##### Table of Contents

As filed with the Securities and Exchange Commission on May 26, 2010







UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F





ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

Commission File Number: 001-34086

TELMEX INTERNACIONAL, S.A.B. de C.V.

(Exact name of registrant as specified in its charter)

Telmex International

(Translation of registrants name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Avenida de los Insurgentes 3500

Colonia Peña Pobre

Delegación Tlalpan

14060 México, D.F., México

(Address of principal executive offices)





Juan Antonio
Pérez Simón González

Avenida de los Insurgentes 3500, Oficina 2130

Colonia Peña Pobre

Delegación Tlalpan

14060 México, D.F., México

52 (55) 5223-3200

Fax: 52 (55) 5244-0367

(Name, telephone, e-mail and/or facsimile number and address of company contact person)





Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                                                                                    |  |                                                                           
|----------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------
|Title of each class                                                                 |  | Name of each exchangeon which
registered                                  
|American Depositary Shares, each representing 20 Series L Shares, without par value |  | New York Stock Exchange, Inc.                                             
|                                                                                    | 
|Series L Shares, without par value                                                  |  | New York Stock Exchange, Inc. (not for trading, for listing purposes only)
|                                                                                    | 
|American Depositary Shares, each representing 20 Series A Shares, without par value |  | New York Stock Exchange, Inc.                                             
|                                                                                    | 
|Series A Shares, without par value                                                  |  | New York Stock Exchange, Inc. (not for trading, for listing purposes only)

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act:

None

The number of outstanding shares of each class of capital or common stock as of December 31, 2009 was:



|              |  |  |  |                                     |  | 
|------------- |  |  |  | ----------------------------------- |  | 
|8,115 million |  |  |  | Series AA Shares, without par value |  | 
|394 million   |  |  |  | Series A Shares, without par value  |  | 
|9,506 million |  |  |  | Series L Shares, without par value  |  | 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.

x  Yes            
 ̈  No

If this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 ̈  Yes            
x  No

Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).N/A

 ̈  Yes            
 ̈  No

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

x  Yes            
 ̈  No

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated
filer  x            Accelerated
filer   ̈            Non-accelerated filer    ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|                       |  |                                                                                                                     |  |                   
|---------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ------------------
|U.S. GAAP             ̈ |  | International Financial Reporting            
 ̈ Standards as issued by the International
Accounting Standards Board |  | Other            x

If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has
elected to follow.

 ̈  Item 17           
 x  Item 18

If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12B-2 of the Exchange Act).

 ̈  Yes            
x  No









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TABLE OF CONTENTS

PART I



|           |  |                                                                                |  |   
|---------- |  | ------------------------------------------------------------------------------ |  | --
|Item 1.    |  | Identity of Directors, Senior Management and Advisers                          |  | 1 
|Item 2.    |  | Offer Statistics and Expected Timetable                                        |  | 1 
|Item 3.    |  | Key Information                                                                |  | 1 
|           |  | Selected Financial Data                                                        |  | 1 
|           |  | Exchange Rate Information                                                      |  | 5 
|           |  | Risk Factors                                                                   |  | 6 
|Item 4.    |  | Information on the Company                                                     |  | 18
|           |  | The Company                                                                    |  | 18
|           |  | Operations in Brazil                                                           |  | 23
|           |  | Operations Outside Brazil                                                      |  | 35
|           |  | Yellow Pages Business                                                          |  | 41
|           |  | Capital Expenditures                                                           |  | 44
|           |  | Plant, Property and Equipment                                                  |  | 44
|Item 4A.   |  | Not Applicable.                                                                |  | 46
|Item 5.    |  | Operating and Financial Review and Prospects                                   |  | 46
|Item 6.    |  | Directors, Senior Management and Employees                                     |  | 65
|Item 7.    |  | Major Shareholders and Related Party Transactions                              |  | 72
|           |  | Major Shareholders                                                             |  | 72
|           |  | Related Party Transactions                                                     |  | 73
|Item 8.    |  | Financial Information                                                          |  | 77
|           |  | Consolidated Financial Statements                                              |  | 77
|           |  | Legal Proceedings                                                              |  | 77
|           |  | Dividends                                                                      |  | 77
|Item 9.    |  | The Offer and Listing                                                          |  | 79
|           |  | Trading Markets                                                                |  | 79
|           |  | Trading on the Mexican Stock Exchange                                          |  | 80
|Item 10.   |  | Additional Information                                                         |  | 81
|           |  | Bylaws and Mexican Law                                                         |  | 81
|           |  | Certain Contracts                                                              |  | 86
|           |  | Exchange Controls                                                              |  | 86
|           |  | Taxation                                                                       |  | 86
|           |  | Documents on Display                                                           |  | 91
|Item 11.   |  | Quantitative and Qualitative Disclosures about Market Risk                     |  | 91
|           |  | Exchange Rate and Interest Rate Risks                                          |  | 91
|           |  | Sensitivity Analysis Disclosures                                               |  | 92
|Item 12.   |  | Description of Securities other than Equity Securities                         |  | 93
|Item 12.A. |  | Debt Securities                                                                |  | 93
|Item 12.B. |  | Warrants and Rights                                                            |  | 93
|Item 12.C. |  | Other Securities                                                               |  | 93
|Item 12.D. |  | American Depositary Shares                                                     |  | 93
|           |  |                                                                               
|           |  | PART II                                                                        |  |   
|           |  |                                                                               
|Item 13.   |  | Defaults, Dividend Arrearages and Delinquencies                                |  | 94
|Item 14.   |  | Material Modifications to the Rights of Securities Holders and Use of Proceeds |  | 94
|Item 15.   |  | Controls and Procedures                                                        |  | 94
|Item 16A.  |  | Audit Committee Financial Expert                                               |  | 96



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|          |  |                                                                        |  |    
|--------- |  | ---------------------------------------------------------------------- |  | ---
|Item 16B. |  | Code of Ethics                                                         |  | 97 
|Item 16C. |  | Principal Accountant Fees and Services                                 |  | 97 
|Item 16D. |  | Exemptions from the Listing Standards for Audit Committees             |  | 98 
|Item 16E. |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |  | 98 
|Item 16F. |  | Change in Registrants Certifying Account                              |  | 99 
|Item 16G. |  | Corporate Governance                                                   |  | 100
|          |  |                                                                       
|          |  | PART III                                                               |  |    
|Item 17.  |  | Financial Statements                                                   |  | 103
|Item 18.  |  | Financial Statements                                                   |  | 103
|Item 19.  |  | Exhibits                                                               |  | 104



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FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports
to the U.S. Securities and Exchange Commission, or SEC, on Form 6-K, in our annual report to shareholders, in offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors
or employees to analysts, investors, representatives of the media and others. Examples of such forward-looking statements include:



| |  |  | projections of operating revenues, net income, net income per share, capital expenditures, dividends, capital structure or other financial items or
ratios;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements of our acquisition or divestiture plans;
| | - |  | ---------------------------------------------------



| |  |  | statements about the impact of our acquisition of businesses outside of Mexico;
| | - |  | -------------------------------------------------------------------------------



| |  |  | statements of our plans, objectives or goals relating to competition, regulation and rates;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | statements about competition in the business sectors in which we operate;
| | - |  | -------------------------------------------------------------------------



| |  |  | statements about our future financial performance or the economic performance of Brazil, Mexico or other countries;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | statements about interest rates, currency exchange rates and foreign securities markets;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | statements about the availability and cost of external financing for our operations, which have been affected by the stress experienced by the global
financial markets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements about the future impact of regulations; and
| | - |  | ------------------------------------------------------



| |  |  | statements of assumptions underlying such statements.
| | - |  | -----------------------------------------------------

Words such as believe, anticipate, plan, expect, intend, target,
estimate, project, predict, forecast, guideline, should, will and similar expressions are intended to identify forward-looking statements but are not the exclusive
means of identifying them.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number
of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors, some of which are discussed under Item 3. Key
InformationRisk Factors beginning on page 6, include the global economic crisis, technological improvements, customer demand, competition, economic and political conditions and government policies in the countries in which we operate or
elsewhere, inflation rates, exchange rates and regulatory developments. We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in
forward-looking statements.

Forward-looking statements speak only as of the date they are made. We do not undertake to update
such statements in light of new information or new developments.



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PART I



|Item 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------

Not applicable.



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------

Not applicable.



|Item 3. | Key Information
|------- | ---------------

SELECTED FINANCIAL DATA

In this annual report, Telmex Internacional, S.A.B. de C.V., a sociedad anónima
bursátil de capital variableorganized under the laws of the United Mexican States, or Mexico, is referred to as the registrant and, unless the context otherwise requires, the registrant and its consolidated subsidiaries are referred to
collectively as Telmex Internacional. Telmex Internacional was established on December 26, 2007 pursuant to a procedure under Mexican law called an escisión, or the Escisión, which split off the South American and
yellow pages businesses of Teléfonos de México, S.A.B de C.V., or Telmex. See Item 4. Information on the CompanyThe CompanyHistoryThe Escisión and Note 1 to our audited consolidated financial
statements.

This annual report includes under Item 18 our audited consolidated financial statements as of
December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007. The audited consolidated financial statements and the selected financial data provided below for the dates and periods prior to the Escisióninclude the historical operations of the entities transferred by Telmex to us in the Escisión that established Telmex Internacional on December 26, 2007. See Note 1 to our audited consolidated financial statements.

The selected consolidated financial data set forth below have been derived from our audited consolidated financial statements for each of
the five years in the period ended December 31, 2009, which have been reported on by Mancera, S.C., a member practice of Ernst & Young Global, an independent registered public accounting firm. The selected consolidated financial data
should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and notes thereto included elsewhere in this annual report.

Our consolidated financial statements have been prepared in accordance with Mexican Financial Reporting Standards, or Mexican FRS, which
differ in certain respects from generally accepted accounting principles in the United States, or U.S. GAAP. Note 19 to our audited consolidated financial statements provides a description of the principal differences between Mexican FRS and U.S.
GAAP, as they relate to us, a reconciliation to U.S. GAAP of net income and total stockholders equity, and condensed financial statements under U.S. GAAP.

Due to the adoption of Mexican FRS B-10, effective January 1, 2008, we ceased to recognize the effects of inflation on our financial
information. Through December 31, 2007, under Bulletin B-10, inflation accounting had extensive effects on the presentation of our financial statements. In our financial information for 2008 and 2009, inflation adjustments from prior periods
have not been removed from stockholders equity and the re-expressed amounts for non-monetary assets and liabilities at December 31, 2007 became the accounting basis for those assets and liabilities beginning on January 1, 2008 and
for subsequent periods, as required by Mexican FRS. Financial statements for periods prior to 2008 are presented in constant pesos as of December 31, 2007. See Item 5. Operating and Financial Review and ProspectsEffect of
Inflation Accounting.



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References herein to pesos or P. are to Mexican pesos, unless
otherwise specified, references to U.S. dollars or U.S.$ are to United States dollars and references to the real or reais are to Brazilian reales.



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|                                                         |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|-------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | -- | ------- |  | ------- | ------- | ---- | -- | ------- |  | -- | ------
|                                                         |  | Year ended December 31,                                                                                                                                       
|                                                         |  | 2009(1)                                                                                                                                                        |         | 2008(1) |    | 2007    |  | 2006(2) |         | 2005
|                                                         |  | (2009 and 2008 in millions of Mexican pesos; 2007, 2006 and 2005 inmillions of constant Mexican pesos as of December 31, 2007, except
shareand per share data)
|Income Statement Data:                                   |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Mexican FRS:                                             |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Operating revenues                                       |  | P.                                                                                                                                                             | 92,540  |         | P. | 76,005  |  | P.      | 67,760  |      | P. | 65,520  |  | P. | 61,346
|Operating costs and expenses                             |  |                                                                                                                                                                | 81,488  |         |    | 67,082  |  |         | 57,430  |      |    | 62,204  |  |    | 54,177
|Operating income                                         |  |                                                                                                                                                                | 11,052  |         |    | 8,923   |  |         | 10,330  |      |    | 3,316   |  |    | 7,169 
|Net income                                               |  |                                                                                                                                                                | 9,563   |         |    | 5,631   |  |         | 7,014   |      |    | 3,018   |  |    | 4,586 
|Majority interest                                        |  |                                                                                                                                                                | 9,105   |         |    | 5,535   |  |         | 6,464   |      |    | 2,353   |  |    | 3,180 
|Earnings per
share(3)                                    |  |                                                                                                                                                                | 0.50    |         |    | 0.30    |  |         | 0.33    |      |    | 0.11    |  |    | 0.14  
|Weighted average number of shares outstanding (millions) |  |                                                                                                                                                                | 18,157  |         |    | 18,596  |  |         | 19,766  |      |    | 20,948  |  |    | 22,893
|                                                         |  |                                                                                                                                                                |         |         |   
|U.S. GAAP:                                               |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Operating revenues                                       |  | P.                                                                                                                                                             | 92,540  |         | P. | 76,005  |  | P.      | 67,760  |      | P. | 53,924  |  | P. | 46,349
|Operating costs and expenses                             |  |                                                                                                                                                                | 82,313  |         |    | 67,716  |  |         | 58,172  |      |    | 51,641  |  |    | 41,169
|Operating income                                         |  |                                                                                                                                                                | 10,227  |         |    | 8,288   |  |         | 9,588   |      |    | 2,283   |  |    | 5,180 
|Net
income(4)                                            |  |                                                                                                                                                                | 8,587   |         |    | 3,277   |  |         | 6,163   |      |    | 1,702   |  |    | 2,955 
|Earnings per
share(3)                                    |  |                                                                                                                                                                | 0.46    |         |    | 0.18    |  |         | 0.29    |      |    | 0.08    |  |    | 0.13  
|Dividends per
share(5)                                   |  |                                                                                                                                                                | 0.17    |         |    | 0.15    |  |         |        |      |    |        |  |    |      
|                                                         |  |                                                                                                                                                                |         |         |   
|Balance Sheet Data:                                      |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Mexican FRS:                                             |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Plant, property and equipment, net                       |  | P.                                                                                                                                                             | 80,124  |         | P. | 58,479  |  | P.      | 50,494  |      | P. | 47,271  |  | P. | 44,198
|Total assets                                             |  |                                                                                                                                                                | 174,301 |         |    | 131,513 |  |         | 129,281 |      |    | 108,181 |  |    | 94,119
|Short-term debt and current portion of long-term debt    |  |                                                                                                                                                                | 12,667  |         |    | 14,728  |  |         | 4,713   |      |    | 4,932   |  |    | 1,711 
|Long-term debt                                           |  |                                                                                                                                                                | 21,310  |         |    | 10,895  |  |         | 11,269  |      |    | 12,558  |  |    | 9,196 
|Total stockholders equity                               |  |                                                                                                                                                                | 99,485  |         |    | 80,125  |  |         | 85,534  |      |    | 61,697  |  |    | 61,898
|Capital stock                                            |  |                                                                                                                                                                | 16,978  |         |    | 17,173  |  |         | 17,829  |      |    |        |  |    |      
|U.S. GAAP:                                               |  |                                                                                                                                                                |         |         |    |         |  |         |         |      |    |         |  |    |       
|Plant, property and equipment, net                       |  | P.                                                                                                                                                             | 88,449  |         | P. | 65,349  |  | P.      | 58,672  |      | P. | 42,053  |  | P. | 34,657
|Total assets                                             |  |                                                                                                                                                                | 186,841 |         |    | 135,141 |  |         | 136,177 |      |    | 89,340  |  |    | 67,470
|Short-term debt and current portion of long-term debt    |  |                                                                                                                                                                | 12,667  |         |    | 14,728  |  |         | 4,713   |      |    | 4,932   |  |    | 1,711 
|Long-term debt                                           |  |                                                                                                                                                                | 20,677  |         |    | 10,411  |  |         | 10,855  |      |    | 9,923   |  |    | 6,645 
|Total stockholders
equity(4)                            |  |                                                                                                                                                                | 111,948 |         |    | 85,837  |  |         | 91,563  |      |    | 51,956  |  |    | 44,504
|Capital stock                                            |  |                                                                                                                                                                | 16,978  |         |    | 17,173  |  |         | 17,829  |      |    |        |  |    |      



|(1) | New accounting pronouncements under Mexican FRS that became effective in 2009 and 2008 were applied on a prospective basis. As a result, the financial statements of
prior years, which are presented for comparative purposes, have not been modified and may not be comparable to our financial statements for 2009 and 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Our results of operations in 2006 were affected by several items relating to Brazilian tax proceedings. Under commercial, general and administrative costs, we recorded
(a) a charge of P.4,210 million related to Embratels settlement of a dispute over its liability for value added tax and (b) a provision of P.1,467 million for penalties and monetary correction related to income tax on incoming
international long-distance service. Under other expenses (income), net we recorded (a) other income of P.3,919 million representing the monetary gain and accrued interest related to taxes Embratel paid between 1990 and 1994 and became entitled
to recover in 2006 and (b) other expenses of P.1,862 million representing the monetary gain and interest accrued related to back income tax Embratel was required to pay in 2006 on incoming international long-distance service for prior periods.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(3) | Based on the weighted average numbers of shares of Telmex in 2007 and prior years. We have not presented net income on a per ADS basis. Each L Share ADS represents 20 L
Shares, and each A Share ADS represents 20 A Shares.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Information for prior years was retrospectively adjusted for presentation and disclosure purposes, in accordance with amendments to Accounting Standards Codification
(ASC) 810, Consolidation. See Note 19 to our audited consolidated financial statements. ASC 810 states that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the
consolidated financial statements, and requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The dividend of P.0.15 per share declared at the general shareholders meeting held in July 2008 was paid in equal installments of P.0.075 per share. Holders of
ADSs were paid a U.S. dollar equivalent of U.S.$0.144 per ADS in September 2008 and U.S.$0.111 per ADS in December 2008 (based on the exchange rate applicable on each payment date). The dividend of P.0.17 per share declared at the general
shareholders meeting held in April 2009 was paid in equal installments of P.0.085 per share. Holders of ADSs were paid a U.S. dollar equivalent of U.S.$0.128 per ADS in August 2009 and U.S.$0.131 per ADS in November 2009 (based on the exchange
rate applicable on each payment date).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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EXCHANGE RATE INFORMATION

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rate expressed in Mexican pesos
per U.S. dollar.



|         |  |      |       |     |    |            |  |            |       |  |    |      
|-------- |  | ---- | ----- | --- | -- | ---------- |  | ---------- | ----- |  | -- | -----
|Period   |  | High |       | Low |    | Average(1) |  | Period End
|2005     |  | P.   | 10.41 |     | P. | 11.41      |  | P.         | 10.89 |  | P. | 10.63
|2006     |  |      | 10.43 |     |    | 11.46      |  |            | 10.90 |  |    | 10.80
|2007     |  |      | 10.67 |     |    | 11.27      |  |            | 10.93 |  |    | 10.92
|2008     |  |      | 9.92  |     |    | 13.94      |  |            | 11.21 |  |    | 13.83
|2009     |  |      | 12.63 |     |    | 15.41      |  |            | 13.50 |  |    | 13.06
|         |  |      |       |    
|2009     |  |      |       |     |    |            |  |            |       |  |    |      
|November |  |      | 12.86 |     |    | 13.38      |  |            | 13.11 |  |    | 12.92
|December |  |      | 12.63 |     |    | 13.08      |  |            | 12.86 |  |    | 13.06
|         |  |      |       |    
|2010:    |  |      |       |     |    |            |  |            |       |  |    |      
|January  |  |      | 12.65 |     |    | 13.03      |  |            | 12.81 |  |    | 13.03
|February |  |      | 12.76 |     |    | 13.19      |  |            | 12.94 |  |    | 12.76
|March    |  |      | 12.30 |     |    | 12.74      |  |            | 12.57 |  |    | 12.30
|April    |  |      | 12.16 |     |    | 12.41      |  |            | 12.24 |  |    | 12.23



Source: The Federal Reserve Bank of New York and the U.S. Federal Reserve Board.

|(1) | Average of month-end rates for the annual periods and average daily rates for the monthly periods.
|--- | --------------------------------------------------------------------------------------------------

On May 21, 2010 the exchange rate was P.12.97 to U.S.$1.00, according to the U.S. Federal Reserve Board.

We pay cash dividends in pesos, and exchange rate fluctuations affect the U.S. dollar amounts received by holders of our American
Depositary Shares, or ADSs, on conversion by the depositary of cash dividends on the shares represented by such ADSs. Fluctuations in the exchange rate between the peso and the U.S. dollar will affect the U.S. dollar equivalent of the peso price of
our shares on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.) and, as a result, can also affect the market price of the ADSs.



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RISK FACTORS

Risks Relating to Our Business

Increasing competition in the telecommunications industry could adversely affect our revenues, profitability and market share

We face significant competition in Brazil and the other countries in which we operate, which could result in
decreases in current and potential customers, revenues and profitability. Governmental authorities in many of these countries continue to grant new licenses and concessions to new market entrants, which results in increased competition. In addition,
technological developments are increasing cross-competition in certain markets, such as between fixed-line operators and wireless providers and between cable television providers and telephony providers.

The effects of competition on our business are uncertain and will depend on a variety of factors, including economic conditions,
regulatory developments, the behavior of our competitors with regard to prices and promotions and the effectiveness of measures that we take in response to competition. Our ability to compete successfully will depend on our customer service, on our
success in selling double and triple play bundled products, on our marketing strategy and on our ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including the introduction of new services
and technologies, changes in consumer preferences, demographic trends and economic conditions, as well as discount pricing strategies implemented by our competitors. If we are unable to successfully respond to competition and compensate for
declining prices by adding new customers, increasing usage and offering new services, our revenues and profitability could decline.

Adverse global economic conditions and, in particular, the slowdown of the Brazilian, U.S. and Mexican economies could have a
negative impact on our operating results and financial condition

Our business is influenced by general global
economic conditions. Further deterioration in the economic environment could have an adverse effect on demand for some of our products and services. In difficult economic conditions, consumers may seek to reduce discretionary spending. Under these
conditions, the business customers that we serve may delay purchasing decisions, delay full implementation of service offerings or reduce their use of services. Adverse economic conditions may also lead to an increased number of our residential and
business customers that are unable to pay for services. If these events were to occur, it could have a material adverse effect on our results of operations.

Our industry is subject to rapid technological changes, which could adversely affect our ability to compete

The telecommunications industry is subject, by nature, to frequent technological change and technology convergence is taking place and
new competitors are emerging. Our future success depends, in part, on our ability to anticipate and adapt in a timely manner to these changes and to implement and adapt our network and platform to support new services. We expect that new products
and technologies will emerge and that existing products and technologies will further develop. These new products and technologies may reduce the prices we can charge for our services or they may be superior to, and render obsolete, the products and
services we offer and the technologies we use. They may consequently reduce the revenues generated by our products and services or require investment in new technology. As a result, our most significant competitors in the future may be new entrants
to our markets that would not be burdened by an installed base of older equipment. This challenge forces us to continuously re-invent our processes and keep our human capital knowledgeable of technological trends and changes.



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Changes in government regulation could hurt our businesses

Our businesses are subject to extensive government regulation and can be adversely affected by changes in law, regulation or regulatory
policy. The licensing, construction, operation, sale, resale and interconnection arrangements of telecommunications systems in Latin America and elsewhere are regulated to varying degrees by government or regulatory authorities. Any of these
authorities having jurisdiction over our businesses could adopt or change regulations or take other actions that could adversely affect our operations. In particular, the regulation of prices that operators may charge for their services could have a
material adverse effect on us by reducing our profit margins.

Many Latin American countries have recently privatized, and in
some cases, deregulated, the provision of communications services and many of the laws, regulations and licenses that regulate our businesses became effective only recently. Consequently, there is only a limited history that would allow us to
predict the impact of these regulations on our future operations. In reviewing historical information and in evaluating our future financial and operating performance, you should consider carefully the extensive changes in the structure and
regulation of our industry.

For example, in Brazil, where increased regulation accompanied privatization, the
Brazilian National Telecommunications Agency (Agência Nacional de Telecomunicações, or Anatel) in 2005 defined a series of cost-based methods, including the fully allocated cost methodology and
long-run incremental cost methodology, for determining interconnection fees charged by operators belonging to an economic group with significant market power. Anatel has not published the applicable regulations regarding cost-based methods, although
in 2006 it provided criteria for determining whether an operator belongs to a group with significant market power in four segments: rented lines, telephone services, fixed interconnection and mobile interconnection. Based on these criteria, Anatel
concluded that Embratel is an economic group with significant market power in two of the segments: long distance rented lines and long distance telephone service. When the cost-based methods are ultimately implemented, the revenues and results of
operations of our Brazilian business may be affected.

In 2009, Anatel began a public comment process regarding
proposed changes to Embratels concessionary contracts, which could impact both its quality of service targets and the obligation to provide public pay telephones.

In addition, changes in political administrations could lead to the adoption of policies concerning competition, privatization and
taxation of communications services that may be detrimental to our operations throughout Latin America. These restrictions, which may take the form of preferences for local over foreign ownership of communications licenses and assets, or for
government over private ownership, may make it impossible for us to continue to develop our businesses. These restrictions could result in our incurring losses of revenues and require capital investments all of which could materially adversely
affect our businesses and results of operations.

We depend on key suppliers and vendors to provide equipment that we
need to operate our business

We depend upon various key suppliers and vendors, including Cisco, Nokia-Siemens,
Huawei, Alcatel-Lucent, Motorola and Hispamar to provide us network equipment or services, which we need to expand and operate our business. If these suppliers or vendors fail to provide equipment or service to us on a timely basis, we could
experience disruptions, which could have an adverse effect on our revenues and results of operations. In addition, we might be unable to satisfy the requirements contained on our concessions.



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We are exposed to special risks in connection with our international call services

Revenues from international service in part reflect payments under bilateral agreements between us and foreign
telecommunications authorities or private carriers, which are influenced by the guidelines of the international tariff and trade regulations and cover virtually all international calls to and from the countries in which we operate. Various factors,
including unauthorized international traffic (commonly known as bypass), increases in the proportion of outgoing to incoming calls and the levels of settlement prices could affect the amount of net settlement payments from U.S. or other
international carriers to us in future years.

Developments in the telecommunications sector have resulted, and in the
future may result, in substantial write-downs of the carrying value of certain of our assets

We review the value of
our long-lived assets to assess whether those carrying values can be supported by the future cash flows expected to be derived from such assets. In addition, whenever we consider that our fixed assets, intangible assets or goodwill may be impaired
due to changes in the economic, regulatory or business environment, we consider the necessity of performing certain valuation tests, which may result in impairment charges. The recognition of impairments of long-lived tangible and intangible assets
could result in a non-cash charge on our income statement, which could adversely affect our results of operations.

We
continue to look for investment opportunities, and any future acquisitions and related financings could involve risk and have a material effect on our business, results of operations and financial condition

We continue to look for other investment opportunities in telecommunication companies, primarily in Latin America, and we often have
several possible acquisitions under consideration. Any new investment may involve risks to which we previously have not been exposed. We cannot assure you that these investments will be successful. Any future acquisitions and related financings also
could have a material effect on our business, results of operations and financial condition, but we cannot give any assurances that we will complete any of them. In addition, we may incur significant costs and expenses as we integrate these
companies in our systems, controls and networks.

Our ability to pay dividends depends on our subsidiaries ability
to transfer income and dividends to us

We are a holding company with no significant assets other than the shares of
our subsidiaries and our holdings of cash and cash equivalents. Accordingly, our cash flows will be derived principally from dividends, interest and other distributions made to us by our subsidiaries. Our ability to pay dividends depends on the
continued transfer to us of dividends and other income from our subsidiaries. The ability of our subsidiaries to pay dividends and make other transfers to us may be limited by various regulatory, contractual and legal constraints that affect our
subsidiaries.

We are subject to regulatory limitations in Brazil on the prices we can charge for our domestic and
international long distance services

Embratels concessions provide for a price cap mechanism to set and adjust
rates for basic domestic and international long distance tariffs on an annual basis. We are subject to comprehensive regulations that limit our ability to set tariffs for our services. These regulations may limit our ability to raise prices or may
render some kinds of customer traffic unprofitable.



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Tariff regulations are subject to challenge in the Brazilian courts, which may result in a
loss of profits. We cannot assure you that our financial condition will not be affected by tariff rate challenges in the future.

We are at a disadvantage in Brazil relative to certain of our competitors that control local access networks

To complete long distance telephone calls, we typically must pay originating access charges to the local or the mobile telephone service
provider of the caller and terminating access charges to the local or the mobile telephone service provider of the recipient of the call. The Brazilian Telecommunications Law and the concessions for local services oblige local service
concessionaires to treat all long distance operators on an equal basis. This means that local service concessionaires should charge their own long distance service concessionaire the same interconnection rate charged to competitors like us. In
addition, the Brazilian Telecommunications Law prohibits cross-subsidies between local and long distance concessions, so that if a local service concessionaire were to charge its own long distance concessionaire a lower interconnection rate than the
one charged to us, it would be engaging in an anti-competitive practice under the law. However, since some companies own both local and long distance concessions, proving discriminatory pricing and cross-subsidies may be difficult and Anatel may not
have sufficient means to audit and prove such practices. As a result, while we must pay access charges to the local service concessionaire, a local service concessionaire may allow its own long distance concessionaire to avoid payment of such
charges. Although we have demanded and will continue to demand that Brazils competitive regulation be fully enforced to prevent local service concessionaires from allowing their long distance concessionaires to sell long distance services
below cost, there can be no assurance that we will be successful in achieving such enforcement and we may suffer anti-competitive behavior in certain segments of the long distance market.

Since January 1, 2006, fixed-line local access and long distance interconnection rates have been capped at a fixed percentage of the
rates charged to customers, which may limit the ability of local service concessionaires to engage in the discriminatory pricing practices described above, but we cannot assure you that this measure or similar measures adopted in the future will be
effective in counteracting these practices.

Most of our basic voice services in Brazil are sold on a per call basis.
This makes it easier for customers to switch providers, which could lead us to lose business

Under Brazilian
regulations, fixed-line and mobile telephone customers can select their basic domestic and international long distance carrier on a per call basis. Thus, we do not have contracts with most of our customers in our basic domestic and international
long distance segment, and those customers can select a different provider at any time. We cannot assure you that our customers will remain loyal to us. If a significant number of our customers were to select another telecommunications service
provider, it could have a material adverse impact on our business and financial condition.

If we are unable to
successfully combat fraudulent use of our network in Brazil, as well as in the other countries in which we operate, and successfully manage the collections process, our bad debt expense could increase, which would harm our results and our cash flow

Embratel, as well as our other operations, have experienced high levels of bad debt expense, in part because it is
required to provide access to our network to all fixed-line and cellular customers without



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prior assurance that they are creditworthy users. Brazilian telecommunications regulations allow operators to block fixed-line and cellular users only after the customer fails to pay the amount
billed. Embratels bad debt expense was 3.7% of its net revenues for the year ended December 31, 2009 and 3.7% of its net revenues for the year ended December 31, 2008.

We cannot assure you that our strategies will be effective in combating the fraudulent use of our network or in enabling us to recover
unpaid amounts billed for use of our networks or that efforts that have proved effective in our traditional business will be equally effective in markets such as personal mobile service (SMP) mobile calls and local services. Embratels level of
bad debt expense may increase in the future, which could harm our profitability and operating cash flow.

We are
obligated to meet certain quality of service goals and maintain quality of service standards, and failure to meet such obligations can result in sanctions

Anatel requires Embratel under its concessions to meet certain quality of service goals, including, for example, minimum call completion
rates, maximum busy circuit rates, operator availability and responsiveness to repair requests. Failure to meet quality of service obligations can result and has resulted in the imposition of fines by Anatel and other governmental entities. Our
ability to meet these goals can be impeded by factors beyond our control, and we cannot assure you that we will meet these goals in the future or that we will not be fined in the future.

We are subject to large claims under legal disputes in Brazil

Embratel is party to various legal proceedings in Brazil, some of which involve significant monetary claims for which we have established
no reserves. In particular, Embratel is involved in various legal proceedings, including several tax disputes with the Brazilian tax authorities alleging underpayments by Embratel and social security administrative and civil lawsuits for aggregate
claims that are substantial. We cannot be certain that these claims will be resolved in our favor. As of December 31, 2009, Embratel had recorded P.2,549 million in reserves for disputes for which an unfavorable result is probable. There is an
additional P.32,225 million claimed for which we believe the likelihood of an unfavorable outcome is possible but less than probable and, consequently, we have not provided a reserve for such amount in our financial statements. If all or a
significant part of these actions were decided adversely to us, it could have a material impact on our business, financial condition and results of operations.

We will face increased costs if Star One is not able to launch a replacement satellite prior to the end of the operational life of
the existing Brasilsat B-3 satellite

Our satellite subsidiary in Brazil, Star One S.A., or Star One, currently has
five satellites in geostationary orbit and two satellites in inclined orbit. Satellites have an operational life, based on the expected duration of the satellites equipment and propellant at the start of commercial operations.

The Brasilsat B-3 satellite is predicted to run out of propellant by February 2013, and its replacement satellite, the Star One C-3 is
currently being manufactured and is expected to become operational in June 2012. Delays in the launch of Star One C-3 may occur as a result of construction delays, unavailability of launch vehicles and other reasons.

Moreover, satellites are subject to launch failures. If either delivery of the replacement satellite is delayed or failure occurs and
Star One fails to implement a contingency plan for an interim solution that will maintain the continuity of Brasilsat B-3s customer traffic for a sufficient period of time to allow for successful procurement and launch of a replacement
satellite, we may be unable to properly serve our satellite customers and could experience a decrease in our revenues.



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Star Ones in-orbit satellites are subject to operational risks

Satellites in orbit are susceptible to anomalies, which are incidents that impair normal satellite operation but for
which redundant components may reestablish normal operation. Satellites may also experience more serious malfunctions or other failures. Some anomalies may affect key components or units critical to satellite operation and we may be unable to
restore normal operations by using a redundant component or unit onboard the satellite. As a consequence, an anomaly may, either in whole or in part, degrade the satellites performance, shorten its operational life, and reduce its capacity
available for sale. In the event of an anomaly, we may be unable to properly serve our satellite customers and could experience a decrease in our revenues.

In August 2008, the Star One C-1 satellite experienced an anomaly affecting one of the three operating momentum wheels. This occurrence
did not cause any traffic disturbance to our customers, shorten its operational life, reduce its capacity or affect its revenue-generating ability, although the anomaly caused insurers to include an additional exclusion in our in-orbit insurance
policy for Star One C-1. A redundant momentum wheel has replaced the affected momentum wheel and the satellite has been operating normally. The momentum wheels manufacturer considers the anomaly an isolated event. The cause of the anomaly
after initial investigations seems to be a possible lack or excess of lubricant in the ball-bearing system. The functionality of the affected momentum wheel is still under evaluation. Regardless of the results of the evaluation, we cannot be certain
that the momentum wheel set that is currently operational will continue to function satisfactorily in the future. In the event of unsatisfactory operation, the satellites commercial life may be shortened and we could experience a decrease in
our revenue-generating ability.

In December 2009, a spontaneous switch-off of a Ku-band radio frequency (Rf) amplifier of the
Star One C-2 satellite occurred. Star One tried twice without success to switch back on the affected amplifier. The satellites transponder is using one of the two redundant amplifiers available in place of the affected polarization amplifiers.
If the two additional operating amplifiers with the same polarization switch off spontaneously and Star One is unable to switch them back on, one radio frequency channel of Star One C-2 will be unavailable and Star One could experience a decrease in
its revenue-generating ability.

Latin American economic, political and social conditions may adversely affect our
business

Our financial performance may be significantly affected by general economic, political and social conditions
in the markets where we operate. Many countries in Latin America, including Mexico and Brazil, have suffered significant economic, political and social crises in the past, and these events may occur again in the future. We cannot predict whether
changes in administrations will result in changes in governmental policy and whether such changes will affect our business. In addition, governments in these countries have frequently intervened in their economies. The Brazilian governments
actions to control inflation and other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price and wage controls, currency devaluations, capital control and limits on export and
imports.

Uncertainty in the region has been caused by many different factors, including:



| |  |  | significant governmental influence over local economies;
| | - |  | --------------------------------------------------------



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| |  |  | substantial fluctuations in economic growth;
| | - |  | --------------------------------------------



| |  |  | high levels of inflation;
| | - |  | -------------------------



| |  |  | changes in currency values;
| | - |  | ---------------------------



| |  |  | exchange controls or restrictions on expatriation of earnings;
| | - |  | --------------------------------------------------------------



| |  |  | high domestic interest rates;
| | - |  | -----------------------------



| |  |  | wage and price controls;
| | - |  | ------------------------



| |  |  | changes in governmental economic or tax policies;
| | - |  | -------------------------------------------------



| |  |  | imposition of trade barriers;
| | - |  | -----------------------------



| |  |  | unexpected changes in regulation; and
| | - |  | -------------------------------------



| |  |  | overall political, social and economic instability.
| | - |  | ---------------------------------------------------

Adverse economic, political and social conditions in Latin America may inhibit demand for telecommunications services and create
uncertainty regarding our operating environment, which could have a material adverse effect on us.

Our financial
condition and results of operations are affected by exchange rate variations

Changes in the value of the various
currencies in which we conduct operations against the Mexican peso and changes in the value of the Mexican peso or our other operating currencies against the U.S. dollar affect our financial condition and results of operations. We report exchange
gains or losses on our indebtedness and accounts payable, especially in U.S. dollars, and currency variations affect the results of our non-Mexican subsidiaries as reported in Mexican pesos.

Since 2004, we have acquired a number of companies in other countries in Latin America. During the period from 2004 to 2007, the Mexican
peso was relatively stable against the U.S. dollar, although currencies of certain other countries, specifically the Brazilian realand the Colombian peso, appreciated relative to the U.S. dollar and the Mexican peso. Since 2008, the
currencies of most countries in which we operate have depreciated against the U.S. dollar due to the current financial crisis. 2009 was characterized by currency volatility that resulted from market uncertainty. Such volatility in exchange rates
amplifies the impact of operations in these countries on our revenues as well as costs. We cannot predict the behavior of the Mexican peso and other currencies against the U.S. dollar in the future and what effect they will have on our financial
condition and results of operations.

Exchange rate variations also affect our debt. We use derivative financial
instruments to manage our exposure to the risk associated with such variations. As of December 31, 2009, our U.S. dollar-denominated indebtedness amounted to P.12,614 million. In 2007, the Mexican peso and Brazilian realgenerally appreciated against the U.S. dollar, and our foreign exchange gain was offset by losses on derivative financial instruments we had entered into. In 2008, the Mexican peso and Brazilian
real generally depreciated against the U.S. dollar. In 2008, we had an exchange rate loss due to the depreciation of the Brazilian real against the dollar, which was partially
offset by the fair value gain on the derivatives that we had in place to manage our exposure to the risk associated with such variations. In 2009, we had an exchange rate gain due to the appreciation of the Brazilian realagainst the U.S. dollar, which was partially offset by the fair value loss on the derivatives that we had in place to manage our exposure to the risk associated with such variations.



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Major devaluation or depreciation of any such currencies may also result in disruption of
the international foreign exchange markets and may limit our ability to transfer or to convert such currencies for the purpose of paying dividends or making timely payments of interest and principal on our indebtedness. The Mexican government or the
Brazilian government could institute restrictive exchange rate policies in the future, which could adversely affect us.

The ongoing uncertainty in global financial markets could materially adversely affect our ability and our larger customers
ability to access capital needed to fund business operations

The instability in the global financial markets and
ongoing uncertainty affecting these markets have resulted in volatility in the credit, equity and fixed income markets. This volatility may continue to limit companies access to the credit markets, leading to significantly higher borrowing
costs for companies or, in many cases, the inability of these companies to fund their ongoing operations. As a result, our larger customers, who tend to be heavy users of our data services, may be forced to delay, reduce or preclude their ability to
finance purchases of our products and services and may delay payment or default on outstanding bills owed to us.

In addition,
we enter into transactions with large financial institutions to support our own treasury operations, including contracts to minimize our exposure on interest rates and foreign exchange, and the funding of credit lines and other short-term debt
obligations, including commercial paper. A financial crisis could render us unable to access the credit and fixed income markets when needed, severely affecting our business operations.

Furthermore, banking institutions that are the subject of divestiture or merger, or that are in distress, may restrict the availability
of capital to customers, including customers that have existing credit facilities. Banks may be unwilling to renew expiring credit facilities or to extend them on the same terms. In some cases, financial institutions may be unable or unwilling to
honor their commitments, particularly if they fail.

We are exposed to currency and interest rate risk on our debt, and
we have entered into derivatives contracts to limit these risks

A substantial part of our indebtedness is denominated
in U.S. dollars, and we have relatively limited assets and revenues denominated in U.S. dollars. As of December 31, 2009, 37% of our indebtedness was denominated in U.S. dollars (P.12,614 million). In addition, our indebtedness bears interest
at variable rates. As a result, we are exposed to risks from fluctuations in currency exchange rates and interest rates.

To offset these risks, we enter into derivative financial instruments with large financial institutions to minimize the
impact of changes in exchange rates and variable interest rates on our indebtedness. The types of derivative financial instruments we have typically entered into in recent periods principally include cross-currency swaps (in which we generally pay
Brazilian real amounts based on Brazilian real interest rates and receive U.S. dollar amounts based on U.S. dollar interest rates).

Our derivative financial instruments do not provide complete protection against the exchange rate or interest-rate risk of our
indebtedness. We may determine that the risks are acceptable or that the protection available through derivative financial instruments in the market is insufficient or too costly. These determinations depend on many factors, including market
conditions, the specific risks in question and our expectations concerning future market developments. We review and change our derivatives positions regularly, and our hedging policies change from time to time.



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When the financial markets are volatile, as they have been in recent periods, our results of
operations may be substantially affected by variations in exchange rates and, to a lesser degree, interest rates. These effects include foreign exchange gain and loss on assets and liabilities denominated in U.S. dollars, fair value gain and loss on
derivative financial instruments and changes in interest income and interest expense. These effects are generally much more volatile than our operating performance or our operating cash flows.

We attempt to match the cash flows on our derivative transactions with the cash flows on our indebtedness. The net effects on our
reported results in any period are difficult to predict and depend on market conditions and on the specifics of our derivatives positions. For example, in 2009 the Brazilian real appreciated against the U.S. dollar by 25.5%, from R$2.3370 per
U.S.$1.00 as of December 31, 2008 to R$1.7412 per U.S.$1.00 as of December 31, 2009. We recognized an exchange gain of P.4,103 million resulting from the appreciation of the Brazilian real against the dollar, and a net fair value
loss of P.1,670 million on cross-currency swaps.We also recognized lower interest expense due to a slight reduction in the average level of debt held by Embratel and a decrease in the average LIBOR interest rate.

Our derivative transactions are also subject to the risk that counterparties will default or seek bankruptcy protection. The instability
and uncertainty in the financial markets have made it more difficult to assess the risk of counterparties to derivatives contracts. Moreover, in light of the greater volatility in the global securities and exchange markets, there may be fewer
financial entities available with which we could continue entering into derivative financial instruments to protect against currency and interest rate risk.

Our historical performance may not be representative of our performance as a separate company

Our audited consolidated financial statements and the selected financial data included herein for the dates and periods prior to the
Escisión in December 2007 include the historical operations of the entities transferred by Telmex to us in the Escisión. Our historical performance might have been different if we had been separate from Telmex during the
periods presented.

The historical financial information included in this annual report is not necessarily indicative of what
our results of operations, financial position and cash flows will be in the future.

Risks Relating to Our Controlling Shareholder and
Capital Structure

We are controlled by one shareholder

A majority of the voting shares of our company (71.6% as of March 5, 2010) is owned by Carso Global Telecom, S.A.B. de C.V., or Carso
Global Telecom. Carso Global Telecom has the effective power to designate a majority of the members of our board of directors and to determine the outcome of other actions requiring a vote of the shareholders, except in very limited cases that
require a vote of the holders of L Shares. Carso Global Telecom is controlled by Carlos Slim Helú and members of his immediate family, who, taken together, own a majority of the common stock of Carso Global Telecom.

On May 11, 2010, América Móvil commenced two concurrent public exchange offers to acquire the outstanding shares of
Carso Global Telecom and Telmex Internacional. The exchange offers will expire on June 10, 2010, unless extended. Shareholders of Carso Global Telecom have been offered



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2.0474 L Shares of América Móvil for each share of Carso Global Telecom. Holders of Telmex Internacional A Shares or L Shares may elect to receive either 0.373 L Shares of
América Móvil or P.11.66 in cash. Carso Global Telecom and América Móvil may both be deemed to be controlled by Carlos Slim Helú and members of his immediate family.

Carso Global Telecom has announced that it will not tender any of its Telmex Internacional L Shares and A Shares in the exchange offer
related to Telmex Internacional. However, if the exchange offer is accepted by the shareholders of Carso Global Telecom, América Móvil will indirectly acquire 60.7% of our shares through its ownership of Carso Global Telecom. AT&T
Inc. has stated, in a beneficial ownership report filed with the SEC on April 30, 2010, that it intends to tender all of its Telmex Internacional shares and ADSs in the exchange offer related to Telmex Internacional in exchange for
América Móvil L Shares.

The protections afforded to minority shareholders in Mexico are different from
those in the United States

Our bylaws provide that any dispute between us and our shareholders will be governed by
Mexican law and that legal actions relating to the execution, interpretation or performance of the bylaws may be brought only in Mexican courts. Under Mexican law, the protections afforded to minority shareholders are different from those in the
United States. In particular, the case law concerning fiduciary duties of directors is not well developed, there is no procedure for class actions, there are different procedural requirements for bringing shareholder lawsuits and there are different
discovery rules. As a result, it may be more difficult in practice for minority shareholders of Telmex Internacional to enforce their rights against us or our directors or controlling shareholder than it would be for shareholders of a U.S. company.

We engage in transactions with related parties that may create the potential for conflicts of interest

We engage in transactions with entities that, like us, are controlled, directly or indirectly, by Carlos Slim
Helú and members of his immediate family. These entities include (a) Telmex and certain subsidiaries of Telmex, (b) Grupo Carso, S.A.B. de C.V., or Grupo Carso, and its subsidiaries, (c) Grupo Financiero Inbursa, S.A.B. de
C.V., or Grupo Financiero Inbursa, and its subsidiaries, (d) América Móvil, S.A.B. de C.V., or América Móvil, and its subsidiaries and (e) Carso Global Telecom. Our transactions with Telmex include the
completion of the international traffic of Telmex in countries where we operate, the completion of our international traffic through Telmexs facilities in Mexico, our publication and distribution of Telmexs directories and access to
Telmexs customer database and Telmexs billing and collection in connection with our directories business. Transactions with Grupo Carso include the purchase of network construction services and materials, and transactions with
Grupo Financiero Inbursa include financial services and insurance. Our transactions with América Móvil include mutual completion of long distance traffic, transportation of calls, rental of transmission lines in most of the countries
in which we operate and provision of call center services mostly in Brazil.

With respect to our shareholders Carso Global
Telecom and AT&T International, we entered into agreements for consulting and management services in 2009. We paid both companies an aggregate of U.S.$25 million for such services in 2009. The current agreement with Carso Global Telecom was
renewed for 2010 on substantially similar terms to the prior agreement and we will pay U.S.$22.5 million this year under the agreement. We expect to enter into an agreement with AT&T International for 2010 with substantially similar terms as the
agreement in place in 2009. In addition, we have agreements with AT&T International that provide for the completion of calls in our respective countries of operation.



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Our transactions with related parties may create the potential for conflicts of interest.

Holders of L Shares and L Share ADSs have limited voting rights

Our bylaws provide that holders of L Shares are not permitted to vote except on such limited matters as the transformation or merger of
Telmex Internacional or the cancellation of registration of the L Shares with the National Securities Registry (Registro Nacional de Valores), managed by the Mexican National Banking and Securities Commission (Comisión Nacional
Bancaria y de Valores, or CNBV) or any stock exchange on which they are listed. If you hold L Shares or L Share ADSs, you will not be able to vote on most matters, including the declaration of dividends, which are subject to a shareholder vote
in accordance with our bylaws.

Holders of ADSs are not entitled to attend shareholders meetings, and they may
only vote through the ADS depositary

Under Mexican law, a shareholder is required to deposit its shares with a
custodian in order to attend a shareholders meeting. As long as a shareholder holds shares in ADS form, the shareholder will not be able to satisfy this requirement. There can be no assurance that holders of ADSs will receive notice of
shareholders meetings from our ADS depositary in sufficient time to enable such holders to return voting instructions to the ADS depositary in a timely manner. In the event that instructions are not received with respect to any shares
underlying ADSs, the ADS depositary will, subject to certain limitations, grant a proxy to a person designated by us. In the event that this proxy is not granted, the ADS depositary will vote these shares in the same manner as the majority of the
shares of each class for which voting instructions are received.

You may not be entitled to preemptive rights

Under Mexican law, if we issue new shares for cash as part of a capital increase, we generally must grant our shareholders
the right to purchase a sufficient number of shares to maintain their existing ownership percentage in Telmex Internacional. Rights to purchase shares in these circumstances are known as preemptive rights. Preemptive rights do not arise upon the
sale of newly issued shares in a public offering or the resale of shares of capital stock previously repurchased by us.

We
may not legally be permitted to allow holders of ADSs or holders of L Shares or A Shares in the United States to exercise any preemptive rights in any future capital increase unless we file a registration statement with the SEC with respect to that
future issuance of shares. At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration statement with the SEC and any other factors that we consider important to determine
whether we will file such a registration statement. We cannot assure you that we will file a registration statement with the SEC to allow holders of ADSs or U.S. holders of L Shares or A Shares to participate in a preemptive rights offering. As a
result, the equity interest of such holders in Telmex Internacional may be diluted proportionately. In addition, under current Mexican law, it is not practicable for the ADS depositary to sell preemptive rights and distribute the proceeds from such
sales to ADS holders.

Our bylaws restrict transfers of shares in some circumstances

Our bylaws provide that any acquisition or transfer of 10% or more of our capital stock by any person or group of persons acting together
requires the approval of our board of directors. If you wish to acquire or transfer 10% or more of our capital stock, you will not be able to do so without the approval of our board of directors.



16



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##### Table of Contents

Our bylaws restrict the ability of non-Mexican shareholders to invoke the protection
of their governments with respect to their rights as shareholders

As required by Mexican law, our bylaws provide that
non-Mexican shareholders shall be considered as Mexicans in respect of their ownership interests in Telmex Internacional and shall be deemed to have agreed not to invoke the protection of their governments in certain circumstances. Under this
provision, a non-Mexican shareholder is deemed to have agreed not to invoke the protection of his own government by asking such government to interpose a diplomatic claim against the Mexican government with respect to the shareholders rights
as a shareholder but is not deemed to have waived any other rights he may have, including any rights under the U.S. securities laws, with respect to his investment in Telmex Internacional. If you invoke such governmental protection in violation of
this agreement, your shares could be forfeited to the Mexican government.

It may be difficult to enforce civil
liabilities against us or our directors, officers and controlling persons

Telmex Internacional is organized under the
laws of Mexico, and most of our directors, officers and controlling persons reside outside the United States. In addition, a substantial portion of our assets and their respective assets are located in Brazil and Mexico. As a result, it may be
difficult for investors to effect service of process within the United States on such persons or to enforce judgments, including in any action based on civil liabilities under the U.S. federal securities laws, against them. There is doubt as to the
enforceability against such persons in Mexico or Brazil, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws.



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##### Table of Contents

|Item 4. | Information on the Company
|------- | --------------------------

THE COMPANY

Overview

We are a
Mexican holding company, providing through our subsidiaries in Brazil, Colombia, Argentina, Chile, Peru, Ecuador and Uruguay a wide range of telecommunications services, including voice, data and video transmission, Internet access and integrated
telecommunications solutions, and pay cable and direct-to-home satellite television, all of which we bundle through double and triple play offerings. We also provide print and Internet-based yellow pages directories in Mexico, the United States,
Argentina, Peru and Colombia.

Our principal business is in Brazil, which accounts for nearly 80% of our total revenues. We
operate in Brazil through Embratel Participações S.A. and its subsidiaries. We refer to Embratel Participações S.A. and, where the context requires, its consolidated subsidiaries, as Embratel.

The following is a summary of our business by geographic market:



| |  |  | Brazil. Through Embratel, we are one of the leading providers of telecommunications services in Brazil. Our principal service offerings in
Brazil include local telephone service; domestic and international long-distance; data solutions; Internet access; data center services; and satellite services (direct-to-home (DTH) pay television services, data, Internet and telephone services),
though Embratel is evolving from being a long-distance revenue-based company to being an integrated telecommunications provider. Through Embratels high-speed data network, we offer a broad array of products and services to a substantial number
of Brazils 500 largest corporations. In addition, through Embratels partnership in Net Serviços de Comunicação S.A., or Net, the largest cable television operator in Brazil whose network passes approximately
10.8 million homes, we offer triple-play services in Brazil.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Colombia. We operate in Colombia through Telmex Colombia S.A. and several cable television subsidiaries that we acquired beginning in October
2006 and whose network passes 4.9 million homes. We offer data solutions, Internet access, local telephone service, domestic and international long distance, data center services and pay cable television services to residential and corporate
customers.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Argentina. We provide data solutions, Internet access, local telephone service, domestic and international long-distance and hosting services
through two data centers to corporate and residential customers. We also offer broadband Internet and telephony access through WiMax in the 3.5 GHz frequency and GPON access technologies to service small- to medium-sized businesses.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Chile. We provide pay television services throughout Chile. We offer such services along with local telephone services, long-distance and
broadband services to the residential market. To small- and medium-sized business customers, as well as to corporate customers, we provide data solutions, local telephone services, domestic and international long-distance, Internet access, data
center services, high capacity media services and other advanced services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Peru. We provide data solutions, Internet access, local telephony, domestic and international long-distance, public telephone services, pay
television, data center services and application- managed services for residential and corporate clients. We have a network that passes approximately 320,000 homes. We recently began offering fixed wireless telephony using CDMA 450 MHz technology in
the interior provinces of the country. We also employ a WiMax platform in the 3.5 GHz frequency.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ecuador. We entered the telecommunications market in Ecuador in March 2007 as a competitive alternative to local incumbents in the residential
and business segments. We offer data solutions, data center, Internet access, local telephone services, domestic and international long-distance, public telephone services and pay cable television services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Uruguay. We provide data solutions, Internet access, international long-distance, data center services and international managed voice, data and
video services to corporate and residential customers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Yellow pages. Our yellow pages business operates in five countries and we publish a total of 179 directories. Of these directories, 124 are
available in Mexico throughout all of the Mexican states and Mexico City, 36 are available in 23 states of the United States with a particular focus on Hispanic markets, two directories are available in Peru in the city of Lima and two directories
are available in Argentina in the city of Buenos Aires. In 2009, we began operations of our yellow pages business in Colombia, with two directories available in the city of Cali.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Telmex Internacional, S.A.B. de C.V. is a sociedad anónima bursátil de capital variable organized under the laws of
Mexico with its principal executive offices at Avenida de los Insurgentes 3500, Colonia Peña Pobre, Delegación Tlalpan, 14060 México, D.F., México. The telephone number of Telmex Internacional at this location is 52
(55) 5223-3200. Our website can be accessed at www.telmexinternacional.com.

Our strategy

As an integrated telecommunications company with service offerings across Latin America, we aim to satisfy the telecommunications needs of
our customers by providing an integrated selection of products and services that are supported by innovation, convergence and management. We strongly believe in creating value for our customers with profitability. Consistent with this objective, our
corporate strategy is based on three tactical pillars: growth, optimization and service. These three pillars of our strategy consist of:



| |  |  | increasing the number of our services used by existing customers and penetrating new markets with a greater variety of telecommunications products and
services with more and better features;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | maximizing revenues, controlling costs, reducing churn and identifying and replicating best practices throughout all the countries in which we operate;
and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | ensuring quality throughout the entire customer process, from presales, sales, installation and post-sales service, offering personalized and special
care to all our customers with the best service.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

History

We were established on December 26, 2007, by means of a procedure under Mexican corporate law called escisión, by which
Telmex split off its South American and yellow pages directory businesses.

The Escisión

The Escisión by which we were established was conducted using a procedure under Mexican corporate law called
escisión, or split-up. In an escisión, an existing company is divided, creating a new company to which specified assets and liabilities are allocated. The shares of the new company are issued to the
shareholders of the existing company pro rata to their share ownership in the existing company. This procedure differs from the procedure by which a spin-off is typically conducted in the United States, where a parent company distributes to its
shareholders shares of a subsidiary.

The Escisión was approved on December 21, 2007, by a single action of
the shareholders of Telmex at an extraordinary meeting. Our establishment became effective on December 26, 2007. As of the effective date of the Escisión, each holder of Telmex shares became the owner of an equal number of Telmex
Internacional shares of the corresponding class, and each Telmex ADS represented an equal number of Telmex and Telmex Internacional shares. On June 10, 2008, our shares and ADSs started trading separately from our shares and ADSs on the Mexican
Stock Exchange and the New York Stock Exchange.

Embratel

We acquired Embratel in a series of transactions beginning in July 2004. As of May 24, 2010, we owned 98.1% of the outstanding voting
stock and 98.0% of the outstanding non-voting stock of Embratel (98.1% of the total outstanding capital stock) as a result of transactions undertaken from 2004 through 2007:



| |  |  | In July 2004, Telmex purchased 51.8% of the outstanding voting stock of Embratel from MCI for a cash purchase price of U.S.$400 million (P.5,144
million).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In December 2004, Telmex purchased additional voting stock through a tender offer for a total of U.S.$271.6 million (P.3,413 million).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Between March and May 2005, Telmex purchased new voting and non-voting stock in a capital increase of Embratel.
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | In October 2005, Telmex received new voting stock in exchange for Telmexs capital stock of Telmex do Brasil Ltda., or Telmex do Brasil, and its
37.1% interest in Net.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In May 2006, Telmex began a cash tender offer for any and all publicly held shares of Embratels voting and non-voting stock at a price of 6.95
Brazilian reais per 1,000 shares, plus an adjustment at a monthly index published by the Central Bank of Brazil. In November 2006, Telmex acquired all tendered shares of Embratels voting and non-voting stock, including non-voting shares
represented by ADSs, increasing Telmexs interest in Embratel to 98.0% of the outstanding voting stock and 94.7% of the outstanding non-voting stock. As required under Brazilian law, Telmex continued to purchase shares at the tender offer price
following the expiration of the tender offer through June 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Other South American Telecommunications and Cable Businesses

In addition to the acquisition of Embratel, Telmex also made the following significant acquisitions to expand operations into Latin
America beginning in 2004:



| |  |  | companies that are now known as Telmex Argentina S.A., Telmex do Brasil, Telmex Chile Holding S.A., Telmex Colombia S.A. and Telmex Perú S.A.
(holding the assets of AT&T Latin America Corp.) in February 2004;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | PrimeSys Soluções Empresariais S.A., or PrimeSys, in November 2005;
| | - |  | -------------------------------------------------------------------



| |  |  | a non-controlling interest in the Brazilian cable television provider Net in 2005, which Telmex transferred to Embratel later in 2005; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the subscribers, assets and a portion of the liabilities of multiple cable television providers in Colombia beginning in October 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

For a description of our other acquisitions, see Note 5 to our audited consolidated financial statements.

Yellow Pages Business

Our yellow pages business in Mexico is conducted through our subsidiary Anuncios en Directorios, S.A. de C.V., or Anuncios, which traces
its history to 1897 and is the owner of the registered trademark Sección Amarilla in Mexico. Our yellow pages business in the United States is conducted through our subsidiary Sección Amarilla USA, acquired in October 2006
by Telmex. Our yellow pages businesses began operations in Argentina and Peru in 2007, and in Colombia in 2009, through our subsidiaries in those countries.

América Móvil Public Exchange Offer

On May 11, 2010, América Móvil commenced two concurrent public exchange offers to acquire the outstanding shares of
Carso Global Telecom and Telmex Internacional. The exchange offers will expire on June 10, 2010, unless extended. Shareholders of Carso Global Telecom have been offered 2.0474 L Shares of América Móvil for each share of Carso
Global Telecom. Holders of Telmex Internacional A Shares or L Shares may elect to receive either 0.373 L Shares of América Móvil or P.11.66 in cash. Carso Global Telecom and América Móvil may both be deemed to be
controlled by Carlos Slim Helú and members of his immediate family.

Carso Global Telecom has announced that it will
not tender any of its Telmex Internacional L Shares and A Shares in the exchange offer related to Telmex Internacional. However, if the exchange offer is accepted by the shareholders of Carso Global Telecom, América Móvil will
indirectly acquire 60.7% of our shares through its ownership of Carso Global Telecom. AT&T Inc. has stated, in a beneficial ownership report filed with the SEC on April 30, 2010, that it intends to tender all of its Telmex Internacional
shares and ADSs in the exchange offer related to Telmex Internacional in exchange for América Móvil L Shares.



