TELEFONOS DE MEXICO, S.A.B. DE C.V. - FIRST QUARTER 2011, APRIL 28, 2011.

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 April 2011

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.... .....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... ..

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

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

STOCK EXCHANGE CODE: TELMEX QUARTER: 1 YEAR: 2011

I N D E X

FS-01 CONSOLIDATED STATEMENT OF FINANCIAL POSITION, AT MARCH 31, 201I, DECEMBER 31, 2010 & JANUARY 1, 2010

FS-02 CONSOLIDATED STATEMENT OF FINANCIAL POSITION - INFORMATIONAL DATA -

FS-03 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

FS-04 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) (NET OF TAX) - FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

FS-05 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – INFORMATIONAL DATA - FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

FS-06 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – INFORMATIONAL DATA (12 MONTHS) - FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

FS-07 CONSOLIDATED STATEMENT OF CASH FLOWS, TO MARCH 31, 2011 & 2010

FS-08 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ANNEX 1.- CHIEF EXECUTIVE OFFICER REPORT

ANNEX 2.- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ANNEX 3.- INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

ANNEX 4.- BREAKDOWN OF CREDITS

ANNEX 5.- MONETARY FOREIGN CURRENCY POSITION

ANNEX 6.- DEBT INSTRUMENTS

ANNEX 7.-DISTRIBUTION OF REVENUE BY PRODUCT

ANALYSIS OF PAID CAPITAL STOCK

DERIVATIVE FINANCIAL INSTRUMENTS

GENERAL INFORMATION

BOARD OF DIRECTORS

________________

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-01

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT MARCH 31, 201I, DECEMBER 31, 2010 & JANUARY 1, 2010

(Thousands of Mexican Pesos)

Final printing

---

ACCOUNT

SUBACCOUNT

ENDING CURRENT

PREVIOUS YEAR END

HOME PREVIOUS YEAR

Amount

Amount

Amount

1Q 2011

4Q 2010

4Q 2009

TOTAL ASSETS

 

150,846,954

156,273,094

176,803,426

CURRENT ASSETS

 

32,885,403

36,759,328

51,649,800

CASH AND CASH EQUIVALENTS

 

3,247,096

7,493,465

14,379,768

SHORT TERM INVESMENT

 

-

-

-

 

HELD-FOR-SALE INVESTMENTS

-

-

-

 

HELD-FOR-TRADING INVESTMENTS

-

-

-

 

HELD TO MATURITY INVESTMENTS

-

-

-

TRADE RECEIVABLES (NET)

 

16,412,776

15,368,111

15,612,825

 

TRADE RECEIVABLES

21,308,423

20,403,417

19,921,706

 

ALLOWANCE FOR DOUBTFUL ACCOUNTS

- 4,895,647

- 5,035,306

- 4,308,881

OTHER RECEIVABLES (NET)

 

4,005,866

2,280,422

4,812,731

 

OTHER RECEIVABLES

4,005,866

2,280,422

4,812,731

 

ALLOWANCE FOR DOUBTFUL ACCOUNTS

-

-

-

INVENTORIES

 

1,823,788

1,783,579

1,448,102

OTHER CURRENT ASSETS

 

7,395,877

9,833,751

15,396,374

 

PREPAYMENTS

3,597,866

3,137,852

3,307,937

 

DERIVATIVE FINANCIAL INSTRUMENTS

3,798,011

6,695,899

12,088,437

 

ASSETS AVAILABLE FOR SALE

-

-

-

 

DISCONTINUED OPERATIONS

-

-

-

 

RIGHTS AND LICENSES

-

-

-

 

OTHERS

-

-

-

TOTAL NON-CURRENT ASSETS

 

117,961,551

119,513,766

125,153,626

RECEIVABLES (NET)

 

-

-

-

INVESTMENTS

 

1,392,234

1,392,042

1,744,573

 

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

1,392,234

1,392,042

1,744,573

 

HELD-TO-MATURITY INVESTMENTS

-

-

-

 

HELD-FOR-SALE INVESTMENTS

-

-

-

 

OTHERS INVESTMENTS

-

-

-

PROPERTY, PLANT AND EQUIPMENT

 

96,906,983

99,421,332

106,047,642

 

LAND AND BUILDINGS

19,179,523

19,264,542

18,901,853

 

MACHINERY AND INDUSTRIAL EQUIPMENT

78,578,307

77,764,532

72,326,959

 

OTHER EQUIPMENT

19,943,810

19,019,758

14,409,756

 

ACCUMULATED DEPRECIATION

- 21,246,015

- 16,871,969

-

 

CONSTRUCTION IN PROGRESS

451,358

244,469

409,074

INVESTMENT PROPERTY

 

-

-

-

BIOLOGICAL ASSETS

 

-

-

-

INTANGIBLE ASSETS

 

1,219,746

1,252,677

738,548

 

GOODWILL

103,289

103,289

-

 

BRANDS

449,592

456,707

-

 

RIGHTS AND LICENSES

666,865

692,681

738,548

 

OTHERS INTANGIBLE ASSETS

-

-

-

DEFERRED TAX ASSETS

 

-

-

-

OTHERS NON-CURRENT ASSETS

 

18,442,588

17,447,715

16,622,863

 

DERIVATIVE FINANCIAL INSTRUMENTS

-

-

-

 

EMPLOYEE BENEFIT

17,396,635

16,290,368

15,214,802

 

DISCONTINUED OPERATIONS

-

-

-

 

DEFERRED CHARGES

1,045,953

1,157,347

1,408,061

 

OTHERS

-

-

-

TOTAL LIABILITIES

 

104,803,924

110,496,107

136,610,162

CURRENT LIABILITIES

 

32,833,873

32,673,661

37,326,097

BANK LOANS

 

1,217,141

1,272,982

7,363,129

STOCK MARKET LOANS

 

4,500,000

4,500,000

12,405,765

OTHER LIABILITIES WITH COST

 

5,983,900

6,178,550

-

TRADE PAYABLES

 

4,179,454

5,572,154

3,538,048

TAXES PAYABLE

 

2,161,230

2,443,268

2,211,626

 

INCOME TAX PAYABLE

-

219,060

-

 

OTHER TAXES PAYABLE

2,161,230

2,224,208

2,211,626

OTHERS CURRENT LIABILITIES

 

14,792,148

12,706,707

11,807,529

 

INTEREST PAYABLE

552,104

630,490

936,516

 

DERIVATIVE FINANCIAL INSTRUMENTS

1,197,552

1,547,054

848,824

 

ADVANCES AND DEPOSITS FROM CUSTOMERS

20,458

26,269

94,572

 

OTHER DEFERRED REVENUE

865,694

889,824

1,005,480

 

EMPLOYEE BENEFITS

7,594,066

5,454,440

5,319,547

 

PROVISIONS

-

-

-

 

DISCONTINUED OPERATIONS

-

-

-

 

OTHERS

4,562,274

4,158,630

3,602,590

TOTAL NON-CURRENT LIABILITIES

 

71,970,051

77,822,446

99,284,065

BANK LOANS

 

19,429,447

20,624,954

35,750,038

STOCK MARKET LOANS

 

37,056,443

41,944,459

47,355,416

OTHER LIABILITIES WITH COST

 

-

-

-

DEFERRED TAX LIABILITIES

 

14,881,854

14,641,160

15,720,811

OTHERS NON-CURRENT LIABILITIES

 

602,307

611,873

457,800

 

DERIVATIVE FINANCIAL INSTRUMENTS

-

-

-

 

ADVANCES AND DEPOSITS FROM CUSTOMERS

-

-

-

 

OTHER DEFERRED REVENUE

602,307

611,873

457,800

 

EMPLOYEE BENEFITS

-

-

-

 

PROVISIONS

-

-

-

 

DISCONTINUED OPERATIONS

-

-

-

 

OTHERS

-

-

-

TOTAL EQUITY

 

46,043,030

45,776,987

40,193,264

EQUITY ATTRIBUTABLE TO OWNERS OF PARENT

 

45,737,464

45,467,630

40,151,174

NON-CONTROLLING INTERESTS

 

305,566

309,357

42,090

CAPITAL STOCK

 

5,450,613

5,467,035

5,473,815

SHARES REPURCHASED

 

-

-

-

PREMIUM ON ISSUANCE OF SHARES

 

-

-

-

CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES

 

-

-

-

OTHER CAPITAL CONTRIBUTED

 

-

-

-

RETAINED EARNINGS (ACCUMULATED LOSSES)

 

40,540,298

39,887,713

33,944,158

 

LEGAL RESERVE

1,094,763

1,094,763

1,094,763

 

OTHER RESERVES

-

-

-

 

RETAINED EARNINGS

29,286,824

17,203,780

26,448,731

 

NET INCOME FOR THE YEAR

3,758,047

15,188,506

-

 

OTHERS

6,400,664

6,400,664

6,400,664

OTHER ITEMS OF INCOME (LOSS) ACCUMULATED COMPREHENSIVE

 

- 253,447

112,882

733,201

 

REVALUATION SURPLUS

-

-

-

 

ACTUARIAL EARNINGS (LOSS) FROM LABOR OBLIGATIONS

-

-

-

 

FOREING CURRENCY TRANSLATION

9,560

55,367

-

 

CHANGES IN THE VALUATION OF FINANCIAL ASSETS HELD-FOR-SALE

-

-

-

 

CHANGES IN THE VALUATION OF DERIVATIVE FINANCIAL INSTRUMENTS

- 263,007

57,515

733,201

 

CHANGES IN FAIR VALUE OF OTHER ASSETS

-

-

-

 

SHARE OF OTHER COMPREHENSIVE INCOME (LOSS) OF ASSOCIATES AND JOINT VENTURES

-

-

-

 

OTHER COMPREHENSIVE INCOME

-

-

-



---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-02

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

- INFORMATIONAL DATA -

(Thousands of Mexican Pesos)

Final printing

---

Informational data (not part of the Statement)

ENDING CURRENT

PREVIOUS YEAR END

HOME PREVIOUS YEAR

Amount

Amount

Amount

1Q 2011

4Q 2010

4Q 2009

SHORT-TERM FOREIGN CURRENCY LIABILITIES

9,199,283

10,124,601

18,294,695

LONG TERM FOREIGN CURRENCY LIABILITIES

30,585,890

36,669,413

52,705,454

CAPITAL STOCK (NOMINAL)

78,044

78,398

78,545

RESTATEMENT OF CAPITAL STOCK

5,372,569

5,388,637

5,395,270

PENSIONS AND SENIORITY PREMIUMS

-

-

-

NUMBER OF EXECUTIVES

82

83

84

NUMBER OF EMPLOYEES

9,248

9,260

9,269

NUMBER OF WORKERS

42,425

42,719

43,593

OUTSTANDING SHARES

18,076,000,000

18,158,000,000

18,191,892,260

REPURCHASED SHARES

82,000,000

33,892,260

-

RESTRICTED CASH

-

-

-

GUARANTEED DEBT OF ASSOCIATED COMPANIES

-

-

-


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-03

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

(Thousands of Mexican Pesos)

Final printing

---

ACCOUNT

SUBACCOUNT

CURRENT YEAR

PREVIOUS YEAR

1Q 2011

1Q 2010

ACCUMULATED

QUARTER

ACCUMULATED

QUARTER

REVENUE NET

 

27,546,700

27,546,700

28,566,655

28,566,655

 

SERVICES

25,878,002

25,878,002

26,777,949

26,777,949

 

SALE OF ASSETS

1,132,031

1,132,031

1,178,743

1,178,743

 

INTERESTS

-

-

-

-

 

ROYALTIES

-

-

-

-

 

DIVIDENDS

-

-

-

-

 

LEASES

-

-

-

-

 

OTHER

536,667

536,667

609,963

609,963

COST OF SALES

 

14,833,830

14,833,830

15,396,027

15,396,027

GENERAL EXPENSES

 

5,603,837

5,603,837

5,376,874

5,376,874

PROFIT (LOSS) BEFORE OTHER INCOME AND EXPENSES, NET

 

7,109,033

7,109,033

7,793,754

7,793,754

OTHER INCOME (EXPENSE), NET

 

- 450,274

- 450,274

- 131,541

- 131,541

OPERATING PROFIT (LOSS) (*)

 

6,658,759

6,658,759

7,662,213

7,662,213

FINANCE INCOME

 

1,578,857

1,578,857

2,727,372

2,727,372

 

INTEREST INCOME

127,191

127,191

111,293

111,293

 

GAIN ON FOREIGN EXCHANGE, NET

1,451,666

1,451,666

2,616,079

2,616,079

 

GAIN ON DERIVATIVES, NET

-

-

-

-

 

CHANGE IN FAIR VALUE OF FINANCIAL INSTRUMENTS

-

-

-

-

 

OTHER FINANCE INCOME

-

-

-

-

FINANCE COSTS

 

- 2,555,915

- 2,555,915

- 3,885,387

- 3,885,387

 

INTEREST EXPENSE

- 799,921

- 799,921

- 927,799

- 927,799

 

LOSS ON FOREIGN EXCHANGE, NET

-

-

-

-

 

LOSS ON DERIVATIVES, NET

- 1,417,161

- 1,417,161

- 2,957,588

- 2,957,588

 

REPAYMENT OF EXPENSES FOR ISSUE

-

-

-

-

 

CHANGE IN FAIR VALUE OF FINANCIAL INSTRUMENTS

-

-

-

-

 

OTHER FINANCE COSTS

- 338,833

- 338,833

-

-

FINANCE INCOME (COSTS) NET

 

- 977,058

- 977,058

- 1,158,015

- 1,158,015

SHARE OF PROFIT (LOSS) OF ASSOCIATES AND JOINT VENTURES

 

6,878

6,878

20,006

20,006

PROFIT (LOSS) BEFORE INCOME TAX

 

5,688,579

5,688,579

6,524,204

6,524,204

INCOME TAX EXPENSE

 

1,934,323

1,934,323

2,004,309

2,004,309

 

