1st Quarter Results - Part 1

Telefonica SA
16 May 2000


PART 1

                               Telefonica
                                 Results
                           January-March 2000

Results by business lines corresponding to 1999, which are presented to
allow for a comparison with the current year may differ from those
presented in March 1999. During the period the process of segregation of
business lines was completed, which caused slight changes in the results
by business lines in March 99.

The financial statements included in this report the result of the
conversion of the items reported in pesetas to euros, while the partial
sums are already calculated in euros. This may cause small differences
when rounding off decimals.

Telefonica has filed four registration statements on Form F-4 with the
SEC, one for each of the exchange offers Telefonica is making for the
outstanding shares in TdP, Telesp, Tele Sudeste and Telefonica Argentina.
Each of these registration statements is preliminary and subject to
completion. Telefonica will be filing with the SEC one or more amendments to
these registration statements to complete the information contained
therein, as well as other relevant documents concerning the exchange offers. WE
URGE INVESTORS TO READ THE FINAL REGISTRATION STATEMENTS/PROSPECTUSES
AND ANY OTHER RELEVANT DOCUMENTS THAT TELEFONICA HAS FILED AND WILL FILE
WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Investors will be able to obtain copies of the registration statements
and other documents from the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549, Telephone [phone], Fax (202)
628-9001, Email: [e-mail]. In addition, documents (excluding
any exhibits) filed with the SEC by Telefonica will be available free of
charge from the Director of Investor Relations of Telefonica at Gran Vis
28, 28013 Madrid, Spain, Telephone [phone]. Once the registration
statements have become effective, investors will also be able to obtain
them free of charge at Telefonica's website, http://www.telefonica.com. 
READ THE DEFINITIVE REGISTRATION STATEMENTS/PROSPECTUSES CAREFULLY BEFORE
MAK1NG A DECISION REGARDING THE EXCHANGE OFFERS.

This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of such jurisdiction.


NTRODUCTION

BASIS FOR THE PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

In accordance with generally accepted accounting principles in Spain,
the Brazilian company Celular CRT Participacoes, 36.97%-owned by the
Telefonica Group since August 1999, has been fully consolidated in
2000.  In 1999, this company was consolidated by equity method, except
in the month of December 1999 when it was fully consolidated.

CRT Fixa is reported in the year-2000 financial statements of the Telefonica 
Group at the book value corresponding to December 1999, due to the transitory
nature of the shareholding in this company.

In accordance with agreements signed in early 2000 for the future sale of
Cablevision, this company is now reported in the financial statements of the
Telefonica Group at the book value corresponding to December 1999 (consolidated
by equity method in 1999).

DTS Distribuidora de Television Digital, S.A., has increased its capital in the
year 2000. Telefonica Media, S.A. a 100%-owned subsidiary of Telefonica, S.A.,
acquired a less than proportional number of the new shares issued, thereby
reducing its interest in the share capital of DTS to 48.63% (68.6% in December
1999 and 43.04% in March of the same year). The company continues to be
consolidated by equity method.

In the first quarter of 2000, Telefonica, S.A., pursuant to agreements signed
with Banco Bilbao Vizcaya Argentaria, S.A., sold the latter a 3% stake in the
capital of Terra Networks, S.A..  This company, 67.47%-owned by the Telefonica
Group (100% in March 1999), continues to be fully consolidated.

In the first quarter of 2000, the Terra Group acquired an additional 5% of Terra
Networks Guatemala, S.A. The Terra Group now controls the entire capital of this
company,  which continues to be fully consolidated.

Terra Networks, S.A. has also participated in the creation of a new firm, Red
Universal de Marketing y Booking On-Line, S.A. (RUMBO), in which it holds a 50%
interest.  This company is now fully consolidated.

In February 2000, Telefonica, S.A. sold 6.1% of Amper, S.A., reducing its
shareholding in the company to 6.1% (12.2% in March 1999). Amper S.A continues
to be consolidated by equity method.

In January 2000, Telefonica Intercontinental, S.A., 100%-owned subsidiary of
Telefonica, S.A., sold 4% of Medi Telecom (Morocco), and now holds a 30.5%
interest. Medi Telecom is consolidated by equity method in 2000 (at acquisition
cost in 1999).

Telefonica Publicidad e Informacion, S.A., 63%-owned subsidiary of Telefonica, 
S.A., acquired an additional 24.44% of TMP Worldwide Espana, S.A. in January
2000. The company, which is currently  fully controlled by TPI, continues to be
fully consolidated.