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##### Table of Contents

Significant subsidiaries

The following table sets forth our significant subsidiaries as of the date of this annual report. Our subsidiary Embratel also owns a
35.3% interest in Net, a provider of cable television, local telephone services and broadband Internet access services in Brazil, which we account for under the equity method.



|                                                           |  |                              |  |                                          |     |  |                                                                                                                          
|---------------------------------------------------------- |  | ---------------------------- |  | ---------------------------------------- | --- |  | -------------------------------------------------------------------------------------------------------------------------
|Name of Company                                            |  | Jurisdiction ofestablishment |  | Percentageof ownershipand
votinginterest |     |  | Description                                                                                                              
|Controladora de Servicios Telecomunicaciones, S.A. de C.V. |  | Mexico                       |  | 100.0                                    | %   |  | Intermediate holding company                                                                                             
|                                                           |  |                              | 
|Anuncios en Directorios, S.A. de C.V.                      |  | Mexico                       |  | 100.0                                    |     |  | Producer of yellow and white pages directories in Mexico                                                                 
|                                                           |  |                              | 
|Sección Amarilla USA, LLC                                  |  | Delaware                     |  | 100.0                                    |     |  | Producer of Spanish-language yellow pages directories in the United States                                               
|                                                           |  |                              | 
|Embratel Participações S.A.                                |  | Brazil                       |  | 98.1                                     |     |  | Intermediate holding company of domestic and international long-distance, local and data services providers in Brazil    
|                                                           |  |                              | 
|Empresa Brasileira de Telecomunicações S.A.  EMBRATEL     |  | Brazil                       |  | 97.3                                     | (1) |  | Provider of domestic and international long-distance, local and data services in Brazil                                  
|                                                           |  |                              | 
|Star One S.A.                                              |  | Brazil                       |  | 77.8                                     | (1) |  | Provider of satellite services in Brazil                                                                                 
|                                                           |  |                              | 
|PrimeSys Soluções Empresariais S.A.                        |  | Brazil                       |  | 97.3                                     | (1) |  | Provider of high level value-added services, such as net integration and outsourcing                                     
|                                                           |  |                              | 
|Telmex do Brasil Ltda.                                     |  | Brazil                       |  | 98.1                                     | (1) |  | Provider of telecommunications services to corporate customers in Brazil                                                 
|                                                           |  |                              | 
|Metrored Holdings S.R.L.                                   |  | Argentina                    |  | 96.1                                     |     |  | Intermediate holding company of providers of telecommunications services in Argentina                                    
|                                                           |  |                              | 
|Telmex Argentina S.A.                                      |  | Argentina                    |  | 96.7                                     |     |  | Provider of telecommunications services to corporate customers in Argentina                                              
|                                                           |  |                              | 
|Ertach S.A.                                                |  | Argentina                    |  | 96.9                                     |     |  | Provider of Internet access, and data and voice services in Argentina                                                    
|                                                           |  |                              | 
|Telmex Chile Holding, S.A.                                 |  | Chile                        |  | 100.0                                    |     |  | Intermediate holding company in Chile                                                                                    
|                                                           |  |                              | 
|Telmex Corp. S.A.                                          |  | Chile                        |  | 99.7                                     |     |  | Intermediate holding company whose subsidiaries provide long-distance, Internet access and data network services in Chile
|                                                           |  |                              | 
|Telmex TV S.A.                                             |  | Chile                        |  | 100.0                                    |     |  | Provider of satellite television in Chile                                                                                
|                                                           |  |                              | 
|Superview Telecomunicaciones, S.A.                         |  | Colombia                     |  | 99.6                                     |     |  | Cable television provider in Colombia                                                                                    
|                                                           |  |                              | 
|Telmex Colombia
S.A.(2)                                    |  | Colombia                     |  | 100.0                                    |     |  | Provider of cable television, Internet and telecommunications services in Colombia.                                      
|                                                           |  |                              | 
|Network and Operation S.A.                                 |  | Colombia                     |  | 100.0                                    |     |  | Provider of cable television and Internet services in Colombia                                                           
|                                                           |  |                              | 
|The Now Operation S.A.                                     |  | Colombia                     |  | 100.0                                    |     |  | Editor of cable television programming magazine in Colombia                                                              
|                                                           |  |                              | 
|Megacanales S.A.                                           |  | Colombia                     |  | 100.0                                    |     |  | Producer of cable television content                                                                                     
|                                                           |  |                              | 
|Cablecaribe S.A.                                           |  | Colombia                     |  | 100.0                                    |     |  | Provider of cable television and Internet services in Colombia                                                           



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|                          |  |                              |  |                                          |  |                                                                       
|------------------------- |  | ---------------------------- |  | ---------------------------------------- |  | ----------------------------------------------------------------------
|Name of Company           |  | Jurisdiction ofestablishment |  | Percentageof ownershipand votinginterest |  | Description                                                           
|New Dinamic Company, S.A. |  | Colombia                     |  | 100.0                                    |  | Provider of cable television and Internet services in Colombia        
|                          |  |                              | 
|Telmex Perú S.A.          |  | Peru                         |  | 100.0                                    |  | Provider of telecommunications services to corporate customers in Peru
|                          |  |                              | 
|Ecuadortelecom, S.A.      |  | Ecuador                      |  | 100.0                                    |  | Provider of telecommunications services in Ecuador                    
|                          |  |                              | 
|Telstar, S.A.             |  | Uruguay                      |  | 100.0                                    |  | Provider of telecommunications services in Uruguay                    



|(1) | Indirect interest held through Embratel Participações S.A.
|--- | ----------------------------------------------------------

|(2) | In September 2009, Telmex Colombia S.A. and Telmex Hogar, S.A. merged and the combined company was renamed Telmex Colombia S.A.
|--- | -------------------------------------------------------------------------------------------------------------------------------

Certain financial information by region

The following table sets forth selected financial information on our geographic segments for the years ended December 31, 2009 and
2008, prepared in accordance with Mexican FRS and expressed in pesos and as a percentage of our total consolidated group.



|                            |  |                                                    |  |      |                 |  |          |          |      |   |  |            |  |       |  
|--------------------------- |  | -------------------------------------------------- |  | ---- | --------------- |  | -------- | -------- | ---- | - |  | ---------- |  | ----- | -
|                            |  | Year Ended December 31, 2009                       | 
|                            |  | (in millions of Mexican pesos, except percentages) | 
|                            |  | Brazil                                             |  |      | Other countries |  |          | Total(1) |     
|Operating revenues          |  | P.  72,325                                         |  | 78.2 | %               |  | P.20,215 |          | 21.8 | % |  | P.  92,540 |  | 100.0 | %
|Operating cost and expenses |  | 61,335                                             |  | 75.3 |                 |  | 20,153   |          | 24.7 |   |  | 81,488     |  | 100.0 |  
|Segment
assets(2)           |  | P.184,110                                          |  | 83.0 | %               |  | P.37,532 |          | 17.0 | % |  | P.221,642  |  | 100.0 | %
|                            | 
|                            |  | Year Ended December 31, 2008                       | 
|                            |  | (in millions of Mexican pesos, except percentages) | 
|                            |  | Brazil                                             |  |      | Other countries |  |          | Total(1) |     
|Operating revenues          |  | P.  59,954                                         |  | 78.9 | %               |  | P.16,051 |          | 21.1 | % |  | P.  76,005 |  | 100.0 | %
|Operating cost and expenses |  | 51,651                                             |  | 77.0 |                 |  | 15,431   |          | 23.0 |   |  | 67,082     |  | 100.0 |  
|Segment
assets(2)           |  | P.135,599                                          |  | 83.1 | %               |  | P.27,608 |          | 16.9 | % |  | P.163,207  |  | 100.0 | %



|(1) | After the elimination of intersegment revenues.
|--- | -----------------------------------------------

|(2) | Segment assets consist of property, plant and equipment (without deducting accumulated depreciation), construction in progress, advances to suppliers and inventories
for operation of the telephone plant. See Note 18 to our audited consolidated financial statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPERATIONS IN BRAZIL

We operate in Brazil through Embratel and its subsidiaries, offering a full range of
telecommunications services to customers throughout Brazil. Embratel was founded in 1965 and later became the long-distance subsidiary of Telecomunicações Brasileiras S.A.  Telebrás, or Telebrás, the Brazilian
government-owned telephone company. In 1998, Telebrás was broken up into 12 holding



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##### Table of Contents

companies, including Embratel, which were then privatized. Embratel was granted the concession for domestic and international long-distance services. Embratel is a publicly traded company in
Brazil and its shares are listed on the São Paulo Stock Exchange. After the Brazilian local service market opened to competition, Embratel began providing local telephone services in 2002. We currently own 98.1% of the outstanding voting
stock and 98.0% of the outstanding non-voting stock of Embratel (98.1% of the total outstanding capital stock).

Revenues from
our Brazilian operations in 2009 amounted to P.72,325 million. Of our total Brazilian revenues in 2009, approximately 64.5% was attributable to voice services, approximately 32.3% was attributable to data services and the remainder was attributable
to other services. Voice services include domestic and international long-distance and local services. We generate most of our voice services revenue from domestic and international long-distance services. Residential customers generate the majority
of our long-distance revenues. Data services include data and Internet access services. Other services include television, direct-to-home satellite pay television service and call center services. Of our total Brazilian revenues in 2009, 56.7% was
attributable to corporate customers and the remainder to residential customers. Through the satellite fleet of our subsidiary Star One, we have significantly expanded telecommunications services to our customers, reaching areas not covered by
terrestrial networks with services such as television, data, Internet, distance education, telephony and other special services projects.

Domestic long-distance services

Through Embratel, we are one of Brazils major domestic long-distance service providers. We provide inter-regional, intra-regional
and intra-sectorial long-distance services to corporate, residential and cellular customers throughout Brazil. Domestic long-distance services accounted for 42.5% of Embratels total net operating revenues in 2009, 45.8% in 2008 and 47.4% in
2007.

The domestic long-distance services that we provide throughout Brazil include the following:



| |  |  | Inter-regional long-distance. Inter-regional long-distance service consists of all calls originating within one and terminating in another of
the three fixed-line regions and all calls originating in one and terminating in another cellular region.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Intra-regional long-distance. Intra-regional long-distance service consists of all calls originating in one local calling area within a
fixed-line region and terminating in another local calling area within the same fixed-line region. A local calling area is generally equivalent to a municipality, and there are usually several local calling areas within an area code.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Intra-sectorial long-distance. Intra-sectorial long-distance service consists of all calls originating in one local calling area within a fixed
line sector and terminating in another local calling area within the same fixed line sector. A fixed-line sector is generally equivalent to a state.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Domestic long-distance rates

Rates for domestic long-distance calls are based on the time of day and day of the week when a call is made, the calls duration and
the distance covered. The tariff structure for domestic long-distance calls is established by Anatel and is uniform throughout Brazil. There are currently 16 domestic long-distance tariffs, based on combinations of four distance categories and four
day/time categories.



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##### Table of Contents

Embratels concession, effective as of January 1, 2006, permits it to set its own
rates in accordance with an annual rate adjustment mechanism established by Anatel. See RegulationRates.

We set our basic domestic long-distance rates each year based primarily on the rate adjustment mechanism Anatel imposes on all operators.
In 2007, we reduced some of our tariffs in accordance with the rate adjustment mechanism. Our average domestic long-distance rate decreased by 1.5% in 2007. We increased our fixed-line to fixed-line rates by an average of 1.2% in 2008 in accordance
with the Anatel annual rate adjustment allowance. Our domestic long-distance rates for fixed to mobile calls, which have their own readjustment rules, increased 2.9% in 2009 and increased 11.3% in 2008 in accordance with our negotiated agreements
with mobile phone companies. These rates did not change in 2007.

While these rates apply to basic plan customers, we have
developed a variety of promotional and customer retention programs since 2000 that enable many of our customers to obtain long-distance packages that may include lower rates and/or subscription fees. These programs offer discounts from
Anatel-approved rates and are designed to increase our market share and promote usage of the 21 carrier selection code assigned to Embratel. In addition, we offer discounts to corporate customers on a case-by-case basis. Embratel also
employs campaigns that target specific groups of our corporate customers, such as small- and medium-sized businesses or regional groups. Our customer retention and discount programs are designed to allow us to build customer loyalty and to improve
collections by identifying our customers before we bill them for our services.

The majority of our long-distance voice
services customers are not pre-subscribed. In other words, customers do not register with us before we begin providing services to them. Instead, each time a customer initiates a long-distance domestic or international call from either a
fixed or a mobile terminal, the customer chooses whether to use our services by dialing the 21 selection code or to use the services of another service provider by dialing a different code.

International long-distance services

Through Embratel, we are one of the major providers of international long-distance service in Brazil, and we believe that we operate the
largest long-distance telecommunications network in Latin America. We also have ownership interests in several undersea cables between South America and the rest of the world through cable consortia. International long-distance services generated
4.0% of Embratels total net operating revenues in 2009, 4.9% in 2008 and 5.8% in 2007.

Revenues generated by
international long-distance services are primarily derived from:



| |  |  | charges for international outgoing calls originating in Brazil; and
| | - |  | -------------------------------------------------------------------



| |  |  | net settlement payments made by other international telecommunications operators for incoming calls carried through our network in Brazil.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

International long-distance rates

Rates charged for outgoing international calls vary depending on the time of day and the day of the week when a call is made, the duration
of the call, the country of destination and whether special services, such as operator assistance, are used. See RegulationRates. We reduced our basic international long-distance rates in accordance with the Anatel rate
adjustment mechanism by an average of 1.2% in 2007. In 2008, we increased rates for outgoing international calls by an average of 1.2%. In 2009, we increased rates by 0.4%.



25



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##### Table of Contents

Net settlement payments

Revenues from international long-distance services also reflect payments under bilateral agreements between Embratel and foreign
state-owned or private telecommunications providers, which are influenced by the guidelines of the international tariff and trade regulations and cover virtually all international calls to and from Brazil. These agreements set forth the settlement
rates of payment from Embratel to foreign carriers for the use of their facilities in connecting international calls originating in Brazil and from foreign carriers to Embratel for the use of its facilities in connecting international calls
originating abroad. The settlement rates under these agreements are negotiated with each foreign carrier and are based on foreign currency. They are charged or paid on a net basis. Various factors could affect the amount of net settlement payments
from foreign carriers to Embratel in future years. These factors include unauthorized international traffic (commonly known as bypass), increases in the proportion of outgoing as opposed to incoming calls, the volume of minutes included in the
bilateral agreements, fluctuations of the Brazilian realversus the currencies involved, changes in market rates and modifications to the tax policies affecting the transfer of payments related to telecommunication payments abroad.

Data transmission and Internet access services

Through Embratel, we are one of Brazils leading providers of data communication services. Our data transmission network, which
incorporates fiber optic, digital microwave, satellite and copper transmission technology, allows us to provide a range of value-added data services to a client base that includes a substantial majority of Brazils top 500 corporations. Our
data transmission services include the renting of high-speed data lines to businesses and to other telecommunications providers, satellite data transmission, Internet services, packet-switched data transmission, frame relay and message-handling
systems. In November 2005, Embratel bolstered its offerings of value-added services through the acquisition of PrimeSys, a leading provider of data outsourcing and managed telecommunication network operations, for approximately U.S.$100 million
(P.613.8 million). Data transmission services accounted for 32.3% of Embratels total net operating revenues in 2009, 29.9% in 2008 and 26.4% in 2007.

Embratel also operates a free dial-up Internet service provider called Click21, which provides us with an easily accessible channel for
the marketing and sale of voice services to residential customers and small businesses. At December 31, 2009, Click21 had approximately 2.8 million subscribers, compared to approximately 2.7 million subscribers at December 31,
2008.

Data transmission services and rates are not regulated, though a license to provide them is required. See
Regulation for more information concerning regulation of our other operations.

In recent years, we have
reduced rates per 64 Kbps billed-line equivalent, partly due to new technologies enabling telecommunications companies to provide more bandwidth capacity at lower costs and also in response to more competition in this market. In 2009, rates for 64
Kbps billed-line equivalents remained the same, and in 2008, our rates for 64 Kbps billed-line equivalents decreased by 11.8% on average.

Local services

In the
fourth quarter of 2002, Embratel began providing local telephony services, and in 2009 we served 499 Brazilian cities, including all major Brazilian metropolitan areas. We are the only local service provider present in all Brazilian states. Local
services represented 18.0% of Embratels total net operating revenues in 2009, 15.4% in 2008, and 9.0% in 2007.



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In December 2003, Embratel acquired Vésper S.A. and Vésper São Paulo
S.A. and their subsidiaries, together Vésper, which are wireless local loop, local services and broadband data operators with operations in São Paulo and 16 other Brazilian states. This enabled us to further accelerate the rollout of
our local service offerings. We market our wireless local loop service to residential customers under the name Livre. We offer voice over Internet protocol, or VoIP services, to large- and medium-sized business customers under the name
VipLine. To our residential customers, we also offer VoIP services through Net Fone via Embratel, in conjunction with Net. We had 4.2 million residential customers and 2.2 million business customers as of December 31,
2009.

Our local rates are affected by marketing and competition and vary by product. During 2007, we increased Livrerates, on average, by 25%. During 2008, we increased Livre rates, on average, by 21%. During 2009, we increased Livre rates, on average, by 7%. Net Fone via Embratel rates for fixed-line-to-mobile calls increased by 11.3% in
2008 and by 10% in 2009.

Satellite services

Through Embratels subsidiary Star One, we are Brazils leading provider of satellite solutions, including space segment
provision, broadband and data network services. Star One currently has four satellites in full operation (geostationary orbit). Star One also has joint ownership in a satellite operating in joint ownership with SES World Skies. Star One has the most
extensive satellite system in Latin America with a fleet covering the entire territory of South America, Mexico, part of Central America and part of Florida. Star One also owns 11 transponders on board of NSS-10 (originally AMC-12, and referred to
as Star One C-12) operated by SES World Skies. Embratel owns 80.0% of the capital stock of Star One; the remainder is owned by GE Satellites Holdings LLC. We include revenues from satellite services as revenues from corporate networks.

Star Ones principal customers include television broadcasters, cable operators, telecommunications service providers and financial
and governmental institutions. Star One also provides satellite services to the Brazilian Defense Department. A significant amount of Star Ones satellite capacity is leased directly to Embratel to provide data, voice and other
telecommunications services to our customers.

Direct-to-home (DTH) satellite pay television service

In December 2008, Embratel launched, through a newly created, wholly-owned subsidiary, Embratel TV SAT Telecomunicações
Ltda., or Embratel TV SAT, its pay television service via satellite. Branded as Via Embratel, the service uses DTH technology, a mode of transmission in which television signals are sent by satellite directly to the customers with high
quality sound and image. Monthly subscription fees range in price from R$59.90 to R$119.90, including taxes.

Other services

In addition to long-distance, data transmission and local services, we provide other services including text, telex, sound
and image transmission and maritime communications. We also provide call center services through BrasilCenter to related third parties, including the Brazilian subsidiaries of América Móvil that operate under the brand name
Claro and our investee Net. The revenues from other services accounted for 1.7% of Embratels total net operating revenues in 2009, 2.6% in 2008 and 3.6% in 2007.



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Equity investment in Net Serviços de Comunicação S.A.

Embratel owns a non-controlling interest in Net, the largest cable television operator in Brazil. Net has grown substantially as a result
of (a) an increase in subscribers, (b) the two-step acquisition of Vivax S.A., or Vivax, in December 2006 and June 2007 and (c) the acquisition of 614 Telecomunicações Ltda., 614 TVP Joao Pessoa S.A and 614 TVT
Maceió S.A., jointly referred to as BIGTV, in December 2008. As of December 31, 2009, Net had approximately 3.7 million pay television subscribers (3.1 million at the end of 2008) and 2.9 million Internet broadband subscribers
(2.2 million at the end of 2008). During the year ended December 31, 2009, Net had revenues of P.28,811 million and net income of P.4,623 million.

In addition to cable television services, Net also offers the Net Fone via Embratelvoice service, integrated with video and
broadband data services, as part of the triple play package provided jointly with Embratel. This service had approximately 2.6 million subscribers as of December 31, 2009 (1.8 million at the end of 2008) and uses VoIP technology, which
functions in the same way as a conventional phone line and allows the user to make local, long-distance and international calls to any telephone or handset. These calls are charged per minute and not by pulse. Subscribers can apply their minimum
monthly fee to make any type of call, including local and long-distance calls and calls to mobile phones. Net Fone via Embratelis primarily directed to the residential market and was offered with a minimum monthly subscription fee of R$27.04
per month through year end 2009. As of December 31, 2009, the service is available in 75 cities, including São Paulo, Campinas, Santos, Rio de Janeiro, Porto Alegre, Curitiba, Florianópolis, Belo Horizonte and Brasília.

Embratels total direct and indirect interest in Net is 35.3%. We originally acquired the interest in Net from Globo
Comunicações e Participações S.A. and two related entities (together, referred to as Globo) in 2005 and increased our interest in successive transactions with Globo in 2006 and 2007, for an aggregate purchase price of
P.5,713 million. Our interest was subsequently diluted in 2007 when Net issued shares to acquire Vivax.

A majority of the
voting shares of Net is owned by GB Empreendimentos e Participações S.A., or GB. Globo owns a majority of the voting interests in GB. Globo also owns Net Brasil S.A., a company with which Net has (a) a long-term agreement to
purchase Brazilian source programming and (b) a licensing agreement for the right to use the Net brand name through 2015.

Under current Brazilian law governing cable operators, Embratel is not permitted to control Net because Embratel is not under Brazilian
control. If Brazilian law changes to allow Embratel to own a controlling interest in Net, Embratel (which currently owns 49% of the voting interests and all of the non-voting interests in GB) has the right to purchase an additional interest in GB to
give it control of 51% of the voting shares of Net, and Globo has the right to cause Embratel to purchase such interest.

Direct billing
and collections

We directly bill our telecommunications and related services, including collect-calling services and
standard voice services, to a portion of our end-user customers. Direct billing results in the risk of bad debts. Since 2000, we have taken a number of measures to reduce our bad debt expense, including the following:



| |  |  | Co-billing. In 2002, Embratel implemented co-billing arrangements with three local operators to allow these operators to bill Embratels
long-distance calls originated by their local customers. In 2009, we had co-billing arrangements with approximately 13 operators. Since 2006, Embratel also has incoming co-billing service, which allows us to bill on behalf of other long-distance
operators for calls that originate on an Embratel local customers line.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Use of call centers. We make proactive use of our call centers in our collection efforts.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Collections system. In 2002, we implemented the CACS Telecom System, a simple, automated collections system that enables us to combine different
collection strategies for different customer profiles. Since 2002, bad debt over net revenue for this has decreased significantly to 3.4% as of December 31, 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Anti-fraud system.This system is capable of monitoring 80 million call detail reports per day, including all local, domestic and
international long-distance traffic, and is capable of performing real-time call monitoring behavior analysis and scenario investigation using artificial intelligence.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Use of third-party credit collection firms. We use third-party collection firms to collect overdue charges from our customers.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | Customer Data System. In the third quarter of 2006, a new customer data system called CCC was implemented. The system allows for faster updating
of information, flexibility in customer account structure, quality improvement and improved payment of taxes across the different Brazilian states.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Network and facilities

We believe that Embratel owns the largest long-distance telecommunications network in Latin America and the largest network of broadband
fiber optic transmission systems in Brazil. The network, which connects all of the regional fixed-line and cellular operators throughout Brazil, uses a 100% digital switching system for voice and data services and the latest generation Internet
Protocol, or IP, routers to support IP-based services, such as VoIP, Internet access and virtual private networks (VPN) through Multiprotocol Label Switching (MPLS) technology. Our domestic long-distance and international transmission facilities
extend to all 26 states and the Federal District of Brazil and include fiber optic, digital microwave, satellite and copper wireline networks.

Domestic long-distance and local metropolitan network

We are the principal provider of high-speed data transmission and Internet service in Brazil, with the largest national fiber-optic
transmission network. We have approximately 44,000 kilometers of cable in a mesh network that has three or more outlets with a capacity of 1.0 Tbps. We use a 100% digital switching system for voice and data services and the latest generation IP
routers to support IP-based services. Our Internet backbone is the largest in Latin America with 718 Gbps capacity distributed through 1,401 POPs and 50 routing centers, including one in each of Miami and New York City.

We have local metropolitan digital fiber networks with approximately 4,500 kilometers of cable in the major Brazilian cities, and we
offer direct wireline or wireless connections to businesses in those cities. We are attaching fiber extensions to commercial buildings connected to metropolitan rings, providing high quality direct connections. Our telephony networks have also been
modified to use Nets coaxial cable networks to provide telephony services to Nets broadband customers through Net Fone via Embratel. In December 2009, we were granted an indefeasible right to use Nets hybrid fiber coaxial
(HFC) network to provide local fixed telephone service.



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We use long-distance microwave systems, with a total range of 16,254 kilometers, in areas
where installation of fiber cables is difficult. These long-distance microwave links offer alternative routes to the fiber network. As a supplement to the long-distance microwave and fiber networks, we also use five satellites to provide services to
remote locations within the country.

We offer local telephony services to our Livreresidential customers using Code
Division Multiple Access (CDMA) digital wireless technology. We also provide wireless Internet access services in 48 cities using CDMA 1xRTT technology.

We have licenses to use the 3.5 GHz frequency with nationwide coverage for the implementation of WiMax technology. In March 2008, we
introduced local and long-distance telephone services and Internet broadband access to small- and medium-sized business customers using this technology. This technology, originally available in 12 major cities in Brazil, is now available in over 203
cities. With the introduction of WiMax technology, we can provide new service options via wireless broadband transmission to the homes and offices of our customers and achieve cost reductions.

International network

Embratels submarine cable network reaches all continents through 13 different cable systems in which it has various ownership
interests. Embratel also participates in Telmexs International Regional Network to offer seamless solutions for connection to the major countries of North and South America. To supplement and diversify the international network and increase
its global service capacity, in addition to leasing satellite capacity from international satellite systems, Embratel leases submarine capacities in other private cable systems. Embratels system also connects to the international Internet
backbone to reach the global IP network and provide content to corporate and retail customers. The backbond has 130 Gbps of capacity with transmission diversity, providing highly reliable international IP.

Satellite infrastructure

Star One currently operates an earth station in Guaratiba, located in the state of Rio de Janeiro. This station, activated in 1985, is ISO
certified and controls the operations of its Brasilsat B-1, B-2, B-3 and B-4, and Star One C-1 and C-2 satellites. Embratel has a back-up satellite earth station in Tanguá, also in the state of Rio de Janeiro. Both earth stations are used for
satellite operations and control as well as for satellite communications. A third earth station, Mosqueiro, is located in the north of Brazil.

Satellites have an operational life, based on the expected duration of the satellites equipment and propellant at the start of
commercial operations. Star One has a program to replace satellites that are nearing or have reached the end of their contractual lives. In December 2009, Star One signed a contract for the in-orbit delivery of a new satellite, the Star One C-3,
with Orbital Sciences Corporation. This satellite is intended to replace Brasilsat B-3, which is expected to run out of propellant by February 2013. Star One C-3, which is currently being manufactured, is expected to become operational in June 2012.

Star One C-3, together with Star One C-1 and C-2, already in operation, will be part of the new generation of more modern and
powerful C series satellites, which provide expanded coverage and are intended to ensure the continuity and quality of Star Ones communication services to most of South America.

Delays in launching may occur as a result of construction delays, unavailability of launch vehicles and other reasons. Moreover,
satellites are subject to launch failures. If either delivery of the replacement satellite is delayed or failure occurs and Star One fails to implement a contingency plan for an interim solution that will maintain the continuity of Brasilsat
B-3s customer traffic for a sufficient period of time to allow for successful procurement and launch of a replacement satellite, we may be unable to properly serve our satellite customers and could experience a decrease in our revenues.



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The predicted overall investment in the Star One C-3 project is U.S.$270 million.
Approximately 75% of the total amount will be financed by banks and supported by an export credit agency.

Competition

The leading operators in Brazils telecommunications market are the companies that were split off from Telebrás, the former
government-owned telephone company, upon its privatization. These companies include Telefónica S.A., or Telefónica, Brasil Telecom S.A., or Brasil Telecom, Oi Participações S.A., whose service in Brazil is under the brand
name Oi, and Embratel. In 2008, a change in Brazilian regulations allowed Oi to purchase Brasil Telecom. Following the breakup and privatization of Telebrás, three mirror companies were created by the auction of mirror licenses to
provide local services over public switched networks in the same geographic areas served by the incumbent carriers. In 2003, Embratel acquired Vésper S.A. and Vésper São Paulo S.A., two of the three mirror companies. Global
Village Telecom holds the third mirror license for local service. In the case of domestic and international long-distance service, our competitor Intelig holds a mirror license.

Since 2002, the Brazilian federal government has authorized Anatel to grant an unlimited number of authorizations for the provision of
any type of telecommunications service. Embratel was granted a nationwide license in August 2002 to provide local telephone service after it met certain universal service requirements.

Our principal competitors in Brazil vary by region and type of service. In northern and eastern Brazil, we compete primarily with Oi and
CTBC Telecom for local services and Oi and Intelig for long-distance services. In São Paulo, we compete primarily with Telefónica for local services and Telefónica and Intelig for long-distance services. In southern and western
Brazil, we compete primarily with Oi (formerly Brasil Telecom) and Global Village Telecom for local services and Oi and Intelig for long-distance services. There are no official statistics we can use to determine our market shares, but we prepare
estimates based on public reports of revenues. In local service, market shares vary by area, but for the total nationwide market we estimate that in 2009 our share was between 8% and 9%, while Oi had 58% of the total market for local service and
Telefónica had 33%. In long-distance service, we estimate that in 2009 Embratel had approximately 37% of the market, Oi had 36% and Telefónica had 27%.

In addition, we have experienced competition for the provision of international long-distance service from companies outside Brazil known
as telephone service resellers. Telephone service resellers provide customers with lower international rates by offering international long-distance voice services using data protocols in Brazil. Initially, these companies provided services without
the required public telephony authorizations from Anatel. However, as licenses have become available, several of these companies have acquired them and become regulated providers.

Regulation

The
Brazilian Telecommunications Law (Lei Geral das Telecomunicações Brasileiras) provides a framework for telecommunications regulation. Pursuant to Article 8 of the Telecommunications Law and Decree No. 2,338 of
October 7, 1997, the primary regulator of Embratel is Anatel. Anatel has the authority to propose and issue regulations that are legally binding on telecommunications services providers. Any proposed regulation of Anatel is subject to a period
of public comment, which may include public hearings. Anatels actions may ultimately be challenged in Brazilian courts.



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In October 2008, the General Plan of Regulation Updates (Plano Geral de
Atualização da Regulamentação) was approved by Anatel to serve as a framework to develop public telecommunications policies during the next ten years.

In November 2008, the new General Plan of Awards (Plano Geral de Outorgas), or PGO, was approved by Decree No. 6654. The new
PGO established rules concerning the geographic division of the country and the acquisition of new licenses to enhance competition in the fixed switch telephony service market. The new PGO rules also loosened restrictions on the transfer of
concessions for long-distance and local services. As a result, Oi was allowed to purchase Brasil Telecom.

Concessions
and authorizations

Voice Services

Embratel holds a domestic long-distance concession and an international long-distance concession, as well as authorizations to provide
local, data, satellite services and satellite television services.

Embratels concession for the provision of domestic
and international long-distance service was renewed on December 22, 2005, and will expire on December 31, 2025. Anatels regulations provide for possible revision every five years to take into account changed conditions and reconsider
universal service obligations and quality targets. The initial grant of the concession to Embratel did not require payment of a fee. Since January 1, 2006, however, Embratel has been required to pay a fee every two years during the term of the
concession equal to 2% of the revenues from switched fixed telephone services, net of taxes and social contributions, for the year preceding the payment.

Under the terms of the concession agreements effective January 1, 2006:



| |  |  | All operators are to provide co-billing under equal treatment terms. The terms governing co-billing have been established through a public comment
process.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Since April 2006, new regulations guarantee effective accounting separation for each service.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | The General Plan of Competition, introduced in the concession and pending promulgation by Anatel, will set forth rules designed to enhance competition
in the local fixed switched telephony market.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Satellite services

Star Ones authorizations for C-band frequencies for satellites C-1, C-2, B-2 and B-4 were renewed for 15-year terms in December
2005. Star Ones authorizations to operate in the Ku-band frequencies for satellites C-1 and C-2 were granted in 2003, and each has a 15-year term. Anatel also granted Star One 15-year authorizations for operation in both the Ku-band and C-band
frequencies for satellites B-1 and B-3 2007.

Direct-to-home (DTH) satellite television services

Embratel holds an authorization to provide direct-to-home (DTH) satellite television services, granted by Anatel on May 2008 for Embratel
TV SAT.



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Obligations of telecommunications companies

Service and quality targets

Since the privatization of the Brazilian telecommunications system, concessionaires have been required to meet certain universal service
and quality targets. Failure to meet these targets carries the possibility of fines and penalties from Anatel.

As provided
for in the concession and the General Plan of Telephony Universalization Goals, as of December 31, 2009, Embratel had installed 1,662 public pay telephones to promote universal service.

Telecommunications providers are subject to the quality targets set forth in the new General Plan on Quality. This plan sets forth a
series of service quality obligations that are incorporated into the concessions.

Failure to fulfill our quality of service
obligations could lead to the imposition of fines and penalties on Embratel by Anatel. There are a variety of external factors that may impede our ability to fulfill those obligations. Because Embratels network connects with those of regional
fixed-line operators, regional cellular operators and foreign operators, the quality of service it provides may also be significantly affected by the quality of the networks on which calls originate or terminate.

Interconnection

All telecommunications networks are required to provide interconnection upon request. While the terms and conditions of interconnection
are negotiated between the parties, interconnection tariffs are subject to a price cap established by Anatel. Rates below the cap may be freely negotiated between the parties. If a company offers an interconnection tariff below the price cap, it
must offer that price to any other party requesting interconnection on a non-discriminatory basis.

Co-location

Co-location allows a party requesting interconnection to place its switching equipment in or near the local exchange of
the network operator whose network the requesting party wishes to use and may connect to the network at this point of presence. Co-location arrangements are currently negotiated directly by the parties. Anatel declared that co-location of network
elements and services by operators that provide network elements and services is required by the regulation currently in place. However, the regulation does not determine which network elements and services are to be co-located or how co-location
should occur.

Number portability

Number portability is the ability of a customer to move to a new home or office or switch service providers while retaining the same
telephone number. Full implementation occurred in March 2009.

Recent Regulatory Developments

During 2009, Anatel approved certain regulatory revisions to the rules applicable to some of Embratels operations:



| |  |  | Telecommunication Services Index  IST Regulation. In August 2009, Anatel published Resolution No. 532/09, which approved a revision
to rules used to calculate IST. IST is an adjustment index applied to the provision of telecommunications services.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Monitoring and Control of Bonds for Universal Goals  STFC. In November 2009, Anatel published Resolution No. 536/09, which approved
the Monitoring and Control of Universal Service Obligations Regulation. This new regulation established more precise criteria and procedures for monitoring and controlling the fulfillment of universal service goals.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Concession Agreements, PGMQ and PGMU Revisions. Anatel began a process of public comment to revise the terms of Embratels long distance
services concession agreement, the General Plan of Quality Goals (PGMQ) and General Plan of Telephony Universalization Goals (PGMU). The review process being implemented is based on the terms of Embratels concessionary agreements.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, in November 2009, Anatel, pursuant to Act No. 6447/09, granted a data services license
for Via Embratel to operate the Multimedia Communication Service (SCM) domestically and internationally for an indefinite term throughout the country.

Rates

Embratel annually changes its rates for its basic domestic and international long-distance services in accordance with the Anatel rate
adjustment mechanism. The rate adjustment is determined based on inflation and productivity across the Brazilian telecommunications industry and sets the average percentage increase or decrease for the basket of all basic long-distance rates. Each
of the six fixed-line concessionaires may increase or decrease individual tariffs within the basket by 5% above or below the average percentage change, provided that the aggregate percentage change for all rates in the basket does not exceed the
average percentage increase or fall short of the average percentage decrease, as the case may be, set by Anatel.

Network usage charges or interconnection rates

Other telecommunications companies that wish to interconnect with and use Embratels network must pay certain fees, including a
network usage fee. The network usage fee is subject to a price cap set by Anatel. The price cap for the network usage fee varies from operator to operator based on the underlying cost characteristics of each companys network. The fee is
charged on a per distance and/or per minute of use basis that represents an average charge for a basket of network elements and services.

Taxes and duties on telecommunications services

In addition to the taxes described under Item 5. Operating and Financial Review and Prospects the cost of providing
telecommunications services includes a variety of taxes and duties.

State taxes and duties

The principal tax imposed on telecommunications services is a state-level value-added tax, the Imposto sobre Circulação
de Mercadorias e Serviços (ICMS). Each Brazilian state imposes its own tax rate on gross revenues derived from telecommunications services, which varies from state to state and averages 26%.



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Federal taxes and duties

The principal taxes collected on gross revenues include:



| |  |  | Programa de Integração Social (PIS). PIS contributions are applied at a rate of 0.65% on gross revenues derived from
telecommunications services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contribuição para Financiamento da Seguridade Social (COFINS). COFINS contributions are applied at a rate of 3.0% on gross
revenues derived from telecommunications services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The principal taxes collected on net revenues include:



| |  |  | Fundo de Universalização dos Serviços de Telecomunicações (FUST)and Fundo para o Desenvolvimento
Tecnologico das Telecomunicações (FUNTTEL) taxes. These taxes are applied at a rate of 1% and 0.5% of net revenues, respectively.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Concession fee. Embratel is required to pay a fee every two years during the term of the concession equal to 2% of the revenues from switched
fixed telephone services, net of taxes and social contributions, for the year preceding the payment. See RegulationConcessions and authorizations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPERATIONS OUTSIDE BRAZIL

We provide telecommunications services in Colombia, Argentina, Chile, Peru, Ecuador and Uruguay. We offer cable or satellite television
in Colombia, Chile, Peru and Ecuador. Our yellow pages operations are carried out in Mexico, the United States, Argentina, Peru and Colombia.

Colombia

We operate in
Colombia through Telmex Colombia S.A., or Telmex Colombia, and several other subsidiaries that we acquired beginning in 2006, including the entity formerly known as Telmex Hogar, S.A., or Telmex Hogar. Effective in October 2009, Telmex Colombia and
Telmex Hogar merged and now operate under the name Telmex Colombia S.A. Revenues from our Colombian operations in 2009 amounted to P.7,441 million, of which pay television services constituted 39.4%, Internet access 29.7%, voice services 15.1%, data
12.7%, and other services 3.1%. We extended our yellow pages directory operations to Colombia in 2009.

The main
telecommunications regulatory authority in Colombia with respect to cable and broadcast television is the National Television Commission (Comisión Nacional de Televisión). The main regulatory authorities with
respect to other telecommunications services are the Communications Ministry (Ministerio de Comunicaciones) and the Telecommunications Regulatory Commission (Comisión de Regulación de
Telecomunicaciones). Our main competitors in Colombia are Telefónica Telecom (a subsidiary of Telefónica, S.A.) Empresa de Telecomunicaciones de Bogotá S.A. E.S.P.  ETB and EPM Telecomunicaciones S.A. E.S.P.,
all of which offer fixed-line telephone service, Internet access, data services and pay television.

We provide
business and residential services to customers by means of a metropolitan and inter-city fiber optic network. We provide cable television services, data and Internet access services, local, domestic and international long-distance service,
value-added services and video conferencing. At the end of 2007, Telmex Colombia was the first company that was not an incumbent operator to obtain a concession to provide long-distance services.



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Internet access, data and voice services

Telmex Colombia provides services to the corporate segment and to small- and medium-sized businesses. Data and Internet solutions
represent 41% of our total revenues in Colombia. During 2009, we continued the expansion of the metropolitan fiber optic network to improve quality in Colombia and provide more comprehensive coverage for our business customers, reaching 28 major
cities with 8,300 km of cable that permits outflow to submarine cables. Growth in our small- and medium-sized businesses segment has resulted from the sales of broadband Internet service packages as well as an increase in the volume of service
provided, due to our expansion from two local interconnected cities in 2006 to six interconnected cities in 2007. As of December 31, 2009, Telmex Colombia had approximately 480,000 local telephone lines, of which 419,000 were residential lines
and 61,000 lines were for corporate customers, compared to approximately 335,000 local telephone lines at year-end 2008.

Cable operations

Through our cable television subsidiaries, we offer pay television, broadband Internet access with speeds from 150 Kbps to 20 Mbps, voice
services in local fixed telephony and value-added services associated with VoIP, such as three-way calling, voicemail and caller identification. We have coverage in 190 cities and towns, including the countrys major population centers, such as
Bogotá, Medellín, Cali, Barranquilla, Bucaramanga, Cúcuta, Cartagena, Ibagué, Manizales, Pereira and Armenia. We had 4.9 million homes passed with our network across the country in 2009, an increase of 5% as compared
to 2008, due mainly to the construction of our bidirectional network. We estimate that our operations account for approximately 50% of the pay television market, 23% of the broadband Internet market and 7% of the local fixed telephony market based
on the number of subscribers in Colombia.

Of our total network, 59% of the capacity is bidirectional, meaning that data flows
to and from the customer, allowing us to provide triple play services. In the key cities of Bogotá, Medellín and Cali, which represent more than 28% of Colombias population, 60% of our network in these markets is bidirectional.
At the end of 2009, we had approximately 290,000 triple play customers in Colombia.

We entered the cable television business
beginning in 2006 and made the following acquisitions:



| |  |  | In October 2006 we acquired a 99.6% stake in Superview, a cable television provider in Bogotá, for U.S.$37 million (P.514 million).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | In March 2007, we acquired 100% of TV Cable S.A. and its subsidiary, TV Cable Comunicaciones S.A. E.S.P., which provide cable television, Internet
access and voice services in Bogotá and Cali, for U.S.$123 million (P.1,404 million).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In March 2007, we also acquired 100% of Medellín-based TV Cable del Pacífico S.A. E.S.P., or Cable Pacífico, a cable television
and broadband Internet access provider with operations in nine departments of Colombia, for U.S.$113 million (P.1,299 million). In November 2007, TV Cable S.A. merged with Cable Pacífico, and the surviving company changed its name to Telmex
Hogar S.A.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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In October 2007, through our subsidiaries we acquired for U.S.$345 million (P.3,733 million)
several Delaware companies, which in turn owned 100% of the assets and a portion of the liabilities of the following companies:



| |  |  | Unión de Cableoperadores del Centro, Cablecentro S.A., or Cablecentro (now operating as Network and Operation S.A.), a cable television services
provider from which we also acquired 100% of its cable television subscribers;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Megainvest Ltda. (now operating as Megacanales S.A.), which produces content for cable television; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Comunicaciones Ver TV, S.A. (now operating as The Now Operation S.A.), which publishes a television programming magazine.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

In October 2007, we acquired for U.S.$51 million (P.554 million) the subscribers, assets and a portion of the liabilities of Satelcaribe
S.A. (now operating as Cablecaribe S.A.), a cable television services provider.

In February 2008, after receiving approval of
the Colombian competition authority, we acquired for U.S.$2.5 million (P.37 million) 100% of Cablecentros Internet subscribers.

In September 2008, after receiving the regulatory approval from the National Television Commission, we acquired for U.S.$30.9 million
(P.351 million) several Delaware companies, which in turn owned 100% of the assets and a portion of the liabilities of the following companies:



| |  |  | Teledinámica S.A., a cable television services provider from which we also acquired 100% of its subscribers;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Organización Dinámica S.A., an Internet services provider from which we also acquired 100% of its subscribers; and
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | Telebarranquilla S.A., which produces content for cable television.
| | - |  | -------------------------------------------------------------------

These three companies now operate as New Dinamic Company, S.A.

Argentina

In Argentina,
we operate through Telmex Argentina S.A., or Telmex Argentina. In October 2007, we acquired 100% of Ertach S.A., or Ertach, for a purchase price of P.297.7 million (U.S.$28 million).

In 2009, 31.9% of our revenues in Argentina was attributable to voice services, 60.9% was derived from data and Internet services and the
remaining portion was derived from other services.

Telmex Argentina provides data, Internet access and local and
long-distance voice services to corporate and residential customers in Argentina, operates fiber optic rings in metropolitan areas, provides last-mile access to reach its customers and offers data administration and hosting through
two data centers. We have also developed a new wireless network using pre-WiMax technology in the 3.3 GHz frequency band to provide wireless telecommunications services to small- and medium-sized businesses. Through Ertach, we provide
Internet access and data and voice services through a wireless network integrating Wireless Local Loop (WLL) and WiMax technologies over the 3.5 GHz frequency band. Ertachs network covers more than 160 cities and towns in Argentina. Telmex
Argentina also provides a yellow pages directory in print and on the Internet. See Yellow Pages Business.



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Telmex Argentina operates a local point-multipoint distribution service, or LMDS, and fiber
optic network in Argentina and provides voice, data, video and other telecommunications services. LMDS is a wireless service using radio signals to transmit voice, video signal transportation and data. Telmex Argentina also operates an international
information center that monitors the services it provides to its international customers located throughout Latin America.

Telmex Argentina has a fiber optic network of over 12,120 km that covers many major cities in Argentina and reaches approximately 53% of
the population. The voice network covers approximately 81 interconnected cities. Telmex Argentina has completed construction of fiber optic lines to connect the major cities of the northeastern region of Argentina, as well as fiber optic lines that
connect operations in Argentina and Uruguay.

The main telecommunications regulatory authorities in Argentina are the
Secretary of Communications (Secretaría de Comunicaciones) and the Communications Commission (Comisión de Comunicaciones), both of which are under the authority of the Ministry of Federal Planning, Public Investment and
Services of the National Government. Telefónica de Argentina S.A. and Telecom Argentina S.A. are Telmex Argentinas main competitors. Several newer entrants in the Argentine telecommunications market, such as Global Crossing S.A., Comsat
S.A. and NSS S.A., also compete with Telmex Argentina in fixed-line telephony, public telephones and data and Internet access services.

In the second half of 2006, we began renegotiating the conditions of our interconnection contracts with the incumbent operators in
Argentina, Telefónica de Argentina S.A. and Telecom Argentina S.A. These contracts regulate the terms and conditions of interconnection for local and domestic and international long-distance telephony between telecommunications operators. We
have made a request to the Secretary of Communications to make a determination as to interconnection rates.

Since June of 2007, we have been required to pay a fee to the Universal Fund (Fondo Fiduciario del
Servicio Universal), which is used to give underserved persons access to telecommunications services. This requirement requires that all telecommunications operators pay 1% of their revenues, determined after certain deductions.
The implementation of the Universal Fund and the procedures for the filing of projects covering plans for the Universal Service are still pending definition by the Secretary of Communications.

Chile

We started
operations in Chile in February 2004 with the acquisition of all of the assets of AT&T Latin America Corp., including AT&T Chile Holding S.A., renamed Telmex Chile Holding S.A., or Telmex Chile, which was organized as Telmexs holding
corporation in Chile. Additional acquisitions include the following:



| |  |  | In April 2004, we acquired approximately 40% of Chilesat Corp. S.A., or Chilesat, for P.619 million (U.S.$47 million) and subsequently increased our
interest to 99.7%. Thereafter, Chilesats name was changed to Telmex Corp. S.A., or Telmex Corp.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In August 2007, we acquired 100% of Zap Television Directa al Hogar Ltda., now operating as Telmex TV S.A., for P.57.4 million (U.S.$4.8 million).
Telmex TV S.A. provides pay DTH television services in Chile through satellite technology, which provides coverage throughout the entire Chilean territory.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Of our revenues from Chilean operations in 2009, 41.1% was attributable to pay television,
29.3% to data and Internet access services, 28.5% to voice services (composed of 16.4% long-distance services and 12.1% local services and the remainder to other telecom services.

Telmex Chile is a provider of advanced telecommunications services. To business customers in Chile, we provide data transmission,
long-distance and local telephony, private telephony, virtual private and long-distance networks, dedicated Internet access and high capacity media services. We also offer a variety of advanced services, such as network administration,
videoconferencing, virtual PABX and Internet hosting, as well as data center and contact center services, and electronic billing.

In the residential market, Telmex Chile has expanded the focus of offerings beyond long-distance services to pay television via satellite
(DTH). During 2008, Telmex Chile began installing the newest HFC network in Latin America, passing 850,000 homes by December 31, 2009, in areas of Santiago and four other major cities. In December 2009 we reached 110,000 triple play service
subscribers.

Our fiber optic network covers more than 4,000 kilometers of continental Chile, from Arica to Santiago, Santiago
to Valparaiso and Santiago to Valdivia. To cover the southern regions of Chile and Isla de Pascua, we use a satellite platform and leased facilities. We also own and operate metropolitan fiber networks covering Santiago and Chiles other major
cities. In 2005, we introduced the first commercial 10-gigabit Metro Ethernet network in Santiago, which enables our network to offer integrated IP services to the corporate market, including VoIP services. In 2007, we expanded our Metro Ethernet
infrastructure to offer services supported by DWDM technology, which can reach a maximum capacity of up to 400 Gbps. In addition to services supported by these technologies, we offer services through a variety of platforms, including WiMax, xDSL,
VSAT and SCPC, among others.

The General Telecommunications Law of 1982, as amended, established the legal framework for the
provision of telecommunications services in Chile. The law established the rules for granting concessions and permits to provide telecommunications services and for the regulation of rates and interconnection. The main regulatory agency of the
Chilean telecommunications sector is the Ministry of Transportation and Telecommunications (Ministerio de Transportes y Telecomunicaciones), which acts primarily through the Undersecretary of Telecommunications, or Subtel. We have the right
to use licenses to provide local fixed and wireless service through the 50 MHz of the 3.4 to 3.6 GHz frequency band throughout the country, domestic and international long-distance service, data services, Internet access, pay television services and
value-added services.

We face competition in all of our business segments, and we compete with Movistar Chile (owned by
Telefónica S.A.), Entel S.A. and four other carriers. This competition has been vigorous in the small- and medium-sized business and residential telecommunications markets. In pay television, we face competition from VTR, Movistar Chile,
Direct TV and other minor competitors. We compete with VTR, Telefónica and, to a lesser extent, Telsur, in triple play services.

Peru

Through Telmex
Perú, S.A., or Telmex Perú, we provide data, Internet access, fixed-line telephony (including domestic and international long-distance), public telephony, and Internet hosting services. We serve corporate and residential customers in
Lima and the interior of Peru through a fiber optic network and a last-mile wireless network in the 3.5 GHz band. We also have a local Metro Ethernet network and utilize WiMax technology in Lima and other cities and provinces throughout the country.
In 2006, we extended our yellow pages directory operations to Peru. See Yellow Pages Business. Of the revenues from our Peruvian operations in 2009, 42.0% to data and Internet access services, 34.4% was attributable to voice
services, 10.4% to cable television and the remainder to other services.



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In 2006, we acquired concessions to provide wireless access services in the 3.5 GHz band in
Lima and eight provinces in Peru. We implemented 85% of the wireless access platform and began offering the services during the fourth quarter of 2006. In five provinces, the platform functions in the 10.5 GHz band, providing point-to-point access
capabilities. This platform enables us to broaden our service offerings to small- and medium-sized business customers and to expand our metropolitan network coverage.

In March 2007, we acquired 100% of Boga Comunicaciones S.A., or Boga, a cable television provider with operations in Lima and Chiclayo,
for P.284.6 million (U.S.$25 million). In July 2007, we also acquired the assets of Virtecom S.A., a cable television company with a network that passes through residential areas in Lima, for P.21.7 million (U.S.$2 million). These subsidiaries were
merged into Telmex Perú in February 2008. As of December 31, 2009, our digital network passed 321,853 homes, through which we can provide double and triple play services in the Peruvian residential market.

In 2008, we launched DTH services under the commercial name of Telmex TV Sat, with a basic package geared to the low end of the
residential market. To supplement this offering, we had launched CDMA 450 MHz prepaid telephony services in five cities by the end of 2009.

The main telecommunications regulatory authorities in Peru are the Regulatory Body for Private Investment in Telecommunications
(Organismo Regulador de la Inversión Privada en Telecomunicaciones) and the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones). Telefónica del Peru S.A., an affiliate of
Telefónica, S.A., is our main competitor in fixed-line telephony, public telephony, data and Internet access services. Americatel Peru S.A., an affiliate of Telecom Italia, also competes with us in the fixed-line long-distance market.
Telefónica Multimedia, an affiliate of Telefónica, S.A., is our main competitor in cable television.

United States

Our yellow pages directory operations in the United States are described under Yellow Pages Business.

Ecuador

In
March 2007, we acquired 100% of Ecuadortelecom S.A., or Ecuadortelecom, for P.270.7 million (U.S.$24 million) and began offering a wide array of voice, data, and Internet services as well as pay television to residential and business customers.
Ecuadortelecom holds a concession to offer fixed-line telephony (including long-distance), public telephony and data transmission services as well as a license to use the 3.5 GHz frequency band.

We currently offer local and long-distance telephony and broadband access in Guayaquil and Quito over an HFC network to residential,
small- and medium-sized businesses customers. Additionally, we offer cable television in Guayaquil and offer double and triple play packages. As of year end 2009, we pass approximately 400,000 homes in both cities.

As of December 31, 2009, Ecuadortelecom had approximately 23,000 Internet services installed, 14,000 cable television customers
installed and 16,000 local telephone lines, of which 12,000 were residential and 4,000 were for commercial customers, including public telephones (locutorios).

In December 2009, we began selling laptop computers, netbooks and desktop computers with Internet services to customers who have
contracted our services for at least two months prior to the date of the purchase of this equipment.



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The main telecommunications regulatory authority in Ecuador for cable and broadcast
television and telecommunications services is the Telecommunications Ministry (Ministerio de Telecomunicaciones). Our main competitors in Ecuador are Grupo TV Cable, which offers fixed-line telephone service, Internet access, data
services and cable television, and CNT  Corporación Nacional de Telecomunicaciones, a government-run company, which offers fixed-line telephone service, Internet access and data services.

Uruguay

Our subsidiary
in Uruguay, Telstar, S.A., or Telstar, provides data transmission, Internet access, hosting and housing to small- and medium-sized businesses and corporate customers, as well as long-distance voice services to corporate and residential customers in
Uruguays major cities.

Telstar operates a local point-multipoint distribution service, or LMDS, and fiber optic network
to provide voice, data, video and other telecommunications services. LMDS is a wireless service using radio signals to transmit voice, video signal transportation and data.

In 2009, 51.2% of our revenues in Uruguay were derived from data and Internet services, 30.4% were derived from the provision of mobile
telecommunications equipment to the government of the Argentine Province of Mendoza as part of a special project, 18.2% were attributable to voice services and the remaining portion was derived from other services.

In 2009, Telstar has completed the construction of fiber optic lines that connect operations in Argentina and Uruguay.

We face competition in all business segments; our most important competitors are Antel (Administración Nacional de
Telecomunicaciones, a government-owned corporation), Telefónica and Dedicado Telecomunicaciones.

YELLOW PAGES BUSINESS

We offer yellow pages directory services in Mexico, the United States, Argentina, Peru and
Columbia. In Mexico, we operate our yellow pages business through Anuncios en Directorios, S.A. de C.V.; in the United States, we operate through Sección Amarilla USA; in Argentina, Páginas Telmex Argentina provides services in Buenos
Aires under the name Páginas Telmex; in Peru, Páginas Telmex Perú provides services in the department of Lima y Callao under the name Páginas Telmex; and in Colombia, Páginas Telmex Colombia provides services in
Cali under the name Páginas Telmex. In all of these markets, we provide print and digital products and services.

Print directories

We primarily provide yellow pages directories, and through an arrangement with Telmex, we also provide a white pages
directory in Mexico.

Yellow pages

We offer two types of printed yellow pages directories: a complete yellow pages book and a two-column hand directory. The smaller edition
is a complement to the larger book and contains similar information. Basic listing in our yellow pages directories is provided at no charge and includes the name, address and telephone number of the business according to its classification. In
addition, we sell paid advertising space on an annual basis in our directories and offer various advertising options to our clients.



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Directories are published on a 12-month cycle with staggered publication times. We outsource the printing of our directories. In 2009, we produced approximately 16.3 million directories in
Mexico (including white pages directories), 3.4 million in the United States, 800,000 in Perú, 350,000 in Colombia and 200,000 in Argentina.

In Mexico, we have over 100 years of history of providing telephone directories under the brand name Sección Amarilla. In
2009, we published and distributed 124 directories covering different cities and regions within the country. In most cases, we combine yellow and white pages directories in the same book, and these are provided at no cost to fixed telephone line
users. In Mexicos three largest cities, Mexico City, Guadalajara and Monterrey, the yellow pages and white pages are provided in separate books.

In the United States, we began our directory business in October 2006 following our acquisition of an 80% interest in Cobalt
Publishing LLC. Subsequent to the acquisition, Cobalt Publishing LLC was renamed Sección Amarilla USA LLC, or Sección Amarilla USA. Sección Amarilla USA publishes Sección Amarilla, a Spanish-language
telephone directory with circulation in 23 states, of which our largest offerings are in California, Florida, New York and Texas. Sección Amarilla USA also provides its directory through the Internet. We offered 47 directories in 2007, 52 in
2008 and 49 in 2009. We expect to offer 36 in 2010. In the United States, we identify Spanish-speaking zones and distribute our directories without charge to our advertisers and residents in these areas.

In Argentina and Peru, we began publishing yellow pages directories in 2007. We offer two directories in each country. In Colombia, we
began publishing two directories in 2009.

White pages

As a service to Telmex, we publish and distribute white pages directories in exchange for a fixed fee pursuant to our long-term contract
with Telmex.

Internet yellow pages directory

In 1997, Anuncios began providing electronic directory services by establishing the Sección Amarilla website on the Internet,
accessed at www.seccionamarilla.com or www.paginastelmex.com. The web pages provide access to the information published in the print directories. The websites for Mexico, the United States, Argentina, Peru and Colombia are similar and enable
searches by geographic location, classification or business name. Maps accompany search results showing where a business is located. Beginning in 2001, we began selling advertising on our website.

In Mexico, our website had 27.6 million visits in 2009, 23.6 million in 2008 and 17.6 million in 2007. From 2007 to 2009,
page views of our website increased from 1456.0 million in 2007 to 184.9 million page views in 2008 and decreased to 175.9 million in 2009. The high amount of page views in 2008 resulted from a joint venture between Telmex and the
Microsoft website (Prodigy MSN), which increased our visibility on the Internet. Page view reduction in 2009 resulted from an improvement to the websites search tool, making searches more efficient while reducing the number of pages views for
the same results.

SMS text-messaging services

We offer short text messaging (SMS) services to our customers. Through this service, potential clients of our advertisers can search for
and access information through their mobile phones.



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Advertising sales and marketing

We derive our revenues through the sale of print and electronic advertising. We sell a majority of our advertisements directly. Customers
can advertise in a single directory, though some of our larger customers have national accounts in which they advertise throughout all directories in the territory. Print directory advertising remains the most important source of revenue, though
increased access to the Internet might shift this result in the future.

Access to Telmex customer database

We have an arrangement with Telmex whereby we have access to the Telmex customer database for agreed fees.

Competition

In Mexico,
we are the main provider of yellow pages directories. In the United States, in many of our markets we are the only directory published in the Spanish language. Nevertheless, the U.S. directory advertising industry is highly competitive. We also
compete with other types of media, including television broadcasting, newspaper, radio, direct mail, search engines and other Internet yellow pages.



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CAPITAL EXPENDITURES

The following table sets forth our capital expenditures for each year in the three-year period ended December 31, 2009.



|                                          |  |                                                                                                                  |  |           |  |          
|----------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | --------- |  | ---------
|                                          |  | Year ended December 31,                                                                                         
|                                          |  | 2009                                                                                                             |  | 2008      |  | 2007     
|                                          |  | (2009 and 2008 in millions of Mexican pesos;
2007 in millions of constant
Mexican pesos as of December 31, 2007)
|Network infrastructure                    |  | P.  3,905                                                                                                        |  | P.  8,076 |  | P.  4,359
|Access, infrastructure and local services |  | 7,323                                                                                                            |  | 6,718     |  | 3,508    
|Data services                             |  | 3,516                                                                                                            |  | 2,958     |  | 3,592    
|Satellite investments                     |  | 315                                                                                                              |  | 240       |  | 775      
|Other                                     |  | 759                                                                                                              |  | 607       |  | 570      
|                                          |  |                                                                                                                  |  |           |  |          
|Total capital expenditures                |  | P.15,818                                                                                                         |  | P.18,599  |  | P.12,804 
|                                          |  |                                                                                                                  |  |           |  |          

Our capital expenditures decreased 15.0% in 2009. In
2009, our consolidated capital expenditures totaled P.15.8 billion (U.S.$1.2 billion). Of our consolidated capital expenditures, our Brazilian operations represented 48.7% (P.7.7 billion or U.S.$567 million) and the remainder of our South American
operations represented 51.3% (P.8.1 billion or U.S.$597 million).

We have budgeted capital expenditures in an amount
equivalent to approximately P.19.2 billion (U.S.$1.5 billion) for the year 2010, including P.10.2 billion (U.S.$782 million) for Brazil, and P.9.0 billion (U.S.$691 million) for our other operations in Colombia, Argentina, Chile, Peru, Ecuador,
Uruguay and the United States. Budgeted capital expenditures for 2010 exclude any other investments we may make to acquire other companies. In subsequent years, our capital expenditures will depend on economic and market conditions. Our budgeted
capital expenditures are financed through operating cash flows and limited borrowing.

PLANT,
PROPERTY AND EQUIPMENT

Our principal properties consist of the networks located in the South American countries in which
our subsidiaries operate, including broadband fiber optic transmission systems, digital switching systems, cable television networks, a satellite network, submarine cables and related real estate. As of December 31, 2009, the net book value of
our plant, property and equipment was P.80,124 million (U.S.$6.1 billion).

Embratels properties comprise a majority of
our plant, property and equipment and are located throughout Brazil, providing the necessary infrastructure to support local, nationwide long-distance and international telecommunications. We conduct the majority of Embratels management
functions from Rio de Janeiro, and Embratel owns and leases office space in other cities, including São Paulo, Porto Alegre, Belo Horizonte, Curitiba, Brasília, Salvador and Belém. Embratels network facilities are in good
condition and are suitable to support the wide array of advanced communications services that we provide. Through Star One, Embratel also owns properties related to its space services, consisting primarily of satellites, along with miscellaneous
administrative assets held by Star One.



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Our properties located in Colombia, Argentina, Chile, Peru, Ecuador and Uruguay consist of
transmission and switching networks with coverage in major cities, as well as administrative and customer service offices. Additionally, we have a cable television network in Colombia and Peru and a satellite television network in Chile. For our
yellow pages business, we have administrative and customer service offices in Mexico and the United States.



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|Item 4A. | Not Applicable.
|-------- | ---------------



|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

The following discussion should be read in conjunction with the financial statements and notes thereto included in this report. Our
financial statements for all dates and periods prior to our establishment in December 2007 have been prepared on a consolidated basis and include the historical operation of the subsidiaries transferred to us in the Escisión.

Our consolidated financial statements have been prepared in accordance with Mexican FRS, which differ in certain respects
from U.S. GAAP. Note 19 to our audited consolidated financial statements provides a description of the principal differences between Mexican FRS and U.S. GAAP as they relate to us, a reconciliation to U.S. GAAP of net income and total
stockholders equity and condensed financial statements under U.S. GAAP.

Overview

The highlights of our results for the period from 2007 to 2009 included the following:



| |  |  | In 2009, we focused on increasing revenues from local service, data transmission and Internet access services, and pay television to reduce our
dependence on revenues from long-distance service in Brazil.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In 2008, we maintained our leading franchise in Brazilian long-distance, despite an increase in competition.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | In our corporate networks and Internet access businesses across Latin America, we had revenue growth in 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | Our Brazilian local service business, which started in late 2002, has successfully established itself with steady growth in customers and revenues. At
year-end 2009, we had more than 6 million customers for a range of services, and for the year we had P.13 billion in operating revenues. This represented year-over-year customer increases at the end of 2009 of 7.8% in Livre service (residential
telephony) and 46.6% in Net Fone via Embratel service (residential VoIP), which led to an increase in consolidated local service revenues of 20.4% for 2009.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Beginning in 2006, we made a series of acquisitions of cable television businesses in Colombia, giving us a 57% share of the pay television market by
the end of 2009. We expect continued revenue growth and improved profitability from our Colombian operations. Our consolidated revenues from pay television surpassed P.3.2 billion in 2008 and reached P.5.4 billion 2009. In addition, our equity
investee, Net continues to grow in the pay television business in Brazil.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our financing cost increased significantly in 2008, due to the depreciation of the Brazilian realagainst the U.S. dollar. During 2009, the
Brazilian real appreciated against the U.S. dollar, resulting in a decrease in our financing cost.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effects of
Exchange Rate Variations

Our financial statements are presented in Mexican pesos, but less than 10% of our revenues are
from Mexico. Effective January 1, 2008, in each jurisdiction in which we operate, we treat the local currency as the functional currency for accounting purposes. In Brazil, for example, the Brazilian realis the functional currency.



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The financial statements of our foreign subsidiaries and affiliates that are consolidated or
accounted for based on the equity method first are adjusted to conform to Mexican FRS and then local currency amounts are translated into Mexican pesos as follows: assets and liabilities are translated into 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 are made and income is generated; and revenues, costs and expenses are translated using an average of the
applicable historical exchange rates for the period.

Changes in the average exchange rate of the Brazilian
real against the peso can have a significant effect on our financial performance, since the majority of our revenues (78.2% in 2009) are generated in Brazil. If the Brazilian realappreciates against the peso from one year to the next, our revenues will tend to increase as reported in pesos. In 2009, the average exchange rate increased 10.0% compared to 2008 due principally to the appreciation of the
Brazilian real, which caused our results, as reported in pesos, to improve from year to year. In 2008, the average exchange rate was virtually the same as in 2007. As a result, our performance in 2008 compared to
2007 was not significantly affected.

Exchange rate variations also affect our financial performance because of
our U.S. dollar-denominated debt. We recognize an exchange gain or loss based on changes in the value of the U.S. dollar against the functional currencies of the primary operating environments of our subsidiaries that have debt denominated
in U.S. dollars. Most of our U.S. dollar-denominated debt is in Brazil, and we have used derivative instruments to hedge against exchange loss on this debt. In 2009, the appreciation of the Brazilian real against the U.S. dollar resulted
in an exchange gain of P.4,154 million, which was partly offset by a fair value loss of P.1,670 million on derivatives we entered into to convert our U.S. dollar exposure to Brazilian reais. In 2008, the appreciation of the dollar against the
Brazilian real resulted in an exchange loss of P.4,177 million, which was partly offset by fair value gains in the amount of P.2,577 million on derivatives we entered into to convert our U.S. dollar exposure to Brazilian reais.

Effect of Inflation Accounting

Due to the adoption of Mexican FRS B-10, effective January 1, 2008, we ceased to recognize the effects of inflation on our financial
information. Prior to 2008, inflation accounting had extensive effects on the presentation of our financial statements. Our financial statements for periods through December 31, 2007 have been re-expressed in constant pesos as of
December 31, 2007, using a factor that is based on the Mexican consumer price index. The value of the re-expression factor has a significant impact on the comparison between our results of operations for 2007 and for prior years. See Note 2(c)
to our audited consolidated financial statements.

Effects of theEscisión

Telmex Internacional is a Mexican holding company that was established in December 2007. Our operating subsidiaries were all owned
by Telmex prior to our establishment, and they were transferred to us on December 26, 2007 in the split-up that we refer to as the Escisión. We believe in general that our financial performance has not been
materially affected by the separation from Telmex, and our historical financial statements for earlier dates and periods would not have been materially different if we had been separate from Telmex prior to the
Escisíon.