CURRENT TAX

1,568,914

1,568,914

2,481,717

2,481,717

 

DEFERRED TAX

365,409

365,409

- 477,408

- 477,408

PROFIT (LOSS) FROM CONTINUING OPERATIONS

 

3,754,256

3,754,256

4,519,895

4,519,895

DISCONTINUED OPERATIONS

 

-

-

-

-

PROFIT (LOSS), NET

 

3,754,256

3,754,256

4,519,895

4,519,895

PROFIT (LOSS), ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

 

- 3,791

- 3,791

- 224

- 224

PROFIT (LOSS), ATTRIBUTABLE TO OWNERS OF PARENT

 

3,758,047

3,758,047

4,520,119

4,520,119







BASIC EARNINGS (LOSS) PER SHARE

 

0.21

0.21

0.25

0.25

DILUTED EARNINGS (LOSS) PER SHARE

 

 

 

 

 


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-04

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

- OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) (NET OF TAX) –

FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

(Thousands of Mexican Pesos)

Final printing

---

ACCOUNT

CURRENT YEAR

PREVIOUS YEAR

1Q 2011

1Q 2010

ACCUMULATED

QUARTER

ACCUMULATED

QUARTER

PROFIT (LOSS), NET

3,754,256

3,754,256

4,519,895

4,519,895

REVALUATION SURPLUS

-

-

-

-

ACTUARIAL EARNINGS (LOSS) FROM LABOR OBLIGATIONS

-

-

-

-

FOREING CURRENCY TRANSLATION

- 45,807

- 45,807

52,557

52,557

CHANGES IN THE VALUATION OF FINANCIAL ASSETS HELD-FOR-SALE

-

-

-

-

CHANGES IN THE VALUATION OF DERIVATIVE FINANCIAL INSTRUMENTS

- 320,522

- 320,522

- 592,660

- 592,660

CHANGES IN FAIR VALUE OF OTHER ASSETS

-

-

-

-

SHARE OF OTHER COMPREHENSIVE INCOME (LOSS) OF ASSOCIATES AND JOINT VENTURES

-

-

-

-

OTHER COMPREHENSIVE INCOME

-

-

-

-

TOTAL OTHER COMPREHENSIVE ITEMS

- 366,329

- 366,329

- 540,103

- 540,103

TOTAL COMPREHENSIVE INCOME

3,387,927

3,387,927

3,979,792

3,979,792

COMPREHENSIVE INCOME, ATTRIBUTABLE TO OWNERS OF PARENT

3,391,718

3,391,718

3,980,016

3,980,016

COMPREHENSIVE INCOME, ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

- 3,791

- 3,791

- 224

- 224


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-05

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

- INFORMATIONAL DATA –

FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

(Thousands of Mexican Pesos)

Final printing

---

ACCOUNT

CURRENT YEAR

PREVIOUS YEAR

1Q 2011

1Q 2010

ACCUMULATED

QUARTER

ACCUMULATED

QUARTER

OPERATING DEPRECIATION AND AMORTIZATION

4,136,492

4,136,492

4,218,395

4,218,395

EMPLOYEES PROFIT SHARING EXPENSES

460,647

460,647

535,440

535,440

---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-06

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

- INFORMATIONAL DATA (12 MONTHS) -

FOR THREE MONTHS ENDED MARCH 31, 2011 & 2010

(Thousands of Mexican Pesos)

Final printing

---

Informative data (12 Months)

YEAR

CURRENT

PREVIOUS

1Q 2011

1Q 2010

REVENUE NET (**)

112,542,153

117,648,510

PROFIT (LOSS) FROM OPERATION (**)

27,055,523

30,942,203

PROFIT (LOSS), ATTRIBUTABLE TO OWNERS OF PARENT(**)

14,426,434

19,967,094

PROFIT (LOSS), NET (**)

14,410,160

19,966,544

OPERATING DEPRECIATION AND AMORTIZATION (**)

16,838,890

17,079,715


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-07

CONSOLIDATED STATEMENT OF CASH FLOWS

- TO MARCH 31, 2011 & 2010 -

(Thousands of Mexican Pesos)

Final printing

---

ACCOUNT

SUBACCOUNT

CURRENT YEAR

PREVIOUS YEAR

Amount

Amount

ACTIVITIES OF OPERATION

 

 

 

PROFIT (LOSS) BEFORE INCOME TAX

 

5,688,579

6,524,204

+(-) ITEMS NOT REQUIRING CASH

 

1,823,272

1,857,661

+ ESTIMATE FOR THE PERIOD

1,960

3,023

 

+ PROVISION FOR THE PERIOD

1,821,312

1,854,638

 

+(-) OTHER UNREALIZED ITEMS

-

-

+(-) ITEMS RELATED TO INVESTING ACTIVITIES

 

4,230,326

4,353,420

DEPRECIATION AND AMORTIZATION FOR THE PERIOD

4,237,204

4,373,426

 

(-)+ GAIN OR LOSS ON SALE OF PROPERTY, PLANT AND EQUIPMENT

-

-

 

+(-) LOSS (REVERSAL) IMPAIRMENT

-

-

 

(-)+ EQUITY IN RESULTS OF ASSOCIATES AND JOINT VENTURES

- 6,878

- 20,006

 

(-) DIVIDENDS RECEIVED

-

-

 

(-) INTEREST INCOME

-

-

 

(-) EXCHANGE FLUCTUATION

-

-

 

(-)+ OTHER INFLOWS (OUTFLOWS) OF CASH

-

-

+(-) ITEMS RELATED TO FINANCING ACTIVITIES

 

1,137,820

1,117,330

 

(+) ACCRUED INTEREST

799,921

927,799

 

(+) EXCHANGE FLUCTUATION

- 1,418,095

- 2,768,057

 

(+) DERIVATIVE TRANSACTIONS

1,417,161

2,957,588

 

(-)+ OTHER INFLOWS (OUTFLOWS) OF CASH

338,833

-

CASH FLOW BEFORE INCOME TAX

 

12,879,997

13,852,615

CASH FLOW FROM (USED IN) OPERATING ACTIVITIES

 

- 5,473,180

- 835,387

 

+(-) DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE

- 1,044,664

- 1,901,704

 

+(-) DECREASE (INCREASE) IN INVENTORIES

- 40,209

87,925

 

+(-) DECREASE (INCREASE) IN OTHER ACCOUNTS RECEIVABLE

- 957,222

- 583,616

 

+(-) INCREASE (DECREASE) IN TRADE ACCOUNTS PAYABLE

- 13,283

1,184,557

 

+(-) INCREASE (DECREASE) IN OTHER LIABILITIES

- 731,864

3,193,899

 

+(-) INCOME TAXES PAID OR RETURNED

- 2,685,938

- 2,816,448

NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES

 

7,406,817

13,017,228

INVESTMENT ACTIVITIES

 

 

 

NET CASH FLOW FROM INVESTING ACTIVITIES

 

- 3,157,908

- 2,677,042

 

(-) PERMANENT INVESTMENTS

-

-

 

+ DISPOSITION OF PERMANENT INVESTMENTS

-

-

 

(-) INVESTMENT IN PROPERTY, PLANT AND EQUIPMENT

- 3,156,823

- 2,675,168

 

+ SALE OF PROPERTY, PLANT AND EQUIPMENT

-

-

 

(-) TEMPORARY INVESTMENTS

-

-

 

+ DISPOSITION OF TEMPORARY INVESTMENTS

-

-

 

(-) INVESTMENT IN INTANGIBLE ASSETS

- 1,085

- 1,874

 

+ DISPOSITION OF INTANGIBLE ASSETS

-

-

 

(-) ACQUISITIONS OF JOINT VENTURES

-

-

 

+ DISPOSITIONS OF JOINT VENTURES

-

-

 

+ DIVIDEND RECEIVED

-

-

 

+ INTEREST RECEIVED

-

-

 

+(-) DECREASE (INCREASE) ADVANCES AND LOANS TO THIRD PARTS

-

-

 

+(-) OTHER ITEMS

-

-

FINANCING ACTIVITIES

 

 

 

NET CASH FLOW FROM FINANCING ACTIVITIES

 

- 8,495,278

- 18,252,447

 

+ BANK FINANCING

-

-

 

+ STOCK MARKET FINANCING

1,000,000

1,500,000

 

+ OTHER FINANCING

-

-

 

(-) BANK FINANCING AMORTIZATION

- 510,121

- 3,952,578

 

(-) STOCK MARKET FINANCING AMORTIZATION

- 5,403,641

- 13,794,140

 

(-) OTHER FINANCING AMORTIZATION

-

-

 

+(-) INCREASE (DECREASE) IN CAPITAL STOCK

-

-

 

(-) DIVIDENDS PAID

- 2,215,514

- 2,047,288

 

+ PREMIUM ON ISSUANCE OF SHARES

-

-

 

+ CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES

-

-

 

(-) INTEREST EXPENSE

- 850,371

- 1,194,550

 

(-) REPURCHASE OF SHARES

- 860,697

- 11,043

 

(-)+ OTHER INFLOWS (OUTFLOWS) OF CASH

345,066

1,247,152

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

- 4,246,369

- 7,912,261

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

-

-

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

7,493,465

14,379,768

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

3,247,096

6,467,507


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

FS-08

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Thousands of Mexican Pesos)

Final printing

---

CONCEPTS

CAPITAL STOCK

SHARES REPURCHASED

PREMIUM ON ISSUANCE OF SHARES

CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES

OTHER CAPITAL CONTRIBUTED

PROFITS OR LOSSES ACCUMULATED

OTHER ITEMS OF INCOME (LOSS) ACCUMULATED COMPREHENSIVE

EQUITY ATTRIBUTABLE TO OWNERS OF PARENT

NON-CONTROLLING INTERESTS

TOTAL EQUITY

RESERVES

RETAINED EARNINGS (ACCUMULATED LOSSES)

BALANCE AT JANUARY 1st, 2010

5,473,815

-

-

-

-

1,094,763

32,849,395

733,201

40,151,174

42,090

40,193,264

RETROSPECTIVE ADJUSTMENTS

-

-

-

-

-

-

-

-

-

-

-

APPLICATION OF COMPREHENSIVE INCOME (LOSS) TO RETAINED EARNINGS

-

-

-

-

-

-

-

-

-

-

-

CONSTITUTION OF RESERVES

-

-

-

-

-

-

-

-

-

-

-

DECREED DIVIDENDS

-

-

-

-

-

-

- 2,091,952

-

- 2,091,952

-

- 2,091,952

(DECREASE) INCREASE CAPITAL

-

-

-

-

-

-

-

-

-

-

-

REPURCHASE OF SHARES

- 197

-

-

-

-

-

- 10,846

-

- 11,043

-

- 11,043

(DECREASE) INCREASE IN PREMIUM ON ISSUE OF SHARES

-

-

-

-

-

-

-

-

-

-

-

(DECREASE) INCREASE NON-CONTROLLING INTERESTS

-

-

-

-

-

-

-

-

-

-

-

OTHER CHANGES

-

-

-

-

-

-

-

-

-

-

-

COMPREHENSIVE INCOME (1)

-

-

-

-

-

-

4,520,119

- 540,103

3,980,016

- 224

3,979,792

BALANCE AT MARCH 31th,2010

5,473,618

-

-

-

-

1,094,763

35,266,716

193,098

42,028,195

41,866

42,070,061

























BALANCE AT JANUARY 1st, 2011

5,467,035

-

-

-

-

1,094,763

38,792,950

112,882

45,467,630

309,357

45,776,987

RETROSPECTIVE ADJUSTMENTS

-

-

-

-

-

-

-

-

-

-

-

APPLICATION OF COMPREHENSIVE INCOME (LOSS) TO RETAINED EARNINGS

-

-

-

-

-

-

-

-

-

-

-

CONSTITUTION OF RESERVES

-

-

-

-

-

-

-

-

-

-

-

DECREED DIVIDENDS

-

-

-

-

-

-

- 2,261,188

-

- 2,261,188

-

- 2,261,188

(DECREASE) INCREASE CAPITAL

-

-

-

-

-

-

-

-

-

-

-

REPURCHASE OF SHARES

- 16,422

-

-

-

-

-

- 844,274

-

- 860,696

-

- 860,696

(DECREASE) INCREASE IN PREMIUM ON ISSUE OF SHARES

-

-

-

-

-

-

-

-

-

-

-

(DECREASE) INCREASE NON-CONTROLLING INTERESTS

-

-

-

-

-

-

-

-

-

-

-

OTHER CHANGES

-

-

-

-

-

-

-

-

-

-

-

COMPREHENSIVE INCOME (1)

-

-

-

-

-

-

3,758,047

- 366,329

3,391,718

- 3,791

3,387,927

BALANCE AT MARCH 31th,2011

5,450,613

-

-

-

-

1,094,763

39,445,535

- 253,447

45,737,464

305,566

46,043,030


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 1

CHIEF EXECUTIVE OFFICER REPORT

Final printing

---

Highlights

1 st Quarter 2011

 During the first quarter of 2011, revenues totalled 27.547 billion pesos, a decrease of 3.6% compared with the first quarter of 2010. On the other hand, net income was 3.758 billion pesos in the first quarter. Earnings per share were 0.21 pesos, 16% lower than the same period of the previous year.

 At March 31, 2011, we had 12.523 million lines, a decrease of 0.9% compared with the first quarter of 2010. Of these:

- 1.5 million lines are mainly in rural areas which will be served by Telmex Social.

- In the rest of the country, there are 727 thousand public telephony lines and 862 thousand prepaid lines, a decrease of 135 thousand and 1 million 1 1 3 thousand lines, in the last five years, respectively; therefore, an important decrease is expected in the future. It should be noted that due to the increase in cellular telephony penetration in the country, public telephony revenues have decreased more than 75.6% in the last five years.

- The total lines were 15.562 million lines, a decrease of 1.6% compared with the number of lines in the first quarter of 2010.

