, provided the signature is original) with any required signature guarantee or, in the case of ADSs held in book-entry form, a timely confirmation of a book-entry transfer of such ADSs into the U.S. Depositary’s account at the Book-Entry Transfer Facility together with an Agent’s Message, and any other documents required by such ADS Letter of Transmittal, are received by the U.S. Depositary within three NYSE trading days after the date of execution of the ADS Notice of Guaranteed Delivery.

The ADS Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by facsimile transmission to the U.S. Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. In the case of ADSs held through the Book-Entry Transfer Facility, the ADS Notice of Guaranteed Delivery must be delivered to the U.S. Depositary by a participant in the Book-Entry Transfer Facility via the Book-Entry Transfer facility confirmation system by means of an Agent’s Message.

Other Requirements. Notwithstanding any other provisions hereof, payment for ADSs accepted for payment pursuant to the U.S. Offer will, in all cases, be made only after receipt by the U.S. Depositary of ADRs evidencing such ADSs or book-entry transfer of such ADSs, a properly completed and duly executed ADS Letter of Transmittal (or a copy thereof, provided the signature is original) or an Agent’s Message, together with any required signature guarantees and any other documents required by the ADS Letter of Transmittal. Accordingly, payment might not be made to all tendering holders of ADSs at the same time if certain tendering holders tender pursuant to the guaranteed delivery procedure and will depend upon when ADRs evidencing such ADSs are received by the U.S. Depositary or book-entry confirmations with respect to such ADSs are received into the U.S. Depositary’s account at the Book-Entry Transfer Facility. Under no circumstances will interest be paid on the U.S. Offer Price to be paid by Purchaser, regardless of any extension of the U.S. Offer or any delay in making such payment.

The method of delivery of ADSs and all other required documents, including through the Book-Entry Transfer Facility, is at the option and risk of the tendering holders of ADSs and the delivery will be deemed made only when actually received by the U.S. Depositary (including, in the case of book-entry transfer, by book-entry confirmation). In all cases, sufficient time should be allowed to ensure a timely delivery. Registered mail with return receipt requested, properly insured, is recommended for ADSs sent by mail.

Acceptance of U.S. Offer and Representations by Holder. The tender of ADSs pursuant to any one of the procedures described above will constitute the tendering holder’s acceptance of the U.S. Offer, as well as the tendering holder’s representation and warranty that (a) such holder owns the ADSs being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act, (b) the tender of such ADSs complies with Rule 14e-4, and (c) such holder has the full power and authority to tender and assign the ADSs tendered, as specified in the ADS Letter of Transmittal. Purchaser’s acceptance for payment of ADSs tendered pursuant to the U.S. Offer will constitute a binding agreement between the tendering holder of ADSs and Purchaser containing the terms of the U.S. Offer.

Matters Concerning Validity, Eligibility and Acceptance. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of ADSs will be determined by Purchaser in its sole discretion, which determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of ADSs determined by it not to be in proper form or if the acceptance for payment of, or payment for, such ADSs may, in the opinion of Purchaser’s counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of ADSs, whether or not similar defects or irregularities are waived in the case of other holders. No tender of ADSs will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Telefónica Group, the U.S. Depositary or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification. Purchaser’s interpretation of the terms and conditions of the U.S. Offer (including the ADS Letter of Transmittal and the instructions thereto) will be final and binding on all parties.

Appointment as Attorney-in-Fact and Proxy. By executing the ADS Letter of Transmittal (or delivering an Agent’s Message) as set forth above, the tendering holder of ADSs irrevocably appoints each designee of Purchaser set forth therein as attorney-in-fact and proxy of such holder, with full power of substitution, to vote the ADSs as in such manner as each such attorney-in-fact and proxy (or any substitute thereof) will deem proper in its sole discretion, and to otherwise act (including pursuant to written consent) to the full extent of such holder’s rights with respect to the ADSs (and any and all securities or rights issued or issuable in respect of such ADS on or after December 2, 2008 (collectively, the “ADS Distributions”)) tendered by such holder and accepted for payment by Purchaser prior to the time of such vote or action. All such proxies and powers of attorney will be considered coupled with an interest in the tendered ADSs and will be irrevocable and are granted in consideration of, and are effective upon, the acceptance for payment of such ADSs and all ADS Distributions in accordance with the terms of the U.S. Offer. Such acceptance for payment by Purchaser will revoke, without further action, any other proxy or power of attorney granted by such holder at any time with respect to such ADSs and all ADS Distributions and no subsequent proxies or powers of attorney may be given or written consent executed (or, if given or executed, will not be deemed effective) with respect thereto by such holder. By executing the ADS Letter of Transmittal as set forth above, the tendering holder of ADSs further agrees that effective from and after the date ADSs are tendered thereby that: (a) Purchaser shall be entitled to direct the exercise of any votes attaching to any Shares represented by ADSs in respect of which the U.S. Offer has been accepted or is deemed to have been accepted and any other rights and privileges attaching to such Shares represented by ADSs, including any right to call a meeting of the Shareholders; and (b) the execution of the ADS Letter of Transmittal and its delivery to the U.S. Depositary will constitute (1) an authority from the tendering holder of ADSs to send any notice, circular, document or other communications which may be required to be sent to such holder to Purchaser at its registered office, (2) an authority to Purchaser to sign any consent to execute a form of proxy in respect of the Shares represented by the ADSs in respect of which the U.S. Offer has been accepted or is deemed to have been accepted appointing any person nominated by Purchaser to attend general meetings of Shareholders of the Company and to exercise the votes attaching to such Shares on behalf of the tendering holder of ADSs, and (3) the agreement of the tendering holder of ADSs not to exercise any of such rights without the consent of Purchaser and the irrevocable undertaking of the tendering holder of ADSs not to appoint a proxy for or to attend general meetings of Shareholders.

In addition, by executing the ADS Letter of Transmittal (or delivering an Agent’s Message) as set forth above, the tendering holder of ADSs irrevocably appoints each of Purchaser and the U.S. Depositary as attorney-in-fact of such holder, with full power of substitution, to register the transfer of the tendered ADSs, to surrender the tendered ADSs for withdrawal of the Shares represented by the ADSs and to instruct the ADS Depositary as to delivery of those Shares.

Backup U.S. Federal Income Tax Withholding. Under U.S. federal income tax law, the U.S. Depositary may be required to withhold and pay over to the U.S. Internal Revenue Service a portion of the amount of any payments made pursuant to the U.S. Offer. To avoid backup withholding, unless an exemption applies, a holder of Shares, including Shares represented by ADSs, that is a U.S. Holder (as defined for U.S. federal income tax purposes, see “The U.S. Offer — Section 6 — Certain Tax Considerations” of this Offer to Purchase) must provide the U.S. Depositary with the holder’s correct taxpayer identification number (“TIN”) and certify under penalties of perjury that the TIN is correct and that the holder is not subject to backup withholding by completing the Substitute Form W-9 in the ADS Letter of Transmittal. If a U.S. Holder does not provide its correct TIN or fails to provide the certifications described above, the U.S. Internal Revenue Service may impose a penalty on the holder, and any payment made to the holder pursuant to the U.S. Offer may be subject to backup withholding. All U.S. Holders surrendering Shares or ADSs pursuant to the U.S. Offer should complete and sign the Substitute Form W-9 included in the ADS Letter of Transmittal to provide the information and certifications necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the U.S. Depositary).

Certain holders (including, among others, all corporations and certain foreign individuals and foreign entities) may not be subject to backup withholding. Non-U.S. Holders (as defined for U.S. federal income tax purposes, see “The U.S. Offer — Section 6 — Certain Tax Considerations” of this Offer to Purchase) should complete and sign the appropriate Form W-8 (a copy of which may be obtained from the U.S. Depositary) in order to avoid backup withholding. These holders should consult a tax advisor to determine which Form W-8 is appropriate. See the ADS Letter of Transmittal, for more information.

Purchaser’s acceptance for payment of the ADSs tendered pursuant to the U.S. Offer will constitute a binding agreement between each tendering holder of ADSs and Purchaser upon the terms and subject to the conditions of the U.S. Offer.

If you are in any doubt about the procedure for tendering ADSs, please telephone the Information Agent at its telephone number set forth on the back cover of this Offer to Purchase.

5. Withdrawal Rights. Tenders of Shares and ADSs made pursuant to the U.S. Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after January 30, 2009, unless theretofore accepted for payment as provided in this Offer to Purchase, or at such later time as may apply if the U.S. Offer is extended beyond that date.

If Purchaser extends the period of time during which the U.S. Offer is open, is delayed in accepting for payment or paying for Shares and ADSs, or is unable to accept for payment or pay for Shares and ADSs pursuant to the U.S. Offer for any reason, then, without prejudice to Purchaser’s rights under the U.S. Offer but subject to Purchaser’s obligations under the Exchange Act, the Share Depositary or the U.S. Depositary may, on behalf of Purchaser retain all Shares and ADSs tendered, and such Shares and ADSs may not be withdrawn except as otherwise provided in this section. Any such delay will be an extension of the U.S. Offer to the extent required by law.

For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Share Depositary or the U.S. Depositary, as applicable, at one of their respective addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares or ADSs to be withdrawn and the number of Shares or ADSs to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares or ADS. If the Shares or ADSs to be withdrawn have been delivered to the Share Depositary or the U.S. Depositary, as applicable, a signed notice of withdrawal (with such signature guaranteed by an Eligible Institution in the case of ADSs except for ADSs tendered by an Eligible Institution) must be submitted prior to the release of such Shares or ADSs. Such notice must also specify, in the case of Shares or ADSs tendered by delivery of certificates, the serial numbers shown on the particular títulos (certificates of title) or ADRs evidencing the Shares or ADSs to be withdrawn or, in the case of Shares or ADSs tendered by book-entry transfer, the name and number of the account to be credited with the withdrawn Shares or ADSs. In addition, Shares tendered by book-entry transfer may be withdrawn only by means of the withdrawal procedures made available by the DCV and must comply with the DCV’s procedures. ADSs tendered by the book-entry transfer may be withdrawn only by means of the withdrawal procedures made available by the Book-Entry Transfer Facility and must comply with the Book-Entry Transfer Facility’s procedures. Withdrawals may not be rescinded, and Shares and ADSs withdrawn will thereafter be deemed not validly tendered for purposes of the U.S. Offer. However, withdrawn Shares and ADSs may be re-tendered by again following one of the procedures described in “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” and “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs,” as applicable, at any time prior to the Expiration Date.

All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser in its sole discretion, which determination shall be final and binding. None of the Telefónica Group, the Share Depositary, the U.S. Depositary or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification.

6. Certain Tax Considerations. The following describes the material U.S. federal income tax and Chilean tax consequences of the tender of Shares and/or ADSs pursuant to the U.S. Offer.

U.S. Federal Income Tax Consequences. The following describes the material U.S. federal income tax consequences to U.S. Holders, as defined below, of the tender of their Shares, or to U.S. Holders and Non-U.S. Holders, as defined below, of the tender of their ADSs, pursuant to the U.S. Offer. This discussion is based on the tax laws of the United States currently in effect, including the Internal Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed Treasury regulations, administrative pronouncements and judicial decisions, all of which are subject to change, possibly with retroactive effect. This discussion does not address U.S. state, local or non-U.S. tax consequences. The discussion applies only to U.S. Holders of Shares or U.S. Holders and Non-U.S. Holders of ADSs, that, in each case, hold the Shares or ADSs as capital assets for U.S. federal income tax purposes and it does not address special classes of holders, such as:


	•	certain financial institutions;


	•	insurance companies;

	•	dealers and traders in securities or foreign currencies;

	•	persons holding Shares or ADSs as part of a hedge, straddle or conversion transaction;

	•	persons whose functional currency for U.S. federal income tax purposes is not the U.S. Dollar;

	•	partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

	•	persons liable for the alternative minimum tax;

	•	tax-exempt organizations; or

	•	persons holding Shares or ADSs that own or are deemed to own ten percent or more of any class of the Company’s stock.

These special classes of holders are urged to consult their U.S. tax advisors as to any special U.S. provisions that may be applicable to them.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of Shares or ADSs that is, for U.S. federal income tax purposes, (i) a citizen or individual resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust that (A) is subject to the primary supervision of a United States court and the control of one or more United States persons or (B) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person. A “Non-U.S. Holder” is a holder that is not a U.S. Holder, including, but not limited to, residents of Chile or persons carrying on a trade, profession or vocation in Chile through a branch, agency or permanent establishment.

General. In general, a U.S. Holder that receives cash for the Shares or ADSs pursuant to the U.S. Offer will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the amount realized in exchange for the Shares or ADSs (generally the amount of cash received by such U.S. Holder) and such U.S. Holder’s adjusted tax basis in such Shares or ADSs. Subject to the discussion below, any gain or loss recognized will be capital gain or loss and will be long-term capital gain or loss (subject to a maximum 15% tax rate for certain non-corporate taxpayers) if the U.S. Holder has held the Shares or ADSs for more than one year.

A Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of ADSs unless: (i) the gain is effectively connected with such Non-U.S. Holder’s conduct of a trade or business within the United States (and, under certain treaties, is attributable to a U.S. permanent establishment); or (ii) such Non-U.S. Holder is an individual, present in the United States for 183 days or more in the taxable year of disposition and meets certain other conditions.

PFIC. Based on the Company’s annual report on Form 20-F for the year ended December 31, 2007, filed by the Company with the Commission on May 7, 2008 (the “2007 20-F”), we believe the Company was not a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes for its 2007 taxable year. While we are not aware of any significant transactions or events in 2008 that would change this conclusion, since the PFIC status of the Company for each year depends upon the composition of the Company’s income and assets and upon the market value of the Company’s assets (generally including, among others, equity investments less than 25% owned) from time to time, there can be no assurance that the Company will not be considered a PFIC for any taxable year. If the Company were considered a PFIC for any taxable year during which a U.S. Holder held Shares or ADSs, certain adverse tax consequences could apply to such U.S. Holder pursuant to a sale of such Shares or ADSs in the U.S. Offer, including the imposition of interest charges and tax at higher rates than would otherwise apply. Certain elections may be available (including a mark-to-market election) to U.S. Holders that may mitigate the tax adverse consequences resulting from PFIC status. U.S. Holders should consult the 2007 20-F under the subsection “U.S. Federal Income Taxation — Passive Foreign Investment Company Status” for more details on the U.S. federal income tax consequences of the sale or other disposition of Shares or ADSs in the event the Company is or has ever been a PFIC for U.S. federal income tax purposes and any elections available to a U.S. Holder.

U.S. Federal Income Tax Withholding. As noted in “The U.S. Offer — Section 3 — Procedures for Accepting the U.S. Offer — Holders of Shares” and “The U.S. Offer — Section 4 — Procedures for Accepting the U.S. Offer — Holders of ADSs,” a holder of Shares and/or ADSs (other than an “exempt recipient,” including a corporation, a Non-U.S. Holder that provides appropriate certification (if the payor does not have actual knowledge that such certificate is false) and certain other persons) that receives cash in exchange for Shares and/or ADSs may be subject to United States federal backup withholding tax (currently at a rate equal to 28%), unless such holder provides its taxpayer identification number and certifies that such holder is not subject to backup withholding tax by submitting a completed Substitute Form W-9 to the Share Depositary or the U.S. Depositary, as applicable. Accordingly, each U.S. Holder should complete, sign and submit the Substitute Form W-9 included as part of the Form of Acceptance and ADSs Letter of Transmittal in order to avoid the imposition of such backup withholding tax. Non-U.S. Holders should complete and sign the appropriate Form W-8 (a copy of which may be obtained from the Share Depositary or the U.S. Depositary, as applicable) and submit such form to the Share Depositary or the U.S. Depositary, as applicable, in order to avoid backup withholding.

Chilean Tax Consequences for U.S. Holders. Any gain recognized by an individual who is not domiciled or resident in Chile or any legal entity that is not organized under the laws of the Republic of Chile and does not have a permanent establishment in Chile (a “Non-Chilean Holder”) upon the sale of the ADSs pursuant to the U.S. Offer will not be subject to Chilean taxation.

Gains recognized by a Non-Chilean Holder upon the sale of Shares pursuant to the U.S. Offer will currently be subject to the following taxes: (a) a 17% fixed tax rate, provided that (1) such Shares have been held for at least one year, (2) the Non-Chilean Holder is not considered to be customarily engaged in the buying and selling of shares, and (3) such transfer is not made to a person related to such person; or (b) in case any of the three requirements set forth in (a) is not met, such gains will be added to the net taxable earnings of such person and, as such, are subject to a 17% first category tax, plus the additional tax at a rate of 35%, minus a credit for the 17% first category tax already paid on these capital gains. Withholdings on such capital gains are applicable under Chilean law based on different rates depending on the final payable tax rate described above.

Notwithstanding the foregoing, gains recognized by a Non-Chilean Holder upon the sale of Shares will not be subject to Chilean taxes if (a) such Shares have a “high presence” in the Chilean Exchanges (as described below), (b) such Shares originally were acquired in (1) a local stock exchange, (2) a tender offer for Shares, (3) an initial public offering of Shares during the formation of the Company or capital increase of the Company or (4) conversion of convertible bonds, and (c) the subsequent sale is made in (1) a local stock exchange, (2) other authorized stock exchanges, or (3) a tender offer for Shares.

Shares are considered to have a “high presence” in the Chilean Exchanges when they have been traded for a certain number of days at a volume exceeding a specific amount. As of the date of this Offer to Purchase, the Shares are considered to have a high presence in the Chilean Exchanges.

Any gain recognized by any person other than a Non-Chilean Holder (a “Chilean Holder”) upon the sale of the ADSs pursuant to the U.S. Offer will be subject to Chilean income taxes by adding such gain to the taxable income of such Chilean Holder and applying to such income the tax rate which would otherwise be applicable on such Chilean Holder’s income under Chilean law.

No Chilean stamp, issue, registration or similar taxes or duties will apply to the sale of Shares or ADSs pursuant to the U.S. Offer.

Because individual circumstances may differ, you should consult your tax advisor regarding the applicability of the rules discussed above to you and the particular tax effects to you of the U.S. Offer.

7. Price Range of Shares and ADSs; Dividends.

Price Range of Shares. The Shares are listed and traded on the Chilean Exchanges under the symbols “CTC-A” and “CTC-B”. As of November 26, 2008, there are 957,157,085 Shares outstanding, including 162,846,960 Shares represented by ADSs. As of the date of this Offer to Purchase, the Telefónica Group owns, directly and indirectly, 926,028,064 Shares representing approximately 96.75% of the outstanding Shares, including Shares represented by ADSs. The following table sets forth, for the periods indicated, the quarterly high and low closing prices of the Shares in Chilean

pesos as reported by the Santiago Stock Exchange. The following information reflects nominal Chilean peso amounts as of the trade dates and has not been restated in constant Chilean pesos.


	Ch$ per Share
	High				Low
	Series A		Series B		Series A		Series B

Fiscal Year Ending December 31, 2008
First Quarter		969		900		751		785
Second Quarter		994		880		745		660
Third Quarter		992		884		745		660
October		1,090		961		867		880
November		1,090		990		970		961
Fiscal Year Ended December 31, 2007
First Quarter		1,260		1,100		1,055		951
Second Quarter		1,330		1,125		1,140		1,020
Third Quarter		1,285		1,081		1,050		980
Fourth Quarter		1,245		1,110		935		900
Fiscal Year Ended December 31, 2006
First Quarter		1,264		1,060		1,055		1,000
Second Quarter		1,195		1,080		910		900
Third Quarter		995		927		860		779
Fourth Quarter		1,082		990		935		845


Source:		The Company’s Annual Report on Form 20-F for its fiscal year ended December 31, 2007 (other than data for the fiscal year ending December 31, 2008, the source of which is Bloomberg L.P.).

On November 28, 2008, the last full trading day on the Santiago Stock Exchange prior to the public announcement of the Offers, the reported closing sales price of the Shares on the Santiago Stock Exchange was Ch$1,002.10 per Series A Share and Ch$990 per Series B Share. On December 1, 2008, the last full trading day on the Santiago Stock Exchange prior to the date of this Offer to Purchase, the reported closing sales price of the Shares on the Santiago Stock Exchange was approximately Ch$1,085 per Series A Share and Ch$990 per Series B Share. Holders are urged to obtain current market quotations for the Series A Shares and Series B Shares.

Price Range of ADSs. The ADSs are traded on the NYSE under the symbol “CTC.” Each ADS represents 4 Series A Shares. As of the close of business on November 26, 2008, there were 40,711,740 ADSs outstanding. The Telefónica Group owns 37,865,393 ADSs. The following table sets forth, for the periods indicated, the quarterly high and low closing prices of the ADSs in U.S. dollars as reported by the NYSE.


	US$ per ADS
	High		Low

Fiscal Year Ending December 31, 2008
First Quarter		8.62		6.61
Second Quarter		9.20		5.68
Third Quarter		7.44		5.32
October		7.15		5.60
November		6.56		5.80
Fiscal Year Ended December 31, 2007
First Quarter		9.43		8.04
Second Quarter		9.92		8.75
Third Quarter		9.94		8.15
Fourth Quarter		9.90		7.46
Fiscal Year Ended December 31, 2006
First Quarter		9.70		8.02
Second Quarter		9.18		6.47
Third Quarter		7.53		6.40
Fourth Quarter		8.28		6.94


Source:		The Company’s Annual Report on Form 20-F for its fiscal year ended December 31, 2007 (other than data for the fiscal year ending December 31, 2008, the source of which is Bloomberg L.P.

On November 28, 2008, the last full trading day on the NYSE prior to the public announcement of the Offers, the reported closing sales price of the ADSs on the NYSE was U.S.$5.98 per ADS (or Ch$3,974, based on the Observed Exchange Rate on December 1, 2008). On December 1, 2008, the last full trading day on the NYSE prior to the date of this Offer to Purchase, the reported closing sales price of the ADSs on the NYSE was U.S.$6.68 (or Ch$4,439.33) per ADS, based on the Observed Exchange Rate on December 1, 2008. Holders are urged to obtain current market quotations for the ADS.

Dividends. As required by the Chilean Corporation Act, unless otherwise decided by unanimous vote of the holders of all of the issued and outstanding shares, the Company must distribute a cash dividend in an amount equal to at least 30% of its consolidated net profits for that year determined in accordance with Chilean generally accepted accounting principles ( “Chilean GAAP”) unless and except to the extent it has incurred losses.

The table below sets forth the nominal Chilean peso amount of dividends per Share and U.S. dollar amount of dividends per ADS (each ADS representing 4 Series A Shares) for fiscal years 2006, 2007 and 2008, as reported by the Company in its Annual Report filed on Form F-20 and Current Company Reports filed on Forms 6-K filed on April 30, 2008 and August 6, 2008, respectively, paid in respect of each of the years indicated.


DIVIDENDS	DATE OF PAYMENT	CH$ PER SHARE			US$ PER SHARE

Capital Reduction	June 15, 2006	$	42.0		$	.08
Final Dividend No. 171	June 22, 2006	$	15.3	(4)	$	.02
Interim Dividend No. 172	November 23, 2006	$	11.0	(5)	$	.02
Final Dividend No. 173	May 16, 2007	$	13.4	(6)	$	.03
Capital Reduction	June 12, 2007	$	51.0		$	.08
Interim Dividend No. 174	November 21, 2007	$	6.0		$	.01
Final Dividend No. 175	May 14, 2008	$	5.3		$	.01
Capital Reduction	June 13, 2008	$	41.0		$	.09
Interim Dividend No. 176	December 10, 2008*	$	6.0			*


*		According to the Form 6-K filed by the Company on November 24, 2008, Interim Dividend No. 176 will be paid starting on December 10, 2008.

8. Certain Information Concerning the Company. Except as otherwise stated in this Offer to Purchase, the following and other information contained in this Offer to Purchase concerning the Company is taken from the Company’s Annual Report on Form 20-F for its fiscal year ended December 31, 2007. Although Purchaser has no knowledge that would indicate that any statements contained herein based upon such reports and documents are untrue, neither Telefónica nor Purchaser takes responsibility for the accuracy or completeness of the information contained in such reports and other documents or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but that are unknown to Telefónica or Purchaser.

The Company is a Chilean company that provides a broad range of telecommunications and other services throughout Chile, including local telephone service and broadband, domestic and international long distance service, data transmission, dedicated lines, terminal equipment sales and leasing and interconnection, security, value-added and pay television services.

As of the date of this Offer to Purchase, there were 957,157,085 Shares issued and outstanding, including Shares evidenced by ADSs. As of the date of this Offer to Purchase, the Telefónica Group owns, directly or indirectly, 926,028,064 Shares (including Shares represented by ADSs) representing approximately 96.75% of the issued and outstanding Shares. As of November 26, 2008, there were 162,846,960 Shares evidenced by ADSs. 11,385,388 of the Series A Shares are represented by ADSs not held by the Telefónica Group.

The Company is organized and existing under the laws of the Republic of Chile and has its principal executive offices located at Avenida Providencia 111, Santiago, Chile, telephone: (+56) 26 91 3869.

Financial Information. The following table presents summary financial data for the Company as of and for the three-year period ended December 31, 2007 and as of and for the nine-month periods ended September 30, 2007 and 2008. The summary financial data for each of the fiscal years have been derived from, and are qualified by reference to, the Company’s financial statements contained in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007, which Ernst & Young Ltda., the independent registered public accountants of the Company, have audited. The financial data for each of the fiscal years includes certain data reconciled under U.S. GAAP taken from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007. The summary financial data for the nine months ended September 30, 2007 and 2008 have been derived from, and are qualified by reference to, the Company’s unaudited interim information for the nine-month period ended September 30, 2008 contained in the Company’s Form 6-K filed with the Commission on October 23, 2008. No U.S. GAAP reconciliation is available for the financial data for the nine-month period ended September 30, 2008. The Company’s financial statements were prepared in accordance with Chilean GAAP, which differs in certain significant respects from U.S. GAAP. For a summary of significant differences between Chilean GAAP and U.S. GAAP, including the impact of such differences on the Company’s net income and shareholders’ equity, see Section I of Note 37 to the Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007, a copy of which is included herein as Annex D.