In 1999 Telefonica Internacional acquired 5.03% of Telefonica del Peru.  With
this operation, the Telefonica Group's total shareholding in the company at
end-March 2000 was 40.03% (36.44% in March 1999).  The company continues to be
fully consolidated.

In 1999 Telefonica Internacional increased its shareholding in certain Brazilian
companies. At end-March 2000 Telefonica Internacional held 19.3% of Telesp, S.A.
(12.1% in March 1999), 17.6% of TeleSudeste Celular Participacoes, S.A. (15.9%
in March 1999) and 9.0% of TeleLeste Celular Participacoes,  S.A.  (7.3% in
March 1999).

In 1999 Telefonica Media increased its interest in Antena 3 de Television to
47.21% (40.49% in March 1999). This company continues to be reported by equity
method.

In 1999, Telefonica Media acquired 30% of Patagonik Film group, S.A.  At the end
of March, 2000, the company was reported at acquisition cost.

In the second half of 1999 Telefonica Media acquired 100% of Uniprex, S.A and of
Cadena Voz de Radiodifusion, S.A. Both companies are reported by full
consolidation method.

In the second half of 1999 Telefonica S.A. increased its interest in Portugal
Telecom, S.A. to 3.75% (3.5 in March 2000). Portugal Telecom S.A. continues to
be reported by equity method.

In December 1999, Producciones Multitematicas, a subsidiary of Telefonica Media,
increased its shareholding in Lola Films, S.A., to approximately 70% (33.3% in
March 1999).  This company is fully consolidated in 2000 (by the equity method
until November 1999).

In December 1999, Telefonica Medios de Comunicacion, S.A., a subsidiary of
Telefonica Media, sold the 20% interest it held in Recoletos Compania Editorial.
This company had been reported by the equity method.

In 1999, Telefonica Servicios Moviles S.A. acquired the remaining 10% of
Compania Gestora del Servicio Mensatel, S.A., which continues to be fully
consolidated.

In December 1999, Telesp acquired 72.6% of CETERP. This company was reported on
Telefonica Group accounts at acquisition cost until January 3rd 2000, and since
then, the company has been fully consolidated.

On 16 December 1999, Infonet was floated on the stock market, thus reducing the
Telefonica Group's shareholding to 14.35% at March 2000 (18.74% in March 1999).
Until then this company had been reported at cost and started to be consolidated
by equity method after its IPO.

In June 1999, Telefonica Internacional exercised a buy option on 19% TLD, so
increasing its stake in this company to 98% (79% in March 1999). TLD continues
to be fully consolidated.

In June 1999, Telefonica Media acquired 5% of the Pearson publishing group. This
company is reported by equity method.

In June 1999, the initial public offering of 35% of TPI-Paginas Amarillas was
completed. This company continues to be reported by full consolidation method.

In May 1999, Telefonica Data S.A. acquired 50% of the Colombian company Rey
Moreno S.A.  This company is reported by equity method.  Subsequently in June,
Telefonica Data S.A. acquired 50.93% of Telecomunicaciones Ganaderas S.A.
(Colombia), which is reported by the equity method.

In May 1999, Telefonica sold 100% of its subsidiary Temasa to Tyco Submarine
Systems Ltd. This company was fully consolidated.

In March 1999, Telefonica sold all the shares that it owned in Sofres Audiencia
of Medios, representing 25% of the company, which was reported by equity method.

It should be noted that the revenues and costs associated to the Telefonica
Argentina management contract have been reclassified. In 1999 these items were
reported under other operating revenues/expenses while, as of 2000, they are
reported under operating revenues and subcontracts respectively. The figures for
1999 have, however, been restated in these accounts for comparative purposes,
applying the same criteria in both years.

As of the second half of 1999, changes in stocks have been reclassified in
Telefonica Moviles accounts from 'internal expenditure capitalised in fixed
assets' to 'supplies'. The figures for the first quarter of 1999 have been
restated to facilitate comparison between the two years.