 At the Extraordinary Shareholders’ Meeting held on April 4, a corporate restructuring was approved in order to create the subsidiary Telmex Social. It will provide telecommunications and interconnection services primarily in rural areas. Given that these regions have a significant lack of economic and social development we intend for this restructuring to encourage greater access to telecommunications services, emphasize the importance of investing to expand and modernize these services, and drive the digital culture, which will improve the quality of life of citizens in these areas and incorporate these communities into the country's socio-economic development.

 Telmex Social will serve approximately 1.5 million lines, with a density of 14.8 inhabitants per line, located in 10 thousand 453 communities without the presence of competitors. The Local Service Areas of Telmex Social cover approximately 40% of the national territory with more than 22 million inhabitants.

 Our high speed Internet access service infinitum, thanks to our customers’ preference, at the end of March served 7.6 million broadband accesses, reinforcing that infinitum continues to be the best connection because of its quality, service, price and high speed.

 infinitum ’ s growth has been supported by the sale of more than 106,000 computers in the first quarter, an increase of 24.4% compared with the same period of 2010. Since 1999, we have sold more than 2.9 million computers, helping to increase PC penetration in Mexican homes.

 At TELMEX, we continue to act on our commitment to drive technological innovation, the digital culture and information and communications technologies by carrying out the investments required to maintain state-of-the-art technology with the most reliable, efficient and modern network in the country.

 During the first quarter of 2011, revenues totaled 27.547 billion pesos, a decrease of 3.6% compared with the same period of 2010.  Revenues from local services, long distance and interconnection decreased 6.7%, 2.8% and 16.8%, respectively. Revenues from our data business increased 7.0% compared with the first quarter of 2010.



From January to March, adjusted EBITDA (1) totaled 11.346 billion pesos, producing a margin of 41.2%. Operating income totaled 6.659 billion pesos, with a margin of 24.2%.

 Net income in the first quarter totaled 3.758 billion pesos. In the quarter, earnings per share were 21 Mexican cents, 16% lower than the same period of last year, and earnings per ADR (2) were 34 US cents, a decrease of 12.8% compared with the first quarter of 2010.

 At the end of March of 2011, total debt was the equivalent of 5.698 billion dollars. Total net debt (3) was equivalent to 5.427 billion dollars, 785 million dollars less than March 31, 2010.

 Capital expenditures (Capex) were the equivalent of 118 million dollars in the first quarter. Of this investment, 67.4% was used for growth and infrastructure projects in the data business, connectivity and transmission networks.

 During the first quarter, the company used 860.697 million pesos to repurchase 82 million shares.

(1) Adjusted EBITDA: Defined as operating income plus depreciation and amortization and other expenses, net. Go to www.telmex.com in the Investor Relations section where you can find the reconciliation of adjusted 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.



Relevant Event

On April 28, 2011, TELMEX announced that its Series “L” Shares Special and its Annual Shareholders’ Meetings approved, among others, the following issues: The Chief Executive Officer’s report regarding the performance of the company for 2010, the financial statements to that year, the Board of Directors reports regarding the main accounting policies and information criteria followed in the preparation of financial information and regarding the operations and activities in which the Board was involved in during 2010, The External Auditor’s report, the opinion of the Board of Directors regarding the Chief Executive Officer’s report and the respective reports of the Audit and Corporate Practices Committees; The payment of a cash dividend of 0.55 Mexican pesos per outstanding share in four equal payments of 0.1375 Mexican pesos per outstanding share, resulting from the net tax profit account. Dividend payments will be made in Mexico on or after June 16, 2011, September 22, 2011, December 15, 2011 and March 22, 2012; Ratified the activities of the Board of Directors and the Chief Executive Officer for 2010; The members of the Board of Directors and the Executive Committee, as well as the Corporate Practices Committee and Audit Committee.

Operating Results

Lines and local traffic

At March 31, 2011, we had 12.523 million lines, a decrease of 0.9% compared with the first quarter of 2010. Of these:

- 1.5 million lines are mainly in rural areas which will be served by Telmex Social.

- In the rest of the country, there are 727 thousand public telephony lines and 862 thousand prepaid lines, a decrease of 135 thousand and 1 million 1 1 3 thousand lines, in the last five years, respectively; therefore, an important decrease is expected in the future. It should be noted that due to the increase in cellular telephony penetration in the country, public telephony revenues have decreased more than 75.6% in the last five years.

- The total lines were 15.562 million lines, a decrease of 1.6% compared with the number of lines in the first quarter of 2010.

In the first quarter of 2011, local calls decreased 6.0% compared with the same period of 2010, totaling 4.533 billion local calls. The decline reflected the lower number of billed lines due to the growth in cellular telephony services and competition from other operators, as well as the customers’ change in the consumption path.

Long distance

From January to March, domestic long distance (DLD) traffic decreased 3.3% compared with the same quarter of 2010, totaling 4.334 billion minutes, mainly due to the decrease in termination traffic with cellular telephony operators.

In the quarter, outgoing international long distance (ILD) traffic increased 25.7% compared with the first quarter of 2010, totaling 403 million minutes. Among factors contributing to this increase were the inclusion of this service in the infinitum packages and the increase of termination traffic from cellular operators. Incoming international long distance traffic increased 10.8% compared with the first quarter of 2010, totaling 2.088 billion minutes. The incoming-outgoing ratio was 5.2 times.

Interconnection

In the first quarter, interconnection traffic totaled 10.433 billion minutes, 1.5% lower than the same quarter of 2010, due to the 2.0% decrease in interconnection traffic with other local and long distance operators and the 6.4% decrease in traffic related to calling party pays services.

Internet access

Our high speed Internet access service infinitum, thanks to our customers’ preference, at the end of March served 7.6 million broadband accesses, reinforcing that infinitum continues to be the best connection because of its quality, service, price and high speed.

infinitum ’ s growth has been supported by the sale of more than 106,000 computers in the first quarter, an increase of 24.4% compared with the same period of 2010. Since 1999, we have sold more than 2.9 million computers, helping to increase PC penetration in Mexican homes.



Financial Results

The following financial information for 2011 and 2010 is presented according to International Financial Reporting Standards (IFRS).

Revenues: In the first quarter, revenues totaled 27.547 billion pesos, a decrease of 3.6% compared with the same period of the previous year. Revenues related to local, long distance and interconnection services showed decreases of 6.7%, 2.8% and 16.8%, respectively; data services increased 7.0%.

Costs and expenses: In the first quarter of 2011, total costs and expenses were 20.888 billion pesos, similar to the level of the same period of the previous year, mainly due to higher maintenance and labor costs, partially offset by lower charges for uncollectables and interconnection costs.

Adjusted EBITDA (1) and operating income : Adjusted EBITDA (1) totaled 11.346 billion pesos in the first quarter of 2011, a decrease of 6.7% compared with the same period of the prior year. The EBITDA margin was 41.2%. Operating income totaled 6.659 billion pesos in the first quarter and the operating margin was 24.2%.

Financing cost: In the first quarter, financing cost produced a charge of 978 million pesos. This was the result of: i) a net interest charge of 1.009 billion pesos, because of debt reduction, recognition of the market value of interest rate swaps and the premium paid for the anticipated payment of senior notes of 366.2 million dollars with maturities in 2015 and 2019 and ii) a net exchange gain of 31 million pesos because of the first-quarter exchange rate appreciation of 0.3893 pesos per dollar and the 3.090 billion dollars in dollar-peso hedges in effect at the end of March 31, 2011.

Net income: In the first quarter, net income was 3.758 billion pesos, 16.9% lower than the same period of the previous year. Earnings per share were 21 Mexican cents, 16% lower than the first quarter of 2010, and earnings per ADR (2) were 34 US cents, a decrease of 12.8% compared with the same period of the previous year.

Investments: In the first quarter of 2011, capital expenditures (Capex) were the equivalent of 118 million dollars, of which 67.4% was used for growth and infrastructure projects in the data business, connectivity and transmission networks.

Acquisition of own shares : During the first quarter, the company repurchased 82 million shares for 860.697 million pesos.

Debt: Total debt at March 31, 2011, was the equivalent of 5.698 billion dollars, of which 82.8% is long-term, 53.2% has fixed rates taking interest rate swaps into consideration, and 55.3% is in foreign currency, equivalent to 3.154 billion dollars. To minimize risks from variations in the exchange rate, at March 31, 2011, we had dollar-peso hedges for 3.090 billion dollars.

On March 10, 2011, TELMEX as part of the strategy to reduce its debt, acquired from América Móvil 243.6 million dollars of TELMEX senior notes due 2015 and 122.6 million dollars of TELMEX senior notes due 2019. TELMEX paid approximately 394 million dollars, which includes a premium of 27.8 million dollars.

Total net debt (3) decreased during the last 12 months the equivalent of 785 million dollars, bringing the total to 5.427 billion dollars.

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 first quarter of 2011 and 2010.











Mexico Local Service Business






Income Statements






[ In millions of Mexican pesos ]











%



1Q2011


1Q2010

Inc.

Revenues






Access, rent and measured service

P.

9,672

P.

10,369

(6.7)

LADA interconnection


1,126


1,164

(3.3)

Interconnection with operators


317


391

(18.9)

Interconnection with cellular operators


2,137


2,461

(13.2)

Other


3,844


4,028

(4.6)

Total


17,096


18,413

(7.2)







Costs and expenses






Cost of sales and services


6,258


5,995

4.4

Commercial, administrative and general

4,347


4,512

(3.7)

Interconnection


1,249


1,602

(22.0)

Depreciation and amortization


2,309


2,359

(2.1)

Other expenses, net


296


186

59.1

Total


14,459


14,654

(1.3)







Operating income

P.

2,637

P.

3,759

(29.8)







EBITDA (1)

P.

5,242

P.

6,304

(16.8)







EBITDA margin (%)


30.7


34.2

(3.5)

Operating margin (%)


15.4


20.4

(5.0)







Mexico Long Distance Service Business





Income Statements






[ In millions of Mexican pesos ]











%



1Q2011


1Q2010

Inc.

Revenues






Domestic long distance

P.

3,506

P.

3,647

(3.9)

International long distance


1,295


1,443

(10.3)

Total


4,801


5,090

(5.7)







Costs and expenses






Cost of sales and services


1,155


1,181

(2.2)

Commercial, administrative and general

1,256


1,262

(0.5)

Interconnection to the local network


1,689


1,790

(5.6)

Depreciation and amortization


409


430

(4.9)

Other expenses, net


41


26

57.7

Total


4,550


4,689

(3.0)







Operating income

P.

251

P.

401

(37.4)







EBITDA (1)

P.

701

P.

857

(18.2)







EBITDA margin (%)


14.6


16.8

(2.2)

Operating margin (%)


5.2


7.9

(2.7)













---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Thousands of Mexican Pesos)

Final printing

---

TELÉFONOS DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to unaudited condensed consolidated financial statements

For the three-month periods ended March 31, 2011 and 2010

(In thousands of Mexican pesos)



1. Reporting entity


Teléfonos de México, S.A.B. de C.V. and its subsidiaries (collectively “the Company” or “TELMEX”) provide telecommunications services, primarily in Mexico, including domestic and international long distance and local telephone services, data services, the interconnection of subscribers with cellular networks (calling party pays), as well as the interconnection of domestic long distance carriers’, cellular telephone companies’ and local service carriers’ networks with the TELMEX local network. TELMEX also obtains revenues from the sale of telephone equipment and personal computers.


The amended Mexican government concession under which TELMEX operates was signed on August 10, 1990. The concession runs through the year 2026, but it may be renewed for an additional period of fifteen years. Among other significant aspects, the concession stipulates the requirements for providing telephony services and establishes the basis for regulating rates.


The rates to be charged for basic telephone services are subject to a cap determined by the Federal Telecommunications Commission (COFETEL). During the last eleven years, TELMEX management decided not to raise its rates for basic services.


TELMEX has concessions in Mexico to operate radio spectrum wave frequency bands to provide fixed wireless telephone services and to operate radio spectrum wave frequency bands for point-to-point and point-to-multipoint microwave communications.


The foreign subsidiary has licenses for use of point-to-point and point-to-multipoint links in the U.S.A.


On May 11, 2010, América Móvil, S.A.B. de C.V. (América Móvil) launched two concurrent public exchange offers to acquire the outstanding shares of Carso Global Telecom, S.A.B. de C.V. (Carso Global Telecom) (TELMEX’s controlling stockholder) and Telmex Internacional, S.A.B de C.V.. Carso Global Telecom was the direct holder of 59.4% of the outstanding shares of TELMEX. On June 16, 2010, América Móvil completed the acquisition of 99.4% of the outstanding shares of Carso Global Telecom by means of a first public exchange offer, thus, América Móvil indirectly owned 59.1% of the outstanding shares of TELMEX by then. Upon completion of this transaction, TELMEX became a subsidiary of América Móvil. América Móvil launched an additional offer on November 19, 2010, which ended on December 17, 2010, increasing to 59.5% its indirect ownership of the outstanding shares of TELMEX.


The corporate offices of the Company are located on Parque Vía 190, Colonia Cuauhtémoc, 06599 México D.F., México.



2. First-time Adoption of International Financial Reporting Standards (IFRS)


The Company, with the authorizations of its Board of Directors, Audit Committee, Mexican Stock Exchange and Mexican Banking and Securities Commission (BMV and CNBV), decided to adopt IFRS as of January 1, 2011, with a transition date as of January 1, 2010. In the following paragraphs, the effects of initial adoption to IFRS are explained and a reconciliation between Mexican Financial Reporting Standards (Mexican FRS) and IFRS is presented. Mexican FRS are the financial reporting standards under which the Company was obliged to prepare its financial information until December 31, 2010.


IFRS 1 "First-time Adoption of International Financial Reporting Standards" provides a number of optional exemptions from the general requirement for full retrospective application of the IFRSs, in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements.


It also establishes a number of mandatory exemptions that prohibit retrospective application of IFRS in some areas, particularly where retrospective application would require judgments by management about past conditions after the outcome of a particular transaction is already known.