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Effects of Acquisitions

Prior to the Escisión, Telmex was engaged in the Mexican yellow pages business for many years. All of our other businesses,
however, were acquired by Telmex after January 1, 2004, starting with the purchase of AT&T Latin America in February 2004 and the purchase of a controlling interest in Embratel in July 2004. Our past financial performance has been affected
by the recent acquisitions made during those periods. The most significant recent acquisitions are listed below, together with the effective date as of which each has been reflected in our financial statements. These and other, less significant
acquisitions are summarized in Note 5 to our audited consolidated financial statements.



| |  |  | Sección Amarilla USA, LLC (November 2006)producer of Spanish-language yellow pages directories in the United States; in December 2009, we
acquired the remaining 20% non-controlling interest.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Boga (April 2007)cable television provider in Peru.
| | - |  | ----------------------------------------------------



| |  |  | Ecutel (April 2007)telecommunications provider in Ecuador.
| | - |  | -----------------------------------------------------------



| |  |  | TV Cable S.A. and Cable del Pacífico (April 2007)two cable television companies in Colombia, now operating as Telmex Colombia, S.A.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Zap Television Directa al Hogar Ltda. (September 2007) satellite television services provider in Chile, now operating as Telmex TV, S.A.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cablecentro, Megainvest Ltda., Comunicaciones Ver TV, S.A., Satelcaribe, S.A. (November 2007)cable television assets in Colombia.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ertach (November 2007)Internet, data and voice services provider in Argentina.
| | - |  | -------------------------------------------------------------------------------



| |  |  | Teledinámica, S.A., Organización Dinámica, S.A. and Telebarranquilla, S.A. (October 2008)cable television and Internet
access assets in Colombia, now operating as New Dinamic Company, S.A.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contenido Cultural y Educativo, S.A. de C.V. (March 2009)engaged in the sale of print advertising in Mexico.
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | Eidon Software, S.A. de C.V. (May 2009)provider of software services.
| | - |  | ----------------------------------------------------------------------

We have accounted for business acquisitions using the purchase method of accounting, which has resulted in the recognition of a
substantial amount of goodwill. At December 31, 2009, the balance of goodwill was P.14,399 million. We have also allocated substantial value to the licenses and trademarks of acquired entities and prepaid indefeasible rights of use, which has
resulted in a net balance of P.14,557 million on our balance sheet at December 31, 2009.

We will continue to evaluate
possible acquisitions, particularly in the Latin American telecommunications business, and we may acquire businesses when we are presented with opportunities that are strategically complementary and reasonably priced. Any acquisitions we may make
will affect our financial performance in future periods. We may incur additional debt to finance acquisitions, and we may acquire companies with pre-existing debt. Increased debt would also affect our financial condition and our results of
operations.



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Changes in Mexican FRS

Note 2(z) to our audited consolidated financial statements discusses new accounting pronouncements under Mexican FRS that became effective
in 2009, and Notes 2(b), 2(c) and 2(u) to our audited consolidated financial statements discuss new accounting pronouncements under Mexican FRS that became effective in 2008. These accounting pronouncements were applied on a prospective basis. As a
result, the financial statements of prior years, which are presented for comparative purposes, have not been modified and may not be comparable to our financial statements for 2009 and 2008. In 2010, other pronouncements might affect certain aspects
of our consolidated financial statements.

Transition to IFRS

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 adopted by the International Accounting Standards Board (IASB). Mexican issuers may voluntarily report using IFRS before the change in the reporting standards
becomes mandatory.



49



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##### Table of Contents

Summary of Operating Income and Net Income

The table below summarizes our consolidated income statement for the past three years.



|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|----------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- | ------ | - | --------------------------------- | ----- | - | ------------------ | -- | ------ | --------------------------------- |  | ----- | ------------------ |  | -- | --------------------------------- | - |  | ----- | -
|                                                |  | Year ended December 31,                                                                                                     |       
|                                                |  | 2009                                                                                                                        |        |   | 2008                              |       |   | 2007               |   
|                                                |  | (millions ofpesos)                                                                                                          |        |   | (percentage 
ofoperatingrevenues) |       |   | (millions ofpesos) |    |        | (percentage 
ofoperatingrevenues) |  |       | (millions ofpesos) |  |    | (percentage 
ofoperatingrevenues) |  
|                                                |  | (in millions of Mexican pesos for 2009 and 2008 and in millions of constant
Mexican pesos as of December 31, 2007 for 2007) |       
|Operating revenues:                             |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Domestic long-distance service                  |  | P.                                                                                                                          | 31,514 |   |                                   | 34.0  | % |                    | P. | 28,299 |                                   |  | 37.2  | %                  |  | P. | 27,084                            |   |  | 40.0  | %
|Corporate networks                              |  |                                                                                                                             | 21,745 |   |                                   | 23.5  | % |                    |    | 16,757 |                                   |  | 22.1  |                    |  |    | 15,390                            |   |  | 22.7  |  
|Local service                                   |  |                                                                                                                             | 15,255 |   |                                   | 16.5  | % |                    |    | 10,594 |                                   |  | 13.9  |                    |  |    | 7,874                             |   |  | 11.6  |  
|Yellow pages                                    |  |                                                                                                                             | 4,930  |   |                                   | 5.3   | % |                    |    | 5,519  |                                   |  | 7.3   |                    |  |    | 5,639                             |   |  | 8.3   |  
|Internet access services                        |  |                                                                                                                             | 8,018  |   |                                   | 8.7   | % |                    |    | 5,496  |                                   |  | 7.2   |                    |  |    | 4,381                             |   |  | 6.5   |  
|International long-distance service             |  |                                                                                                                             | 3,362  |   |                                   | 3.6   | % |                    |    | 3,294  |                                   |  | 4.3   |                    |  |    | 3,605                             |   |  | 5.3   |  
|Pay television                                  |  |                                                                                                                             | 5,355  |   |                                   | 5.8   | % |                    |    | 3,203  |                                   |  | 4.2   |                    |  |    | 1,044                             |   |  | 1.5   |  
|                                                |  |                                                                                                                             |        |   |                                   |      
|Other                                           |  |                                                                                                                             | 2,361  |   |                                   | 2.6   | % |                    |    | 2,843  |                                   |  | 3.8   |                    |  |    | 2,743                             |   |  | 4.1   |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Total operating revenues                        |  |                                                                                                                             | 92,540 |   |                                   | 100.0 | % |                    |    | 76,005 |                                   |  | 100.0 |                    |  |    | 67,760                            |   |  | 100.0 |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Operating costs and expenses:                   |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Transport and interconnection                   |  |                                                                                                                             | 32,726 |   |                                   | 35.4  | % |                    |    | 26,925 |                                   |  | 35.4  |                    |  |    | 23,649                            |   |  | 34.9  |  
|Cost of sales and services                      |  |                                                                                                                             | 15,695 |   |                                   | 17.0  | % |                    |    | 12,048 |                                   |  | 15.9  |                    |  |    | 9,803                             |   |  | 14.5  |  
|Commercial, administrative and general expenses |  |                                                                                                                             | 21,541 |   |                                   | 23.3  | % |                    |    | 19,141 |                                   |  | 25.2  |                    |  |    | 16,207                            |   |  | 23.9  |  
|Depreciation and amortization                   |  |                                                                                                                             | 11,526 |   |                                   | 12.4  | % |                    |    | 8,968  |                                   |  | 11.8  |                    |  |    | 7,771                             |   |  | 11.5  |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Total operating costs and expenses              |  |                                                                                                                             | 81,488 |   |                                   | 88.1  | % |                    |    | 67,082 |                                   |  | 88.3  |                    |  |    | 57,430                            |   |  | 84.8  |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Operating income                                |  |                                                                                                                             | 11,052 |   |                                   | 11.9  | % |                    |    | 8,923  |                                   |  | 11.7  | %                  |  |    | 10,330                            |   |  | 15.2  | %
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Other expenses, net                             |  |                                                                                                                             | 48     |   |                                   |       |   |                    |    | 103    |                                   |  |       |                    |  |    | 242                               |   |  |       |  
|Financing (income) cost:                        |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Interest income                                 |  |                                                                                                                             | (1,085 | ) |                                   |       |   |                    |    | (1,266 | )                                 |  |       |                    |  |    | (1,217                            | ) |  |       |  
|Interest expense                                |  |                                                                                                                             | 2,366  |   |                                   |       |   |                    |    | 1,508  |                                   |  |       |                    |  |    | 1,631                             |   |  |       |  
|Exchange loss, net                              |  |                                                                                                                             | (2,373 | ) |                                   |       |   |                    |    | 1,879  |                                   |  |       |                    |  |    | 3                                 |   |  |       |  
|Monetary gain,
net(1)                           |  |                                                                                                                             |       |   |                                   |       |   |                    |    |       |                                   |  |       |                    |  |    | (141                              | ) |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|                                                |  |                                                                                                                             | (1,092 | ) |                                   |       |   |                    |    | 2,121  |                                   |  |       |                    |  |    | 276                               |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Equity interest in net income of affiliates     |  |                                                                                                                             | 1,889  |   |                                   |       |   |                    |    | 191    |                                   |  |       |                    |  |    | 689                               |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Income before income tax                        |  |                                                                                                                             | 13,985 |   |                                   |       |   |                    |    | 6,890  |                                   |  |       |                    |  |    | 10,501                            |   |  |       |  
|Income tax                                      |  |                                                                                                                             | 4,422  |   |                                   |       |   |                    |    | 1,259  |                                   |  |       |                    |  |    | 3,487                             |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Net income                                      |  |                                                                                                                             | 9,563  |   |                                   |       |   |                    |    | 5,631  |                                   |  |       |                    |  |    | 7,014                             |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Distribution of net income:                     |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Majority interest                               |  |                                                                                                                             | 9,105  |   |                                   |       |   |                    |    | 5,536  |                                   |  |       |                    |  |    | 6,464                             |   |  |       |  
|Non-controlling interest                        |  |                                                                                                                             | 458    |   |                                   |       |   |                    |    | 95     |                                   |  |       |                    |  |    | 550                               |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|                                                |  |                                                                                                                             | 9,563  |   |                                   |       |   |                    |    | 5,631  |                                   |  |       |                    |  |    | 7,014                             |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  
|Earnings per share                              |  | P.                                                                                                                          | 0.50   |   |                                   |       |   |                    | P. | 0.30   |                                   |  |       |                    |  | P. | 0.33                              |   |  |       |  
|                                                |  |                                                                                                                             |        |   |                                   |       |   |                    |    |        |                                   |  |       |                    |  |    |                                   |   |  |       |  



|(1) | We do not report monetary gain after 2007 because we are no longer required to present the effects of inflation under Mexican FRS after 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------



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Results of Operations for 2009, 2008 and 2007

Revenues

Domestic Long-distance Revenues

Operating revenues from domestic long-distance service consist of (a) revenues for carrying long-distance calls for
customers and (b) amounts earned from other telecommunications operators for transporting their domestic long-distance calls. The amount of operating revenues from domestic long-distance service depends on rates and traffic volume. Domestic
long-distance revenues increased by 11.4% in 2009 and by 4.5% in 2008. The increase in 2009 was primarily due to an exchange rate variation (a 10% increase) principally attributable to the appreciation of the Brazilian
real against the Mexican peso and an increase in domestic long distance revenues at Embratel reflecting increased long-distance mobile traffic carried by Embratel for its customers and long distance traffic
originating on other operators mobile networks and transported by Embratel. The increase in 2008 was principally due to a 4.7% increase in domestic long-distance revenues at Embratel, mainly as a result of increased traffic from
Embratels corporate customers and the growth of long-distance traffic originating on other operators mobile networks.

Revenues from Corporate Networks

Revenues from corporate networks are primarily from dedicated private lines and from providing virtual private network services. Revenues
from corporate networks increased by 29.8% in 2009 and increased by 8.9% in 2008. The increase in 2009 was principally due to an increase of data network services subscribed to by corporate customers in Brazil (35.2% increase in 64 Kbps billed-line
equivalents). The increase in 2008 was principally due to increased volume at Embratel (46.9% increase in 64 Kbps billed-line equivalents), which was partially offset by decreased rates.

Local Service Revenues

Operating revenues from local service include installation charges for new lines, monthly line rental charges and monthly
measured service charges based on the number of minutes. These revenues depend on the number of lines in service, the number of new lines installed and the volume of minutes. Revenues from Embratels residential and business local services,
Livre, Net Fone via Embrateland VipLine,are accounted for under local service revenues. Revenues from local service increased by 44.0% in 2009 and by 34.5% in 2008. The increase
in 2009 was principally due to an increase of 20.5% in the number of total lines in service in Brazil. The increase in 2008 was due primarily to the increase in Embratels local services revenues as a result of an increase of 53.2% in 2008 in
total lines. The increase in total lines in 2009 and 2008 was primarily from Livre and Net Fone via Embratel services.

Revenues from Yellow Pages

Operating revenues from yellow pages consist of sales of yellow pages advertising, principally in Mexico. Revenues from yellow pages
decreased 10.7% in 2009 and 2.1% in 2008. The decrease in 2009 was principally due to a decrease in the sale of advertising in directories in Mexico. The decrease in 2008 was principally due to higher discounts offered to our key customers.

Revenues from Internet Access Services

Revenues from Internet access services include set-up and service fees for broadband and dial-up Internet access. Revenues from Internet
access services increased by 45.9% in 2009 and increased by



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25.5% in 2008. The increase in 2009 was principally due to a 100.4% increase in the number of users of our Internet access service in Brazil and a 22.8% increase in the number of users of our
Internet access service in Colombia. The increase in 2008 was principally due to a 79.1% increase in the number of users of our Internet access service in Colombia, the expansion of Embratels corporate services resulting from bundled solutions
offered to our customers and a 19.2% increase in the number of users of our Internet access service in Brazil.

International Long-distance Revenues

Operating revenues from international long-distance service depend on the volume of traffic, the rates charged to our customers, the rates
charged by each party under agreements with foreign carriers, principally in the United States, and the effects of competition. We generally settle on a net basis the amounts owing to and from each foreign carrier, but we report the amounts owed to
us as revenues and the amounts we owe in cost or sales and services. Settlement payments under service agreements with foreign carriers are generally denominated in U.S. dollars.

International long-distance revenues increased by 2.1% in 2009 and decreased by 8.6% in 2008. The increase in 2009 was primarily
caused by an exchange gain principally due to the appreciation of the Brazilian realagainst the Mexican peso, partially offset by a decrease in international long distance revenues from residential customers in Brazil. The
decrease in 2008 was primarily caused by a 9.7% decline in traffic in Brazil due to growing competition from new technologies, such as VoIP.

Revenues from Pay Television

Our revenues from pay television amounted to P.5,355 million in 2009, compared to P.3,203 million in 2008 and P.1,044 million in 2007. The
increase in revenues in 2009 was primarily the result of the launch in December 2008 of satellite television in Brazil (Via Embratel), a 36.5% increase in pay television customers in Chile consisting of subscribers to DTH services and
subscribers to services through the HFC network and a 3.1% increase in cable television subscribers along with an increased average revenue per user in Colombia. The increase in revenues in 2008 is the result of a 27.6% increase in the number of
subscribers in Colombia, a 313.4% increase in the number of subscribers in Chile and a 62.5% increase in the number of subscribers in Peru.

Other Revenues

The largest components of other revenues are revenues from interconnection (fees we charge other telecommunications operators for
completing calls to our local network), provision of call center services (principally in Brazil) and sales of telecommunications equipment (principally handsets sold to our local service customers in Brazil). Other revenues decreased by 17.0% in
2009 and by 3.6% in 2008. The decrease in 2009 was principally due to decreased call center services contracted in Brazil. The increase in 2008 was principally due to an increase in other revenues in Chile resulting from network construction in
connection with public works projects, partially offset by a decrease in other revenues in Brazil as the result of a decline in call center services and sales of handsets.

Operating Costs and Expenses

Transport and Interconnection

Costs from transport and interconnection consist primarily of payments to operators of mobile and local networks for the use of their
facilities to complete calls to their customers and the rental of capacity from other operators in areas where we use rented capacity to complement our network. These



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costs are driven in large part by our traffic in Brazil. Transport and interconnection costs increased by 21.5% in 2009 and increased by 13.9% in 2008. The increase in 2009 was due to an increase
in interconnection costs for mobile termination mainly in Brazil and higher costs associated with originating mobile traffic due to a rate increase adjustment, effective in January 2009. The increase in 2008 was due to growth in mobile call traffic,
resulting in increased transport and interconnection costs, and an increase of mobile network interconnection rates in Brazil.

Cost of Sales and Services

Cost of sales and services increased by 30.3% in 2009 and increased by 22.9% in 2008. The increase in 2009 was due to
(a) an increase in the cost of providing data and local services in Brazil, (b) the purchase of television content to increase programming offerings in Colombia, Chile and Peru and (c) the leasing of infrastructure facilities in
Colombia. The increase in 2008 was due to increased costs for (a) television content, due to growth in the number of pay television subscribers in Colombia and Chile, (b) increased network maintenance in Colombia and Chile, (c) the
leasing of infrastructure facilities in Colombia and (d) the hiring of additional technical and customer service personnel in Colombia.

Commercial, Administrative and General Expenses

Commercial, administrative and general expenses increased by 12.5% in 2009 and increased by 18.1% in 2008. The increase in 2009 was due to
higher expenses associated with (a) customer service call centers and (b) billing and collections services in Colombia and Chile, mainly as a result of increased revenues in these countries and specifically related to pay television
revenues in Colombia. The increase in 2008 was due to the expansion of our operations in Colombia, the United States and Chile, including increased personnel and an increase in corporate expenses following the Escisión.

Depreciation and Amortization

Depreciation and amortization increased by 28.5% in 2009 and increased by 15.4% in 2008. The increase in 2009 was mainly due to the
expansion of our network in Brazil, Colombia, Chile and Ecuador. The increase in 2008 was due to the expansion of our network in Colombia, Brazil, Argentina and Chile. As a result of Mexican FRS, changes in exchange rates affect the value of fixed
assets and thus the amount of depreciation.

Operating Income

Operating income increased by 23.9% in 2009 primarily due to an increase in revenues of 21.8%. Our operating margin was 11.9% in 2009
compared to 11.7% in 2008.

Operating income decreased by 13.6% in 2008 due to an increase of 16.8% in costs and expenses,
partially offset by an increase of 12.2% in revenues, with Brazilian revenues increasing 8.1% and Colombian revenues increasing 110.7%. Our operating margin was 11.7% in 2008 compared to 15.2% in 2007, due to an increase in costs and expenses
principally resulting from the expansion of our network and our pay television and Internet access operations as well as an increase in depreciation caused by an increased investment in plant, property and equipment.

Financing (Income) Cost, Net

Financing (income) cost, net reflects interest income, interest expense, foreign exchange gain or loss and, through 2007, the gain or loss
attributable to the effects of inflation on monetary liabilities and assets. A substantial amount of our indebtedness (37.1% at December 31, 2009), is denominated in



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U.S. dollars, so variations in the value of the U.S. dollar affect our foreign exchange gain or loss and interest expense. Approximately 6.6% of our monetary assets were denominated in
U.S. dollars at December 31, 2009.

In each country in which we have monetary assets or liabilities, we determine
foreign exchange gain or loss based on the functional currency of local operations, and, through 2007, we determined monetary gain or loss based on the local inflation rate. Because our subsidiary Embratel has 44.2% of our total indebtedness,
exchange gain or loss is driven primarily by the value of the Brazilian real against the U.S. dollar.

We enter
into derivative transactions to manage our exposure to changes in exchange rates, and the change in fair value of these derivative transactions is included in exchange gain or loss.

In 2009, financing (income) cost, net was P.(1,092) million compared with P.2,121 million in 2008 and P.276 million in 2007. The changes
in each component were as follows:



| |  |  | Interest income decreased by 14.3% in 2009 after increasing by 4.0% in 2008. The decrease in 2009 was principally due to a lower average level of
interest-generating financial assets. The increase in 2008 was principally due to an increase in cash equivalents following the Escisión.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest expense increased by 56.8% in 2009 after decreasing by 7.5% in 2008. The increase in 2009 was principally due to a higher average debt
balance. The change in 2008 was due to a slight reduction in the average level of debt held by Embratel and a decrease in the average LIBOR interest rate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We recorded a net exchange gain of P.2,373 million in 2009, compared to net exchange losses of P.1,879 million in 2008 and P.3 million in 2007. In
2009, the gain was primarily due to the appreciation of the Brazilian realagainst the U.S. dollar during the period, which was partially offset by fair value losses of Embratels Brazilian real/U.S. dollar cross-currency swaps.
In 2008, the amount reflects the offsetting effects of exchange loss on dollar-denominated debt, primarily at Embratel, and fair value gains on cross-currency swaps, primarily entered into to cover our exposure from U.S. dollars to Brazilian
reais. In 2007, the amount reflects the offsetting effects of exchange gain on dollar-denominated debt and fair value losses on cross-currency swaps.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Beginning in 2008, due to a change in Mexican FRS, we did not recognize the effects of inflation on monetary assets and liabilities. We had a net
monetary loss of P.141 million in 2007. In 2007, we had a gain in Brazil, where we have substantial monetary liabilities, and a loss in Mexico, where we have substantial monetary assets. The inflation rate in Brazil was 7.8% in 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity interest in net income of affiliates

Equity interest is the application of the equity method on the net income of affiliates, mainly in Net, the largest cable television
operator in Brazil. Equity income increased 889% in 2009 and decreased 72.3% in 2008. The increase in 2009 was principally due to net income growth substantially as a result of an increase in subscribers in all of Nets products and the
integration of companies acquired in recent years, as well as a net exchange gain due to the appreciation of the Brazilian real against the U.S. dollar. The decrease in 2008 was principally due to a higher net exchange loss due to the
appreciation of the U.S. dollar against the Brazilian real, partially offset by an increase in operating income as a result of an increase in subscribers.



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Income Tax

The statutory rate of the Mexican corporate income tax was 28% in 2009, 2008 and 2007. The statutory tax rate on our income in Brazil,
which accounts for the majority of our taxable income, was 34% in 2009, 2008 and 2007. Our effective rate of corporate income tax as a percentage of pre-tax profit was 31.6% in 2009, 18.3% in 2008 and 33.2% in 2007. Our effective tax rate was higher
in 2009 and 2007 than 2008 primarily because in 2008 we recognized the reversal of the valuation allowance on deferred tax assets in our Brazilian subsidiaries. The effective tax rates in 2009 and 2007 were virtually the same.

Net Income

Net income increased by 69.8% in 2009 and decreased by 19.7% in 2008. In 2009, the increase was primarily due to lower financing cost,
higher operating income and an increase in equity interest in Net.In 2008, the decrease was due to lower operating margin and higher exchange losses, which more than offset increased revenues.

Results of Operations by Segment

We operate in eight geographic segments. Segment information is presented in Note 18 of our audited consolidated financial statements
included in this report. Brazil is our principal geographic market, accounting for 78.2% of our total operating revenues in 2009 (compared to 78.9% in 2008 and 81.8% in 2007) and 75.3% of our total costs and expenses in 2009 (compared to 77.0% in
2008 and 83.8% in 2007). Colombia is our second most important geographic market, accounting for 8.0% of our total operating revenues in 2009 (compared to 7.5% in 2008 and 4.0% in 2007) and 9.0% of our total costs and expenses in 2009 (compared to
8.8% in 2008 and 4.4% in 2007).

The table below sets forth the percentage of our total revenues and total costs and expenses
represented by each of our principal geographic segments for the periods indicated.



|          |  |                   |   |  |                            |   |  |                   |   |  |                            |   |  |                   |   |  |                            |  
|--------- |  | ----------------- | - |  | -------------------------- | - |  | ----------------- | - |  | -------------------------- | - |  | ----------------- | - |  | -------------------------- | -
|          |  | 2009              |   |  | 2008                       |   |  | 2007              |  
|          |  | % ofTotalrevenues |   |  | % ofTotal costsandexpenses |   |  | % ofTotalrevenues |   |  | %
ofTotal costsandexpenses |   |  | % ofTotalrevenues |   |  | % ofTotal costsandexpenses |  
|Brazil    |  | 78.2              |   |  | 75.3                       |   |  | 78.9              |   |  | 77.0                       |   |  | 81.8              |   |  | 83.8                       |  
|Colombia  |  | 8.0               |   |  | 9.0                        |   |  | 7.5               |   |  | 8.8                        |   |  | 4.0               |   |  | 4.4                        |  
|Mexico    |  | 5.1               |   |  | 4.5                        |   |  | 6.8               |   |  | 4.7                        |   |  | 8.1               |   |  | 4.0                        |  
|Chile     |  | 3.9               |   |  | 4.8                        |   |  | 3.1               |   |  | 4.0                        |   |  | 2.5               |   |  | 3.2                        |  
|Argentina |  | 2.4               |   |  | 2.7                        |   |  | 2.4               |   |  | 3.1                        |   |  | 2.1               |   |  | 2.6                        |  
|Peru      |  | 2.0               |   |  | 2.3                        |   |  | 1.7               |   |  | 2.1                        |   |  | 1.5               |   |  | 1.7                        |  
|Other(1)  |  | 0.4               |   |  | 1.4                        |   |  | (0.4              | ) |  | 0.3                        |   |  | 0.0               |   |  | 0.3                        |  
|          |  |                   |   |  |                            |   |  |                   |   |  |                            |   |  |                   |   |  |                            |  
|Total     |  | 100.0             | % |  | 100.0                      | % |  | 100.0             | % |  | 100.0                      | % |  | 100.0             | % |  | 100.0                      | %
|          |  |                   |   |  |                            |   |  |                   |   |  |                            |   |  |                   |   |  |                            |  



|(1) | Includes United States, Ecuador and consolidation adjustments.
|--- | --------------------------------------------------------------



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Brazil

Operating revenues in Brazil increased by 20.6% in 2009, principally due to an increase in revenues from local services, domestic long
distance, corporate networks and Internet access service, which was partially offset by decreases in revenues from international long distance and other revenue sources. Operating revenues in Brazil increased by 8.1% in 2008, due primarily to an
increase in revenues from local, data and long-distance services. Measured in Brazilian reaiswithout the effects of inflation accounting, currency translation or re-expression, operating revenues in Brazil increased by 8.4% from 2008 to
2009.

Total costs and expenses in Brazil increased by 18.7% in 2009 and by 7.3% in 2008. The increase in 2009 was mainly the
result of higher costs associated with originating mobile traffic due to a rate increase adjustment, effective in January 2009 and an increase in depreciation due to an increased investment in plant, property and equipment. The increase in 2008 was
primarily due to the growth in mobile call traffic, resulting in increased transport and interconnection costs.

Colombia

Operating revenue in Colombia increased by 31.0% in 2009, due mainly to an increase of 37.8% in local telephone service customers, an
increase of 22.8% of users of our Internet access service and an increase of 3.1% of subscribers to our paid television services along with an increased average revenue per user. Operating revenues in Colombia increased by 110.7% in 2008, due mainly
to an increase of 27.6% of subscribers to our paid television services and an increase of 79.1% of users of our Internet access service in Colombia.

Total costs and expenses in Colombia increased by 34.7% in 2009 and by 134.0% in 2008. The increase in 2009 was principally due to an
increase in higher depreciation costs associated with the expansion of plant, property and equipment, increased costs to purchase television content resulting from the rise in the number of pay television subscribers, increased reserves for doubtful
accounts and increased rent for infrastructure resulting from an expansion of our operations. The increase in 2008 was due to the hiring of additional sales personnel, increased network maintenance costs, increased costs to purchase television
content resulting from the rise in the number of pay television subscribers and higher depreciation costs associated with greater capital expenditures.

Mexico

Operating revenues in Mexico decreased by 9.3% in 2009 and decreased by 5.8% in 2008. Mexican operating revenues are principally
attributable to our yellow pages business. The decrease in 2009 was due primarily to a decrease in the sale of advertising in our telephone directories. The decrease in 2008 was due primarily to greater discounts offered to our key customers.

Total costs and expenses increased by 15.9% in 2009 and increased by 36.9% in 2008. The increase in 2009 was due to an
increase in U.S. dollar-denominated costs to produce our directories as a result of the appreciation of the U.S. dollar against the Mexican peso, increased expenses for software maintenance, publicity, fees and depreciation, and costs associated
with the incorporation of Contenido Cultural y Educativo, S.A. de C.V. into our operations. The increase in 2008 was due to an increase in corporate expenses following the Escisión, an increase in the payment to Telmex of fees for the
use of its customer database and costs associated with the development of enhanced information technology support and software for our growing online yellow pages business. In the future, we expect to continue to only pay Telmex an annual renewal
fee for use of its customer database.



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Other countries

The other countries in which we operate are Chile, Argentina, Peru, Ecuador and the United States. Together they represented 8.9% of 2009
revenues and an operating loss of P.1,117 million. In 2009, the decrease in operating loss was principally due to an increase in revenues from pay television in Chile resulting from an increase in the number of subscribers, partially offset by a
higher cost of television content and higher expenses due to an increased allowance for doubtful accounts and increased depreciation due to an increase in plant, property an equipment. In 2008, revenues from these other countries represented less
than 8% of 2008 revenues and an operating loss of P.1,169 million. In 2008, the increase in operating loss was principally due to a higher depreciation in Argentina and Chile generated by an increase in plant, property and equipment and an increase
in expenses for advertising and advisory services in the United States.

Liquidity and Capital Resources

Our principal capital requirements are for capital expenditures and working capital. We generally plan for each of our major operating
subsidiaries to meet its capital requirements from its operating cash flow. Our subsidiaries, other than those in Brazil, may not generate sufficient cash flow to meet their capital requirements and will rely on funding provided by us. Our cash
flows provided by operating activities were P.19,724 million in 2009. In 2008, our cash flows provided by operating activities were P.14,077 million.

We had a working capital deficit of P.255 million as of December 31, 2009, a working capital deficit of P.1,889 million at
December 31, 2008 and a working capital surplus of P.8,121 million at December 31, 2007. We expect our working capital to stabilize, and we believe our working capital is sufficient for our present requirements.

Our capital expenditures were P.15.8 billion in 2009, P.18.6 billion in 2008 and P.12.8 billion in 2007. We have budgeted capital
expenditures in 2010 of approximately P.19.2 billion (U.S.$1.5 billion). Budgeted capital expenditures for 2010 exclude any other investments we might make to acquire other companies.

We also use funds to repurchase our shares. In July 2008, the ordinary shareholders meeting authorized share repurchases up to P.10
billion. The ordinary shareholders meeting held on April 29, 2009, approved up to an additional P.5 billion to be used for share repurchases, which, in addition to the approximately P.5 billion not utilized for share repurchases since
July 2008 until the additional approval, provided us with approximately P.10 billion available for share repurchases in 2009. The amount we spent on share repurchases after June 10, 2008, when our shares and those of Telmex began trading
separately was P.4,245 million in 2008, and we spent P.2,490 million on share repurchases in 2009. The amount spent on share repurchases is determined from time to time by our board of directors based on market conditions.

In 2008, we paid dividends totaling P.2,786 million. In April 2009, we declared a dividend of P.0.17 per share, which was payable in
equal installments of P.0.085 per share in August 2009 and November 2009, and we paid dividends totaling approximately P.3,000 million in 2009. No dividends were declared for 2010.



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From the time of the Escisión
through the separate trading of our shares on June 10, 2008, Telmex carried out repurchases of its shares. These transactions reduced the number of outstanding shares of Telmex Internacional by 414 million L Shares and 1 million A
Shares. The repurchase transactions did not reduce the assets of Telmex Internacional because, as contemplated in the December 21, 2007 shareholder decisions, in May 2008 the Telmex board of directors approved the transfer to us of an
additional amount of P.3,572 million. We paid Telmex P.3,572 million in July 2008 in respect of these repurchases.

We believe that the telecommunications industry in Latin America will continue to be characterized by growth, technological change,
competition and consolidation. We may take advantage of these opportunities through direct or indirect investments or strategic alliances, but future investments may require substantial additional capital and expose us to new risks. Our expenditures
for acquisitions were P.431 million in 2009, P.507 million in 2008 and P.8,365 million in 2007.

Embratel has a substantial
amount of tax-related contingencies. If a major part of the tax disputes were to be decided against Embratel, our liquidity could be materially affected even if we had previously established provisions. See Note 17 to our audited consolidated
financial statements.

Outstanding Indebtedness

At December 31, 2009, we had total indebtedness of P.33,977 million (U.S.$2,602 million). Indebtedness of our Brazilian
subsidiaries represented approximately 44% of our total indebtedness. At December 31, 2009, 48% was denominated in Mexican pesos, 37% of our total consolidated indebtedness was denominated in U.S. dollars, 8% was denominated in Brazilian
reais, and 6% was denominated in other currencies. We have P.12,677 million (U.S.$970 million) in debt that will come due in 2010. Subject to market conditions, we plan to refinance this amount with new debt or
partially repay it.

The major categories of our indebtedness are as follows:



| |  |  | U.S. dollar-denominated bank financing. We had U.S.$966 million (P.12,614 million) of U.S. dollar-denominated bank financing
outstanding at December 31, 2009. Of this amount, approximately 59% was under loans from export credit and development agencies. Most of our bank borrowings bear interest at a spread over LIBOR. In March 2009, Embratel entered into a syndicated
credit facility for an aggregate principal amount of U.S.$200 million due in 2014.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | U.S. dollar-denominated export credit agency financing for satellites. We had U.S.$201.8 million (P.2,635 million) outstanding at
December 31, 2009, in financing the acquisition of satellites Star One C-1 and Star One C-2. These loans bear interest at an average rate of 3.9% and mature in 2013.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Peso-denominated senior notes issued in Mexico. We have issued peso-denominated senior notes (certificadoes bursátiles) from time
to time in the Mexican market through a five-year debt program registered with the Comisión Nacional Bancaria y de Valores (CNBV) for an amount of up to P.20,000 million. Of this amount, we issued P. 5,000 million in short-term
notes, which have been renewed. Additionally, we have issued senior notes with maturities of five and three years as follows: P.5, 000 million issued in September 2009 and maturing in August 2012, and P.5,000 million issued in December 2009 and
maturing in November 2014.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In January 2010, Embratel paid at maturity U.S.$100.5 million (P.1,312 million)
aggregate principal amount of a one-year bank loan.



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In April 2010, Embratel pre-paid U.S.$3.3 million to the Export-Import Bank of the United
States previously outstanding under a credit agreement. In May 2010, Embratel pre-paid an aggregate amount of U.S.$9.3 million to Société Generale previously outstanding under loan agreements.

We also have other categories of outstanding indebtedness, including local currency-denominated loans from local banks, financial leases
and supplier credits for equipment financing. We look for the best sources for borrowing in terms of cost and term, including sources within local and international capital markets as well as international and local banks.

Most of our credit agreements include cross-default provisions and cross-acceleration provisions that would permit the holders of such
indebtedness to declare the indebtedness to be in default and to accelerate the maturity thereof if a significant portion of the principal amount of our debt is in default or accelerated. The terms of these agreements restrict the ability of our
subsidiaries to grant liens, pledge assets, sell or dispose of assets and make certain acquisitions, mergers or consolidations. Under a number of these agreements, we are required to maintain certain specified financial ratios, including EBITDA to
payments of principal and interest expense of no less than 1.2 to 1.0 and net debt to EBITDA of no more than 3.5 to 1.00 (using terms defined in the credit agreements).

A number of Embratels financing instruments are subject to either acceleration or repurchase at the holders option if there
is a change of control of Embratel, as defined in the respective instruments. The definitions of change of control vary, but most of them are not triggered so long as we continue to control a majority of Embratels voting stock. The offer
announced by América Móvil, S.A.B. de C.V. to acquire our outstanding shares could fall within the definition of change of control in certain of Embratels financing instruments, and we amended such instruments.

Of our total debt outstanding as of December 31, 2009, approximately 65.1% of our bank facilities bear interest at specified
spreads, mainly over LIBOR, and the remaining 34.9% bear interest at fixed rates. The weighted average cost of all borrowed funds at December 31, 2009 (including interest and taxes withheld, but excluding fees) was approximately 4.97%. The
inclusion of fees in the calculation of weighted average cost of all borrowed funds at December 31, 2009 would increase such cost by 0.15% to 5.12%.

Risk Management

We
regularly assess our interest rate and currency exchange exposures in order to determine how to manage the risk associated with these exposures. We use derivative financial instruments to hedge or adjust our exposures. Our practices vary from time
to time depending on our judgment of the level of risk, expectations as to exchange or interest rate movements and the cost of using derivative instruments. We may stop using derivative financial instruments or modify our practices at any time.
Currently, our derivative financial transactions relate entirely to Embratels indebtedness and consist solely of cross-currency swaps (under which we generally pay amounts in Brazilian reais and receive U.S. dollars).

Because our U.S. dollar-denominated indebtedness far exceeds our U.S. dollar-denominated assets and revenues, from time to time
we enter into derivative transactions to protect to some degree against the short-term risks of devaluation of the Brazilian real.Under Mexican FRS, we account for these transactions on a fair-value basis, and changes in such fair value
offset gains and losses from the foreign currency-denominated liabilities that are hedged. We do not apply hedge accounting rules to our derivative financial instruments. We had cross-currency swaps covering U.S.$528 million of Embratels
indebtedness at December 31, 2009 (U.S.$217 million of Embratels indebtedness at December 31, 2008). The fair value of our derivative financial instruments amounted to a liability of P.1,094 million at December 31, 2009 and an
asset of P.1,025 million at December 31, 2008. We recognized a net loss of P.1,670 million in 2009 (compared to a gain of P.2,577 million in 2008), included under our financing cost, net, which reflects the effects of exchange rate variations
under our derivative financial instruments.



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Contractual Obligations

In the table below we set forth certain contractual obligations as of December 31, 2009 and the period in which the contractual
obligations come due. The amount of our long-term debt reported in the table excludes interest and fee payments, which are primarily variable amounts, and does not reflect derivative financial instruments, which provide for payment flows that vary
depending on exchange rates. Purchase obligations include commitments for the purchase of equipment and consulting and management services as well as payments for the right to use satellite orbital positions. The table below does not include pension
liabilities, tax liabilities or accounts payable.



|                         |  |                                                 |  |          |  |           |  |           |  |               
|------------------------ |  | ----------------------------------------------- |  | -------- |  | --------- |  | --------- |  | --------------
|                         |  | Payments Due by Period(as of
December 31, 2009)
|                         |  | Total                                           |  | 2010     |  | 2011-2012 |  | 2013-2014 |  | 2015 andbeyond
|                         |  | (in millions of Mexican pesos)                 
|Contractual obligations: |  |                                                 |  |          |  |           |  |           |  |               
|Total
debt(1)            |  | P.33,406                                        |  | P.12,562 |  | P.13,167  |  | P.7,529   |  | P.148         
|Capital leases           |  | 572                                             |  | 106      |  | 211       |  | 150       |  | 105           
|Purchase obligations     |  | 2,065                                           |  | 2,065    |  |          |  |          |  |              
|                         |  |                                                 |  |          |  |           |  |           |  |               
|Total                    |  | P.36,043                                        |  | P.14,733 |  | P.13,378  |  | P.7,679   |  | P.253         
|                         |  |                                                 |  |          |  |           |  |           |  |               



|(1) | Excludes interest payments, fees and the effect of derivative financial instruments.
|--- | ------------------------------------------------------------------------------------

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements of the type that we are required to disclose under Item 5E of Form 20-F.

U.S. GAAP Reconciliation

In December 2007, the FASB issued Accounting Standards Codification (ASC) 810,
Consolidation, as amended by SFAS 160. This ASC establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary, effective beginning
January 1, 2009, requiring retroactive presentation and disclosure of existing non-controlling interest. See Note 19 to our audited consolidated financial statements.

Net income under U.S. GAAP was P.8,587 million in 2009, P.3,277 million in 2008 and P.6,163 million in 2007. Compared to net income under
Mexican FRS, net income under U.S. GAAP was 10.2% lower in 2009, 41.8% lower in 2008 and 12.1% lower in 2007.

There are
certain differences between Mexican FRS and U.S. GAAP that affect our net income and stockholders equity. The most significant in their effects concern (i) elements of inflation accounting that are determined differently under U.S. GAAP
than under Mexican FRS, (see Effect of Inflation Accounting above), (ii) differences in the application of purchase accounting to the successive transactions in which we increased our interest in Embratel, (iii) changes
in the valuation allowance of deferred taxes after purchase price allocation and (iv) deferred tax effect on foreign translation effect.



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Other differences that affected net income relate to accounting for business combinations
and capitalization of interest on assets under construction. The differences in stockholders equity under Mexican FRS and U.S. GAAP reflect these same matters. For a discussion of the principal differences between Mexican FRS and
U.S. GAAP, see Note 19 to our audited consolidated financial statements.

Use of Estimates in Certain Accounting Policies

In preparing our financial statements, we make estimates concerning a variety of matters. Some of these matters are highly
uncertain, and our estimates involve judgments we make based on the information available to us. In the discussion below, we have identified several of these matters for which our financial presentation would be materially affected if either
(a) we used different estimates that we could reasonably have used or (b) in the future we change our estimates in response to changes that are reasonably likely to occur.

The discussion addresses only those estimates that we consider most important based on the degree of uncertainty and the likelihood of a
material impact if we used a different estimate. There are many other areas in which we use estimates about uncertain matters, but the reasonably likely effect of revised or different estimates is not material to our financial presentation.

Estimated Useful Lives of Plant, Property and Equipment

We estimate the useful lives of particular classes of plant, property and equipment in order to determine the amount of depreciation
expense to be recorded in each period. Depreciation expense is a significant element of our costs, amounting in 2009 to P.10,064 million, or 12.4% of our operating costs and expenses under Mexican FRS. See Note 6 to our audited consolidated
financial statements.

The estimates are based on historical experience with similar assets, anticipated technological changes
and other factors and their selection takes into account the practices of other telecommunications companies. We review estimated useful lives when we consider it necessary to determine whether they should be changed, and at times we have changed
them for particular classes of assets. We may shorten the estimated useful life of an asset class in response to technological changes, changes in the market or other developments. This results in increased depreciation expense, and in some cases it
might result in our recognizing an impairment charge to reflect a write-down in value. The same kinds of developments can also lead us to lengthen the useful life of an asset class, resulting in reduced depreciation expense.

Employee Pensions and Seniority Premiums

We recognize liabilities on our balance sheet and expenses in our income statement to reflect our obligations to pay employees under the
defined-benefit and defined-contribution plans as well as a medical assistance plan for defined-benefit plan participants at Embratel. We also have a defined-benefit plan and termination benefits for our Mexican employees. The amounts we recognize
are determined on an actuarial basis that involves many estimates and accounts for post-retirement and termination benefits in accordance with Mexican FRS. In 2009, we recognized net period cost relating to these obligations of P.39.2 million under
Mexican FRS.

We use estimates in several specific areas that have a significant effect on these amounts: (a) the actual
discount rates that we use to calculate the present value of our future obligations, (b) the actual rate of increase in salaries that we assume we will observe in future years, (c) long term average inflation, (d) health care cost
trends and (e) the rate of return we assume our pension fund will achieve on its investments. The assumptions we have applied are identified in Notes 14 (Mexican FRS) and 19 (U.S. GAAP) to our audited consolidated financial statements. These
estimates are based on our historical



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experience, on current conditions in the financial markets and on our judgments about the future development of our salary costs and the financial markets. We review the estimates each year, and
if we change them, our reported expense for pension costs may increase or decrease. In 2008, we began using nominal rates instead of real rates in preparing these estimates as a result of the cessation of inflation accounting under Mexican FRS.

In 2009, we had a net increase in the unamortized balance of actuarial gain of P.980 million in the defined benefit pension
plan (DBP) and a net increase in the unamortized balance of actuarial loss of P.31 million in the medical assistance plan (MAP) in Brazil, which will be amortized over the estimated average remaining working lifetime of Embratels employees.
The net increases were primarily attributable to the variations between actual experience and the actuarial assumptions used in the computation of Embratels DBP and MAP. Actuarial assumptions were based on our experience and future
expectations with respect to retirement as well as general trends in Brazil over the past several years, including interest rates, investment returns and level of inflation, mortality rates and future employment levels.

As of December 31, 2009, 89.0% of fund assets consisted of Brazilian reais-denominated fixed-income securities, 7.0%
consisted of variable-income securities of Brazilian companies and 4.0% of other instruments. Our actuarial assumptions as of December 31, 2009 include an assumed annual return of 11.3% on plan assets.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts based on our estimates of losses that we may experience if our customers or other
telecommunications operators do not pay the amounts they owe us. At December 31, 2009, the amount of the allowance was P.5,408 million. For our customers, we perform a statistical analysis based on our past experience, current delinquencies and
economic trends. For operators, we make individual estimates that may reflect our evaluation of pending disputes over amounts owed. Our allowance could prove insufficient if our statistical analysis of our customer receivables is inadequate or if
one or more operators refuse or are unable to pay us. See Note 3 to our audited consolidated financial statements.

Impairment of Long-Lived Assets and Goodwill

We have large amounts of long-lived assets on our balance sheet. Under Mexican FRS and U.S. GAAP, we are required to test long-lived
assets for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable for plant, property and equipment and licenses and trademarks. Impairment testing for goodwill is required to be performed on an annual
basis. At December 31, 2009, long-lived assets include plant, property and equipment (P.80,124 million, net of accumulated depreciation), goodwill (P.14,399 million), licenses, trademarks and indefeasible rights of use (P.14,557 million, net of
accumulated depreciation). To estimate the fair value of long-lived assets, we typically make various assumptions about the future prospects for the business to which the asset relates, consider market factors specific to that business and estimate
future cash flows to be generated by that business. Based on these assumptions and estimates as well as guidance provided by Mexican FRS and U.S. GAAP relating to the impairment of long-lived assets, we determine whether we need to take an
impairment charge to reduce the net carrying value of the asset as stated on our balance sheet to reflect its estimated fair value. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can
be affected by a variety of factors, including external factors, such as industry and economic trends, and internal factors, such as changes in our business strategy and our internal forecasts. Different assumptions and estimates could materially
impact our reported financial results. More conservative assumptions of the anticipated future benefits from these businesses could



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result in impairment charges, which would decrease net income and result in lower asset values on our balance sheet. Conversely, less conservative assumptions could result in smaller or no
impairment charges, higher net income and higher asset values. During 2009, 2008 and 2007, we did not recognize any impairment of long-lived assets or goodwill.

Purchase AccountingPurchase Price Allocation

During 2009, 2008 and 2007, we made a number of acquisitions applying the purchase method of accounting. Accounting for the acquisition of
a business under the purchase method requires the determination of the fair values of the net assets acquired and then the allocation of the purchase price to the various assets and liabilities of the acquired business, which affects goodwill
recognized on our balance sheet. The most difficult estimations of individual fair values are those involving plant, property and equipment and identifiable intangible assets, such as licenses and trademarks. We use all available resources to make
these fair value determinations, including the retention of appraisers to determine the fair value of trademarks and an examination of the market value of licenses with similar characteristics to determine the fair value of licenses.

Realization of Net Deferred Tax Assets

The recognition of net deferred tax assets on temporary differences mainly due to Brazilian tax losses and to the negative basis for
calculating social contribution in Brazil is supported by the history of taxable income and Embratels estimate of future profitability. Mexican FRS D-4 and ASC 740 establish the conditions for measuring and recognizing deferred tax assets.
Based on Embratels financial projections, we believe that these assets will be realized over a period of approximately five years. A future change in these projections of profitability could result in the need to record a valuation allowance
against these net deferred tax assets, resulting in a negative impact on future results.

Provision for Contingencies

We are subject to proceedings, lawsuits and other claims related to tax, labor and civil matters. We are required to
assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each
individual matter based on advice of our legal counsel. We record provisions for contingencies only when we believe that it is probable that we will incur a loss in connection with the matter in dispute. In several tax disputes with the Brazilian
tax authorities, we have recognized no provisions because we do not believe a loss is probable. The total balance of probable losses is recorded as a current liability because it is not possible to estimate the time required to reach a settlement.
The required reserves for these and other contingencies may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. Such changes could have an adverse
impact on future results and cash flows.

Fair Value of Derivatives

Under Mexican FRS C-10, Instrumentos Financieros Derivados y Operaciones de Cobertura (Derivative Financial Instruments and Hedging
Activities) and U.S. GAAP (SFAS 133), we are required to recognize all derivatives as either assets or liabilities on our balance sheet and measure those instruments at fair value. We obtain the fair values from the financial institutions with whom
we enter into these transactions. We use these fair values as a reference to establish the basis for recognition of the derivative financial instruments in our financial statements. The fair value of derivative financial instruments is based on
estimated settlement costs or quoted market prices supported by confirmations of



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these values received from the counterparties to these financial instruments and by determinations of independent third parties applying technical models based on statistical and market data.
Changes in the fair value of derivative financial instruments are recorded each year in net income.



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|Item 6. | Directors, Senior Management and Employees
|------- | ------------------------------------------

Directors

Management of
our business is vested in the board of directors and the chief executive officer. Our bylaws provide for the board of directors to consist of a maximum of 21 directors and up to an equal number of alternate directors. Each alternate director may
attend meetings of the board of directors and vote in the absence of a corresponding director.

Directors are elected by a
majority of the holders of the AA Shares and A Shares voting together, provided that any holder or group of holders of at least 10% of the total AA Shares and A Shares is entitled to name one of such directors and one of such alternate directors,
and up to two directors and two alternate directors are elected by a majority vote of the holders of L Shares. Directors and alternate directors are elected at each annual ordinary general meeting of shareholders and each annual ordinary special
meeting of holders of L Shares. Pursuant to our bylaws and Mexican law, at least 25% of our directors must qualify as independent, as determined by our shareholders at their annual ordinary general meeting pursuant to the Mexican Securities Market
Law (Ley del Mercado de Valores).

Our bylaws provide that the members of the Board of Directors are appointed for
terms of one year and may be reelected. The names and positions of the current 11 members of our Board of Directors ratified at the annual ordinary general meeting of our shareholders held on April 28, 2010, their dates of birth and information
on their principal business activities outside Telmex Internacional are as follows:



|                             |  |                                               |  |                                                                                                                                                                                                                         
|---------------------------- |  | --------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Carlos Slim Domit            |  | Born:                                         |  | 1967                                                                                                                                                                                                                    
|Chairman                     |  | First elected:                                |  | 2007                                                                                                                                                                                                                    
|                             |  | Principal occupation and other directorships: |  | Chairman of the board of directors of Grupo Carso, S.A.B. de C.V., Teléfonos de México, S.A.B. de C.V. and Grupo Sanborns, S.A. de C.V.; Vice Chairman of the board of
directors of Carso Global Telecom, S.A.B. de C.V.
|                             |  | Business experience:                          |  | Chief Executive Officer of Sanborn Hermanos, S.A.                                                                                                                                                                       
|                             |  |                                              
|Laura Diez Barroso Azcárraga |  | Born:                                         |  | 1951                                                                                                                                                                                                                    
|Director                     |  | First elected:                                |  | 2007                                                                                                                                                                                                                    
|                             |  | Principal occupation:                         |  | President of Tenedora y Promotora Azteca S.A. de C.V.                                                                                                                                                                   
|                             |  | Other directorships:                          |  | Member of the board of directors of Grupo Financiero Inbursa, S.A.B. de C.V., Fundación del Centro Histórico de la Ciudad de México A.C. and Royal Caribbean
International                                              
|                             |  |                                              
|Arturo Elías Ayub            |  | Born:                                         |  | 1966                                                                                                                                                                                                                    
|Director                     |  | First elected:                                |  | 2007                                                                                                                                                                                                                    
|                             |  | Principal occupation:                         |  | Head of Strategic Alliances, Communications and Institutional Relations at Teléfonos de México, S.A.B. de C.V.; Chief Executive Officer of Fundación
Telmex                                                             



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|                        |  |                       |  |                                                                                                                                                                                                                                                                       
|----------------------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  | Other directorships:  |  | Member of the board of directors of GrupoSanborns, S.A.B. de C.V., Grupo Carso, S.A.B.de C.V., Carso Global Telecom, S.A.B. de C.V.,Sears Roebuck de México and TM
& MS LLC                                                                                           
|                        |  | Business experience:  |  | Chief Executive Officer of Sociedad Comercial Cadena, President of Pastelería Francesa (El Globo) and President of Club Universidad Nacional, A.C.                                                                                                                    
|                        |  |                      
|Roberto Kriete Ávila    |  | Born:                 |  | 1953                                                                                                                                                                                                                                                                  
|Director                |  | First elected:        |  | 2007                                                                                                                                                                                                                                                                  
|                        |  | Principal occupation: |  | Chairman and CEO, TACA Airlines; President, Compañia de Inversiones of Kriete Group; President, Gloria Kriete Foundation; Director, Escuela Superior de Economía y
Negocios (ESEN) in El Salvador                                                                     
|                        |  | Other directorships:  |  | President of the board of directors, Real Intercontinental Hotel of San Salvador; President, Coatepeque Foundation; Member of the board of directors of non-profit organization AGAPA
(against extreme poverty) and FUNDASALVA (rehabilitation against drug addiction)
|                        |  | Business experience:  |  | Director, Camino Real Hotel; Director and Secretary, Banco Agrícola Comercial of El Salvador                                                                                                                                                                          
|                        |  |                      
|Francisco Medina Chávez |  | Born:                 |  | 1956                                                                                                                                                                                                                                                                  
|Director                |  | First elected:        |  | 2007                                                                                                                                                                                                                                                                  
|                        |  | Principal occupation: |  | President and Chief Executive Officer of Grupo Fame                                                                                                                                                                                                                   
|                        |  | Other directorships:  |  | Member of the boards of directors of Banamex Citigroup Mexico and Aeroméxico                                                                                                                                                                                          
|                        |  | Business experience:  |  | Director of several companies involving real estate, automobiles and financing                                                                                                                                                                                        
|                        |  |                      
|Fernando Solana Morales |  | Born:                 |  | 1931                                                                                                                                                                                                                                                                  
|Director                |  | First elected:        |  | 2007                                                                                                                                                                                                                                                                  
|                        |  | Principal occupation: |  | President of the Mexican Board of International Affairs; President of the Mexican Fund for Education and Development; President of Solana Advisers; member of the board of directors
of Analitica                                                                     
|                        |  | Other directorships:  |  | Member of the boards of directors of banks, industrial enterprises, universities, philanthropic and cultural organizations                                                                                                                                            



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|                                                                     |                       |                                               |                                                                             |                                                                                                                                                                                                              
|-------------------------------------------------------------------- | --------------------- | --------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                     |                       | Business experience:                          |                                                                             | Member of the Mexican Senate; Chief Executive Officer of Banco Nacional de México, S.A.; Secretary to the Mexican Ministry of International Affairs; Ministry of Education;
Ministry of Commerce             
|                                                                     |                       |                                              
|Antonio del Valle Ruiz                                               |                       | Born:                                         |                                                                             | 1938                                                                                                                                                                                                         
|Director and Chairman of the audit and corporate practices committee |                       | First elected:                                |                                                                             | 2007                                                                                                                                                                                                         
|                                                                     | Principal occupation: |                                               | Chairman of the board of directors of Grupo Empresarial Kaluz, S.A. de C.V.
|                                                                     |                       | Other directorships:                          |                                                                             | Member of the board of directors of Mexichem, S.A.B. de C.V., Escuela Bancaria y Comercial, Minera las Cuevas y Polímeros de México and Fundación Pro Empleo,
A.C.                                           
|                                                                     |                       | Business experience:                          |                                                                             | Founder of Grupo Empresarial Kaluz, S.A. de C.V.; founder and Chief Executive Officer of Grupo Financiero Bital; Chairman of the Mexican Business Round Table; president of the
Mexican Bankers Association  
|                                                                     |                       |                                              
|Oscar Von Hauske Solís                                               |                       | Born:                                         |                                                                             | 1957                                                                                                                                                                                                         
|Director and Chief Executive Officer                                 |                       | First elected:                                |                                                                             | 2007                                                                                                                                                                                                         
|                                                                     | Principal occupation  |                                               | Chief Executive Officer of Telmex Internacional                            
|                                                                     |                       | Business experience:                          |                                                                             | Member of the board of directors of Teléfonos de México, S.A.B. de C.V.; Chief Systems and Telecommunications Officer at Teléfonos de México, S.A.B. de
C.V.; Head of finance at Grupo Condumex, S.A. de C.V.
|                                                                     |                       |                                              
|Rayford Wilkins, Jr.                                                 |                       | Born:                                         |                                                                             | 1951                                                                                                                                                                                                         
|Director                                                             |                       | First elected:                                |                                                                             | 2007                                                                                                                                                                                                         
|                                                                     |                       | Principal occupation and other directorships: |                                                                             | Group president of AT&T International; member of the board of directors and the executive committee of América Móvil, S.A.B. de C.V.                                                                         
|                                                                     |                       | Business experience:                          |                                                                             | Various positions in the wireless industry at AT&T Corp.                                                                                                                                                     
|                                                                     |                       |                                              
|Michael Bowling                                                      |                       | Born:                                         |                                                                             | 1967                                                                                                                                                                                                         
|Director                                                             |                       | First elected:                                |                                                                             | 2009                                                                                                                                                                                                         
|                                                                     |                       | Principal occupation:                         |                                                                             | President of AT&T México                                                                                                                                                                                     
|                                                                     |                       | Business experience:                          |                                                                             | Vice President of Converged Services and Platform Development of AT&T Inc., Vice President of Marketing of AT&T Inc. and Product Management for Broadband of AT&T Inc.                                       



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|                   |  |                       |  |                                                                                                     
|------------------ |  | --------------------- |  | ----------------------------------------------------------------------------------------------------
|Louis C. Camilleri |  | Born:                 |  | 1955                                                                                                
|Director           |  | First elected:        |  | 2009                                                                                                
|                   |  | Principal occupation: |  | Chairman and Chief Executive Officer of Philip Morris International                                 
|                   |  | Business experience:  |  | Chairman and Chief Executive Officer of Altria and various positions in Philip Morris International.

Eric D. Boyer, first elected to the board of directors in 2007, tendered his resignation at the shareholders meeting held on
December 15, 2009. Michael Bowling was ratified and Louis C. Camilleri was appointed, each as independent members, at the shareholders meeting held on December 15, 2009. The resignations previously tendered by Jaime Chico Pardo and
Jorge Andrés Saieh Guzmán, each of whom was first elected to the board of directors in 2007 were accepted at the shareholders meeting held on April 28, 2010.

The secretary of the board of directors is Eduardo Alvarez Ramírez de Arellano. He is not a member of our board of directors.

Of our directors Carlos Slim Domit is the son of Carlos Slim Helú and Arturo Elías Ayub is the son-in-law of
Carlos Slim Helú. Carlos Slim Helú, together with certain members of his immediate family, including Carlos Slim Domit, holds a controlling interest in Telmex Internacional. See Item 7. Major Shareholders and Related Party
Transactions.

Audit and Corporate Practices Committee

The audit and corporate practices committee consists of Antonio del Valle Ruiz (the audit and corporate practices committees
chairman), Francisco Medina Chávez and Fernando Solana Morales, all three of whom are directors. Each member of the audit and corporate practices committee qualifies as independent, as determined by our shareholders at their annual ordinary
general meeting held on April 28, 2010, pursuant to the Mexican Securities Market Law, and also meets the independence requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. See
Item 16A. Audit Committee Financial Expert. The audit and corporate practices committee operates under a written charter approved by our Board of Directors. A copy of the audit and corporate practices committee charter is available on
our website at www.telmexinternacional.com.

With respect to its audit function, the audit and corporate practices committee
is responsible for reviewing the accuracy of quarterly and annual financial statements in accordance with accounting, internal control and auditing requirements. The audit and corporate practices committee gives its opinion to the board of directors
with respect to internal control and internal audit guidelines, accounting policies and the appointment of external auditors. The committee investigates possible violations of operational guidelines or policies of the internal control, internal
audit and accounting records system, establishes procedures for receiving, retaining and addressing complaints regarding our accounting, internal control and audit matters, including procedures for confidential submission of such complaints, informs
the board of directors of any detected irregularities with respect to the internal control and internal audit system and proposes corrective actions to be taken. The audit and corporate practices committee may hire independent counsel and other
advisors. As necessary, the company compensates the independent auditor and any independent advisor hired by the audit and corporate practices committee and provides funding for ordinary administrative expenses incurred by the committee in the
course of its duties.

With respect to its corporate governance function, the audit and corporate practices committee is
responsible for giving an opinion to the board of directors with respect to (a) the policies and guidelines



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for the use of our assets, (b) the policies and guidelines applicable to related party transactions, including the authorization of loans or guarantees, (c) the appointment, election or
dismissal and the evaluation and compensation of the chief executive officer and the policies relating to the appointment and compensation of members of management and (d) exemptions for directors and members of management to participate in
business opportunities that belong to us or to entities over which we have significant influence. The audit and corporate practices committee may also call a shareholders meeting and request the inclusion of matters it considers appropriate on
the agenda.

The audit and corporate practices committee has reviewed this annual report, as well as our consolidated
financial statements and notes thereto included elsewhere in this annual report, and recommended that such financial statements be included herein.

Executive Officers

The
names, responsibilities and prior business experience of our executive officers are as follows:



|                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Officer                                                    |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                
|                                                           | 
|Oscar Von Hauske Solís
Chief Executive Officer             |  | Member of the board of directors of Teléfonos de México, S.A.B. de C.V.; Chief Systems and Telecommunications Officer at Teléfonos de México, S.A.B.
de C.V.; head of finance at Grupo Condumex, S.A. de C.V.                                                                                                                                                                                      
|                                                           | 
|Gonzalo Lira Coria
Chief Financial Officer                 |  | Treasurer of Grupo Condumex, S.A. de C.V.; various other positions at Grupo Condumex S.A. de C.V.                                                                                                                                                                                                                                                                                                  
|                                                           | 
|Luis Antonio Villanueva Gómez
Head of Development          |  | Chief executive officer of Teléfonos del Noreste, S.A. de C.V.; various positions at Teléfonos de México, S.A.B. de C.V.                                                                                                                                                                                                                                                                           
|                                                           | 
|Francisco Javier Ortega Castañeda
Chief Commercial Officer |  | Western division head of Teléfonos de México, S.A.B. de C.V.; various other positions at Teléfonos de México, S.A.B. de C.V.                                                                                                                                                                                                                                                                       
|                                                           | 
|José Formoso Martínez
Chief Executive Officer of Embratel  |  | Chief executive officer and vice president of Embratel Participações S.A.; Chief executive officer and general director of Empresa Brasileira de
Telecomunicações S.A.EMBRATEL; Vice chairman of the Board of Directors of Embratel Participações S.A. and of Empresa Brasileira de Telecomunicações S.A.EMBRATEL; Chief executive officer of Telgua
S.A.; Chief executive officer of Cablevisión
|                                                           | 
|Eduardo Alvarez Ramírez de Arellano
General Counsel        |  | Head of international legal affairs at Teléfonos de México, S.A.B. de C.V.; various other positions at Teléfonos de México, S.A.B. de
C.V.                                                                                                                                                                                                                                                         



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Compensation of Officers and Directors

The aggregate compensation of all of our directors and executive officers paid for services in all capacities for the year ended
December 31, 2009 was approximately P.52.0 million, which included bonus payments totaling P.20.2 million. Annual bonus payments are approved by our audit and corporate practices committee on the basis of various factors, including achievement
of performance targets and seniority.

Each director received an average fee of P.69.9 thousand for each meeting of the board
of directors attended in 2009. Members of the audit and corporate practices committee received an average fee of P.17.5 thousand for each committee meeting attended in 2009. None of our directors is a party to any contract with us or any of our
subsidiaries that provides for benefits to our directors in their capacity as directors. Our executive officers are eligible for benefits on the same terms as all other Telmex Internacional employees, and we do not separately set aside, accrue or
determine the amount of costs attributable to executive officers.

Share ownership of Carlos Slim Helú and certain
members of his immediate family is set forth in Item 7. Major Shareholders and Related Party TransactionsMajor Shareholders. Excluding the individuals discussed therein, our directors, alternate directors and executive
officers as a group beneficially own less than 1% of any class of our capital stock.



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Employees

The following table sets forth the number of employees and a breakdown of employees by main category of activity and geographic location
as of the end of each year in the three-year period ended December 31, 2009.



|                                   |  |                         |  |        |  |        |  | 
|---------------------------------- |  | ----------------------- |  | ------ |  | ------ |  | 
|                                   |  | Year ended December 31,
|                                   |  | 2009                    |  | 2008   |  | 2007  
|End of period number of employees  |  | 24,769                  |  | 28,477 |  | 26,321
|Employees by category of activity: |  |                         |  |        |  |       
|Telecommunications                 |  | 11,220                  |  | 11,060 |  | 10,086
|Call centers                       |  | 5,438                   |  | 8,445  |  | 8,439 
|Cable television                   |  | 5,793                   |  | 6,622  |  | 5,493 
|Yellow pages                       |  | 2,289                   |  | 2,350  |  | 2,303 
|Others                             |  | 29                      |  |       |  |      
|Employees by geographic location:  |  |                         |  |        |  |       
|Argentina                          |  | 824                     |  | 887    |  | 871   
|Brazil                             |  | 13,298                  |  | 16,286 |  | 16,044
|Chile                              |  | 1,069                   |  | 1,020  |  | 693   
|Colombia                           |  | 5,654                   |  | 6,613  |  | 5,547 
|Ecuador                            |  | 492                     |  | 334    |  | 140   
|Mexico                             |  | 1,932                   |  | 1,894  |  | 1,783 
|Peru                               |  | 926                     |  | 915    |  | 800   
|United States                      |  | 574                     |  | 528    |  | 443   

At
December 31, 2009, 13.9% of our employees were members of unions. We believe our relationship with labor unions is good. All management positions are held by non-union employees. Salaries and certain benefits of employees are negotiated every
year.