													For the Nine Months
	For the Year Ended December 31,												Ended September 30,
	2005			2006			2007			2007			2007			2008
	(In millions of constant Chilean pesos									(In			(In millions of constant Chilean pesos as of
	as of December 31, 2007,									millions			June 30, 2008, except
	except ratios and share data)									of U.S.			ratios and share data)
										Dollars)

Statement of Operations Data:
*Chilean GAAP*
Operating Revenues		636,779			619,917			632,572			1,273.1			503,941			503,018
Operating Costs and Expenses		(409,073	)		(400,629	)		(423,274	)		(851.8	)		(340,168	)		(348,152	)
Administrative and Selling Costs		(132,200	)		(130,550	)		(140,963	)		(283.7	)		(114,089	)		(117,932	)
Operating Results		95,505			88,738			68,335			137.5			49,684			36,934
Interest Income		8,755			4,765			7,173			14.4			3,859			4,011
Interest Expense, Net of Capitalized Interest		(32,350	)		(20,922	)		(18,910	)		(38.1	)		(14,120	)		(22,799	)
Price Level Restatement and Exchange Differences(1)		3,181			715			1,393			2.8			3,043			22,212
Other non-operating income, net		(10,828	)		(16,469	)		(24,375	)		(49.1	)		(5,737	)		(10,470	)
Income before Income Taxes		64,264			56,826			43,960			88.5			36,729			29,888
Income Tax		(36,616	)		(31,790	)		(33,214	)		(66.8	)		(26,184	)		(21,866	)
Net Income (loss)		27,615			25,081			10,856			(21.8	)*		10,867			8,272
Dividends Paid(2)		126,916			25,800			19,434			39.1			20,439			14,592
Chilean GAAP earnings (loss) per Share(3)		28.85			26.20			11.34			0.02			11.35			8.64
Earnings per ADS(4)		115.40			104.80			45.37			0.09			45.41			34.57
Dividends per Share(5)		13.60			26.95			20.30			0.04			21.35			15.24
Dividends per ADS(4)		530.39			107.82			81.22			0.16			85.41			85.41
Weighted Average Number of Shares Outstanding		957,157,085			957,157,085			957,157,085						957,157,085			957,157,085


*	This is a number reflected in the “Key Information — A. Selected Financial Data” section of the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007. This number appears incorrect, and we believe the correct number should be 21.8.


									For the Nine Months
	For the Year Ended December 31,								Ended September 30,
	2005		2006		2007		2007		2007		2008
	(In millions of constant Chilean pesos						(In		(In millions of constant
	as of December 31, 2007,						millions		Chilean pesos as of June 30, 2008, except
	except ratios and share data)						of U.S.		ratios and share data)
							Dollars)

Statement of Operations Data:
*U.S. GAAP*
Net Income (loss) in accordance with U.S. GAAP		50,042.0		43,705.9		35,988.9		72.4		*		*
Net income (loss) from continuing operations**		50,042.0		43,705.9		35,988.9		72.4		*		*
Net income (loss) from discontinuing operations**		—		—		—		—		*		*
Number of Shares		957,157,085		957,157,085		957,157,085		957,157,085		957,157,085		957,157,085
Net Income (loss) in accordance with U.S. GAAP per Share		52.28		45.66		38.00		0.08		*		*
Net Income (loss) from continuing operations per Share		52.28		45.66		38.00		0.08		*		*
Net Income (loss) from discontinuing operations per Share		—		—		—		—		*		*
Balance Sheet Data:
*Chilean GAAP*
Current Assets		349,041		315,448		352,577		709.3		355,576		348,467
Property, Plant and Equipment, net		1,426,066		1,330,430		1,257,311		2,530.4		1,358,175		1,273,358
Other Assets		101,229		87,771		75,027		151.0		84,466		101,086
Total Assets		1,876,336		1,733,648		1,684,916		3,390.9		1,798,217		1,722,911
Total Long-Term Debt (including Current Maturities)(6)		550,875		431,308		391,549		788.0		434,347		428,583
Total Shareholders’ Equity		1,014,943		967,417		906,534		1,824.4		974,838		930,892
*U.S. GAAP*
Total Assets		1,876,029		1,744,700		1,704,464		3,430.3		*		*
Shareholders’ Equity		882,845		855,992		829,147		1,668.7		*		*
Paid in Capital		1,000,817		956,821		904,736		1,820.8		*		*
Other Data:
Capital Expenditures(7)		79,024		117,629		144,654		291.1		108,303		96,501


*	There is no publicly available interim information that is reconciled to U.S. GAAP.

The Company has revised its amounts previously presented under U.S. GAAP to reclassify its discontinued operations for the sale of Telefónica Móvil de Chile S.A. in 2004. These revised numbers are unaudited. Under Chilean GAAP, the Company is not required to restate or reclassify financial information presented in previous years to reflect significant divestures. For purposes of U.S. GAAP, the Company is required to eliminate the results of operations of certain divested operations from those of its continuing operations in presenting its U.S. GAAP results. See Note 37 to the Audited Consolidated Financial Statements included herein as Annex D.


(1)		Monetary correction is the aggregate of purchasing power gain (loss) on indexation and gain (loss) on foreign currency transactions.

(2)		Dividends paid represents the amount of dividends paid in the periods indicated.

(3)		Basic earnings (loss) per share have been computed using the weighted average number of shares outstanding during each period presented.

(4)		Calculated on the basis that each ADS represents four shares of Series A Common Stock.

(5)		Represents an amount equal to the interim dividends declared for each year and the final dividend for the preceding year declared in April of each year.

(6)		Total Long-Term Debt (including Current Maturities) includes notes and accounts payable to related companies and capital lease obligations.

(7)		Represents the amount disbursed in each year, irrespective of the year in which the investment was made.

Exchange Rates. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. The following table sets forth the annual high, low, average and year-end Observed Exchange Rate for United States dollars for each year starting in 2005 as reported by the Central Bank of Chile.

Observed Exchange Rates of Ch$ per US$1.00


Year	Low(1)		High(1)		Average(2)		Year-end

2008 (through December 1)		431.22		676.75		523.73		664.57
2007		493.14		548.67		522.47		495.82
2006		511.44		549.63		530.28		534.43
2005		509.70		592.75		559.77		514.21


Source:		Central Bank of Chile.


(1)		Exchange rates are the actual high and low, on a day-by-day basis, for each period.

(2)		The average of monthly average rates during the period.

The Observed Exchange Rate applicable on December 1, 2008 was Ch$664.57 = U.S.$1.00.

Available Information. The Company is subject to the informational requirements of the Exchange Act applicable to foreign private issuers with securities registered under Section 12 of the Exchange Act and in accordance therewith is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Such reports and other information may be retrieved from the Commission’s website (www.sec.gov) and inspected at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the Commission in Washington, D.C. 20549, at prescribed rates. Such material should also be available for inspection at the library of the NYSE, 20 Broad Street, New York, New York 10005.

9. Certain Information Concerning the Telefónica Group.

Purchaser. Purchaser is a corporation organized and existing under the laws of the Republic of Chile and is a wholly owned subsidiary of Telefónica. As of the date of this Offer to Purchase, the Telefónica Group owns, directly or indirectly, 926,028,064 Shares (including 151,461,572 Series A Shares represented by 37,865,393 ADSs) representing approximately 96.75% of the outstanding Shares of the Company. The principal business address of Purchaser is Avenida Vitacura 2736, Piso 2, Las Condes, Santiago, Chile. The telephone number of Purchaser is (+56) 26 91 4156.

Telefónica, S.A. is a publicly held stock corporation organized and existing under the laws of the Kingdom of Spain with its corporate seat in Madrid. Telefónica is a diversified telecommunications group which provides a comprehensive range of services through one of the largest and most modern telecommunications networks in the world, mainly focused on providing fixed and mobile telephony services. Telefónica is present principally in Spain, Europe and Latin America.

Telefónica’s ordinary shares, nominal value one euro each, are currently listed on Madrid, Barcelona, Bilbao and Valencia stock exchanges under the symbol “TEF.” They are also listed on various foreign exchanges such as the London, Buenos Aires and Tokyo stock exchanges and are quoted through the Automated Quotation System of the Spanish stock exchanges. American Depositary Shares representing Telefónica’s common shares are listed on the NYSE and the Lima Stock Exchange under the symbol “TEF”. The business address of Telefónica is Distrito C, Ronda de la Comunicacion, s/n, 28050 Madrid, Spain. The telephone number of Telefónica at such offices is 011-34 91 482 8600 (Investor Relations).

Telefónica is subject to the informational and reporting requirements of the Exchange Act applicable to foreign private issuers with securities registered under Section 12 of the Exchange Act and is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Additional information concerning Telefónica is set forth in Telefónica’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007. Such report and other information may be retrieved from the Commission’s website (www.sec.gov) and inspected at the public reference facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the Commission in Washington, D.C. 20549, at

prescribed rates. Such material should also be available for inspection at the library of the NYSE, 20 Broad Street, New York, New York 10005.

During the last five years, none of the Telefónica Group or, to the best of their knowledge, any of the persons listed in Schedule I hereto (a) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of such laws.

10. Source and Amount of Funds. The U.S. Offer is not conditioned upon any financing arrangements. The amount of funds required to purchase in the Offers all of the outstanding Shares and ADSs not already owned by the Telefónica Group and to pay related fees and expenses is expected to be approximately Ch$33,904 million or U.S.$51 million, based on the Observed Exchange Rate on December 1, 2008.

The funds to be used by Purchaser to purchase tendered securities and pay expenses in connection with the Offers will be provided by TICSA, a 99.999999% indirect subsidiary of Telefónica and the Chilean parent company of Purchaser. These funds will come from one or more of the following sources: (i) the cash available in TICSA and (ii) an intercompany loan granted by TISA to TICSA.

As of the date hereof, no new loan agreements with any third party have been entered into in connection with the Offers.

11. Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration.

Effects on Market for Shares and Registration of Shares in the Chilean Securities Registry. The purchase of Shares pursuant to the Offers will further reduce the number of Shares that might otherwise trade publicly and could further reduce the number of holders of Shares which could adversely affect the liquidity and market value of the Shares held by the public.

The Shares and the Company are currently registered with the Securities Registry kept by the SVS. The Shares are also listed and traded on the Chilean Exchanges. According to Chilean law, the SVS may cancel the registration of the shares of any company in the Securities Registry if the shares or the companies do not comply with the requirements for its registration. In addition, a company may voluntarily request that the SVS cancel the registration of its shares with the Securities Registry. Such application may be made to the SVS if (a) for a period of six months, (1) there are fewer than 100 holders of such shares who, taken together, hold at least 10% of the issued capital of the company, excluding those who individually, or through other individuals or corporations, exceed that percentage and (2) there are fewer than 500 holders of shares, and (b) two-thirds of the shareholders of the company vote in favor of the company ceasing to be a public company and ceasing to be a company registered with the SVS. Any shareholders who dissent from such shareholder approval or who did not attend the corresponding shareholders meeting would be entitled to statutory appraisal rights. If the above-mentioned conditions are met, the board of directors of such company would file an application with the SVS requesting the cancellation of the company and its shares from registration. In addition, once the cancellation of registration is granted by the SVS, the company may request that the relevant stock exchanges delist its shares from such exchanges. Once the foregoing steps are taken, Chilean law generally does not require any additional shareholder approval in order for a Chilean company to delist.

However, the Telefónica Group is not planning, within the next 12-month period, to cancel the registration of the Shares with the SVS and to cease being subject to the reporting requirements applicable to publicly traded companies in Chile, nor to delist the Shares from the Chilean Exchanges.

Effects on Market for ADSs. The purchase of ADSs pursuant to the U.S. Offer will further reduce the number of ADSs that might otherwise trade publicly and could further reduce the number of holders of ADSs which could adversely affect liquidity and market value of the remaining ADSs held by the public.

the NYSE requirements for continued listing, the Telefónica Group intends to cause the Company to seek to have the ADSs delisted from the NYSE pursuant to the rules of the NYSE for voluntary delistings.

If the ADSs are delisted from the NYSE, it is possible that the ADSs would continue to trade on other securities exchanges or in the over-the-counter market and that price quotations would be reported by such exchanges or through other sources for so long as there continues to be in effect the Deposit Agreement. However, the extent of the public market for the ADSs and the availability of such quotations would depend upon such factors as the number of holders and/or the aggregate market value of the ADSs and/or Shares remaining at such time, the interest in maintaining a market in the ADSs on the part of securities firms, the possible termination of registration under the Exchange Act and other factors.

