TELEFONOS DE MEXICO, S.A.B. DE C.V. - SECOND QUARTER 2010 - HIGHLIGHTS. JULY 20, 2010.

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of July 2010

Commission File Number: 333-13580

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

(Exact Name of the Registrant as Specified in the Charter)

Telephones of Mexico

(Translation of Registrant's Name into English)

Parque Vía 190

Colonia Cuauhtémoc

México City 06599, México, D.F.

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F....Ö .....Form 40-F.........

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ..... No...Ö ..

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

Highlights

2nd quarter 2010.

·         TELMEX remains committed to offering our customers products and services with the highest quality standards and maintaining Infinitum as the best product in the market. Because of this firm commitment, we will continue to carry out investments that allow us to keep up our state-of-the-art technology and world-class network. Therefore, we have 6.954 million broadband Infinitum customers attracted by the quality, continuity, speed and price of our services, with growth of 17.9% in the last twelve months.

·         The OECD’s most recent publication shows that during the last 10 years Mexico achieved the highest growth rate in the number of total accesses of telecommunications services, including fixed, mobile and broadband services. Mexico’s growth rate of 22% was double the 11% average of OECD member countries (Communications Outlook 2009).

·         At June 30, we had 15.7 million lines in service, 1.7 million fewer than June 2009. TELMEX’s share of fixed lines has continued to decrease to 79.5% of fixed lines in Mexico, below the average of 85.6% for 35 of the most representative countries worldwide (Bank of America/ Merrill Lynch Global Wireline Matrix 2010). TELMEX has 14.9% of the market with cellular telephony services included.

·         2010- The Year of  Technological Innovation: we continue promoting education and the digital culture in Mexico by actively contributing to the development of the country in the knowledge era and to the use of Information Technologies, with the following updates:  

–         Information Technologies: The Instituto Tecnológico de TELMEX en Tecnologías de la Información (Inttelmex IT) began operations. To date it has trained, at no cost, more than 450 IT professionals to innovate and produce solutions that support the competitiveness of companies and domestic institutions.

–         Education and Digital Culture: To date, we have implemented 2,650 Bibliotecas and Aulas Digitales TELMEX (TELMEX Digital Libraries and Computer Class Rooms) nationwide.

–         Connectivity in the Country: At the end of June, TELMEX provided more than 2,250 WiFi Móvil en Infinitum sites, in the major airports, shopping malls, public parks and educational facilities nationwide, such as the Universidad Nacional Autónoma de México (UNAM, Mexico’s national university). It is important to highlight that that the Secretaría de Comunicaciones y Transportes (SCT) decided over a year ago to operate connectivity for education and health institutions in rural communities, canceling the services that operators previously offered.

·         In the second quarter of 2010, total revenues were 28.4 billion pesos, a decrease of 4.6% compared with the same quarter of 2009, mainly due to the continuous price reduction of the prices of our services and to the unexplainable delay of technological convergence in spite of the fact that nearly four years ago TELMEX signed the “Acuerdo de Convergencia (Convergence Agreement),” with the SCT. This is why there is a lack of competition of integrated services. This is why there is a lack of competition of integrated services. Moreover, the “Comisión Federal de Competencia” (Federal Competition Commission) has made declarations and fined other operators for absolute monopolistic practices. Among these operators are some that have been offering telecommunications services for more than 10 years. The effect of the convergence situation restricts consumer access to more and better telecommunications services with lower prices and to the benefits of the information and knowledge society.

·         In the quarter, EBITDA (1) totaled 11.3 billion pesos, producing a margin of 39.6%. Operating income totaled 6.9 billion pesos, with a margin of 24.1%.

·         Net income in the second quarter totaled 3.6 billion pesos. In the quarter, earnings per share were 20 Mexican cents, 37.5% lower than the same period of last year, and earnings per ADR (2) were 31 US cents, a decrease of 34% compared with the second quarter of 2009.

·         At June 30, 2010, total debt was the equivalent of 6.696 billion dollars. Total net debt (3) was equivalent to 5.830 billion dollars, 716 million dollars less than June 30, 2009. 

·         Capital expenditures (Capex) were the equivalent of 168 million dollars in the second quarter. Of this investment, 70.4% was used for growth and infrastructure projects in the data business.  For the six months, capex totaled 327 million dollars.

 

(1) EBITDA: defined as operating income plus depreciation and amortization. Go to www.telmex.com in the Investor Relations section where you will find the conciliation of EBITDA to operating income.

(2) One ADR represents 20 shares.

(3) Net debt is defined as total debt less cash and cash equivalents and marketable securities.