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|Item 7. | Major Shareholders and Related Party Transactions
|------- | -------------------------------------------------

MAJOR SHAREHOLDERS

As of March 5, 2010, the AA Shares represented 45.1% of the total capital stock and 95.4% of the full voting shares (AA Shares and A
Shares). The AA Shares are owned by (a) Carso Global Telecom, (b) AT&T International and (c) various other Mexican investors. Carso Global Telecom holds interests in the telecommunications industry and was separated from Grupo
Carso, S.A. de C.V. in 1996. According to reports of beneficial ownership of our shares filed with the SEC, Carso Global Telecom is controlled by Mr. Carlos Slim Helú and members of his immediate family.

On May 11, 2010, América Móvil commenced two concurrent public exchange offers to acquire the outstanding shares of
Carso Global Telecom and Telmex Internacional. The exchange offers will expire on June 10, 2010, unless extended. Shareholders of Carso Global Telecom have been offered 2.0474 L Shares of América Móvil for each share of Carso
Global Telecom. Holders of Telmex Internacional A Shares or L Shares may elect to receive either 0.373 L Shares of América Móvil or P.11.66 in cash. Carso Global Telecom and América Móvil may both be deemed to be
controlled by Carlos Slim Helú and members of his immediate family.

Carso Global Telecom has announced that it will
not tender any of its Telmex Internacional L Shares and A Shares in the exchange offer related to Telmex Internacional. However, if the exchange offer is accepted by the shareholders of Carso Global Telecom, América Móvil will
indirectly acquire 60.7% of our shares through its ownership of Carso Global Telecom. AT&T Inc. has stated, in a beneficial ownership report filed with the SEC on April 30, 2010, that it intends to tender all of its Telmex Internacional
shares and ADSs in the exchange offer related to Telmex Internacional in exchange for América Móvil L Shares.

The following table identifies owners of more than five percent of any class of our shares, based on shares outstanding as of
March 5, 2010. Except as described below, we are not aware of any holder of more than five percent of any class of our shares. Holders of five percent or more of any class of our shares have the same voting rights with respect to their shares
as do holders of less than five percent of the same class.



|                           |  |                  |  |                 |             |  |                  |             |                 |   |                            |                  |  |                 |   |  |      |  
|-------------------------- |  | ---------------- |  | --------------- | ----------- |  | ---------------- | ----------- | --------------- | - | -------------------------- | ---------------- |  | --------------- | - |  | ---- | -
|                           |  | AA Shares(1)     |  |                 | A Shares(2) |  |                  | L Shares(3) |                 |   | Percentof 
votingshares(4) |                 
|                           |  | Shares(millions) |  | Percent ofclass |             |  | Shares(millions) |             | Percent ofclass |   |                            | Shares(millions) |  | Percent ofclass |   | 
|Carso Global
Telecom(5)(6) |  | 6,000            |  | 73.9            | %           |  | 92.1             |             | 23.4            | % |                            | 4,846.0          |  | 51.0            | % |  | 71.6 | %
|AT&T
International(5)      |  | 1,799            |  | 22.2            |             |  |                 |             |                |   |                            |                 |  |                |   |  | 21.1 |  



|(1) | As of March 5, 2010, there were 8,115 million AA Shares outstanding, representing 95.4% of the total full voting shares (A Shares and AA Shares).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As of March 5, 2010, there were 394 million A Shares outstanding, representing 4.6% of the total full voting shares (A Shares and AA Shares).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(3) | As of March 5, 2010, there were 9,504 million L Shares outstanding.
|--- | -------------------------------------------------------------------

|(4) | A Shares and AA Shares.
|--- | -----------------------

|(5) | Holders of A Shares and AA Shares are entitled to convert a portion of these Shares to L Shares, subject to the restrictions set forth in our bylaws.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Derived from reports of beneficial ownership of our shares filed with the SEC. For comparability purposes, percent of class is calculated based on the number of
L Shares outstanding on March 5, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets forth the share ownership, as of
March 5, 2010, of our officers and directors who own more than one percent of any class of our capital stock. Carlos Slim Domit (chairman of the board of directors) together with certain other members of Carlos Slim Helús immediate
family,



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are the main shareholders of Carso Global Telecom, and may be deemed to have beneficial ownership of 6,000.0 million AA Shares, 92.8 million A Shares, and 5,038.2 million L Shares
held by Carso Global Telecom and other companies that are under common control with us. Except as described below, we are not aware of any director, alternate director or executive officer that holds more than one percent of any class of our shares.



|                     |  |                  |  |                 |             |  |                  |             |                 |   |                            |                  |  |                 |   |  |      |  
|-------------------- |  | ---------------- |  | --------------- | ----------- |  | ---------------- | ----------- | --------------- | - | -------------------------- | ---------------- |  | --------------- | - |  | ---- | -
|                     |  | AA
Shares(1)     |  |                 | A
Shares(1) |  |                  | L
Shares(1) |                 |   | Percentof 
votingshares(2) |                 
|                     |  | Shares(millions) |  | Percentof class |             |  | Shares(millions) |             | Percentof class |   |                            | Shares(millions) |  | Percentof class |   | 
|Carlos Slim
Domit(3) |  | 6,000.0          |  | 73.9            | %           |  | 92.8             |             | 23.6            | % |                            | 5,038.2          |  | 53.0            | % |  | 71.6 | %



|(1) | Holders of AA Shares and A Shares are entitled to convert a portion of these Shares to L Shares, subject to the restrictions set forth in our bylaws. See Item 10.
Additional InformationBylaws and Mexican Law. Based on reports of beneficial ownership filed with the SEC, as of March 5, 2010, 4,512,225,770 AA Shares and all A Shares, of which Carlos Slim Domit may be deemed to share beneficial
ownership, could be converted to L Shares. Based on the 2008 annual report of Carso Global Telecom, Carlos Slim Domit and certain other members of Carlos Slim Helús immediate family may be deemed to share directly or indirectly,
beneficial ownership of 82.69% of Carso Global Telecoms shareholders equity.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | AA Shares and A Shares.
|--- | -----------------------

|(3) | Includes 9,516,264 L Shares owned directly by Carlos Slim Domit.
|--- | ----------------------------------------------------------------

At December 31, 2009, 45.6% of our outstanding L Shares were represented by L Share ADSs, each representing the right to receive 20
L Shares, and 99.2% of the holders of L Share ADSs (10,546 holders, including The Depository Trust Company, or DTC) had registered addresses in the United States. Of our outstanding A Shares, 24.7% were represented by A Share ADSs issued under a
sponsored A Share ADS facility, each representing the right to receive 20 A Shares, and 99.5% of the holders of sponsored A Share ADSs (3,984 holders, including DTC) had registered addresses in the United States.

We do not have information concerning holders with registered addresses in the United States of shares that are not represented by ADSs.
We also have no information concerning U.S. ownership of A Share ADSs held under unsponsored A Share ADS programs.

We
purchase our shares on the Mexican Stock Exchange from time to time up to a specified maximum aggregate value authorized by the holders of AA Shares and A Shares and our Board of Directors. See Item 5. Operating and Financial Review and
ProspectsLiquidity and Capital Resources.

RELATED PARTY TRANSACTIONS

General

We engage in a
variety of transactions with affiliates, including transactions related to the Escisión and in the ordinary course of business. Pursuant to Mexican law, our board of directors has to vote on whether or not to approve certain
transactions with related parties (1) that are outside the ordinary course of our business or (2) that are at non-market prices. A director with an interest in the transaction is not permitted to vote on its approval. None of the
transactions described below was subject to approval by our board of directors.

The aggregate amount of our revenues from
affiliates was P.7,194 million in 2009, P.4,923 million in 2008 and P.4,683 million in 2007. The aggregate amount of our expenses paid to affiliates was P.14,071 million in 2009, P.10,751 million in 2008 and P.6,497 million in 2007. See Note 4 to
our audited consolidated financial statements.

From time to time we may make investments together with affiliated companies,
sell our investments to affiliates and buy investments from affiliates. In July 2006, for example, we entered into a



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50-50 joint venture with América Móvil to construct a fiber optic network along Perus coastline for an estimated total cost to us of U.S.$42.6 million (P.579 million), of
which we have paid U.S.$37.3 million (P.507 million). In February 2009, we paid P.77 million to Pedregales del Sur, S.A. de C.V. and Inmobiliaria Carso, S.A. de C.V., both related parties, to acquire 100% of the capital stock of Contenido Cultural y
Educativo, S.A. de C.V., a company that sells print advertising. In April 2009, we purchased for P.248 million 51% of the capital stock of Eidon Software, S.A. de C.V., or Eidon Software, from Promotora del Desarrollo de América Latina, S.A.
de C.V., or Promotora. Promotora is a majority-owned subsidiary of Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V., a company that is indirectly controlled by Carlos Slim Helú and members of his immediate family.
Eidon Software is a provider of customized and general software applications.

Transactions Relating to theEscisión

The creation of Telmex Internacional and the transfer of assets and liabilities to
Telmex Internacional was effected by the action of the extraordinary shareholders meeting of Telmex on December 21, 2007. Telmex has not made any representations regarding the value of any of the assets we received in the
Escisión. We have agreed to indemnify Telmex against any liability, expense, cost or contribution asserted against Telmex that arises out of the assets owned directly or indirectly by Controladora de Servicios de Telecomunicaciones,
S.A. de C.V., or Consertel, the subsidiary whose shares were transferred to us in the Escisión. Mexican law also provides that if an obligation is assumed by the new company in an escisión, and the new company fails to
perform, a claimant may make a claim against the old company for up to three years unless the claimant expressly consented to the escisión. We did not assume any obligations in the Escisión, so Telmex is not liable for
any obligations of Telmex Internacional. Consertel, which is a subsidiary of Telmex Internacional, will be subject to the possibility that a claimant against the new Telmex subsidiary created in the Consertel split-up might seek to assert its claim
against Consertel if that new Telmex subsidiary defaults. We consider the risk of such a claim to be remote, and Telmex has agreed to indemnify us against any such claim.

In connection with the Escisión, we entered into a master transition agreement, or the Master Agreement, with Telmex. The
Master Agreement includes provisions intended to ensure that the purposes of the Escisión are fully achieved. Among other things, this agreement provides in general terms as follows:



| |  |  | Telmex Internacional agrees to indemnify Telmex against any loss or expense resulting from the assertion against Telmex of any liabilities or claims
that were transferred to Telmex Internacional in the Escisión or that relate to the businesses transferred to Telmex Internacional in the Escisión.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Telmex agrees to indemnify Telmex Internacional against any loss or expense resulting from the assertion against Telmex Internacional of any
liabilities or claims that were retained by Telmex in the Escisión or that relate to the businesses retained by Telmex in the Escisión.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Each party agrees to provide the other with information required to prepare financial statements, tax returns, regulatory filings or submissions and
for other specified purposes.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Each party agrees to maintain the confidentiality of any information concerning the other that it obtained prior to the Escisión or that
it obtains in connection with the implementation of the Escisión.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Each party agrees that it will not take any action that could reasonably be expected to prevent the Escisión from qualifying as tax-free
under Mexican or U.S. federal tax laws.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Each party releases the other from certain claims arising prior to the Escisión. Telmex makes no representations concerning the assets
transferred directly or indirectly in the Escisión.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under the Master Agreement, Telmex also
provided a variety of administrative services to us on an interim basis. We entered into contracts whereby Telmex continues to provide such services, including certain data processing and corporate support and administrative services, generally at
cost plus a specified percentage.

In addition, from the time of the Escisión through the separate trading of
our shares on June 10, 2008, Telmex carried out repurchases of its shares. These transactions reduced the number of outstanding shares of Telmex Internacional by 414 million L Shares and 1 million A Shares. The repurchase transactions
did not reduce the assets of Telmex Internacional because, as contemplated in the December 21, 2007 shareholder decisions, in May 2008 the Telmex board of directors approved the transfer to us of an additional amount of P.3,572 million. We paid
Telmex P.3,572 million in July 2008 in respect of these repurchases.

Ordinary-Course Transactions with Related Parties

We engage in transactions with entities that, like us, are controlled, directly or indirectly, by Carlos Slim Helú and members of
his immediate family. These entities include (a) Telmex and certain subsidiaries of Telmex, (b) América Móvil and its subsidiaries, (c) Grupo Carso and its subsidiaries and (d) Grupo Financiero Inbursa and its
subsidiaries. In addition, we enter into transactions with our shareholder AT&T International.

We complete international
traffic in Brazil, Colombia, Argentina, Chile, Peru and Ecuador from Telmex and América Móvil and their subsidiaries. Telmex completes international traffic from us in Mexico. The subsidiaries of América Móvil in Latin
America and the Caribbean complete international traffic from us through their cellular networks.

In Brazil, Embratel
provides telecommunications services in the same geographical markets as subsidiaries of América Móvil that operate under the brand name Claro. As a result, Embratel and América Móvil have extensive operational
relationships. Embratel, as a local and long-distance service provider, and Claro, as a mobile service provider, interconnect each others traffic and make use of each others networks. Embratel also transports Claros
traffic and leases lines to Claro. Through its subsidiary, BrasilCenter, Embratel provides call center services to Claro. América Móvil also provides interconnection to its cellular network in the other countries in South
America where we have operations. Additionally, in these other countries, we provide private circuits and long-distance services to the subsidiaries of América Móvil.

In 2009, Embratel and Net entered into an agreement for shared network use. Embratel was granted an indefeasible right to use Nets
HFC network to provide local fixed telephone service, and Net may use data transmission capacity on Embratels IP backbone to provide its broadband service, Virtua.

In Mexico, we publish Telmexs white pages telephone directories. Telmex provides us access to its customer database for use in our
yellow pages directories and Telmex handles billing and collection of payments from customers advertising in our yellow pages directories. See Note 19 to our audited consolidated financial statements.



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Transactions with Grupo Carso include the purchase of network construction services and
materials and, in Brazil, the sale of services and the leasing of facilities to Grupo Carso. Transactions with Grupo Financiero Inbursa include financial services and insurance.

We have agreements with AT&T International that provide for AT&T International completing our international calls to the United
States and for our completing AT&T Internationals calls from the United States.

The terms of our ordinary-course
transactions with our affiliates and with other companies that may be deemed to be under common control with us are generally similar to those on which each company does business with other, unaffiliated parties.

Transactions with our Shareholders

We pay fees to our shareholders Carso Global Telecom and AT&T International for consulting and management services, pursuant to
agreements with each party. We paid both companies an aggregate of U.S.$25 million for such services in 2009. The current agreement with Carso Global Telecom was renewed for 2010 on substantially similar terms to the prior agreement and we will pay
U.S.$22.5 million this year under the agreement. We expect to enter into an agreement with AT&T International for 2010 with substantially similar terms as the agreement in place in 2009. In addition, we have agreements with AT&T
International that provide for the completion of calls in our respective countries of operation.



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|Item 8. | Financial Information
|------- | ---------------------

CONSOLIDATED FINANCIAL STATEMENTS

See Item 18. Financial Statements beginning on page F-1.

LEGAL PROCEEDINGS

Embratel

Tax
Disputes

We are engaged in a significant number of ongoing disputes with the tax authorities in Brazil relating to tax
assessments and other claims against Embratel. As a result, we have a substantial amount of tax-related contingencies. As of December 31, 2009, we had recorded provisions in the aggregate amount of P.457 million with respect to tax-related
contingencies at Embratel. While we believe that our positions in these cases are well founded, there can be no assurance that we will prevail or that the amount of our provisions will be sufficient to meet any adverse judgments or penalties.

In August 2006, pursuant to an agreement among all Brazilian states, we were granted a proportional reduction of our
liability for value-added goods and services tax, or ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços), including restatement penalties and surcharges, through July 2006. The agreement
is applicable throughout all states and the Federal District of Brazil, but the implementation of its provisions depends on each states regulations. In the states in which the agreement has already been implemented, we made payments of P.5,353
million in settlement of all disputes related to this matter in such states. With respect to the states in which the agreement has not yet been implemented, we recorded a provision of P.112 million at December 31, 2009.

For more information regarding our tax-related and other contingencies in Brazil, see Note 17 to our audited consolidated financial
statements.

Disputes with Third Parties

We are involved in a variety of additional litigation and administrative proceedings that have arisen in the ordinary course of business.
Various disputes are in an advanced stage of the litigation process, and we may lose at least some of the cases. As of December 31, 2009, we had a provision of P.1,136 million for unfavorable rulings in 2009, compared to P.811 million as of
December 31, 2008.

DIVIDENDS

The dividends from earnings in a given fiscal year are determined at the annual ordinary shareholders meeting that, pursuant to our
bylaws, is held within four months of the end of that fiscal year. In July 2008, we declared a dividend of P.0.15 per share, which we paid in equal installments of P.0.075 per share in August 2008 and November 2008. In April 2009, we declared a
dividend of P.0.17 per share, which was payable in equal installments of P.0.085 per share in August 2009 and November 2009. No dividends were declared for 2010.

The declaration, amount and payment of dividends is determined by majority vote of the holders of A Shares and AA Shares, generally on
the recommendation of the board of directors, and depends on our results of operations, financial condition, cash requirements, future prospects and other factors deemed relevant by the holders of A Shares and AA Shares. Accordingly, we cannot
assure you that we



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will pay dividends in the future or that we will do so on a continuous and regular basis. Our bylaws provide that holders of A Shares, AA Shares and L Shares participate on a per-share basis
in dividend payments and other distributions. See Item 10. Additional InformationBylaws and Mexican LawDividend Rights.



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|Item 9. | The Offer and Listing
|------- | ---------------------

TRADING MARKETS

The L Share ADSs, each representing 20 L Shares of Telmex Internacional, are issued by JPMorgan Chase Bank, N.A., or the Depositary, as
depositary for the L Share ADSs. The L Share ADSs are traded on the New York Stock Exchange, and the L Shares are traded on the Mexican Stock Exchange and listed on the Mercado de Valores Latinoamericano (Latibex) in Madrid, Spain.

The A Share ADSs, each representing 20 A Shares of Telmex Internacional, are issued by the Depositary, as depositary for the
A Share ADSs. The A Share ADSs are traded on the New York Stock Exchange, and the A Shares are traded on the Mexican Stock Exchange and listed on Latibex.

The following table sets forth, for the periods indicated, the reported high and low sales prices for the L Shares on the Mexican Stock
Exchange and the reported high and low sales prices for the L Share ADSs on the New York Stock Exchange. Prices have not been restated in constant currency units.



|                         |  |                        |       |                                |    |       |  |       |       |  |       |      
|------------------------ |  | ---------------------- | ----- | ------------------------------ | -- | ----- |  | ----- | ----- |  | ----- | -----
|                         |  | Mexican Stock Exchange |       | New York Stock Exchange       
|                         |  | (pesos per L Share)    |       | (U.S. dollars per L Share ADS)
|                         |  | High                   |       | Low                            |    | High  |  | Low  
|Annual highs and lows    |  |                        |       |                                |    |       |  |       |       |  |       |      
|2009                     |  | P.                     | 12.15 |                                | P. | 4.98  |  | U.S.$ | 18.98 |  | U.S.$ | 6.43 
|                         |  |                        |       |                               
|Quarterly highs and lows |  |                        |       |                                |    |       |  |       |       |  |       |      
|2008:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|Third quarter            |  | P.                     | 8.35  |                                | P. | 5.89  |  | U.S.$ | 15.96 |  | U.S.$ | 10.67
|Fourth quarter           |  |                        | 8.21  |                                |    | 5.20  |  |       | 13.45 |  |       | 7.31 
|2009:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|First quarter            |  | P.                     | 8.47  |                                | P. | 4.98  |  | U.S.$ | 12.26 |  | U.S.$ | 6.43 
|Second quarter           |  |                        | 8.83  |                                |    | 6.30  |  |       | 13.10 |  |       | 8.92 
|Third quarter            |  |                        | 9.98  |                                |    | 7.70  |  |       | 14.79 |  |       | 11.25
|Fourth quarter           |  |                        | 12.15 |                                |    | 8.41  |  |       | 18.98 |  |       | 12.50
|2010:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|First quarter            |  | P.                     | 12.20 |                                | P. | 11.29 |  | U.S.$ | 19.39 |  | U.S.$ | 17.15
|                         |  |                        |       |                               
|Monthly highs and lows   |  |                        |       |                                |    |       |  |       |       |  |       |      
|2009:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|November                 |  | P.                     | 10.20 |                                | P. | 8.70  |  | U.S.$ | 15.86 |  | U.S.$ | 13.13
|December                 |  |                        | 12.15 |                                |    | 10.01 |  |       | 18.98 |  |       | 15.55
|2010:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|January                  |  | P.                     | 11.98 |                                | P. | 11.29 |  | U.S.$ | 18.88 |  | U.S.$ | 17.55
|February                 |  |                        | 11.70 |                                |    | 11.30 |  |       | 18.36 |  |       | 17.15
|March                    |  |                        | 12.20 |                                |    | 11.54 |  |       | 19.39 |  |       | 18.23
|April                    |  |                        | 12.03 |                                |    | 11.60 |  |       | 19.94 |  |       | 18.81



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The following table sets forth, for the periods indicated, the reported high and low sales
prices for the A Shares on the Mexican Stock Exchange and the reported high and low sales prices for the A Share ADSs on the New York Stock Exchange. Prices have not been restated in constant currency units.



|                         |  |                        |       |                                |    |       |  |       |       |  |       |      
|------------------------ |  | ---------------------- | ----- | ------------------------------ | -- | ----- |  | ----- | ----- |  | ----- | -----
|                         |  | Mexican Stock Exchange |       | New York Stock Exchange       
|                         |  | (pesos per A Share)    |       | (U.S. dollars per A Share ADS)
|                         |  | High                   |       | Low                            |    | High  |  | Low  
|Annual highs and lows    |  |                        |       |                                |    |       |  |       |       |  |       |      
|2009                     |  | P.                     | 11.96 |                                | P. | 5.25  |  | U.S.$ | 18.75 |  | U.S.$ | 6.30 
|                         |  |                        |       |                               
|Quarterly highs and lows |  |                        |       |                                |    |       |  |       |       |  |       |      
|2008:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|Third quarter            |  | P.                     | 7.88  |                                | P. | 6.40  |  | U.S.$ | 15.60 |  | U.S.$ | 10.50
|Fourth quarter           |  |                        | 7.80  |                                |    | 5.52  |  |       | 13.98 |  |       | 7.15 
|2009:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|First quarter            |  | P.                     | 8.00  |                                | P. | 5.25  |  | U.S.$ | 12.50 |  | U.S.$ | 6.30 
|Second quarter           |  |                        | 8.30  |                                |    | 6.25  |  |       | 12.90 |  |       | 8.51 
|Third quarter            |  | P.                     | 9.60  |                                | P. | 7.75  |  | U.S.$ | 14.88 |  | U.S.$ | 11.27
|Fourth quarter           |  |                        | 11.96 |                                |    | 8.70  |  |       | 18.75 |  |       | 12.87
|2010:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|First quarter            |  | P.                     | 11.85 |                                | P. | 10.51 |  | U.S.$ | 19.17 |  | U.S.$ | 17.01
|                         |  |                        |       |                               
|Monthly highs and lows   |  |                        |       |                                |    |       |  |       |       |  |       |      
|2009:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|November                 |  | P.                     | 9.90  |                                | P. | 8.90  |  | U.S.$ | 15.77 |  | U.S.$ | 13.00
|December                 |  |                        | 11.96 |                                |    | 10.05 |  |       | 18.75 |  |       | 15.52
|2010:                    |  |                        |       |                                |    |       |  |       |       |  |       |      
|January                  |  | P.                     | 11.70 |                                | P. | 11.00 |  | U.S.$ | 19.17 |  | U.S.$ | 17.25
|February                 |  |                        | 11.60 |                                |    | 10.51 |  |       | 18.25 |  |       | 17.01
|March                    |  |                        | 11.85 |                                |    | 10.51 |  |       | 19.06 |  |       | 17.75
|April                    |  |                        | 11.88 |                                |    | 10.51 |  |       | 19.56 |  |       | 18.55

TRADING ON THE MEXICAN STOCK EXCHANGE

The Mexican Stock Exchange (Bolsa Mexicana de
Valores, S.A.B. de C.V.) located in Mexico City, is the only stock exchange in Mexico. Trading on the Mexican Stock Exchange takes place principally through automated systems, which are generally open on business days between the
hours of 8:30 a.m. and 3:00 p.m., Mexico City time. Trades in securities listed on the Mexican Stock Exchange can also be effected off the exchange. The Mexican Stock Exchange operates a system of automatic suspension of trading in shares of a
particular issuer as a means of controlling excessive price volatility, but under current regulations this system does not apply to securities such as the Telmex Internacional A Shares or the Telmex Internacional L Shares that are directly or
indirectly (for example, through ADSs) quoted on a stock exchange outside Mexico.

Settlement is effected three
business days after a share transaction on the Mexican Stock Exchange. Deferred settlement, even by mutual agreement, is not permitted without the approval of the CNBV. Most securities traded on the Mexican Stock Exchange, including those of Telmex
Internacional, are on deposit with S.D. Indeval, Institución para el Depósito de Valores, S.A. de C.V., a privately owned securities depositary that acts as a clearinghouse for Mexican Stock Exchange transactions.



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|Item 10. | Additional Information
|-------- | ----------------------

BYLAWS AND MEXICAN LAW

Set forth below is a brief summary of certain significant provisions of our bylaws. This description does not purport to be complete and
is qualified by reference to our bylaws, which have been filed as an exhibit to this annual report.For a description of the provisions of our bylaws relating to our board of directors and its committees, see Item 6. Directors, Senior
Management and Employees.

Organization and Register

Telmex Internacional is a sociedad anónima bursátil de capital variable organized in Mexico under the Mexican
Companies Law (Ley General de Sociedades Mercantiles) and the Mexican Securities Market Law. It is registered with the Public Registry of Commerce of Mexico City under the number 375,438.

Purpose

Our main
corporate purpose is to create, organize, operate, acquire and participate in the capital stock or equity of any and all commercial and individual (non-commercial) entities, associations or corporations, whether industrial, commercial, service or of
any other type, domestic and foreign, and to construct, install, maintain and operate telecommunications networks.

Voting Rights

Each AA Share and A Share entitles the holder thereof to one vote at any meeting of our shareholders. Each L Share
entitles the holder to one vote at any meeting at which holders of L Shares are entitled to vote. Holders of L Shares are entitled to vote only to elect up to two members of the board of directors and the corresponding alternate directors and on the
following matters:



| |  |  | the transformation of Telmex Internacional from one type of company to another;
| | - |  | -------------------------------------------------------------------------------



| |  |  | any merger in which Telmex Internacional is not the surviving entity or any merger with an entity whose principal corporate purposes are different from
those of Telmex Internacional (when Telmex Internacional is the surviving entity); and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | cancellation of the registration of Telmex Internacional shares on the Mexican National Registry of Securities and any foreign stock exchange on which
they are registered.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A resolution on any of the specified matters requires the affirmative vote of both a
majority of all outstanding shares and a majority of the AA Shares and the A Shares voting together.

Under Mexican law,
holders of shares of any series are also entitled to vote as a class on any action that would affect the rights of holders of shares of such series. Additionally, holders of 20% or more of all outstanding shares would be entitled to request judicial
relief against any such action taken without such a vote. The determination whether an action requires a class vote on these grounds would initially be made by the board of directors or any other party calling for shareholder action. A negative
determination could be subject to judicial challenge by an affected shareholder, and a court would ultimately determine the necessity for a class vote. There are no other procedures for determining whether a proposed shareholder action requires a
class vote, and Mexican law does not provide extensive guidance on the criteria to be applied in making such a determination.



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Shareholders Meetings

General shareholders meetings may be ordinary meetings or extraordinary meetings. Extraordinary general meetings are those called to
consider certain matters specified in Article 182 of the Mexican Companies Law, including, principally, amendments of the bylaws, liquidation, merger and transformation from one type of company to another, as well as to consider the removal of our
shares from listing on the Mexican Stock Exchange or any foreign stock exchange. General meetings called to consider other matters are ordinary meetings. The two directors elected by the holders of L Shares are elected at a special meeting of
holders of L Shares. All other matters on which holders of L Shares are entitled to vote would be considered at an extraordinary general meeting. Holders of L Shares are not entitled to attend or address meetings of shareholders at which they are
not entitled to vote.

A special meeting of the holders of L Shares must be held each year for the election of directors. An
ordinary general meeting of the holders of AA Shares and A Shares must be held each year to consider the approval of the financial statements for the preceding fiscal year, to elect directors and to determine the allocation of the profits of the
preceding year.

The quorum for an ordinary general meeting of the AA Shares and A Shares is 50% of such shares, and action
may be taken by a majority of the shares present. If a quorum is not available, a second meeting may be called and action may be taken by a majority of the AA Shares and A Shares present, regardless of the number of such shares. Special meetings of
holders of L Shares are governed by the same rules applicable to ordinary general meetings of holders of AA Shares and A Shares. The quorum for an extraordinary general meeting at which holders of L Shares may not vote is 75% of the AA shares and A
Shares, and the quorum for an extraordinary general meeting at which holders of L Shares are entitled to vote is 75% of the outstanding capital stock. If a quorum is not available in either case, a second meeting may be called and action may be
taken, provided a majority of the shares entitled to vote is present. Whether on first or second call, actions at an extraordinary general meeting may be taken by a majority vote of the AA Shares and A Shares outstanding and, on matters which
holders of L Shares are entitled to vote, a majority vote of all the capital stock.

Holders of 20% of our outstanding capital
stock may have any shareholder action set aside by filing a complaint with a court of law within 15 days after the close of the meeting at which such action was taken and showing that the challenged action violates Mexican law or our bylaws. In
addition, any holder of our capital stock may bring an action at any time within five years challenging any shareholder action. Relief under these provisions is only available to holders:



| |  |  | who were entitled to vote on, or whose rights as shareholders were adversely affected by, the challenged shareholder action; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | whose shares were not represented when the action was taken or, if represented, were voted against it.
| | - |  | ------------------------------------------------------------------------------------------------------

Shareholders meetings may be called by the board of directors, its chairman, co-chairman or secretary, by the committee that
performs audit and corporate practices functions or its chairman, or by a court. The board of directors or the committee that performs audit and corporate practices functions may be required to call a meeting of shareholders by the holders of 10% of
the outstanding capital stock. Notice of meetings must be published in the Official Gazette or a newspaper of general circulation in Mexico City at least 15 days prior to the meeting. In order to attend a meeting, shareholders must deposit their
shares with us at our office in Mexico City, with a Mexican or foreign banking institution or with a Mexican exchange broker. If so entitled to attend the meeting, a shareholder may be represented by proxy. The depositary for the L Share ADSs and
the A Share ADSs does not satisfy this requirement, so ADS holders are not entitled to attend shareholders meetings. ADS holders must exercise their voting rights through the depositary.



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Dividend Rights

At the annual ordinary general meeting of holders of AA Shares and A Shares, the board of directors submits our financial statements for
the previous fiscal year, together with a report thereon by the board of directors, to the holders of AA Shares and A Shares for approval. Once the holders of AA Shares and A Shares have approved the financial statements, they determine the
allocation of our net profits for the preceding year. They are required by law to allocate 5% of such net profits to a legal reserve, which is not thereafter available for distribution except as a stock dividend, until the amount of the legal
reserve equals 20% of our capital stock. The remainder of net profits is available for distribution.

All shares outstanding
at the time a dividend or other distribution is declared are entitled to participate in such dividend or other distribution.

Limitation on
Capital Increases

Our bylaws require that any capital increase be represented by new shares of each series in proportion
to the number of shares of each series outstanding.

Preemptive Rights

In the event of a capital increase, a holder of existing shares of a given series has a preferential right to subscribe for a sufficient
number of shares of the same series to maintain the holders existing proportionate holdings of shares of that series. Preemptive rights must be exercised within 30 calendar days following the publication of notice of the capital increase in
the Official Gazette and a newspaper of general circulation in Mexico City. Under Mexican law, preemptive rights cannot be traded separately from the corresponding shares that give rise to such rights. As a result, there is no trading market for the
rights in connection with a capital increase. Holders of ADSs may exercise preemptive rights only through the depositary. We are not required to take steps that may be necessary to make this possible.

Under the Mexican Securities Market Law, however, if Telmex Internacional were to increase its capital stock to effect a public offering
of newly issued shares or were to resell any repurchased shares, no preemptive rights would be available to the holders of outstanding shares as a result of the issuance or resale.

Limitations on Share Ownership

Pursuant to our bylaws, non-Mexican investors are not permitted to own more than 49% of our capital stock. The A Shares and the L Shares
are unrestricted. The AA Shares, however, which must always represent at least 51% of the combined AA Shares and A Shares, may be owned only by holders that qualify as Mexican investors as defined in the Foreign Investment Law and our bylaws. A
holder that acquires AA Shares in violation of the restrictions on non-Mexican ownership will have none of the rights of a shareholder with respect to those AA Shares. As a consequence of these limitations, a non-Mexican investor cannot own AA
Shares except through a trust that effectively neutralizes the votes of non-Mexican investors. The restrictions in our bylaws reflect provisions in the bylaws of Telmex. The restrictions in Telmexs bylaws are derived from the Foreign
Investment Law and its regulations, which are applicable to Mexican enterprises in certain economic sectors, including telephone services.



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Restrictions on Certain Transactions

Our bylaws provide that any acquisition of 10% or more of our issued and outstanding shares, effected in one or more transactions by any
person or group of persons acting in concert, requires prior approval by our board of directors.

Restrictions on Deregistration in Mexico

Our shares are registered with the National Registry for Securities, as required under the Mexican Securities Market Law.
If we wish to cancel our registration, or if it is cancelled by the CNBV, we will be required to make a public offer to purchase all outstanding shares prior to such cancellation. Unless the CNBV authorizes otherwise, the offer price will be the
higher of (1) the average of the closing price during the previous 30 days on which the shares may have been quoted, or (2) the book value of the shares in accordance with the most recent quarterly report submitted to the CNBV and to the
Mexican Stock Exchange. If, after the public offer is concluded, there are still outstanding shares held by the general public, we will be required to create a trust for a period of six months, into which we will be required to contribute funds in
an amount sufficient to purchase, at the same price as the offer price, the number of outstanding shares held by the general public. Within the five days prior to the commencement of the public offer, after taking into account the opinion of the
audit and corporate practices committee, our board of directors must publish its opinion regarding the offer price.

Tender Offer Rules

Our bylaws provide that any purchasers or group of purchasers that obtain or increase a significant participation,
(i.e., 30% or more) in the capital stock of the company, without conducting a previous public offer in accordance with the Mexican Securities Market Law and applicable rules issued by the CNBV, would not have the right to exercise the
corporate rights of their shares, and that the company will not register such shares in the share registry book.

Other Provisions

Variable capital. We are permitted to issue shares constituting fixed and variable capital. All of our
outstanding shares of capital stock constitute fixed capital. The issuance of variable-capital shares, unlike the issuance of fixed-capital shares, does not require an amendment of the bylaws, although it does require a majority vote of the AA
Shares and the A Shares.

Forfeiture of shares. As required by Mexican law, our bylaws provide that any
alien who at the time of incorporation or at any time thereafter acquires an interest or participation in the capital of the corporation shall be considered, by virtue thereof, as Mexican in respect thereof and shall be deemed to have agreed not to
invoke the protection of his own government, under penalty, in case of breach of such agreement, of forfeiture to the nation of such interest or participation. Under this provision, a non-Mexican shareholder is deemed to have agreed not to
invoke the protection of his own government by asking such government to interpose a diplomatic claim against the Mexican government with respect to the shareholders rights as a shareholder but is not deemed to have waived any other rights he
may have, including any rights under the U.S. securities laws, with respect to his investment in us. If the shareholder invokes such governmental protection in violation of this agreement, his shares could be forfeited to the Mexican government.
Mexican law requires that such a provision be included in the bylaws of all Mexican corporations unless such bylaws prohibit ownership of shares by non-Mexican persons.



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Exclusive jurisdiction. Our bylaws provide that legal actions relating to the
execution, interpretation or performance of the bylaws shall be brought only in Mexican federal courts.

Duration. Telmex Internacionals existence under the bylaws is 99 years from the date of the public deed in which its
incorporation is evidenced.

Purchase of our own shares. We may repurchase our shares on the Mexican Stock
Exchange at any time at the then prevailing market price. Any such repurchase must be made in compliance with the policies established by the board of directors. The shareholders meeting approves the maximum amount of funds that may be used
during the year for the repurchase of shares. In July 2008, the ordinary shareholders meeting authorized share repurchases up to P.10 billion, of which approximately P.5 billion have been used. The ordinary shareholders meeting held on
April 29, 2009, approved up to an additional P.5 billion to be used for share repurchases, which, in addition to the approximately P.5 billion not utilized for share repurchases since July 2008, provides us with approximately P.10 billion
available for share repurchases. Such funds are used for the repurchase of shares through the Mexican Stock Exchange. The economic and voting rights corresponding to repurchased shares may not be exercised during the period in which we own such
shares, and such shares are not deemed to be outstanding for purposes of calculating any quorum or vote at any shareholders meeting during such period.

Conflict of interest. Shareholders with conflicting interests with Telmex Internacional with respect to a transaction are
required to abstain from deliberating and voting on the specific transaction. A shareholder that votes on a specific business transaction in which its interest conflicts with Telmex Internacionals may be liable for damages, but only if the
transaction would not have been approved without its vote. A determination of conflicting interest would initially be made by the shareholder subject to judicial challenge. Mexican law does not provide extensive guidance on the criteria to be
applied in making such a decision.

Appraisal rights. Whenever the shareholders approve a change of corporate
purposes, change of nationality of the corporation or transformation from one type of company to another, any shareholder entitled to vote on such change that has voted against it may withdraw from Telmex Internacional and receive the book value
attributable to its shares, provided it exercises its right within 15 days following the adjournment of the meeting at which the change was approved.

Rights of Shareholders

The protections afforded to minority shareholders under Mexican law are different from those in the United States and many other
jurisdictions. The case law concerning fiduciary duties of directors has not been developed and has not been the subject of extensive judicial interpretation in Mexico, unlike many states in the United States where duties of care and loyalty
elaborated by judicial decisions help to shape the rights of minority shareholders. Mexican civil procedure does not contemplate class actions, which permit shareholders in U.S. courts to bring actions on behalf of other shareholders. Shareholders
cannot challenge corporate action taken at a shareholders meeting unless they meet certain procedural requirements, as described above under Shareholders Meetings. As a result of these factors, in practice it may be
more difficult for our minority shareholders to enforce rights against us or our directors or controlling shareholders than it would be for shareholders of a U.S. company.

Enforceability of Civil Liabilities

Telmex Internacional is organized under the laws of Mexico, and most of our directors, officers and controlling persons reside outside the
United States. In addition, a substantial portion of our assets and their assets are located in Brazil and Mexico. As a result, it may be difficult for investors to effect



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service of process within the United States on such persons. It may also be difficult to enforce against them, either inside or outside the United States, judgments obtained against them in U.S.
courts, or to enforce in U.S. courts judgments obtained against them in courts in jurisdictions outside the United States, in any action based on civil liabilities under the U.S. federal securities laws. There is doubt as to the enforceability
against such persons in Mexico, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws.

CERTAIN CONTRACTS

We are party to concession agreements that authorize us to provide certain telecommunications services on specific terms. These
agreements are described in Item 4. Information on the Company.

Our agreements with related parties are described
in Item 
7. Major Shareholders and Related Party TransactionsRelated Party Transactions.

EXCHANGE
 CONTROLS

Mexico has had a free market for foreign exchange since 1991, and the Mexican government has allowed the peso
to float freely against the U.S. dollar since December 1994.

TAXATION

The following summary contains a description of certain Mexican federal and U.S. federal income tax consequences of the acquisition,
ownership and disposition of our L Shares, A Shares, L Share ADSs, or A Share ADSs, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or sell shares or
ADSs.

The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion and a Protocol thereto between
the United States and Mexico entered into force on January 1, 1994 and has been amended by an additional protocol that entered into force on July 3, 2003 (together, the Tax Treaty). The United States and Mexico have also
entered into an agreement concerning the exchange of information with respect to tax matters.

This discussion does not
constitute, and should not be considered as, legal or tax advice to holders. This discussion is for general information purposes only and is based upon the federal tax laws of Mexico (including the Mexican Income Tax Law and the Mexican Federal Tax
Code) and the United States as in effect on the date of this annual report (including the Tax Treaty), which are subject to change, and such changes may have retroactive effect. Holders of our shares or ADSs should consult their own tax advisers as
to the Mexican, U.S. or other tax consequences of the purchase, ownership and disposition of our shares or ADSs, including, in particular, the effect of any foreign, state or local tax laws.

Mexican Tax Considerations

The following is a general summary of the principal consequences under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta)
and the rules and regulations thereunder, as currently in effect, of an investment in shares or ADSs by a holder that is not a resident of Mexico and that will not hold the shares or ADSs or a beneficial interest therein in connection with the
conduct of a trade or business through a permanent establishment in Mexico (a nonresident holder).



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For purposes of Mexican taxation, the definition of residence is highly technical and
residence arises in several situations. Generally, an individual is a resident of Mexico if he or she has established his or her home in Mexico or if he or she has his or her center of interests in Mexico; a corporation is considered a resident if
it has established its place of effective management in Mexico. However, any determination of residence should take into account the particular situation of each person or legal entity.

If a legal entity or an individual is deemed to have a permanent establishment in Mexico for Mexican tax purposes, all income
attributable to that permanent establishment will be subject to Mexican income taxes, in accordance with applicable tax laws.

This summary does not address all of the Mexican tax consequences that may be applicable to specific holders of the shares (including a
holder that controls us, an investor that holds 10% or more of the shares or holders that constitute a group of persons for purposes of Mexican law). It also does not purport to be a comprehensive description of all the Mexican tax considerations
that may be relevant to a decision to purchase, own or dispose of the shares. In particular, this summary does not describe any tax consequences arising under the laws of any state, locality, municipality or taxing jurisdiction other than certain
federal laws of Mexico.

Tax Treaties

The Mexican Income Tax Law has established procedural requirements for a nonresident holder disposing of shares to be entitled to benefits
under any of the tax treaties to which Mexico is a party. These procedural requirements include the obligation to (i) prove tax treaty residence, (ii) appoint a representative in Mexico for taxation purposes and (iii) present tax
calculations prepared by authorized certified public accountants. These requirements are also applicable to provisions of the Tax Treaty that may affect the taxation of certain U.S. holders (as defined in U.S. Federal Income Tax
Considerations).

Payment of Dividends

Dividends, either in cash or in kind, paid with respect to our shares or ADSs will not be subject to Mexican withholding tax.

Taxation of Dispositions

Gains on the sale of shares or ADSs by a non-Mexican holder will generally not be subject to Mexican income tax, provided that the
transaction is carried out through (a) the Mexican Stock Exchange, (b) other securities exchanges or markets approved by the Mexican Ministry of Finance or (c) other securities exchanges or markets with ample securities trading that
are located in countries with which Mexico has entered into an income tax treaty, such as the New York Stock Exchange and Latibex.

The tax exemption described in the previous paragraph will not be applicable to pre-negotiated trades executed through the facilities of
a Mexican securities exchange. The exemption also will not be applicable in the case of a person or group of persons that, directly or indirectly, holds 10% or more of the shares representing our capital stock, or that holds a controlling interest
in us, if in a period of 24 months, a sale of 10% or more of our fully paid shares, or of a controlling interest in us, is carried out through one or several simultaneous or successive transactions, including those carried out through derivative
instruments or other similar transactions.

For a nonresident corporation or individual that does not meet the requirements
summarized above, proceeds obtained from the sale or disposition of shares will be subject to a 25% tax. Under certain circumstances, nonresident corporations and individuals, alternatively, may elect to pay a 20% tax on the gain obtained from the
transaction.



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Pursuant to the Tax Treaty, gains realized by a U.S. holder (as defined in U.S.
Federal Income Tax Considerations) eligible for the benefits of the Tax Treaty from the sale or other disposition of shares, even if the sale or disposition is not carried out under the circumstances described in the preceding paragraphs, will
not be subject to Mexican income tax, provided that such U.S. holder owned less than 25% of the shares representing capital stock (including ADSs), directly or indirectly, during the 12-month period preceding such disposition.

Gains realized by other nonresident holders that are eligible to receive benefits pursuant to other income tax treaties to which Mexico
is a party may be exempt from Mexican income tax in whole or in part. If the holder is a corporation or a other juridical organization that is subject to a preferential tax regime (as defined by the Mexican Income Tax Law), the applicable rate will
be 40% on the gross income obtained. Non-U.S. holders should consult their own tax advisers as to their possible eligibility under such treaties.

In other cases, nonresident holders will be subject to Mexican income tax on the sale or other disposition of shares or ADSs. Such
nonresident holders should consult with their own tax advisers as to how Mexican income tax would apply to their circumstances.

Other Mexican Taxes

Under certain circumstances, a nonresident holder will not be liable for estate, inheritance or similar taxes with respect to its holdings
of shares or ADSs. A gratuitous transfer of shares by a nonresident holder, however, may in certain circumstances result in the imposition of Mexican tax upon the recipient. There are no Mexican stamp, issue, registration or similar taxes payable by
a nonresident holder with respect to shares or ADSs.

U.S. Federal Income Tax Considerations

The following is a summary of certain U.S. federal income tax consequences to U.S. holders (as defined below) of the acquisition,
ownership and disposition of shares or ADSs. The summary does not purport to be a comprehensive description of all of the tax consequences of the acquisition, ownership or disposition of shares or ADSs that may be relevant to U.S. holders. The
summary applies only to U.S. holders that will hold their shares or ADSs as capital assets and does not apply to special classes of U.S. holders such as dealers in securities or currencies, holders with a functional currency other than the U.S.
dollar, holders of 10% or more of our voting shares (whether held directly or through ADSs or both), tax-exempt organizations, financial institutions, holders liable for the alternative minimum tax, securities traders electing to account for their
investment in their shares or ADSs on a mark-to-market basis, certain short-term holders of shares or ADSs and persons holding their shares or ADSs in a hedging transaction or as part of a straddle or conversion transaction.

For purposes of this discussion, a U.S. holder is a holder or beneficial owner of shares or ADSs that is:



| |  |  | a citizen or resident of the United States of America;
| | - |  | ------------------------------------------------------



| |  |  | a corporation organized under the laws of the United States of America or any state thereof; or
| | - |  | -----------------------------------------------------------------------------------------------



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| |  |  | otherwise subject to U.S. federal income taxation on a net income basis with respect to the shares or ADSs.
| | - |  | -----------------------------------------------------------------------------------------------------------

If a partnership holds our shares or ADSs, the tax treatment of a partner will generally depend on the status of the partner and the
activities of the partnership. Partners of a partnership holding our shares or ADSs should consult their own tax advisers.

Each U.S. holder should consult such holders own tax adviser concerning the overall tax consequences to it of the ownership or
disposition of shares or ADSs that may arise under foreign, state and local laws.

Treatment of ADSs

In general, a U.S. holder of ADSs will be treated as the owner of the shares represented by those ADSs for U.S.
federal income tax purposes. Deposits or withdrawals of shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes. A U.S. holders tax basis in such shares will be the
same as its tax basis in such ADSs, and the holding period in such shares will be the same as the holding period for such ADSs. U.S. holders that withdraw any shares should consult their own tax advisers regarding the treatment of any foreign
currency gain or loss on any pesos received in respect of such shares.

Taxation of Distributions

In this discussion, we use the term dividends to mean distributions paid out of our current or accumulated earnings and
profits with respect to our shares or ADSs. In general, the gross amount of any dividends will be subject to U.S. federal income taxation. Dividends will be paid in pesos and will be includible in the income of a U.S. holder in a U.S. dollar amount
calculated by reference to the exchange rate in effect on the day that they are received by the U.S. holder in the case of shares or by the depositary in the case of ADSs. U.S. holders should consult their own tax advisers regarding the treatment of
foreign currency gain or loss, if any, on any pesos received by a U.S. holder or depositary that are converted into U.S. dollars on a date subsequent to receipt. Subject to certain exceptions for short-term and hedged positions, the U.S. dollar
amount of dividends received by an individual prior to January 1, 2011 with respect to the ADSs, L Shares and A Shares will be subject to taxation at a maximum rate of 15% if the dividends are qualified dividends. Dividends paid on
the ADSs, L Shares and A Shares will be treated as qualified dividends if (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the Internal Revenue Service has approved for the purposes of the
qualified dividend rules and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company, or PFIC. The Tax Treaty has been approved
for the purposes of the qualified dividend rules. In addition, based on our audited consolidated financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with
respect to our 2008 or 2009 taxable years. In addition, based on our audited consolidated financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income and relevant market and
shareholder data, we do not anticipate becoming a PFIC for our 2010 taxable year.

To the extent that the amount of any
distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in
the adjusted basis of the shares or ADSs (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of the shares or ADSs), and the balance in excess of adjusted basis will be taxed
as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a
dividend (as discussed above).



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Dividends paid by us will not be eligible for the dividends-received deduction allowed to
corporations under the U.S. Internal Revenue Code of 1986, as amended (the Code).

Distributions of additional
shares or ADSs to U.S. holders with respect to their shares or ADSs that are made as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Taxation of Dispositions

A U.S. holder will recognize gain or loss on the sale or other disposition of the shares or ADSs in an amount equal to the difference
between the U.S. holders basis in such shares or ADSs (in U.S. dollars) and the amount realized on the disposition (in U.S. dollars, determined at the spot rate on the date of disposition or, for a cash basis U.S. holder (or an electing
accrual basis U.S. holder), at the exchange rate in effect on the settlement date, if the amount realized is denominated in a foreign currency). Gain or loss realized by a U.S. holder on such sale or other disposition generally will be long-term
capital gain or loss if, at the time of disposition, the shares or ADSs have been held for more than one year. The net amount of long-term capital gain recognized by an individual holder is taxed at a reduced rate.

Gain, if any, realized by a U.S. holder on the sale or other disposition of the shares or ADSs will be treated as U.S. source income for
U.S. foreign tax credit purposes. Consequently, if a Mexican withholding tax is imposed on the sale or disposition of the shares or ADSs, a U.S. holder that does not receive significant foreign source income from other sources may not be able to
derive effective U.S. foreign tax credit benefits in respect of these Mexican taxes. U.S. holders should consult their own tax advisers regarding the application of the foreign tax credit rules to their investment in, and disposition of, our shares
or ADSs.

Exchange of Shares

A U.S. holders exchange of A Shares for L Shares will not constitute a taxable event for U.S. federal income tax purposes. An
exchanging U.S. holder will have a tax basis in the L Shares equal to the basis such holder had in the exchanged A Shares. An exchanging U.S. holders holding period for the L Shares will include the holding period such U.S. holder had in the A
Shares before such shares were exchanged.

Information Reporting and Backup Withholding

Dividends on, and proceeds from the sale or other disposition of, the shares or ADSs paid to a U.S. holder generally may be subject to the
information reporting requirements of the Code and may be subject to backup withholding unless the holder:



| |  |  | established that it is a corporation or other exempt holder; or
| | - |  | ---------------------------------------------------------------



| |  |  | provides an accurate taxpayer identification number on a properly completed Internal Revenue Service Form W-9 and certifies that it is not subject to
backup withholding and otherwise complies with applicable requirements of the backup withholding rules.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The amount of any backup withholding from a payment to a holder will be allowed as a credit
against the U.S. holders U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is furnished to the Internal Revenue Service.

U.S. Tax Consequences for Non-U.S. holders

Distributions. A holder or beneficial owner of shares or ADSs that is not a U.S. holder for U.S. federal income tax purposes
(a non-U.S. holder) generally will not be subject to U.S. federal income or withholding tax on dividends received on shares or ADSs, unless such income is effectively connected with the conduct by the holder of a U.S. trade or business.

Dispositions. A non-U.S. holder of shares or ADSs will not be subject to U.S. federal income or withholding tax
on gain realized on the sale of shares or ADSs, unless:



| |  |  | such gain is effectively connected with the conduct by the holder of a U.S. trade or business; or
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | in the case of gain realized by an individual non-U.S. holder, the non-U.S. holder is present in the United States for 183 days or more in the taxable
year of the sale and certain other conditions are met.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Information reporting and backup
withholding. Although non-U.S. holders generally are exempt from backup withholding, a non-U.S. holder may be required to comply with certification and identification procedures in order to establish its exemption from information reporting
and backup withholding.

DOCUMENTS ON DISPLAY

We file reports, including annual reports on Form 20-F, and other information electronically with the SEC pursuant to the rules and
regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Any filings we make are also available to the public over the Internet at the SECs website at www.sec.gov and at our website at www.telmexinternacional.com. (This URL is intended to
be an inactive textual reference only. It is not intended to be an active hyperlink to our website. The information on our website, which might be accessible through a hyperlink resulting from this URL, is not and shall not be deemed to be
incorporated into this annual report.)



|Item 11. | Quantitative and Qualitative Disclosures about Market Risk
|-------- | ----------------------------------------------------------

EXCHANGE RATE AND INTEREST RATE RISKS

We are exposed to exchange rate risk and interest rate risk related to our indebtedness. Exchange rate risk exists principally with
respect to our indebtedness denominated in currencies other than the currencies of the primary operating environments for each of our subsidiaries. As of December 31, 2009, indebtedness denominated in foreign currencies was P.17,578 million, of
which P.12,614 million was denominated in U.S. dollars. Interest rate risk exists principally with respect to our indebtedness that bears interest at floating rates. We had P.22,120 million of indebtedness bearing interest at floating rates at
December 31, 2009.



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We use derivative instruments to minimize the impact of fluctuations in exchange rates
affecting our indebtedness. We regularly assess our exposure and monitor opportunities to manage these risks. See Item 5. Operating and Financial Review and ProspectsRisk Management.

SENSITIVITY ANALYSIS DISCLOSURES

Exchange Rate and Interest Rate Risks

We are exposed to exchange rate risk and interest rate risk related to our indebtedness. Exchange rate risk exists principally with
respect to our indebtedness denominated in currencies other than the currencies of the primary operating environments for each of our subsidiaries. As of December 31, 2009, indebtedness denominated in foreign currencies was P.17,578 million, of
which P.12,614 million was denominated in U.S. dollars. Interest rate risk exists principally with respect to our indebtedness that bears interest at floating rates. We had P.22,120 million of indebtedness bearing interest at floating rates at
December 31, 2009.

We use derivative financial instruments to minimize the impact of fluctuations in exchange rates
affecting our indebtedness. We regularly assess our exposure and monitor opportunities to manage these risks. See Item 5. Operating and Financial Review and ProspectsRisk Management.

Sensitivity Analysis Disclosures

Exchange Rates

The potential loss in fair value of financial instruments held at December 31, 2009 that would have resulted from a hypothetical,
instantaneous and unfavorable 10% change in currency exchange rates, taking into account our derivative transactions, would have been approximately P.2,940 million. Such a change in currency exchange rates would also have resulted in additional
interest expense of approximately P.402 million per year, assuming no change in the principal amount of such indebtedness, reflecting the increased costs in local currency of servicing foreign currency indebtedness. This sensitivity analysis assumes
an instantaneous unfavorable 10% change in exchange rates affecting the foreign currencies in which our indebtedness is denominated.

Interest Rates

The potential loss in fair value of financial instruments (which consisted solely of indebtedness) held at December 31, 2009 that
would have resulted from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate applicable to such financial instruments, taking into account our derivative transactions, would have been approximately P.132
million. This effect would be fully attributable to the impact of the interest rate change on fixed-rate financial liabilities. A hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate applicable to floating-rate
financial liabilities held at December 31, 2009, taking into account our derivative transactions, would have resulted in additional interest expense of approximately P.568 million per year, assuming no change in the principal amount of such
indebtedness. The above sensitivity analyses are based on the assumption of an unfavorable 100 basis point movement of the interest rates applicable to each homogeneous category of financial liabilities. A homogeneous category is defined according
to the currency in which financial assets and liabilities are denominated and assumes the same interest rate movement with each homogeneous category. As a result, interest rate risk sensitivity analysis may overstate the impact of interest rate
fluctuations for such financial instruments as consistently unfavorable.



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|Item 12. | Description of Securities other than Equity Securities
|-------- | ------------------------------------------------------



|Item 12.A. | Debt Securities
|---------- | ---------------

Not
applicable.



|Item 12.B. | Warrants and Rights
|---------- | -------------------

Not
applicable.



|Item 12.C. | Other Securities
|---------- | ----------------

Not
applicable.



|Item 12.D. | American Depositary Shares
|---------- | --------------------------

JPMorgan Chase Bank, N.A., or the Depositary, serves as the depositary for our ADSs. ADS holders are required to pay various fees to the
Depositary, and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.

ADS holders are required to pay the Depositary: (i) an annual fee of up to US$0.02 per ADS for administering the ADS program, and
(ii) amounts in respect of expenses incurred by the Depositary or its agents on behalf of ADS holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, cable, telex and facsimile transmission,
or conversion of foreign currency into U.S. dollars. In both cases, the Depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions.

ADS holders are also required to pay additional fees for certain services provided by the Depositary, as set forth in the
table below.



|                                                                                                        |  |                                            
|------------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|Depositary service                                                                                      |  | Fee payable by ADS
holders                 
|Issuance and delivery of ADRs, including in connection with share distributions, sales and stock splits |  | U.S.$5.00 per 100 ADSs (or portion thereof)
|Any dividend or other cash distribution                                                                 |  | U.S.$0.02 or less per ADS                  
|Withdrawal, cancellation or reduction of shares underlying ADSs                                         |  | U.S.$5.00 per 100 ADSs (or portion thereof)
|Any transfer of ADRs                                                                                    |  | U.S.$1.50 per ADR                          

In addition, holders
may be required to pay a fee for the distribution or sale of securities. Such fee would be for an amount equal to the fee for the execution and delivery of ADSs that would be charged as if the securities were treated as deposited shares.

Payments by the Depositary

The Depositary pays us an agreed amount, which includes reimbursements for certain expenses we incur in connection with the ADS program.
These reimbursable expenses currently include investor relations expenses, exchange application and listing fees, and fees payable to service providers for the distribution of material to ADR holders. The amount of reimbursement available to us is
not calculated based on the fees the depositary collects from investors. For the year ended December 31, 2009, this amount was U.S.$9.2 million.



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PART II



|Item 13. | Defaults, Dividend Arrearages and Delinquencies
|-------- | -----------------------------------------------

None.



|Item 14. | Material Modifications to the Rights of Securities Holders and Use of Proceeds
|-------- | ------------------------------------------------------------------------------

None.



|Item 15. | Controls and Procedures
|-------- | -----------------------

Disclosure
Controls and Procedures

We have evaluated, with the participation of our chief executive officer and chief financial
officer, the effectiveness of our disclosure controls and procedures as of December 31, 2009. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and
the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief
executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that it is accumulated and communicated to our management, including our chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over
Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with Mexican Financial Reporting Standards, including the reconciliation to U.S. GAAP in accordance with Item 18 of Form 20-F. Our internal control over financial reporting includes those
policies and procedures that:



| | (a) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Mexican Financial Reporting
Standards, including the reconciliation to U.S. GAAP in accordance with Item 18 of Form 20-F, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (c) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a
material effect on the financial statements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework and,
with respect to the effectiveness of our information technology, the criteria set forth in the Control Objectives for Information and related Technology (COBIT).

Based on our assessment and those criteria, management believes that the company maintained effective internal control over financial
reporting as of December 31, 2009.

Mancera, S.C., a member practice of Ernst & Young Global, the independent
registered public accounting firm that has audited our financial statements, has issued an attestation report on our internal control over financial reporting, which appears below.

There has been no change in our internal control over financial reporting during 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting

The Board of Directors and Stockholders

Telmex Internacional, S.A.B. de C.V.

We have audited Telmex Internacional, S.A.B. de C.V.s internal control over financial reporting as of December 31, 2009, based
on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Telmex Internacional, S.A.B. de C.V.s management is responsible for
maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Annual Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



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A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Mexican Financial Reporting Standards, including the reconciliation to U.S. GAAP in accordance
with Item 18 of Form 20-F. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Mexican Financial Reporting Standards,
including the reconciliation to U.S. GAAP in accordance with Item 18 of Form 20-F, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Telmex Internacional, S.A.B. de C.V. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2009 based on the COSO criteria.

We also have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United States of America), the consolidated balance sheets of Telmex Internacional, S.A.B. de C.V. as of December 31, 2009 and 2008, the related consolidated statements of income and changes in
stockholders equity for each of the three years in the period ended December 31, 2009, and the consolidated statements of cash flows for each of the two years in the period ended December 31, 2009 and the consolidated statement of
changes in financial position for the year ended December 31, 2007, and our report dated March 23, 2010, expressed an unqualified opinion thereon.



Mancera, S.C.A member practice ofErnst & Young Global/s/ CPC David Sitt CofradíaC.P.C. David Sitt Cofradía


Mexico City, Mexico

March 23, 2010



|Item 16A. | Audit Committee Financial Expert
|--------- | --------------------------------

Our Board of Directors has determined that Mr. Antonio del Valle Ruiz, the chairman of our audit and corporate practices committee
and a member of our Board of Directors, qualifies as an audit committee financial expert. Mr. del Valle Ruiz, who studied accounting at the Escuela Bancaria y Comercial, acquired his expertise through his role as chief executive officer
at various Mexican banks over the last 38 years. Mr. del Valle Ruiz qualifies as independent, as determined by our shareholders at their annual ordinary general meeting pursuant to the Mexican Securities Market Law and as defined under the
rules of the New York Stock Exchange and the NASDAQ Stock Market, Inc. that are applicable to foreign private issuers. See Item 6. Directors, Senior Management and EmployeesAudit and Corporate Practices Committee.



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|Item 16B. | Code of Ethics
|--------- | --------------

We have
adopted a code of ethics, as defined in Item 16B of Form 20-F. Our code of ethics applies to our chief executive officer, chief financial officer, principal accounting officer, persons performing similar functions and other personnel. Our code
of ethics is available on our website at www.telmexinternacional.com. If we amend the provisions of our code of ethics that apply to our chief executive officer, our chief financial officer, our principal accounting officer and persons performing
similar functions or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address.



|Item 16C. | Principal Accountant Fees and Services
|--------- | --------------------------------------

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors, Mancera, S.C., a member practice of Ernst &
Young Global, an independent, registered public accounting firm, and by other Ernst & Young Global members during the fiscal years ended December 31, 2009 and 2008.



|                   |  |                         |  |            
|------------------ |  | ----------------------- |  | -----------
|                   |  | Year ended December 31,
|                   |  | 2009                    |  | 2008       
|                   |  | (thousands)             |  | (thousands)
|Audit fees         |  | P.65,864                |  | P.58,477   
|Audit-related fees |  | 8,436                   |  | 70         
|Tax fees           |  | 3,886                   |  | 1,293      
|All other fees     |  |                        |  |           
|                   |  |                         |  |            
|Total fees         |  | P.78,186                |  | P.59,840   
|                   |  |                         |  |            

Audit fees in the above table are the aggregate fees
billed in connection with the audit of our annual financial statements, the review of our interim financial statements and statutory and regulatory audits.

Audit-related fees in the above table are fees billed for services related to the IFRS first-time adoption process, which has not been
completed, attestation services and audit-related fees billed with respect to compliance with our debt covenants.

Tax fees in
the above table are fees billed for tax compliance services.

All other fees in the above table are fees billed primarily
related to review of reports on our operations to industry regulatory agencies. There were no other fees in 2009 or 2008.

Audit and
Corporate Practices Committee Approval Policies and Procedures

Our audit and corporate practices committee has established
policies and procedures for the engagement of our independent auditors for services. Such policies and procedures outline services that require specific approval on a case-by-case basis and general services that have been approved in advance by the
audit and corporate practices committee, including statutory and regulatory audits, tax compliance and evaluation of the security of our information technology. Prior to providing any services that require specific pre-approval, our independent
auditor, together with our chief financial officer, will jointly present to the audit and corporate practices committee a request for approval of audit services, in which such persons confirm that the request complies with applicable rules.



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|Item 16D. | Exemptions from the Listing Standards for Audit Committees
|--------- | ----------------------------------------------------------

Not applicable.