Registration of Series A Shares and ADSs Under the Exchange Act. The Series A Shares and ADSs are currently registered under the Exchange Act. The Telefónica Group intends to cause the Company to terminate these registrations. Such registration may be terminated if (i) the ADSs and the Series A Shares are not listed on a national securities exchange and (ii) the ADSs and the Series A Shares are (a) held of record (as defined in Rule 12g5-1 under the Exchange Act) by fewer than 300 persons resident in the United States or (b) the average daily trading volume in the United States of the Series A Shares (including Series A Shares represented by ADSs) for a recent 12-month period has been no greater than 5 percent of the average daily trading volume of that class on a worldwide basis.

The termination of registration of the Series A Shares and ADSs under the Exchange Act would make certain provisions of the Exchange Act, such as the requirements of Rule 13e-3 under the Exchange Act with respect to “going private” transactions and the reporting obligations under Section 13(d) and the rules relating thereto, no longer applicable to the Series A Shares or ADSs. Furthermore, “affiliates” of the Company and persons holding “restricted securities” of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act. If registration of the Series A Shares and ADSs under the Exchange Act were terminated, the Company would no longer be required to file periodic reports with the Commission and the ADSs would no longer be “margin securities” under the rules of the Board of Governors of the United States Federal Reserve System (the “Federal Reserve Board”) or eligible for listing on the NYSE.

Margin Regulations. The ADSs are currently “margin securities” under the regulations of the Federal Reserve Board, which has the effect, among other things, of allowing brokers to extend credit on the collateral of such securities. Depending upon factors such as the number of the aggregate market value of the publicly held ADSs, following the Offers it is possible the ADSs would no longer constitute “margin securities” for the purpose of the Federal Reserve Board’s margin regulations, in which event such ADSs could no longer be used as collateral for loans made by brokers.

For a more detailed description of the foregoing, see “Special Factors — Certain Effects of the Offers.”

12. Certain Conditions of the U.S. Offer.

The U.S. Offer is not conditioned upon approval of at least a majority of unaffiliated security holders of the Company.

13. Certain Legal Matters; Regulatory Approvals.

General. Except as otherwise stated in this Offer to Purchase, the information contained in this Offer to Purchase concerning the Company is taken from the Company’s Annual Report on Form 20-F for its fiscal year ended December 31, 2007. Based on such information, Purchaser is not aware of (a) any governmental license or regulatory permit that appears to be material to the Company’s business that might be adversely affected by Purchaser’s acquisition of the Shares and/or the ADSs in the Offers, (b) any approval or other action by any government or governmental administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of the Shares and/or the ADSs by Purchaser as contemplated herein, or (c) any approval or other action by any government or governmental administrative regulatory authority or agency, domestic or foreign, or any consent, waiver or other approval that would be

required as a result of or in connection with the Offers, including but not limited to, any consents or other approvals under any licenses, concessions, permits and agreements to which the Company or Purchaser or any of their respective subsidiaries or affiliates is a party. Should any such approval or other action be required, Purchaser currently contemplates that such approval or other action will be sought. Purchaser does not currently intend to delay the acceptance for payment of or payment for the Shares and/or the ADSs tendered pursuant to the U.S. Offer pending any such approval or other action. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to the business of the Company or the Telefónica Group, any of which could cause Purchaser to elect to terminate the U.S. Offer without the purchase of the Shares and/or the ADSs thereunder.

Chilean Corporate Law. Chilean law provides for statutory appraisal rights for minority shareholders when holders of at least two-thirds of the outstanding shares with voting power approve certain fundamental resolutions set forth in “Special Factors — Appraisal Rights.” Following the adoption of a resolution relating to any of these matters, the Company would be required to publish an advertisement in a newspaper describing such resolution. Appraisal rights are only granted to shareholders that (1) stated their opposition to the relevant resolution in the corresponding shareholders meeting, or (2) did not attend the meeting and stated their opposition to the resolution within 30 days from the date of the meeting. The Board of Directors of the Company may convene another shareholders meeting to consider the resolution that triggered the appraisal right. If the Board of Directors does not convene a second shareholders meeting or the resolution is not revoked at such meeting, all dissenting shareholders that previously notified the Company would have the right to compel the Company to purchase their Shares. The price of the purchases arising from appraisal rights must be paid within 60 days of the date on which the resolution triggering appraisal rights is approved. Appraisal rights purchases must be made at a price determined from the weighted average trading price on stock exchanges in Chile during the two months prior to the date of the shareholders’ meeting at which the resolution relating to such fundamental decision was approved. If no such weighted average trading price is available, the share purchase would be made at book value.

In accordance with Article 12 of the Chilean Securities Act, Purchaser must report the results of the Offers to the SVS and the relevant Chilean stock exchanges within two trading days of the date on which Purchaser acquires more than 10% of the Shares (including ADSs) pursuant to the Offer. In addition, the Company must give notice of the acquisition of a majority of the ownership interests of the Company within two trading days after the first day of the month following the month in which the purchases under the Offers are made. Purchaser intends to take, or cause to be taken, all steps necessary to comply with Article 12 of the Chilean Securities Act.

Antitrust and Regulatory Laws. Under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), certain acquisitions may not be consummated unless certain information has been furnished to the Federal Trade Commission and the Antitrust Division of the Department of Justice and certain waiting period requirements have been satisfied. Based on a review of publicly available documents filed with the Commission in the United States, Purchaser believes that the HSR Act is not applicable to the purchase of the Shares and/or the ADSs pursuant to the Offers and that such purchase will not violate such antitrust laws.

There are no requirements under Chilean law that the Chilean Antitrust Authority (the “CAA”) be notified of the Offers. The CAA does, however, have broad authority to investigate any intended transaction that the CAA determines is likely to cause an adverse effect on, or lessen, competition. Although it is not anticipated that the CAA will investigate the Offers, no assurance can be given that the CAA will not determine that the Offers are anticompetitive and subject to the scrutiny of the CAA.

Provision for Unaffiliated Security Holders. In connection with the Offers, the Telefónica Group has not granted to unaffiliated security holders access to its corporate files or arranged for counsel or appraisal services at the expense of the Telefónica Group.

14. Fees and Expenses. Except as set forth below, Purchaser will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of the Shares or the ADSs pursuant to the U.S. Offer.

Purchaser has retained Citibank, N.A. to act as depositary of Purchaser for the ADSs in the U.S. Offer and Santander S.A. Corredores de Bolsa to act as depositary of Purchaser for the Shares in the U.S. Offer. The U.S. Depositary and the

Share Depositary will receive reasonable and customary compensation for their services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the U.S. federal securities laws. Purchaser has also retained D.F. King & Co., Inc. to act as information agent in connection with the U.S. Offer. The information agent will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the U.S. federal securities laws.

Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering material to their customers.

Purchaser has agreed to pay Santander S.A. Corredores de Bolsa reasonable and customary compensation for its services as financial advisor, a portion of which is contingent upon the consummation of the Offers. In addition, Purchaser has agreed to indemnify the Financial Advisor and its affiliates against certain liabilities, and to reimburse Financial Advisor up to a certain amount for its reasonable out-of-pocket expenses in connection with the Offers. The Financial Advisor and its affiliates have performed and perform from time to time, in the ordinary course of business, various investment and/or commercial banking services for the Telefónica and its affiliates, including investment banking, debt capital markets, credit and financing transactions, derivatives and risk management, transaction banking and corporate trust services. During the last two years, the Financial Advisor or its affiliates acted as arranger or underwriter in 8 financing transactions and acquisitions exceeding U.S.$200 million for Telefónica or one of its affiliates, including the Initial Tender Offer, for which it received customary fees.

In the ordinary course of business, the Financial Advisor and its affiliates may actively trade Shares or ADSs of the Company and equity or debt securities of Telefónica and its affiliates for their own accounts and for the accounts of their customers and accordingly may hold a long or short position in such securities.

It is estimated that the expenses incurred by Purchaser in connection with the U.S. Offer will be approximately as set forth below:


Advertising	US	$	125,000
Depositary Fees		$	25,000
Legal Fees and Related Expenses		$	200,000
Financial Advisors, Filing Fees and Related Expenses		$	100,000
Printing, Mailing and Distribution Expenses		$	50,000
Miscellaneous		$	25,000
Total	US	$	525,000

Purchaser will be responsible for payment of the foregoing fees and expenses. The Company will not be responsible for payment of any of the foregoing fees and expenses.

No employee of the Company has been or will be employed or used by the Telefónica Group in connection with the transactions.

15. Forward-Looking Statements. This Offer to Purchase contains “forward-looking” statements. Those forward-looking statements include, but are not limited to, statements as to plans for the Company, statements as to expectations regarding whether conditions of closing the Offers will be satisfied and whether the Offers will be consummated on schedule or at all, and statements as to the funding of future expenditures and investments. Those forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in those forward-looking statements. Such factors include, but are not limited to, the effect of general economic conditions, changes in interest rates, the behavior of other market participants and the actions of government regulators. Fluctuations in exchange rates between the Euro and the other currencies in which Telefónica’s assets, liabilities or results are denominated, in particular the U.S. dollar and the Chilean peso, can also influence the actual results as can other factors discussed in Telefónica’s public filings. Many of these factors are beyond the Telefónica Group’s ability to control or estimate precisely. Readers are cautioned not to place undue reliance on such forward-looking statements, which only speak as of the date of this Offer to Purchase. For a more detailed discussion of such risks and other factors, see Telefónica’s Annual Report on Form 20-F for its most recent fiscal year. The Telefónica Group does not undertake any obligation to release publicly any revisions to those forward-looking statements to reflect events or

circumstances after the date of this Offer to Purchase or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

16. Miscellaneous. The U.S. Offer is not being made to, and tenders will not be accepted from or on behalf of, holders of Shares or ADSs in any jurisdiction in which the making of the U.S. Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, Purchaser may, in its discretion, take such action as it may deem necessary to make the U.S. Offer in any jurisdiction and extend the U.S. Offer to holders in such jurisdiction. In those jurisdictions where it is required that the U.S. Offer be made by a licensed broker or dealer, the U.S. Offer shall be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. Purchaser is not aware of any jurisdiction where the making of the U.S. Offer is prohibited by any administrative or judicial action pursuant to any valid statute.

No person has been authorized to give any information or make any representation on behalf of Purchaser not contained in this Offer to Purchase or the related Form of Acceptance, ADS Letter of Transmittal or ADS Notice of Guaranteed Delivery and, if given or made, such information or representation must not be relied upon as having been authorized.

Purchaser has filed with the Commission a Tender Offer Statement on Schedule TO, together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 thereunder, furnishing certain additional information with respect to the U.S. Offer, which includes information required by Schedule 13E-3. The Schedule TO and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the Commission in the manner set forth in this Offer to Purchase. The Schedule TO and any amendments thereto, including any exhibits thereto, are also publicly available on the Commission website (www.sec.gov). See “The U.S. Offer — Section 8 — Certain Information Concerning the Company.”

Inversiones Telefónica Internacional Holding Limitada

December 2, 2008

SCHEDULE I

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF TELEFÓNICA, S.A. AND MANAGEMENT OF INVERSIONES TELEFÓNICA INTERNACIONAL HOLDING LIMITADA.

1. Board Members, Executive Commission Members and Executive Officers of Telefónica, S.A. (“Telefónica”). Set forth below is the name, present and principal occupation or employment and material occupations, positions, offices or employments for the past five years of each member of the Board of Directors and each Executive Officer of Telefónica. The primary business address of each of the following Directors and Executive Officers is Telefónica’s principal address at Distrito C, Ronda de la Comunicación, s/n 28050 Madrid, Spain, Telephone: +34 91 482 8548. Members of the Executive Commission are identified by an asterisk. Except as noted below, all of the Directors and Executive Officers of Telefónica are citizens of the Kingdom of Spain.


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years


César Alierta Izuel*		Executive Chairman and Chairman of the Board. On January 1997, Mr. Alierta was appointed as a director of Telefónica and on July 26, 2000, he was appointed as Telefónica’s Executive Chairman. Mr. Alierta is director of Telecom Italia since November 8, 2007. Mr. Alierta holds a law degree from the University of Zaragoza and an MBA from Columbia University (New York) and is currently a member of the Columbia Business School Board of Overseers.

Isidro Fainé Casas*		Vice-Chairman of the Board. For over 40 years, Mr. Fainé has worked in several financial institutions, including amongst others: Banco Atlántico, S.A., (1964), Banco de Asunción (Paraguay) (1969), Banco Riva y García, S.A. (1973), Banca Jover, S.A. (1974), and Banco Unión, S.A. (1978). Mr. Fainé is currently chairman of La Caja de Ahorros y Pensiones de Barcelona (“la Caixa”), executive chairman of Abertis Infraestructuras, S.A. and vice-chairman of the board of directors of Repsol YPF, S.A. He is also a member of the board of directors of Criteria CaixaCorp, S.A., Caifor, S.A. and Port Aventura, S.A.

Vitalino Manuel Nafría Aznar		Vice-Chairman of the Board. In July 2000, he was appointed general manager and director of the board of directors of Banco Bilbao Vizcaya Argentaria (BBVA) Bancomer. In December 2001, he was appointed a member of the executive committee of BBVA and in January 2003 he became general manager of BBVA America. Since January 2005, he has been the Retail Banking Manager in Spain and Portugal for BBVA.