 

Operating Results

Lines and local traffic

At June 30, we had 15.7 million lines in service, 1.7 million fewer than June 2009. TELMEX’s share of fixed lines has continued to decrease, to 79.5% of fixed lines in Mexico, below the average of 85.6% for 35 of the most representative countries worldwide (Bank of America/ Merrill Lynch Global Wireline Matrix 2010). TELMEX has 14.9% of the market with cellular telephony services included.

 

During the second quarter, local calls decreased 7.3% compared with the same period of 2009, totaling 4.871 billion local calls. The decline reflected the lower number of billed lines, the increase in cellular telephony services and competition from other operators.

Long distance

In the second quarter, domestic long distance (DLD) traffic decreased 6.9% compared with the second quarter of 2009, totaling 4.708 billion minutes, due to the decrease in termination traffic with cellular telephony operators and other long distance operators.

In the quarter, outgoing international long distance (ILD) traffic decreased 1.6% compared with the second quarter of 2009, totaling 339 million minutes. The decline reflected a decrease in traffic from mobile operators. Incoming international long distance traffic increased 30.9% compared with the second quarter of 2009, totaling 1.808 billion minutes. The incoming-outgoing ratio was 5.3 times.

Interconnection

In the second quarter, interconnection traffic totaled 11.040 billion minutes, 1.4% higher than the same quarter of 2009, due to the combined effect of the 3.4% increase in interconnection traffic with local and long distance operators and the 0.7% decrease in traffic related to calling party pays services.

Internet access

TELMEX remains committed to offering our customers products and services with the highest quality standards and maintaining Infinitum as the best product in the market. Because of this firm commitment, we will continue to carry out investments that allow us to keep up our state-of-the-art technology and world-class network. Therefore, we have 6.954 million broadband Infinitum customers attracted by the quality, continuity, speed and price of our services, with growth of 17.9% in the last twelve months.



During the second quarter, broadband Infinitum (ADSL) had a gain of 183,000 services.  This growth has been supported by the sales of more than 2.6 million computers since 1999 and by the promotion of our telecommunications service packages, which offer discounts of up to 44%, broadband Internet access and several voice services.



Financial Results

The following financial information for 2010 and 2009 is presented in nominal pesos, according to Mexican Financial Reporting Standards.

Revenues: In the second quarter, revenues totaled 28.4 billion pesos, a decrease of 4.6% compared with the same period of the previous year. Revenues related to data services increased 12.2%, and local, long distance and interconnection revenues decreased 10.0%, 13.9% and 9.9%, respectively.

Costs and expenses: In the second quarter of 2010, total costs and expenses were 21.574 billion pesos, 1.3% higher than the same period of the previous year, mainly due to higher costs of equipment and services for customer sales and lower interconnection costs resulting from the decrease of 8.3% in the amount paid to cellular telephony operators for calling party pays services, as well as to initiatives to optimize resource use.  

EBITDA (1) and operating income: EBITDA (1) totaled 11.274 billion pesos in the second quarter of 2010, a decrease of 13.4% compared with the same period of the prior year. The EBITDA margin was 39.6%. Operating income totaled 6.862 billion pesos in the second quarter and the operating margin was 24.1%.

Financing cost: In the second quarter of the year, financing cost produced a charge of 1.252 billion pesos. This was a result of: i) a net interest charge of 1.342 billion pesos, 24.5% higher than the April-June period of 2009 which includes the recognition of the market value of interest rate swaps and in part offset by debt reduction, and ii) a net exchange gain of 90.0 million pesos due to 3.791 billion dollars in dollar-peso hedges in effect at the end of June 2010, offset by the second-quarter exchange rate depreciation of 0.1927 pesos per dollar.

Net income: In the second quarter, net income was 3.573 billion pesos, 39.7% lower than the same period of the previous year. Earnings per share were 20 Mexican cents, 37.5% lower than the second quarter of 2009, and earnings per ADR (2) were 31 US cents, a decrease of 34.0% compared with the same period of the previous year.

Investments and other uses of cash: In the second quarter, capital expenditures (Capex) were the equivalent of 168 million dollars, of which 70.4% was used for growth and infrastructure projects in the data business. For the six months, investments totaled 327 million dollars.

Debt: Total debt at June 30, 2010, was the equivalent of 6.696 billion dollars, of which 95.5% is long-term, 44.7% has fixed rates considering interest rate swaps, and 61.1% is in foreign currency, equivalent to 4.094 billion dollars. To minimize risks from variations in the exchange rate, at June 30, 2010, we had dollar-peso hedges for 3.791 billion dollars.