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|--------- | ----------------------------------------------------------------------

The following table provides information on L Shares purchased by our company and affiliated purchasers in 2009:



|                             |  |                                     |  |                                      |       |                                                                          |             |                                                                                   |    |                                                                                                            |  |    |           
|---------------------------- |  | ----------------------------------- |  | ------------------------------------ | ----- | ------------------------------------------------------------------------ | ----------- | --------------------------------------------------------------------------------- | -- | ---------------------------------------------------------------------------------------------------------- |  | -- | ----------
|Year ended December 31, 2009 |  | Total Number ofL
SharesPurchased(1) |  | WeightedAverage PricePaid per LShare |       | Total Number ofL SharesPurchased asPart of the
ShareRepurchaseProgram(2) |             | WeightedAverage PricePaid per LSharePurchased asPart of
theShareRepurchaseProgram |    | Approximate PesoValue (inThousands) of LShares that May Yet BePurchased
Underthe ShareRepurchaseProgram(3)
|January 1-31                 |  | 35,102,000                          |  | P.                                   | 7.31  |                                                                          | 35,102,000  |                                                                                   | P. | 7.31                                                                                                       |  | P. | 5,484,531 
|February 1-29                |  | 14,443,400                          |  |                                      | 6.62  |                                                                          | 14,443,400  |                                                                                   |    | 6.62                                                                                                       |  |    | 5,388,850 
|March 1-31                   |  | 32,182,700                          |  |                                      | 6.03  |                                                                          | 31,182,700  |                                                                                   |    | 6.06                                                                                                       |  |    | 5,197,241 
|April 1-30                   |  | 20,250,000                          |  |                                      | 7.15  |                                                                          | 20,250,000  |                                                                                   |    | 7.15                                                                                                       |  |    | 10,049,881
|May 1-31                     |  | 79,629,600                          |  |                                      | 7.45  |                                                                          | 30,073,500  |                                                                                   |    | 7.44                                                                                                       |  |    | 9,824,369 
|June 1-30                    |  | 70,800,000                          |  |                                      | 8.22  |                                                                          | 40,800,000  |                                                                                   |    | 8.21                                                                                                       |  |    | 9,488,088 
|July 1-31                    |  | 25,908,300                          |  |                                      | 8.27  |                                                                          | 25,908,300  |                                                                                   |    | 8.27                                                                                                       |  |    | 9,269,967 
|August 1-31                  |  | 30,050,000                          |  |                                      | 8.36  |                                                                          | 30,050,000  |                                                                                   |    | 8.36                                                                                                       |  |    | 9,016,822 
|September 1-30               |  | 20,000,000                          |  |                                      | 9.25  |                                                                          | 20,000,000  |                                                                                   |    | 9.25                                                                                                       |  |    | 8,827,583 
|October 1-31                 |  | 28,100,000                          |  |                                      | 9.23  |                                                                          | 22,000,000  |                                                                                   |    | 9.20                                                                                                       |  |    | 8,622,145 
|November 1-30                |  | 24,571,100                          |  |                                      | 9.66  |                                                                          | 18,471,100  |                                                                                   |    | 9.77                                                                                                       |  |    | 8,438,165 
|December 1-31                |  | 17,127,500                          |  |                                      | 11.34 |                                                                          | 15,122,100  |                                                                                   |    | 11.27                                                                                                      |  |    | 8,264,798 
|                             |  |                                     |  |                                      |       |                                                                          |             |                                                                                   |    |                                                                                                            |  |    |           
|Total/Average                |  | 398,164,600                         |  | P.                                   | 8.06  |                                                                          | 303,403,100 |                                                                                   | P. | 8.97                                                                                                       |  |    |           
|                             |  |                                     |  |                                      |       |                                                                          |             |                                                                                   |    |                                                                                                            |  |    |           



|(1) | We do not repurchase our L Shares other than through the share repurchase program. An aggregate of 95 million L Shares were purchased by our affiliated purchasers
in 2009. These shares were purchased through open-market transactions.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We periodically repurchase our L Shares on the open market using funds authorized by our shareholders specifically for the repurchase of L Shares and A Shares by us at
our discretion. On April 29, 2009, our shareholders authorized an additional P.5 billion for the repurchase of L Shares and A Shares.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | This is the approximate peso amount available at the end of the period for purchases of both L Shares and A Shares pursuant to the share repurchase program. These are
nominal figures and have not been restated for inflation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table provides information on A Shares purchased by our company and affiliated
purchasers in 2009:



|                             |  |                                     |  |                                       |       |                                                                            |           |                                                                                      |    |                                                                                                            |  |    |           
|---------------------------- |  | ----------------------------------- |  | ------------------------------------- | ----- | -------------------------------------------------------------------------- | --------- | ------------------------------------------------------------------------------------ | -- | ---------------------------------------------------------------------------------------------------------- |  | -- | ----------
|Year ended December 31, 2009 |  | Total Number ofA
SharesPurchased(1) |  | WeightedAverage PricePaid per A Share |       | Total Number ofA SharesPurchased as Part of the Share
RepurchaseProgram(2) |           | WeightedAverage PricePaid per A Share Purchased asPart of the
ShareRepurchaseProgram |    | Approximate PesoValue (inThousands) of AShares that May Yet BePurchased
Underthe ShareRepurchaseProgram(3)
|January 1-31                 |  | 1,929,900                           |  | P.                                    | 7.05  |                                                                            | 1,929,900 |                                                                                      | P. | 7.05                                                                                                       |  | P. | 5,484,531 
|February 1-29                |  | 13,800                              |  |                                       | 6.84  |                                                                            | 13,800    |                                                                                      |    | 6.84                                                                                                       |  |    | 5,388,850 
|March 1-31                   |  | 445,900                             |  |                                       | 6.03  |                                                                            | 445,900   |                                                                                      |    | 6.03                                                                                                       |  |    | 5,197,241 
|April 1-30                   |  | 354,800                             |  |                                       | 7.07  |                                                                            | 354,800   |                                                                                      |    | 7.07                                                                                                       |  |    | 10,049,881
|May 1-31                     |  | 237,100                             |  |                                       | 7.21  |                                                                            | 237,100   |                                                                                      |    | 7.21                                                                                                       |  |    | 9,824,369 
|June 1-30                    |  | 163,300                             |  |                                       | 8.04  |                                                                            | 163,300   |                                                                                      |    | 8.04                                                                                                       |  |    | 9,488,088 
|July 1-31                    |  | 480,500                             |  |                                       | 8.27  |                                                                            | 480,500   |                                                                                      |    | 8.27                                                                                                       |  |    | 9,269,967 
|August 1-31                  |  | 240,500                             |  |                                       | 8.19  |                                                                            | 240,500   |                                                                                      |    | 8.19                                                                                                       |  |    | 9,016,822 
|September 1-30               |  | 452,000                             |  |                                       | 9.25  |                                                                            | 452,000   |                                                                                      |    | 9.25                                                                                                       |  |    | 8,827,583 
|October 1-31                 |  | 325,000                             |  |                                       | 9.05  |                                                                            | 325,000   |                                                                                      |    | 9.05                                                                                                       |  |    | 8,622,145 
|November 1-30                |  | 374,500                             |  |                                       | 9.53  |                                                                            | 374,500   |                                                                                      |    | 9.53                                                                                                       |  |    | 8,438,165 
|December 1-31                |  | 267,100                             |  |                                       | 11.01 |                                                                            | 267,100   |                                                                                      |    | 11.01                                                                                                      |  |    | 8,264,798 
|                             |  |                                     |  |                                       |       |                                                                            |           |                                                                                      |    |                                                                                                            |  |    |           
|Total/Average                |  | 5,284,400                           |  | P.                                    | 7.85  |                                                                            | 5,284,400 |                                                                                      | P. | 7.85                                                                                                       |  |    |           
|                             |  |                                     |  |                                       |       |                                                                            |           |                                                                                      |    |                                                                                                            |  |    |           



|(1) | No A Shares were purchased by us or our affiliated purchasers in 2009 other than through our share repurchase program.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | We periodically repurchase our A Shares on the open market using funds authorized by our shareholders specifically for the repurchase of L Shares and A Shares by us at
our discretion. On April 29, 2009, our shareholders authorized an additional P.5 billion for the repurchase of L Shares and A Shares.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | This is the approximate peso amount available at the end of the period for purchases of both L Shares and A Shares pursuant to the share repurchase program. These are
nominal figures and have not been restated for inflation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 16F. | Change in Registrants Certifying Account
|--------- | -----------------------------------------

Not applicable.



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|Item 16G. | Corporate Governance
|--------- | --------------------

The
table below discloses the significant differences between our corporate governance practices and the New York Stock Exchange (NYSE) listing standards. This disclosure is also required pursuant to Section 303A.11 of the Listed Company Manual of
the NYSE, is posted on our website and can be accessed at www.telmexinternacional.com.



|                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                                                                                                                                                                                                                                                                                                        |  | Our Corporate Governance Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Director Independence. Majority of board of directors must be independent. §303A.01. Controlled companies, which would include our company if we
were a U.S. issuer, are exempt from this requirement. A controlled company is one in which more than 50% of the voting power is held by an individual, group or another company, rather than the public. §303A.00. |  | Director Independence. Pursuant to the Mexican Securities Market Law and our bylaws, our shareholders are required to appoint a board of directors of no more than 21
members, 25% of whom must be independent. Certain directors are per senon-independent, including insiders, control persons, major suppliers and any relatives of such persons. In accordance with the Mexican Securities Market Law, our
shareholders are required to make a determination as to the independence of our directors, though such determination may be challenged by the CNBV. There is no exemption from the independence requirement for controlled companies.
|                                                                                                                                                                                                                                                                                                                                                                      | 
|Executive Sessions. Non-management directors must meet at regularly scheduled executive sessions without management. Independent directors should meet alone
in an executive session at least once a year. §303A.03.                                                                                                                                                  |  | Executive Sessions. Our independent directors have not held executive sessions without management, and under our bylaws and applicable Mexican law, they are
not required to do so.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                      | 
|Nominating/Corporate Governance Committee.Nominating/corporate governance committee composed entirely of independent directors is required. The committee
must have a charter specifying the purpose, duties and evaluation procedures of the committee. §303A.04. Controlled companies are exempt from these requirements. §303A.00.                               |  | Nominating Committee.We currently do not have a nominating committee. We are not required to have a nominating
committee. However, Mexican law requires us to have one or more committees that oversee the corporate governance function. 
We have an audit and corporate practices committee, which performs corporate governance functions.
 As a controlled company, we would be exempt from these requirements if we were a
U.S. issuer.                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                      | 
|Compensation Committee.Compensation committee composed entirely of independent directors is required, which must evaluate and approve executive officer
compensation. The committee must have a charter specifying the purpose, duties and evaluation procedures of the committee §303A.05. Controlled companies are exempt from this requirement. §303A.00.        |  | Compensation Committee.We have an audit and corporate practices committee, which assists our board of directors in
evaluating and compensating our senior executives. The Mexican Securities Market Law requires that a majority of the members of the corporate practices committee of controlled companies be independent. All of the members of our audit and corporate
practices committee are independent.  As a controlled company, we would be
exempt from this requirement if we were a U.S. issuer.                                                                                                                                        



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Our Corporate Governance Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Audit Committee.Audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act , and the more stringent
requirements under the NYSE standards is required. §§303A.06 & 303A.07.                                                                                                                                                                                                                                                                                                    |  | Audit and Corporate Practices Committee. We have an audit and corporate practices committee of three members. Each member of the audit and corporate practices
committee qualifies as independent, as determined by our shareholders at their annual ordinary general meeting pursuant to the Mexican Securities Market Law, and also meets the independence requirements of Rule 10A-3 under the Exchange Act or
qualifies for an exemption. Our audit and corporate practices committee operates primarily pursuant to (1) a written charter approved by our Board of Directors and (2) Mexican law. For a description of the duties of our audit and corporate practices
committee, see Item 6. Directors, Senior Management and EmploymentAudit and Corporate Practices Committee.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|Equity Compensation Plans.Equity compensation plans and material revisions thereto require shareholder approval, subject to limited exemptions.
§§303A.08 & 312.03.                                                                                                                                                                                                                                                                                                                                                         |  | Equity Compensation Plans. Shareholder approval is required under Mexican law for the adoption and amendment of an equity compensation plan. Such plans should provide
for general application to all executives. We do not have a stock option plan for our executive officers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|Shareholder Approval for Issuance of Securities.Issuances of securities (1) that will result in a change of control of the issuer, (2) that are to a related
party or someone closely related to a related party, (3) that have voting power equal to at least 20% of the outstanding common stock voting power before such issuance or (4) that will increase the number of shares of common stock by at least 20% of
the number of outstanding shares before such issuance require shareholder approval. §§312.03(b)-(d). |  | Shareholder Approval for Issuance of Securities. Mexican law and our bylaws require us to obtain shareholder approval of the issuance of new equity
securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|Code of Business Conduct and Ethics.Corporate governance guidelines and a code of business conduct and ethics is required, with disclosure of any waiver for
directors or executive officers. The code must contain compliance standards and procedures that will facilitate the effective operation of the code. §303A.10.                                                                                                                                                                                                 |  | Code of Business Conduct and Ethics. We have adopted a code of ethics that applies to all our personnel, including our directors and executive officers. A copy of our
code of ethics is available on our website: www.telmexinternacional.com.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|Conflicts of Interest. Determination of how to review and oversee related party transactions is left to the listed company. The audit committee or comparable body,
however, could be considered the forum for such review and oversight. §307.00. Certain issuances of common stock to a related party require shareholder approval. §312.03(b).                                                                                                                                                                           |  | Conflicts of Interest. Pursuant to Mexican law, our bylaws and applicable internal guidelines, provided that the corporate practices committee of our board of
directors has opined favorably, our board of directors must vote on whether or not to grant approval of certain transactions with a related party (1) that are outside the ordinary course of our business or (2) that are at non-market prices. A
director with an interest in the transaction is not permitted to vote on its approval.                                                                                                                                                                                                                                                                                 



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|                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                                                                                                                                                   |  | Our Corporate Governance Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Solicitation of Proxies.Solicitation of proxies and provision of proxy materials is required for all meetings of shareholders. Copies of such proxy
solicitations are to be provided to NYSE. §§402.01 & 402.04. |  | Solicitation of Proxies. We are not required to distribute proxy materials to, or solicit the return of proxies from, our shareholders. In accordance with Mexican
law and our bylaws, we inform shareholders of all meetings by public notice, which states the requirements for admission to the meeting and provides a mechanism by which shareholders can vote through a representative using a power of attorney. Under
the new Mexican Securities Market Law, we have to make power of attorney forms available to shareholders at their request. Under the deposit agreements relating to our ADSs, holders of our ADSs receive notices of shareholders meetings and,
where applicable, instructions on how to vote at the shareholders meeting through the depositary.



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PART III



|Item 17. | Financial Statements
|-------- | --------------------

Not
applicable.



|Item 18. | Financial Statements
|-------- | --------------------

Our
audited consolidated financial statements are included in this annual report beginning on page F-1.



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|Item 19. | Exhibits
|-------- | --------

Documents filed
as exhibits to this registration statement:



|     |  |                                                                                                                                                                                                                                                                                                                                          
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1  |  | Amended and restated bylaws (estatutos sociales) of Telmex Internacional, S.A.B. de C.V., dated April 29, 2009 (English translation) (incorporated by reference to the annual
report on Form 20-F of Telmex Internacional, S.A.B. de C.V. (File No. 1-34086) filed on June 26, 2009).                                                    
|     | 
|2.1  |  | Form of L Share Deposit Agreement (incorporated by reference to our registration statement on Form F-6 (File No. 333-151240) filed on June 26, 2009).                                                                                                                                                                                    
|     | 
|2.2  |  | Form of A Share Deposit Agreement (incorporated by reference to our registration statement on Form F-6 (File No. 333-151242) filed on May 29, 2008).                                                                                                                                                                                     
|     | 
|4.1  |  | Master Transition Agreement between Teléfonos de México, S.A.B. de C.V. and Telmex Internacional, S.A.B. de C.V., dated as of December 26, 2007 (English translation)
(incorporated by reference to the registration statement on Form 20-F of Telmex Internacional, S.A.B. de C.V. (File No. 1-34086) filed on May 30, 2008).           
|     | 
|4.2  |  | Services Agreement, dated January 1, 2010, between Controladora de Servicios de Telecomunicaciones, S.A. de C.V. and Carso Global Telecom, S.A.B. de C.V. (English
translation).                                                                                                                                                         
|     | 
|4.3  |  | Service Agreement for Management and Operation, dated January 1, 2009, between Controladora de Servicios de Telecomunicaciones, S.A. de C.V. and AT&T México, Inc.
(English Translation) (incorporated by reference to the annual report on Form 20-F of Telmex Internacional, S.A.B. de C.V. (File No. 1-34086) filed on June 26, 2009).
|     | 
|8.1  |  | List of significant subsidiaries of Telmex Internacional, S.A.B. de C.V.                                                                                                                                                                                                                                                                 
|     | 
|12.1 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                 
|     | 
|12.2 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                 
|     | 
|13.1 |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                 

The exhibits do not include any instrument defining the rights of holders of long-term debt of the registrant or of its subsidiaries for
which consolidated or unconsolidated financial statements are required to be filed when under such instrument the total amount of securities authorized does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated
basis. The registrant agrees to furnish a copy of any such instrument to the SEC upon its request.



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INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                |  |     
|--------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                |  | Page
|Audited consolidated financial statements of Telmex Internacional, S.A.B. de C.V.                               |  |     
|                                                                                                                | 
|Report of Mancera, S.C.                                                                                         |  | F-1 
|                                                                                                                | 
|Consolidated Balance Sheets as of December 31, 2009 and 2008                                                    |  | F-2 
|                                                                                                                | 
|Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007                          |  | F-3 
|                                                                                                                | 
|Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2009, 2008 and 2007 |  | F-4 
|                                                                                                                | 
|Consolidated Statement of Cash Flows for the years ended December 31, 2009 and 2008                             |  | F-5 
|                                                                                                                | 
|Consolidated Statements of Changes in Financial Position for the year ended December 31, 2007                   |  | F-6 
|                                                                                                                | 
|Notes to the Audited Consolidated Financial Statements                                                          |  | F-7 



105



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Telmex Internacional, S.A.B. de C.V.

We have
audited the accompanying consolidated balance sheets of Telmex Internacional, S.A.B. de C.V. and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income and changes in stockholders equity for each
of the three years in the period ended December 31, 2009, the consolidated statements of cash flows for each of the two years in the period ended December 31, 2009 and the consolidated statement of changes in financial position for the
year ended December 31, 2007. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States of America). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Telmex Internacional, S.A.B. de C.V. and subsidiaries at December 31, 2009 and 2008, the consolidated results of their operations for each of the three years in the period ended
December 31, 2009, and their cash flows for each of the two years ended December 31, 2009 and changes in their financial position for the year ended December 31, 2007, in conformity with Mexican Financial Reporting Standards, which
differ in certain respects from U.S. generally accepted accounting principles (see Note 19 to the consolidated financial statements).

As
discussed in Note 2(z) to the financial statements, as of January 1, 2009, the Company adopted the new Mexican Financial Reporting Standards B-8, Consolidated and Combined Financial Statements, with the effects described therein. Also,
as discussed in Note 2 to the financial statements, as of January 1, 2008, the Company adopted the new Mexican Financial Reporting Standards B-10, Effects of Inflation; B-15, Foreign Currency Translation; and B-2, Statement of
Cash Flows, with the effects described therein.

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States of America), Telmex Internacional, S.A.B. de C.V.s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control  Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 23, 2010 expressed an unqualified opinion thereon.



Mancera, S.C.
A Member Practice of
Ernst & Young Global/s/ David Sitt CofradíaC.P.C. David Sitt Cofradía


Mexico City, Mexico

March 23, 2010



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands of Mexican pesos, see Note 2c)



|                                                                          |  |              |             |      |    |            
|------------------------------------------------------------------------- |  | ------------ | ----------- | ---- | -- | -----------
|                                                                          |  | December 31,
|                                                                          |  | 2009         |             | 2008
|Assets                                                                    |  |              |             |      |    |            
|Current assets:                                                           |  |              |             |      |    |            
|Cash and cash equivalents                                                 |  | P.           | 10,699,224  |      | P. | 7,510,575  
|Accounts receivable, net (Note 3)                                         |  |              | 20,462,805  |      |    | 20,290,321 
|Related parties (Note 4)                                                  |  |              | 4,000,119   |      |    | 2,465,259  
|Inventories for sale                                                      |  |              | 675,859     |      |    | 1,976,925  
|Prepaid expenses and other current assets                                 |  |              | 2,346,295   |      |    | 2,503,554  
|                                                                          |  |              |             |      |    |            
|Total current assets                                                      |  |              | 38,184,302  |      |    | 34,746,634 
|                                                                          |  |              |             |      |    |            
|Plant, property and equipment, net (Note 6)                               |  |              | 80,123,766  |      |    | 58,479,225 
|Inventories for operation of the telephone plant, net                     |  |              | 4,000,775   |      |    | 4,178,872  
|Licenses, trademarks and prepaid indefeasible rights of use, net (Note 7) |  |              | 14,556,572  |      |    | 6,071,282  
|Equity investments (Note 5)                                               |  |              | 16,766,564  |      |    | 11,193,739 
|Deferred taxes (Note 16)                                                  |  |              | 6,098,449   |      |    | 5,703,932  
|Goodwill, net (Note 5)                                                    |  |              | 14,399,481  |      |    | 11,006,692 
|Other non-current assets                                                  |  |              | 170,828     |      |    | 132,888    
|                                                                          |  |              |             |      |    |            
|Total assets                                                              |  | P.           | 174,300,737 |      | P. | 131,513,264
|                                                                          |  |              |             |      |    |            
|                                                                          |  |              |             |      |    |            
|Liabilities and Stockholders equity                                      |  |              |             |      |    |            
|Current liabilities:                                                      |  |              |             |      |    |            
|Short-term debt and current portion of long-term debt (Note 8)            |  | P.           | 12,667,266  |      | P. | 14,727,645 
|Accounts payable and accrued liabilities (Note 12)                        |  |              | 15,966,673  |      |    | 14,182,719 
|Related parties (Note 4)                                                  |  |              | 3,320,070   |      |    | 2,227,341  
|Taxes payable                                                             |  |              | 468,842     |      |    | 264,457    
|Deferred credits (Note 11)                                                |  |              | 4,494,451   |      |    | 4,009,739  
|Employee benefits (Note 14)                                               |  |              | 1,522,305   |      |    | 1,223,828  
|                                                                          |  |              |             |      |    |            
|Total current liabilities                                                 |  |              | 38,439,607  |      |    | 36,635,729 
|                                                                          |  |              |             |      |    |            
|Long-term debt (Note 8)                                                   |  |              | 21,310,434  |      |    | 10,894,623 
|Employee benefits (Note 14)                                               |  |              | 2,778,593   |      |    | 2,285,105  
|Deferred credits long-term (Note 11)                                      |  |              | 4,991,473   |      |    |           
|Deferred taxes (Note 16)                                                  |  |              | 7,295,658   |      |    | 1,572,557  
|                                                                          |  |              |             |      |    |            
|Total liabilities                                                         |  |              | 74,815,765  |      |    | 51,388,014 
|                                                                          |  |              |             |      |    |            
|                                                                          |  |              |             |      |    |            
|Stockholders equity (Note 15):                                           |  |              |             |      |    |            
|Capital stock                                                             |  |              | 16,977,642  |      |    | 17,172,810 
|Other capital contributions                                               |  |              | 38,037,900  |      |    | 38,037,900 
|Retained earnings:                                                        |  |              |             |      |    |            
|Prior years                                                               |  |              | 11,215,607  |      |    | 11,518,574 
|Current year                                                              |  |              | 9,104,501   |      |    | 5,535,476  
|                                                                          |  |              |             |      |    |            
|                                                                          |  |              | 20,320,108  |      |    | 17,054,050 
|Accumulated other comprehensive income items (Note 2r)                    |  |              | 20,400,517  |      |    | 5,531,032  
|                                                                          |  |              |             |      |    |            
|Majority stockholders equity                                             |  |              | 95,736,167  |      |    | 77,795,792 
|Non-controlling interest                                                  |  |              | 3,748,805   |      |    | 2,329,458  
|                                                                          |  |              |             |      |    |            
|Total stockholders equity                                                |  |              | 99,484,972  |      |    | 80,125,250 
|                                                                          |  |              |             |      |    |            
|Total liabilities and stockholders equity                                |  | P.           | 174,300,737 |      | P. | 131,513,264
|                                                                          |  |              |             |      |    |            

The accompanying notes are an integral part of these financial
statements.



F-2



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands of Mexican pesos, except earnings per share, see Note 2c)



|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ---------- | - | ---- | -- | ---------- | ---- |  | -- | ---------- | -
|                                                                                                                                                                             |  | Year endedDecember 31, |           
|                                                                                                                                                                             |  | 2009                   |            |   | 2008 |    |            | 2007 | 
|Operating revenues:                                                                                                                                                          |  |                        |            |   |      |    |            |      |  |    |            |  
|Domestic long-distance service                                                                                                                                               |  | P.                     | 31,514,115 |   |      | P. | 28,298,510 |      |  | P. | 27,083,640 |  
|Corporate networks                                                                                                                                                           |  |                        | 21,744,480 |   |      |    | 16,757,327 |      |  |    | 15,390,235 |  
|Local service                                                                                                                                                                |  |                        | 15,255,365 |   |      |    | 10,593,515 |      |  |    | 7,873,585  |  
|Yellow pages                                                                                                                                                                 |  |                        | 4,930,218  |   |      |    | 5,518,778  |      |  |    | 5,638,733  |  
|Internet access services                                                                                                                                                     |  |                        | 8,017,708  |   |      |    | 5,496,491  |      |  |    | 4,381,169  |  
|International long-distance service                                                                                                                                          |  |                        | 3,362,373  |   |      |    | 3,294,264  |      |  |    | 3,604,967  |  
|Pay television                                                                                                                                                               |  |                        | 5,354,872  |   |      |    | 3,202,715  |      |  |    | 1,043,879  |  
|Other                                                                                                                                                                        |  |                        | 2,360,955  |   |      |    | 2,843,141  |      |  |    | 2,743,963  |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        | 92,540,086 |   |      |    | 76,004,741 |      |  |    | 67,760,171 |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Operating costs and expenses:                                                                                                                                                |  |                        |            |   |      |    |            |      |  |    |            |  
|Transport and interconnection                                                                                                                                                |  |                        | 32,725,808 |   |      |    | 26,925,068 |      |  |    | 23,649,023 |  
|Cost of sales and services                                                                                                                                                   |  |                        | 15,695,224 |   |      |    | 12,047,733 |      |  |    | 9,802,648  |  
|Commercial, administrative and general expenses                                                                                                                              |  |                        | 21,540,979 |   |      |    | 19,141,283 |      |  |    | 16,207,483 |  
|Depreciation and amortization (Notes 6 and 7) (includes P. 9,406,928 in 2009, P. 7,247,610 in 2008 and P. 6,285,879 in 2007, not
included in the cost of sales and services) |  |                        | 11,526,288 |   |      |    | 8,967,605  |      |  |    | 7,770,805  |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        | 81,488,299 |   |      |    | 67,081,689 |      |  |    | 57,429,959 |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Operating income                                                                                                                                                             |  |                        | 11,051,787 |   |      |    | 8,923,052  |      |  |    | 10,330,212 |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Other expense, net                                                                                                                                                           |  |                        | 47,973     |   |      |    | 102,434    |      |  |    | 242,692    |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Financing cost:                                                                                                                                                              |  |                        |            |   |      |    |            |      |  |    |            |  
|Interest income                                                                                                                                                              |  |                        | (1,085,044 | ) |      |    | (1,265,849 | )    |  |    | (1,216,707 | )
|Interest expense                                                                                                                                                             |  |                        | 2,365,641  |   |      |    | 1,508,463  |      |  |    | 1,630,535  |  
|Exchange (gain) loss, net                                                                                                                                                    |  |                        | (2,372,766 | ) |      |    | 1,878,262  |      |  |    | 3,107      |  
|Monetary gain, net                                                                                                                                                           |  |                        |           |   |      |    |           |      |  |    | (140,781   | )
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        | (1,092,169 | ) |      |    | 2,120,876  |      |  |    | 276,154    |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Equity interest in net income of affiliates                                                                                                                                  |  |                        | 1,889,386  |   |      |    | 190,519    |      |  |    | 689,075    |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Income before income tax                                                                                                                                                     |  |                        | 13,985,369 |   |      |    | 6,890,261  |      |  |    | 10,500,441 |  
|Income tax (Note 16)                                                                                                                                                         |  |                        | 4,422,481  |   |      |    | 1,259,333  |      |  |    | 3,486,763  |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Net income                                                                                                                                                                   |  | P.                     | 9,562,888  |   |      | P. | 5,630,928  |      |  | P. | 7,013,678  |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Distribution of net income:                                                                                                                                                  |  |                        |            |   |      |    |            |      |  |    |            |  
|Majority interest                                                                                                                                                            |  | P.                     | 9,104,501  |   |      | P. | 5,535,476  |      |  | P. | 6,463,834  |  
|Non-controlling interest                                                                                                                                                     |  |                        | 458,387    |   |      |    | 95,452     |      |  |    | 549,844    |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  | P.                     | 9,562,888  |   |      | P. | 5,630,928  |      |  | P. | 7,013,678  |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Weighted average number of shares issued and outstanding (millions)                                                                                                          |  |                        | 18,157     |   |      |    | 18,596     |      |  |    | 19,766     |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  
|Earnings per share                                                                                                                                                           |  | P.                     | 0.50       |   |      | P. | 0.30       |      |  | P. | 0.33       |  
|                                                                                                                                                                             |  |                        |            |   |      |    |            |      |  |    |            |  

The accompanying notes are an integral part of these financial statements.



F-3



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders Equity

For the years ended December 31, 2009, 2008 and 2007

(In thousands of Mexican pesos, see Note 2c)



|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|---------------------------------------------------------------- |  | ----------------- | ----------- | - | ------------- | -- | ---------- | -------------------------- |  | ----------------- | ---------- |  | ----------------------------------------- | ---------- | - | -------------------------------- | -- | ---------- | ----------------------- |  | -- | ------------------- | - |  | ------------------------ | --------- | - |  | -- | ---------- | - |  | -- | ---------- | -
|                                                                 |  | Parent
investment |             |   | Capital
stock |    |            | Other capitalcontributions |  | Retained earnings |            |  | Accumulatedothercomprehensiveincome items |            |   | Totalmajoritystockholdersequity |    |            | Non-controllinginterest |  |    | Comprehensiveincome |   |  | Totalstockholdersequity |          
|                                                                 |  |                   |             |  
|Balance at December 31, 2006                                     |  | P.                | 35,620,168  |   |               | P. |           |                            |  | P.                |           |  | P.                                        | 11,885,458 |   |                                  | P. | 10,715,509 |                         |  | P. | 58,221,135          |   |  | P.                       | 3,475,639 |   |  | P. |           |   |  | P. | 61,696,774 |  
|Increase in parent investment                                    |  |                   | 19,990,005  |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    | 19,990,005          |   |  |                          |           |   |  |    |            |   |  |    | 19,990,005 |  
|Effect of split-up                                               |  |                   | (55,610,173 | ) |               |    | 17,828,563 |                            |  |                   | 37,781,610 |  |                                           |            |   |                                  |    |            |                         |  |    |                    |   |  |                          |           |   |  |    |            |   |  |    |           |  
|Cash dividend paid to non-controlling interest in subsidiary     |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                    |   |  |                          | (122,703  | ) |  |    |            |   |  |    | (122,703   | )
|Acquisition of non-controlling interest                          |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | 9,414      |   |                                  |    |            |                         |  |    | 9,414               |   |  |                          | (388,348  | ) |  |    |            |   |  |    | (378,934   | )
|Gain on dilution of investment in affiliate                      |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | 1,840,815  |   |                                  |    |            |                         |  |    | 1,840,815           |   |  |                          |           |   |  |    |            |   |  |    | 1,840,815  |  
|Comprehensive income:                                            |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Net income of the year                                           |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | 6,463,834  |   |                                  |    |            |                         |  |    | 6,463,834           |   |  |                          | 549,844   |   |  | P. | 7,013,678  |   |  |    | 7,013,678  |  
|Other comprehensive income items:                                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Effect of translation of foreign entities                        |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | 652,182    |                         |  |    | 652,182             |   |  |                          | 70,482    |   |  |    | 722,664    |   |  |    | 722,664    |  
|Effect of labor obligations, net of deferred taxes               |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | (33,610    | )                       |  |    | (33,610             | ) |  |                          |           |   |  |    | (33,610    | ) |  |    | (33,610    | )
|Deficit from holding non-monetary assets, net of deferred taxes  |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | (4,251,420 | )                       |  |    | (4,251,420          | ) |  |                          | (943,013  | ) |  |    | (5,194,433 | ) |  |    | (5,194,433 | )
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Comprehensive income                                             |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  | P. | 2,508,299  |   |  |    |            |  
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            | 
|Balance at December 31, 2007                                     |  |                   |            |   |               |    | 17,828,563 |                            |  |                   | 37,781,610 |  |                                           | 20,199,521 |   |                                  |    | 7,082,661  |                         |  |    | 82,892,355          |   |  |                          | 2,641,901 |   |  |    |            |   |  |    | 85,534,256 |  
|Effect of adopting Mexican FRS B-10, net of deferred taxes       |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | (2,048,626 | ) |                                  |    | 2,048,626  |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |           |  
|Effect of adopting Mexican FRS D-3                               |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | 75,360     |                         |  |    | 75,360              |   |  |                          |           |   |  |    |            |   |  |    | 75,360     |  
|Dividend declared                                                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | (2,786,482 | ) |                                  |    |            |                         |  |    | (2,786,482          | ) |  |                          |           |   |  |    |            |   |  |    | (2,786,482 | )
|Cash purchase of Companys own shares                            |  |                   |             |   |               |    | (655,753   | )                          |  |                   | 256,290    |  |                                           | (3,845,839 | ) |                                  |    |            |                         |  |    | (4,245,302          | ) |  |                          |           |   |  |    |            |   |  |    | (4,245,302 | )
|Cash dividends paid to non-controlling interest in subsidiary    |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          | (195,208  | ) |  |    |            |   |  |    | (195,208   | )
|Comprehensive income:                                            |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Net income of the year                                           |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | 5,535,476  |   |                                  |    |            |                         |  |    | 5,535,476           |   |  |                          | 95,452    |   |  | P. | 5,630,928  |   |  |    | 5,630,928  |  
|Other comprehensive income items:                                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Effect of translation of foreign entities, net of deferred taxes |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | (3,675,615 | )                       |  |    | (3,675,615          | ) |  |                          | (212,687  | ) |  |    | (3,888,302 | ) |  |    | (3,888,302 | )
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Comprehensive income                                             |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  | P. | 1,742,626  |   |  |    |            |  
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            | 
|Balance at December 31, 2008 (Note 15)                           |  |                   |            |   |               |    | 17,172,810 |                            |  |                   | 38,037,900 |  |                                           | 17,054,050 |   |                                  |    | 5,531,032  |                         |  |    | 77,795,792          |   |  |                          | 2,329,458 |   |  |    |            |   |  |    | 80,125,250 |  
|Dividend declared                                                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | (3,098,073 | ) |                                  |    |            |                         |  |    | (3,098,073          | ) |  |                          |           |   |  |    |            |   |  |    | (3,098,073 | )
|Cash purchase of Companys own shares                            |  |                   |             |   |               |    | (195,168   | )                          |  |                   |            |  |                                           | (2,294,732 | ) |                                  |    |            |                         |  |    | (2,489,900          | ) |  |                          |           |   |  |    |            |   |  |    | (2,489,900 | )
|Cash dividends paid to non-controlling interest in subsidiary    |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          | (52,291   | ) |  |    |            |   |  |    | (52,291    | )
|Transaction between entities under common control                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | (445,638   | ) |                                  |    |            |                         |  |    | (445,638            | ) |  |                          | 221,011   |   |  |    |            |   |  |    | (224,627   | )
|Comprehensive income:                                            |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Net income of the year                                           |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           | 9,104,501  |   |                                  |    |            |                         |  |    | 9,104,501           |   |  |                          | 458,387   |   |  | P. | 9,562,888  |   |  |    | 9,562,888  |  
|Other comprehensive income items:                                |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Effect of translation of foreign entities, net of deferred taxes |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    | 14,869,485 |                         |  |    | 14,869,485          |   |  |                          | 792,240   |   |  |    | 15,661,725 |   |  |    | 15,661,725 |  
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  |    |            |   |  |    |            |  
|Comprehensive income                                             |  |                   |             |   |               |    |            |                            |  |                   |            |  |                                           |            |   |                                  |    |            |                         |  |    |                     |   |  |                          |           |   |  | P. | 25,224,613 |   |  |    |            |  
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            | 
|Balance at December 31, 2009 (Note 15)                           |  | P.                |            |   |               | P. | 16,977,642 |                            |  | P.                | 38,037,900 |  | P.                                        | 20,320,108 |   |                                  | P. | 20,400,517 |                         |  | P. | 95,736,167          |   |  | P.                       | 3,748,805 |   |  |    |            |   |  | P. | 99,484,972 |  
|                                                                 |  |                   |             |   |               |    |            |                            |  |                   |            | 

The accompanying notes are an integral part of these financial statements.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands of Mexican pesos, see Note 2c)



|                                                            |  |                         |             |   |      |    |             |  
|----------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | -- | ----------- | -
|                                                            |  | Year ended December 31, |            
|                                                            |  | 2009                    |             |   | 2008 |   
|Operating activities                                        |  |                         |             |   |      |    |             |  
|Income before income tax                                    |  | P.                      | 13,985,369  |   |      | P. | 6,890,261   |  
|Items not requiring the use of cash:                        |  |                         |             |   |      |    |             |  
|Depreciation and amortization                               |  |                         | 11,526,288  |   |      |    | 8,967,605   |  
|Net period cost of labor obligations                        |  |                         | 39,243      |   |      |    | 48,611      |  
|Exchange (gain) loss, net                                   |  |                         | (2,566,789  | ) |      |    | 1,556,944   |  
|Accrued interest expense                                    |  |                         | 2,365,641   |   |      |    | 1,508,463   |  
|Equity interest in net income of affiliates                 |  |                         | (1,889,386  | ) |      |    | (190,519    | )
|Changes in operating assets and liabilities:                |  |                         |             |   |      |    |             |  
|Decrease (increase) in:                                     |  |                         |             |   |      |    |             |  
|Accounts receivable                                         |  |                         | 84,757      |   |      |    | (2,821,747  | )
|Inventories for sale                                        |  |                         | 1,006,697   |   |      |    | (959,703    | )
|Other accounts receivable and other assets                  |  |                         | 1,791,488   |   |      |    | 1,915,543   |  
|(Decrease) increase in:                                     |  |                         |             |   |      |    |             |  
|Accounts payable and accrued liabilities                    |  |                         | (747,500    | ) |      |    | (910,213    | )
|Other liabilities                                           |  |                         | (2,441,721  | ) |      |    | (279,560    | )
|Income tax paid                                             |  |                         | (3,468,314  | ) |      |    | (1,627,237  | )
|Benefits paid to employees                                  |  |                         | 39,035      |   |      |    | (21,810     | )
|                                                            |  |                         |             |   |      |    |             |  
|Net cash flow provided by operating activities              |  |                         | 19,724,808  |   |      |    | 14,076,638  |  
|                                                            |  |                         |             |   |      |    |             |  
|                                                            |  |                         |             |   |      |    |             |  
|Investing activities                                        |  |                         |             |   |      |    |             |  
|Acquisition of property, plant and equipment                |  |                         | (15,818,370 | ) |      |    | (18,317,821 | )
|Investment in intangibles                                   |  |                         | (2,369,349  | ) |      |    | (1,510,908  | )
|Investment in affiliated company                            |  |                         | (156,401    | ) |      |    | (200,600    | )
|Acquisition of companies                                    |  |                         | (324,910    | ) |      |    | (507,340    | )
|                                                            |  |                         |             |   |      |    |             |  
|Net cash flow used in investing activities                  |  |                         | (18,669,030 | ) |      |    | (20,536,669 | )
|                                                            |  |                         |             |   |      |    |             |  
|                                                            |  |                         |             |   |      |    |             |  
|Net cash flow before financing activities                   |  |                         | 1,055,778   |   |      |    | (6,460,031  | )
|                                                            |  |                         |             |   |      |    |             |  
|                                                            |  |                         |             |   |      |    |             |  
|Financing activities                                        |  |                         |             |   |      |    |             |  
|New loans                                                   |  |                         | 28,093,304  |   |      |    | 12,812,577  |  
|Repayment of loans                                          |  |                         | (20,196,990 | ) |      |    | (6,583,944  | )
|Derivative financial instruments                            |  |                         | 571,348     |   |      |    | (528,868    | )
|Dividends paid                                              |  |                         | (3,000,328  | ) |      |    | (2,786,482  | )
|Interest paid                                               |  |                         | (1,976,135  | ) |      |    | (1,488,959  | )
|Dividend paid to non-controlling stockholders in subsidiary |  |                         | (21,628     | ) |      |    | (195,208    | )
|Acquisition of non-controlling interest                     |  |                         | (106,250    | ) |      |    |            |  
|Repurchase of shares                                        |  |                         | (2,489,900  | ) |      |    | (4,245,302  | )
|                                                            |  |                         |             |   |      |    |             |  
|Net cash flow generated (used) in financing activities      |  |                         | 873,421     |   |      |    | (3,016,186  | )
|                                                            |  |                         |             |   |      |    |             |  
|                                                            |  |                         |             |   |      |    |             |  
|Net increase (decrease) in cash and cash equivalents        |  |                         | 1,929,199   |   |      |    | (9,476,217  | )
|Effect of changes in cash and cash equivalents value        |  |                         | 1,259,450   |   |      |    | (281,011    | )
|Cash and cash equivalents at beginning of year              |  |                         | 7,510,575   |   |      |    | 17,267,803  |  
|                                                            |  |                         |             |   |      |    |             |  
|Cash and cash equivalents at end of year                    |  | P.                      | 10,699,224  |   |      | P. | 7,510,575   |  
|                                                            |  |                         |             |   |      |    |             |  

The accompanying notes are an integral part of these financial statements.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated Statement of Changes in Financial Position

(In thousands of Mexican pesos, see Note 2c)



|                                                                                            |  |                            |             |  
|------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | -
|                                                                                            |  | Year endedDecember 31,2007 |            
|Operating activities                                                                        |  |                            |             |  
|Net income                                                                                  |  | P.                         | 7,013,678   |  
|Add (deduct) items not requiring the use of resources:                                      |  |                            |             |  
|Depreciation                                                                                |  |                            | 6,436,751   |  
|Amortization                                                                                |  |                            | 1,334,054   |  
|Deferred taxes                                                                              |  |                            | 1,430,443   |  
|Equity interest in net income of affiliates                                                 |  |                            | (689,075    | )
|Net period cost of labor obligations                                                        |  |                            | 145,575     |  
|                                                                                            |  |                            |             |  
|                                                                                            |  |                            | 15,671,426  |  
|Changes in operating assets and liabilities:                                                |  |                            |             |  
|Decrease (increase) in:                                                                     |  |                            |             |  
|Accounts receivable                                                                         |  |                            | 2,032,933   |  
|Related parties, net                                                                        |  |                            | (981,293    | )
|Inventories for sale                                                                        |  |                            | (939,106    | )
|Prepaid expenses and others                                                                 |  |                            | (427,157    | )
|Decrease in:                                                                                |  |                            |             |  
|Labor obligations:                                                                          |  |                            |             |  
|Contributions to trust fund                                                                 |  |                            | (338        | )
|Payments to employees                                                                       |  |                            | (13,184     | )
|Accounts payable and accrued liabilities                                                    |  |                            | (414,034    | )
|Taxes payable                                                                               |  |                            | (408,691    | )
|Deferred credits                                                                            |  |                            | (26,628     | )
|                                                                                            |  |                            |             |  
|Resources provided by operating activities                                                  |  |                            | 14,493,928  |  
|                                                                                            |  |                            |             |  
|                                                                                            |  |                            |             |  
|Financing activities                                                                        |  |                            |             |  
|New loans                                                                                   |  |                            | 5,280,218   |  
|Repayment of loans                                                                          |  |                            | (3,771,268  | )
|Effect of exchange rate fluctuation and variance in re-expression of debt to constant pesos |  |                            | (3,816,533  | )
|Increase in holding company investment                                                      |  |                            | 19,990,005  |  
|Cash dividend paid to non-controlling stockholders in subsidiaries                          |  |                            | (147,979    | )
|                                                                                            |  |                            |             |  
|Resources provided by financing activities                                                  |  |                            | 17,534,443  |  
|                                                                                            |  |                            |             |  
|                                                                                            |  |                            |             |  
|Investing activities                                                                        |  |                            |             |  
|Plant, property and equipment                                                               |  |                            | (12,180,470 | )
|Licenses and trademarks                                                                     |  |                            | (849,763    | )
|Inventories for operation of the telephone plant                                            |  |                            | (623,430    | )
|Subsidiaries and affiliated companies, net                                                  |  |                            | (8,364,691  | )
|Initial balance of cash investments in subsidiaries                                         |  |                            | 352,276     |  
|                                                                                            |  |                            |             |  
|Resources used in investing activities                                                      |  |                            | (21,666,078 | )
|                                                                                            |  |                            |             |  
|                                                                                            |  |                            |             |  
|Net increase in cash and cash equivalents                                                   |  |                            | 10,362,293  |  
|Cash and cash equivalents at beginning of year                                              |  |                            | 6,905,510   |  
|                                                                                            |  |                            |             |  
|Cash and cash equivalents at end of year                                                    |  | P.                         | 17,267,803  |  
|                                                                                            |  |                            |             |  

The accompanying notes are an integral part of this financial statement.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|1. | Incorporation and Description of the Business
|-- | ---------------------------------------------

a) Incorporation

Telmex
Internacional, S.A.B. de C.V. and subsidiaries (collectively the Company or Telmex Internacional) was incorporated under Mexican law on December 26, 2007 as a result of the split-up of Teléfonos de México, S.A.B. de C.V. (Telmex),
at which time each of the holders of Telmexs shares became the owner of an equal number of Telmex Internacionals shares of the corresponding class. Carso Global Telecom, S.A.B. de C.V. (Carso Global Telecom) holds the majority of the
Companys voting shares (71.6% as of December 31, 2009).

The split-up of the entities comprising Telmex
Internacional, S.A.B. de C.V. and its subsidiaries was approved by Telmexs stockholders at the extraordinary stockholders meeting held on December 21, 2007. On December 26, 2007, Telmex contributed all of the outstanding shares
of Controladora de Servicios de Telecomunicaciones, S.A. de C.V. (Telmexs former subholding company) to Telmex Internacional. The split-up was implemented using a procedure under Mexican corporate law called escision or split-up.

All of the entities that comprise Telmex Internacional have been operating on a stand-alone basis. Costs incurred or paid by Telmex on
behalf of the split-up entities prior to the split-up were charged to each entity.

Ongoing relationships between Telmex and
Telmex Internacional after the split-up are limited to: i) ordinary commercial relationships arising in the normal course of business; ii) agreements relating to the execution of the split-up such as indemnification, assistance in obtaining
consents, exchange of information, covenants relating to the tax treatment of the split-up and similar matters; and iii) administrative service agreements. Telmex provides Telmex Internacional these services at a fixed price based on the specific
costs plus a percentage.

Prior to its incorporation, the operations of Telmex Internacional were conducted through
subsidiaries of Telmex. The accompanying financial statements for these periods are presented on a consolidated basis prepared from Telmexs historical accounting records, and include the historical operations of the entities transferred to
Telmex Internacional by Telmex in the split-up. Telmex and its subsidiaries net investment in Telmex Internacional and its subsidiaries have been included in these financial statements at Telmexs cost plus its equity in the undistributed
earnings or losses of the contributed entities.

On January 13, 2010, América Móvil, S.A.B. de C.V.
(América Móvil) announced an exchange offer to the shareholders of Carso Global Telecom, S.A.B. de C.V. (Telmex Internacionals controlling stockholder) to acquire 100% of Carso Global Telecom, through which América
Móvil would acquire indirectly 59.4% of the outstanding shares of Telmex and 60.7% of the outstanding shares of Telmex Internacional. América Móvil also announced its intention to file an offering for the exchange or purchase of
all of Telmex Internacionals shares that are not already owned by Carso Global Telecom (39.3%).

In the event that, at
completion of the processes described above, a sufficient number of shares are obtained, América Móvil has indicated that it intends to delist both Carso Global Telecom and Telmex Internacional from the various securities markets in
which their shares are registered.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



On February 11, 2010 the majority of the board of the Mexican Antitrust Regulator
(Comisión Federal de Competencia) unconditionally authorized América Móvil to carry out an offer to purchase all outstanding shares of Carso Global Telecom with a reciprocal subscription of América Móvils
shares, and an offer to purchase all outstanding shares of Telmex Internacional, with a reciprocal subscription of América Móvils shares.

b) Description of the Business

Telmex Internacional is engaged in providing a wide range of telecommunications services, including voice, data and video transmission,
internet access, subscription television and integrated telecommunications solutions through its subsidiaries in Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Uruguay, as well as services related to yellow pages directories in Mexico, the
United States, Colombia, Argentina and Peru.

An analysis of the principal subsidiaries and affiliated companies at
December 31, 2009, 2008 and 2007 follows:



|                                                                          |  |           |  |                                  |      |  |       |      |  |       |     
|------------------------------------------------------------------------- |  | --------- |  | -------------------------------- | ---- |  | ----- | ---- |  | ----- | ----
|                                                                          |  |           |  | % equity interest at December 31 |     
|Company                                                                   |  | Country   |  | 2009                             |      |  | 2008  |      |  | 2007  |     
|Subsidiaries:                                                             |  |           |  |                                  |      |  |       |      |  |       |     
|Controladora de Servicios de Telecomunicaciones, S.A. de C.V. (Consertel) |  | Mexico    |  | 100.0                            | %    |  | 100.0 | %    |  | 100.0 | %   
|Soporte de Servicios Integrales, S.A. de C.V.                             |  | Mexico    |  | 100.0                            |      |  | 100.0 |      |  |      |     
|Latam Servicios Integrales, S.A. de C.V.                                  |  | Mexico    |  | 100.0                            |      |  | 100.0 |      |  |      |     
|Soporte Comercial de Latam Negocios, S.A. de C.V.                         |  | Mexico    |  | 100.0                            |      |  | 100.0 |      |  |      |     
|Contenido Cultural y Educativo, S.A. de C.V.                              |  | Mexico    |  | 100.0                            | (1)  |  |      |      |  |      |     
|Anuncios en Directorios, S.A. de C.V.                                     |  | Mexico    |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Sección Amarilla USA, LLC (SAUSA)                                         |  | U.S.A.    |  | 100.0                            |      |  | 80.0  |      |  | 80.0  |     
|Embratel Participações, S.A. (Embrapar)                                   |  | Brazil    |  | 98.1                             |      |  | 98.0  |      |  | 98.0  |     
|Empresa Brasileira de Telecomunicações S.A. (Embratel)                    |  | Brazil    |  | 97.3                             |      |  | 97.2  |      |  | 97.0  |     
|Star One, S.A.                                                            |  | Brazil    |  | 77.8                             |      |  | 77.8  |      |  | 77.6  |     
|Primesys Soluçoes Empresariais, S.A.                                      |  | Brazil    |  | 97.3                             |      |  | 97.2  |      |  | 97.0  |     
|Vésper S.A.                                                               |  | Brazil    |  |                                 | (2)  |  |      | (2)  |  | 97.0  |     
|Vésper São Paulo, S.A.                                                    |  | Brazil    |  |                                 | (2)  |  |      | (2)  |  | 97.0  |     
|Telmex do Brasil Ltda.                                                    |  | Brazil    |  | 98.1                             |      |  | 98.0  |      |  | 98.0  |     
|Metrored Holdings, S.R.L. (formerly MetroRed Telecomunicaciones S.R.L.)   |  | Argentina |  | 96.1                             |      |  | 95.7  |      |  | 95.0  |     
|Telmex Argentina, S.A.                                                    |  | Argentina |  | 96.7                             | (3)  |  | 96.4  | (3)  |  | 95.3  | (3) 
|Ertach, S.A.                                                              |  | Argentina |  | 96.9                             | (4)  |  | 96.8  | (4)  |  | 95.1  | (4) 
|Telmex Chile Holding, S.A.                                                |  | Chile     |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Telmex Corp S.A. (formerly Chilesat Corp S.A.)                            |  | Chile     |  | 99.7                             |      |  | 99.7  |      |  | 99.7  |     
|Telmex TV, S.A.                                                           |  | Chile     |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Superview Telecomunicaciones, S.A.                                        |  | Colombia  |  | 99.6                             |      |  | 99.6  |      |  | 99.6  |     
|Telmex Colombia, S.A.                                                     |  | Colombia  |  | 100.0                            | (5)  |  | 100.0 |      |  | 100.0 |     
|Network and Operation, S.A.                                               |  | Colombia  |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|The Now Operation, S.A.                                                   |  | Colombia  |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Megacanales, S.A.                                                         |  | Colombia  |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Cablecaribe, S.A.                                                         |  | Colombia  |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|New Dinamic Company, S.A.                                                 |  | Colombia  |  | 100.0                            |      |  | 100.0 |      |  |      |     
|Telmex Perú, S.A.                                                         |  | Peru      |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Boga Comunicaciones, S.A.                                                 |  | Peru      |  |                                 | (6)  |  |      | (6)  |  | 100.0 |     
|Ecuador Telecom, S.A. (Ecutel)                                            |  | Ecuador   |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|Telstar, S.A.                                                             |  | Uruguay   |  | 100.0                            |      |  | 100.0 |      |  | 100.0 |     
|                                                                          |  |           |  |                                 
|Affiliated companies:                                                     |  |           |  |                                  |      |  |       |      |  |       |     
|Net Serviços de Comunicação S.A. (Net)                                    |  | Brazil    |  | 34.6                             | %(7) |  | 34.6  | %(7) |  | 34.4  | %(7)
|Eidon Software, S.A. de C.V.                                              |  | Mexico    |  | 51.0                             | (1)  |  |      |      |  |      |     



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|(1) | Companies acquired in 2009 (see Note 5).
|--- | ----------------------------------------



|(2) | On February 29, 2008, these companies were merged into Embratel.
|--- | ----------------------------------------------------------------



|(3) | Corresponds to the indirect equity interest of Telmex Internacional in Telmex Argentina; the direct equity interest of Metrored Holdings, S.R.L. and Controladora de
Servicios de Telecomunicaciones, S.A. de C.V. in Telmex Argentina, S.A. is 100%.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Corresponds to the indirect equity interest of Telmex Internacional in Ertach; the direct equity interest of Metrored Holdings, S.R.L. and Controladora de Servicios
de Telecomunicaciones, S.A. de C.V. in Ertach is 100%.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | On September 21, 2009 Telmex Hogar, S.A. was merged into Telmex Colombia, S.A.
|--- | ------------------------------------------------------------------------------



|(6) | On February 1, 2008, Boga Comunicaciones was merged into Telmex Perú.
|--- | ---------------------------------------------------------------------



|(7) | Corresponds to the direct and indirect equity interest of Telmex Internacional in Net; the direct and indirect equity interest of Embratel
Participações S.A. in Net at December 31, 2009 and 2008 is 35.3% (35.1% in 2007).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenues are obtained primarily from telecommunications services, which are comprised of local telephone services, domestic and
international long-distance services, as well as the interconnection of domestic long-distance operators, cellular telephone companies and local service operators networks with the Telmex Internacional local network and data
transmission to corporate networks, internet access, cable and satellite television and published and on-line telephone directories. Other revenues are obtained from the sale of telephone equipment principally.

Empresa Brasileira de Telecomunicações S.A. (Embratel) is the Companys most significant subsidiary. Embratel provides
domestic and international long-distance services, data transmission and other services, and through its subsidiary Star One S.A. (Star One), it provides satellite services. Both companies operate under two separate concessions granted by the
Brazilian federal government via the Brazilian Telecommunications Agency (ANATEL).

Under the terms of telecommunications
concessions in Brazil for domestic and international long-distance services starting January 1, 2006, Embratel obtained from the Federal Government a renewal for a 20-year term concession. The cost of this license is based on 2% of the total
annual revenues from switched telephone service of the year prior to when the license payment is due, net of taxes and social contributions, and is paid on a bi-annual basis. For the years ended December 31, 2009, 2008 and 2007, the cost was P.
319,981, P. 282,314 and P. 251,364, respectively, and is included in cost of sales and services. The satellite licenses are in effect through December 31, 2025, and the related license costs are paid by Star One based on a fixed annual payment
of approximately P. 13.0 million. Both concessions may be renewed upon expiration.

Additionally, Telmex Internacional, in
other countries, has authorization, licenses, permits and concessions (hereinafter collectively referred to as licenses) to build, install, operate and use both public and private telecommunications networks and provide telecommunication
services (long distance, fixed-line telephony, satellite service and cable television) in the countries in which the Company has presence, except for in the U.S. These licenses will expire on various dates between the years 2011 and 2025.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Some of these licenses require the payment to the respective governments of a share in
sales determined as a percentage of revenues from services under concession. The percentage is set as either a fixed rate or in some cases based on the number of channels in operation.

On March 2, 2010, the Companys Audit Committee, Chief Executive Officer, General Counsel and Chief Financial Officer
authorized the issuance of the accompanying consolidated financial statements and these notes as of December 31, 2009 and 2008, and for each of the three years in the period ended December 31, 2009, and Management evaluated subsequent
events through March 23, 2010.



|2. | Significant Accounting Policies
|-- | -------------------------------

The principal accounting policies followed by the Company in the preparation of the financial statements, which are in conformity with
Mexican Financial Reporting Standards (Mexican FRS), are described below:

a) Basis of consolidation and equity method

The consolidated financial statements include the accounts of Telmex Internacional, S.A.B. de C.V. and those of the subsidiaries over
which the Company exercises control. The financial statements of the subsidiaries have been prepared for the same reporting period and following the same accounting policies as those of the Company. All companies operate in the telecommunications
sector or provide services to companies operating in this sector.

Subsidiaries are fully consolidated from the month
following the date of acquisition, and cease to be consolidated when the Company no longer has control over the subsidiary.

The equity method of accounting is used for investments in affiliated companies over which the Company exercises significant influence.
This accounting method consists in general terms of recognizing the Companys proportionate share in the net income and the stockholders equity of the investee after their conversion to Mexican Financial Reporting Standards (see Note 5).

The gains and losses arising from issuances by investees of their own stock are recognized in stockholders equity.

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

b) Translation
of financial statements of foreign subsidiaries and affiliates

The financial statements of the subsidiaries and affiliates
located abroad were translated into Mexican pesos, as follows:

Beginning January 1, 2008, the Company adopted B-15
Foreign Currency Translation,which incorporates the concepts of recording currency, functional currency and reporting currency, and eliminates the concepts of integrated foreign operations and foreign entity established in Mexican accounting
Bulletin B-15. This standard also establishes new procedures for translating financial information of a companys foreign



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



operations from its recording currency to its functional currency, and from the functional currency to the reporting currency. The application of the changes of this standard resulted in a
decrease in the translation of foreign entities for 2008 of approximately P. 410,000. After the adoption, the financial statements prepared under Mexican Financial Reporting Standards reported by the subsidiaries and affiliates abroad in their
functional currency are translated as follows:

i) all assets and liabilities are translated at the prevailing exchange rate
at year-end;

ii) stockholders equity accounts are translated at the prevailing exchange rate at the time capital
contributions were made and earnings were generated;

iii) revenues, costs and expenses are translated using the weighted
average exchange rates;

iv) the difference resulting from the translation process is called Effect of translation of foreign
entities and is included in stockholders equity as part of the caption Accumulated other comprehensive income items; and

v) the statement of cash flows was translated using the weighted average exchange rate and the effect of exchange rate changes on cash
balances is separately presented in the statement of cash flows under the caption Effect of exchange rate fluctuations on cash flows.

Through December 31, 2007, the financial statements as reported by the foreign subsidiaries were converted to conform to Mexican
Financial Reporting Standards in the local currency, and subsequently restated to constant monetary values based on the inflation rate of the country in which the subsidiary operates.

Once the financial information of foreign subsidiaries and affiliates was expressed in each countrys currency in constant monetary
values as of December 31, 2007, the financial statements were translated into Mexican pesos as follows:

i) all assets
and liabilities were translated at the prevailing exchange rate at year-end;

ii) stockholders equity accounts were
translated at the prevailing exchange rate at the time capital contributions were made and earnings were generated;

iii)
income statement amounts were translated at the prevailing exchange rate at the end of the year being reported on;

iv)
exchange rate variances and effect of intercompany monetary items were recorded in the consolidated statements of income; and

v) the difference resulting from the translation process is called Effect of translation of foreign entities and was included in
stockholders equity as part of the caption Accumulated other comprehensive income items.

The statement of changes in
financial position for the year ended December 31, 2007 was prepared based on the financial statements expressed in constant Mexican pesos. The source and application of resources represent the differences between beginning and ending financial
statement balances in constant Mexican pesos. Monetary and foreign exchange gains and losses are considered cash items requiring the use of resources.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



c) Recognition of the effects of inflation on financial information

Mexican FRS B-10, Effects of Inflation,which became effective on January 1, 2008, and upon adoption, the Company ceased to
recognize the effects of inflation in its financial information because it currently operates in a non-inflationary economic environment.

However, even though the economic environment in 2007 qualified as being non-inflationary, Mexican accounting Bulletin B-10,
Accounting Recognition of the Effects of Inflation on Financial Information, was still effective. Accordingly, the financial statements for the year ended December 31, 2007 are presented in Mexican pesos with purchasing power at
December 31, 2007, while the 2009 and 2008 financial statements are expressed in nominal pesos, except for those non-monetary items that included inflation effects through December 31, 2007. Subsequent additions are recognized at
historical cost.

Capital stock, premium on sale of shares and retained earnings were restated for inflation through
December 31, 2007 based on the Mexican National Consumer Price Index (NCPI).

Through December 31, 2007, the deficit
from re-expression of stockholders equity consists of the accumulated monetary position loss of the Mexican subsidiaries at the time the provisions of Bulletin B-10 were first applied, and of the result from holding non-monetary assets, which
represents the difference between re-expression by the specific indexation method and re-expression based on the NCPI. At December 31, 2007, this item is included in stockholders equity under the Accumulated other comprehensive income
items caption. In conformity with Mexican FRS B-10, the cumulative result from holding non-monetary assets, together with the initial effect from the adoption of Bulletin B-10, was reclassified to retained earnings in 2008.

The net monetary position gain (loss) shown in the 2007 income statement represents the effect of inflation on monetary assets and
liabilities and is included as part of the caption Financing cost.

d) 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, and other service charges to subscribers.

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 rates authorized by the relevant regulatory bodies of each country. Revenues from international long-distance
service also include the revenues earned under agreements with foreign telephone service providers or operators for the use of facilities in interconnecting international calls. These agreements specify the rates for the use of such international
interconnecting facilities.

Revenues and expenses resulting from the sale of advertising in the telephone directory are
recognized ratably over the period the directory is in circulation, typically twelve months. Revenues from the sale of equipment are recorded when products are delivered.

Subscription television revenue includes fees from the subscription service, connection fees, and pay-per-view services. Revenue is
recorded in the month the services are provided.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Revenues related to the sale of capacity to the affiliate NET, under a long-term
indefeasible rights of use agreement, is recognized on a straight line basis over the five-year term.

e) Use of estimates

The preparation of financial statements in conformity with Mexican Financial Reporting Standards requires the use of estimates and
assumptions. Actual results could differ from these estimates.

f) Cash and cash equivalents

Cash and cash equivalents consist principally of bank deposits and highly liquid investments with original maturities of less than 90
days. Such investments are stated at acquisition cost plus accrued interest, which is similar to their market value.

g) 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. In order to reduce the risks due to exchange rate and interest rate fluctuations, the Company utilizes cross-currency interest rate
swaps to fix exchange rates and interest rates on foreign-currency denominated debt being hedged; however, the Company does not apply hedge accounting rules to its derivative financial instruments.

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 uses the fair values obtained from the financial institutions, as a reference to establish the basis for recognition of the derivative instruments. Changes in
the fair value of derivatives are recognized in the income statement.

h) Allowance for doubtful accounts

The allowance for doubtful accounts is computed using a statistical analysis based on the Companys past experience, current
delinquencies and economic trends. With respect to accounts due from operators, the Company makes individual estimates that reflect its evaluation of pending disputes over amounts owed.