Julio Linares López*		Director and Chief Operating Officer since December 19, 2007. In January 2000, he was appointed executive chairman of Telefónica de España, S.A., a position which he held until December 2005, when he was appointed Telefónica’s managing director for Coordination, Business Development and Synergies of Telefónica.

José María Abril Pérez*		Director. In 2002, he became managing director of Wholesale and Investment Banking Division and member of the executive committee of BBVA, and he is now in early retirement. Until July 2007, he was vice president of Bolsas y Mercados Españoles, S.A.

José Fernando de Almansa Moreno-Barreda		Director. From 1993 to 2002, Mr. Fernando de Almansa was Chief of the Royal Household and is currently Personal Advisor to His Majesty the King. He is also chief executive officer of Servicios Externos de Apoyo Empresarial, S.A. de C.V. and substitute director of BBVA Bancomer México, S.A. de C.V.

I-1


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years


José María Álvarez-Pallete López		Director. In July 2002, he was appointed chairman and chief executive officer of Telefónica Internacional, S.A. and he has been General Manager of Telefónica Latin America since July 2006.

Sir David Arculus		Director. From 2002 to 2004, he was chairman of Earls Court and Olympia Ltd. From 2004 to January 2006, he served as chairman of O2. Sir Arculus was deputy president of the Confederation of British Industry (CBI) until 2006 and is currently a member of the Oxford University Press Finance Committee. Sir Arculus is a British citizen.

Eva Castillo Sanz		Director. In 2000, Ms. Castillo became chief executive officer of Merrill Lynch Capital Markets Spain. After that, Ms. Castillo was appointed chief operating officer for EMEA Equity Markets. In October 2003, she was appointed head of Global Markets & Investment Banking in Spain and Portugal, as well as president of Merrill Lynch Spain. Currently she heads Global Wealth Management business operations in Europe, the Middle East and Africa, including Merrill Lynch Bank (Suisse) and the International Trust and Wealth Structuring business. She is a member of the Merrill Lynch EMEA Executive Committee, the Global Wealth Management Executive and Operating Committees.

Carlos Colomer Casellas*		Director. In 1990, Mr. Colomer was appointed executive vice-president and chief operating officer of Revlon Inc. In 2000, he was appointed chairman and chief executive officer of the Colomer Group. Mr. Colomer is chairman of the Colomer Group and director of Altadis, S.A. He is also vice-chairman of Indo Internacional, S.A., chairman of Ahorro Bursátil, S.A. SICAV and Inversiones Mobiliarias Urquiola, S.A. SICAV.

Peter Erskine*		Director. In 2001, Mr. Erskine became chief executive officer and a director of the board of directors of Telefónica O2 Europe, Plc. In 2006, he became executive chairman of Telefónica O2 Europe, Plc and from July 2006 until December 2007, he served as general manager of Telefónica O2 Europe, Plc. Currently, Mr. Erskine is member of the advisory board of the University of Reading Business School. Mr. Erskine is a British citizen.

Alfonso Ferrari Herrero*		Director. From 1996 until 2000, served as chairman and chief executive officer of Beta Capital, S.A.

Luiz Fernando Furlán		Director. Throughout his career he has been chairman of the board of directors of Sadia S.A., where he worked since 1978, and member of the board of directors of several other companies in Brazil and abroad such as Pan American Beverages, Inc. — USA (Panamco) and Brasmotor S.A. (Brazil). From 2003 to 2007, he was Minister of Development, Industry and Foreign Trade of Brazil. Currently he is also chairman of Amazonas Sustainability Foundation and member of the board of directors of Redecard S.A., Amil Participações S.A., Kroton Educacional S.A., Marisa S.A. and Stefanini IT Solutions S.A. Mr. Furlán is a Brazilian citizen.

Gonzalo Hinojosa Fernández de Angulo*		Director. From 1985 until 2006, Mr. Hinojosa served as chief executive officer of Cortefiel, S.A., a post which he combined with his appointment as chairman since 1998. He currently serves as a director of Dinamia Capital Privado, S.A., SCR.

I-2


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years


Pablo Isla Álvarez de Tejera		Director. In 1996, Mr. Isla was appointed general manager of the National Heritage Department of the Treasury Department of Spain (Ministerio de Economía y Hacienda). In July 2000, Mr. Isla was appointed chairman of the board of Grupo Altadis and co-chairman of the company. Since June 2005, Mr. Isla is the deputy chairman and chief executive officer of Inditex, S.A.

Antonio Massanell Lavilla		Director. Mr. Massanell is currently senior executive vice president of la Caixa and a member of the boards of directors of e-La Caixa 1, S.A., Port Aventura, S.A. Espacio Pyme, S.A., Bousorama, S.A., Caixa Capital Desarrollo, S.C.R., S.A. and Caixa Capital Risc, S.G.E.C.R., S.A.

Francisco Javier De Paz Mancho*		Director. From 1996 to 2004, he was corporate strategy manager of the Panrico Donuts Group. From 1998 to 2004, he served as director of Mutua de Accidentes de Zaragoza (MAZ) and of the Panrico Group. From 2004 to 2006, he was director of Tunel de Cadí, S.A.C. and from 2003 to 2004, he served as chairman of the Patronal Pan y Bollería Marca (COE). From 2004 to 2007, he was chairman of the National Company MERCASA.

Guillermo Ansaldo Lutz		Managing Director of Telefónica Spain since December 2007, and a member of the Executive Committee of Telefónica. From 2000 to 2004, he was the chief executive officer of Telefónica de Argentina, S.A. and since April 2005, he held the position of chief executive officer of Telefónica de España, S.A.

Matthew Key		General Manager of Telefónica Europe and a member of the Executive Committee of Telefónica. From 2000 to 2002, he worked as non-executive director in Vodafone Egypt. He has served as chairman and non-executive director of Telco Mobile since 2003. From 2003 to 2005, he was non-executive director of Link Stores. In February 2002, he was appointed chief financial officer of O2 UK until December 2004. In January 2005, he was appointed chief executive officer of O2 UK. Mr. Key is a British citizen.

Santiago Fernández Valbuena		General Manager of Finance and Corporate Development since December 2002 and a member of the Executive Committee of Telefónica. He has served as the chief financial officer since July 2002. He joined Telefónica Group in 1997 as chief executive officer of Fonditel, Telefónica’s pension assets manager.

Luis Abril Pérez		Technical General Secretary to the Chairman. From 1994 to 1999, Mr. Abril acted as general director for Banco Español de Crédito, S.A. (Banesto), and he later acted as general director for Communications for Banco Santander Central Hispano, S.A. (1999 to 2001).

Calixto Ríos Pérez		General Manager of Internal Audit. In November 2000, he joined the Telefónica Group as general manager for Institutional Relations, and in July 2002, he was appointed general manager for Internal Auditing and Communications.

I-3


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years


Ramiro Sánchez de Lerín García-Ovies		General Secretary and Secretary to Telefónica’s Board of Directors. In 1982, he became a Government Attorney (Abogado del Estado) and started working for the Local Tax Authorities in Madrid (Delegación de Hacienda de Madrid). Afterwards he was assigned to the State Secretariat for the European Communities and later to the Foreign Affairs Ministry. He has been general secretary and secretary of the Board of Elosúa, S.A., Tabacalera, S.A., Altadis, S.A. and Xfera Móviles, S.A.

2. Directors and Executive Officers of Inversiones Telefónica Internacional Holding Limitada (“Purchaser”). Purchaser is a limited liability company (sociedad de responsabilidad limitada) organized and existing under the laws of the Republic of Chile. The management of a limited liability company in Chile is freely determined in its bylaws by the partners thereof. The management of Purchaser is vested upon one of its partners, Telefónica Internacional Chile S.A., which has the widest authorities to represent Purchaser. For administration purposes, Telefónica Internacional Chile S.A. may appoint by public deed one or more agents. The principal address of Purchaser is: Vitacura 2736, Piso 2; Las Condes, Santiago, Chile, telephone: +56 269 14 156.

By public deed dated August 2, 2006, Telefónica Internacional Chile S.A. appointed the persons set forth below as agents, which acting jointly any two of them have the power to represent Purchaser. Each of the persons set forth below is a citizen of the Republic of Chile.


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years

Jorge Mario Martina Aste		Commercial Engineer — Pontificia Universidad Católica de Chile. From January of 2000 through the present, Mr. Martina Aste has acted as General Manager of Terra Networks Chile. In 2006, he assumed the additional role of General Director for Chile, Argentina, Colombia, Mexico and Peru. His principal objective is to lead and implement the Strategy for Terra Latin America in Spanish-speaking countries.
Luis Domingo Muñoz Vallejos		Commercial Engineer — Universidad de Chile. From January 2000 through the present, Mr. Muñoz Vallejos has acted as the Director of Administration and Finances of Terra Networks Chile, where his principle objective has been to maximize the company’s profitability.
Waldo Rafael Maldonado Catalán		Civil Engineer — Universidad de Chile. From January 2000 through the present, Mr. Maldonado Catalán has acted as Director of Integration Technology, where his principle role has focused on the evaluation, development and implementation of technology solutions needed for the development of Terra Networks Chile’s business.
Claudio Contreras Villalón		Computer Engineer — IPS. From June of 2000 through the present, Mr. Contreras Villalón has acted as Director of Operations, where his principle objective has been guarantying the impeccability and availability of Terra Networks Chile’s services to its clients and ensuring client satisfaction.

By resolution dated October 24, 2008, the Board of Directors of Telefónica Internacional Chile S.A., appointed the persons set forth below as agents. Any two of the persons set forth below acting jointly have the power to represent Purchaser, other than Mr. Álvarez-Pallete who, acting individually, has the power to represent Purchaser. Messrs. Sintes, Vidaurrazaga and Álvarez-Pallete are citizens of the Kingdom of Spain. Messrs. Aninat and Galilea are citizens of the Republic of Chile.

I-4


		Present Principal Occupation or Employment; Material Positions
Name		Held During the Past Five Years

Cristián Aninat Salas		Secretary of the Board of Directors from 1997 until November 1, 2008 and General Counsel of the Company. Mr. Aninat Salas joined the Company in 1994 and has been the General Counsel of Telefónica Latinoamerica since November 2008. He holds a law degree from the Universidad Católica de Chile.
Ignacio Gaspar Sintes		Finance Director of Telefónica Internacional S.A. since January 2002. Mr. Gaspar Sintes has also served as Treasury and Financial Planning Director for Telefónica Latinoamérica since January 2007 and holds a degree in Economics and Business Administration from the University of Valencia, Spain.
Juan Vidaurrazaga Guerenabarrena		Chief Financial Officer of the Company since November 2007. Appointed Chief Financial Officer of Telefónica Móviles Chile since July 2005. Joined Telefónica, SA in Madrid in June 2001 as manager in the capital markets area. He holds a graduate degree in economics from the Universidad Pontificia de Comillas of Madrid
Víctor Galilea Page		General Counsel and Secretary of the Board of Directors of the Company since November 2008. Prior to that, Mr. Galilea was the regulatory director of Telefónica S.A. since 2006, and the general counsel of Telefónica Móviles Chile since 2004. Mr. Galilea holds a law degree from the Universidad de Chile. Former Director of Legal and Regulation of Telefónica Móviles Chile S.A.
José María Álvarez-Pallete López		In July 2002, Mr. Álvarez-Pallete was appointed chairman and chief executive officer of Telefónica Internacional, S.A. and he has been General Manager of Telefónica Latin America since July 2006. Mr. Álvarez-Pallete holds a graduate degree in economics from the Complutense University of Madrid. He also studied economics at the Université Libre de Belgique.

I-5

ANNEX A

Description of Appraisal Rights Under the Chilean Corporations Law

The following is an English language translation of Article 69 of the Chilean Corporations Act relating to shareholders’ appraisal rights. The summary set forth below is included for general information only. Holders of Shares and/or ADSs should consult their own legal advisors with respect to the application and effect of Article 69 of the Chilean Corporations Act to them in connection with the U.S. Offer.

Article 69. The approval by the meeting of shareholders of any of the matters indicated below shall grant the dissenting shareholder the right to appraisal of his or her shares. Notwithstanding the foregoing, if the bankruptcy of the company has been declared, the exercise of the appraisal right¹ shall be suspended for as long as the credits existing at the time the appraisal right was granted remain unpaid. The same rule shall apply when the company becomes subject to an agreement with creditors approved in accordance with Title XII of the Bankruptcy Act, while such agreement is in effect, unless its provisions authorize the payment of appraisal rights of shareholders or when such agreement is terminated by the declaration of bankruptcy.

A shareholder is considered to be dissenting when he has opposed the matter with respect to which appraisal rights exist in the respective meeting, or, while not dissenting at the meeting, expresses his opposition to the matter in writing to the company within the term set forth in the next article 30 days from the date of the corresponding shareholders meeting.

The price to be paid by the company to the dissenting shareholder who exercises his appraisal rights shall be, in private corporations, the book value per share, and in the publicly held corporations, the market value per share, calculated as set forth in the Rule the market value per share shall be determined from the weighted average trading price on stock exchanges in Chile during the two months prior to the date of the shareholders’ meeting where the relevant matter was approved.

