This summary is based on the third quarter fiscal 2007 earnings call conducted by Telefonos de Mexico SAB de CV (TMX: chart) on October 23, 2007.

Management:
Chief Financial Officer: Adolfo Cerezo
Investor Relations Officer: Rui Echavarra

Key Investors Issues

- The net income increased 38% over the prior year to 9.3 billion pesos.
- Quarterly revenue of 48 billion pesos represents a growth of 2.1% from last year.
- The Q3 turned in an operating margin of 36.9% in Mexico and an EBITDA margin of 50.3%.

Third Quarter Fiscal 2007 Financial Highlights

The consolidated revenues increased 2.1% from a year ago, totaling 48 billion Pesos.

Three factors were primarily responsible for the improvement.
- Internet access revenues increased almost 9%.
- Interconnection revenues rose 16% mainly due to domestic and international long distance calling party base.
- Other revenues primarily reflecting the contribution of TELMEX stores and Yellow Pages gained 34%.

The firm’s relentless cost control efforts, along with the absence of the non-recurring charge in the 2006 period related to Brazil, ICMS tax enabled the firm to reduce cost 3.3% entering third quarter.

Net income reached 9.3 billion Pesos, 38% more than in the third quarter of last year.

TELMEX achieved a strong border line performance in the third quarter. It is especially a significant accomplishment given that the firm’s markets are highly competitive and are undergoing accelerated regulatory and technological change.

Operating income increased 18% with a margin of 21.4% and EBITDA increased 11% with a margin of 42.5%.

In third quarter, TELMEX had 18.157 million lines in service.

That represents 21% of Mexico''s telecommunications market of fixed, mobile and voice services including those also by the cable companies. About 9.8 million of the lines are in areas where there is competition. The firm’s cable companies have market presence. Those 9.8 million lines represent 46% of the fixed voice services market in Mexico. The remaining 8.3 million TELMEX lines, which account for 39% of the fixed voice services market are in areas where the company’s competitors do not choose to operate. In this quarter, these customers generated revenues of 5.8 billion Pesos and an operating loss of 708 million Pesos. The firm has recognized that these areas, that do not attract competitors, are different from other market segments. Even so, TELMEX respects these customers, as part of its commitment to serving all of Mexico. Therefore, to work effectively with the particular characteristics of these market segments, the firm has created the non-served communities by competition business unit, which will operate and report independently within TELMEX with the objective of meeting their needs in an efficient manner.

The company continues to make computers available for sales in its TELMEX stores.

The firm offers financing for up to three years and customers can choose their loan plans, starting at monthly payments of 183 Pesos without Value Added Tax. Additionally, customers who sign up for our internet service receive a 20% discount on their computer payments. These efforts contribute to growth in broadband services, recognizing that low computer penetration in the country is one of the main obstacles to growth in that market. These plans are a major reason that the firm has sold more than 240,000 computers in TELMEX stores throughout this year.

In the third quarter, the firm added 296,000 broadband Infinitum ADSL accounts in Mexico, bringing the total to approximately 2.7 million services.

Of the total of 3.1 million internet users, 85% are broadband Infinitum users. In Mexico now, close to 13% of homes have access to broadband services. There is still a lot of room for growth in that market. But the firm’s efforts to expand broadband usage are having a positive impact. The pace of broadband growth in Mexico is among the highest of all countries that are members of the OECD, according to it''s Communication Outlook 2007 Report.

In the quarter, the firm launched a new service package called Todo México sin límites or all Mexico without limits.

For a fixed monthly fee of 869 Pesos without value added tax, customers get fixed line rent, unlimited local calls and domestic long distance minutes, as well as access to an Infinitum account and digital services. The new package continues its emphasis on matching service it chooses with customer preferences. Packages also give the company more predictable revenue strength. This is another win-win situation in how TELMEX works with customers.

The firm is taking a novel step to improve the Local Service Areas arrangement for its customers.