The risk of uncollectibility from intercompany receivables is evaluated annually based on an examination of each related partys
financial situation and the markets in which they operate.

i) Inventories

Inventories for sale are valued using the average cost method and, through December 31, 2007, they were restated for inflation based
on the National Consumer Price Index of each country. The carrying value of inventories is not in excess of their net realizable value.

Inventories for the operation of the telephone plant are valued using the average cost method and, through December 31, 2007, were
restated for inflation on the basis of specific indexes. The carrying value of inventories is not in excess of their net realizable value.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



j) Plant, property and equipment

Beginning January 1, 2008 plant, property and equipment are recorded at acquisition cost. Through December 31, 2007, plant,
property and equipment acquired abroad were initially recorded at acquisition cost and were then restated for inflation based on the NCPI of each country, and acquisitions of imported telephone plant and equipment were restated based on the rate of
inflation of its country of origin and the prevailing exchange rate at the balance sheet date.

At December 31, 2007,
approximately 74% of the value of the plant, property and equipment was restated for inflation using specific indexation factors.

Depreciation is computed on the assets carrying values using the straight-line method, based on the estimated useful lives of the
related assets (see Note 6).

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.

For the years ended December 31,
2009, 2008 and 2007, there were no indicators of impairment in the Companys plant, property and equipment.

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

k) Leases

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.

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.

l) Licenses, Trademarks and Prepaid Indefeasible Rights of Use
(IRU)

The Company recognizes licenses at acquisition cost. Through December 31, 2007, licenses were restated based on
the rate of inflation of each country. The amortization period is based on the terms of the licenses, which range from 5 to 29 years (see Note 7).

The Company recognizes trademarks at their estimated fair values at the time of their acquisition. Through December 31, 2007,
trademarks were restated based on the rate of inflation of each country. The amortization is calculated using the straight-line method over periods ranging from one to ten years (see Note 7).



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The Company recognizes prepaid indefeasible rights of use (IRU) at acquisition cost. The
amortization is calculated using the straight-line method based on the terms of the agreements, which is 5 years.

The
carrying value of intangible assets with defined useful lives is reviewed whenever there are indications of impairment in the value of such assets. When there are indications of impairment in the value of intangible assets, the related loss is
determined based on the recoverable values of the related assets, which is defined as the higher of the assets net selling price or its value in use computed based on discounted cash flows. When the net carrying amount of an asset exceeds its
recoverable value, the difference is recognized as an impairment loss.

Intangible assets with indefinite useful lives,
including those that are not yet available for use, and intangible assets with defined useful lives whose amortization period exceeds 20 years from the date they were available for use, are tested for impairment at the end of each year.

During the years ended December 31, 2009, 2008 and 2007, no impairment losses in the carrying amount of licenses, trademarks and
prepaid rights of use have been recognized.

m) Business acquisitions and goodwill

Business acquisitions are recorded using the acquisition method. The acquisition of non-controlling interests is considered a transaction
between entities under common control and any difference between the purchase price and the book value of net assets acquired is recognized as an equity transaction.

Goodwill represents the difference between the acquisition cost and the fair value of the net assets acquired at the purchase date.
Goodwill is not amortized; however, it is subject to annual impairment tests, or whenever there are indicators of impairment, and adjusted for any impairment loss that may be determined (see Note 5). Effective January 1, 2009, the Company
adopted the changes in Mexican FRS B-8 Consolidated and Combined Financial Statements,in accordance with these changes, the goodwill is pushed-down to the subsidiaries and recorded in the subsidiaries functional currency
and translated into the parents reporting currency at year-end exchange rates. As a result of this adoption, the Company record an effect in goodwill and effect of translation of foreign entities of P. 3,388,371.

Impairment losses are recognized when the carrying amount of goodwill exceeds its recoverable value. Telmex Internacional determines the
recoverable value of goodwill based on its perpetuity value, which is computed by dividing the average excess in the value in use of the cash generating unit where the goodwill is identified, by the average of the appropriate discount rates used in
the determination of the present value of cash flows from the cash generating unit.

For the years ended December 31,
2009, 2008 and 2007, there was no impairment in the Companys goodwill.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



n) Provisions

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.

o) Employee benefits

The cost of pension benefits, seniority premiums, the medical assistance plan and legal termination payments (dismissals) are recognized
periodically during the years of service of personnel, based on actuarial computations made by independent actuaries, using the projected unit-credit method (see Note 14).

Contributions by the Company to the defined contribution plan are recognized as an expense.

As of January 1, 2008, the Company adopted Mexican FRS D-3 Employee Benefits, which replaced Mexican
accounting Bulletin D-3, Labor Obligations. As a result of the MFRS D-3 adoption, the transition liability for labor obligations at December 31, 2007 is being amortized over a maximum period of five years. Prior to
December 31, 2007, the transition liability was being amortized using the straight-line method over the estimated remaining working lifetime of Telmex Internacionals employees. Prior service costs and actuarial gains and losses are being
amortized over the estimated average remaining working lifetime of the Companys employees (see Note 14).

The
Company recognizes an accrual for the costs of paid absences, such as vacation time, based on the accrual method.

p) Employee profit
sharing

Current-year and deferred employee profit sharing is included in Other expenses, net in the income statement.

Beginning January 1, 2008, in connection with the adoption of Mexican FRS D-3, Employee Benefits, the Company
recognizes deferred employee profit sharing using the asset and liability method. Under this method, deferred profit sharing is computed by applying the 10% rate to all differences between the book and tax values of all assets and liabilities. The
Company periodically evaluates the possibility of recovering deferred employee profit sharing assets and, if necessary, creates a valuation allowance for those assets that do not have a high probability of being realized.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Through December 31, 2007, deferred employee profit sharing was recognized only on
temporary differences in the reconciliation of current year net income to taxable income for employee profit sharing purposes, only when there was an indication that the related liability or asset would be realized in the future.

q) Foreign currency transactions

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

See Note 13 for the Companys consolidated foreign currency position as of December 31, 2009 and 2008, and the exchange rates
used to translate foreign currency denominated balances.

r) Comprehensive income

Comprehensive income consists of the net income for the year, the effects of the translation of the financial statements of foreign
entities, the changes in the result from holding non-monetary assets (prior to 2008), the effect of labor obligations (prior to 2008) and the deferred taxes related to those items.

Accumulated other comprehensive income items as of December 31, 2009, 2008 and 2007, are comprised of the following:



|                                                   |  |      |            |   |      |    |            |      |  |    |            |  
|-------------------------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | ---- |  | -- | ---------- | -
|                                                   |  | 2009 |            |   | 2008 |    |            | 2007 | 
|Effect of translation of foreign entities          |  | P.   | 28,334,052 |   |      | P. | 7,707,843  |      |  | P. | 9,206,647  |  
|Deferred taxes                                     |  |      | (7,933,535 | ) |      |    | (2,176,811 | )    |  |    | 173,551    |  
|Deficit from re-expression of stockholders equity |  |      |           |   |      |    |           |      |  |    | (2,222,177 | )
|Labor obligations                                  |  |      |           |   |      |    |           |      |  |    | (75,360    | )
|                                                   |  |      |            |   |      |    |            |      |  |    |            |  
|                                                   |  | P.   | 20,400,517 |   |      | P. | 5,531,032  |      |  | P. | 7,082,661  |  
|                                                   |  |      |            |   |      |    |            |      |  |    |            |  

s) Income taxes

Deferred taxes on profits are recognized on all differences between the financial reporting and tax bases 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.

As a result of the adoption of Mexican FRS B-10, as of January 1, 2008, the financial statement amounts are no longer adjusted for
the effects of inflation. However, for income tax purposes the Company continues to recognize the effects of inflation on its reported taxable income as required by current Mexican tax legislation, as well as for determining its deferred income
taxes.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



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.

t) Income
statement presentation

Costs and expenses shown in the Companys income statement are presented on a combined basis
between their nature and function, in accordance with industry practice since such classification allows for an appropriate evaluation of gross profit and operating margins.

The Operating income caption is shown in the income statement since it is an important indicator used for evaluating the
Companys operating results.

u) Statement of Cash Flows

Effective January 1, 2008, the Company adopted Mexican FRS B-2 Statement of Cash Flows, which replaced Mexican accounting
Bulletin B-12, Statement of Changes in Financial Position. Accordingly, the statement of cash flows substituted the statement of changes in financial position. The main differences between both statements is that the statement of cash flows
shows the entitys cash inflows and outflows during the period, while the statement of changes in financial position shows the changes in the entitys financial structure. Also, the statement of cash flows first presents income before
taxes on profits, followed by cash flows from operating activities, then cash flows from investing activities and finally cash flows from financing activities.

The statement of cash flows for the years ended December 31, 2009 and 2008 were prepared using the indirect method. The statement of
cash flows is not comparable to the statement of changes in financial position for the year ended December 31, 2007.

v) Earnings per
share

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

For the year ended December 31, 2007, earnings per share have been determined by dividing net income by the weighted average number
of Telmexs outstanding shares, since the split-up ratio was 1:1.

w) Concentration of risk

The Companys principal financial instruments consist of bank loans, derivative financial instruments, capital leases and accounts
payable. The Company has other financial assets, such as accounts receivable and short-term deposits, 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.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



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.

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. 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 creditworthiness of its customers and does not require collateral to guarantee collection of its accounts receivable. In the event the Companys collection cycles deteriorate significantly, its results of
operations could be adversely affected.

A portion of excess cash is invested in time deposits in financial institutions with
strong credit ratings, and is therefore exposed to risk related to the viability of such financial institutions.

The Company
operates internationally and is therefore exposed to market risks related to fluctuations in exchange rates.

The Company
depends upon various key suppliers and vendors and accordingly, if any of these suppliers fail to provide the Company with services or equipment on a timely and cost effective basis, the Companys business and results of operations could be
adversely affected.

x) Segment information

Segment information is prepared based on information used by the Company in its decision-making processes, based on the geographical areas
in which it operates (see Note 18).

y) Reclassifications

Certain captions shown in the 2008 and 2007 financial statements as originally issued have been reclassified for uniformity of
presentation with the 2009 financial statements. An analysis of the effects of such reclassifications is as follows:



|                   |  |    |   |  |                          |            |                  |    |            |                     |  |    |           
|------------------ |  | -- | - |  | ------------------------ | ---------- | ---------------- | -- | ---------- | ------------------- |  | -- | ----------
|                   |  |    |   |  | As originally issued2008 |            | Reclassification |    |            | As reclassified2008
|Assets             |  |    |   |  |                          |            |                  |    |            |                     |  |    |           
|Equity investments |  | (1 | ) |  | P.                       | 5,714,639  |                  | P. | 5,479,100  |                     |  | P. | 11,193,739
|Goodwill, net      |  | (1 | ) |  |                          | 16,485,792 |                  |    | (5,479,100 | )                   |  |    | 11,006,692
|                   |  |    |   | 
|                   |  |    |   |  | As originally
issued2007 |            | Reclassification |    |            | As reclassified2007
|Assets             |  |    |   |  |                          |            |                  |    |            |                     |  |    |           
|Equity investments |  | (1 | ) |  | P.                       | 5,932,778  |                  | P. | 5,629,732  |                     |  | P. | 11,562,510
|Goodwill, net      |  | (1 | ) |  |                          | 16,297,953 |                  |    | (5,629,732 | )                   |  |    | 10,668,221



|(1) | Reclassification of Goodwill to Equity investments in accordance with the adoption of MFRS C-7.
|--- | -----------------------------------------------------------------------------------------------



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



z) New accounting pronouncements

i) Following is a discussion of the new accounting pronouncements issued by the Mexican Financial Reporting Standards Research and
Development Board (Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera, A.C. or CINIF) that became effective on January 1, 2009 and that affected the Companys accounting
policies:

Mexican FRS B-7,Business Combinations

In December 2008, the CINIF issued Mexican FRS B-7, which became effective for fiscal years beginning on or after January 1, 2009.
Mexican FRS B-7 replaces Mexican accounting Bulletin B-7, Business Combinations.

Both Mexican FRS B-7 and Mexican
accounting Bulletin B-7 require the application of the purchase method for the recognition of business combinations. However, unlike Mexican accounting Bulletin B-7, this new standard requires that all of the costs incurred in a business combination
be recognized in the operating results of the acquiring entity.

In certain cases, this standard allows transactions between
entities under common control to be treated as business combinations, unlike Mexican accounting Bulletin B-7, which required such transactions, without exceptions, to be recorded at book value. Regarding business combinations carried out in stages,
this standard also clarifies that the values recognized in the balance sheet of the buyer for its investment, net of any depreciation, amortization or impairment adjustments, are to be considered as part of the consideration paid (and not at their
fair value), when determining goodwill at the time control is acquired over the investee.

The adoption of this standard did
not have a material effect on the Companys financial statements and results of operations as of and for the year ended December 31, 2009.

Mexican FRS B-8,Consolidated and Combined Financial Statements

In November 2008, the CINIF issued Mexican FRS B-8, which is effective for fiscal years beginning on or after January 1, 2009.
Mexican FRS B-8 replaces Mexican accounting Bulletin B-8, Consolidated and Combined Financial Statements and the Valuation of Long-Term Equity Investments. Mexican FRS B-8 establishes the overall guidelines for preparing and presenting
consolidated or combined financial statements, and transfers the guidance related to accounting for long-term equity investments to Mexican FRS C-7.

Unlike Mexican accounting Bulletin B-8, Mexican FRS B-8 does not require sub-holding companies to present consolidated financial
statements under certain circumstances. In such cases, the investments in subsidiaries of these intermediary holding companies are accounted for using the equity method.

This standard establishes that to determine the existence of control, the Company must consider any potential voting rights held that
could be exercised or converted, regardless of managements intention and ability to exercise them.

This standard
includes guidelines for the accounting treatment of special purpose entities and, upon adoption, abolishes the supplementary application of International Financial Reporting Standards SIC 12, Consolidation  Special Purpose Entities
(SPEs). Mexican FRS B-8 establishes that special purpose entities over which the Company exercises control must be consolidated.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Mexican FRS B-8 adds to Mexican FRS B-15 the specific requirement that the goodwill be
pushed-down to the subsidiaries and recorded in the subsidiaries functional currency and translated into the parents reporting currency at year-end exchange rates.

The adoption of this standard did not have material effect on the Companys financial statements and results of operations as of and
for the year ended December 31, 2009, except as described in Note 2(m) and 5.

Mexican FRS C-7,Investments in
Affiliates and Other Permanent Investments

In November 2008, the CINIF issued Mexican FRS C-7, which became effective
for fiscal years beginning on or after January 1, 2009. The purpose of this standard is to establish guidelines for the accounting recognition of investments in affiliated companies, as well as for the recognition of any other permanent
investments through which the reporting entity does not have control, joint control or exercise significant influence.

Unlike
Mexican accounting Bulletin B-8, this standard establishes that there is significant influence when an entity holds 10% or more of the voting shares in an entity that is listed on a stock exchange, or when it holds 25% or more of the voting shares
in an entity not listed on a stock exchange. Mexican FRS C-7 also provides the guidelines for determining the existence of significant influence in the case of an SPE.

In identifying the existence of significant influence, both Mexican FRS B-8 and this standard requires consideration of any potential
voting rights held by the entity that might be exercised or converted, regardless of managements actual intention and financial capacity to exercise such rights.

Investments in an affiliated company or an equity interest in an SPE over which the reporting entity exercises significant influence must
be initially recognized at fair value, determined at the time of acquisition, and subsequently by applying the equity method of accounting. To apply the equity method, unlike Mexican accounting Bulletin B-8, the financial statements of the
affiliated company must be prepared in conformity with Mexican Financial Reporting Standards.

This standard also establishes
the guidelines for the recognition of losses incurred by affiliated companies, since Mexican accounting Bulletin B-8 did not address this issue.

This standard establishes that the investment in the affiliated company must be tested for impairment when indicators of impairment
exists and modifies Mexican accounting Bulletin C-15, Impairment in the Value of Long-lived Assets, by establishing that the impairment of investments in affiliated companies must be presented as part of the caption Equity interest in net
income of unconsolidated subsidiaries and affiliates.

The adoption of this standard did not have material effects on the
Companys financial statements and results of operations as of and for the year ended December 31, 2009.

Mexican
FRS C-8,Intangible Assets

Mexican FRS C-8 replaced Mexican accounting Bulletin C-8, Intangible
Assets, and became effective for fiscal years beginning on or after January 1, 2009.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Unlike Mexican accounting Bulletin C-8, this standard establishes that separability is
not the only condition necessary to determine that an intangible asset is identifiable. Mexican FRS C-8 also provides additional guidance on the accounting recognition of intangible assets acquired through exchange transactions.

Finally, Mexican FRS C-8 establishes the accounting treatment for disposals of intangible assets resulting from sale, abandonment or
exchange. The adoption of this standard did not have a material impact on the Companys financial statements as of December 31, 2009.

ii) The most significant new accounting pronouncements that will become effective on January 1, 2011, and that could affect the
Companys accounting policies, are as follows:

Mexican FRS B-5,Financial Information by Segment

In November 2009, the CINIF issued Mexican FRS B-5, which is effective for fiscal years beginning on or after January 1, 2011.
Mexican FRS B-5 will replace Mexican accounting Bulletin B-5.

Mexican FRS B-5 establishes the criteria for identifying the
segments to be reported by an entity, as well as the standards for disclosing the financial information of such segments. The standard also contains the requirements applicable to the disclosure of certain information related to the entity as a
whole.

The principal changes compared to Mexican accounting Bulletin B-5 are as follows:



| |  |  | Information to be disclosedMexican FRS B-5 is management-focused, since the segment information disclosures it requires refer to the
information used by the entitys most-senior business decision makers. Mexican FRS B-5 also requires the disclosure of information related to an entitys products, geographic zones, customers and suppliers.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Business risksIn identifying operating segments, this standard does not require the different areas of the business to be subject to
different risks.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segments in the pre-operating stageUnder Mexican FRS B-5, the different areas of a business in its pre-operating stage can be classified
as operating segments.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Disclosure of financial resultsThis standard requires disclosure of interest income and expense, as well as the other comprehensive
financing items.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Disclosure of liabilities  Mexican FRS B-5 requires disclosure of the liabilities included in the regular information for the operating segment
that is habitually used by the entitys most-senior business decision makers.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company expects that
this standard will not have a material impact on its determination of segments and related disclosures.

Mexican FRS B-9,Interim
Financial Information

In November 2009, the CINIF issued Mexican FRS B-9, which is effective for fiscal years
beginning on or after January 1, 2011. Mexican FRS B-9 replaces Mexican accounting Bulletin B-9, Interim Financial Information.

Mexican FRS B-9 establishes that interim financial information must contain, as a minimum for each interim period, the following
comparative financial statements:



| |  |  | Condensed statement of financial position;
| | - |  | ------------------------------------------



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



| |  |  | Condensed income statement or statement of activities, as applicable;
| | - |  | ---------------------------------------------------------------------



| |  |  | Condensed statement of changes in shareholders equity;
| | - |  | -------------------------------------------------------



| |  |  | Condensed statement of cash flows;
| | - |  | ----------------------------------



| |  |  | Notes to financial statements with select disclosures.
| | - |  | ------------------------------------------------------

Mexican FRS C-9 requires the interim financial information at the end of a period to be compared to the information at the closing of the
immediately prior equivalent period (except for the statement of financial position), which makes it necessary to also include a comparison with the statement at the immediately prior annual closing date.

The Company expects that this standard will not have a material impact on its financial position and results of operations.



|3. | Accounts Receivable
|-- | -------------------

a)
An analysis of accounts receivable at December 31, 2009 and 2008 is as follows:



|                                           |  |      |            |      |    |           
|------------------------------------------ |  | ---- | ---------- | ---- | -- | ----------
|                                           |  | 2009 |            | 2008
|Customers                                  |  | P.   | 20,565,851 |      | P. | 18,663,948
|Link-up services                           |  |      | 570,443    |      |    | 672,019   
|Recoverable taxes                          |  |      | 1,847,697  |      |    | 1,764,660 
|Derivative financial instruments (Note 10) |  |      |           |      |    | 1,025,013 
|Sundry debtors                             |  |      | 2,886,905  |      |    | 2,868,303 
|                                           |  |      |            |      |    |           
|                                           |  |      | 25,870,896 |      |    | 24,993,943
|Less:                                      |  |      |            |      |    |           
|Allowance for doubtful accounts            |  |      | 5,408,091  |      |    | 4,703,622 
|                                           |  |      |            |      |    |           
|Net                                        |  | P.   | 20,462,805 |      | P. | 20,290,321
|                                           |  |      |            |      |    |           

b) An analysis of activity in the allowance for
doubtful accounts during the years ended December 31, 2009, 2008 and 2007 is as follows:



|                                 |  |      |            |   |      |    |            |      |  |    |            |  
|-------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | ---- |  | -- | ---------- | -
|                                 |  | 2009 |            |   | 2008 |    |            | 2007 | 
|Beginning balance at January 1   |  | P.   | 4,703,622  |   |      | P. | 4,520,257  |      |  | P. | 4,661,878  |  
|Effect of acquired companies     |  |      |           |   |      |    | 26,048     |      |  |    | 63,754     |  
|Increase charged to expenses     |  |      | 3,676,161  |   |      |    | 2,702,855  |      |  |    | 2,684,271  |  
|Translation and monetary effects |  |      | 1,474,843  |   |      |    | (320,704   | )    |  |    | (315,900   | )
|Applications to the allowance    |  |      | (4,446,535 | ) |      |    | (2,224,834 | )    |  |    | (2,573,746 | )
|                                 |  |      |            |   |      |    |            |      |  |    |            |  
|Ending balance at December 31    |  | P.   | 5,408,091  |   |      | P. | 4,703,622  |      |  | P. | 4,520,257  |  
|                                 |  |      |            |   |      |    |            |      |  |    |            |  



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|4. | Related Parties
|-- | ---------------

The
companies mentioned in this note are considered to be related parties, since the Companys main stockholders are also either direct or indirect stockholders in such companies.

a) An analysis of balances due from/to related parties at December 31, 2009 and 2008 is as follows:



|                                              |  |      |           |      |    |          
|--------------------------------------------- |  | ---- | --------- | ---- | -- | ---------
|                                              |  | 2009 |           | 2008
|Due from:                                     |  |      |           |      |    |          
|Affiliates:                                   |  |      |           |      |    |          
|América Móvil, S.A.B. de C.V. (América Móvil) |  | P.   | 1,442,522 |      | P. | 992,805  
|Net Serviços de Comunicação S.A. (Net)        |  |      | 2,240,507 |      |    | 1,216,397
|Teléfonos de México, S.A.B. de C.V. (Telmex)  |  |      | 176,922   |      |    | 145,708  
|AT&T Corp (AT&T)                              |  |      | 83,413    |      |    | 39,909   
|Grupo Carso, S.A. de C.V. (Grupo Carso)       |  |      | 56,568    |      |    | 70,261   
|Other                                         |  |      | 187       |      |    | 179      
|                                              |  |      |           |      |    |          
|                                              |  | P.   | 4,000,119 |      | P. | 2,465,259
|                                              |  |      |           |      |    |          
|                                              |  |     
|                                              |  | 2009 |           | 2008
|Due to:                                       |  |      |           |      |    |          
|Affiliates:                                   |  |      |           |      |    |          
|América Móvil                                 |  | P.   | 1,946,130 |      | P. | 1,233,931
|Net                                           |  |      | 869,403   |      |    | 644,458  
|Telmex                                        |  |      | 262,330   |      |    | 173,833  
|AT&T                                          |  |      | 14,294    |      |    | 5,157    
|Grupo Carso                                   |  |      | 227,795   |      |    | 169,221  
|Other                                         |  |      | 118       |      |    | 741      
|                                              |  |      |           |      |    |          
|                                              |  | P.   | 3,320,070 |      | P. | 2,227,341
|                                              |  |      |           |      |    |          

At December 31, 2009 and 2008, Accounts
Receivablein Note 3 includes P. 2,100,846 and P. 961,951, respectively, with América Móvil related to co-billing.

b) For the years ended December 31, 2009, 2008 and 2007, the most significant transactions with related parties were:



|                                                                         |  |      |            |      |    |            |  |    |          
|------------------------------------------------------------------------ |  | ---- | ---------- | ---- | -- | ---------- |  | -- | ---------
|                                                                         |  | 2009 |            | 2008 |    | 2007      
|Investment and expenses:                                                 |  |      |            |      |    |            |  |    |          
|Purchase of materials, inventories and fixed assets (1)                  |  | P.   | 1,080,644  |      | P. | 927,241    |  | P. | 259,790  
|Billing and services (2)                                                 |  |      | 1,397,101  |      |    | 1,823,494  |  |    | 705,478  
|Interconnection expenses (3)                                             |  |      | 11,593,590 |      |    | 8,000,012  |  |    | 5,531,302
|                                                                         |  |      |            |      |    |            |  |    |          
|                                                                         |  | P.   | 14,071,335 |      | P. | 10,750,747 |  | P. | 6,496,570
|                                                                         |  |      |            |      |    |            |  |    |          
|                                                                         |  |      |           
|Revenues:                                                                |  |      |            |      |    |            |  |    |          
|Sale of long distance services and other telecommunications services (4) |  | P.   | 6,139,939  |      | P. | 3,501,475  |  | P. | 2,355,277
|Printing and distribution of white pages directories (5)                 |  |      | 794,861    |      |    | 830,828    |  |    | 1,658,084
|Sale of materials and other services (6)                                 |  |      | 259,222    |      |    | 590,932    |  |    | 669,324  
|                                                                         |  |      |            |      |    |            |  |    |          
|                                                                         |  | P.   | 7,194,022  |      | P. | 4,923,235  |  | P. | 4,682,685
|                                                                         |  |      |            |      |    |            |  |    |          



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|(1) | For all three years, these transactions are comprised solely of network construction services and purchase of materials from subsidiaries of Grupo Carso and
América Móvil, which are entities under common control with Carso Global Telecom, the company that controls Telmex Internacional, S.A.B. de C.V.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | In 2009, Telmex Internacional, through its subsidiaries, paid P. 997,231 (P. 1,479,216 in 2008 and P. 494,948 in 2007) to Telmex for services related to the Yellow
Pages business, which include billing and collections and other administrative services, as well as an arrangement whereby the Company has access to Telmexs customer database for agreed fees.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2009 and 2008, the Company reimbursed Telmex US$ 24.6 million (P. 334,188) and US $ 22.5 million (P. 243,997),
respectively, of the amount Telmex paid Carso Global Telecom for consulting and administrative services.

No amounts
were paid in 2009 and 2008 (P. 73,489 in 2007) for financial services from subsidiaries of Grupo Financiero Inbursa, S.A.B. de C.V.



|(3) | Interconnection expenses include outgoing calls from fixed-line telephones to cellular telephones paid to subsidiaries of América Móvil. This includes
P. 8,659,012 (P. 6,041,135 in 2008 and P. 4,949,030 in 2007) paid by Embratel for cellular interconnection to subsidiaries of América Móvil that operate under the trade name Claro in Brazil.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Revenues from billings of long-distance services and other telecommunications services in 2009 include P. 3,308,185 (P. 1,854,633 in 2008 and P. 1,399,077 in 2007)
from América Móvils subsidiaries, P. 2,271,994 (P. 1,249,948 in 2008 and P. 588,542 in 2007) from Net and P. 196,462 (P. 141,467 in 2008 and P. 158,430 in 2007) from subsidiaries of AT&T.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Service related to the printing and distribution of Telmexs white pages directories.
|--- | -------------------------------------------------------------------------------------



|(6) | In 2009 and 2008, these transactions are comprised solely of the call center services rendered to América Móvil and Net. In 2007, the transactions
include P. 597,066 from the sale of construction materials to subsidiaries of América Móvil.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

c) In December 2009, Embratel signed an agreement for sale of capacity for P. 6,372 million (US$ 487.9 million), through which it
grants, a right to use its IP Backbone infrastructure. In addition, Embratel signed an agreement to obtain the right to use the network of local access transmission capacity from Net through its network for P.6,551 million (US$ 501.7 million). Both
agreements are indefeasible rights of use (IRU) for 5 years with an option to renew them for an additional 5 years.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



d) During 2009, the Company paid P. 52,046(P. 53,275 in 2008) in direct short-term
benefits to its key managers and top executives.



|5. | Investments
|-- | -----------

a) Equity
investments

An analysis of the equity investments in affiliated companies at December 31, 2009 and 2008, and a brief
description of each, is as follows:



|                                       |  |      |            |      |    |           
|-------------------------------------- |  | ---- | ---------- | ---- | -- | ----------
|                                       |  | 2009 |            | 2008
|Equity investments in:                 |  |      |            |      |    |           
|Net Serviços de Comunicação S.A. (Net) |  | P.   | 16,567,698 |      | P. | 11,156,688
|Other                                  |  |      | 198,866    |      |    | 37,051    
|                                       |  |      |            |      |    |           
|Total                                  |  | P.   | 16,766,564 |      | P. | 11,193,739
|                                       |  |      |            |      |    |           

Net

The aggregate value of the Companys investment in Net at December 31, 2009 and 2008, based on the quoted market value of
Nets shares and the number of shares held, is P. 19,246,342 and P. 14,078,035, respectively.

In February 2009, the
Company paid P. 156,401 to directly and indirectly acquire additional shares in Net, to prevent the dilution of its equity interest in this affiliate resulting from the subscription of shares to other stockholders. As a result, the Company recorded
goodwill in the amount of P. 156,401. Embratels equity interest in Net is 35.3% as of December 31, 2009 and 2008.

In February 2008, Company paid P. 147,840 to directly and indirectly acquire additional shares in Net, to prevent the dilution of its
equity interest in this affiliate resulting from the subscription of shares to other stockholders.

In November 2008, Company
acquired 795 thousand preferred shares in Net, for which it paid P. 52,760, thus increasing its equity interest in Net to 35.3%. As a result of the 2008 acquisitions, the Company recorded goodwill in the amount of P. 162,983.

In February 2007, Company paid P. 184,094 to directly and indirectly acquire additional shares in Net, to prevent dilution of its equity
interest in this affiliate resulting from the subscription of shares to other stockholders. As a result of 2007 acquisitions, the Company recorded goodwill in the amount of P. 184,094.

On June 11, 2007, following the regulatory approval granted by the Brazilian National Telecommunications Agency (ANATEL), Net
completed the acquisition of the remaining 63.3% controlling interest in Vivax, S.A. (Vivax), the second largest cable television service provider in Brazil. This operation was carried out through an exchange of shares between Vivaxs
stockholders and Net, whereby Vivaxs stockholders received 23 million shares of Net, with a market value of P. 8,625,212 (US$ 747.4 million) as payment for the shares they held in Vivax. As a result of this acquisition, Telmex
Internacionals equity interest in Net was diluted from 39.9% to 35.1% on such date, giving rise to a credit of P. 1,840,815 to stockholders equity.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Under current Brazilian law governing cable operators, Embratel is not permitted to
control Net because it is itself controlled by a foreign entity. Globo Comunicação e Participações S.A. (Globo) owns a majority of the voting interests in GB Emprendimientos e Partipações, S.A., which in
turn still holds the majority of the voting shares of Net. If Brazilian law changes to allow Embratel to control Net, Embratel will have the right to purchase an additional interest in GB to gain control of 51% of the voting shares of Net, and Globo
shall have the right to cause Embratel to purchase such interest.

The difference between the carrying value and the
Companys share of the net assets of Net corresponds to goodwill of P. 7,247,318 in 2009 and P. 5,479,100 in 2008.

b)
Goodwill

Changes in the carrying amount of goodwill during the years ended December 31, 2009, 2008 and 2007 were as
follows:



|                                |  |      |            |      |    |            |      |  |    |           
|------------------------------- |  | ---- | ---------- | ---- | -- | ---------- | ---- |  | -- | ----------
|                                |  | 2009 |            | 2008 |    |            | 2007
|Balance at beginning of year    |  | P.   | 11,006,692 |      | P. | 10,668,221 |      |  | P. | 3,951,987 
|Acquisitions                    |  |      |           |      |    | 333,413    |      |  |    | 6,693,405 
|Purchase accounting adjustments |  |      | 4,418      |      |    | (5,058     | )    |  |    | 22,829    
|Translation effects             |  |      | 3,388,371  |      |    |           |      |  |    |          
|                                |  |      |            |      |    |            |      |  |    |           
|Balance at end of year          |  | P.   | 14,399,481 |      | P. | 11,006,692 |      |  | P. | 10,668,221
|                                |  |      |            |      |    |            |      |  |    |           

c) Investments in subsidiaries

As part of its strategy for expanding its business in Latin America, the Company made the investments during 2009, 2008 and 2007 shown in
paragraphs d), e) and f) below. The Company pays a premium over the fair value of the net assets acquired for a variety of reasons, including the opportunity to take advantage of synergies, increase cost savings, and integrate and expand services
and coverage in Latin America.

d) Investments in 2009

Contenido Cultural

In
February 2009, the Company paid P. 77,050 (US$ 5.9 million) to Pedregales del Sur, S.A. de C.V. e Inmobiliaria Carso, S.A. de C.V. (related parties) to acquire 100% of the shares of Contenido Cultural y Educativo, S.A. de C.V., an entity that sells
print advertising. As a result of this acquisition the Company recorded an amount of P. 26,943 as contribution to stockholders.

EIDON
Software

In April 2009, Telmex Internacional paid P. 247,860 (US$ 18.9 million) to Impulsora para el Desarrollo y el
Empleo en America Latina, S.A.B. de C.V. (related party) to acquire 51% of the shares of Eidon Software, S.A. de C.V., a software services provider. As a result of this acquisition the Company recorded an amount of P. 91,434 as contribution to
stockholders.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



SAUSA

In December 2009, the Company acquired the remaining 20% non-controlling interest of Sección Amarilla USA, LLC for P. 106,250 (US$
8.1 million).

e) Investments in 2008

New Dinamic

In September
2008, the Company acquired all of the assets and assumed a portion of the liabilities of Teledinámica, S.A., Organización Dinámica, S.A. and Telebarranquilla, S.A. (cable television and internet providers in Barranquilla) for P.
351,548 (US$ 30.9 million). These companies operate as New Dinamic Company S.A.

The following analysis shows the allocation
of the acquisition cost over the final fair values of the net assets acquired.



|                                        |  |                         |         |  
|--------------------------------------- |  | ----------------------- | ------- | -
|                                        |  | New 
DinamicOctober2008 |        
|Current assets                          |  | P.                      | 14,723  |  
|Plant, property and equipment, net      |  |                         | 68,661  |  
|Licenses and trademarks                 |  |                         | 3,015   |  
|Less:                                   |  |                         |         |  
|Current liabilities                     |  |                         | 68,264  |  
|                                        |  |                         |         |  
|Fair value of net assets acquired       |  |                         | 18,135  |  
|% of equity acquired                    |  |                         | 100     | %
|                                        |  |                         |         |  
|Total fair value of net assets acquired |  |                         | 18,135  |  
|Acquisition cost                        |  |                         | 351,548 |  
|                                        |  |                         |         |  
|Goodwill                                |  | P.                      | 333,413 |  
|                                        |  |                         |         |  

Pro forma financial data (unaudited)

The following unaudited pro forma consolidated financial data for 2008 and 2007 are based on the Companys historical financial
statements, adjusted to give effect to (i) the acquisition mentioned in the preceding paragraphs and to (ii) certain accounting adjustments related to the net assets of the acquired companies.

The unaudited pro forma adjustments assume that the acquisition was made at the beginning of 2007 and is determined based upon available
information and other assumptions that management believes are reasonable.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The unaudited consolidated pro forma financial information data does not purport to
represent what the effect on the Companys consolidated operations would have been had the transactions occurred at the beginning of each year, nor are they intended to predict the Companys future results of operations.



|                                                |  |                                                                                                 |            |      |    |           
|----------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | ---------- | ---- | -- | ----------
|                                                |  | Unaudited pro forma consolidated TelmexInternacional information for
theyears ended December 31
|                                                |  | 2008                                                                                            |            | 2007
|Operating revenues                              |  | P.                                                                                              | 76,016,167 |      | P. | 68,331,248
|Majority net income                             |  |                                                                                                 | 5,535,012  |      |    | 6,355,695 
|Earnings per majority share (in Mexican pesos): |  |                                                                                                 | 0.30       |      |    | 0.32      

f) Investments in
2007

During 2007, the Company acquired several subsidiaries. The allocation of the acquisition cost over fair values of
the net assets acquired at the acquisition date is as follows:



|                                        |  |                            |           |   |                            |    |           |               |  |    |                 |   |  |                                     |         |   |                   |    |         |                 |  |    |                                   |   |  |       |        |   |  |    |           |   |  |    |          
|--------------------------------------- |  | -------------------------- | --------- | - | -------------------------- | -- | --------- | ------------- |  | -- | --------------- | - |  | ----------------------------------- | ------- | - | ----------------- | -- | ------- | --------------- |  | -- | --------------------------------- | - |  | ----- | ------ | - |  | -- | --------- | - |  | -- | ---------
|                                        |  | Values at acquisition date
|                                        |  | TV
CableS.A.(1) 
March2007 |           |   | CablePacifico(1) March2007 |    |           | BogaMarch2007 |  |    | EcutelMarch2007 |   |  | Telmex 
TV(formerlyZAPTV)August2007 |         |   | ErtachOctober2007 |    |         | VirtecomMay2007 |  |    | Cable
TVCompanies 
(2)October2007 |   |  | Total
|Current assets                          |  | P.                         | 422,641   |   |                            | P. | 28,943    |               |  | P. | 37,473          |   |  | P.                                  | 19,305  |   |                   | P. | 47,052  |                 |  | P. | 75,321                            |   |  | P.    |       |   |  | P. | 502,841   |   |  |    |          
|Plant, property and equipment, net      |  |                            | 780,806   |   |                            |    | 232,109   |               |  |    | 32,535          |   |  |                                     | 53,379  |   |                   |    | 77,456  |                 |  |    | 112,736                           |   |  |       | 6,867  |   |  |    | 77,810    |   |  |    |          
|Licenses and trademarks                 |  |                            | 474,545   |   |                            |    | 89,441    |               |  |    | 5,380           |   |  |                                     | 917     |   |                   |    | 76,998  |                 |  |    | 1,242                             |   |  |       |       |   |  |    |          |   |  |    |          
|Less:                                   |  |                            |          |   |                            |    |          |               |  |    |                |   |  |                                     |        |   |                   |    |        |                 |  |    |                                  |   |  |       |       |   |  |    |          |   |  |    |          
|Current liabilities                     |  |                            | 1,173,450 |   |                            |    | 273,726   |               |  |    | 84,183          |   |  |                                     | 32,410  |   |                   |    | 235,710 |                 |  |    | 100,066                           |   |  |       |       |   |  |    | 24,274    |   |  |    |          
|Long-term liabilities                   |  |                            |          |   |                            |    | 3,144     |               |  |    |                |   |  |                                     |        |   |                   |    |        |                 |  |    |                                  |   |  |       |       |   |  |    |          |   |  |    |          
|                                        |  |                            |           |   |                            |    |           |               |  |    |                 |   |  |                                     |         |   |                   |    |         |                 |  |    |                                   |   |  |       |        |   |  |    |           |   |  |    |          
|Fair value of net assets acquired       |  |                            | 504,542   |   |                            |    | 73,623    |               |  |    | (8,795          | ) |  |                                     | 41,191  |   |                   |    | (34,204 | )               |  |    | 89,233                            |   |  |       | 6,867  |   |  |    | 556,377   |   |  |    |          
|% of equity acquired                    |  |                            | 100.0     | % |                            |    | 100.0     | %             |  |    | 100.0           | % |  |                                     | 100.0   | % |                   |    | 100.0   | %               |  |    | 100.0                             | % |  |       | 100.0  | % |  |    | 100.0     | % |  |    |          
|                                        |  |                            |           |   |                            |    |           |               |  |    |                 |   |  |                                     |         |   |                   |    |         |                 |  |    |                                   |   |  |       |        |   |  |    |           |   |  |    |          
|Total fair value of net assets acquired |  |                            | 504,542   |   |                            |    | 73,623    |               |  |    | (8,795          | ) |  |                                     | 41,191  |   |                   |    | (34,204 | )               |  |    | 89,233                            |   |  |       | 6,867  |   |  |    | 556,377   |   |  | P. | 1,228,834
|Acquisition cost                        |  |                            | 1,404,060 |   |                            |    | 1,298,710 |               |  |    | 284,577         |   |  |                                     | 270,708 |   |                   |    | 57,401  |                 |  |    | 297,676                           |   |  |       | 21,732 |   |  |    | 4,287,375 |   |  |    | 7,922,239
|                                        |  |                            |           |   |                            |    |           |               |  |    |                 |   |  |                                     |         |   |                   |    |         |                 |  |    |                                   |   |  |       |        |   |  |    |           |   |  |    |          
|Goodwill                                |  | P.                         | 899,518   |   |                            | P. | 1,225,087 |               |  | P. | 293,372         |   |  | P.                                  | 229,517 |   |                   | P. | 91,605  |                 |  | P. | 208,443                           |   |  | P.    | 14,865 |   |  | P. | 3,730,998 |   |  | P. | 6,693,405
|                                        |  |                            |           |   |                            |    |           |               |  |    |                 |   |  |                                     |         |   |                   |    |         |                 |  |    |                                   |   |  |       |        |   |  |    |           |   |  |    |          



|(1) | In November 2007, TV Cable was merged into Cable Pacífico, and the surviving company changed its name to Telmex Hogar, S.A.
|--- | ---------------------------------------------------------------------------------------------------------------------------



|(2) | Network and Operation, Cable Caribe, Megacanales and The Now Operation
|--- | ----------------------------------------------------------------------

Embrapar

During 2007,
Telmex Internacional made additional acquisitions of non-controlling interests in Embrapar totaling P. 378,934 (US$ 34.4 million), thereby increasing its ownership from 97% to 98% of all of Embrapars ordinary shares, issued and outstanding.
The aggregate carrying value of such acquisitions was P. 388,348, and the difference between the carrying value and the price paid was credited to stockholders equity.

TV Cable y Cable Pacífico

On March 13, 2007 and March 16, 2007, Telmex Internacional acquired 100% of the shares of TV Cable and Cable Pacífico for
P. 1,404,060 (US$ 122.9 million) and P.1,298,710 (US$ 113 million), respectively. In November 2007, TV Cable was merged into Cable Pacífico, which then changed its name to Telmex Hogar, S.A. (Telmex Hogar), now Telmex Colombia, S.A. as of
September 21, 2009.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



TV Cable provides cable television, internet and IP voice services in Bogota and Cali,
Colombia. Cable Pacífico operates in several states in Colombia, and has its main operation in Medellin.

Boga

On March 9, 2007, Telmex Internacional paid P. 284,577 (US$ 25.0 million) to acquire 100% of the shares of Boga Comunicaciones, S.A.,
a cable television operator in Lima and Chiclayo in Peru.

Virtecom

On May 16, 2007, Boga Comunicaciones, S.A. acquired all the assets of Virtecom, S.A.C. and Virtecom Technology, S.R.L., which are
cable television operators in Peru. The transfer of ownership of the assets included all the parts and accessories comprising the operations. The purchase price was P. 21,732 (US$ 2.0 million).

Ecutel

On
March 12, 2007, Telmex Internacional acquired 100% of the shares of Ecuador Telecom, S.A., which provides telecommunication services to corporate clients and to small and medium size companies in Guayaquil and Quito, Ecuador. The purchase price
was P. 270,708 (US$ 23.6 million).

ZAP TV

On August 14, 2007, Telmex Internacional acquired 100% of the shares of ZAP TV Televisión Directa al Hogar, Ltda. (ZAP TV) for
P. 57,401 (US$ 4.8 million). In December 2007, ZAP TV changed its name to Telmex TV, S.A. (Telmex TV). Telmex TV provides pay television services in Chile.

Ertach

On
November 9, 2006, Telmex Internacional acquired 100% of the shares of Ertach, S.A. (Ertach) for which it paid P. 297,676 (US$ 28.3 million). This acquisition was closed in October 2007.

Ertach provides internet access and data and voice services in Argentina over a wireless network using Wireless Local Loop (WLL) and
WiMax technology over the 3.5 GHz frequency.

Network and Operation, Cable Caribe, Megacanales and The Now Operation

In October 2007, through its subsidiaries, Telmex Internacional paid P. 3,733,092 (US$ 345.0 million) for all of the subscribers and 100%
of the assets and a portion of the liabilities of Unión de Cableoperadores del Centro, Cablecentro, S.A., or Cablecentro (now operating as Network and Operation, S.A.), a cable television service provider. The Company also acquired 100% of
the cable television subscribers of Megainvest Ltda. (now operating as Megacanales, S.A.), which produces content for cable television, and Comunicaciones Ver TV, S.A. (now operating as The Now Operation, S.A.), which publishes a television
programming magazine. All of these companies operate in Colombia.

In October, 2007, the Company paid P. 554,283 (US$ 51
million) to acquire all of the subscribers, assets and a portion of the liabilities of Satelcaribe, S.A. (now operating as Cablecaribe, S.A.), a cable television service provider in Colombia.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|6. | Plant, Property and Equipment
|-- | -----------------------------

a) A summary of this caption at December 31, 2009 and 2008 is as follows:



|                                      |  |      |             |      |    |            
|------------------------------------- |  | ---- | ----------- | ---- | -- | -----------
|                                      |  | 2009 |             | 2008
|Telephone plant and equipment         |  | P.   | 158,008,226 |      | P. | 114,425,608
|Computer equipment and other assets   |  |      | 34,021,840  |      |    | 23,498,881 
|Land and buildings                    |  |      | 19,432,912  |      |    | 15,138,826 
|Construction in progress and advances |  |      | 6,178,125   |      |    | 5,964,329  
|                                      |  |      |             |      |    |            
|                                      |  |      | 217,641,103 |      |    | 159,027,644
|Less:                                 |  |      |             |      |    |            
|Accumulated depreciation              |  |      | 137,517,337 |      |    | 100,548,419
|                                      |  |      |             |      |    |            
|Total                                 |  | P.   | 80,123,766  |      | P. | 58,479,225 
|                                      |  |      |             |      |    |            

Construction in progress is comprised mainly of
investments being made by Embratel and Star One.

In December 2009, Star One signed a contract denominated in U.S. dollars
with a manufacturer for the construction and delivery in orbit of the satellite Star One C-3. The project cost is estimated to amount to approximately P. 3,526,000 (US$ 270 million).

b) Depreciation of telephone plant and equipment has been calculated at annual rates based on useful lives ranging from 5 to 30 years.
The rest of the Companys assets are depreciated at rates based on useful lives ranging from 3 to 30 years. Depreciation expense charged to results of operations for the years ended December 31, 2009, 2008 and 2007 was P. 10,064,156, P.
7,695,564 and P. 6,436,751, respectively.

c) Plant, property and equipment, includes the following assets which are held
under capital leases:



|                               |  |      |         |      |    |        
|------------------------------ |  | ---- | ------- | ---- | -- | -------
|                               |  | 2009 |         | 2008
|Assets under capital leases    |  | P.   | 893,164 |      | P. | 794,920
|Less: Accumulated depreciation |  |      | 501,023 |      |    | 225,280
|                               |  |      |         |      |    |        
|Net                            |  | P.   | 392,141 |      | P. | 569,640
|                               |  |      |         |      |    |        

d) At December 31, 2009, Embratel has pledged
property and other equipment with a carrying amount of P. 2,749,677 (P. 2,746,369 in 2008) in connection with certain legal proceedings. Also, at December 31, 2008, Star One had two fleet satellites pledged in guarantee to the Brazilian Federal
Tax Agency (SRF) as a result of a review regarding the subsidiarys income tax (IRPJ) and social contributions (CSLL), with a carrying amount of P. 2,505,182.



|7. | Licenses, Trademarks and Prepaid Indefeasible Rights of Use
|-- | -----------------------------------------------------------

a) An analysis of licenses, trademarks and prepaid indefeasible rights of use at December 31, 2009 and 2008 is as follows:



|                                                     |  |      |            |      |    |          
|---------------------------------------------------- |  | ---- | ---------- | ---- | -- | ---------
|                                                     |  | 2009 |            | 2008
|Licenses and prepaid indefeasible rights of use, net |  | P.   | 12,740,656 |      | P. | 4,336,372
|Trademarks, net                                      |  |      | 1,815,916  |      |    | 1,734,910
|                                                     |  |      |            |      |    |          
|Total                                                |  | P.   | 14,556,572 |      | P. | 6,071,282
|                                                     |  |      |            |      |    |          



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Amortization expense associated with licenses, trademarks and prepaid rights of use is
expected to be approximately P. 2,700,000 in each of the next five years.

b) Licenses and prepaid indefeasible rights of
use

Telmex Internacional has software licenses, licenses for use of point-to-point and point-to-multipoint links and the
indefeasible right to use transmission capacity and databases.

An analysis of these investments in 2009 is as follows:



|                         |  |                          |            |   |                                        |    |            |                   |  |    |                            |   |  |    |             |  
|------------------------ |  | ------------------------ | ---------- | - | -------------------------------------- | -- | ---------- | ----------------- |  | -- | -------------------------- | - |  | -- | ----------- | -
|                         |  | Balance
atJanuary 1,2009 |            |   | Acquisitionsandamortizationof the year |    |            | Translationeffect |  |    | Balance
atDecember 31,2009 |  
|Investment               |  | P.                       | 14,249,563 |   |                                        | P. | 8,781,014  |                   |  | P. | 3,526,623                  |   |  | P. | 26,557,200  |  
|Accumulated amortization |  |                          | (9,913,191 | ) |                                        |    | (1,178,178 | )                 |  |    | (2,725,175                 | ) |  |    | (13,816,544 | )
|                         |  |                          |            |   |                                        |    |            |                   |  |    |                            |   |  |    |             |  
|Net                      |  | P.                       | 4,336,372  |   |                                        | P. | 7,602,836  |                   |  | P. | 801,448                    |   |  | P. | 12,740,656  |  
|                         |  |                          |            |   |                                        |    |            |                   |  |    |                            |   |  |    |             |  

In 2009, the investment corresponds primarily to the acquisition of the indefeasible right to use
transmission capacity and point-to-point links.

An analysis of these investments in 2008 is as follows:



|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |          |   |  |    |            |  
|------------------------ |  | ------------------------ | ---------- | - | --------------------------- | -- | -------------------------------------- |  | -- | ----------------- | - |  | -------------------------- | -------- | - |  | -- | ---------- | -
|                         |  | Balance
atJanuary 1,2008 |            |   | Effectof 
acquiredcompanies |    | Acquisitionsandamortizationof the year |  |    | Translationeffect |   |  | Balance
atDecember 31,2008 |         
|Investment               |  | P.                       | 13,270,780 |   |                             | P. | 3,015                                  |  | P. | 1,510,908         |   |  | P.                         | (535,140 | ) |  | P. | 14,249,563 |  
|Accumulated amortization |  |                          | (9,404,963 | ) |                             |    |                                       |  |    | (1,031,505        | ) |  |                            | 523,277  |   |  |    | (9,913,191 | )
|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |          |   |  |    |            |  
|Net                      |  | P.                       | 3,865,817  |   |                             | P. | 3,015                                  |  | P. | 479,403           |   |  | P.                         | (11,863  | ) |  | P. | 4,336,372  |  
|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |          |   |  |    |            |  

In 2008, the investment corresponds primarily to the acquisition of point-to-point links, the right to use
databases and the acquisition of software licenses.

An analysis of these investments in 2007 is as follows:



|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |         |   |  |    |            |  
|------------------------ |  | ------------------------ | ---------- | - | --------------------------- | -- | -------------------------------------- |  | -- | ----------------- | - |  | -------------------------- | ------- | - |  | -- | ---------- | -
|                         |  | Balance
atJanuary 1,2007 |            |   | Effectof 
acquiredcompanies |    | Acquisitionsandamortizationof
the year |  |    | Translationeffect |   |  | Balance
atDecember 31,2007 |        
|Investment               |  | P.                       | 12,346,197 |   |                             | P. | 226,236                                |  | P. | 615,050           |   |  | P.                         | 83,297  |   |  | P. | 13,270,780 |  
|Accumulated amortization |  |                          | (8,223,108 | ) |                             |    |                                       |  |    | (1,115,693        | ) |  |                            | (66,162 | ) |  |    | (9,404,963 | )
|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |         |   |  |    |            |  
|Net                      |  | P.                       | 4,123,089  |   |                             | P. | 226,236                                |  | P. | (500,643          | ) |  | P.                         | 17,135  |   |  | P. | 3,865,817  |  
|                         |  |                          |            |   |                             |    |                                        |  |    |                   |   |  |                            |         |   |  |    |            |  

In 2007, the investment corresponds primarily to the acquisition of rights-of-way and software licenses.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



c) Trademarks

At December 31, 2009, the Company has recorded amounts for the trademarks of certain acquired foreign companies, which were
recognized at their fair value at the date of acquisition.

An analysis of these investments in 2009 is as follows:



|                         |  |                          |           |   |                                        |    |          |                   |  |    |                            |   |  |    |            |  
|------------------------ |  | ------------------------ | --------- | - | -------------------------------------- | -- | -------- | ----------------- |  | -- | -------------------------- | - |  | -- | ---------- | -
|                         |  | Balance
atJanuary 1,2009 |           |   | Acquisitionsandamortizationof the year |    |          | TranslationEffect |  |    | Balance
atDecember 31,2009 |  
|Investment               |  | P.                       | 2,480,796 |   |                                        | P. | 1,679    |                   |  | P. | 560,944                    |   |  | P. | 3,043,419  |  
|Accumulated amortization |  |                          | (745,886  | ) |                                        |    | (283,954 | )                 |  |    | (197,663                   | ) |  |    | (1,227,503 | )
|                         |  |                          |           |   |                                        |    |          |                   |  |    |                            |   |  |    |            |  
|Net                      |  | P.                       | 1,734,910 |   |                                        | P. | (282,275 | )                 |  | P. | 363,281                    |   |  | P. | 1,815,916  |  
|                         |  |                          |           |   |                                        |    |          |                   |  |    |                            |   |  |    |            |  

An analysis of these investments in 2008 is as follows:



|                         |  |                          |           |   |                               |    |                                        |  |    |                   |   |  |                            |         |   |  |    |           |  
|------------------------ |  | ------------------------ | --------- | - | ----------------------------- | -- | -------------------------------------- |  | -- | ----------------- | - |  | -------------------------- | ------- | - |  | -- | --------- | -
|                         |  | Balance
atJanuary 1,2008 |           |   | Purchaseaccountingadjustments |    | Acquisitionsandamortizationof the year |  |    | TranslationEffect |   |  | Balance
atDecember 31,2008 |        
|Investment               |  | P.                       | 2,327,305 |   |                               | P. | 193,326                                |  | P. |                  |   |  | P.                         | (39,835 | ) |  | P. | 2,480,796 |  
|Accumulated amortization |  |                          | (471,788  | ) |                               |    |                                       |  |    | (240,536          | ) |  |                            | (33,562 | ) |  |    | (745,886  | )
|                         |  |                          |           |   |                               |    |                                        |  |    |                   |   |  |                            |         |   |  |    |           |  
|Net                      |  | P.                       | 1,855,517 |   |                               | P. | 193,326                                |  | P. | (240,536          | ) |  | P.                         | (73,397 | ) |  | P. | 1,734,910 |  
|                         |  |                          |           |   |                               |    |                                        |  |    |                   |   |  |                            |         |   |  |    |           |  

An analysis of the changes in 2007 is as follows:



|                         |  |                          |           |   |                            |    |                               |  |                                        |        |  |                   |          |   |                            |    |        |   |  |    |           |  
|------------------------ |  | ------------------------ | --------- | - | -------------------------- | -- | ----------------------------- |  | -------------------------------------- | ------ |  | ----------------- | -------- | - | -------------------------- | -- | ------ | - |  | -- | --------- | -
|                         |  | Balance
atJanuary 1,2007 |           |   | Effect
ofacquiredcompanies |    | Purchaseaccountingadjustments |  | Acquisitionsandamortizationof the year |        |  | Translationeffect |          |   | Balance
atDecember 31,2007 |   
|Investment               |  | P.                       | 1,772,413 |   |                            | P. | 422,287                       |  | P.                                     | 75,902 |  | P.                |         |   |                            | P. | 56,703 |   |  | P. | 2,327,305 |  
|Accumulated amortization |  |                          | (250,769  | ) |                            |    |                              |  |                                        |       |  |                   | (218,361 | ) |                            |    | (2,658 | ) |  |    | (471,788  | )
|                         |  |                          |           |   |                            |    |                               |  |                                        |        |  |                   |          |   |                            |    |        |   |  |    |           |  
|Net                      |  | P.                       | 1,521,644 |   |                            | P. | 422,287                       |  | P.                                     | 75,902 |  | P.                | (218,361 | ) |                            | P. | 54,045 |   |  | P. | 1,855,517 |  
|                         |  |                          |           |   |                            |    |                               |  |                                        |        |  |                   |          |   |                            |    |        |   |  |    |           |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



8. Debt

a) An analysis of the Companys debt is as follows:



|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|----------------------------------------------------------- |  | -------------------------------------------- | - | - | -------------- | ---- | ----------------------- | ------------ | ---- | ---- | -- | ---------- |  | -- | ----------
|                                                            |  | Weighted-averageinterest rate
atDecember 31, |   |   | Maturitiesfrom |      | Balance at December 31,
|                                                            |  | 2009                                         |   |   | 2008           |      |                         | 2010 through |      | 2009 |    | 2008      
|U.S. dollar denominated debt:                               |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Banks                                                       |  | 2.                                           | 6 | % |                | 3.4  | %                       |              | 2014 |      | P. | 12,209,057 |  | P. | 13,053,784
|Suppliers credit lines                                     |  | 4.                                           | 3 | % |                | 5.8  | %                       |              | 2014 |      |    | 351,186    |  |    | 397,492   
|Capital leases                                              |  | 7.                                           | 0 | % |                | 6.7  | %                       |              | 2011 |      |    | 53,378     |  |    | 71,592    
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Total U.S. dollar denominated debt:                         |  |                                              |   |   |                |      |                         |              |      |      |    | 12,613,621 |  |    | 13,522,868
|                                                            |  |                                              |   |   |               
|Debt denominated in Brazilian reals:                        |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Banks                                                       |  | 9.                                           | 4 | % |                | 17.0 | %                       |              | 2019 |      |    | 2,800,105  |  |    | 4,924,091 
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Total Brazilian real denominated debt                       |  |                                              |   |   |                |      |                         |              |      |      |    | 2,800,105  |  |    | 4,924,091 
|Mexican peso denominated debt:                              |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Banks (domestic senior notes):                              |  | 5.                                           | 9 | % |                | 10.1 | %                       |              | 2014 |      |    | 15,000,000 |  |    | 5,500,000 
|Banks:                                                      |  | 5.                                           | 8 | % |                |     |                         |              | 2010 |      |    | 1,400,000  |  |    |          
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Total Mexican peso denominated                              |  |                                              |   |   |                |      |                         |              |      |      |    | 16,400,000 |  |    | 5,500,000 
|                                                            |  |                                              |   |   |               
|Debt denominated in other foreign currencies:               |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Banks                                                       |  | 4.                                           | 9 | % |                | 11.7 | %                       |              | 2018 |      |    | 1,645,089  |  |    | 1,140,906 
|Capital leases                                              |  | 8.                                           | 4 | % |                | 15.3 | %                       |              | 2019 |      |    | 518,885    |  |    | 534,403   
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Total debt denominated in other foreign currencies          |  |                                              |   |   |                |      |                         |              |      |      |    | 2,163,974  |  |    | 1,675,309 
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Total debt                                                  |  |                                              |   |   |                |      |                         |              |      |      |    | 33,977,700 |  |    | 25,622,268
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Less: Short-term debt and current portion of long-term debt |  |                                              |   |   |                |      |                         |              |      |      |    | 12,667,266 |  |    | 14,727,645
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           
|Long-term debt                                              |  |                                              |   |   |                |      |                         |              |      |      | P. | 21,310,434 |  | P. | 10,894,623
|                                                            |  |                                              |   |   |                |      |                         |              |      |      |    |            |  |    |           

The amount of the Companys consolidated debt is
within the cap set by the Board of Directors.

The rates shown in the table above are subject to market variances and do not
include the effect of the Companys agreement to reimburse certain lenders for Mexican taxes withheld.

The
Companys short-term debt and the current portion of long-term debt is P. 12,667,266 at December 31, 2009 and P. 14,727,645 at December 31, 2008.

The weighted average cost of borrowed funds at December 31, 2009 and 2008 (including interest, fees, commissions and taxes withheld)
was approximately 5.1% and 8.3%, respectively.

b) Domestic senior notes

On November 27, 2008, the National Banking and Securities Commission of Mexico (CNBV) authorized the Company to open a revolving dual
domestic senior note program (Certificados Bursátiles). The amount authorized under the program is P. 10,000,000 or its equivalent in monetary investment units (UDIs) on the date of issuance. This program is revolving, though the sum of
outstanding issuances on a given date may not exceed the authorized amount.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



On September 4, 2009 the Company issued its first series of the year of
peso-denominated senior notes (Certificados Bursátiles) authorized by CNBV, in an aggregate principal amount of P. 5,000,000 which will mature in August 2012. The interest rate of this issue is TIIE (Tasa de Interés Interbancaria de
Equilibrio) for 28 days plus 135 base points. Interest is paid every 28 days.

On December 4, 2009, the Company issued a
second series of the year 2009, of peso-denominated senior notes (Certificados Bursátiles) authorized by CNBV, in an aggregate principal amount of P. 5,000,000 which will mature in November 2014. The interest rate of this issue is TIIE (Tasa
de Interés Interbancaria de Equilibrio) for 28 days plus 150 base points. Interest is paid every 28 days.

On
November 27, 2009, CNBV authorized the increase of the original amount of the senior notes up to P. 20,000,000, or its equivalent in UDIs (Unidades de Inversión). On December 11, 2009, the Company issued peso-denominated
short-term senior notes (Certificados Bursátiles) in an aggregate principal amount of P. 5,000,000 which matured in January 2010. The interest rate of this issue is 5.07% for 40 days.

The maximum term for issuing domestic senior notes under the program is five years as of the authorization date.

Maturities of each long-term issuance shall be between one and forty years. Maturities of short-term senior notes shall not exceed 365
days.

At December 31, 2009, the Company has outstanding the following domestic senior notes:



|       |            |               |           |               |           |             |         |               |              |  
|------ | ---------- | ------------- | --------- | ------------- | --------- | ----------- | ------- | ------------- | ------------ | -
|Amount |            | Issuance date |           | Maturity date |           | Term (days) |         | Interest rate |             
|P.     | 5,000,000  |               | Sep-4-09  |               | Aug-30-12 |             | 3 years |               | TIIE+135 bps |  
|       | 5,000,000  |               | Dec-4-09  |               | Nov-27-14 |             | 5 years |               | TIIE+150 bps |  
|       | 5,000,000  |               | Dec-11-09 |               | Jan-20-10 |             | 40 days |               | 5.07         | %
|       |            |               |           |               |           |             |         |               |              |  
|P.     | 15,000,000 |               |           |               |           |             |         |               |              |  
|       |            |               |           |               |           |             |         |               |              |  

c) Restrictions

A portion of Embratels debt is subject to certain restrictive covenants with respect to maintaining certain financial ratios, as
well as restrictions on selling a significant portion of groups of assets, among others. At December 31, 2009, the subsidiary has complied with all these restrictions.

A portion of Embratels 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 subsidiary.