Appraisal rights are triggered if any of the following matters are approved by the shareholders:

1) The transformation of the company into another type of corporate entity;

2) The merger of the company;

3) The transfer of 50% or more of the assets of the company in accordance with the provisions referred to in Article 67, No. 9 of the Chilean Corporations Act;

4) The creation of guarantees or liens referred to in Article 67 No. 11 of the Chilean Corporations Act liens to guaranty obligations of third parties (other than company’s subsidiaries) in an amount in excess of 50% of the company’s assets;

5) The creation of preferences for a series of shares or the increase or reduction of existing preferences. In this case, only the dissenting shareholders of the affected series of shares shall have appraisal rights;

6) The curing of a flaw in a corporation’s constitutive documents or any amendment thereto that may have resulted in their annulment;

7) All other cases set forth in the law or the company’s bylaws giving rise to appraisal rights, as applicable; and

8) Article 1 of the Chilean Corporations Act provides that approving the deregistration of the company from the Registry of Commerce kept by the Superintendencia de Valores y Seguros also triggers appraisal rights for dissenting shareholders and for shareholders not attending the meeting where the deregistration was approved.

¹ This Annex A discusses “withdrawal rights” under Chilean law. The term “appraisal rights,” which is a literal translation of and conveys the same meaning as “withdrawal rights,” is used because this is the commonly used term in the United States for the same concept.

A-1

ANNEX B

Description of the Mandatory Tender Offer Requirement Under the Chilean Corporations Law

The following is an English language translation of Article 69 ter of the Chilean Corporations Act relating to the mandatory tender offer requirement that requires Purchaser to commence a second public tender offer in Chile for the remaining Shares of the Company that were not acquired by Purchaser during the tender offer that commenced on September 17, 2008. The summary set forth below is included for general information only. Holders of Shares and/or ADSs who wish to tender their Shares and/or ADSs should consult their own legal advisors with respect to the application and effect of Article 69 ter of the Chilean Corporations Act to them in connection with the U.S. Offer.

Article 69 ter. If, as a consequence of any acquisition, a person becomes the owner of two thirds or more of the outstanding voting stock of a company that offers its shares to the public, such person shall, within thirty days from the date of such acquisition, make a tender offer for the remaining shares in accordance to the terms of Title XXV of Law No. 18,045 (tender offers general regulation). Said tender offer must be made at a price not lower than that price that would apply in case of appraisal rights.

If the tender offer is not made within the term set forth herein, appraisal rights shall be granted to shareholders in accordance with the terms of Article 69 ter (described in Annex A). In such a case, the purchase price would be calculated based on the date following the expiration day of the aforementioned 30 days term.

The obligation set forth in the second preceding paragraph shall not be applicable when the ownership of two-thirds or more of the shares referred therein is obtained as a consequence of a statutory capital reduction of such company resulting from the capital not being fully subscribed and paid for within the legal term.

In case all shareholders exercise their option to sell all their shares to the controlling shareholder or to exercise their appraisal rights, as the case may be, the ground for dissolution set forth in Article 103, No. 2, shall not apply to the company, unless the controller decides to the contrary and makes a statement in such regard in accordance to Article 213 of Law No. 18,045.

B-1

ANNEX C

Procedures for Tendering Shares in the Chilean Offer

State of the Offered Shares

The accepted shares shall be registered in the name of the acceptor in the Shareholders Registry of the Company, duly paid and free of encumbrances.

Formalities for the Acceptance of the Offer and Necessary Documents

The Chilean Offer will be conducted in the Santiago Stock Exchange, using a procedure called Block Firm Offer (Oferta a Firme en Bloque), specifically approved by the Santiago Stock Exchange for simplified tender offer procedures.

The Block Firm Offer procedure is described in Title 2.2.3 of the Santiago Stock Exchange’s Manual for Stock Operations, approved in October 21, 1991.

According to this procedure, only Santiago Stock Exchange’s stock brokers may participate in the tender offer process. Therefore, those shareholders who intend to tender their shares in the Chilean Offer must approach the Offer Administrator or any other Santiago Stock Exchange stock broker.

The shareholder delivering his or her acceptance of the Chilean Offer shall simultaneously execute a transfer for the totality of the shares subject to the Chilean Offer that he or she is willing to sell, which shall fulfill all current regulations, in favor of the Offer Administrator or in favor of the facilitating broker, as applicable, and further execute a custody contract with the Offer Administrator or the corresponding broker who shall perform the necessary formalities to take possession of the relevant shares, and, in the case of a broker other than the Offer Administrator, such delivery must be made in the terms of the Chilean Offer.

The shareholders accepting the Chilean Offer shall indicate the same only during the valid term or its relevant extension, via a written sale order, subject to the terms and conditions of the Chilean Offer, which such shareholder must sign before a representative of the Offer Administrator or a participating broker, or via a duly authorized signature executed before a public notary, and, in both cases, with the fingerprints of the signatories.

Participating stock brokers must deliver the corresponding sale orders or acceptances according to the Santiago Stock Exchange Manual for Stock Operations.

The acceptance shall be delivered from Monday to Friday, 9:30 a.m. to 6:30 p.m. Chilean time, with the exception of the applicable expiration date of the Chilean Offer or its respective extension, on which the acceptance shall be received until 5:30 p.m. Chilean time.

Likewise, those shareholders or the broker to whom such shareholder turns shall deliver to the Offer Administrator the following documents:

(i) The titles of the original shares for the shares sold in their possession, or a certificate that for this purpose shall be issued by the Securities Department of the Company, accrediting that the title or titles are deposited with the Company located at Avenida Providence 111, borough of Providencia, city of Santiago, Chile.

(ii) A certificate issued by the Securities Department of the Company, accrediting that in their records the shares are not affected by any encumbrance.

(iii) Copy, of both sides, of the identity card of the shareholder or its representative, or the legal representative if the shareholder is a company, which original shall be provided at the moment of executing the acceptance. The copy must be certified as faithful by a public notary or checked by the corresponding participating broker.

(iv) Original or authorized copy of the valid power of attorney with which the representatives act on behalf of the shareholders, which shall contain sufficient representative powers to sell the shares under the conditions established in the Chilean Notice, granted or authorized by a public notary.

(v) Authorized copy of the totality of legal antecedents of the shareholders that are companies, including the totality of incorporating documents, any modifications thereto, and existing authorizations and other pertinent

C-1

resolutions, as well as an authorized copy of the totality of documents that accredit the legal capacity of its representatives.

(vi) Authorized copy of the totality of the legal antecedents of the shareholders whose shares were registered in the name of communities or heirs, including the totality of declarative documents related thereto, any modifications, and all resolutions and pertinent certificates, including an authorized copy of all the documents that accredit the legal capacity of its representatives.

Additionally, the acceptance shall include a client form and a custody contract with the respective broker, in accordance with the relevant regulations.

Participating brokers other than the Offer Administrator shall take into custody the relevant shares and, as the case may be, shall formulate one or more acceptances to the Chilean Offer Administrator, in the terms indicated in this section, which shall be delivered jointly with the other documents identified herein.

The administrators of pension funds and mutual funds, for the funds administered by them, as well as the other institutional investors who are required to maintain their investments in their name until the sale of the same, who decide to participate in the Chilean Offer hereunder, shall be governed by the procedures and mechanisms provided in the applicable regulations and shall deliver the acceptance of the Chilean Offer to the Offer Administrator’s office, during the valid term of the Chilean Offer or its extension, it not being necessary to deliver a share transfer nor the delivery of titles mentioned in number (i) above. In any event, such documents shall be delivered jointly to the Offer Administrator with the payment of the corresponding institutional investor of the price for the shares sold in this process.

Devolution of Values

In the event that the Chilean Offer fails, whether by reason of the conditions pertinent thereto or for any other, the shares accepted as sold and part of the Chilean Offer, as well as all other documents required for acceptance shall be made immediately available to them, and in any event, as of 9:00 a.m. Chilean time on the day of publication of the Result Advertisement is publicized, or the next banking day, without generating any right to an indemnification, payment or reimbursement for the shareholders that have accepted the Chilean Offer, nor shall the same imply an obligation or responsibility of the Bidder, its agents, advisors, or representatives.

C-2

ANNEX D

Note 37. Description of Differences Between Chilean and United States Generally Accepted Accounting Principles from Compañía de Telecomunicaciones de Chile S.A.’s annual report on Form 20-F for the fiscal year ended December 31, 2007, filed on May 7, 2008.

The Company prepared its consolidated balance sheets as of December 31, 2006 and 2007, respectively, and its consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2007, included in its 20-F filing for the year ended December 31, 2007, in conformity with accounting principles generally accepted in Chile (“Chilean GAAP”) with a reconciliation to net income for each of the three years in the period ended December 31, 2007, and a reconciliation to shareholders’ equity as of December 31, 2006 and 2007, respectively, derived from applying accounting principles generally accepted in the United States of America (“US GAAP”). This presentation is in accordance with Item 18 of Form 20-F.


I.	Differences in measuring methods

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in Chile, which differ in certain respects from US GAAP.

Under Chilean GAAP, financial statements are restated to reflect the full effects of the gain (loss) in the purchasing power of the Chilean peso on the financial position and results of operations of reporting entities. The method is based on a model that enables calculation of net inflation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power. The model prescribes that the historical cost of such accounts be restated for general price-level changes between the date of origin of each item and the year-end. As allowed pursuant to the rules and regulations for Form 20-F, the reconciliation included herein of consolidated net income, other comprehensive income and shareholders’ equity does not include adjustments to eliminate the effect of inflation accounting under Chilean GAAP.

Under Chilean GAAP, in accordance with Technical Bulletin 64 (BT 64), the financial statements of foreign subsidiaries that operate in countries exposed to significant risks (“unstable countries), and that are not considered to be an extension of the parent Company’s operations, must be remeasured into US dollars. The Company has an equity method investment in the Brazilian TBS Celular Participacion S.A., the Company remeasured this foreign equity-investee into US dollars under this requirement as follows:

Monetary assets and liabilities are translated at year-end rates of exchange between the US dollar and the local currency.

All non-monetary assets and liabilities and shareholders equity are translated at historical rates of exchange between the US dollar and the local currency.

Income and expense accounts are translated at average rates of exchange between the US dollar and local currency.

The effects of any exchange rate fluctuations are included in the results of operations for the period.

Under BT 64, the investment in a foreign subsidiary is price-level restated, the effects of which are reflected in income, while the effects of the foreign exchange gain or loss between the Chilean Peso and the US dollar are reflected in equity in the account “Cumulative Translation Adjustment”; as the foreign investment itself is measured in US dollars.

In the opinion of the Company and under the exemption allowed for Technical Bulletin 64 by the AICPA International Task Force, the Chilean GAAP procedures described above are part of the comprehensive basis of preparation of price-level adjusted financial statements required by Chilean GAAP. Inclusion of inflation and translation effects in the financial statements is permitted for Form 20-F and considered appropriate under the inflationary conditions that have historically affected the Chilean economy and accordingly, are not eliminated in the reconciliation to US GAAP.


a)	*Technical revaluation of Property, Plant and Equipment*

As mentioned in Note 2(k) to the Chilean GAAP financial statements, in accordance with standards issued by the SVS in 1986, the property, plant and equipment of the Company subject to such regulation are allowed to be revalued pursuant to a technical appraisal. The difference between the book value prior to revaluation and the revalued amount is

D-1

included in equity as a surplus on account of such technical appraisal, and is subject to Chilean inflation adjustment and depreciation. Under US GAAP, such revaluations are not permitted. The effects of the reversal of this revaluation net of the accumulated depreciation, as well as of the related depreciation expense for the years are shown under paragraph (o) below.


b)	*Investments in Debt and Equity Securities*

Under Chilean GAAP, investments in securities are accounted for at the lower of cost or market value. Under US GAAP, securities are classified as trading, held-to-maturity or available-for-sale. Those securities classified as trading are carried at their fair value, with realized and unrealized gains and losses recognized currently in earnings. Available-for-sale securities are also carried at fair value, with unrealized gains and losses recorded in shareholders’ equity. Securities classified as held-to-maturity are carried at amortized cost. The effects of the reversal of the unrealized losses that were considered to be temporary and the recording of the unrealized gains on available- for-sale securities which are recorded in equity in US GAAP for each year are included in paragraph (o) below.


c)	*Deferred Income Taxes*


(i)	Complementary Accounts

Starting January 1, 2000, the Company recorded income taxes in accordance with Technical Bulletin No. 60 of the Chilean Association of Accountants and its related amendments. Recognizing, using the liability method, the deferred tax effects of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. As a transitional provision, a contra asset or liability had been recorded for the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Such complementary asset or liability is being amortized to income over the estimated average reversal periods corresponding to the underlying temporary differences to which the deferred tax asset or liability relates. The effects of the differences, primarily related to the amortization of the complementary account are included under paragraph (o) below.