TELMEX has applied the mandatory exemptions included in IFRS 1 regarding to retrospective application of other IFRS at the transition date, which relate to the following items:

  1. Accounting estimates

  2. Derecognition of financial assets and financial liabilities

  3. Hedge accounting

  4. Non-controlling interests

  5. Classification and measurement of financial assets


The optional exemptions adopted by the Company are set out below:


A) Deemed cost


In accordance with IFRS 1, “an entity may elect to measure an item of property, plant and equipment at fair value at the date of its transition to IFRS and use that fair value as its deemed cost at that date”.


“ A first-time adopter may elect to use a previous GAAP revaluation of an item of property, plant and equipment at, or before, the date of transition to IFRS as deemed cost at the date of the revaluation, if the revaluation was, at the date of the revaluation, broadly comparable to:


(a) fair value; or

(b) cost or depreciated cost under IFRS, adjusted to reflect, for example, changes in a general or specific price index”.


TELMEX has decided to use as deemed cost at the date of transition, the revalued amount of its plant, property and equipment performed under Mexican FRS, which includes effects of inflation through December 31, 2007 and subsequent additions at historical cost.


B) Employee benefits


Cumulative actuarial losses


In accordance with IAS 19, “Employee benefits”, an entity may elect to use a ‘corridor’ approach that leaves some actuarial gains and losses unrecognised. Retrospective application of this approach requires an entity to split the cumulative actuarial gains and losses from the inception of the plan until the date of transition to IFRSs into a recognised portion and an unrecognised portion.


However, a first-time adopter may elect to recognise all cumulative actuarial gains and losses at the date of transition to IFRSs, even if it uses the corridor approach for later actuarial gains and losses


TELMEX elected to apply the “corridor” approach retrospectively and therefore deferred the recognition of actuarial gains and losses in conformity with international standard, resulting in a decrease in net projected asset of P.1,216,051 at the date of transition to IFRSs.


Deferred employee profit sharing


NIF D-3, “Employee benefits”, requires the recognition of deferred employee profit sharing on financial statements while IFRS does not establish guidelines for its recognition. Therefore, the Company canceled the deferred employee profit sharing liability of P3,954,136 at the date of transition to IFRSs.


Termination benefits


NIF D-3 requires the recognition of actuarial provision for termination benefits of employment other reasons different of restructuring, while IFRSs don’t address this issue. Because of this, TELMEX canceled a termination benefits provision of P.159,377 at the date of transition to IFRSs.


C) Recognition of effects of inflation


IAS 29 "Financial reporting in hyperinflationary economies" requires the recognition of the effects of inflation on financial information when the entity operates in a hyperinflationary economic environment, which one of its features is that the cumulative inflation rate over three years approaches, or exceeds 100%.


The last three years in which Mexico was no longer a hyperinflationary economy was the period from 1996 to 1998, whereby the Company eliminated the inflation in the rest of its non-monetary assets and liabilities, as well as items of capital stock and legal reserve, recognised under Mexican FRS from January 1, 1999 to December 31, 2007.


D) Cumulative translation differences


In accordance with IFRS 1, a first-time adopter need not comply with the requirements of IAS 21 "The effects of changes in foreign exchange rates". TELMEX used this exemption therefore considered null the effect of translation of foreign entities at the date of transition to IFRSs, which at that time was of P.134,550, net of deferred taxes.



E) Risk of the party and counterparty


IAS 39, “Financial instruments: Recognition and Measurement”, requires that credit risk is taken into account when determining fair value of financial instruments. For the transition from Mexican FRS to IFRS, TELMEX adjusted the fair value of derivative assets and liabilities determined under Mexican FRS with the non performance risk. Therefore, the fair value of derivative assets and liabilities position is net of a credit valuation adjustment attributable to TELMEX’s “own credit risk” and derivative counterparty default risk, which at the date of transition amounted P.137,112.


F) Deferred tax


As a result of the exemptions as well as the differences described above, were affected the carrying value of certain assets and liabilities, therefore deferred taxes were recalculated using the guidelines of IAS 12 "Income taxes", resulting in an increase of P.661,053 in deferred tax liability at the date of transition to IFRSs.




TELÉFONOS DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES

Reconciliations of Equity reported under Mexican FRS to Equity under IFRSs (unaudited)

(In thousands of Mexican pesos)

Note

Mexican FRS

Effect of transition to IFRSs

Opening IFRS


Mexican FRS

Effect of transition to IFRSs

IFRSs


Mexican FRS

Effect of transition to IFRSs

IFRSs


2

As at January 1, 2010 (date of transition)


As at March 31, 2010


Year ended December 31, 2010

Assets












Current assets:













Cash and cash equivalents


P. 14,379,768


P. 14,379,768


P. 6,467,507


P. 6,467,507


P. 7,493,465


P. 7,493,465

Accounts receivable, net


20,425,556


20,425,556


23,106,056


23,106,056


17,648,533


17,648,533

Derivative financial instruments

E

12,225,550

( 137,113)

12,088,437


7,521,305

( 133,741)

7,387,564


6,957,018

( 261,119)

6,695,899

Inventories for sale, net


1,448,102


1,448,102


1,360,177


1,360,177


1,783,579


1,783,579

Prepaid expenses and others

C

3,303,275

4,662

3,307,937


3,523,926

7,906

3,531,832


3,121,994

15,858

3,137,852

Total current assets


51,782,251

( 132,451)

51,649,800


41,978,971

( 125,835)

41,853,136


37,004,589

( 245,261)

36,759,328








Plant, property and equipment, net


106,047,642


106,047,642


103,838,431


103,838,431


99,421,332


99,421,332

Licenses and trademarks, net

C

918,341

( 179,793)

738,548


899,562

( 174,566)

724,996


1,307,517

( 158,129)

1,149,388

Equity investments


1,775,380

( 30,807)

1,744,573


1,787,367

( 30,806)

1,756,561


1,392,042

1,392,042

Net projected asset

B

16,430,857

( 1,216,055)

15,214,802


15,084,416

( 1,145,387)

13,939,029


17,342,200

( 1,051,832)

16,290,368

Goodwill






103,289


103,289

Deferred charges and prepaid expenses, net

C

1,442,330

( 34,269)

1,408,061


1,353,967

( 30,438)

1,323,529


1,183,363

( 26,016)

1,157,347

Total assets


P. 178,396,801

( 1,593,375)

P. 176,803,426


P 164,942,714

( 1,507,032)

P. 163,435,682


P. 157,754,332

( 1,481,238)

P. 156,273,094








Liabilities and stockholders’ equity













Current liabilities:













Short-term debt and current portion of long-term debt


P. 19,768,894

P. 19,768,894


P. 3,737,803

P. 3,737,803


P. 11,951,532

P. 11,951,532

Accounts payable and accrued liabilities

E

14,245,612

( 87)

14,245,525


18,682,999

( 6,816)

18,676,183


17,377,010

( 14,242)

17,362,768

Taxes payable


2,211,626


2,211,626


2,295,845


2,295,845


2,443,268


2,443,268

Deferred revenues

C

1,104,175

( 4,123)

1,100,052


962,852

( 1,280)

961,572


917,377

( 1,284)

916,093

Total current liabilities


37,330,307

( 4,210)

37,326,097


25,679,499

( 8,096)

25,671,403


32,689,187

( 15,526)

32,673,661








Long-term debt


83,105,454


83,105,454


80,155,227


80,155,227


62,569,413


62,569,413

Labor obligations

B

4,113,513

( 4,113,513)


3,750,615

( 3,750,615)


3,516,686

( 3,516,686)

Deferred taxes

F

15,060,058

660,753

15,720,811


14,443,469

569,456

15,012,925


14,132,763

508,397

14,641,160

Deferred revenues

C

466,696

( 8,896)

457,800


537,491

( 11,425)

526,066


622,351

( 10,478)

611,873

Total liabilities


140,076,028

( 3,465,866)

136,610,162


124,566,301

( 3,200,680)

121,365,621


113,530,400

( 3,034,293)

110,496,107








Stockholders’ equity:







Capital stock

C

9,020,300

( 3,546,485)

5,473,815


9,019,971

( 3,546,353)

5,473,618


9,008,985

( 3,541,950)

5,467,035

Retained earnings:







Prior years

C

28,375,768

( 832,274)

27,543,494


26,273,103

( 832,407)

25,440,696


19,135,353

( 836,810)

18,298,543

Initial effect of IFRS adoption



6,400,664

6,400,664



6,400,664

6,400,664



6,400,664

6,400,664

Current year




4,661,024

( 140,905)

4,520,119


15,384,162

( 195,656)

15,188,506



28,375,768

5,568,390

33,944,158


30,934,127

5,427,352

36,361,479


34,519,515

5,368,198

39,887,713

Accumulated other comprehensive income items

B, D, E

883,225

( 150,024)

733,201


381,085

( 187,987)

193,098


386,109

( 273,227)

112,882

Controlling interest


38,279,293

1,871,881

40,151,174


40,335,183

1,693,012

42,028,195


43,914,609

1,553,021

45,467,630

Noncontrolling interest


41,480

610

42,090


41,230

636

41,866


309,323

34

309,357

Total stockholders’ equity


38,320,773

1,872,491

40,193,264


40,376,413

1,693,648

42,070,061


44,223,932

1,553,055

45,776,987

Total liabilities and stockholders’ equity


P. 178,396,801

( 1,593,375)

P. 176,803,426


P. 164,942,714

( 1,507,032)

P. 163,435,682


P. 157,754,332

( 1,481,238)

P. 156,273,094



TELÉFONOS DE MÉXICO, S.A.B. D E C.V. AND SUBSIDIARIES


Reconciliations of Profit under Mexican FRS to Profit under IFRS (unaudited)


(In thousands of Mexican pesos)

Note

Mexican FRS

Effect of transition to IFRSs

IFRSs


Mexican FRS

Effect of transition to IFRSs

IFRSs


2

For the three months ended

March 31, 2010


For the year ended

December 31, 2010

Operating revenues:









Local service


P. 10,461,871


P. 10,461,871


P. 41,006,772


P. 41,006,772

Long distance service:









Domestic


3,104,378


3,104,378


12,264,837


12,264,837

International


1,438,962


1,438,962


5,646,278


5,646,278

Interconnection service


3,754,129


3,754,129


15,022,721


15,022,721

Data

C

8,018,923

( 314)

8,018,609


32,878,968

( 1,257)

32,877,711

Other


1,788,706


1,788,706


6,743,789


6,743,789



28,566,969

( 314)

28,566,655


113,563,365

( 1,257)

113,562,108

Operating costs and expenses:









Cost of sales and services

B, C

8,624,747

( 56,204)

8,568,543


34,710,580

( 131,040)

34,579,540

Commercial, administrative and

general expenses

B, C

5,247,007

( 25,164)

5,221,843


22,351,181

( 54,380)

22,296,801

Interconnection

C

2,609,089


2,609,089


10,561,053


10,561,053

Depreciation and amortization

B

4,378,948

( 5,522)

4,373,426


17,523,330

( 22,959)

17,500,371

Other expenses, net


131,541

131,541


565,366

565,366



20,859,791

44,651

20,904,442


85,146,144

356,987

85,503,131

Operating income


7,707,178

( 44,965)

7,662,213


28,417,221

( 358,244)

28,058,977






Other (income) expenses, net

B

( 152,332)

152,332


78,337

( 78,337)










Financing cost:









Interest income


( 111,293)


( 111,293)


( 583,761)


( 583,761)

Interest expense

C

1,565,429

( 378)

1,565,051


5,733,627

( 1,399)

5,732,228

Exchange gain, net


( 295,743)


( 295,743)


( 394,470)


( 394,470)



1,158,393

( 378)

1,158,015


4,755,396

( 1,399)

4,753,997






Equity interest in net income

of affiliates


20,006


20,006


195,910


195,910










Income before taxes on profits


6,721,123

( 196,919)

6,524,204


23,779,398

( 278,508)

23,500,890

Provision for income tax

F

2,060,349

( 56,040)

2,004,309


8,407,940

( 82,849)

8,325,091

Net income


P. 4,660,774

( 140,879)

P. 4,519,895


P. 15,371,458

( 195,659)

P. 15,175,799










Distribution of net income:









Controlling interest


P. 4,661,024

( 140,905)

P. 4,520,119


P. 15,384,162

( 195,656)

P. 15,188,506

Noncontrolling interest


( 250)

26

( 224)


( 12,704)

( 3)

( 12,707)



P. 4,660,774

( 140,879)

P. 4,519,895


P. 15,371,458

( 195,659)

P. 15,175,799












3. Basis of presentation of financial statements and accounting rules


3.1 Basis of preparation


These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS 34) “ Interim Financial Reporting” , issued by the International Accounting Standards Board (IASB). These are the Company’s first condensed consolidated interim financial statements prepared in conformity with IFRS for part of the period covered by the first IFRS annual financial statements and IFRS 1 “ First-time Adoption of International Financial Reporting Standards has been applied. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.


In preparing these condensed consolidated interim financial statements the Company has applied IFRS and current interpretations, which are subject to changes issued by the IASB. Therefore, until the Company prepares its first complete set of financial statements under IFRS at December 31, 2011, there is the possibility that comparative consolidated financial statements be adjusted.


An explanation of how the transition to IFRS has affected the previous financial statements issued under Mexican FRS is presented in Note 3 “ First-time adoption of IFRS ” . This note includes reconciliations of equity at January, 2010, the date of transition to IFRS, at March 31, 2010 and December 31, 2010, as well as reconciliations of profit for the three months ended March 31, 2010 and the year ended December 31, 2010, which were prepared under Mexican FRS and have been restructured under IFRS with effects since the date of transition.


3.2 Basis of consolidation


The consolidated financial statements include the accounts of Teléfonos de México, S.A.B. de C.V. and those of the subsidiaries over which the Company exercises control. All the companies operate in the telecommunications sector or provide services to companies operating in this sector.


Subsidiaries are fully consolidated from the date of acquisition, being the date on which TELMEX obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as TELMEX, using consistent accounting policies.