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 the Company or Carso Global Telecom (Telmex Internacionals controlling stockholder) or its controlling current stockholders continue to control the majority of Embratels voting
shares.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



d) Lines of credit

At December 31, 2009, Embratel had unused lines of credit of P. 248,000 (US$ 19 million) available with a 4.5% annual interest.

e) Foreign currency denominated debt

An analysis of the foreign currency denominated debt at December 31, 2009, is as follows:



|               |  |                               |  |                                             |         |                            |    |           
|-------------- |  | ----------------------------- |  | ------------------------------------------- | ------- | -------------------------- | -- | ----------
|Currency       |  | Foreigncurrency(in thousands) |  | Exchange rate atDecember 
31,2009(in units) |         | Equivalent inMexican
pesos
|U.S. dollar    |  | 965,917                       |  | P.                                          | 13.0587 |                            | P. | 12,613,621
|Brazilian real |  | 373,356                       |  | 7.                                          | 4998    |                            |    | 2,800,105 
|Other currency |  |                               |  |                                             |         |                            |    | 2,163,974 
|               |  |                               |  |                                             |         |                            |    |           
|Total          |  |                               |  |                                             |         |                            | P. | 17,577,700
|               |  |                               |  |                                             |         |                            |    |           

f) Long-term debt

Maturities of long-term debt at December 31, 2009 are as follows:



|                    |  |       |           
|------------------- |  | ----- | ----------
|Year                |  | Total
|2011                |  | P.    | 5,174,517 
|2012                |  |       | 8,204,035 
|2013                |  |       | 1,906,033 
|2014                |  |       | 5,772,506 
|2015                |  |       | 145,837   
|2016 and thereafter |  |       | 107,506   
|                    |  |       |           
|Total               |  | P.    | 21,310,434
|                    |  |       |           

g) Credit agreements

Most of the Companys credit agreements include cross-default provisions and cross-acceleration provisions that would permit the
holders of such indebtedness to declare the indebtedness to be in default and to accelerate the maturity thereof if a significant portion of the principal amount of the Companys debt is in default or accelerated. The terms of these agreements
restrict the ability of the Companys subsidiaries to grant liens, pledge assets, sell or dispose of assets and make certain acquisitions, mergers or consolidations. Under a number of these agreements, the Company is required to maintain
certain specified financial ratios. At December 31, 2009, the Company has complied with all these financial ratios.

h) Subsequent event - Embratel

In January 2010, Embratel paid at maturity of P. 1,312 million (US$ 100.5 million) aggregate principal amount of a one-year bank
loan.

In January 2010, Embratel signed a loan agreement with Banco Safra (BNDES - FINAME) for P.71,300 (R$ 9.5 million) for a
period of 5 years with an annual interest fixed rate equal to 4.5%.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|9. | Capital Leases
|-- | --------------

a) At
December 31, 2009 and 2008, the Company has capital leases for machinery and equipment.

b) Minimum lease payment
obligations of future years under the leases at December 31, 2009 are as follows:



|                                                      |  |      |        
|----------------------------------------------------- |  | ---- | -------
|                                                      |  | 2009
|2010                                                  |  | P.   | 156,943
|2011                                                  |  |      | 163,530
|2012                                                  |  |      | 119,562
|2013                                                  |  |      | 116,497
|2014                                                  |  |      | 67,065 
|2015 and thereafter                                   |  |      | 146,471
|                                                      |  |      |        
|Total                                                 |  |      | 770,068
|Less: unaccrued interest                              |  |      | 197,805
|                                                      |  |      |        
|Present value of minimum payments                     |  |      | 572,263
|Less: Short-term portion of capital lease obligations |  |      | 105,796
|                                                      |  |      |        
|Long-term capital lease obligations                   |  | P.   | 466,467
|                                                      |  |      |        



|10. | Derivative Financial Instruments
|--- | --------------------------------

Embratel uses derivative financial instruments (cross-currency interest rate swaps) to protect itself from the financial effects of
Brazilian real/U.S. dollar exchange rate and interest rate fluctuations in connection with its U.S. dollar denominated loans. For the years ended December 31, 2009, 2008 and 2007, Embratel recognized a loss (gain) of P. 1,670,060, P.
(2,576,776), and P. 2,828,752, respectively, in results of operations in exchange (gain) loss, net for changes in the fair value of such instruments.

At December 31, 2009 and 2008, the financial instruments contracted by the Company are as follows:



|                          |  |                 |         |            |    |            |  
|------------------------- |  | --------------- | ------- | ---------- | -- | ---------- | -
|2009
Financial instrument |  | Notional amount |         | Fair value |   
|Cross-Currency swaps      |  | US$             | 528,083 |            | P. | (1,094,223 | )
|                          |  |                 |         |            |    |            |  
|                          |  |                
|2008
Financial instrument |  | Notional amount |         | Fair value |   
|Cross-Currency swaps      |  | US$             | 216,871 |            | P. | 1,025,013  |  
|                          |  |                 |         |            |    |            |  

The Companys financial derivative instruments are acquired in the over-the-counter markets. The
Company and its subsidiaries have entered into agreements only with well-known and financially strong financial institutions and counterparties. As a result, Telmex Internacional is able to balance its risk positions with its counterparties. The
Companys counterparties are local banks in the countries in which Telmex Internacional operates and have at least credit ratings of A on the Fitch scale, A2 on the Moodys scale, and A on the
Standard & Poors scale.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The Company and its subsidiaries have no contractual obligations for derivative
financial instruments for which they must provide pledges to guarantee margin calls.



|11. | Deferred Credits
|--- | ----------------

At
December 31, 2009 and 2008, deferred credits consist of the following:



|                                     |  |      |           |      |    |          
|------------------------------------ |  | ---- | --------- | ---- | -- | ---------
|                                     |  | 2009 |           | 2008
|Advance billings                     |  | P.   | 2,497,110 |      | P. | 3,412,003
|Advances from services (IRU)         |  |      | 6,265,892 |      |    |         
|Advances from subscribers and others |  |      | 722,922   |      |    | 597,736  
|                                     |  |      |           |      |    |          
|Total                                |  |      | 9,485,924 |      |    | 4,009,739
|                                     |  |     
|Less: Short-term deferred credits    |  |      | 4,494,451 |      |    | 4,009,739
|                                     |  |      |           |      |    |          
|Long-term deferred credits           |  | P.   | 4,991,473 |      | P. |         
|                                     |  |      |           |      |    |          



|12. | Accounts payable and Accrued Liabilities
|--- | ----------------------------------------

An analysis of accounts payable and accrued liabilities at December 31, 2009 and 2008 is as follows:



|                                           |  |      |            |      |    |           
|------------------------------------------ |  | ---- | ---------- | ---- | -- | ----------
|                                           |  | 2009 |            | 2008
|Suppliers                                  |  | P.   | 11,519,806 |      | P. | 11,312,769
|Accruals for contingencies                 |  |      | 1,979,784  |      |    | 1,969,999 
|Derivative financial instruments (Note 10) |  |      | 1,094,223  |      |    |          
|Sundry creditors                           |  |      | 125,436    |      |    | 74,596    
|Link-up services                           |  |      | 418,032    |      |    | 437,036   
|Accrued interest                           |  |      | 274,412    |      |    | 236,628   
|Other                                      |  |      | 554,980    |      |    | 151,691   
|                                           |  |      |            |      |    |           
|                                           |  | P.   | 15,966,673 |      | P. | 14,182,719
|                                           |  |      |            |      |    |           

Changes in the Companys principal accruals for
contingencies during the years ended December 31, 2009, 2008 and 2007 were as follows:



|                                    |  |      |            |   |      |    |            |      |  |    |            |  
|----------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | ---- |  | -- | ---------- | -
|                                    |  | 2009 |            |   | 2008 |    |            | 2007 | 
|Balance at beginning of year        |  | P.   | 1,969,999  |   |      | P. | 5,399,516  |      |  | P. | 8,386,396  |  
|Increase through charge to expenses |  |      | 814,278    |   |      |    | 354,137    |      |  |    | 350,832    |  
|Payments                            |  |      | (1,390,565 | ) |      |    | (3,466,215 | )    |  |    | (2,941,183 | )
|Translation effects                 |  |      | 586,072    |   |      |    | (317,439   | )    |  |    | (396,529   | )
|                                    |  |      |            |   |      |    |            |      |  |    |            |  
|Balance at end of year              |  | P.   | 1,979,784  |   |      | P. | 1,969,999  |      |  | P. | 5,399,516  |  
|                                    |  |      |            |   |      |    |            |      |  |    |            |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|13. | Foreign Currency Position and Transactions
|--- | ------------------------------------------

At December 31, 2009 and 2008, the Company had the following foreign currency denominated assets and liabilities:



|                 |  |                                |  |                                   |       |      |         |                                   |    |      
|---------------- |  | ------------------------------ |  | --------------------------------- | ----- | ---- | ------- | --------------------------------- | -- | -----
|                 |  | Foreign currency (in millions)
|                 |  | 2009                           |  | Exchange rate atDecember 
31,2009 |       | 2008 |         | Exchange rate atDecember 
31,2008
|Assets:          |  |                                |  |                                   |       |      |         |                                   |    |      
|U.S. dollars     |  | 194                            |  | P.                                | 13.06 |      | 234     |                                   | P. | 13.54
|Argentinean peso |  | 171                            |  |                                   | 3.44  |      | 247     |                                   |    | 3.92 
|Brazilian real   |  | 4,289                          |  |                                   | 7.50  |      | 4,107   |                                   |    | 5.79 
|Chilean peso     |  | 45,282                         |  |                                   | 0.03  |      | 60,172  |                                   |    | 0.02 
|Colombian peso   |  | 287,209                        |  |                                   | 0.01  |      | 144,363 |                                   |    | 0.01 
|Peruvian sol     |  | 189                            |  |                                   | 4.52  |      | 350     |                                   |    | 4.31 
|Liabilities:     |  |                                |  |                                   |       |      |         |                                   |    |      
|U.S. dollars     |  | 1,165                          |  | P.                                | 13.06 |      | 1,312   |                                   | P. | 13.54
|Argentinean peso |  | 172                            |  |                                   | 3.44  |      | 182     |                                   |    | 3.92 
|Brazilian real   |  | 3,687                          |  |                                   | 7.50  |      | 2,516   |                                   |    | 5.79 
|Chilean peso     |  | 64,797                         |  |                                   | 0.03  |      | 51,031  |                                   |    | 0.02 
|Colombian peso   |  | 469,644                        |  |                                   | 0.01  |      | 355,663 |                                   |    | 0.01 
|Peruvian sol     |  | 148                            |  |                                   | 4.52  |      | 99      |                                   |    | 4.31 

At March 23,
2010, the exchange rates are as follows:



|                 |  |               |      
|---------------- |  | ------------- | -----
|Currency         |  | Exchange rate
|U.S. dollars     |  | P.            | 12.58
|Argentinean peso |  |               | 3.26 
|Brazilian real   |  |               | 6.98 
|Chilean peso     |  |               | 0.02 
|Colombian peso   |  |               | 0.01 
|Peruvian sol     |  |               | 4.43 
|Euro             |  |               | 17.02



|14. | Employee Benefits
|--- | -----------------

a)
Short-term

An analysis of short-term employee benefits at December 31, 2009 and 2008 is as follows:



|                            |  |      |           |      |    |          
|--------------------------- |  | ---- | --------- | ---- | -- | ---------
|                            |  | 2009 |           | 2008
|Vacation accrual            |  | P.   | 665,930   |      | P. | 544,011  
|Sundry contractual benefits |  |      | 668,776   |      |    | 492,811  
|Other employee benefits     |  |      | 187,599   |      |    | 187,006  
|                            |  |      |           |      |    |          
|Total                       |  | P.   | 1,522,305 |      | P. | 1,223,828
|                            |  |      |           |      |    |          



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



b) Long-term

Brazil

Embratel has established a defined-benefit pension plan (DBP) and a defined-contribution plan (DCP) that covers substantially all of its
employees, as well as a medical assistance plan (MAP) for its DBP participants. Liabilities (assets) recorded at December 31, 2009 and 2008 for such plans are as follows:



|                                   |  |      |           |   |      |    |           |  
|---------------------------------- |  | ---- | --------- | - | ---- | -- | --------- | -
|                                   |  | 2009 |           |   | 2008 |   
|Defined-benefit pension plan (DBP) |  | P.   | (531,903  | ) |      | P. | (169,498  | )
|Medical assistance plan (MAP)      |  |      | 2,871,369 |   |      |    | 1,973,695 |  
|Defined-contribution plan (DCP)    |  |      | 435,173   |   |      |    | 477,763   |  
|                                   |  |      |           |   |      |    |           |  
|Total                              |  | P.   | 2,774,639 |   |      | P. | 2,281,960 |  
|                                   |  |      |           |   |      |    |           |  

DBP is determined on the basis of compensation of employees in their final year of employment, their
seniority, and their age at the time of retirement. The Company has established funds for these labor obligations through Fundação Embratel de Seguridade Social - Telos, an independent entity that manages these types of funds.

Unrecognized gains and losses are being amortized over a period of 14 years, the estimated average remaining working lifetime
of the Companys employees.

Defined-benefit and medical assistance plans

An analysis of net period cost of Embratels benefit plans for the years ended December 31, 2009, 2008 and 2007 is as follows:



|                                     |  |      |            |   |      |    |         |      |  |    |          |   |  |     |         |   |     |    |          |   |  |    |         |  
|------------------------------------ |  | ---- | ---------- | - | ---- | -- | ------- | ---- |  | -- | -------- | - |  | --- | ------- | - | --- | -- | -------- | - |  | -- | ------- | -
|                                     |  | 2009 |            |   | 2008 |    |         | 2007 | 
|                                     |  | DBP  |            |   | MAP  |    |         | DBP  |  |    | MAP      |   |  | DBP |         |   | MAP |   
|Labor cost                           |  | P.   | 195        |   |      | P. | 135     |      |  | P. | 382      |   |  | P.  | 52      |   |     | P. | 368      |   |  | P. | 49      |  
|Financial cost of benefit obligation |  |      | 1,016,279  |   |      |    | 322,635 |      |  |    | 701,779  |   |  |     | 243,232 |   |     |    | 749,691  |   |  |    | 256,807 |  
|Expected return on plan assets       |  |      | (1,235,739 | ) |      |    | (11,475 | )    |  |    | (876,485 | ) |  |     | (16,614 | ) |     |    | (849,446 | ) |  |    | (26,121 | )
|Amortization of (gains) losses       |  |      | (92,893    | ) |      |    | 4,905   |      |  |    | (43,494  | ) |  |     | 7,207   |   |     |    | (9,447   | ) |  |    | 10,828  |  
|                                     |  |      |            |   |      |    |         |      |  |    |          |   |  |     |         |   |     |    |          |   |  |    |         |  
|Net period (benefit) cost            |  | P.   | (312,158   | ) |      | P. | 316,200 |      |  | P. | (217,818 | ) |  | P.  | 233,877 |   |     | P. | (108,834 | ) |  | P. | 241,563 |  
|                                     |  |      |            |   |      |    |         |      |  |    |          |   |  |     |         |   |     |    |          |   |  |    |         |  

A summary of the defined-benefit plan and medical assistance plan obligation at December 31, 2009 and
2008 is as follows:



|                                    |  |      |           |      |    |           |  |     |           |  |    |          
|----------------------------------- |  | ---- | --------- | ---- | -- | --------- |  | --- | --------- |  | -- | ---------
|                                    |  | 2009 |           | 2008
|                                    |  | DBP  |           | MAP  |    | DBP       |  | MAP
|Present value of labor obligations: |  |      |           |      |    |           |  |     |           |  |    |          
|Vested benefit obligation           |  | P.   | 9,385,959 |      | P. | 3,173,777 |  | P.  | 7,598,503 |  | P. | 2,365,848
|                                    |  |      |           |      |    |           |  |     |           |  |    |          
|Defined benefit obligation          |  | P.   | 9,385,959 |      | P. | 3,173,777 |  | P.  | 7,598,503 |  | P. | 2,365,848
|                                    |  |      |           |      |    |           |  |     |           |  |    |          



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



An analysis of changes in defined-benefit plan and medical assistance plan obligations
during the years ended December 31, 2009 and 2008 is as follows:



|                                                                                             |  |      |           |   |      |    |           |     |  |    |           |   |  |    |           |  
|-------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | -- | --------- | --- |  | -- | --------- | - |  | -- | --------- | -
|                                                                                             |  | 2009 |           |   | 2008 |   
|                                                                                             |  | DBP  |           |   | MAP  |    |           | DBP |  |    | MAP       |  
|Defined benefit obligation at beginning of year                                              |  | P.   | 7,598,503 |   |      | P. | 2,365,848 |     |  | P. | 7,204,148 |   |  | P. | 2,443,216 |  
|Labor cost                                                                                   |  |      | 195       |   |      |    | 135       |     |  |    | 382       |   |  |    | 52        |  
|Financial cost on obligations                                                                |  |      | 1,016,279 |   |      |    | 322,635   |     |  |    | 701,779   |   |  |    | 243,232   |  
|Actuarial (gain) loss                                                                        |  |      | (579,422  | ) |      |    | (73,858   | )   |  |    | 675,890   |   |  |    | (96,535   | )
|Payments from trust fund                                                                     |  |      | (888,347  | ) |      |    | (138,034  | )   |  |    | (582,570  | ) |  |    | (88,077   | )
|Translation effects                                                                          |  |      | 2,238,751 |   |      |    | 697,051   |     |  |    | (401,126  | ) |  |    | (136,040  | )
|                                                                                             |  |      |           |   |      |    |           |     |  |    |           |   |  |    |           |  
|Defined-benefit plan obligation and obligations under medical assistance plan at end of year |  | P.   | 9,385,959 |   |      | P. | 3,173,777 |     |  | P. | 7,598,503 |   |  | P. | 2,365,848 |  
|                                                                                             |  |      |           |   |      |    |           |     |  |    |           |   |  |    |           |  

An analysis of changes in plan assets for the years ended December 31, 2009 and 2008 is as follows:



|                                               |  |      |            |   |      |    |          |     |  |    |           |   |  |    |         |  
|---------------------------------------------- |  | ---- | ---------- | - | ---- | -- | -------- | --- |  | -- | --------- | - |  | -- | ------- | -
|                                               |  | 2009 |            |   | 2008 |   
|                                               |  | DBP  |            |   | MAP  |    |          | DBP |  |    | MAP       |  
|Fair value of plan assets at beginning of year |  | P.   | 9,172,387  |   |      | P. | 128,408  |     |  | P. | 8,921,064 |   |  | P. | 214,975 |  
|Expected return on plan assets                 |  |      | 1,235,739  |   |      |    | 11,475   |     |  |    | 876,485   |   |  |    | 16,614  |  
|Actuarial gain (loss)                          |  |      | 79,281     |   |      |    | (31,694  | )   |  |    | 453,797   |   |  |    | (3,163  | )
|Payments from trust fund                       |  |      | (888,347   | ) |      |    | (138,034 | )   |  |    | (582,570  | ) |  |    | (88,077 | )
|Contributions to fund                          |  |      | 442        |   |      |    | 37       |     |  |    | 337       |   |  |    | 29      |  
|Translation effects                            |  |      | 2,702,465  |   |      |    | 37,833   |     |  |    | (496,726  | ) |  |    | (11,970 | )
|                                               |  |      |            |   |      |    |          |     |  |    |           |   |  |    |         |  
|Fair value of plan assets at end of year       |  | P.   | 12,301,967 |   |      | P. | 8,025    |     |  | P. | 9,172,387 |   |  | P. | 128,408 |  
|                                               |  |      |            |   |      |    |          |     |  |    |           |   |  |    |         |  

At December 31, 2009, 89% (81% in 2008) of plan assets were invested in fixed-yield securities, 7% (14%
in 2008) in variable-yield securities, and the remainder in other investments.

An analysis of the net projected liability for
the pension plan and medical assistance plan for the years ended December 31, 2009 and 2008 is as follows:



|                                         |  |      |            |   |      |    |           |     |  |    |            |   |  |    |           |  
|---------------------------------------- |  | ---- | ---------- | - | ---- | -- | --------- | --- |  | -- | ---------- | - |  | -- | --------- | -
|                                         |  | 2009 |            |   | 2008 |   
|                                         |  | DBP  |            |   | MAP  |    |           | DBP |  |    | MAP        |  
|(Overfunding) underfunding of obligation |  | P.   | (2,916,008 | ) |      | P. | 3,165,752 |     |  | P. | (1,573,884 | ) |  | P. | 2,237,440 |  
|Unamortized actuarial gain (loss)        |  |      | 2,384,105  |   |      |    | (294,383  | )   |  |    | 1,404,386  |   |  |    | (263,745  | )
|                                         |  |      |            |   |      |    |           |     |  |    |            |   |  |    |           |  
|Net projected (asset) liability          |  | P.   | (531,903   | ) |      | P. | 2,871,369 |     |  | P. | (169,498   | ) |  | P. | 1,973,695 |  
|                                         |  |      |            |   |      |    |           |     |  |    |            |   |  |    |           |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The rates used in the actuarial calculations at December 31, 2009, 2008 and 2007
are as follows:



|                               |  |                    |  |                    |  |                
|------------------------------ |  | ------------------ |  | ------------------ |  | ---------------
|                               |  | 2009
Nominal rates |  | 2008
Nominal rates |  | 2007
Real rates
|                               |  | %                  |  | %                  |  | %              
|Discount of labor obligations: |  |                    |  |                    |  |                
|Long-term average              |  | 11.3               |  | 10.8               |  | 6.0            
|Salary increase:               |  |                    |  |                    |  |                
|Long-term average              |  | 4.5                |  | 4.5                |  |               
|Return on plan assets          |  | 11.3               |  | 10.8               |  | 6.0            
|Annual inflation:              |  |                    |  |                    |  |                
|Long-term average              |  | 4.5                |  | 4.5                |  |               

Based on
the provisions of Mexican FRS D-3, as of January 1, 2008, the actual financial valuation rates were replaced with nominal rates. This change has no effect on the calculation of labor obligations, since these rates are consistent with the rates
used in the actuarial valuation at December 31, 2007 (i.e., the long-term inflation rate, discount rate and salary increase rate are the same as those selected for 2007).

Defined contribution plan

Embratel makes contributions to its defined contribution plan through Embratel Social Security Fund - Telos. Plan contributions are
computed based on the salary of each employee. Participants choose their own contribution percentage (between 3% and 12% of the workers salary), and Embratel matches the employees percentage, though its contribution is capped at 8% of
the participants salary. All employees are eligible to participate in this plan.

The unfunded liability represents
Embratels obligation for those participants that migrated from the DBP to the DCP. Such liability is being amortized over a period of 20 years starting on January 1, 1999. Unpaid balances are adjusted monthly based on the return on the
portfolio assets at that date, which is subject to a yearly increase based on the Brazilian general price index plus 6 percentage points per annum. At December 31, 2009, the balance of the DCP obligation amounted to P. 435,173 (P. 477,763 in
2008).

Pensions and seniority premiums - Mexico

Substantially all of the Companys employees in Mexico are covered under defined benefit retirement and seniority premium plans.
Pension benefits are determined on the basis of compensation of employees in their final year of employment, their seniority, and their age at the time of retirement.

The Company has set up an irrevocable trust fund to finance its plans and has adopted the policy of making annual contributions to such
fund.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The transition liability, prior service cost and unrecognized actuarial gains and losses
are being amortized over 5 years, which is the average remaining service period of the covered employees. The most relevant information related to employee benefits is as follows:

Analysis of net period cost



|                                                   |  |      |         |   |      |    |         |      |  |    |         |  
|-------------------------------------------------- |  | ---- | ------- | - | ---- | -- | ------- | ---- |  | -- | ------- | -
|                                                   |  | 2009 |         |   | 2008 |    |         | 2007 | 
|Labor cost                                         |  | P.   | 19,665  |   |      | P. | 20,053  |      |  | P. | 6,784   |  
|Financing cost on projected benefit obligation     |  |      | 58,000  |   |      |    | 55,098  |      |  |    | 22,146  |  
|Expected return on plan assets                     |  |      | (52,132 | ) |      |    | (50,236 | )    |  |    | (18,582 | )
|Amortization of past services                      |  |      | 1,391   |   |      |    | 1,429   |      |  |    | 1,049   |  
|Amortization of variances in actuarial assumptions |  |      | 7,688   |   |      |    | 5,679   |      |  |    | 1,253   |  
|                                                   |  |      |         |   |      |    |         |      |  |    |         |  
|Net period cost                                    |  | P.   | 34,612  |   |      | P. | 32,023  |      |  | P. | 12,650  |  
|                                                   |  |      |         |   |      |    |         |      |  |    |         |  

Analysis of the defined benefit obligation



|                                             |  |      |         |  |      |    |         | 
|-------------------------------------------- |  | ---- | ------- |  | ---- | -- | ------- | 
|                                             |  | 2009 |         |  | 2008 |   
|Actuarial present value of labor obligation: |  |      |         |  |      |    |         | 
|Vested benefit obligation                    |  | P.   | 292,512 |  |      | P. | 298,174 | 
|Unvested benefit obligation                  |  |      | 403,510 |  |      |    | 344,257 | 
|                                             |  |      |         |  |      |    |         | 
|Defined benefit obligation                   |  | P.   | 696,022 |  |      | P. | 642,431 | 
|                                             |  |      |         |  |      |    |         | 

Analysis of changes in the defined benefit obligation



|                                                |  |      |         |   |      |    |         |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | -- | ------- | -
|                                                |  | 2009 |         |   | 2008 |   
|Defined benefit obligation at beginning of year |  | P.   | 642,431 |   |      | P. | 367,972 |  
|Labor cost                                      |  |      | 19,665  |   |      |    | 20,053  |  
|Financial cost on defined benefit obligation    |  |      | 58,000  |   |      |    | 55,098  |  
|Actuarial loss                                  |  |      | 2,187   |   |      |    | 14,287  |  
|Direct payments to employees                    |  |      | (26,261 | ) |      |    | (21,801 | )
|Transfers                                       |  |      |        |   |      |    | 206,822 |  
|                                                |  |      |         |   |      |    |         |  
|Defined benefit obligation at end of year       |  | P.   | 696,022 |   |      | P. | 642,431 |  
|                                                |  |      |         |   |      |    |         |  

Analysis of changes in plan assets



|                                      |  |      |         |   |      |    |         |  
|------------------------------------- |  | ---- | ------- | - | ---- | -- | ------- | -
|                                      |  | 2009 |         |   | 2008 |   
|Established fund at beginning of year |  | P.   | 540,362 |   |      | P. | 278,279 |  
|Expected return on plan assets        |  |      | 52,133  |   |      |    | 50,236  |  
|Actuarial loss                        |  |      | (23,864 | ) |      |    | (4,451  | )
|Contributions to trust fund           |  |      | 7,948   |   |      |    |        |  
|Transfers                             |  |      |        |   |      |    | 216,298 |  
|                                      |  |      |         |   |      |    |         |  
|Established fund at end of year       |  | P.   | 576,579 |   |      | P. | 540,362 |  
|                                      |  |      |         |   |      |    |         |  

Analysis of the net projected liability



|                                            |  |      |          |   |      |    |         |  
|------------------------------------------- |  | ---- | -------- | - | ---- | -- | ------- | -
|                                            |  | 2009 |          |   | 2008 |   
|Unfunded defined benefit obligation         |  | P.   | 119,443  |   |      | P. | 102,069 |  
|Transition liability                        |  |      | (4,316   | ) |      |    | (5,536  | )
|Unamortized actuarial loss                  |  |      | (114,513 | ) |      |    | (96,139 | )
|                                            |  |      |          |   |      |    |         |  
|Net pension and seniority premium liability |  | P.   | 614      |   |      | P. | 394     |  
|                                            |  |      |          |   |      |    |         |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The rates used in the actuarial calculations at December 31, 2009, 2008 and 2007
are as follows:



|                               |  |                    |  |                    |  |                
|------------------------------ |  | ------------------ |  | ------------------ |  | ---------------
|                               |  | 2009
Nominal rates |  | 2008
Nominal rates |  | 2007
Real rates
|                               |  | %                  |  | %                  |  | %              
|Discount of labor obligations: |  |                    |  |                    |  |                
|Long-term average              |  | 9.2                |  | 9.2                |  | 5.51           
|Salary increase:               |  |                    |  |                    |  |                
|Long-term average              |  | 4.5                |  | 4.5                |  | 0.97           
|Return on plan assets          |  | 9.2                |  | 9.2                |  | 5.51           

Dismissals

The most important information related to labor obligations for dismissals is as follows:

Analysis of net period cost



|                                               |  |      |     |      |    |      |  |    |     |  
|---------------------------------------------- |  | ---- | --- | ---- | -- | ---- |  | -- | --- | -
|                                               |  | 2009 |     | 2008 |    | 2007 | 
|Labor cost                                     |  | P.   | 299 |      | P. | 190  |  | P. | 178 |  
|Financing cost on projected benefit obligation |  |      | 223 |      |    | 130  |  |    | 90  |  
|Actuarial loss                                 |  |      | 67  |      |    |     |  |    |    |  
|Amortization of past services                  |  |      |    |      |    | 209  |  |    | (72 | )
|                                               |  |      |     |      |    |      |  |    |     |  
|Net period cost                                |  | P.   | 589 |      | P. | 529  |  | P. | 196 |  
|                                               |  |      |     |      |    |      |  |    |     |  

Analysis of labor obligations for dismissals



|                           |  |      |       |      |    |      
|-------------------------- |  | ---- | ----- | ---- | -- | -----
|                           |  | 2009 |       | 2008
|Defined benefit obligation |  | P.   | 3,340 |      | P. | 2,751
|                           |  |      |       |      |    |      
|Net projected liability    |  | P.   | 3,340 |      | P. | 2,751
|                           |  |      |       |      |    |      

A reconciliation of the recorded liability is as
follows:



|                             |  |      |       |      |    |      
|---------------------------- |  | ---- | ----- | ---- | -- | -----
|                             |  | 2009 |       | 2008
|Balance at beginning of year |  | P.   | 2,751 |      | P. | 2,222
|Net period cost              |  |      | 589   |      |    | 529  
|                             |  |      |       |      |    |      
|Balance at end of year       |  | P.   | 3,340 |      | P. | 2,751
|                             |  |      |       |      |    |      



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|15. | Stockholders Equity
|--- | --------------------

a) The shares of Telmex Internacional were authorized and issued pursuant to the Telmex stockholders meeting held on
December 21, 2007, in which the split-up was approved (see Note 1a). At December 31, 2009 and 2008, capital stock is represented by 18,015 million and 18,323 million common shares issued and outstanding, respectively, with no par
value, representing the Companys fixed capital. An analysis is as follows:



|                                                                           |  |      |            |      |    |           
|-------------------------------------------------------------------------- |  | ---- | ---------- | ---- | -- | ----------
|                                                                           |  | 2009 |            | 2008
|8,115 million Series AA shares                                           |  | P.   | 10,555,469 |      | P. | 10,555,469
|394 million Series A shares (415 in 2008)                                |  |      | 600,472    |      |    | 633,651   
|9,506 million Series L shares with limited voting rights (9,793 in 2008) |  |      | 5,821,701  |      |    | 5,983,690 
|                                                                           |  |      |            |      |    |           
|Total                                                                      |  | P.   | 16,977,642 |      | P. | 17,172,810
|                                                                           |  |      |            |      |    |           

An analysis of the changes in 2009 and 2008 is as
follows:



|                                          |  |                   |  |            |            |              |            |   |        |    |         |              |  |        |        |  |    |           |  
|----------------------------------------- |  | ----------------- |  | ---------- | ---------- | ------------ | ---------- | - | ------ | -- | ------- | ------------ |  | ------ | ------ |  | -- | --------- | -
|                                          |  | Capital stock (1) | 
|                                          |  | Series AA       |  | Series A |            |              | Series L |  
|                                          |  | No. ofshares      |  | Amount     |            | No. ofshares |            |   | Amount |    |         | No. ofshares |  |        | Amount | 
|Balance at December 31, 2007              |  | 8,115             |  | P.         | 10,555,469 |              | 430        |   |        | P. | 655,799 |              |  | 10,815 |        |  | P. | 6,617,295 |  
|Cash purchase of Companys own shares (2) |  |                   |  |            |            |              | (3         | ) |        |    | (4,937  | )            |  | (1,034 | )      |  |    | (650,816  | )
|Conversion of shares                      |  |                   |  |            |            |              | (12        | ) |        |    | (17,211 | )            |  | 12     |        |  |    | 17,211    |  
|                                          |  |                   |  |            |            |              |            |   |        |    |         |              |  |        |        |  |    |           |  
|Balance at December 31, 2008              |  | 8,115             |  | P.         | 10,555,469 |              | 415        |   |        | P. | 633,651 |              |  | 9,793  |        |  | P. | 5,983,690 |  
|Cash purchase of Companys own shares     |  |                   |  |            |            |              | (5         | ) |        |    | (8,131  | )            |  | (303   | )      |  |    | (187,037  | )
|Conversion of shares                      |  |                   |  |            |            |              | (16        | ) |        |    | (25,048 | )            |  | 16     |        |  |    | 25,048    |  
|                                          |  |                   |  |            |            |              |            |   |        |    |         |              |  |        |        |  |    |           |  
|Balance at December 31, 2009              |  | 8,115             |  | P.         | 10,555,469 |              | 394        |   |        | P. | 600,472 |              |  | 9,506  |        |  | P. | 5,821,701 |  
|                                          |  |                   |  |            |            |              |            |   |        |    |         |              |  |        |        |  |    |           |  



|(1) | Number of shares in millions
|--- | ----------------------------

(2) Includes
414 million Series L shares and 1 million Series A shares, acquired through Telmex, as explained in paragraph c) of this Note.

Each A share can be converted into one L share at the option of the holder at any time. Each AA share
is convertible into one L share at the option of the holder at any time, provided that the AA shares do not represent less than 20% of the total capital stock. The AA shares may be owned only by holders that qualify as
Mexican investors as provided in the bylaws of the Company. Series A common shares, which may be freely subscribed, must not exceed more than 19.6% of capital stock and no more than 49% of the common shares of total capital stock. Series
L shares, which have limited voting rights may be freely subscribed and, in a percentage when combined with the Series A shares, may not exceed 80% of capital stock.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Voting rights

Each share of the Series AA and A entitles the holder to one vote at the general stockholders meetings. Each
Series L share entitles the holder to one vote at any stockholders meeting in which holders of Series L shares are authorized to vote. In accordance with the Eighth Clause of the Companys bylaws, holders of Series
L shares have the right to vote on the following matters:



| |  |  | The transformation of Telmex Internacional from one type of entity to another;
| | - |  | ------------------------------------------------------------------------------



| |  |  | Any merger in which Telmex Internacional is not the surviving entity or any merger with an entity whose principal corporate purposes are different from
those of Telmex Internacional (when Telmex Internacional is the surviving entity); and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cancellation of the registration of Telmex Internacionals shares in the securities or special sections of the Mexican National Securities
Registry and in any other foreign stock exchanges in which they are registered.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On the basis of a
resolution passed by Special Stockholders Meeting called for such purpose, holders of Series L shares shall be entitled to appoint up to two directors and their corresponding alternate directors.

For the resolutions adopted in extraordinary stockholders meetings related to any of the matters on which the Series L
shares are entitled to vote to be validated, the approval by a majority vote of the Series AA and Series A stockholders will be required.

Under Mexican law, stockholders of any Series of shares are also entitled to vote as one class on any proposal that could adversely
affect the rights of the stockholders of that particular series and the Companys stockholders (including the Series L stockholders), which individually or collectively represent 20% or more of all capital stock would be entitled to
request judicial relief against any stockholders resolution with respect to those resolutions for which such stockholders have the right to vote. The determination of whether a matter requires the vote by the holders of Series L
under such basis would initially be made by the board of directors or by any other party that calls a stockholders meeting to decide on the resolution. A negative decision would be subject to judicial challenge by any affected stockholder, and
a court would ultimately determine the necessity for a class vote. There are no other procedures for determining whether a proposal requires a class vote, and Mexican law does not provide extensive guidance on the criteria to be applied in making
such a determination.

b) At a regular meeting held on April 29, 2009, the stockholders agreed to declare a cash dividend
of P. 3,098,073, equal to P. 0.17 per outstanding share, payable in two installments on August 20 and November 5, 2009.

At a regular meeting held on July 9, 2008, the shareholders agreed to declare a cash dividend of P. 2,786,482, equal to P.
0.15 per outstanding common share, payable in two installments on August 26 and November 22, 2008.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



c) From the date on which Telmex Internacional was incorporated until the date the
shares of Telmex Internacional and Telmex began to trade separately, Telmex continued acquiring both its own shares, which at the time represented both shares of Telmex and shares of Telmex Internacional, by an amount equivalent to P. 3,571,744
corresponding to 414 million Series L shares and 1 million Series A shares of Telmex Internacional.

The shares acquired by Telmex in the name of Telmex Internacional amounted to P.3,571,744, which in conformity with the resolutions
adopted by the Board of Directors of Telmex were transferred by Telmex to Telmex Internacional as part of the split-up in cash and cash equivalents (inflow). Telmex Internacional then paid Telmex for the value of the shares that Telmex acquired in
the name of Telmex Internacional (outflow), and the related amounts and treasury shares of both companies were adjusted accordingly. At a regular stockholders meeting held on July 9, 2008, the stockholders authorized P. 10,000,000 for the
purchase of the Companys own shares and as of such date, the Company initiated a program to purchase its own shares.

In
addition, during 2008, the Company acquired 620.1 million Series L shares for Ps. 4,230,648 and 2.2 million Series A shares for Ps. 14,654. The cost of the repurchased shares, in the amount that exceeds the portion
of capital stock corresponding to the repurchased shares, is allocated to retained earnings.

At a regular stockholders
meeting held on April 29, 2009, the stockholders authorized an increase of P. 5,000,000 for the purchase of the Companys own shares.

In addition, during 2009, the Company acquired 303.4 million Series L shares for P. 2,448,413 and 5.3 million
Series A shares for P. 41,487. The cost of the repurchased shares, in the amount that exceeds the portion of capital stock corresponding to the repurchased shares, is allocated to retained earnings.

d) In conformity with the Mexican Corporations Act, at least 5% of net income of the year approved by the stockholders must be
appropriated to increase the legal reserve. This practice must be continued each year until the legal reserve reaches 20% of capital stock. At December 31, 2009, the legal reserve is P. 2,910,431 and is included in retained earnings.

e) The terms of the split-up established that neither Telmex Internacional nor Telmex would hold shares of the other. At the
time of the split-up, each Telmex stockholder became an owner of the same number and class of shares in Telmex Internacional as they held in Telmex. Consequently, both companies were owned by the same stockholders.



|16. | Income Tax and Flat-rate Business Tax
|--- | -------------------------------------

a) The Mexican Flat-rate Business Tax (FRBT) Law was published on October 1, 2007. On January 1, 2008, the Law became effective
and abolished the Asset Tax Law. This FRBT law is only applicable to income generated in Mexico.

Beginning January 1,
2008, the FRBT is computed by applying the applicable rate to income determined on the basis of cash flows, which is determined by deducting authorized deductions from all income collected from those activities that are subject to the tax. As
established under the Law, certain FRBT credits also may be deducted from the FRBT payable. Under the Laws transitory provisions, the FRBT rate is 16.5% in 2008, 17% in 2009 and 17.5% in 2010 and succeeding years.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



FRBT is payable only to the extent it exceeds income tax for the same period.

For the years ended December 31, 2009 and 2008, the Company had no FRBT payable and, based on its taxable income
projections, estimates that it will not be subject to the payment of FRBT in subsequent years.

On December 7, 2009, a decree amending
the Mexican Income Tax Law for 2010 was enacted, and it became effective as of January 1, 2010. The main change applicable to the Company is related to the tax rate, which includes a temporary increase of 2% for all taxpayers. The Corporate
income tax rate will increase to 30% from 2010 to 2012, decrease to 29% in 2013 and then return to 28% in 2014.

b) For the
years ended December 31, 2009 , 2008 and 2007 income tax expense is as follows:

Income tax (Foreign entities):



|                                     |  |      |           |  |      |    |         |  |    |          
|------------------------------------ |  | ---- | --------- |  | ---- | -- | ------- |  | -- | ---------
|                                     |  | 2009 |           |  | 2008 |    | 2007   
|Current                              |  | P.   | 3,564,738 |  |      | P. | 117,360 |  | P. | 1,139,840
|Deferred                             |  |      | 767,428   |  |      |    | 552,828 |  |    | 1,415,789
|                                     |  |      |           |  |      |    |         |  |    |          
|Total income tax of foreign entities |  | P.   | 4,332,166 |  |      | P. | 670,188 |  | P. | 2,555,629
|                                     |  |      |           |  |      |    |         |  |    |          

Income tax (Mexican entities):



|                                                 |  |      |           |   |      |    |           |  |    |          
|------------------------------------------------ |  | ---- | --------- | - | ---- | -- | --------- |  | -- | ---------
|                                                 |  | 2009 |           |   | 2008 |    | 2007     
|Current                                          |  | P.   | 113,297   |   |      | P. | 328,142   |  | P. | 916,480  
|Deferred                                         |  |      | (22,982   | ) |      |    | 261,003   |  |    | 14,654   
|                                                 |  |      |           |   |      |    |           |  |    |          
|Total income tax of Mexican entities             |  | P.   | 90,315    |   |      | P. | 589,145   |  | P. | 931,134  
|                                                 |  |      |           |   |      |    |           |  |    |          
|Total income tax of foreign and Mexican entities |  | P.   | 4,422,481 |   |      | P. | 1,259,333 |  | P. | 3,486,763
|                                                 |  |      |           |   |      |    |           |  |    |          

c) At December 31, 2009 and 2008, the foreign
entities recognized deferred taxes on the following temporary differences:



|                                                               |  |      |            |   |      |    |            |  
|-------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | -
|                                                               |  | 2009 |            |   | 2008 |   
|Deferred tax assets:                                           |  |      |            |   |      |    |            |  
|Tax loss carryforwards                                         |  | P.   | 6,123,064  |   |      | P. | 6,144,768  |  
|Accrued liabilities                                            |  |      | 3,031,827  |   |      |    | 1,795,560  |  
|Plant, property and equipment                                  |  |      | 953,821    |   |      |    | 1,481,653  |  
|Other                                                          |  |      | 3,876      |   |      |    |           |  
|Allowances and other reserves                                  |  |      | 1,415,042  |   |      |    | 1,146,298  |  
|Valuation allowance on tax loss carryforwards and other assets |  |      | (5,081,775 | ) |      |    | (4,070,496 | )
|                                                               |  |      |            |   |      |    |            |  
|                                                               |  |      | 6,445,855  |   |      |    | 6,497,783  |  
|                                                               |  |      |            |   |      |    |            |  
|Deferred tax liabilities:                                      |  |      |            |   |      |    |            |  
|Licenses                                                       |  |      | (347,406   | ) |      |    | (603,051   | )
|Other                                                          |  |      |           |   |      |    | (190,800   | )
|                                                               |  |      |            |   |      |    |            |  
|                                                               |  |      | (347,406   | ) |      |    | (793,851   | )
|                                                               |  |      |            |   |      |    |            |  
|Deferred tax asset, net                                        |  | P.   | 6,098,449  |   |      | P. | 5,703,932  |  
|                                                               |  |      |            |   |      |    |            |  



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



d) At December 31, 2009 and 2008, the Mexican entities recognized deferred taxes on
the following temporary items:



|                                           |  |      |            |   |      |    |            |  
|------------------------------------------ |  | ---- | ---------- | - | ---- | -- | ---------- | -
|                                           |  | 2009 |            |   | 2008 |   
|Deferred tax assets                        |  |      |            |   |      |    |            |  
|Advance billings                           |  | P.   | 418,716    |   |      | P. | 718,471    |  
|Allowance for doubtful accounts            |  |      | 43,886     |   |      |    | 29,174     |  
|Tax loss carryforwards                     |  |      | 159,380    |   |      |    |           |  
|Plant, property and equipment              |  |      | 7,818      |   |      |    |           |  
|Accrued liabilities                        |  |      | 31,948     |   |      |    | 6,883      |  
|                                           |  |      |            |   |      |    |            |  
|                                           |  | P.   | 661,748    |   |      | P. | 754,528    |  
|                                           |  |      |            |   |      |    |            |  
|Deferred tax liabilities:                  |  |      |            |   |      |    |            |  
|Deferred assets                            |  | P.   |           |   |      | P. | (141,949   | )
|Deferred tax liabilities                   |  |      | (23,871    | ) |      |    | (6,915     | )
|Effect of translation of investments       |  |      | (7,933,535 | ) |      |    | (2,176,811 | )
|Plant, property and equipment              |  |      |           |   |      |    | (1,410     | )
|                                           |  |      |            |   |      |    |            |  
|                                           |  |      | (7,957,406 | ) |      |    | (2,327,085 | )
|                                           |  |      |            |   |      |    |            |  
|Deferred tax liabilities net               |  | P.   | (7,295,658 | ) |      | P. | (1,572,557 | )
|                                           |  |      |            |   |      |    |            |  
|Total Consolidated deferred tax asset, net |  | P.   | 1,197,209  |   |      | P. | 4,131,375  |  
|                                           |  |      |            |   |      |    |            |  

e) The income tax rates applicable in 2009 in the countries where the Company operates and the years in
which tax loss carryforwards may be applied are as follows:



|          |  |                   |   |  |                   
|--------- |  | ----------------- | - |  | ------------------
|          |  | Statutory taxrate |   |  | Carryforwardperiod
|Mexico    |  | 28                | % |  | 10 years          
|Brazil    |  | 34                | % |  | No expiration     
|Argentina |  | 35                | % |  | 5 years           
|Chile     |  | 17                | % |  | No expiration     
|Colombia  |  | 33                | % |  | No expiration     
|Ecuador   |  | 25                | % |  | 5 years           
|U.S.A.    |  | 35                | % |  | 10 years          
|Peru      |  | 30                | % |  | 4 years           

The foreign
subsidiaries determine their income tax based on the individual results of each subsidiary and in conformity with the specific tax regimes of each country. The pretax income of foreign subsidiaries in 2009, 2008 and 2007 was P. 13,644,749, P.
4,686,318 and P. 7,418,436, respectively. The pretax income of Mexican subsidiaries in 2009, 2008 and 2007 was P. 340,620, P. 2,203,943 and P. 3,082,005, respectively.



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##### Table of Contents

TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



At December 31, 2009 and 2008, Embratel and subsidiaries have available tax loss
carryforwards of P. 10,580,422 and P. 12,292,491, respectively, and negative social contribution bases of P. 10,121,220 and P. 11,674,340, respectively. Under Brazilian tax legislation, tax losses may be carried forward in future years and never
expire; however, the tax loss carryforward applied in each year may not exceed 30% of the tax base. The tax rates applicable to the tax loss carryforwards and negative social contribution bases are 25% and 9%, respectively.

Also, at December 31, 2009 and 2008, subsidiaries of the following countries have available tax loss carryforwards that may be
utilized in future years (see table above for carryforward period of each country):



|          |  |      |           |      |    |          
|--------- |  | ---- | --------- | ---- | -- | ---------
|          |  | 2009 |           | 2008
|Chile     |  | P.   | 6,643,910 |      | P. | 5,485,088
|Argentina |  |      | 1,000,241 |      |    | 1,188,338
|Colombia  |  |      | 2,801,280 |      |    | 1,725,158
|Ecuador   |  |      | 198,975   |      |    | 206,289  

f) A reconciliation
of the statutory corporate income tax rate to the effective income tax rate recognized by the Company for financial reporting purposes for the years ended December 31, is as follows:



|                                                               |  |      |            |   |      |    |           |      |  |    |            |  
|-------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -- | --------- | ---- |  | -- | ---------- | -
|                                                               |  | 2009 |            |   | 2008 |    |           | 2007 | 
|Income before income tax                                       |  | P.   | 13,985,369 |   |      | P. | 6,890,261 |      |  | P. | 10,500,441 |  
|Statutory Mexican income tax rate                              |  |      | 28.0       | % |      |    | 28.0      | %    |  |    | 28.0       | %
|                                                               |  |      |            |   |      |    |           |      |  |    |            |  
|Income tax at statutory rate                                   |  |      | 3,915,903  |   |      |    | 1,929,273 |      |  |    | 2,940,123  |  
|Difference with enacted rates in Mexico                        |  |      | 927,601    |   |      |    | 392,752   |      |  |    | 474,544    |  
|Non-taxable income                                             |  |      | (342,338   | ) |      |    | (164,354  | )    |  |    | (110,731   | )
|Other tax deductions                                           |  |      | 77,454     |   |      |    | 39,749    |      |  |    | 6,190      |  
|Tax inflation effect                                           |  |      | (61,238    | ) |      |    | (128,091  | )    |  |    | (126,215   | )
|Valuation allowance on tax loss carryforwards and other assets |  |      |           |   |      |    | (750,961  | )    |  |    | 139,384    |  
|Other differences                                              |  |      | (94,901    | ) |      |    | (59,035   | )    |  |    | 163,468    |  
|                                                               |  |      |            |   |      |    |           |      |  |    |            |  
|Income tax                                                     |  | P.   | 4,422,481  |   |      | P. | 1,259,333 |      |  | P. | 3,486,763  |  
|                                                               |  |      |            |   |      |    |           |      |  |    |            |  
|Effective income tax rate                                      |  |      | 31.6       | % |      |    | 18.3      | %    |  |    | 33.2       | %
|                                                               |  |      |            |   |      |    |           |      |  |    |            |  

g) At December 31, 2008 and 2009, the balance of the Restated contributed capital account (CUCA) and
the Net tax profit account (CUFIN) was P. 21,687,700 and P. 8,275,198, respectively. These amounts correspond to Telmex Internacional, S.A.B. de C.V. on a stand-alone basis.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|17. | Commitments and Contingencies
|--- | -----------------------------

a) Commitments

At December 31, 2009, the Company has non-cancelable commitments of P. 2,065,332 (P. 3,215,137 in 2008) for the purchase of
equipment, consulting and management services, and rights of exploitation for orbital positions. Payments made under purchase agreements aggregated to P. 2,232,962 in 2009 (P. 2,275,215 in 2008 and P. 181,783 in 2007).

The Companys subsidiary Consertel conducted a split-up in December 2007, which gave rise to a new company called Integración
de Servicios TMX, S.A. de C.V. that remained as a subsidiary of Telmex when the new corporation Telmex Internacional was established. A certain amount of Consertels obligations were transferred to Integración de Servicios TMX. Under
Mexican law, if Integración de Servicios TMX defaults on any of those obligations, the claimant may assert a claim against Consertel. The Company considers the risk of assertion of any such claim to be remote.

b) Contingencies in Brazil

Brazilian value-added goods and services tax (ICMS)

In August 2006, an agreement was published granting a proportional reduction of Embratels liability plus re-expression penalties and
surcharges generated through July 2006 related to the Brazilian ICMS tax on communication services. The provisions of this agreement are applicable throughout all the states of Brazil, and the Federal District (Brasilia). In 2007, Embratel settled
claims totaling of P. 5,353,156, which included the State of Sao Paulo, thus resolving any disputes related to the matter in the states that implemented the benefits of this agreement.

Embratel, Primesys Soluções Empresariais, S.A. and Telmex do Brasil Ltda. received assessments by the tax authorities
related to alleged undue ICMS tax credits of P. 52,851 at December 31, 2009 (P. 133,547 in 2008) not addressed by the agreement referred to above that are considered by the Companys external lawyers as probable losses. Contingencies from
the legal proceedings that are considered to be possible losses aggregate to P. 3,288,862 at December 31, 2009 (P. 2,489,332 in 2008).

Star One has tax contingencies of P. 8,811,473 at December 31, 2009 (P. 4,447,242 in 2008) for unpaid ICMS on internet and satellite
use, which the Company considers as a possible loss; consequently, the Company has not provided for such contingencies in the financial statements.

Brazilian Social Welfare Tax on Service Exports (PIS)

Embratel, Primesys Soluções Empresariais, S.A. and Telmex do Brasil Ltda. have total tax contingencies of P. 1,393,445 at
December 31, 2009 (P. 1,056,538 in 2008), related to the contributions of PIS prior to 1995, which were offset in conformity with Brazilian tax laws. Based on the known facts and arguments and on the opinion of legal consul, only P. 53,774 at
December 31, 2009 (P. 3,655 in 2008) of this contingency was considered as a probable loss and P. 1,339,672 at December 31, 2009 (P. 1,052,802 in 2008) as a possible loss.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Brazilian Social Welfare Tax for Service Export Security Tax (COFINS)

Embratel, Star One and Telmex do Brasil Ltda. have tax contingencies of P. 151,617 at December 31, 2009 (P. 110,125 in 2008) related
to the payment of COFINS from 1999, considered as a probable loss, as well as P. 1,270,958 at December 31, 2009 (P. 2,297,788 in 2008), considered as a possible loss.

Other tax contingencies

Embratel, Embratel Participações, S.A., Telmex do Brasil Ltda., Brasil Center Comunicações Ltda. and Primesys
Soluções Empresariais S.A. have other on-going tax litigations involving the Brazilian Social Security Institute (INSS), Income Tax and Social Contribution on Net Income (IRPJ/CSLL), Telecommunications Systems Universalization Fund
(FUST), Telecom Development Fund (FUNTTEL) and Income Tax on Payments Abroad (IRRF), among others. The total amount of the claim status that is considered as a probable loss at December 31, 2009 is zero (P. 24,950 in 2008), and P. 5,431,938 at
December 31, 2009 (P. 3,042,072 in 2008) was considered as a possible loss.

Additionally, Embratel received assessments
by the Brazilian tax authorities in the form of a fine for not filing electronic files from 2001 through 2005 of P. 3,514,554 at December 31, 2009 (P. 2,714,716 in 2008), which are considered as a possible loss.

Embratel and Star One have other on-going litigation relating to the offsetting of IRPJ, PIS, COFINS, CIDE (Contribuição de
Intervenção do Domínio Econômico), CSLL and IRRF on allegedly improper IRPJ and ILL (Imposto sobre lucro líquido) credits of P. 2,927,910 at December 31, 2009 (P. 2,261,570 in 2008), which are considered as a
possible loss.

Disputes with third parties

Certain cases on a number of different matters are in advanced stages of the litigation process and, according to Embratels external
lawyers, the subsidiary stands a chance of losing at least some of these suits; consequently, P. 1,136,216 at December 31, 2009 (P. 810,682 in 2008) has been accrued for probable unfavorable rulings.

Additionally, Embratel, Telmex do Brasil Ltda., BrasilCenter Comunicações Ltda. and Primesys Soluções
Empresariais S.A. have other on-going litigation with claims totalling of P. 1,442,419 at December 31, 2009 (P. 1,156,670 in 2008), which are considered as a possible loss.

Other civil and labor contingencies

Embratel is party to claims filed by its telephone service customers, for which it has accrued P. 163,174 in 2009 (P. 112,784 in 2008),
since such amount was considered as a probable loss, and P. 385,754 at December 31, 2009 (P. 297,708 in 2008) was considered as a possible loss.

Additionally, Embratel received a fine from Anatel of P. 2,140,676 at December 31, 2009 (P. 1,033,604 in 2008), of which P.
1,986,607 at December 31, 2009 (P. 912,473 in 2008) was considered to be a possible loss, and P. 154,069 at December 31, 2009 (P. 121,131 in 2008) was considered as a probable loss.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|18. | Segments
|--- | --------

Telmex
Internacional operates in various countries in Latin America. Additional information related to the Companys operations is provided in Note 1. The most relevant segment information, which has been prepared based on the accounting policies
described in Note 2, is as follows:



|                              |  |                                                                                                                                    |       |        |    |           |  |    |       |   |  |          |       |   |      |    |        |         |  |    |        |   |  |              |       |   |                   |    |      |   |  |    |      |   |  |    |        
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- | ----- | ------ | -- | --------- |  | -- | ----- | - |  | -------- | ----- | - | ---- | -- | ------ | ------- |  | -- | ------ | - |  | ------------ | ----- | - | ----------------- | -- | ---- | - |  | -- | ---- | - |  | -- | -------
|                              |  | (2009 and 2008 in millions of nominal Mexican pesos; 2007 in millions of Mexican pesos with purchasing power at December 31, 2007)
|                              |  | Mexico                                                                                                                             |       | Brazil |    | Argentina |  |    | Chile |   |  | Colombia |       |   | Peru |    |        | Ecuador |  |    | U.S.A. |   |  | Eliminations |       |   | Consolidatedtotal
|December 31, 2009             |  |                                                                                                                                    |       |        |    |           |  |    |       |   |  |          |       |   |      |    |        |         |  |    |        |   |  |              |       |   |                   |    |      |   |  |    |      |   |  |    |        
|Operating revenues            |  | P.                                                                                                                                 | 4,690 |        | P. | 72,325    |  | P. | 2,176 |   |  | P.       | 3,652 |   |      | P. | 7,441  |         |  | P. | 1,827  |   |  | P.           | 243   |   |                   | P. | 312  |   |  | P. | (126 | ) |  | P. | 92,540 
|Depreciation and amortization |  |                                                                                                                                    | 126   |        |    | 8,225     |  |    | 468   |   |  |          | 727   |   |      |    | 1,479  |         |  |    | 342    |   |  |              | 135   |   |                   |    | 24   |   |  |    |     |   |  |    | 11,526 
|Operating income              |  |                                                                                                                                    | 1,032 |        |    | 10,990    |  |    | (10   | ) |  |          | (240  | ) |      |    | 147    |         |  |    | (67    | ) |  |              | (276  | ) |                   |    | (524 | ) |  |    |     |   |  |    | 11,052 
|Segment assets                |  |                                                                                                                                    | 947   |        |    | 184,110   |  |    | 4,542 |   |  |          | 9,940 |   |      |    | 14,881 |         |  |    | 5,735  |   |  |              | 1,450 |   |                   |    | 37   |   |  |    |     |   |  |    | 221,642
|Goodwill                      |  |                                                                                                                                    |      |        |    | 3,392     |  |    | 424   |   |  |          | 1,738 |   |      |    | 7,826  |         |  |    | 409    |   |  |              | 269   |   |                   |    | 341  |   |  |    |     |   |  |    | 14,399 
|December 31, 2008             |  |                                                                                                                                    |       |        |    |           |  |    |       |   |  |          |       |   |      |    |        |         |  |    |        |   |  |              |       |   |                   |    |      |   |  |    |      |   |  |    |        
|Operating revenues            |  | P.                                                                                                                                 | 5,171 |        | P. | 59,954    |  | P. | 1,799 |   |  | P.       | 2,380 |   |      | P. | 5,678  |         |  | P. | 1,270  |   |  | P.           | 63    |   |                   | P. | 300  |   |  | P. | (610 | ) |  | P. | 76,005 
|Depreciation and amortization |  |                                                                                                                                    | 73    |        |    | 6,773     |  |    | 449   |   |  |          | 494   |   |      |    | 883    |         |  |    | 248    |   |  |              | 29    |   |                   |    | 19   |   |  |    |     |   |  |    | 8,968  
|Operating income              |  |                                                                                                                                    | 2,015 |        |    | 8,303     |  |    | (290  | ) |  |          | (299  | ) |      |    | (226   | )       |  |    | (120   | ) |  |              | (136  | ) |                   |    | (324 | ) |  |    |     |   |  |    | 8,923  
|Segment assets                |  |                                                                                                                                    | 424   |        |    | 135,599   |  |    | 4,502 |   |  |          | 6,169 |   |      |    | 11,081 |         |  |    | 4,228  |   |  |              | 1,170 |   |                   |    | 34   |   |  |    |     |   |  |    | 163,207
|Goodwill                      |  |                                                                                                                                    |      |        |    | 1,866     |  |    | 438   |   |  |          | 1,436 |   |      |    | 6,374  |         |  |    | 309    |   |  |              | 230   |   |                   |    | 354  |   |  |    |     |   |  |    | 11,007 
|December 31, 2007             |  |                                                                                                                                    |       |        |    |           |  |    |       |   |  |          |       |   |      |    |        |         |  |    |        |   |  |              |       |   |                   |    |      |   |  |    |      |   |  |    |        
|Operating revenues            |  | P.                                                                                                                                 | 5,490 |        | P. | 55,457    |  | P. | 1,445 |   |  | P.       | 1,695 |   |      | P. | 2,695  |         |  | P. | 987    |   |  | P.           | 29    |   |                   | P. | 111  |   |  | P. | (149 | ) |  | P. | 67,760 
|Depreciation and amortization |  |                                                                                                                                    | 66    |        |    | 6,442     |  |    | 263   |   |  |          | 344   |   |      |    | 434    |         |  |    | 189    |   |  |              | 17    |   |                   |    | 16   |   |  |    |     |   |  |    | 7,771  
|Operating income              |  |                                                                                                                                    | 3,184 |        |    | 7,334     |  |    | (37   | ) |  |          | (149  | ) |      |    | 172    |         |  |    | 13     |   |  |              | (23   | ) |                   |    | (164 | ) |  |    |     |   |  |    | 10,330 
|Segment assets                |  |                                                                                                                                    | 402   |        |    | 134,688   |  |    | 3,304 |   |  |          | 3,972 |   |      |    | 6,119  |         |  |    | 2,143  |   |  |              | 231   |   |                   |    | 15   |   |  |    |     |   |  |    | 150,874
|Goodwill                      |  |                                                                                                                                    |      |        |    | 1,897     |  |    | 408   |   |  |          | 1,487 |   |      |    | 6,055  |         |  |    | 308    |   |  |              | 230   |   |                   |    | 283  |   |  |    |     |   |  |    | 10,668 

Intersegmental
income by country is omitted as it is considered immaterial.

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.



|19. | Differences between Mexican FRS and U.S. GAAP
|--- | ---------------------------------------------

The Companys consolidated financial statements are prepared in accordance with Mexican Financial Reporting Standards (Mexican
FRS), which differ in certain respects from accounting principles generally accepted in the United States (U.S. GAAP).



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



As described in Note 2c, effective January 1, 2008, the Company ceased to recognize
the effects of inflation in its financial statements as required by Mexican FRS B-10. However, as required by such new standard, the financial statement amounts that were previously reported remained unchanged, and the inflation adjustments
previously recognized have been maintained in their corresponding caption. This new standard required that the re-expressed amounts of non-monetary assets as reported at December 31, 2007 to become the carrying amounts for those assets
effective January 1, 2008. The carrying amounts will also affect net income in subsequent periods. For example, depreciation expense after the adoption of Mexican FRS B-10 is based on carrying amounts of fixed assets that include inflation
adjustments recorded prior to the adoption of Mexican FRS B-10.

The Mexican FRS and US GAAP amounts included in this
Note, as they relate to the years ended December 31, 2009 and 2008, are presented using the carrying amounts as required by MFRS B-10. The effects of inflation that were recorded prior to 2008 have not been reversed in the reconciliations to US
GAAP.

Through December 31, 2007 the consolidated financial statements prepared under Mexican FRS included the effect of
inflation as provided by Bulletin B-10 and, in the case of foreign operations, as provided by Bulletin B-15, Transactions in Foreign Currency and Translation of Financial Statements of Foreign Operations. The reconciliation to U.S. GAAP
includes a reconciling item for the reversal of the effect of applying Bulletin B-15 for the re-expression into constant pesos as of December 31, 2007, because the application of such provisions was equivalent to not presenting the comparative
financial statements in the same currency for all periods presented, as required by the United States Securities and Exchange Commission (SEC) rules.

The Mexican FRS and U.S. GAAP amounts, included throughout Note 19 for the year ended December 31, 2007, are presented in constant
Mexican pesos as of December 31, 2007. The reconciliation to U.S. GAAP for the year ended December 31, 2007 does not include the reversal of the adjustments to the financial statements for the effects of inflation required under Mexican
FRS (Bulletin B-10), because the application of Bulletin B-10 represented a comprehensive measure of the effects of price level changes in the Mexican economy as permitted by the SEC.

The principal differences between Mexican FRS and U.S. GAAP, as they relate to the Company, are described below together with an
explanation, where appropriate, of the method used to determine the adjustments that affect net income, stockholders equity and resources provided by operating and financing activities.

Cash flow information:

The cash flow statements as prepared by the Company under Mexican FRS for the years ended December 31, 2009 and 2008 complies with
International Accounting Standard No. 7, Cash Flow Statements, as issued by the International Accounting Standards Board; therefore, no reconciliation is presented.

However, the financial statements under Mexican FRS for the year ended December 31, 2007, include the presentation of the statement
of changes in financial position as provided for under Bulletin B-12. The changes in the consolidated financial statement balances included in this statement constitute resources provided by and used in operating, financing and investing activities
stated in constant pesos (including monetary and foreign exchange gains and losses).



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Accounting Standards Codification (ASC) 230,Statement of Cash Flows,
does not provide guidance with respect to inflation adjusted financial statements. For 2007, in accordance with Mexican FRS, the changes in current and long-term debt due to re-expression into constant pesos, including the effect of exchange
differences, are presented in the statement of changes in financial position in the financing activities section. Also, under U.S. GAAP non-cash investing activities are not reported in the statement of cash flows, whereas in the statement of
changes in financial position prepared under Mexican FRS, non-cash transactions that affect the financial structure of an entity must be presented separately.