(ii)	Deferred tax effects of US GAAP adjustments

Under US GAAP, companies must account for deferred taxes in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for Income Taxes”, which requires an asset and liability approach for financial accounting and reporting of income taxes, under the following basic principles: (a) a deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and tax loss carryforwards; (b) the measurement of deferred tax liabilities and assets is based on the provisions of the enacted tax law and the effects of future changes in tax laws or rates are not anticipated; and (c) the measurement of deferred tax assets is reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

Temporary differences are defined as any difference between the financial reporting basis and the tax basis of an asset and liability that at some future date will reverse, thereby resulting in taxable income or expense. Temporary differences ordinarily become taxable or deductible when the related asset is recovered or the related liability is settled. A deferred tax liability or asset represents the amount of taxes payable or refundable in future years under currently enacted tax rates as a result of temporary differences at the end of the current year.

Certain US GAAP adjustments generate temporary differences and related tax effects which are included in paragraph (o) below.


(iii)	Adoption of FASB Interpretation No. 48

During 2007, the Company adopted FASB Interpretation No. 48: “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards No. 109: “Accounting for Income Taxes” (“FAS 109”). The Interpretation prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. For each tax position, the enterprise must determine whether it is more likely than not that the position will be sustained upon

D-2

examination by taxing authorities, based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to be recognized within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. For tax positions that meet the more likely than not threshold, the benefit to be recognized is the largest amount that is greater than 50% likely of being realized upon ultimate settlement.

Under Chilean GAAP, the Company recorded a provision for uncertainties in tax positions of Ch$5,487 million. As a result of implementing FIN 48, no material adjustment in the provision for uncertainties in tax positions was recognized. The Company and its subsidiary recognize interest and penalties related to unrecognized tax benefits in financial expense and other operating expense, respectively.

The Company potentially is subject to income tax audits in Chile until the applicable statute of limitations expires. Tax audits by their nature are often complex and can require several years to complete. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2004.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	ThCh$

Balance as of January 1, 2007		6,046,382
Additions for tax positions of prior periods		941,002
Settlements		(1,500,100	)
Balance at December 31, 2007		5,487,284


d)	*Capitalization of finance costs*


(i)	Capitalization of interest

Under Chilean GAAP, all interest on debt directly associated with construction projects is capitalized, including interest, price-level restatement and, with respect to foreign currency borrowings, foreign currency translation gains and losses. Until the end of 2002, all debt of the Company was considered directly associated with construction projects. The capitalization of interest costs associated with projects under construction is optional when incurred on debt that is not directly related to such projects. In 2003 under Chilean GAAP, the Company has discontinued capitalizing interest on its construction in progress due to the lack of incurrence of new debt which could be associated with such construction and the short-term nature of the items currently being included in the construction in progress category. Under US GAAP capitalization of interest is required for the interest which could be avoided should expenditures for the associated assets have not been made. Since 2003 the Company continues to capitalize interest under US GAAP only.

The effects of the differences, including those related to the depreciation, described above are included under paragraph (o) below.


(ii)	Foreign currency exchange differences

Under US GAAP, the Company reverses those amounts previously capitalized related to foreign currency exchange gains and losses on foreign currency borrowings related to construction for purposes of reconciling to US GAAP.

The effects of the differences, including those related to the depreciation, described above are included under paragraph (o) below.


e)	*Staff Severance Indemnities*


(i)	Prior Service Cost

Under Chilean GAAP, prior service cost resulting from the adoption of new severance indemnity plans created in year 1987 were charged to income upon adoption.

Under US GAAP, the prior service cost, under Statement of Financial Accounting Standards 87 is deferred and is amortized into income over the expected working life of the employee. With the adoption of Statement of Financial Accounting Standards No. 158 (SFAS 158), “Employer’s Accounting for Defined Pension and Other Postretirement

D-3

Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R)” as described in part II of Note 37 under paragraph (l), the Company recorded the unamortized amount as a component of the ending balance of accumulated other comprehensive income, net of tax.

The effects of the deferral and the corresponding amortization for the years shown, as well as the adoption of SFAS 158, are included under paragraph (o) below.


(ii)	Staff Severance Indemnities under Chilean GAAP

Under the Company’s employment contracts and collective bargaining agreements, it has committed to provide a lump sum payment to each employee at the end of their employment, whether due to death, termination, resignation or retirement. Until November 30, 2004 the Company determined those obligations using the present value method, based on the current salaries and estimated average service life of each employee at year-end, and applying a discount rate of 7%.

Starting December 2004 the Company changed its estimation for staff severance indemnities by incorporating certain additional variables through an actuarial valuation. Variables such as workforce rotation, average salary increases, workforce mortality and average service life as underlying assumptions. Costs for past services of employees, resulting from these changes in assumptions, are deferred and amortized over the employees’ estimated average remaining service periods.

During 2006, the Company changed the discount rate from 7% to 6% as describe in Note 3 (i) to the financial statements. The cost for past services of employees, resulting from this additional change in assumption, is deferred and amortized over the employees’ estimated average remaining service periods.


(iii)	Staff Severance Indemnities under US GAAP

Under US GAAP, staff severance indemnities have always been recorded in accordance with SFAS No. 87, “Employer’s Accounting for Pensions” using the projected benefit obligation method. The assumptions used correspond to the valuation under Chilean GAAP, with the difference that until December 31, 2005, a discount factor of 5.5% was applied. As of December 31, 2006, under US GAAP a discount factor of 6% is applied, equal to the treatment under Chilean GAAP. The Company has elected to recognize its actuarial gains and losses immediately under US GAAP. The effects of the elimination of the transitional assets and the differences in the discount rate for the year ended December 31, 2005, and of the elimination of the transitional assets for the year ended December 31, 2006, are included under paragraph (o) below.


f)	*Derivatives*

As described in Note 30 to the financial statements, the Company uses derivative instruments to manage exposures to foreign currency and interest rate risk. The Company’s objectives for holding derivatives are to minimize these risks using the most effective methods to eliminate or reduce the impact of these exposures. The effects of the adjustments for financial derivatives are mainly related to cross currency interest rate swap contracts for the three years in the period ended December 31, 2007. The embedded derivatives are quantified as a separate adjustment in the reconciliation. Both adjustments are included in paragraph (o) below.


(i)	Forward exchange contracts:

The Company has forward exchange contracts between the US dollar and Chilean peso and US dollar and the UF, which correspond to expected transactions or to existing assets and liabilities. Under Chilean GAAP, forward exchange contracts related to expected transactions are recorded at fair value with mark to market adjustments recorded as unrealized gains on the balance sheet with no income statement effect and any unrealized loss in the income statements. Forward exchange contracts related to existing assets and liabilities are recorded at fair value with mark to market adjustments recorded as unrealized gains and losses on the balance sheet with no income statement effect. Under US GAAP, these forward exchange contracts are valued at fair value with changes in fair value recognized in income, whether they represent unrealized gains or unrealized losses.

D-4


(ii)	Cross currency interest rate swaps:

The Company entered into cross-currency interest rate swaps as hedges of its debt denominated in US dollars. These swaps hedge both, currency risk and interest rate risk. Under Chilean GAAP, the unrealized gain and loss associated with these contracts was deferred. Under US GAAP, these contracts do not qualify for hedge accounting because they do not meet hedge accounting requirements under SFAS No. 133, therefore mark to market adjustments are also charged to income.


(iii)	Embedded derivatives:

Current Chilean accounting rules do not consider the existence of derivative instruments embedded in other contracts and therefore they are not analyzed and accounted for in the Company’s Chilean GAAP financial statements. For US GAAP purposes, certain implicit or explicit terms included in host contracts that affect some or all of the cash flow or the value of other exchanges required by the contract in a manner similar to a derivative instrument are required to be bifurcated from the host contract and accounted for at fair value.


g)	*Goodwill*

Under Chilean GAAP up through December 31, 2003, the Company recorded goodwill or negative goodwill for the difference between the purchase price and the carrying value of assets acquired and liabilities assumed. As of January 1, 2004 Technical Bulletin No. 72 (“BT 72”) of the Chilean Institute of Accountants became effective. The bulletin requires the assets acquired and liabilities assumed to be recorded at fair value and the excess of the purchase price of the investment over the fair value of assets acquired and liabilities assumed to be recorded as goodwill. Under BT 72 goodwill resulting from business combinations is amortized on a straight-line basis over a maximum period of 20 years. Under US GAAP, assets acquired and liabilities assumed are recorded at their fair values. Any excess of the cost of an investment over the fair values of assets acquired and liabilities assumed is recorded as goodwill. In the opinion of the Company, the book value of any assets acquired or liabilities assumed has not materially differed from their fair values in any transaction recorded under purchase accounting in previous periods.

In accordance with SFAS No. 142, “Goodwill and other Intangible Assets” (SFAS No. 142) the Company no longer amortizes goodwill, instead goodwill is tested for impairment on an annual basis and whenever indicators of impairment arise. The goodwill impairment test, which is based on fair value, is performed on a reporting unit level annually. The Company has performed the annual impairment tests of goodwill required by the standards, which did not result in any impairment adjustment during the periods presented other then the impairment in the following paragraph. The adjustment presented in paragraph (o) below reverses the effects of the amortization of goodwill recorded under Chilean GAAP. During the year 2006, as explained in Note 13 Footnote 1, the Company recorded an impairment loss related to the goodwill of its subsidiary Tecnonautica S.A. Under US GAAP, due to the higher unamortized book value, the Company recorded a higher charge to income, which is also reflected in the adjustment presented in paragraph (o) below.


h)	*Minimum dividend*

As required by Law No. 18.046, the Company must distribute a minimum cash dividend equivalent to 30% of net income. Considering the cash situation, levels of projected investment and the solid financial indicators for 2005 and following years, on April 14, 2005, the Ordinary Shareholders’ Meeting modified the dividend distribution policy reported at the Ordinary Shareholders’ Meeting of April 2004, and agreed to distribute 100% of net income under Chilean GAAP generated during the respective year. Since the payment of these dividends is a legal requirement in Chile, an accrual for US GAAP purposes should be made to recognize the corresponding decrease in shareholders’ equity at each balance sheet date. Under Chilean GAAP, the Company records these dividends when they have received the approval of the shareholders during a shareholders’ meeting usually held in April of the following year. The effects as of December 31, 2006 and 2007 on consolidated shareholders’ equity are shown in the reconciliation in paragraph (o) below.


i)	*Revenue Arrangements with Multiple Deliverables*

Under Chilean GAAP, revenue is generally recognized as services are performed or products are delivered based on the specified contractual price. Under US GAAP, the Company adopted EITF 00-21 “Revenue Arrangements with Multiple Deliverables” on January 1, 2004. Certain of the contracts of the Company contain “multiple elements” as

D-5

defined in the literature. These contracts primarily comprise those of the subsidiary Telefónica Empresas S.A., which is in the business of providing voice and internet data service to corporate customers. Contracts in this business may include equipment sales, equipment rentals, set-up/installation fees, and/or service and maintenance fees. As there is objective and reliable evidence of fair value of all delivered and undelivered items in an arrangement, the total consideration is allocated to the separate units of accounting based on their relative fair values (“relative fair value method”), which approximate the contractually stated prices. The services specified in the arrangement are performed continuously over the term of the contract (and any subsequent renewals). The Company therefore defers and recognizes the set-up fees over the life of the estimated customer relationship in accordance with US GAAP.

Starting in 2005, the Company’s accounting under Chilean GAAP for revenue arrangements with multiple deliverable complies with the provisions of EITF 00-21. The previous periods’ adjustments to income are included in paragraph (o) below.


j)	*Cost adjustment for certain property, plant and equipment*

The Company, as part of its real estate construction-in-progress projects, enters into subcontracting agreements. As part of those agreements, certain cost adjustments may be charged back to the subcontractor. Under Chilean GAAP, back charges are recognized in non-operating income in the period they are collected. Under US GAAP, back charges to subcontractors are included in the determination of acquisition costs and should be applied to reduce contract costs to the extent collectible.

The effect of the adjustment arising from accounting under US GAAP for back charges and the reduction in depreciation related to the reduction of the fixed asset bases is presented in paragraph (o) below.


k)	*Connection Fees and Installation Cost:*

Under Chilean GAAP, until December 31, 2006 connection fees are recognized as revenues with its origination, and installation costs for fixed line services are capitalized in fixed assets. Starting 2007, connection fees are deferred over the average estimated customer relationship of 33 months.

Under US GAAP, until December 31, 2005, connection fees were recognized with its origination equal to the treatment under Chilean GAAP, and installation costs were expensed as incurred. Starting in 2006, these connection fees are deferred and taken to the income statement during the average estimated customer relationship period of 33 to 48 months, whereas installation costs are capitalized in fixed assets equal to Chilean GAAP.

As of December 31, 2005, the cumulative effect of the non-deferral of connection fees and installation costs was deemed immaterial, and no change was made to the Company’s prior period presentation. In accordance with Staff Accounting Bulletin 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, the cumulative effect was corrected in 2006.