Total net debt (3) decreased during the last 12 months the equivalent of 716 million dollars, bringing the total to 5.830 billion dollars.



Relevant Figures

 

 

 

 

 

 

 

 

 

 

( In millions of Mexican pesos,  unless otherwise indicated)

 

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

2Q2010

 

2Q2009

 Inc.

 

6 months 10

6 months 09

Inc.

Revenues

P.

28,436

P.

29,792

(4.6)

P.

57,003

P.

59,810

(4.7)

EBITDA (1)

 

11,274

 

13,019

(13.4)

 

23,360

 

27,112

(13.8)

EBITDA margin (%)

 

39.6

 

43.7

(4.1)

 

41.0

 

45.3

(4.3)

Operating income

 

6,862

 

8,493

(19.2)

 

14,569

 

18,110

(19.6)

Operating margin (%)

 

24.1

 

28.5

(4.4)

 

25.6

 

30.3

(4.7)

Net income attributable to controlling interest

3,573

 

5,924

(39.7)

 

8,234

 

10,683

(22.9)

Earnings per share (pesos)

 

0.20

 

0.32

(37.5)

 

0.45

 

0.58

(22.4)

Earnings per  ADR (dollars) (2)

 

0.31

 

0.47

(34.0)

 

0.71

 

0.83

(14.5)

Weighted average of outstanding shares (millions)

18,191

 

18,483

(1.6)

 

18,191

 

18,483

(1.6)

Equivalent ADRs (millions) (2)

 

910

 

924

(1.6)

 

910

 

924

(1.6)

(1)  EBITDA: defined as operating income plus depreciation and amortization. Go to www.telmex.com in the Investor Relations section where you will find the conciliation of EBITDA to operating income.

(2)  One ADR represents 20 shares.

(3) Net debt is defined as total debt less cash and cash equivalents.



Income Statements

 

 

 

 

 

 

 

 

 

 

[ In millions of  Mexican pesos ]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

2Q2010

 

2Q2009

 Inc.

 

6 months 10

6 months 09

 Inc.

Revenues

 

 

 

 

 

 

 

 

 

 

  Local

P.

10,290

P.

11,432

(10.0)

P.

20,752

P.

22,978

(9.7)

  Domestic long distance

 

3,099

 

3,560

(12.9)

 

6,203

 

7,276

(14.7)

  International long distance

 

1,394

 

1,661

(16.1)

 

2,833

 

3,670

(22.8)

  Interconnection

 

3,815

 

4,233

(9.9)

 

7,569

 

8,398

(9.9)

  Data

 

8,267

 

7,367

12.2

 

16,286

 

14,473

12.5

  Other

 

1,571

 

1,539

2.1

 

3,360

 

3,015

11.4

Total

 

28,436

 

29,792

(4.6)

 

57,003

 

59,810

(4.7)

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

  Cost of sales and services

 

8,785

 

8,540

2.9

 

17,406

 

16,532

5.3

  Commercial, administrative and general

5,706

 

5,242

8.9

 

10,957

 

10,190

7.5

  Interconnection

 

2,671

 

2,991

(10.7)

 

5,280

 

5,976

(11.6)

  Depreciation and amortization

 

4,412

 

4,526

(2.5)

 

8,791

 

9,002

(2.3)

Total

 

21,574

 

21,299

1.3

 

42,434

 

41,700

1.8

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

6,862

 

8,493

(19.2)

 

14,569

 

18,110

(19.6)

Other expenses, net

 

324

 

608

(46.7)

 

171

 

858

(80.1)

Financing cost

 

 

 

 

 

 

 

 

 

 

  Interest, net

 

1,342

 

1,078

24.5

 

2,796

 

2,903

(3.7)

  Exchange gain, net

 

(90)

 

(1,667)

(94.6)

 

(386)

 

(1,099)

(64.9)

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,252

 

(589)

NA

 

2,410

 

1,804

33.6

 

 

 

 

 

 

 

 

 

 

 

Equity interest in net income of affiliates

55

 

81

(32.1)

 

75

 

80

(6.3)

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

5,341

 

8,555

(37.6)

 

12,063

 

15,528

(22.3)

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

1,766

 

2,631

(32.9)

 

3,827

 

4,844

(21.0)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

3,575

 

5,924

(39.7)

 

8,236

 

10,684

(22.9)

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest

 

(2)

 

0

NA

 

(2)

 

(1)

100.0

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to controlling interest

P.

3,573

P.

5,924

(39.7)

P.

8,234

P.

10,683

(22.9)

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

P.

11,274

P.

13,019

(13.4)

P.

23,360

P.