All intercompany balances and transactions have been eliminated in the consolidated financial statements. Noncontrolling interest refers to certain subsidiaries in which the Company does not hold 100% of the shares.


Equity investments in affiliated companies over which the Company exercises significant influence is accounted for using the equity method, which basically consists of recognizing TELMEX’s proportional share in the net income or loss and the stockholders’ equity of the investee.


The results of operations of the subsidiaries and affiliates were included in TELMEX’s financial statements as of the month following their acquisition.


The principal subsidiaries included in the consolidated financial statements are listed below:


% equity interest at


Company


Country

March 31, 2011

December 31, 2010

Subsidiaries:




Integración de Servicios TMX, S.A. de C.V.

México

100%

100%

Alquiladora de Casas, S.A. de C.V.

México

100%

100 %

Cía. de Teléfonos y Bienes Raíces, S.A. de C.V.

México

100%

100 %

Consorcio Red Uno, S.A. de C.V.

México

100%

100 %

Teléfonos del Noroeste, S.A. de C.V.

México

100%

100 %

Uninet, S.A. de C.V.

México

100%

100 %

Telmex USA, L.L.C.

E.U.A.

100%

100 %






3.3 Translation of financial statements of foreign subsidiary


The financial statements of the foreign subsidiary are consolidated once the financial statements have been adjusted to conform to IFRS in the corresponding local currency, and are then translated to the reporting currency. All the assets and liabilities of the foreign subsidiary are translated to Mexican pesos at the prevailing exchange rate at year-end. Stockholders’ equity accounts are translated at the prevailing exchange rate at the time capital contributions were made and earnings were generated. Revenues, costs and expenses are translated at the historical exchange rate. Translation differences are recorded in stockholders’ equity in the line item “Effect of translation of foreign entities” under “Accumulated other comprehensive income items.”


3.4 Significant accounting policies and practices


The accounting policies applied by the Company in these consolidated interim financial statements are the same as applied in its financial statements at December 31, 2010, except for those who may be modified as a result of first-time adoption of IFRS.


a) Recognition of revenues


Revenues are recognized at the time services are provided. Local service revenues are related to new-line installation charges, monthly service fees, measured usage charges based on the number of calls made, and other service charges to subscribers. Local service revenues also include measured usage charges for prepayment plans, based on the number of minutes.


Revenues from the sale of prepaid telephone service cards are recognized based on an estimate of the usage of time covered by the prepaid card. Revenues from the sale of equipment are recorded when the product is delivered to the customer.


Revenues from domestic and international long distance telephone services are determined on the basis of the duration of the calls and the type of service used, which are billed monthly based on the authorized rates. International long distance and interconnection service revenues also include the revenues earned under agreements with foreign carriers for the use of the Company’s facilities in interconnecting international calls. These services are regulated by agreements with these operators, in which the rates to be paid are defined.


Data revenues include revenues from services related to data transmission through private and managed networks and revenues from Internet access.


b) Use of estimates


The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions in certain areas. Actual results could differ from these estimates. TELMEX based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of TELMEX. Such changes are reflected in the estimates and assumptions and the related effect in the financial statements when they occur.


c) Cash and cash equivalents


Cash at banks earns interest at floating rates based on daily bank deposit rates. Cash equivalents are represented by short-term deposits made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. Such investments are stated at acquisition cost plus accrued interest, which is similar to their market value.


d) Derivative financial instruments and hedging activities


The Company is exposed to interest rate and foreign currency risks, which are mitigated through a controlled risk management program that includes the use of derivative financial instruments. The Company uses primarily cross-currency swaps and when necessary foreign currency forwards to offset the short-term risk of exchange rate fluctuations. In order to reduce the risks due to fluctuations in interest rates, the Company utilizes interest-rate swaps, through which it either pays or receives the difference between the net amount of either paying or receiving a fixed interest rate and the cash flow from receiving or paying a floating interest rate, based on a notional amount denominated in Mexican pesos or U.S. dollars. Most of these derivative financial instruments qualify and have been designated as cash flow hedges.


The Company's policy includes: i) formal documentation of all hedging relationships between the hedging instrument and the hedged position; ii) the objectives for risk management; and iii) the strategy for conducting hedging transactions. This process takes into account the relationship between the cash flow of the derivatives with the cash flows of the corresponding assets and liabilities recognized in the balance sheet.


The effectiveness of the Company’s derivatives used for hedging purposes is evaluated prior to their designation as hedges, as well as during the hedging period, which is performed at least quarterly based on recognized statistical techniques. Whenever it is determined that a derivative is not highly effective as a hedge or that the derivative ceases to be a highly effective hedge, the Company ceases to apply hedge accounting for the derivative on a prospective basis. During the first quarter of 2011, there were no gains or losses recognized due to changes in the accounting treatment for hedges.

Derivative financial instruments are recognized in the balance sheet at their fair values, which are obtained from the financial institutions with which the Company has entered into the related agreements. The Company’s policy is to verify such fair values against valuations provided by an independent valuation agent contracted by the Company. The effective portion of the cash flow hedge’s gain or loss is recognized in “Accumulated other comprehensive income items” in stockholders’ equity, while the ineffective portion is recognized in current year earnings. Changes in the fair value of derivatives that do not qualify as hedges are immediately recognized in earnings.


The change in fair value recognized in earnings related to derivatives that are accounted for as hedges is presented in the same income statement caption as the gain or loss of the hedged item.


e) Allowance for doubtful accounts


The allowance for doubtful accounts is determined based on the Company’s historical experience, the aging of the balances and general economic trends, as well as an evaluation of accounts receivable in litigation seeking recovery. The allowance for doubtful accounts primarily covers the balances of accounts receivable greater than 90 days old.


The risk of uncollectibility of accounts receivable from related parties is evaluated annually based on an examination of each related party’s financial situation and the markets in which they operate.


f) Inventories


Inventories for sale are valued at average cost. The carrying value of inventories is not in excess of their net realizable value.


g) Plant, property and equipment


Plant, property and equipment are recognized at cost minus accumulated depreciation and any impairment losses. Cost includes purchase price plus expenses directly attributable to the asset in order to bring it to the location and condition to be operated in the intended manner.


The Company has decided to use as deemed cost at the date of transition, the revalued cost of property, plant and equipment determined in conformity with Mexican FRS at December 31, 2009 (which includes the effects of inflation through December 31, 2007).


Telephone plant and equipment are depreciated using the straight-line method based on the estimated useful lives of the related assets.


The carrying value of plant, property, plant and equipment is reviewed whenever there are indicators of impairment in the carrying value of such assets. Whenever an asset’s recovery value, which is the greater of the asset’s selling price and its value in use (the present value of future cash flows) is less than the asset’s net carrying amount, the difference is recognized as an impairment loss.


An item of plant, property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.


The Company has not capitalized any financing costs since it has no significant qualifying assets with prolonged acquisition periods.


Inventories for the operation of the telephone plant are valued at average cost, which is not in excess of their net realizable value.


h) Leases


When the risks and benefits inherent to the ownership of the leased asset remain mostly with the lessor, they are classified as operating leases and rent expense is charged to results of operations when incurred.


Lease agreements are recognized as capital leases if (i) the ownership of the leased asset is transferred to the lessee upon termination of the lease; (ii) the agreement includes an option to purchase the asset at a reduced price; (iii) the term of the lease is substantially the same as the remaining useful life of the leased asset; or (iv) the present value of minimum lease payments is substantially the same as the market value of the leased asset, net of any future benefit or residual value.


i) Licenses and trademarks


TELMEX records licenses at acquisition cost. The amortization period is based on the terms of the licenses, which range from 5 to 20 years. Trademarks are recorded at their estimated fair values at the date of acquisition, as determined by independent appraisers, and are amortized using the straight-line method over a sixteen-year period.


j) Business combinations and goodwill


Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value of acquisition date and the amount of any noncontrolling interest in the acquiree. For each business combination, the acquirer measures the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs incurred are expensed and included in administrative expenses.


The subsequent acquisition of noncontrolling interest is considered a transaction between entities under common control and any difference between the purchase price and the carrying value of net assets acquired is recognized as an equity transaction.


Goodwill is initially measured as the excess of the acquisition price and the amount recognized for noncontrolling interest, as measured at their fair value, over the net identifiable assets acquired and liabilities assumed.


k) Accrued liabilities


Accrued liabilities are recognized whenever (i) the Company has current obligations (legal or assumed) resulting from a past event, (ii) when it is probable the obligation will give rise to a future cash disbursement for its settlement and (iii) the amount of the obligation can be reasonably estimated.

When the effect of the time value of money is significant, the amount of the liability is determined as the present value of the expected future disbursements to settle the obligation. The discount rate applied is determined on a pre-tax basis and reflects current market conditions at the balance sheet date and, where appropriate, the risks specific to the liability. When discounting is used, an increase in the liability is recognized as a finance expense.


Contingent liabilities are recognized only when it is probable they will give rise to a future cash disbursement for their settlement. Also, commitments are only recognized when they will generate a loss.


l) Labor obligations


The cost of pension, seniority premium and termination benefits (severance) are recognized periodically during the years of service of personnel, based on actuarial computations made by independent actuaries using the projected unit-credit method.


Actuarial (losses) gains are being amortized over a period of 11 years, which is the estimated average remaining working lifetime of Company employees.


m) Exchange differences


Transactions in foreign currency are recorded at the prevailing exchange rate on the day of the related transactions. Foreign currency denominated monetary assets and liabilities are valued at the prevailing exchange rate at the balance sheet date. Exchange differences from the transaction date to the time foreign currency denominated monetary assets and liabilities are settled, as well as those arising from the translation of foreign currency denominated balances at the balance sheet date are charged or credited to results of operations.


n) Taxes on profits


Current income tax


Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.


Deferred tax


Deferred taxes on profits are recognized using the asset and liability method. Under this method, deferred taxes on profits are recognized on all differences between the financial reporting and tax values of assets and liabilities, applying the enacted income tax rate effective as of the balance sheet date, or the enacted rate at the balance sheet date that will be in effect when the deferred tax assets and liabilities are expected to be recovered or settled.


The Company periodically evaluates the possibility of recovering deferred tax assets and, if necessary, creates a valuation allowance for those assets that do not have a high probability of being realized.

o) Earnings per share


Earnings per share are determined by dividing the controlling interest in net income by the weighted-average number of shares outstanding during the period. In determining the weighted-average number of shares outstanding during the period, shares repurchased by the Company have been excluded.


p) Concentration of risk


The Company’s principal financial instruments consist of senior notes, domestic senior notes, bank loans, derivative financial instruments and accounts payable. The Company has financial assets, such as cash and cash equivalents, accounts receivable and prepaid expenses, that are directly related to its business.


The main risks associated with the Company’s financial instruments are cash flow risk, liquidity risk, market risk and credit risk. The Company performs sensitivity analyses to measure potential losses in its operating results based on a theoretical increase of 100 basis points in interest rates and a 10% change in exchange rates. The Board of Directors approves the risk management policies that are proposed by the Company’s management.


Credit risk represents the potential loss from the failure of counterparties to completely comply with their contractual obligations. The Company is also exposed to market risks related to fluctuations in interest rates and exchange rates. In order to reduce the risks related to fluctuations in interest rates and exchange rates, the Company uses derivative financial instruments as hedges against its debt obligations.


Financial instruments which potentially subject the Company to concentrations of credit risk are cash and cash equivalents, trade accounts receivable, debt and derivative financial instruments. Pension fund assets are subject to market risk. The Company’s policy is designed to not restrict its exposure to any one financial institution; therefore, the Company’s financial instruments are maintained in different financial institutions located in different geographical areas.


The credit risk in accounts receivable is diversified, because the Company has a broad customer base that is geographically dispersed. The Company continuously evaluates the credit conditions of its customers and does not require collateral to guarantee collection of its accounts receivable. In the event the collection of accounts receivable deteriorates significantly, the Company’s results of operations could be adversely affected.


A portion of excess cash is invested in time deposits in financial institutions with strong credit ratings.


q) Segments


Segment information is presented based on information used by the Company in its decision-making processes.


Local and long distance segment information differs from the information presented in the consolidated financial statements due to:

• Segment information only includes those companies that are directly involved in rendering local and long distance telephone services in Mexico.


• Local service includes: revenues from basic rent, measured service, installation charges, equipment sales and interconnection.


• Long distance service includes: revenues from basic services of domestic and international long distance services; it does not include revenues from rural and public telephony and data services.


• The services being disclosed include the corresponding attributes for interconnection, billing, collecting, co-location and leased lines.


• Interconnection with cellular operators includes revenues from calling party pays.


r) New accounting pronouncements


IFRS modifications applicable to 2011, which could affect the accounting policies of TELMEX are the following:



The Company is currently evaluating the impact of these modifications in its financial statements and notes.



  1. Plant, Property and Equipment


During the three-month period ended March 31, 2011, the Company made the following capital expenditures, before retirements:

 

1Q11

% of

Amount

Budget

% of


Jan-Mar

advance

exercised

2011

advance

 

 

 

2011

 

 

Data

P. 933,337

18.1

P. 933,337

P. 5,158,387

18.1

Internal plant

18,662

8.6

18,662

218,000

8.6

Networks

150,213

35.4

150,213

424,000

35.4

Transport networks

46,110

2.3

46,110

1,968,000

2.3

Systems

114

0.0

114

420,227

0.0

Other

249,694

9.8

249,694

2,547,000

9.8

Telmex USA

17,956

27.9

17,956

64,386

27.9

Total investment

P. 1,416,086

13.1

P. 1,416,086

P. 10,800,000

13.1










  1. Debt


Short-term and long-term debt consist of the following:

Weighted average interest rate at


Maturities from


Balance at


March 31, 2011

December 31, 2010

2011 through

March 31, 2011

December 31, 2010

Debt denominated in foreign currency:






Senior notes

5.5%

5.5%

2019

P. 11,156,443

P. 16,044,459

Bank loans

0.8%

0.8%

2018

20,419,066

21,665,623

Others

0.6%

0.6%

2022

6,165,422

6,364,863

Total debt denominated in foreign currency




37,740,931

44,074,945

Debt denominated in Mexican pesos:






Senior notes

8.8%

8.8%

2016

4,500,000

4,500,000

Domestic senior notes

6.3%

6.3%

2037

25,900,000

25,900,000

Bank loans

5.5%

5.5%

2011

46,000

46,000

Total debt denominated in Mexican pesos




30,446,000

30,446,000

Total debt




68,186,931

74,520,945

Less short-term debt and current portion

of long-term debt




11,701,041

11,951,532

Long-term debt




P. 56,485,890

P. 62,569,413


The above-mentioned rates are subject to market variances and do not include the effect of the Company’s agreement to reimburse certain lenders for Mexican withholding taxes. The Company’s weighted-average cost of debt at March 31, 2011 (including interest expense, interest rate swaps, fees and withholding taxes, and excluding exchange rate variances) was approximately 6.2% (6.6% at December 31, 2010).