If the monetary gain and the exchange gain or loss related to the debt reported in the year ended December 31, 2007 were treated as
components of operating activities, summarized consolidated statements of cash flows derived from information prepared in accordance with U.S. GAAP would be as follows:



|                                                                                  |  |                              |             |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ----------- | -
|                                                                                  |  | Year ended December 31, 2007 |            
|Cash flows from operating activities:                                             |  |                              |             |  
|Net income under U.S.GAAP                                                         |  | P.                           | 6,163,008   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |             |  
|Depreciation                                                                      |  |                              | 7,381,955   |  
|Amortization                                                                      |  |                              | 1,068,839   |  
|Effect of exchange rate differences on debt                                       |  |                              | (2,789,199  | )
|Monetary gain, net                                                                |  |                              | 141,051     |  
|Deferred taxes                                                                    |  |                              | 1,883,584   |  
|Deferred revenues and deferred credits                                            |  |                              | (26,267     | )
|Equity interest in net income of affiliates                                       |  |                              | (717,730    | )
|Net periodic cost of labor obligations                                            |  |                              | 145,575     |  
|Change in operating assets and liabilities                                        |  |                              | (728,494    | )
|                                                                                  |  |                              |             |  
|Total adjustments                                                                 |  |                              | 6,359,314   |  
|                                                                                  |  |                              |             |  
|Net cash provided by operating activities                                         |  |                              | 12,522,322  |  
|                                                                                  |  |                              |             |  
|Cash flows from investing activities:                                             |  |                              |             |  
|Investment in plant, property and equipment and inventories                       |  |                              | (14,679,007 | )
|Initial cash from subsidiaries acquired                                           |  |                              | 352,276     |  
|Investment in subsidiaries and affiliates                                         |  |                              | (10,336,068 | )
|Other assets                                                                      |  |                              | (1,921,005  | )
|                                                                                  |  |                              |             |  
|Net cash used in investing activities                                             |  |                              | (26,583,804 | )
|                                                                                  |  |                              |             |  
|Cash flows from financing activities:                                             |  |                              |             |  
|Proceeds from new loans                                                           |  |                              | 6,079,868   |  
|Repayment of loans                                                                |  |                              | (3,771,268  | )
|Capitalized interest                                                              |  |                              | (113,153    | )
|Cash dividends paid to non-controlling interest                                   |  |                              | (27,403     | )
|Increase in parent investment                                                     |  |                              | 19,990,005  |  
|                                                                                  |  |                              |             |  
|Net cash provided by financing activities                                         |  |                              | 22,158,049  |  
|                                                                                  |  |                              |             |  
|Effect of inflation accounting on cash and cash equivalents                       |  |                              | 3,178,444   |  
|Net increase in cash and cash equivalents                                         |  |                              | 11,275,011  |  
|Cash and cash equivalents at beginning of year                                    |  |                              | 5,992,792   |  
|                                                                                  |  |                              |             |  
|Cash and cash equivalents at end of year                                          |  | P.                           | 17,267,803  |  
|                                                                                  |  |                              |             |  
|                                                                                  | 
|                                                                                  |  | 2007                         |            
|Supplemental disclosure of cash flow information:                                 |  |                              |             |  
|Income taxes paid                                                                 |  | P.                           | 1,385,028   |  
|Interest paid                                                                     |  |                              | 3,194,300   |  
|Employee profit sharing paid                                                      |  |                              | 51,733      |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Noncash transactions related to investment in plant, property and equipment and
intangible assets as of December 31, 2009, 2008 and 2007 were P. 6,119,886, P. 281,181 and P. 200,067, respectively.

Capitalized
interest:

Under U.S. GAAP, financing cost incurred during the construction period must be considered as an additional
cost of constructed assets to be capitalized in plant, property and equipment and depreciated over the lives of the related assets. The amount of capitalized financing cost for U.S. GAAP purposes was determined by applying the weighted-average rate
of interest.

Under Mexican FRS in force through December 31, 2006, the Company did not capitalize financing cost in its
Mexican FRS financial statements. Starting January 1, 2007, although Telmex Internacional adopted the policy of capitalizing financing costs on assets under construction started on or after January 1, 2007, as a result of adopting Mexican
FRS D-6, it did not capitalize any financing cost since it has not had significant qualifying assets with prolonged acquisition periods. The reconciling items for 2009, 2008 and 2007 show the capitalized interest and the related depreciation, as
required under U.S. GAAP.

Valuation of inventories and plant, property and equipment:

As previously discussed in Note 2i and Note 2j, through December 31, 2007, the re-expression of inventories and plant, property and
equipment was based on the rate of inflation in the respective country of origin. This method is not acceptable for U.S. GAAP purposes; consequently, the difference between this method and the re-expression of inventories and plant, property and
equipment based on the NCPI was taken to the U.S. GAAP reconciliations subsequently presented.

As a result of this
comparison, inventories, plant, property and equipment and stockholders equity increased by P. 10,419,221 in 2009 (P. 8,935,167 in 2008), and the depreciation expense for 2009 increased by P. 1,255,506 (P. 1,468,915 and P. 1,674,019 in 2008
and 2007, respectively).

Deferred income tax and deferred employee profit sharing:

As mentioned in Note 2s, under Mexican FRS, deferred income tax is determined on all differences in balance sheet accounts for
financial and tax reporting purposes, using the enacted income tax rate at the balance sheet date, which is substantially in conformity with ASC 740, Income Taxes, except for the treatment of deferred taxes on effect of translation of foreign
entities.

The Company is required to pay employee profit sharing in accordance with Mexican labor law. Deferred
employee profit sharing under U.S. GAAP is determined following the guidelines of ASC 740, Income Taxes; however, through December 31, 2007, under Mexican FRS the deferred consequences of employee profit sharing were determined only on
temporary differences considered non-recurring with a known turnaround time. The reconciliation between Mexican FRS and U.S. GAAP in 2007 does not include deferred employee profit sharing as related amounts are not significant.

Under Mexican FRS employee profit sharing is presented as other (expenses), net; whereas under US GAAP, such expenses are presented
in operating costs and expenses.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



As described in Note 2p, under Mexican FRS the Company began recognizing deferred
employee profit sharing, using the asset and liability method, beginning January 1, 2008. Under this method, deferred profit sharing is computed by applying the 10% rate to all differences between the values of all assets and liabilities for
financial and tax reporting purposes, which is consistent with ASC 740 Income Taxes.

In accordance with Mexican FRS
D-4 effective as of January 1, 2008, Telmex Internacional recognized deferred taxes on the cumulative effect of translation of foreign entities, which for the year ended December 31, 2009 was a decrease in stockholders equity of P.
5,756,724. However, under US GAAP, deferred tax consequences on unremitted foreign earnings that are considered to be permanently invested are not recognized. Therefore, the Company has eliminated the deferred tax consequences on the effect of
translation of its foreign operations in the reconciliation of stockholders equity between Mexican FRS and US GAAP. In the event that Company repatriated these earnings, incremental taxes may be incurred. The Company has determined that it is
not practicable to determine the amount of these incremental taxes.

The deferred tax adjustment included in the net income
and stockholders equity reconciliations, includes the effect of deferred taxes on all U.S. GAAP adjustments reflected in the reconciliation between Mexican FRS and U.S. GAAP.

The differences in the recognition of deferred income tax between Mexican FRS and U.S. GAAP for purposes of the income statement were as
follows:



|     |  |    |            |  
|---- |  | -- | ---------- | -
|2007 |  | P. | (453,141   | )
|2008 |  |    | (2,013,208 | )
|2009 |  |    | (166,504   | )

The effect of
deferred income tax on the difference between the indexed cost and the specific indexation factor valuation of plant, property and equipment and inventories, primarily for operation of the telephone plant, is applied as an adjustment to
stockholders equity. The related accumulated amounts at December 31, 2009 and 2008 that decreased stockholders equity were P. (3,499,067) and P. (2,852,202), respectively.

The yearly changes in the accumulated amount for deferred taxes applied to stockholders equity as a result of this effect from 2007
through 2009 are the following:



|     |  |    |          |  
|---- |  | -- | -------- | -
|2007 |  | P. | (651,267 | )
|2008 |  |    | 471,331  |  
|2009 |  |    | (646,865 | )

In 2007, monetary
gains of P. 267,411 on the deferred taxes balance related to the difference between the indexed cost and specific indexation cost valuation of fixed assets and inventories, primarily for operation of the telephone plant, were taken to
stockholders equity, as part of the change of the year.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Deferred taxes from our foreign operations under U.S. GAAP at December 31, 2009 and
2008 are as follows:



|                                                               |  |      |            |   |      |    |            |  
|-------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | -
|                                                               |  | 2009 |            |   | 2008 |   
|Deferred tax assets:                                           |  |      |            |   |      |    |            |  
|Tax loss carryforwards                                         |  | P.   | 6,123,064  |   |      | P. | 6,144,768  |  
|Accrued liabilities                                            |  |      | 3,131,920  |   |      |    | 1,255,264  |  
|Allowance and other reserves                                   |  |      | 1,415,042  |   |      |    | 1,146,298  |  
|Other                                                          |  |      | 6,043      |   |      |    |           |  
|Valuation allowance on tax loss carryforwards and other assets |  |      | (5,081,775 | ) |      |    | (4,070,496 | )
|                                                               |  |      |            |   |      |    |            |  
|                                                               |  |      | 5,594,294  |   |      |    | 4,475,834  |  
|                                                               |  |      |            |   |      |    |            |  
|Deferred tax liabilities:                                      |  |      |            |   |      |    |            |  
|Plant, property and equipment                                  |  |      | (4,710,361 | ) |      |    | (2,617,905 | )
|Licenses                                                       |  |      | (130,819   | ) |      |    | (462,133   | )
|Other                                                          |  |      |           |   |      |    | (190,800   | )
|                                                               |  |      |            |   |      |    |            |  
|                                                               |  |      | (4,841,180 | ) |      |    | (3,270,838 | )
|                                                               |  |      |            |   |      |    |            |  
|Deferred tax asset, net                                        |  | P.   | 753,114    |   |      | P. | 1,204,996  |  
|                                                               |  |      |            |   |      |    |            |  

For Mexican FRS purposes, as discussed earlier in Note 16, the net deferred income tax assets recognized for
the foreign operations amounted to P. 6,098,449 and P. 5,703,932 at December 31, 2009 and 2008, respectively.

Deferred
taxes from our Mexican operations under U.S. GAAP at December 31, 2009 and 2008 are as follows:



|                                           |  |      |           |   |      |    |           |  
|------------------------------------------ |  | ---- | --------- | - | ---- | -- | --------- | -
|                                           |  | 2009 |           |   | 2008 |   
|Deferred tax assets:                       |  |      |           |   |      |    |           |  
|Advance billings                           |  | P.   | 418,716   |   |      | P. | 718,471   |  
|Allowance for doubtful accounts            |  |      | 43,886    |   |      |    | 29,174    |  
|Plant, property and equipment              |  |      | 7,818     |   |      |    |          |  
|Tax loss carryforwards                     |  |      | 159,380   |   |      |    |          |  
|Accrued liabilities                        |  |      | 31,948    |   |      |    | 6,883     |  
|                                           |  |      |           |   |      |    |           |  
|                                           |  |      | 661,748   |   |      |    | 754,528   |  
|                                           |  |      |           |   |      |    |           |  
|Deferred tax liabilities:                  |  |      |           |   |      |    |           |  
|Deferred assets                            |  |      | (15,826   | ) |      |    | (22,598   | )
|Deferred tax liabilities                   |  |      | (23,871   | ) |      |    | (6,915    | )
|Plant, property and equipment              |  |      |          |   |      |    | (1,410    | )
|                                           |  |      |           |   |      |    |           |  
|                                           |  |      | (39,697   | ) |      |    | (30,923   | )
|                                           |  |      |           |   |      |    |           |  
|Deferred tax assets, net                   |  | P.   | 622,051   |   |      | P. | 723,605   |  
|                                           |  |      |           |   |      |    |           |  
|Total consolidated deferred tax asset, net |  | P.   | 1,375,165 |   |      | P. | 1,928,601 |  
|                                           |  |      |           |   |      |    |           |  

For Mexican FRS purposes, as discussed in Note 16, the net deferred income tax liability recognized for the
Mexican operations amounted to P. 7,295,658 and P. 1,572,557 at December 31, 2009 and 2008, respectively.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Under U.S. GAAP, deferred tax assets and liabilities are classified as current or
non-current, based on the classification of the asset or liability that originated it. A deferred tax asset or liability that is not related to an asset or liability for financial reporting purposes, including deferred tax assets related to
carryforwards, is classified in accordance to its expected reversal date. For a particular tax-paying component and within a particular tax jurisdiction, (a) all current deferred tax assets and liabilities are offset and presented as a single
amount and (b) all noncurrent deferred tax assets and liabilities are offset and presented as a single amount. However, deferred tax assets and liabilities attributable to different tax-paying components of the enterprise or to different tax
jurisdictions are not offset.

Under Mexican FRS, deferred tax assets and liabilities are classified as noncurrent and are
presented in one net amount in the balance sheet. The consolidated amounts of deferred taxes are not offset if they do not belong to the same taxable entity and to the same taxing authority.

Employee benefit obligation:

Brazil Defined Contribution Plan as of December 31, 2009 and 2008 is as follows:



|                                                       |  |      |          |   |      |    |          |  
|------------------------------------------------------ |  | ---- | -------- | - | ---- | -- | -------- | -
|                                                       |  | 2009 |          |   | 2008 |   
|Unfunded liability (*):                                |  |      |          |   |      |    |          |  
|Beginning balance                                      |  | P.   | 477,763  |   |      | P. | 605,961  |  
|Plus  adjustments for percentage yield on plan assets |  |      | 70,735   |   |      |    | 48,186   |  
|Less  gain on long and short term investments         |  |      | (92,019  | ) |      |    |         |  
|Less  payments during the year                        |  |      | (120,695 | ) |      |    | (142,862 | )
|Effect of translation                                  |  |      | 99,389   |   |      |    | (33,522  | )
|                                                       |  |      |          |   |      |    |          |  
|Ending balance                                         |  | P.   | 435,173  |   |      | P. | 477,763  |  
|                                                       |  |      |          |   |      |    |          |  
|Total expense:                                         |  |      |          |   |      |    |          |  
|Matching contribution plus risk benefits               |  | P.   | 120,908  |   |      | P. | 117,042  |  
|                                                       |  |      |          |   |      |    |          |  



|(*) | The unfunded liability represents Embratels obligation for those participants that migrated from the defined-benefit plan to the defined-contribution plan. Any
unpaid balance is adjusted monthly based on the return on the portfolio assets at that time, subject to a minimum increase based on the Brazilian general price index plus 6% per annum.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Plan assets:

The plan
assets to cover pension and other post-retirement benefits totaled P. 12,309,992 and P. 9,300,795 at December 31, 2009 and 2008, respectively. The Telos fund managers seek to match the plan assets with benefit obligations over the long-term.
Brazilian pension funds are subject to certain restrictions relating to their ability to invest in foreign assets and consequently, the funds are primarily invested in Brazilian securities. Under its current investment strategy, pension assets of
Telos are allocated with a goal to achieve the following distribution:



| |  |  | 89% in fixed income
| | - |  | -------------------



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



| |  |  | 7% in stocks
| | - |  | ------------



| |  |  | 3% in real estate
| | - |  | -----------------



| |  |  | 1% in beneficiary loans
| | - |  | -----------------------



| |  |  | seek the duration and convexity matching between its assets and liabilities
| | - |  | ---------------------------------------------------------------------------

The actual allocations for the pension assets as of December 31, 2009 and 2008 are as follows:



|                  |  |                     |   |  |              |   |  |       |  
|----------------- |  | ------------------- | - |  | ------------ | - |  | ----- | -
|                  |  | 2009                |  
|                  |  | Definedbenefit plan |   |  | Medical plan |   |  | Total |  
|Fixed income      |  | 89                  | % |  | 100          | % |  | 89    | %
|Stocks            |  | 7                   | % |  | 0            | % |  | 7     | %
|Real estate       |  | 3                   | % |  | 0            | % |  | 3     | %
|Beneficiary loans |  | 1                   | % |  | 0            | % |  | 1     | %
|                  |  |                     |   |  |              |   |  |       |  
|Total             |  | 100                 | % |  | 100          | % |  | 100   | %
|                  |  |                     |   |  |              |   |  |       |  
|                  | 
|                  |  | 2008                |  
|                  |  | Definedbenefit plan |   |  | Medical plan |   |  | Total |  
|Fixed income      |  | 81                  | % |  | 100          | % |  | 81    | %
|Stocks            |  | 14                  | % |  | 0            | % |  | 14    | %
|Real estate       |  | 4                   | % |  | 0            | % |  | 4     | %
|Beneficiary loans |  | 1                   | % |  | 0            | % |  | 1     | %
|                  |  |                     |   |  |              |   |  |       |  
|Total             |  | 100                 | % |  | 100          | % |  | 100   | %
|                  |  |                     |   |  |              |   |  |       |  

The table below presents the fair value hierarchy of the plan assets as of December 31, 2009.

The assumed Medical Plan cost trend rates, are as follows:



|                            |  |              |   |  |      |  
|--------------------------- |  | ------------ | - |  | ---- | -
|                            |  | December 31, |  
|                            |  | 2009         |   |  | 2008 |  
|Current trend rate          |  | 12           | % |  | 12   | %
|Ultimate trend rate         |  | 6            | % |  | 6    | %
|Year of ultimate trend rate |  | 2022         |   |  | 2021 |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



There are three broad levels to the fair value hierarchy of inputs to fair value (Level
1 being the highest priority and Level 3 being the lowest priority):



| |  |  | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3: Unobservable inputs (e.g., a reporting entitys own data).
| | - |  | -------------------------------------------------------------------



|                  |  |         |            |         |  |         |    |         |  |    |           
|----------------- |  | ------- | ---------- | ------- |  | ------- | -- | ------- |  | -- | ----------
|                  |  | Level 1 |            | Level 2 |  | Level 3 |    | Total  
|Fixed income      |  | P.      | 10,911,258 |         |  |         |    |         |  | P. | 10,911,258
|Stocks            |  |         | 896,813    |         |  |         |    |         |  |    | 896,813   
|Real estate       |  |         |            |         |  |         | P. | 401,044 |  |    | 401,044   
|Beneficiary loans |  |         |            |         |  |         |    | 100,877 |  |    | 100,877   
|                  |  |         |            |         |  |         |    |         |  |    |           
|Established fund  |  | P.      | 11,808,071 |         |  |         | P. | 501,921 |  | P. | 12,309,992
|                  |  |         |            |         |  |         |    |         |  |    |           

Estimated future benefit payments:

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



|             |  |                     |           |              |    |                |  |    |          
|------------ |  | ------------------- | --------- | ------------ | -- | -------------- |  | -- | ---------
|Years        |  | Definedbenefit plan |           | Medical plan |    | Total per year
|2010         |  | P.                  | 668,034   |              | P. | 123,021        |  | P. | 791,055  
|2011         |  |                     | 691,276   |              |    | 139,699        |  |    | 830,975  
|2012         |  |                     | 714,344   |              |    | 157,779        |  |    | 872,123  
|2013         |  |                     | 736,635   |              |    | 177,052        |  |    | 913,687  
|2014         |  |                     | 759,587   |              |    | 197,496        |  |    | 957,083  
|2015 to 2019 |  |                     | 4,122,745 |              |    | 1,319,628      |  |    | 5,442,373
|             |  |                     |           |              |    |                |  |    |          
|Total        |  | P.                  | 7,692,621 |              | P. | 2,114,675      |  | P. | 9,807,296
|             |  |                     |           |              |    |                |  |    |          

ASC 715 Compensation  Retirement Benefits:

ASC 715 Compensation  Retirement Benefits, (ASC 715) requires (1) recognition on the balance sheet
of an asset for a defined benefit plans overfunded status or a liability for a plans underfunded status, (2) measurement of a defined benefit plans assets and its obligations that determine its funded status as of the end of
the employers fiscal year, and (3) recognition of the changes in the funded status of a defined benefit postretirement plan as a component of other comprehensive income in the year the changes occur.

The requirement to recognize the funded status of a defined benefit plan and the disclosure requirements were effective for fiscal years
ending after December 15, 2006.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The components of the plans funded status reflected in the consolidated statements
of financial position as of December 31, 2009 and 2008 are as follows:



|                             |  |      |            |   |      |    |            |     |  |    |            |   |  |    |            |  
|---------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | --- |  | -- | ---------- | - |  | -- | ---------- | -
|                             |  | 2009 |            |   | 2008 |   
|                             |  | DBP  |            |   | MAP  |    |            | DBP |  |    | MAP        |  
|Projected benefit obligation |  | P.   | (9,385,959 | ) |      | P. | (3,173,777 | )   |  | P. | (7,598,503 | ) |  | P. | (2,365,848 | )
|Fair value of plan assets    |  |      | 12,301,967 |   |      |    | 8,025      |     |  |    | 9,172,387  |   |  |    | 128,408    |  
|                             |  |      |            |   |      |    |            |     |  |    |            |   |  |    |            |  
|Over (under) funded status   |  | P.   | 2,916,008  |   |      | P. | (3,165,752 | )   |  | P. | 1,573,884  |   |  | P. | (2,237,440 | )
|                             |  |      |            |   |      |    |            |     |  |    |            |   |  |    |            |  

Amounts recognized in other accumulated other comprehensive income consist of the following:



|                                   |  |      |            |      |     |    |         |  |    |            |   |  |    |         | 
|---------------------------------- |  | ---- | ---------- | ---- | --- | -- | ------- |  | -- | ---------- | - |  | -- | ------- | 
|                                   |  | 2009 |            | 2008 |    
|                                   |  | DBP  |            |      | MAP |    | DBP     |  |    | MAP        |  
|Unrecognized actuarial (gain) loss |  | P.   | (2,337,854 | )    |     | P. | 288,672 |  | P. | (1,376,017 | ) |  | P. | 248,417 | 
|                                   |  |      |            |      |     |    |         |  |    |            |   |  |    |         | 
|Total                              |  | P.   | (2,337,854 | )    |     | P. | 288,672 |  | P. | (1,376,017 | ) |  | P. | 248,417 | 
|                                   |  |      |            |      |     |    |         |  |    |            |   |  |    |         | 

Through December 31, 2007, for MFRS reporting purposes, labor obligations were accounted for under
rules similar to ASC 715 prior to its amendment by SFAS 158 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, effective December 31, 2006, which requires companies to recognize changes in the funded
status (benefit obligation less fair value of plan assets) in the year in which the changes occur through other comprehensive income to the extent those changes are not included in the net periodic cost. Under Mexican FRS, such items are being
amortized over the estimated average remaining working lifetime of the Companys employees.

Effects of inflation accounting on
U.S. GAAP adjustments:

Through December 31, 2007, to determine the net effect on the consolidated financial
statements of recognizing the U.S. GAAP adjustments described throughout this Note, it was also necessary to recognize the effects of inflation on such adjustments as described in Note 2c. These effects were taken into consideration in the
preparation of the U.S. GAAP reconciliations of net income and stockholders equity.

However, the Company has reversed
the re-expression of the financial information for prior periods, as related to its foreign operations, into constant Mexican Pesos at December 31, 2007, using a weighted-average inflation factor of 1.2607, and re-expressed such period into
constant Mexican Pesos at December 31, 2007 using the Mexican only inflation factor of 1.0376, in order to present its financial statements in the same reporting currency for all periods included in this Note.

Effective January 1, 2008, and as a result of adopting MFRS B-10, Effects of inflation, the Company ceased recognizing the
effects of inflation in its financial statements and considered the re-expressed amounts of all non-monetary items as its carrying basis as of January 1, 2008. The Company has not reconciled the inflation adjustments still included in its
non-monetary items, with one exception for the adjustments in the valuation of plant, property and equipment and related depreciation expense, previously mentioned in this Note.

Business combinations:

Business combinations achieved in stages (step acquisitions):

Under Mexican FRS, business acquisitions are recorded using the acquisition method. The acquisition method requires the determination of
the fair value of net assets acquired and the allocation of the acquisition cost to the estimated fair value of the net assets acquired. Non-controlling interest is measured based on its proportionate share of the fair value of the net assets of the
acquired entity.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



In December 2007, the FASB issued SFAS No. 141(R), Business Combinations
(codified primarily inASC 805, Business Combinations), which replaced SFAS No. 141, Business Combinations. The changes effected by the new standard include accounting for business combinations achieved in stages (step
acquisitions). Under the new standard, it requires that identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree be recognized and measured at fair value as of the acquisition date, which is the date an
acquirer takes control and begins to consolidate an acquiree. The Company adopted the revised ASC 805 as of January 1, 2009. However, the provisions of ASC 805 are applied prospectively. Thus, business combinations with an acquisition date
before January 1, 2009, which were accounted for in accordance with the provisions of SFAS No. 141, have not been modified as a result of adoption of ASC 805. The adoption of this accounting pronouncement did not have any impact on the
Companys financial position or results of operations.

Under the prior accounting method in accordance with SFAS 141, it
required a step-acquisition model under which the fair value of net assets acquired were recorded only with respect to the percentage acquired in each step acquisition. Non-controlling interest is recorded based on the carrying value of the entity
acquired; consequently, the non-controlling interest is not adjusted to reflect the adjustments to fair value of its shares of net assets.

The difference in the application of the acquisition method under Mexican FRS and the step-acquisition model under the prior standard in
U.S. GAAP creates reconciling adjustments principally on the following:

Difference on the measurement of fair value for
Mexican FRS and U.S. GAAP

a) Under Mexican FRS, assets acquired and liabilities assumed and their corresponding effect on
depreciation and amortization in income are recognized at their full estimated fair values as of the date control is obtained. Under U.S. GAAP the estimated fair value of assets acquired and liabilities assumed was measured by the percentage
acquired in each step acquisition using the estimated fair value at each acquisition date.

In the Companys case,
step-acquisitions under U.S. GAAP prior to adoption of ASC 805, as amended by SFAS No. 141(R) as of January 1, 2009, imply the determination of fair values using step-acquisition model at each acquisition date, which differs from the fair
value used under Mexican FRS. As a result it created a reconciling item for the effects on income of the depreciation of plant, property and equipment, amortization of intangible assets and interest expense. The change in fair value of the
percentage acquired at each acquisition date implies the reclassification between stockholders equity recognized under Mexican FRS and the fair value of the net assets acquired.

b) Under Mexican FRS, non-controlling interests are recorded at their estimated fair value at the date of acquisition, whereas under U.S.
GAAP prior to adoption of ASC 805, as amended by SFAS No. 141(R), it was based on the historical carrying values of the acquired entity. This difference in the measurement of non-controlling interest affects the values assigned to plant,
property and equipment, intangible assets, goodwill, debt and non-controlling interest on the balance sheet and the related depreciation and amortization, interest expense and non-controlling interest on the income statement.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Excess of fair value of acquired net assets over cost treated as equity transaction
under Mexican FRS in a series of acquisitions.

Mexican FRS requires that acquisitions of non-controlling interests be
considered as transactions between entities under common control and thus are treated as equity transactions. Any difference between the acquisition cost and the carrying value of the net assets acquired is recognized in equity, whereas under the
prior step-acquisition model of U.S. GAAP, any difference between the acquisition cost paid and the fair value of the net assets acquired at each acquisition date was treated as goodwill.

In summary, due to the differences mentioned above, the reconciliations between net income and stockholders equity include the
following adjustments:

In order to recognize the differences between the full fair value utilized for Mexican FRS and the
fair value at each acquisition date for U.S. GAAP prior to adoption of ASC 805, as amended by SFAS No. 141(R), and between the full fair value utilized for Mexican FRS and the carrying value for non-controlling interest under U.S. GAAP, the
reconciliation of stockholders equity for 2009 and 2008 includes a decrease of P. (661,492) and P. (356,814), respectively, for accumulated depreciation and amortization. For the years ended December 31, 2009, 2008 and 2007, the
impact on the reconciliation of net income to recognize the difference in depreciation and amortization expense is P. (205,352), P. (79,670) and P. 82,780, respectively.

As of December 31, 2009 and 2008, the reconciliation of stockholders equity includes decreases of P. (65,324) and P.
(50,458) respectively, to recognize the difference on the carrying value of fixed assets attributable to the non-controlling interest and its related fair value as recognized under Mexican FRS. For the years ended December 31, 2009, 2008
and 2007, the net income reconciliation includes P. (16,331), P. (12,615) and P. (13,362), respectively, related to the difference in depreciation and amortization on the carrying values of the non-controlling interest and its related fair
value under Mexican FRS.

As result of the acquisitions of Embrapars non-controlling shares in 2005, 2006 and 2007, the
Company has determined an excess of fair value of acquired net assets over cost at each acquisition transaction date, which according to Mexican FRS were treated as an equity transaction (equity increase) since they were acquisitions of a
non-controlling interest; whereas for U.S. GAAP purposes the acquisitions of non-controlling interest are treated as step acquisitions giving rise to negative goodwill that have been accounted for as a reduction of non-current assets.

As of December 31, 2009 and 2008, the reconciliation of stockholders equity includes P. (4,951,724) related to the
reversal of the equity increase recognized under Mexican FRS for the acquisition of Embrapars non-controlling shares, and P. 4,530,885 and P. 3,840,520, respectively, to recognize the effect on accumulated depreciation and amortization due to
the reduction of non-current assets under U.S. GAAP derived from the negative goodwill. For the years ended December 31 2009, 2008 and 2007, the reconciliation of net income includes P.690,365, P. 1,092,398 and P. 1,092,398, respectively, to
recognize the effect of negative goodwill on depreciation and amortization expense under US GAAP.

In addition, gains or
losses on dilution of investment in affiliate under Mexican FRS have been included in retained earnings, whereas under U.S. GAAP these gains were included in other capital contributions.

Excess of cost over the fair value of acquired net assets

In 2005, the Company acquired the remaining equity interest of a subsidiary. This transaction resulted in an excess of cost over the
carrying value of net assets acquired, which was recognized as an equity transaction as required by Mexican FRS for acquisitions of non-controlling interest. As of December 31, 2009 and 2008, the reconciliation of stockholders equity
includes a credit of P. 296,601 due to the reversal of the decrease to equity recognized under Mexican FRS.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Impairment on Goodwill

Under Mexican FRS, an impairment loss on goodwill must be recognized if its carrying value exceeds its recoverable value, which is the
greater of its net selling price, if it can be obtained, and its value in use.

The value in use can be determined through
valuation techniques or, in a more practical manner, through its perpetuity value. Goodwills net selling price shall be determined in the same manner that goodwill is obtained in a business acquisition. In this case, the net selling price of
the business unit must be determined through the use of market values or through valuation techniques.

The determination of
the value in use of goodwill through the determination of perpetuity values is made in two steps. In the first step the Company must determine the excess of the value in use of the cash generating units assets other than intangible assets with
indefinite lives and goodwill, where value in use is the projected discounted cash flows of the cash generating unit. In the second step, the Company must measure the perpetuity value of the excess value in use of the cash generating unit, which is
determined by dividing the average of the excess of the value in use determined in step 1 by the average of the appropriate discount rates used in the cash projections.

For US GAAP purposes the impairment test on goodwill requires a two-step process to identify and quantify the amount of impairment
loss to be recognized. The first step of this test requires the comparison of the fair value of the reporting unit against its carrying value. The fair value of a reporting unit is the amount at which the unit as a whole could be bought or sold in a
current transaction between willing parties. In some instances quoted market prices in active markets provide the best evidence of fair value and should be used as the basis for the measurement, if available. However, there are instances when the
market price of an individual equity security may not be representative of the reporting units fair value taken as a whole.

The quoted market price of an individual equity security, therefore, need not be the sole measurement basis of the fair value of a
reporting unit. When quoted market prices are not available, the fair value can be estimated using the best information that is available. US GAAP allows the use of present value techniques, and if used, the estimates of future cash flows used
shall be consistent with the objective of measuring fair value.

As of December 31, 2009 and 2008, the reconciliation of
stockholders equity includes P. 305,304 to recognize the effect of the reversal of an impairment loss on goodwill recognized in the previous periods for Mexican FRS. In the determination of fair values, Telmex Internacional used the perpetuity
values for Mexican FRS and the discounted cash flows technique for US GAAP purposes. Both techniques give different measurements and results, which in Telmex Internacionals case, gave rise to an impairment charge under Mexican FRS for
goodwill recognized for the acquisitions in Chile, whereas for US GAAP purposes no impairment charge was determined. Therefore, the reconciliations between Mexican FRS and US GAAP show the reversal of P. 305,304 impairment loss recognized
under Mexican FRS in 2006.

Goodwill translation

Through December 31, 2008, for Mexican FRS purposes, the goodwill related to the foreign subsidiaries was recorded at the parent
level and maintained in the parents functional currency. Under U.S. GAAP, the goodwill was pushed-down to the subsidiaries and recorded in the subsidiaries functional currency and translated into the parents reporting
currency at year-end exchange rates.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Goodwill effect of change in valuation allowance of deferred income tax assets

For Mexican FRS purposes, a change in the valuation allowance of deferred income tax assets after the end of the purchase
price allocation period that was originally recorded in a business combination using the purchase method is included in the determination of net income in the period in which the adjustment is determined, whereas for US GAAP prior to adoption
of ASC 805, as modified by SFAS 141(R), the adjustment was recorded as reduction of the goodwill determined in the business combination. In 2009 and 2008 the related adjustment of P. 2,158,090 and P. 1,666,954, respectively, was included in the
reconciliation of stockholders equity as of December 31, 2009 and 2008, and resulted in a decrease to goodwill and an increase in income tax expense of P. 1,666,954 in 2008.

Exchange of long-lived assets between entities under common control:

Mexican FRS requires that an exchange of assets between entities under common control be recognized based on the carrying value of the
assets acquired and any difference with the carrying value of the assets transferred being treated as a capital transaction. For U.S. GAAP, the exchange of assets between entities under common control is accounted for at the lower of fair value or
the carrying amount of the assets transferred. As of December 31, 2009 and 2008, the U.S. GAAP condensed balance sheets, include an increase in non-controlling interest of P. 1,170,300 and a decrease in stockholders equity for the same
amount, related to the exchange of Telmex do Brasil and Net shares between Embrapar and Telmex Internacional which resulted in an increase in Telmex Internacionals participation in Embrapar in October 2005.

Equity method in net income of affiliate:

For Mexican FRS purposes, the equity method in the net income of Net Serviços de Comunicação S.A. was based on its
net income after its conversion to Mexican FRS (see Note 2a), while for U.S. GAAP purposes, the equity method in the net income of this affiliate is determined based on net income reconciled to U.S. GAAP. The differences in 2009, 2008 and 2007 of
(P. 37,711), P. 117,500 and P. 28,655, respectively, shown in the net income reconciliation represent the equity method in the differences applicable in Net, between Mexican FRS and U.S. GAAP, which consist principally of valuation of plant,
property and equipment, as previously described.

Condensed Balance Sheets as of December 31, 2009 and 2008, and Income
Statements for the three years in the period ended December 31, 2009, 2008 and 2007 of Net Serviços de Comunicação S.A. under Mexican FRS are as follows:

Condensed Balance Sheets



|                                           |  |              |            |      |    |           
|------------------------------------------ |  | ------------ | ---------- | ---- | -- | ----------
|                                           |  | December 31,
|                                           |  | 2009         |            | 2008
|Assets                                     |  |              |            |      |    |           
|Current assets                             |  | P.           | 17,007,418 |      | P. | 10,910,362
|Non-current assets                         |  |              | 38,397,310 |      |    | 24,069,603
|                                           |  |              |            |      |    |           
|Total assets                               |  | P.           | 55,404,728 |      | P. | 34,979,965
|                                           |  |              |            |      |    |           
|Liabilities and Stockholders equity       |  |              |            |      |    |           
|Current liabilities                        |  | P.           | 7,548,164  |      | P. | 4,996,090 
|Non-current liabilities                    |  |              | 21,509,806 |      |    | 13,934,103
|                                           |  |              |            |      |    |           
|Total liabilities                          |  |              | 29,057,970 |      |    | 18,930,193
|Stockholders equity                       |  |              | 26,346,758 |      |    | 16,049,772
|                                           |  |              |            |      |    |           
|Total liabilities and stockholders equity |  | P.           | 55,404,728 |      | P. | 34,979,965
|                                           |  |              |            |      |    |           



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Condensed Income Statements



|                             |  |            |             |   |      |    |             |      |  |    |             |  
|---------------------------- |  | ---------- | ----------- | - | ---- | -- | ----------- | ---- |  | -- | ----------- | -
|                             |  | Year ended |            
|                             |  | 2009       |             |   | 2008 |    |             | 2007 | 
|Operating revenues           |  | P.         | 28,810,704  |   |      | P. | 20,831,191  |      |  | P. | 12,924,219  |  
|Operating costs and expenses |  |            | (24,788,693 | ) |      |    | (18,030,916 | )    |  |    | (10,495,050 | )
|                             |  |            |             |   |      |    |             |      |  |    |             |  
|Operating income             |  |            | 4,022,011   |   |      |    | 2,800,275   |      |  |    | 2,429,169   |  
|                             |  |            |             |   |      |    |             |      |  |    |             |  
|Net income                   |  | P.         | 4,622,785   |   |      | P. | 284,453     |      |  | P. | 1,709,953   |  
|                             |  |            |             |   |      |    |             |      |  |    |             |  

Transaction between entities under common control:

In 2008, Telmex provided the Company access to its customer database for use in its yellow pages directories for a payment of P. 452,160.
Since both entities are subsidiaries of Carso Global Telecom, this transaction was considered a transaction between entities under common control and was recognized as a charge to retained earnings for US GAAP purposes net of a tax benefit of
P. 126,605. However, under Mexican FRS, the transaction was considered as an acquisition of a definite-lived intangible asset, which is being amortized over an eight-year period. Therefore, an adjustment of P. 369,735 in 2009 and P. 426,255 in 2008
was included in the US GAAP reconciliation which represents the excess over Telmexs carrying value as of December 31, 2009 and 2008, respectively. For the years ended December 31, 2009 and 2008, the Company reversed the
amortization expense related to the intangible asset of Ps. 56,520 and P. 25,905, respectively recorded under Mexican FRS and included an adjustment in net income of the US GAAP reconciliation.

Offsetting of assets and liabilities:

Under Mexican FRS, in the case of the existence of accounts receivable and accounts payable balances to the same person or entity, such
balances, when applicable, a Company may offset for purposes of its presentation in the balance sheet. Accordingly, the net amount may be presented as either an asset or liability, while for U.S. GAAP purposes the offsetting of assets and
liabilities in the balance sheet is improper except where a right of setoff exists. A right of setoff is a debtors legal right, by contract or otherwise, to discharge all or a portion of the debt owed to another party by applying against the
debt an amount that the other party owes to the debtor. As of December 31, 2009 for U.S. GAAP the balance sheet includes an account receivable from Net of P. 6,372 million and an account payable to Net of P. 6,551 million, while for
Mexican FRS these balances were presented net in the balance sheet.

Other income (expenses):

Under Mexican FRS current and deferred employee profit sharing are presented as other income (expense), net; whereas under US GAAP
they are presented in operating expenses. For the years ended December 31, 2009, 2008 and 2007, the amounts reclassified for this item amounted to (P. 44,854), (P. 55,734) and (P. 62,279), respectively.

Accounting for uncertainty in income taxes:

The Company adopted the provisions of ASC 740, Income Taxes, with respect to the accounting for uncertainty in income taxes for
U.S. GAAP purposes as of January 1, 2007.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The Company establishes reserves to remove some or all of the tax benefit of any of its
tax positions at the time management determines that it becomes uncertain based upon one of the following conditions: (1) the tax position is not more likely than not to be sustained, (2) the tax position is more likely
than not to be sustained, but for a lesser amount, or (3) the tax position is more likely than not to be sustained, but not in the financial period in which the tax position was originally taken.

For purposes of evaluating whether or not a tax position is uncertain, (1) management presumes the tax position will be examined by
the relevant taxing authority that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law
and their applicability to the facts and circumstances of the tax position, and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken.

A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is
raised. The number of years subject to tax assessments varies depending on the tax jurisdiction and is generally five years for the countries in which the Company principally operates. The tax benefit that has been previously reserved because of a
failure to meet the more likely than not recognition threshold would be recognized in the Companys income tax expense in the first period when the uncertainty disappears under any one of the following conditions: (1) the tax
position is more likely than not to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the relevant taxing authority to
examine and challenge the tax position has expired.

The adoption of the provisions with respect to the accounting for
uncertainty in income taxes in ASC 740, Income Taxes, as of January 1, 2007 did not have a material impact on the Companys financial statements and did not result in a cumulative adjustment to retained earnings at adoption, because
all uncertain tax positions not more likely than not to be sustained were reserved in prior years. As of December 31, 2009 and 2008, there are no uncertain tax positions that are not more likely than not to be sustained.

ASC 605, Revenue Recognition:

The Company presents taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a
seller and a customer, such as sales, use, value-added and certain excise taxes on a net basis in operating revenues.

Fair value
measurements:

On January 1, 2008, the Company adopted ASC 820, Fair Value Measurements and Disclosures,
which establishes a framework for measuring fair value for all financial assets and liabilities and for non-financial assets and liabilities recognized or disclosed at fair value on a recurring basis (at least annually). For all other assets and
liabilities, these requirements became effective on January 1, 2009. The adoption of ASC 820 did not have a significant impact on the Companys consolidated financial statements.

Accounting principles generally accepted in United States define fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value
are prioritized based on a three-level hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:



| |  |  | Level 1  Quote prices in active markets for identical assets or liabilities.
| | - |  | -----------------------------------------------------------------------------



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



| |  |  | Level 2  Observable inputs other than quoted priced included in Level 1. We value assets and liabilities included in this level using dealer and
broker quotations, bid prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with U.S. G.A.A.P., certain assets and liabilities are required to be recorded at fair value on a recurring basis. For the
Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are the debt and the derivative financial instruments.

The following tables summarize those assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:



|                                 |  |                        |           |         |    |            |  |       |   |  |    |           
|-------------------------------- |  | ---------------------- | --------- | ------- | -- | ---------- |  | ----- | - |  | -- | ----------
|                                 |  | Fair Value Measurement
|                                 |  | Level 1                |           | Level 2 |    | Level 3    |  | Total
|Liabilities                      |  |                        |           |         |    |            |  |       |   |  |    |           
|Derivative financial instruments |  | P.                     |          |         | P. | 1,094,222  |  | P.    |  |  | P. | 1,094,222 
|Debt                             |  | P.                     | 5,000,000 |         | P. | 28,338,329 |  | P.    |  |  | P. | 33,338,329

The following
table provides a summary of significant assets and liabilities at December 31, 2008 that are measured at fair value on a recurring basis:



|                                 |  |                        |           |         |    |            |  |       |   |  |    |           
|-------------------------------- |  | ---------------------- | --------- | ------- | -- | ---------- |  | ----- | - |  | -- | ----------
|                                 |  | Fair Value Measurement
|                                 |  | Level 1                |           | Level 2 |    | Level 3    |  | Total
|Assets                           |  |                        |           |         |    |            |  |       |   |  |    |           
|Derivative financial instruments |  | P.                     |          |         | P. | 1,025,013  |  | P.    |  |  | P. | 1,025,013 
|Liabilities                      |  |                        |           |         |    |            |  |       |   |  |    |           
|Debt                             |  | P.                     | 5,500,000 |         | P. | 19,953,276 |  | P.    |  |  | P. | 25,453,276

In accordance
with ASC 825, Financial Instruments, under U.S. GAAP it is necessary to provide information about the fair value of certain financial instruments for which it is practicable to estimate that value. The carrying amounts of cash, accounts
receivable and accounts payable and accrued liabilities approximate fair values due to the short-term maturity of these instruments.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The fair value of total debt, excluding capital leases, is estimated using discounted
cash flow analyses based on estimated borrowing rates that the Company would be offered for debt of the same remaining maturities and the market value for the senior notes at December 31, 2009 and 2008. Since the Company primarily uses
observable inputs in its valuation of its debt, they are considered Level 2. The Company uses quoted prices in active markets in its valuation of senior notes and domestic senior notes, which are considered Level 1. As of December 31, 2009, the
carrying value of total debt is P. 33,977,700 (P. 25,622,268 at December 31, 2008) and the fair value is P. 33,338,329 (P. 25,453,276 at December 31, 2008).

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at
fair value on a nonrecurring basis as required by accounting principles generally accepted in the United States. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. During the year ended
December 31, 2009, there were no changes in carrying value as a result of impairment charges.

Short-term debt:

The Companys short-term debt at December 31, 2009 and 2008 is P. 6,806,126, and P. 11,016,031, represented principally by
domestic senior notes in 2009.

Advertising:

Advertising costs are expensed as incurred. For the years ended December 31, 2009, 2008 and 2007, advertising expense aggregated to
P. 1,546,244, P. 1,520,582 and P. 1,185,779, respectively.

A summary of the most significant new pronouncements in U.S.
GAAP that became effective in 2009 or after and may apply to the Company is as follows:

Accounting Standards Codification

On July 1, 2009, FASB Accounting Standards Codification (ASC) became the sole source of authoritative U.S. GAAP
recognized by the Financial Accounting Standards Board (FASB) to be applied by nongovernmental entities for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC did not change U.S. GAAP, but rather
combined the sources of U.S. GAAP and the framework for selecting among those sources into a single source. Accordingly, the adoption of ASC had no impact on the Company.

ASC 605-25,Multiple-Element Arrangements

On September 23, 2009, the FASB ratified Emerging Issues Task Force Issue No. 08-1, Revenue Arrangements with Multiple
Deliverables (EITF 08-1). EITF 08-1 updates the current guidance pertaining to multiple-element revenue arrangements included in ASC 605-25, which originated primarily from EITF 00-21, also titled Revenue Arrangements with Multiple
Deliverables. EITF 08-1 will be effective for annual reporting periods beginning January 1, 2011 for calendar-year entities. The Company is currently evaluating the impact of EITF 08-1 on its financial position, results of operations, cash
flows, and disclosures.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



ASC 350,IntangiblesGoodwill & Other

In November 2008, the FASB ratified ASC 350, IntangiblesGoodwill & Other. ASC 350 requires that a defensive
intangible asset be accounted for as a separate unit of accounting and assigned a useful life which reflects the entitys consumption of the expected benefits related to that asset. A defensive intangible asset is an acquired intangible asset
which the acquirer does not intend to actively use, but intends to hold to prevent others from obtaining access to the asset, excluding intangible assets that are used in research and development. An entitys benefit from holding a defensive
intangible asset is the direct and indirect cash flows resulting from the entity preventing others from realizing any value from the intangible assets. The period over which a defensive asset diminishes in fair value can be used as a proxy for the
entitys consumption of the expected benefits related to the asset. This guidance is effective for defensive intangible assets acquired on or after January 1, 2009. Also in April 2008, the FASB issued and update to this ASC, that amends
the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset and expanded disclosure related to the determination of intangible asset useful lives is
required, effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of this new guidance did not have any impact on the Companys financial position or results of operations.

ASC 810,Consolidation

In December 2007, the FASB issued ASC 810, Consolidation,as amended by SFAS 160. This ASC establishes new accounting and reporting
standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary, effective beginning January 1, 2009, requiring retroactive presentation and disclosure of existing non-controlling interest. ASC 810
clarifies that changes in a parents ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest and requires that a parent recognize a gain or loss
in net income when a subsidiary is deconsolidated. The gain or loss will be measured using the fair value of the non-controlling equity investment on the deconsolidation date. This standard includes expanded disclosure requirements regarding the
interests of the parent and its non-controlling interest. The adoption of this new guidance resulted in a retrospective adjustment of the Balance Sheet, Income Statement and Stockholders Equity for the prior years, for presentation and
disclosures purposes as follows:



|                         |  |                          |            |                  |    |            |                     |  |    |           
|------------------------ |  | ------------------------ | ---------- | ---------------- | -- | ---------- | ------------------- |  | -- | ----------
|                         |  | As originally issued2008 |            | Reclassification |    |            | As reclassified2008
|Non-controlling interest |  | P.                       | 4,307,931  |                  | P. | (4,307,931 | )                   |  | P. |          
|Stockholders equity     |  |                          | 81,529,277 |                  |    | 4,307,931  |                     |  |    | 85,837,208
|Net income               |  |                          | 3,328,579  |                  |    | (51,743    | )                   |  |    | 3,276,836 



|                         |  |                          |            |                  |    |            |                     |  |    |           
|------------------------ |  | ------------------------ | ---------- | ---------------- | -- | ---------- | ------------------- |  | -- | ----------
|                         |  | As originally issued2007 |            | Reclassification |    |            | As reclassified2007
|Non-controlling interest |  | P.                       | 4,790,947  |                  | P. | (4,790,947 | )                   |  | P. |          
|Stockholders equity     |  |                          | 86,771,564 |                  |    | 4,790,947  |                     |  |    | 91,562,511
|Net income               |  |                          | 5,739,051  |                  |    | 423,957    |                     |  |    | 6,163,008 



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



ASC 815,Derivatives and Hedging

In March 2008, the FASB issued ASC 815, Derivatives and Hedging,as amended by SFAS 161. This ASC requires enhanced disclosures
about an entitys derivative and hedging activities. Under ASC 815, as amended by SFAS 161, entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments; (b) how derivative
instruments and related hedged items are accounted for under ASC 815 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows.
ASC 815 is effective beginning January 1, 2009 and encourages comparative disclosures for earlier periods at initial adoption. The adoption of this new guidance did not have any impact on the Companys financial position or results of
operations.

ASC 715,Compensation  Retirement Benefits

In December 2008, the FASB issued ASC 715, Compensation  Retirement Benefits. This ASC requires plan sponsors to provide
improved disclosures about plan assets, including categories of plan assets, nature and amount of concentrations of risk and disclosure about fair value measurements of plan assets, similar to those required by ASC 820. These new disclosures are
required for fiscal years ending after December 15, 2009. The adoption of this new guidance did not have any impact on the Companys financial position or results of operations.

ASC 855, Subsequent Events

In May 2009, the FASB issued ASC 855, Subsequent Events. ASC 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, ASC 855 sets forth (1) the period after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet
date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. In accordance with ASC 855, an entity should apply the requirements to annual financial
periods ending after June 15, 2009. The adoption of this new guidance had no impact on the Company.



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



Summary:

Net income and total stockholders equity, adjusted to take into account the material differences between Mexican FRS and U.S. GAAP,
are as follows:



|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ---------- | - | --------------------------- | -- | ---------- | --------------------------- |  | -- | ---------- | -
|                                                                                                                               |  | Year ended December 31, |           
|                                                                                                                               |  | 2009                    |            |   | 2008Retrospectivelyadjusted |    |            | 2007Retrospectivelyadjusted | 
|Net income as reported under Mexican FRS                                                                                       |  | P.                      | 9,562,888  |   |                             | P. | 5,630,928  |                             |  | P. | 7,013,678  |  
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|U.S. GAAP adjustments:                                                                                                         |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Capitalized interest on net financing cost                                                                                     |  |                         |           |   |                             |    | 22,252     |                             |  |    | 113,153    |  
|Reversal of amortization of intangible asset acquired in transaction between entities under common control                     |  |                         | 56,520     |   |                             |    | 25,905     |                             |  |    |            |  
|Depreciation of capitalized interest                                                                                           |  |                         | (41,848    | ) |                             |    | (37,739    | )                           |  |    | (26,863    | )
|Deferred income tax under U.S. GAAP included in this reconciliation                                                            |  |                         | (166,504   | ) |                             |    | (346,254   | )                           |  |    | (453,141   | )
|Goodwill effect of change in valuation allowance of deferred income tax asset                                                  |  |                         |           |   |                             |    | (1,666,954 | )                           |  |    |           |  
|Difference between the re-expression of depreciation expense based on specific indexation factors and on the basis of the NCPI |  |                         | (1,255,506 | ) |                             |    | (1,468,915 | )                           |  |    | (1,674,019 | )
|Equity interest in net income of affiliate                                                                                     |  |                         | (37,711    | ) |                             |    | 117,500    |                             |  |    | 28,655     |  
|Negative goodwill effect on depreciation and amortization                                                                      |  |                         | 690,365    |   |                             |    | 1,092,398  |                             |  |    | 1,092,398  |  
|Difference between the measurement of depreciation and amortization expense due to step acquisitions                           |  |                         | (205,352   | ) |                             |    | (79,670    | )                           |  |    | 82,780     |  
|Difference between the carrying value and fair value of non-controlling interest                                               |  |                         | (16,331    | ) |                             |    | (12,615    | )                           |  |    | (13,361    | )
|Effects of inflation accounting on U.S. GAAP adjustments                                                                       |  |                         |           |   |                             |    |           |                             |  |    | (272       | )
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Total U.S. GAAP adjustments                                                                                                    |  |                         | (976,367   | ) |                             |    | (2,354,092 | )                           |  |    | (850,670   | )
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Net income under U.S. GAAP                                                                                                     |  | P.                      | 8,586,521  |   |                             | P. | 3,276,836  |                             |  | P. | 6,163,008  |  
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Distribution of net income:                                                                                                    |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Majority interest                                                                                                              |  |                         | 8,312,253  |   |                             |    | 3,328,579  |                             |  |    | 5,739,051  |  
|Non-controlling interest                                                                                                       |  |                         | 274,268    |   |                             |    | (51,743    | )                           |  |    | 423,957    |  
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|                                                                                                                               |  |                         | 8,586,521  |   |                             |    | 3,276,836  |                             |  |    | 6,163,008  |  
|                                                                                                                               |  |                         |            |   |                             |    |            |                             |  |    |            |  
|Weighted average outstanding shares (millions)                                                                                 |  |                         | 18,157     |   |                             |    | 18,596     |                             |  |    | 19,766     |  
|Earnings per share under U.S. GAAP (in pesos)                                                                                  |  | P.                      | 0.46       |   |                             | P. | 0.18       |                             |  | P. | 0.29       |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|                                                                                                                                                        |  |                         |             |   |                             |    |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | - | --------------------------- | -- | ----------- | -
|                                                                                                                                                        |  | Year ended December 31, |            
|                                                                                                                                                        |  | 2009                    |             |   | 2008RetrospectivelyAdjusted |   
|Total stockholders equity under Mexican FRS                                                                                                            |  | P.                      | 99,484,972  |   |                             | P. | 80,125,250  |  
|U.S. GAAP adjustments, net of effects of inflation on monetary items:                                                                                   |  |                         |             |   |                             |    |             |  
|Capitalized interest on net financing cost                                                                                                              |  |                         | 604,531     |   |                             |    | 468,205     |  
|Accumulated depreciation of capitalized interest or net financing cost                                                                                  |  |                         | (139,803    | ) |                             |    | (77,791     | )
|Deferred income tax on U.S.GAAP adjustments included in this reconciliation                                                                             |  |                         | (1,862,094  | ) |                             |    | (1,527,383  | )
|Transaction between entities under common control                                                                                                       |  |                         | (369,735    | ) |                             |    | (426,255    | )
|Deferred income tax on effect of translation of foreign subsidiaries                                                                                    |  |                         | 7,933,535   |   |                             |    | 2,176,811   |  
|Goodwill effect of change in valuation allowance of deferred income tax asset                                                                           |  |                         | (2,158,090  | ) |                             |    | (1,666,954  | )
|Deferred taxes on the difference between the indexed cost and specific indexation factor valuation of inventories and plant,
property and equipment     |  |                         | (3,499,067  | ) |                             |    | (2,852,202  | )
|Difference between the re-expression of inventories and plant, property and equipment based on specific indexation factors and on
the basis of the NCPI |  |                         | 10,419,221  |   |                             |    | 8,935,167   |  
|Labor obligations (ASC 715)                                                                                                                             |  |                         | 2,014,362   |   |                             |    | 1,065,281   |  
|Equity investment in affiliated company                                                                                                                 |  |                         | 65,849      |   |                             |    | 86,600      |  
|Reversal of goodwill impairment                                                                                                                         |  |                         | 305,304     |   |                             |    | 305,304     |  
|Goodwill translation                                                                                                                                    |  |                         |            |   |                             |    | 447,050     |  
|Reversal of capital gain due to negative goodwill                                                                                                       |  |                         | (4,951,724  | ) |                             |    | (4,951,724  | )
|Negative goodwill effect on depreciation and amortization                                                                                               |  |                         | 4,530,885   |   |                             |    | 3,840,520   |  
|Difference between the measurement of accumulated depreciation and amortization due to step acquisitions                                                |  |                         | (661,492    | ) |                             |    | (356,814    | )
|Reversal of capital loss for acquisition of non-controlling interest                                                                                    |  |                         | 296,601     |   |                             |    | 296,601     |  
|Difference between the carrying value and fair value of non-controlling interest                                                                        |  |                         | (65,324     | ) |                             |    | (50,458     | )
|                                                                                                                                                        |  |                         |             |   |                             |    |             |  
|Total U.S. GAAP adjustments net                                                                                                                         |  |                         | 12,462,959  |   |                             |    | 5,711,958   |  
|                                                                                                                                                        |  |                         |             |   |                             |    |             |  
|Total stockholders equity under U.S. GAAP                                                                                                              |  | P.                      | 111,947,931 |   |                             |    | P85,837,208 |  
|                                                                                                                                                        |  |                         |             |   |                             |    |             |  

Condensed financial information under U.S. GAAP

The following table presents consolidated condensed income statements for the years ended December 31, 2009, 2008 and 2007, prepared
under U.S. GAAP, including the differences and reclassifications as compared to Mexican FRS described in this Note:



|                                            |  |      |            |   |      |    |            |      |  |    |            |  
|------------------------------------------- |  | ---- | ---------- | - | ---- | -- | ---------- | ---- |  | -- | ---------- | -
|                                            |  | 2009 |            |   | 2008 |    |            | 2007 | 
|Operating revenues                          |  | P.   | 92,540,086 |   |      | P. | 76,004,741 |      |  | P. | 67,760,171 |  
|Operating costs and expenses                |  |      | 82,313,044 |   |      |    | 67,716,273 |      |  |    | 58,172,227 |  
|                                            |  |      |            |   |      |    |            |      |  |    |            |  
|Operating income                            |  |      | 10,227,042 |   |      |    | 8,288,468  |      |  |    | 9,587,944  |  
|Other expenses, net                         |  |      | (3,119     | ) |      |    | (46,700    | )    |  |    | (180,413   | )
|Financing income (cost), net                |  |      | 1,099,908  |   |      |    | (2,000,410 | )    |  |    | (22,348    | )
|Equity interest in net income of affiliates |  |      | 1,851,675  |   |      |    | 308,019    |      |  |    | 717,729    |  
|                                            |  |      |            |   |      |    |            |      |  |    |            |  
|Income before income tax                    |  |      | 13,175,506 |   |      |    | 6,549,377  |      |  |    | 10,102,912 |  
|Income tax                                  |  |      | 4,588,985  |   |      |    | 3,272,541  |      |  |    | 3,939,904  |  
|                                            |  |      |            |   |      |    |            |      |  |    |            |  
|Net income                                  |  | P.   | 8,586,521  |   |      | P. | 3,276,836  |      |  | P. | 6,163,008  |  
|                                            |  |      |            |   |      |    |            |      |  |    |            |  



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



The following table presents consolidated condensed balance sheets at December 31,
2009 and 2008, prepared under U.S. GAAP, including the differences and reclassifications as compared to Mexican FRS described in this Note:



|                                                      |  |      |             |                             |    |            
|----------------------------------------------------- |  | ---- | ----------- | --------------------------- | -- | -----------
|                                                      |  | 2009 |             | 2008Retrospectivelyadjusted
|Assets                                                |  |      |             |                             |    |            
|Current assets                                        |  | P.   | 49,580,079  |                             | P. | 37,705,009 
|Plant, property and equipment, net                    |  |      | 88,448,843  |                             |    | 65,349,309 
|Goodwill, net                                         |  |      | 12,843,296  |                             |    | 10,220,378 
|Equity investments                                    |  |      | 16,832,412  |                             |    | 11,448,654 
|Other non-current assets                              |  |      | 19,135,878  |                             |    | 10,417,161 
|                                                      |  |      |             |                             |    |            
|Total assets                                          |  | P.   | 186,840,508 |                             | P. | 135,140,511
|                                                      |  |      |             |                             |    |            
|Liabilities and stockholders equity                  |  |      |             |                             |    |            
|Short-term debt and current portion of long-term debt |  | P.   | 12,667,266  |                             | P. | 14,727,645 
|Other current liabilities                             |  |      | 37,135,907  |                             |    | 21,908,084 
|                                                      |  |      |             |                             |    |            
|Total current liabilities                             |  |      | 49,803,173  |                             |    | 36,635,729 
|                                                      |  |      |             |                             |    |            
|Long-term debt                                        |  |      | 20,676,654  |                             |    | 10,411,056 
|Employee benefits                                     |  |      | 764,231     |                             |    | 1,226,744  
|Deferred taxes                                        |  |      | 3,648,519   |                             |    | 1,029,774  
|                                                      |  |      |             |                             |    |            
|Total liabilities                                     |  |      | 74,892,577  |                             |    | 49,303,303 
|                                                      |  |      |             |                             |    |            
|                                                      |  |      |             |                             |    |            
|Stockholders equity                                  |  |      | 106,096,325 |                             |    | 81,529,277 
|Non-controlling interest                              |  |      | 5,851,606   |                             |    | 4,307,931  
|                                                      |  |      |             |                             |    |            
|Total Stockholders equity                            |  |      | 111,947,931 |                             |    | 85,837,208 
|                                                      |  |      |             |                             |    |            
|Total liabilities and stockholders equity            |  | P.   | 186,840,508 |                             | P. | 135,140,511
|                                                      |  |      |             |                             |    |            



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TELMEX INTERNACIONAL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2009 and 2008

(In thousands of Mexican pesos, see Note 2c)



|                                                                                               |  |       |             |  
|---------------------------------------------------------------------------------------------- |  | ----- | ----------- | -
|                                                                                               |  | Total |            
|Balances at December 31, 2006                                                                  |  | P.    | 51,956,347  |  
|Increase in parent investment                                                                  |  |       | 19,990,005  |  
|Cash dividend paid to non-controlling interest in subsidiary                                   |  |       | (122,763    | )
|Acquisition of non-controlling interest                                                        |  |       | (388,348    | )
|Gain on dilution of investment in affiliate                                                    |  |       | 1,840,815   |  
|Comprehensive income:                                                                          |  |       |             |  
|Net income of the year                                                                         |  |       | 6,163,008   |  
|Other comprehensive income items:                                                              |  |       |             |  
|Effect of translation of foreign entities                                                      |  |       | 11,268,001  |  
|Effect of labor obligations, net of deferred taxes                                             |  |       | 855,446     |  
|                                                                                               |  |       |             |  
|Balances at December 31, 2007                                                                  |  |       | 91,562,511  |  
|Dividend declared                                                                              |  |       | (2,786,482  | )
|Repurchase of Companys own shares in cash                                                     |  |       | (4,245,302  | )
|Cash dividend paid to non-controlling interest in subsidiary                                   |  |       | (195,208    | )
|Related parties transactions                                                                   |  |       | (325,555    | )
|Comprehensive income:                                                                          |  |       |             |  
|Net income of the year                                                                         |  |       | 3,276,836   |  
|Other comprehensive income items:                                                              |  |       |             |  
|Deferred taxes allocated to equity                                                             |  |       | 471,331     |  
|Effect of translation of foreign entities                                                      |  |       | (1,716,016  | )
|Effect of ASC 715, net of deferred taxes                                                       |  |       | (204,907    | )
|                                                                                               |  |       |             |  
|Balances at December 31, 2008                                                                  |  |       | 85,837,208  |  
|Dividend declared                                                                              |  |       | (3,098,073  | )
|Repurchase of Companys own shares in cash                                                     |  |       | (2,489,900  | )
|Cash dividend paid to non-controlling interest in subsidiary                                   |  |       | (52,291     | )
|Transactions between entities under common control and acquisition of non-controlling interest |  |       | (224,627    | )
|Comprehensive income:                                                                          |  |       |             |  
|Net income of the year                                                                         |  |       | 8,586,521   |  
|Other comprehensive income items:                                                              |  |       |             |  
|Deferred taxes allocated to equity                                                             |  |       | 193,473     |  
|Effect of translation of foreign entities                                                      |  |       | 22,242,210  |  
|Effect of ASC 715, net of deferred taxes                                                       |  |       | 953,410     |  
|                                                                                               |  |       |             |  
|Balances at December 31, 2009                                                                  |  | P.    | 111,947,931 |  
|                                                                                               |  |       |             |  



|                                  |  |      |            |      |    |           |  |    |           
|--------------------------------- |  | ---- | ---------- | ---- | -- | --------- |  | -- | ----------
|                                  |  | 2009 |            | 2008 |    | 2007     
|Comprehensive income for the year |  | P.   | 31,975,614 |      | P. | 1,827,244 |  | P. | 18,286,455
|                                  |  |      |            |      |    |           |  |    |           



F-76



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##### Table of Contents

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.



Telmex Internacional, S.A.B. de C.V.By:

/s/ Oscar Von Hauske SolísName: Oscar Von Hauske SolísTitle:   Chief Executive Officer


Date: May 26, 2010