27,112

(13.8)

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin (%)

 

39.6

 

43.7

(4.1)

 

41.0

 

45.3

(4.3)

Operating margin (%) 

 

24.1

 

28.5

(4.4)

 

25.6

 

30.3

(4.7)

 

 

 

 

 

 

 

 

 

 

 

Exchange rate at June 30, 2010: 12.6567 pesos per dollar.

NA not applicable.

 

Balance Sheets

 

 

 

 

[ In millions of  Mexican pesos ]

 

 

 

 

 

 

June 30,

 

June 30,

 

 

2010

 

2009

Assets

 

 

 

 

  Cash and cash equivalents

P.

10,958

P.

14,446

  Other current assets

 

38,953

 

41,318

  Plant, property and equipment, net

 

99,889

 

109,575

  Other assets

 

6,359

 

6,206

  Net projected asset

 

13,744

 

12,946

Total assets

P.

169,903

P.

184,491

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

  Current portion of long-term debt

P.

3,790

P.

37,588

  Other current liabilities

 

23,281

 

20,761

  Long-term debt

 

80,963

 

63,278

  Labor obligations

 

3,814

 

4,501

  Deferred taxes

 

14,543

 

15,550

  Deferred credits

 

528

 

379

Total liabilities

 

126,919

 

142,057

Stockholders' equity

 

 

 

 

  Controlling interest 

 

42,661

 

42,388

  Noncontrolling interest

 

323

 

46

Total stockholders’ equity

 

42,984

 

42,434

Total liabilities and stockholders’ equity

P.

169,903

P.

184,491

 

 

 

 

 

Exchange rate at June 30, 2010: 12.6567 pesos per dollar.



Operating Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Inc. vs.

 

 

 

2Q 2010

1Q 2010

4Q 2009

3Q 2009

2Q 2009

2Q 2009

 

 

 

 

 

 

 

 

 

Internet (thousands)

7,059

6,883

6,651

6,446

6,059

16.5

 

 

Prodigy (Dial-up)

105

112

127

143

159

(33.8)

 

 

Infinitum (ADSL)

6,954

6,771

6,524

6,303

5,900

17.9

 

 

 

 

 

 

 

 

 

Billed lines (thousand units)

15,744

15,811

15,882

17,346 *

17,415 *

(9.6)

 

 

 

 

 

 

 

 

 

Local traffic (million units)

 

 

 

 

 

 

 

 

Local calls

4,871

4,821

5,000

5,333

5,257

(7.3)

 

 

Interconnection minutes (A) (B)

11,040

10,596

10,678

11,137

10,882

1.4

 

 

 

 

 

 

 

 

 

Long distance traffic (million minutes)

 

 

 

 

 

 

 

 

Domestic long distance (A)

4,708

4,482

4,810

5,033

5,055

(6.9)

 

 

International long distance

 

 

 

 

 

 

 

 

(incoming and outgoing) (B)

2,147

2,206

2,067

1,891

1,726

24.4

 

 

 

 

 

 

 

 

 

(A) Includes domestic long distance calling party pays traffic.

(B) Includes international long distance calling party pays traffic.

(*) Includes lines with at least 2 months behind on bill payments which at the second quarter 2009 totaled 1.2 million lines .



Mexico Local and Long Distance Accounting Separation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on Condition 7-5 of the Amendments of the Concession Title of Teléfonos de México, the commitment to present the accounting separation of the local and long distance services is presented below for the second quarter of 2010 and 2009.

Mexico Local Service Business

 

 

 

 

 

 

 

 

 

 

Income Statements

 

 

 

 

 

 

 

 

 

 

[ In millions of  Mexican pesos ]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

2Q2010

 

2Q2009

 Inc.

 

6 months 10

6 months 09

 Inc.

Revenues

 

 

 

 

 

 

 

 

 

 

  Access, rent and measured service

P.

         10,220

P.

         11,333

     (9.8)

P.

            20,590

P.

            22,773

     (9.6)

  LADA interconnection

 

           1,191

 

           1,270

     (6.2)

 

              2,355

 

              2,621

   (10.1)

  Interconnection with operators

 

              398

 

              497

   (19.9)

 

                 789

 

                 937

   (15.8)

  Interconnection with cellular operators

           2,540

 

           2,834

   (10.4)

 

              5,001

 

              5,609

   (10.8)

  Other

 

           3,720

 

           3,697

       0.6

 

              7,749

 

              7,386

       4.9

Total

 

         18,069

 

         19,631

     (8.0)

 

            36,484

 

            39,326

     (7.2)

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

  Cost of sales and services

 

           6,068

 

           6,266

     (3.2)

 

            12,110

 

            12,098

       0.1

  Commercial, administrative and general

           4,422

 

           4,706

     (6.0)

 

              8,950

 

              9,246

     (3.2)

  Interconnection

 

           1,630

 

           1,871

   (12.9)

 

              3,233

 

              3,683

   (12.2)

  Depreciation and amortization

 

           2,369

 

           2,682

   (11.7)

 

              4,728

 

              5,353

   (11.7)

Total

 

         14,489

 

         15,525

     (6.7)

 

            29,021

 

            30,380

     (4.5)

 

 

 

 

 

 

 

 

 

 

 

Operating income

P.