         
                    TELEFONICA S.A. FINANCIAL HIGHLIGHTS

            (TISA SHAREHOLDINGS CONSOLIDATED BY THE EQUITY METHOD)

Figures unaudited
million                   January-March
                        2000      1999   % Chg.
Operating revenues   3,577.6   3,171.3    12.8
EBITDA               1,477.2   1,665.8   (11.3)
Operating profits      556.5     647.3   (14.0)
Profit before tax      496.8     323.0    53.8
Net income             346.0     257.9    34.2
Net income per share   0.11.     0.08.    28.4
No. of shares, 
millions (1)         3,276.8   3,136.1     4.5

(1) Outstanding shares at the end of the period. Increases of 62,722,527
and 63,976,998 due to bonus issues (1x50) and 13,966,207 new shares
arising from convertible bonds.  The number of shares stated includes the
(3xl) stock split of 23/07/99.  The March 1999 comparison base has been
adjusted to facilitate comparisons.

Telefonica, S.A. Results

All management discussion given in this report refer to the financial
performance of Telefonica  S.A., including all subsidiaries in which
Telefonica Internacional has interests reported by equity method.

The Telefonica Group posted net income of 346.0 million in the first
quarter of 2000. This gain of 34.2% over the year-ago quarter reflected
the positive performance of Telefonica Moviles in Spain, which reported
net income growth above 43%, and the rising contribution to Group earnings
of Latin American subsidiaries. Progress on these fronts partially offset
the negative impact of the wireline tariff cuts occurred in Spain over 1999 and
the first quarter of 2000 and the downturn in Terra earnings as a result of its
aggressive expansion plan and the launch of free internet access in some Latin
American markets.

First-quarter results were also influenced by a number of extraordinary
items, primarily the capital gains obtained from the sale of 3% of Terra,
which were offset in part by extraordinary charges in respect mainly of
the restatement of pension liabilities and the write down of investments,
in line with the prudence principle applied in prior quarters.

Stripped out these extraordinary items, Group net income would have
registered a growth rate of 18.58%.

Group EBITDA dropped back 11.3% compared to the first quarter last year,
despite a significant rise in consolidated revenues (+12.8%).  Main
contributing factors were:

The impact on Telefonica de Espana results of the tariff reductions of 1999 and
first-quarter 2000, which depressed growth of Telefonica de Espana Group
revenues (+1.5%), despite a strong advance in traffic.  Moreover, intense
competition again required strenuous commercial efforts, translating as a 15.9%
rise in operating costs.  The factors combined to drive the Telefonica de Espana
Group EBITDA figure 13.3% lower vis a vis the year-ago quarter.

A more negative contribution from Terra compared with previous quarters as a
consequence of the commercial efforts mentioned, which served to boost customer
base (+1.9 million new clients versus March 1999) and revenues (.35.7 million
against .2.2 million in first-quarter 1999), but bore down heavily on the
company's EBITDA, which closed at a negative .60.9 million.

The strong growth posted in Telefonica Moviles revenues (+36.9%) delivered a
39.7% rise in EBITDA with respect to first-quarter 1999.  Its important to
underline that in spite of the quantum leap in total customers, which again
locates the company among the fastest-growing in Europe (1,207,803 net adds in
the quarter), the economies of scale generated have raised profitability as
measured by the EBITDA margin (36.4% of revenues against 35.6% in the year-ago
quarter).

The positive revenue performance of other Group business areas like Telefonica 
Data and Atento, with year-on-year growth of 27.9% and 221.9% respectively.

SIGNIFICANT EVENTS:

On 18 April, TPI and Lycos Espana sealed a collaboration agreement which
facilitates Lycos users' access to the services and solutions of the former's
Yellow Pages and White Pages products. The agreement also provides for the
later incorporation of other TPI services and solutions.

On 14 April,  Terra Networks Brazil launched a new WAP portal in conjunction 
with Brazilian mobile phone subsidiaries.  The portal will house specific
contents which can be accessed via mobile, like leisure, culture, entertainment
and  economic  information, sports news, stock market prices and the latest
world news.

The Telefonica, S.A. General Shareholders' Meeting held an 7 April approved all
the points on the agenda presented, including the company's accounts
corresponding to the year 1999, the stock option plans proposed for senior 
managers and the entire staff of Telefonica Group companies indexed to the
share's market price, two 1x50 bonus issues and a further capital increase to
fund the acquisition of Endemol.

On 26 March, Terra and TelePizza signed a letter of intent to develop an
e-commerce platform offering one-hour delivery of items like Videos, books, CDs,
pre-paid cards, leisure goods, etc.  Under its terms, the two companies will
incorporate a 50/50 joint venture for the development of a virtual store. The
agreement also envisages the entry of Atento to TelePizza's capital with an
interest of 4.89%; with Atento handling call-centre, and telemarketing for the
newly created firm.