Short-term debt and current portion of long-term debt consist of the following:

Balance at


March 31, 2011

December 31, 2010

Short term debt:



Bank loans

P. 46,000

P. 46,000

Others

5,983,900

6,178,550


6,029,900

6,224,550

Current portion of long-term debt:



Domestic Senior notes

4,500,000

4,500,000

Bank loans

1,171,141

1,226,982


5,671,141

5,726,982

Total

P. 11,701,041

P. 11,951,532


Senior notes:


At March 31, 2011, we had two outstanding senior notes denominated in US dollars, one for U.S.$554.8 million due in 2015 and the other for U.S.$377.4 million due in 2019 (equivalent, both together to $11,156,143) and an outstanding senior note denominated in Mexican pesos for a total of $4,500,000.



On February 2, 2011, América Móvil launched a private offer to exchange any and all outstanding senior notes of TELMEX with maturity in 2015 and 2019, for new senior notes of América Móvil. The offer expired on March 3, 2011. As a result of the offer, on March 8, 2011, U.S.$243.6 million of senior notes due in 2015 and U.S.$122.6 million of senior notes due in 2019 were exchanged for América Móvil senior notes. On March 10, 2011, TELMEX paid América Móvil U.S.$394.0 million, which includes a premium of U.S.$27.8 million, to extinguish the exchanged senior notes. The consideration paid by TELMEX was based on the same market conditions under which the TELMEX senior notes were exchanged by América Móvil.


Syndicated loans:


There are two syndicated loans, one of them has an outstanding tranche of U.S.$700 million due in October 2013, while the other has an outstanding tranche of U.S.$250 million due in June 2012. These loans bear interest at a specified margin over the London Interbank Offered Rate (LIBOR). At March 31, 2011, these credits are equal to $11,369,410 and are included under Bank loans (debt denominated in foreign currency).


Domestic senior notes (Certificados bursátiles):


All domestic senior notes are denominated in Mexican pesos; some bear fix-rate interest, while others bear interest equal to a specified margin in respect of the Mexican interbank equilibrium interest rate (TIIE). At March 31, 2011, we had $25,900,000 in outstanding domestic senior notes.


Others:


We have a loan with América Móvil for U.S.$500 million due in October, 2011. This loan bears interest with a 25-basis points margin over LIBOR. At March 31, 2011, this loan is equal to $ 5,983,900.


Restricciones:


Part of the above-mentioned debt is subject to certain restrictions with respect to maintaining certain financial ratios, as well as restrictions on selling a significant portion of groups of assets, among others. At March 31, 2011, the Company was in compliance with all these requirements.


A portion of the debt is also subject to early maturity or repurchase at the option of the holders in the event of a change in control of the Company, as so defined in each instrument. The definition of change in control varies from instrument to instrument; however, no change in control shall be considered to have occurred as long as Carso Global Telecom or its current stockholders continue to hold the majority of the Company’s voting shares.



Long-term debt maturities at March 31, 2011 are as follows:


Years

Amount

2012*

P. 11,223,854

2013

10,929,050

2014

8,131,293

2015

7,423,105

2016 and thereafter

18,778,588

Total

P. 56,485,890


* Includes maturities from April to December, 2012.



Derivative financial instruments and hedging activities :


At March 31, 2011 and December 31, 2010, the derivative financial instruments held by the Company are as follows:

March 31, 2011

December 31, 2010



Notional

Fair value

asset (liability)


Notional

Fair value

asset (liability)

Instrument

(in millions)

(in millions)

Cross currency swaps

U.S. $ 3,090

$ 3,798

U.S. $ 3,487

$ 6,696

Forwards dólar-peso



U.S. $ 40

( 21)

Swaps de tasa de interés en pesos

P. 16,649

(1,198)

P. 16,649

( 1,526)

Total


$ 2,600


$ 5,149


The Company’s derivatives are acquired in over-the counter markets, mostly from the same financial institutions with which it has contracted its debt.


During the three-month period ended March 31, 2011, t he change in the fair value of the cross currency swaps that offset the exchange gain on the foreign-currency denominated debt was a net charge of P.1,420,242 (net charge of P.2,320,336 in 2010 ).


During the three-month period ended March 31, 2011, the Company recognized in interest expense a net credit for interest rate swaps of P. 51,831 (net charge of P. 438,031 in 2010).


During the three-month period ended March 31, 2011, t he ineffective portion of the cash flow hedges was a net expense of P. 48,750 (P. 199,221 in 2010), recognized in interest expense.




  1. Related Parties


The most relevant transactions with related parties were as follows:

For the three months ended

March 31,


2011

2010

Investment and expenses:



Construction services, purchase of materials, inventories

and fixed assets

P. 1,087,510

P. 488,017

Insurance premiums, fees for administrative and

operating services, security trading and others

503,103

512,066

Calling Party Pays interconnection fees and other

telecommunication services

1,337,309

1,770,908

Cost of termination of international calls

179,659

173,271




Revenues:



Sale of materials and other services

402,563

488,140

Sale of long distance and other telecommunications services

1,122,257

1,181,549

Revenues from termination of international calls

105,680

192,336



7. Stockholders’ Equity


  1. Capital stock


At Mach 31, 2011, capital stock is represented by 18,076 million shares issued and outstanding with no par value, representing the Company’s fixed capital (18,158 million at December 31, 2010).


In the three-month period ended March 31, 2011, the Company acquired 82.0 million Series “L” shares for P.860,697.


In the three-month period ended March 31, 2010, the Company acquired 1.0 million Series “L” shares for P.10,967 and 6,900 Series “A” shares for P.76.


The cost of the repurchased shares, in the amount that exceeds the portion of capital stock corresponding to the repurchased shares, is charged to retained earnings.


  1. Dividends


At a regular meeting held on April 29, 2010, the stockholders agreed to declare a cash dividend of P.0.50 per outstanding share, to be paid in four installments of P.0.1250 each in June, September and December 2010 and in March 2011. In March 2010, the Company paid the fourth installment of P.0.1150 per outstanding share, which was authorized at the regular meeting held on April 28, 2009.




8. Segments


TELMEX primarily operates in two segments: local and long distance telephone service. The local telephone service segment corresponds principally to local fixed-line wired service, including interconnection service. The long distance service segment includes domestic and international service. Other segments include long distance calls made from public and rural telephones, data services and other services. Additional information related to the Company’s operations is provided in Note 3. The following summary shows the most important segment information, which has been prepared on a consistent basis:

(Amounts in millions of Mexican pesos)


Local service

Long distance

Other segments

Adjustments

Consolidated total

March 31, 2011






Revenues:






External revenues

P. 14,296

P. 4,801

P. 8,450


P. 27,547

Intersegment revenues

2,800

207

P. ( 3,007)

Depreciation and amortization

2,309

409

1,519

4,237

Operating income

2,637

251

3,771

6,659

Segment assets

65,749

10,757

41,647

118,153






March 31, 2010






Revenues:






External revenues

P. 15,642

P. 5,090

P. 7,835


P. 28,567

Intersegment revenues

2,771

228

P. ( 2,999)

Depreciation and amortization

2,359

430

1,584

4,373

Operating income

3,759

401

3,502

7,662

Segment assets

63,124

10,158

34,828

108,110


Inter-segmental transactions are reported based on terms offered to third parties. Employee profit sharing, other expenses, financing cost, equity interest in net income of affiliates and the income tax provision are not allocated to each segment, because they are handled at the corporate level.


Segment assets include plant, property and equipment (excluding accumulated depreciation), construction in progress and advances to equipment suppliers, and inventories for operation of the telephone plant.



9. Subsequent Events


a) At an extraordinary meeting held on April 4, 2011, the stockholders approved a corporate restructuring, through the creation of a subsidiary company that will provide telecommunications and interconnection services in rural areas, where fixed telephony competitors do not invest. The subsidiary will be named Telmex Social.


The restructuring is subject, if needed, to the approval of the Communications Ministry ( Secretaría de Comunicaciones y Transportes , or SCT), as well as the authorization and confirmation of the rest of the corresponding authorities and governmental entities.


b) At a regular meeting held on April 28, 2011, the stockholders agreed to declare a cash dividend of P.0.55 per outstanding share, to be paid in four installments of P.0.1375 each in June, September and December 2011 and in March 2012.



---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 3

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Final printing




COMPANY NAME

PRICIPAL ACTIVITY

NUMBER OF SHARES

% OWNERSHIP

TOTAL AMOUNT

ACQUISITION COST

CURRENT VALUE

Grupo Telvista, S.A. de C.V.

Telemarketing in Mexico and U.S.A.

510,138,000

45.00

510,138

785,009

Centro Histórico de la Ciudad de México, SA de CV

Real State Services

16,004,000

12.79

80,020

102,393

TM and MS, L. L. C.

Internet portal (Prodigy MSN)

1

50.00

29,621

208,593

Hildebrando, S.A. de C.V.

Information Technology Services

462,768

17.63

155,737

172,472

Other Investments

 

-

-

-

123,767

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENT IN ASSOCIATES

 

 

 

775,516

1,392,234


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 4

BREAKDOWN OF CREDITS

(Thousands of Mexican Pesos)

Final printing

---

CREDIT TYPE / INSTITUTION

FOREIGN INSTITUTION (YES / NO)

CONTRACT SIGNING DATE

EXPIRATION DATE

INTEREST RATE

MATURITY OR AMORTIZATION OF CREDITS IN NATIONAL CURRENCY



MATURITY OR AMORTIZATION OF CREDITS IN FOREIGN CURRENCY

TIME INTERVAL



TIME INTERVAL

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

BANKS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOREIGN TRADE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPORT DEVELOPMENT C. (1)

SI

16/03/2006

22/07/2014

0.8488

-

-

-

-

-

-

83,621

65,070

130,142

92,911

15,240

-

MIZUHO CORPORATE BANK LTD (1)

SI

15/01/2007

10/03/2018

0.8058

-

-

-

-

-

-

378,984

378,985

757,969

757,969

757,968

1,475,964

NATIXIS (3)

SI

28/02/1986

31/03/2022

2.0000

-

-

-

-

-

-

15,844

9,281

25,086

25,125

25,125

81,061

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

SECURED

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

COMERCIAL BANKS

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

BANAMEX (4)

NO

12/03/2008

28/06/2011

5.5706

46,000

-

-

-

-

-

-

-

-

-

-

-

BANK OF AMERICA, N.A. (2)

SI

13/06/2008

13/06/2014

0.6530

-

-

-

-

-

-

-

-

-

359,034

239,356

-

BBV ARGENTARIA (6)

SI

12/02/2008

18/02/2014

0.5300

-

-

-

-

-

-

-

-

-

2,874,278

-

-

BBVA BANCOMER (2)

SI

30/06/2006

30/06/2012

0.5530

-

-

-

-

-

-

-

-

2,991,950

-

-

-

CISCO SYSTEMS (3)

SI

25/04/2007

30/09/2014

4.5000

-

-

-

-

-

-

203,452

35,904

215,420

191,485

35,904

-

CITIBANK, N.A. (2)

SI

11/08/2006

11/08/2013

0.6280

-

-

-

-

-

-

-

-

5,584,973

2,792,487

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

OTHER

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL BANKS

 

 

 

 

46,000

-

-

-

-

-

681,901

489,240

9,705,540

7,093,289

1,073,593

1,557,025




CREDIT TYPE / INSTITUTION

FOREIGN INSTITUTION (YES / NO)

CONTRACT SIGNING DATE

EXPIRATION DATE

INTEREST RATE

MATURITY OR AMORTIZATION OF CREDITS IN NATIONAL CURRENCY



MATURITY OR AMORTIZATION OF CREDITS IN FOREIGN CURRENCY

TIME INTERVAL



TIME INTERVAL

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

STOCK MARKET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LISTED STOCK EXCHANGE (MEXICO AND / OR FOREIGN)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNSECURED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CERT. BURSAT TELMEX 02-4(3)

NO

31/05/2002

31/05/2012

10.2000

-

-

300,000

-

-

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 06 (5)

NO

21/09/2006

15/09/2011

4.8600

500,000

-

-

-

-

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 07 (3)

NO

23/04/2007

16/03/2037

8.3600

-

-

-

-

-

5,000,000

-

-

-

-

-

-

CERT. BURSAT TELMEX 07-2 (4)

NO

23/04/2007

16/04/2012

4.7450

-

-

4,500,000

-

-

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 08 (3)

NO

21/04/2008

05/04/2018

8.2700

-

-

-

-

-

1,600,000

-

-

-

-

-

-

CERT. BURSAT TELMEX 09 (4)

NO

10/07/2009

07/07/2011

5.5850

4,000,000

-

-

-

-

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 09-2 (4)

NO

10/07/2009

04/07/2013

5.7950

-

-

-

4,000,000

-

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 09-3 (4)

NO

03/11/2009

30/10/2014

5.7950

-

-

-

-

4,000,000

-

-

-

-

-

-

-

CERT. BURSAT TELMEX 09-4 (4)