           3,580

P.

           4,106

   (12.8)

P.

              7,463

P.

              8,946

   (16.6)

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

P.

           5,949

P.

           6,788

   (12.4)

P.

            12,191

P.

            14,299

   (14.7)

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin (%)

 

             32.9

 

             34.6

     (1.7)

 

                33.4

 

                36.4

     (3.0)

Operating margin (%)

 

             19.8

 

             20.9

     (1.1)

 

                20.5

 

                22.7

     (2.2)

 

 

 

 

 

 

 

 

 

 

 

Mexico Long Distance Service Business

 

 

 

 

 

 

 

 

Income Statements

 

 

 

 

 

 

 

 

 

 

[ In millions of  Mexican pesos ]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

%

 

 

2Q2010

 

2Q2009

 Inc.

 

6 months 10

6 months 09

 Inc.

Revenues

 

 

 

 

 

 

 

 

 

 

  Domestic long distance

P.

           3,694

P.

           4,095

     (9.8)

P.

              7,341

P.

              8,339

   (12.0)

  International long distance

 

           1,340

 

           1,587

   (15.6)

 

              2,784

 

              3,393

   (17.9)

Total

 

           5,034

 

           5,682

   (11.4)

 

            10,125

 

            11,732

   (13.7)

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

  Cost of sales and services

 

           1,084

 

           1,290

   (16.0)

 

              2,269

 

              2,741

   (17.2)

  Commercial, administrative and general

           1,259

 

           1,344

     (6.3)

 

              2,524

 

              2,691

     (6.2)

  Interconnection to the local network

           1,815

 

           1,831

     (0.9)

 

              3,605

 

              3,824

     (5.7)

  Depreciation and amortization

 

              429

 

              469

     (8.5)

 

                 859

 

                 990

   (13.2)

Total

 

           4,587

 

           4,934

     (7.0)

 

              9,257

 

            10,246

     (9.7)

 

 

 

 

 

 

 

 

 

 

 

Operating income

P

              447

P.

              748

   (40.2)

P.

                 868

P.

              1,486

   (41.6)

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

P.

              876

P.

           1,217

   (28.0)

P.

              1,727

P.

              2,476

   (30.3)

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin (%)

 

             17.4

 

             21.4

     (4.0)

 

                17.1

 

                21.1

     (4.0)

Operating margin (%)

 

               8.9

 

             13.2

     (4.3)

 

                  8.6

 

                12.7

     (4.1)



Statement of cash flows

 

 

[ In millions of  Mexican pesos )

 

 

 

 

Six months

 

 

ended

 

 

June 30, 2010

Operating activities

 

 

Income before income tax:

P.

12,063

   Depreciation and amortization

 

8,791

   Accrued interest expense 

 

3,016

   Other items not requiring the use of cash

 

2,966

Total

 

26,836

 

 

 

  Cash flows used in operating activities

 

(3,515)

Net cash flows provided by operating activities

 

23,321

 

 

 

Investing activities

 

 

   Acquisition of plant, property and equipment

 

(4,329)

   Other investments

 

(544)

Net cash flows used in investing activities

 

(4,873)

 

 

 

Cash surplus to be applied to financing activities

 

18,448

 

 

 

Financing activities

 

 

   New loans

 

1,500

   Repayment of loans

 

(17,838)

   Acquisition of own shares

 

(11)

   Dividends paid

 

(4,274)

   Interest paid

 

(2,016)

   Derivative financial instruments

 

769

Net cash flows used in financing activities

 

(21,870)

 

 

 

Net decrease in cash and cash equivalents

 

(3,422)

Cash and cash equivalents at begining of period

 

14,380

Cash and cash equivalents at end of period

P.

10,958







SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 20, 2010.

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

By: /s/__________________

Name: Adolfo Cerezo Pérez
Title: Chief Financial Officer

Ref: TELÉFONOS DE MÉXICO, S.A.B. DE C.V. - SECOND QUARTER 2010 – HIGHLIGHTS