As a consequence, the reconciliation included in paragraph (o) below includes as of December 31, 2005, the reversal of the capitalization of installation costs and their associated depreciation, and as of December 31, 2006 and 2007, the deferral of connection fees received until December 31, 2006. For connection fees and installation cost incurred in 2007, there is no difference in the treatment under Chilean GAAP and US GAAP.


l)	*Write-off of deferred financing costs*

The Company redeemed a UF 3,992,424 series K bond on February 15, 2005. For Chilean GAAP purposes, the majority of the associated deferred financing costs and discount were written off during the year ended December 31, 2004 in the amount of ThCh$3,676,859. The amount written off was calculated assuming a remaining amortization period ending on the redemption date of February 15, 2005. This write off of the deferred financing costs and discount during 2004 is not permitted under US GAAP, as the related debt issuance costs and discount must be charged to expense in the period in which the early extinguishment takes place under Accounting Principles Board Opinion No. 26 “Early Extinguishment of Debt”. Accordingly, this generated a difference of ThCh$3,676,859 in net income and shareholders’ equity between Chilean GAAP and US GAAP, as shown in the reconciliations in paragraph (o) below.

D-6


m)	*Restructuring costs*

Compañía de Telecomunicaciones de Chile S.A. made an offer to some employees to voluntarily terminate their working contracts with the Company. Related to this planned reduction of personnel, the Company made a provision of ThCh$2,223,814 as of December 31, 2005.

Under US GAAP, in accordance with SFAS 88, the recognition of a liability and a loss requires the acceptance of the offer by employees for a reliable estimation of the obligation. There was no acceptance of the offer by employees prior to January 1, 2006, therefore no provision was recognized.


n)	*Amortization of Bond Discount*

Under Chilean GAAP, the Company is deferring and amortizing the difference between par and placement value of bonds on a straight-line basis over the respective term of the instrument. According to US GAAP, the Company should apply the effective interest rate method to determine the amortization of the bond discount. The impact of not applying the effective interest rate method was deemed not significant, thus the Company did not record an adjustment related to this concept.


o)	*Effects of conforming to US GAAP*

The adjustments to reported net income required to conform to accounting principles generally accepted in the United States are as follows:


	For the Years Ending December 31.
										2007
	2005			2006			2007			ThUS$
	ThCh$			ThCh$			ThCh$			(Note 2)

Net income in accordance with Chilean GAAP		27,614,871			25,081,171			10,856,131			21,848
Technical revaluation of property plant and equipment(a)		(51,560	)		118,545			(184,284	)		(371	)
Deferred income taxes(c)
Complementary accounts		14,923,938			14,837,908			14,134,785			28,447
Deferred tax effects of US GAAP adjustments		(1,283,159	)		(630,277	)		(1,931,140	)		(3,886	)
Capitalization of finance costs(d)
Capitalization of interest		3,659,881			3,901,805			9,372,172			18,862
Capitalization of foreign currency exchange differences		433,830			433,830			433,830			873
Staff severance indemnities(e)
Prior service cost		(836,336	)		(426,381	)		(311,058	)		(626	)
Staff severance indemnities		1,786,071			4,419,937			1,442,586			2,903
Derivatives(f)
Financial derivatives		3,719,674			(4,021,233	)		(444,604	)		(895	)
Embedded derivatives		(9,279	)		—			—			—
Goodwill(g)		1,736,460			709,643			1,569,490			3,158
Revenue arrangements with multiple deliverables(i)		223,684			366,671			—			—
Cost adjustment for certain property, plant and equipment(j)
Elimination of back charges		(34,973	)		(135,178	)		(184,344	)		(371	)
Depreciation of fixed assets		86,240			91,838			99,880			201
Installation cost(k)		(474,150	)		1,181,488			1,135,471			2,285
Write-off of deferred financing costs(l)		(3,676,859	)		—			—			—
Restructuring costs(m)		2,223,814			(2,223,814	)		—			—
Net income in accordance with US GAAP		50,042,147			43,705,953			35,988,915			72,428

D-7


	For the Years Ending December 31.
										2007
	2005			2006			2007			ThUS$
	ThCh$			ThCh$			ThCh$			(Note 2)

Other comprehensive income net of tax:
Investments in debt and equity securities(b)		(774,114	)		10,316			(12,806	)		(26	)
Prior service cost(e)					(258,179	)		258,179			520
Cumulative translation adjustment on foreign investment		(514,321	)		(569,380	)		(762,270	)		(1,534	)
Comprehensive income in accordance with US GAAP		48,753,712			42,888,710			35,472,018			71,388

The adjustments required to conform shareholders’ equity amounts to US GAAP are as follows:


	As of December 31,
							2007
	2006			2007			ThUS$
	ThCh$			ThCh$			(Note 2)

Shareholders’ equity in accordance with Chilean GAAP		967,417,180			906,533,598			1,824,414
Technical revaluation of property plant and equipment(a)
Positive adjustment to Fixed Assets		(17,909,068	)		(17,661,302	)		(35,543	)
Accumulated Depreciation		17,762,213			17,608,867			35,438
Negative adjustment to Fixed Assets		10,711,196			10,508,665			21,149
Accumulated Depreciation		(6,788,264	)		(6,864,437	)		(13,815	)
Investment in debt and equity securities(b)		15,823			394			1
Deferred income taxes(c)
Complementary accounts		(109,810,763	)		(95,675,978	)		(192,549	)
Deferred tax effects of US GAAP adjustments		(893,159	)		(2,874,557	)		(5,785	)
Capitalization of finance costs(d)
Capitalization of interest
Gross effect on Fixed Assets		20,973,313			28,343,830			57,041
Accumulated Depreciation		(4,871,989	)		(2,870,334	)		(5,776	)
Capitalization of foreign currency exchange differences
Gross effect on Fixed Assets		(6,033,809	)		(6,033,809	)		(12,143	)
Accumulated Depreciation		3,014,200			3,448,030			6,940
Staff severance indemnities(e)
Staff severance indemnities under US GAAP		(8,998,178	)		(7,555,592	)		(15,206	)
Derivatives(f)
Financial derivatives		—			(444,604	)		(895	)
Goodwill(g)		7,798,310			9,367,800			18,853
Minimum dividend(h)		(13,773,318	)		(5,113,188	)		(10,290	)
Cost adjustment for certain property. plant and equipment(j)
Gross effect on Fixed Assets		(999,068	)		(1,183,538	)		(2,382	)
Accumulated Depreciation		179,565			279,571			562
Connection Fees and Installation cost(k)
Connection Fees		(1,802,068	)		(666,597	)		(1,341	)
Shareholders’ equity in accordance with US GAAP		855,992,116			829,146,819			1,668,673

D-8

The following summarizes the changes in shareholders’ equity under US GAAP during the years ended December 31, 2006 and 2007:


	As of December 31,
							2007
	2006			2007			ThUS$
	ThCh$			ThCh$			(Note 2)

Balance as of January 1		882,845,354			855,992,116			1,722,699
Minimum dividend(h)		(13,773,318	)		(5,113,188	)		(10,290	)
Capital decrease		(43,175,352	)		(48,815,012	)		(98,241	)
Other reserves decrease		(724,149	)		724,149			1,458
Dividend declared and paid		(11,307,854	)		(5,742,943	)		(11,558	)
Price-level restatement		(761,275	)		(3,370,321	)		(6,783	)
Other comprehensive income, net of tax:
Cumulative translation adjustment		(569,380	)		(762,270	)		(1,534	)
Unrealized gain on marketable securities, net of taxes(b)		10,316			(12,806	)		(26	)
Prior Service Cost(e)		(258,179	)		258,179			520
Net income in accordance with US GAAP for the year		43,705,953			35,988,915			72,428
Balance at December 31		855,992,116			829,146,819			1,668,673


p)	*Comprehensive Income*

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income” the Company reports a measure of all changes in shareholder’s equity that result from transactions and other economic events of the period other than transactions with owners (“comprehensive income”). Comprehensive income is the total of net income (loss) and other non-owner equity transactions that result in changes in net equity. The components of other comprehensive income are reported net of the related tax effects.

The following represents accumulated other comprehensive income balances as of December 31, 2005, 2006 and 2007 (in thousands of constant Chilean pesos as of December 31, 2007):


	2005
	Effect of US GAAP
	Chilean			Unrealized
	GAAP			(losses)						Accumulated
	Cumulative			on			Deferred			Other
	Translation			Marketable			Income			Comprehensive
	Adjustment			Securities			Tax			Income (loss)

Beginning balance		(1,406,008	)		936,062			(159,130	)		(629,076	)
Credit (charge) for the year		(514,322	)		(932,667	)		158,553			(1,288,436	)
Ending balance		(1,920,330	)		3,395			(577	)		(1,917,512	)


	2006
	Effect of US GAAP
	Chilean			Unrealized
	GAAP			(losses)								Accumulated
	Cumulative			on		Prior			Deferred			Other
	Translation			Marketable		Service			Income			Comprehensive
	Adjustment			Securities		Cost			Tax			Income (loss)

Beginning balance		(1,920,330	)		3,395		—			(577	)		(1,917,512	)
Credit (charge) for the year		(578,070	)		12,428		(311,058	)		50,767			(825,933	)
Ending balance		(2,498,400	)		15,823		(311,058	)		50,190			(2,743,445	)

D-9

Copies of the Form of Acceptance and the ADS Letter of Transmittal, properly completed and duly signed with original signatures will be accepted. Completed Forms of Acceptance, accompanied by título(s), a duly signed traspaso indicating the number of Shares, but with the date left in blank and a power of attorney to complete the traspaso and all other documents of title and transfer, should be delivered to the Share Depositary at the addresses set forth below. The ADS Letter of Transmittal, ADRs for the ADSs and any other required documents should be sent by each holder of the ADSs or his or her broker, dealer, commercial bank, trust company or other nominee to the U.S. Depositary at the addresses set forth below.

The Depositary for the ADSs in the U.S. Offer is:

Citibank, N.A.


By Mail:		By Hand/Overnight Courier:
Citibank, N.A.		Citibank, N.A.
Corporate Actions		Corporate Actions
P.O. Box 43035		250 Royall Street
Providence, RI 02940-3035		Canton, MA 02021

The Depositary for the Shares in the U.S. Offer is:

Santander S.A. Corredores de Bolsa


By Mail:		By Hand/Overnight Courier:
Santander S.A. Corredores de Bolsa		Santander S.A. Corredores de Bolsa
c/o Citibank, N.A.		c/o Citibank, N.A.
Corporate Actions		Corporate Actions
P.O. Box 43035		250 Royall Street
Providence, RI 02940-3035		Canton, MA 02021

Questions and requests for assistance may be directed to the Information Agent at the address and telephone numbers set forth below. Additional copies of this Offer to Purchase, the related Form of Acceptance, ADS Letter of Transmittal, ADS Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent. A holder of Shares and/or ADSs may also contact a broker, dealer, commercial bank or trust company or other nominee for assistance concerning the U.S. Offer. Copies of the recommendation of the Company on Schedule 14D-9 will be sent to the SVS, the Chilean Exchanges, the Company and the manager of the Chilean Offer when it becomes available.

The Information Agent for the U.S. Offer is:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Bankers and Brokers Call: (212) 269-5550

All Others Call Toll Free: (800) 859-8511


SUMMARY TERM SHEET			1
INTRODUCTION			7
RELIEF GRANTED BY THE COMMISSION			9
SPECIAL FACTORS			9
Background of the Offers			9
Fairness of the Offers			12
Purpose and Structure of the Offers; Reasons of the Telefónica Group for the Offers			15
Certain Shares and ADSs Held by Affiliates of the Company			15
Plans for the Company After the Offers			15
Certain Effects of the Offers			16
Appraisal Rights			18
Interests of Certain Persons in the Offers			19
Transactions and Arrangements Concerning the Shares and ADSs			19
Related Party Transactions			20
Risks of Tendering Shares in the Chilean Offer Instead of the U.S. Offer			25
THE U.S. OFFER			26
1. Terms of the U.S. Offer			26
2. Acceptance for Payment			26
3. Procedure for Accepting the U.S. Offer — Holders of Shares			27
4. Procedures for Accepting the U.S. Offer — Holders of ADSs			31
5. Withdrawal Rights			34
6. Certain Tax Considerations			34
7. Price Range of Shares and ADSs; Dividends			36
8. Certain Information Concerning the Company			38
9. Certain Information Concerning the Telefónica Group			41
10. Source and Amount of Funds			42
11. Effect of the Offers on the Market for the Shares and ADSs; Exchange Act Registration			42
12. Certain Conditions of the U.S. Offer			43
13. Certain Legal Matters; Regulatory Approvals			43
14. Fees and Expenses			44
15. Forward-Looking Statements			45
16. Miscellaneous			46


Schedule I		Information Concerning the Board Members, Directors and Executive Officers of Telefónica, S.A. and Purchaser
Annex A		Description of Appraisal Rights under the Chilean Corporations Law
Annex B		Description of the Mandatory Tender Offer Requirement Under the Chilean Corporations Law
Annex C		English Translation of the Procedure for Tendering Shares pursuant to the Chilean Offer
Annex D		Section I of Note 37 to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007