NO

03/11/2009

27/10/2016

6.0950

-

-

-

-

-

2,000,000

-

-

-

-

-

-

8 3/4 SENIOR NOTES PESOS (3)

SI

31/01/2006

31/01/2016

8.7500

-

-

-

-

-

4,500,000

-

-

-

-

-

-

5 1/2 SENIOR NOTES (3)

SI

27/01/2005

27/01/2015

5.5000

-

-

-

-

-

-

-

-

-

-

6,640,011

-

5 1/2 SENIOR NOTES (3)

SI

12/11/2009

15/11/2019

5.5000

-

-

-

-

-

-

-

-

-

-

-

4,516,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRIVATE PLACEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNSECURED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECURED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL STOCK MARKET LISTED IN STOCK EXCHANGE AND PRIVATE PLACEMENT

 

 

 

 

4,500,000

-

4,800,000

4,000,000

4,000,000

13,100,000

-

-

-

-

6,640,011

4,516,432



CREDIT TYPE / INSTITUTION

FOREIGN INSTITUTION (YES / NO)

CONTRACT SIGNING DATE

EXPIRATION DATE

INTEREST RATE

MATURITY OR AMORTIZATION OF CREDITS IN NATIONAL CURRENCY

MATURITY OR AMORTIZATION OF CREDITS IN FOREIGN CURRENCY

TIME INTERVAL

TIME INTERVAL

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

CURRENT YEAR

UNTIL 1YEAR

UNTIL 2 YEAR

UNTIL 3 YEAR

UNTIL 4 YEAR

UNTIL 5 YEAR OR MORE

OTHER CURRENT AND NON-CURRENT LIABILITIES WITH COST


































OTHER CURRENT LIABILITIES WITH COST

NO

12/11/2010

20/10/2011


-

-

-

-

-

-

5,983,900

-

-

-

-

-



































TOTAL OTHER CURRENT AND NON-CURRENT LIABILITIES WITH COST

-

-

-

-

-

-

5,983,900

-

-

-

-

-



































SUPPLIERS


































OTHER

NO

-

-

-

2,328,465

-

-

-

-

-

-

-

-

-

-

-

OTHER

SI

-

-

-

-

-

-

-

-

-

1,850,989

-

-

-

-

-


















TOTAL SUPPLIERS





2,328,465

-

-

-

-

-

1,850,989

-

-

-

-

-



































OTHER CURRENT AND NON-CURRENT LIABILITIES


































OTHER

NO

-

-

-

13,383,195

1,215,700

70,073

63,151

63,151

405,932

-

-

-

-

-

-

OTHER

SI

-

-

-

-

-

-

-

-

-

193,253

-

-

-

-

-


















TOTAL OTHER CURRENT AND NON-CURRENT LIABILITIES

13,383,195

1,215,700

70,073

63,151

63,151

405,932

193,253

-

-

-

-

-



































GENERAL TOTAL





20,257,660

1,215,700

4,870,073

4,063,151

4,063,151

13,505,932

8,710,043

489,240

9,705,540

7,093,289

7,713,604

6073457







Notes:

A.- Interest rates:

The credits breakdown is presented with an integrated rate as follows:

  1. 6 months USD Libor rate plus margin

  2. 3 months USD Libor rate plus margin

  3. Fixed Rate

  4. TIIE rate plus margin

  5. TIIE rate plus margin

  6. JPY LIBOR plus margin

B.- The following rates were considered:

- Libor at 6 months in US dollars is equivalent to a 0.4595 at March 31, 2011.

- Libor at 3 months in US dollars is equivalent to 0.3030 at March 31, 2011.

- TIIE at 28 days is equivalent to 4.8450 at March 31, 2011.

- TIIE at 91 days is equivalent to 4.8800 at March 31, 2011.

- Libor at 3 months in JPY is equivalent to 0.2000 at March 31, 2011.

C.- The suppliers' Credits are reclassified to Bank Loans because in this document, Emisnet, Long-Term opening to Suppliers' does not exist.

D.- Liabilities in foreign currency were exchanged at the prevailing exchange rate at the end of the reporting period, which at March 31, 2011. were as follows:


CURRENCY

AMOUNT

E.R.

DOLLAR (USD)

2,898,204

11.97

EURO (EUR)

10,695

16.97

JAPANESE YEN (JPY)

19,891,200

0.14


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 5

MONETARY FOREIGN CURRENCY POSITION

(Thousands of Mexican Pesos)

Final printing

---

FOREIGN CURRENCY POSITION

DOLLARS

OTHER CURRENCIES

THOUSAND PESOS TOTAL

THOUSANDS OF DOLLARS

THOUSAND PESOS

THOUSANDS OF DOLLARS

THOUSAND PESOS


 

 

 

 

 

 

MONETARY ASSETS

145,965

1,746,884

-

-

1,746,884

 

 

 

 


 

LIABILITIES

3,068,840

36,727,256

255,512

3,057,917

39,785,173

SHORT-TERM LIABILITIES POSITION

766,394

9,172,047

2,276

27,236

9,199,283

 

 

 

 


 

LONG-TERM LIABILITIES POSITION

2,302,446

27,555,209

253,236

3,030,681

30,585,890

 

 

 

 


 

 

 

 

 

 

 

NET BALANCE

- 2,922,875

- 34,980,372

- 255,512

- 3,057,917

- 38,038,289


Notes:



FOREIGN CURRENCY USED:


Assets and Liabilities in foreign currency were exchanged at the prevailing exchange rate at the end of the reporting period.

At the end of the quarter the exchange rates were as follows:


CURRENCY

E.R.

DOLLAR (USD)

11.97

EURO

16.97

JAPANESE YEN

0.14



---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 6

DEBT INSTRUMENTS

(Thousands of Mexican Pesos)

Final printing

---

FINANCIAL LIMITED BASED IN ISSUED DEED AND/OR TITLE


Part of the long-term debt is subject to certain restrictive covenants with respect to maintaining certain financial ratios and the sale of assets, among others.


A portion of the debt is also subject to early maturity or repurchase at the option of the holders in the event of change of control of the Company, as defined in the related instruments. The definition of change of control varies from instrument to instrument; however, no change in control shall be considered to have occurred as long as Carso Global Telecom, S.A.B. de C.V. (TELMEX's controlling company) or its current stockholders continue to hold the majority of the Company's voting shares.

CURRENT SITUATION OF FINANCIAL LIMITED


At March 31, 2011, the Company has complied with such restrictive covenants.


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANNEX 7

DISTRIBUTION OF REVENUE BY PRODUCT

Final printing

---

MAIN PRODUCTS OR PRODUCT LINE

SALES

MARKET SHARE %

MAIN

VOLUME

AMOUNT

TRADEMARKS

CUSTOMERS

NATIONAL INCOME

 

 

 

 

 

LOCAL SERVICE

-

9,757,216

-

 

 

LONG DISTANCE SERVICE

-

3,671,351

-

 

 

INTERCONNECTION

-

3,123,940

-

 

 

DATA

-

8,547,225

-

 

 

OTHERS

-

1,663,228

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPORT INCOME

 

 

 

 

 

INTERNATIONAL CONNECTION

-

589,231

-

 

 

DATA

-

35,027

-

 

 

OTHERS

-

543

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME OF SUBSIDIARIES ABROAD

 

 

 

 

 

LONG DISTANCE SERVICE

-

154,012

-

 

 

OTHERS

-

4,927

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T O T A L

 

27,546,700

 

 

 


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

ANALYSIS OF PAID CAPITAL STOCK

Final printing

---

SERIES

NOMINAL VALUE ($)

VALID COUPON

NUMBER OF SHARES

CAPITAL STOCK

FIXED PORTION

VARIABLE PORTION

MEXICAN

FREE SUSCRIPTION

FIXED

VARIABLE

A

0.00432

0

378,856,542

0

0

378,856,542

1,636

0

AA

0.00432

0

7,839,596,082

0

7,839,596,082

0

33,848

0

L

0.00432

0

9,857,547,376

0

0

9,857,547,376

42,560

0

TOTAL

 

 

18,076,000,000

 

7,839,596,082

10,236,403,918

78,044

 


---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

DERIVATIVE FINANCIAL INSTRUMENTS

Final printing

---

Quarterly Report of Derivative Financial Instruments


I. Executive Summary


As of March 31, 2011, Teléfonos de México, S.A.B. de C.V. (“ Telmex ” or the “ Company ” ) had cross currency swap agreements in the equivalent of U.S.$3,090 million, which have hedged the exchange rate and interest rate risks related to the bonds with maturity in 2015 and 2019 for a total amount of U.S.$959 million and loans with maturities from 2011 to 2018 for a total amount of U.S.$2,131 million. These hedges allowed us to fix the exchange rate of our debt on a weighted average exchange rate of $10.7613 Mexican pesos per US dollar and an average interest rate of 28-day TIIE less a specified margin, as well as to set a fixed rate of 8.57% for the bond maturing in 2015.


During the quarter, cross currency swaps in the equivalent of U.S.$351 million, which partially hedged the bonds with maturity in 2015 and 2019, were unwound, since the Company acquired U.S.$366 million of such bonds from América Móvil, S.A.B. de C.V. to extinguish them.


At March 31, 2011, the Company had interest rate swaps in Mexican pesos for Ps.$16,649 million to hedge the floating rate risk in local currency, fixing it at an average of 8.48%.


These transactions have been carried out based on the policies, strategies and guidelines of the Company.


II . Qualitative and Quantitative Information


i. Management discussion on the policies for using derivative instruments


The policies for using derivative instruments indicated below, are part of the Financial Risk Management Policies approved by the Board of Directors, which establish the general guidelines for the identification, management, measurement, monitoring and control of financial risks that may affect the operation or expected results of Telmex.


The Audit Committee, as a delegated body of the Board of Directors, is responsible to analyze and define the strategy to hedge or mitigate risks related to exchange rate and interest rate fluctuations of the Company’s debt, assess the Management’s results in handling derivative instruments according to the established policies and inform the Board of Directors for their knowledge and, if appropriate, ratification.


Objective to enter into derivative transactions and selected instruments


With the purpose of reducing the risks related to the variations of exchange rate and interest rate, the Company uses derivative instruments associating the hedges with the debt. The derivative instruments that have been selected are, mainly:


  1. instruments for purchasing US dollars at a specified future time (forwards);

  2. instruments that involve the exchange of principal and interest from one currency to another (cross currency swaps); and

  3. instruments to fix the floating interest rates of the debt (interest rate swaps).


The Company uses these instruments in a conservative manner, without any speculative purpose.


Hedge strategies


When the market conditions are favorable, the Company’s Management determines the amounts and goal parameters under which the hedge agreements are contracted. This strategy seeks to reduce the risk exposure of abnormal market fluctuations in the main variables that affect our debt, including exchange rate and interest rate, to maintain a solid and healthy financial structure. Most of our derivative instruments have been designated and qualify as cash flow hedges.


Trading markets and eligible counterparties


The derivative instruments are traded in over-the-counter-markets, i.e. out of an institutionalized exchange market. The financial institutions and counterparties with which the Company enters into such derivative instruments are considered to have a proven reputation and solvency in the market, which allows us to balance our risk positions with such counterparties.


It is a policy of the Company to try to avoid the concentration of more than 25% (twenty five per cent) of the total derivatives position in a single counterparty.


Also, the Company only uses derivative instruments that are of common use in the markets, and therefore, can be quoted by two or more financial institutions to assure the best conditions in the negotiation.


Policies for the appointment of calculation and valuation agents


Given that the Company uses derivative instruments of common use in the market, it appoints a third independent party that is responsible to provide the market price of such instruments. These prices are compared by the Company with the prices provided by the financial intermediaries; and, in certain transactions, the counterparty is able to act as valuation agent under the applicable documentation if it is a financial institution with a proven reputation.


Main terms and conditions of the agreements


It is a policy of the Company that the amount, date and interest rate conditions of the debt to be hedged, if possible, have to coincide with the terms of the hedges, that is usual for this type of transactions in the different markets where it operates.


All the transactions with derivative instruments are made under the ISDA Master Agreement (International Swap Dealers Association) standardized and duly executed by the legal representatives of the Company and the financial institutions, and in the case of counterparties in México, pursuant to the uses and practices of the market in our country.


Margin policies, collaterals and lines of credit


In some cases, the Company has entered into an accessory agreement to the ISDA Master Agreement with the financial institutions, the Credit Support Annex, which sets forth an obligation to grant collaterals for margin calls in case the mark to market value exceeds certain credit limits (threshold amount).


The Company has the policy to keep a close watch of the volume of the transactions entered into with each financial institution in order to avoid, if possible, any margin call.


Processes of levels of authorization required by type of negotiation


All derivative instrument transactions are executed by the Chief Financial Officer, the Subdirector of Budget and Financial Evaluation or the Treasury Operation Manager, who are the only individuals registered with the financial institutions for such purposes.


Existence of an independent third party that reviews such processes


Both, the fulfillment of the Corporate Governance Guidelines and the measurement of effectiveness of the derivative instruments, to comply with the International Financial Reporting Standards, are discussed with the independent auditors that validate the reasonable accounting application of the effect of such instruments in the financial statements of the Company.


ii. Generic description of the valuation techniques and accounting policies


As previously stated, derivative instruments are carried out by the Company only for hedging purposes. The measurement of the effectiveness of the hedges is made in a prospective and retrospective manner. For the prospective valuation, we use statistic techniques that allow us to measure in what proportion the change in the value of the hedged debt (primary position) is compensated by the change in the value of the derivative instrument. The retrospective valuation is made by comparing the historic results of the debt flows with the flows of the respective hedges.


The effectiveness of the Company’s derivatives used for hedging purposes is evaluated prior to their designation as hedges, as well as during the hedging period, which is performed at least quarterly. Whenever it is determined that a derivative is not highly effective as a hedge or that the derivative ceases to be a highly effective hedge, the Company ceases to apply hedge accounting for the derivative on a prospective basis. During the first quarter of 2011, there were no gains or losses recognized due to changes in the accounting treatment for hedges.


Derivative financial instruments are recognized in the balance sheet at their fair values. The effective portion of the cash flow hedge’s gain or loss is recognized in “Accumulated other comprehensive income items” in stockholders’ equity, while the ineffective portion is recognized in current year earnings. Changes in the fair value of derivatives that do not qualify as hedges are immediately recognized in earnings.


The change in fair value recognized in earnings related to derivatives that are accounted for as hedges is presented in the same income statement caption as the gain or loss of the hedged item.


At March 31, 2011, our cross currency swaps position is deemed to be highly effective, with an effectiveness factor of approximately 96.1%


Also, $11,649 million of our interest rate swaps are deemed to be highly effective, with an effectiveness factor of approximately 95.6%, while the remaining $5,000 million were considered ineffective.


Adjustments due to early adoption of International Financial Reporting Standards


Beginning in 2012, Mexican issuers with securities listed on a Mexican securities exchange will be required to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Issuers may voluntarily report using IFRS before the change in the reporting standards becomes mandatory. Telmex will be presenting financial statements in accordance with IFRS for the fiscal year ending December 31, 2011, with an official IFRS “adoption date” as of December 31, 2011 and a “transition date” to IFRS of January 1, 2010.


International Accounting Standard 39, Financial instruments: Recognition and Measurement , requires that credit risk is taken into account when determining fair value of financial instruments. For the transition from Mexican Financial Reporting Standards to IFRS, Telmex adjusted the fair value of derivative assets and liabilities determined under Mexican FRS with the non performance risk. Therefore, the fair value of derivative assets and liabilities position is net of a credit valuation adjustment attributable to Telmex’s “own credit risk” and derivative counterparty default risk. Non performance risk amounted Ps.$103 million at March 31, 2011 (Ps.$247 million at December 2010).


iii. Management discussion on internal and external liquidity sources to meet the requirements related to derivative instruments


It is estimated that the Company’s cash generation has been enough to service debt and the established derivative instruments to hedge the risks associated with such debt.


iv. Changes in the exposure to the main identified risks and its management


The identified risks are those related to the variations of the exchange rate and interest rate. Given the direct relationship between the hedged debt and the derivative instruments and that they do not have any variables that could affect or terminate the hedge in advance, the Company does not foresee any risk that such hedges could differ from the original purpose for which the hedges were contracted.


During the quarter, cross currency swaps in the equivalent of U.S.$351 million, which partially hedged the bonds with maturity in 2015 and 2019, were unwound; in addition, U.S.$40 million of cross currency swaps and U.S.$40 million of forward contracts became due. No new derivative instruments were contracted.


During the quarter, it was recognized in the statement of income an accrued net charge of Ps.$1,420 million for changes in the fair value of the cross currency swaps, which offset the exchange gain of the foreign currency debt (net charge of Ps.$2,320 million during the first quarter of 2010).


Additionally, it was recognized in the statement of income an accrued net credit of Ps.$52 million for interest rate swaps, which is included in accrued interest expense (accrued charge of Ps.$438 million during the first quarter of 2010).


The ineffective portion of cash flow hedges in the quarter was a net expense of Ps.$49 million, recognized in accrued interest expense (net expense of Ps.$199 million during the first quarter of 2010).


During the first quarter, there were not any margin calls. To date, there has not been any breach in the terms and conditions of the respective agreements.

v. Quantitative information


Derivative instruments summary at March 31, 2011 and December 31, 2010

Figures in thousands of Mexican Pesos and US Dollars


Type of

Derivative

Purpose of

Hedging,

Negotiation

or Others

Notional Amount

Value of Underlying Asset

Variable of Reference

Fair Value

Maturity

Amounts

per year

Collateral / Lines of Credit

(*)

Current

Quarter

Previous

Quarter

Current

Quarter

Previous

Quarter

Current

Quarter

Previous

Quarter


Exchange Rate Hedges

(Principal and interests)

Cross Currency Swap

Hedging

US Dollar

2,850,320

US Dollar

3,241,518

TIIE

4.8450

EXCHANGE RATE

11.9678

TIIE

4.8750

EXCHANGE RATE

12.3571

MXN

2,951,055

MXN

5,689,240

(1)





Forwards



Hedging

US Dollar

-

US Dollar

40,000

EXCHANGE RATE

11.9678

EXCHANGE RATE

12.3571



-



(20,696)



(2)


Total

 

2,850,320

3,281,518

 

 

2,951,055

5,668,544

 

 




Cross Currency Swap



Hedging

YEN

19,891,200

YEN

19,891,200

TIIE

4.8450

EXCHANGE RATE

0.1445

TIIE

4.8750

EXCHANGE RATE

0.1526



846,956



1,006,659



(3)



Exchange Rate Hedges

(Interests only)



Interest Rate Swap

Hedging

MXN

16,649,250

MXN

16,649,250

TIIE

4.8450

TIIE

4.8750

MXN

(1,197,552)

MXN

(1,526,358)



(4)


Total






2600459

5148845





(*) Of our hedge agreements, 59% of the total hedge amount include margin calls, when the market value exceeds the amounts of the lines of credit that we have in the amount of USD$425 million.


(1) These swaps hedge the debt position in US dollars, with the obligation of paying floating rate in Mexican pesos at an average of TIIE less a specified margin and with an average life of 3 years.


(2) This forward position mainly hedged debt service flows in US dollars that became due in January and February 2011.


(3) These swaps hedge debt position in Yens with the obligation of paying $2,000 million in Mexican pesos (equivalent to USD$240 million) at a floating rate and with maturity in February 2014.


(4) These agreements hedge debt position in Mexican pesos at a floating rate, fixing it at an average of 8.48% and with an average life of 6 years.


III. Sensitivity Analysis


In the case of the Company, the sensitivity analysis for changes in the fair value of derivative financial instruments that are in the correlation range of 80% to 125% of effectiveness is not presented, since they are carried out for hedging purposes and therefore, any change in variables (i.e. exchange rates and interest rate) that affect the cash flows of the hedged debt (primary position) would be offset by the changes in the cash flows of the derivative instruments.


Sensitivity analysis for potential losses in fair value considering scenarios of hypothetical, instantaneous and unfavorable changes in interest rates is presented for derivative financial instruments deemed ineffective.


A hypothetical decrease in the underlying asset (interest rate) of 100 basis points, would result in a charge in the Company’s income statements of Ps.$377 million.


Sensitivity Analysis

Underliying Asset Changes

(figures in million)


>






At March 31, 2011


Additional Potential Loss (Pesos)

Type of Derivative

Purpose of Hedging/Negotiation

Type of Currency

Notional Amount

Value of Underlying Asset

Fair Value (Pesos)


- 30bps


- 50bps


- 100 bps


Cross curency swap (1)


Hedging


US Dollar


2,850


4,845%

E.R. 11.9678


2,951


-


-


-

Cross curency swap (1)

Hedging

YEN

19,981

4,845%

E.R. 0.1445

847

-

-

-

Interest rate swap (1)

Hedging

Peso

11,649

4.845%

(900)

-

-

-

Interest rate swap (2)

Hedging

Peso

5,000

4.845%

(298)

(113)

(188)

(377)


Total






2,600


(113)


(188)


(377)


  1. Hedges deemed as highly effective (a sensitivity analysis is not applicable).

  2. Hedges deemed as ineffective.



---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

GENERAL INFORMATION

Final printing

---

ISSUER GENERAL INFORMATION

COMPANY:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

INTERNET PAGE:

TELEFONOS DE MEXICO, S.A.B. DE C.V.

PARQUE VIA 198, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 12 12

www.telmex.com

ISSUER FISCAL INFORMATION

TAX PAYER FEDERAL ID:

FISCAL ADDRESS:

ZIP:

CITY:

TME 840315KT6

PARQUE VIA 198, COL. CUAUHTEMOC

06599

MEXICO, D.F.

OFFICERS INFORMATION

POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

CHAIRMAN OF THE BOARD

CHAIRMAN OF THE BOARD

LIC. CARLOS SLIM DOMIT

AV. SAN FERNANDO No.649, COL. PEÑA POBRE

14060

MEXICO, D.F.

53 25 98 01

55 73 31 77

slimc@sanborns.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

CHIEF EXECUTIVE OFFICER

CHIEF EXECUTIVE OFFICER

LIC. HECTOR SLIM SEADE

PARQUE VIA 190 - 10 TH . FLOOR OFFICE 1004, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 15 86

55 45 55 50

hslim@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

CHIEF FINANCIAL OFFICER

CHIEF FINANCIAL OFFICER

ING. ADOLFO CEREZO PEREZ

PARQUE VIA 190 - 10TH. FLOOR OFFICE 1016, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 57 80

52 55 15 76

acerezo@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

DISTRIBUTION OF CORPORATE INFORMATION DELEGATE

COMPTROLLER

LIC. ROLANDO REYNIER VALDES

PARQUE VIA 198 - 5TH. FLOOR OFFICE 502, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 92 92

57 05 62 31

rreynier@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

DISTRIBUTION OF BUYBACK INFORMATION DELEGATE

SHAREHOLDER SERVICES MANAGER

LIC. MIGUEL ANGEL PINEDA CATALAN

PARQUE VIA 198 - 2ND. FLOOR OFFICE 202, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 53 22

55 46 21 11

mpineda@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

IN-HOUSE LEGAL COUNSEL

LEGAL DIRECTOR

LIC. SERGIO F. MEDINA NORIEGA

PARQUE VIA 190 - 2ND. FLOOR OFFICE 202, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 14 25

55 46 43 74

smedinan@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

DISTRIBUTION OF FINANCIAL INFORMATION DELEGATE

COMPTROLLER

LIC. ROLANDO REYNIER VALDES

PARQUE VIA 198 - 5TH. FLOOR OFFICE 502, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 92 92

57 05 62 31

rreynier@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

DISTRIBUTION OF MATERIAL FACTS DELEGATE

SHAREHOLDER SERVICES MANAGER

LIC. MIGUEL ANGEL PINEDA CATALAN

PARQUE VIA 198 - 2ND. FLOOR OFFICE 202, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 53 22

55 46 21 11

mpineda@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

INVESTOR INFORMATION RESPONSIBLE

INVESTORS RELATIONS MANAGER

LIC. ANNA DOMINGUEZ GONZALEZ

PARQUE VIA 198 - 7TH. FLOOR OFFICE 701, COL. CUAUHTEMOC

06599

MEXICO, D.F.

57 03 39 90

55 45 55 50

ri@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

SECRETARY OF THE BOARD OF DIRECTORS

LEGAL DIRECTOR

LIC. SERGIO F. MEDINA NORIEGA

PARQUE VIA 190 - 2 ND . FLOOR OFFICE 202, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 14 25

55 46 43 74

smedinan@telmex.com


POSITION BMV:

POSITION:

NAME:

ADDRESS:

ZIP:

CITY:

TELEPHONE:

FAX:

E-MAIL:

PAYMENT RESPONSIBLE

COMPTROLLER

LIC. ROLANDO REYNIER VALDES

PARQUE VIA 198 - 5 TH . FLOOR OFFICE 502, COL. CUAUHTEMOC

06599

MEXICO, D.F.

52 22 92 92

57 05 62 31

rreynier@telmex.com

---

MEXICAN STOCK EXCHANGE

Index

SIFIC/ICS

BMV: TELMEX, NYSE: TMX, NASDAQ: TFONY, QUARTER: 1 YEAR: 2011

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

BOARD OF DIRECTORS

Final printing

---

BOARD OF DIRECTORS

DIRECTORS

ALTERNATE DIRECTORS

CARLOS SLIM DOMIT.- PRESIDENT

JOSÉ HUMBERTO GUTIÉRREZ OLVERA Z.

ANTONIO COSÍO ARIÑO

ANTONIO COSÍO PANDO

ANTONIO DEL VALLE RUIZ

- - - - - - - - - - - - - - - - - - - - - -

LAURA DIEZ BARROSO DE LAVIADA

- - - - - - - - - - - - - - - - - - - - - -

AMPARO ESPINOSA RUGARCÍA

- - - - - - - - - - - - - - - - - - - - - -

ELMER FRANCO MACÍAS

MARCOS FRANCO HERNAIZ

DANIEL HAJJ ABOUMRAD

- - - - - - - - - - - - - - - - - - - - - -

ROBERTO KRIETE ÁVILA

- - - - - - - - - - - - - - - - - - - - - -

JOSÉ KURI HARFUSH

EDUARDO TRICIO HARO

ÁNGEL LOSADA MORENO

JAIME ALVERDE GOYA

FRANCISCO MEDINA CHÁVEZ

- - - - - - - - - - - - - - - - - - - - - - - -

JUAN ANTONIO PÉREZ SIMÓN.- VICEPRESIDENT

- - - - - - - - - - - - - - - - - - - - - - - -

MARCO ANTONIO SLIM DOMIT

EDUARDO VALDÉS ACRA

PATRICK SLIM DOMIT

OSCAR VON HAUSKE SOLÍS

HÉCTOR SLIM SEADE

JORGE A. CHAPA SALAZAR

FERNANDO SOLANA MORALES

- - - - - - - - - - - - - - - - - - - - - - - -

MICHAEL  J. VIOLA

- - - - - - - - - - - - - - - - - - - - - - - -

MICHAEL BOWLING

- - - - - - - - - - - - - - - - - - - - - - - -

RAFAEL KALACH MIZRAHI

- - - - - - - - - - - - - - - - - - - - - - - -

RICARDO MARTÍN BRINGAS

JORGE C. ESTEVE RECOLONS



AUDIT COMMITTEE

CORPORATE PRACTICES COMMITTEE

1.- RAFAEL KALACH MIZRAHI.- President

1.- JUAN ANTONIO PÉREZ SIMÓN.- President

2.- JOSÉ KURI HARFUSH

2.- JAIME ALVERDE GOYA

3.- ANTONIO COSÍO ARIÑO

3.- ANTONIO COSÍO PANDO


---

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: April 28, 2011.

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. - FIRST QUARTER 2011.