This alliance combines TelePizza's distribution capacity with Terra's wide
internet audience. Clients of the new Terra-TelePizza service will be able to
purchase items through a multichannel service encompassing internet and the
telephone network.

On 17 March 2000, Telefonica S.A. and Endemol Entertainment Holding
N.V., agreed on the launch by Telefonica of a tender offer for 100% of Endemol,
Europe's largest independent television producer. Endemol's creative team and
its high-quality catalogue of formats will provide new contents for all
Telefonica, distribution channels: Telefonica Media, Terra Networks, Telefonica
Moviles and future broadband ventures.

On 1 March, the shares of Telefonica S.A. began trading on the Lima Stock 
Exchange, in the lead-up to its announced launch of a Exchange Offer of
Telefonica del Peru shares for shares of Telefonica, S.A.

                         TELEFONICA S.A.

MARKET SIZE

Thousand             March        % Chg           Weighted figures (*)    % Chg
                  2000      1999   00/99     March 2000     March 1999    00/99
Lines in service 39,510.4 36,022.2   9.7      24,194.7        22,011.2      9.9
Spain            19,510.6 18,441.4   5.8      19,510.6        18,441.4      5.8
Other countries
(1)              19,999.8 17,580.7  13.8       4,684.1         3,569.7     31.2
Mobile clients   21,824.0 12,001.3  81.8      12,634.7         6,821.4     85.2
Spain            10,260.2  5,716.8  79.5      10,260.2         5,716.8     79.5
other countries  11,563.8  6,284.5  84.0       2,374.5         1,104.6    115.0
Pay TV clients    1,102.3    872.2  26.4         495.0           352.1     40.6
Spain               502.4    286.6  75.3         245.4           123.2     99.1
Other countries
(2)                 599.9    585.6   2.4         249.6           228.9      9.1
TOTAL            62,436.6 48,895.6  27.7      37,324.4        29,184.6     27.9

(*) Weighted for the economic interest held in each company.
(1) 1999 and 2000 figures do not include CRT's lines, given the transitory
    nature of the shareholding in this company.
(2) 1999 and 2000 figures do not include Cablevision clients, given the
    transitory nature of the shareholding in this company.


TELEFONICA S.A. RESULTS BY COMPANY(*)

Unaudited figures                   Revenues                     EBITDA
 million                          January-March              January-March
                              2000    1999   % Chg        2000     1999   % Chg
Telefonica de 
Espana Group                2,504.2  2,468.3   1.5      1,169.0  1,348.9 (13.3)
Telefonica Servicios 
Moviles Group               1,067.1    779.5  36.9        388.1    277.7   39.7
Telefonica Data Group         154.7    121.0  27.9         26.0     20.0   30.0
Terra Networks                 35.7      2.2  n.s.        (60.9)    (1.6)  n.s.
Other subsidiaries            458.4    354.4  29.3        (30.0)    20.0   c.s.
Eliminations                 (642.6)  (554.1) 16.0        (15.1)     0.7   c.s.
GROUP                       3,577.6  3,171.3  12.8      1,477.2  1,665.8 (11.3)

(*) TISA's subsidiaries consolidated by the equity method.


RESULTS ANALYSIS BY COMPANY

TELEFONICA DE ESPANA GROUP

Telefonica de Espana, the operating fixed-line operator in Spain, faces 2000 in
a setting characterised by a fully liberalised market, growing competition and
aggressive commercial policies by competitors.

By the end of 1999, the Company was competing with fully established global 
operators,  numerous cable and niche operators and two mobile operators also
offering fixed-line services under B1 licences.  We must now add the new
broadband radioelectric access licences granted in March 2000, whose customers
are likely to be offering direct access to the local loop in the last four
months this year.

Despite this more intense competition and the price cuts made, most notably 
from last year's fourth quarter onwards (reductions in the period July
1999-January 2000 of 11.9% in local calls, 10.6% in provincial calls, 26.3% in
domestic long distance, 12.5% in international calls and 16.9% in fixed mobile
calls), the Telefonica de Espana  group's operating revenues in the first
quarter of 2000 reflect a sound business performance. These revenues rose 1.5%
year on year to .2.504  billion. Parent company operating revenues dropped only
2.3%, since new competitor entries provided a significant spur to overall market
growth and favoured a strong rise In Telefonica de Espana's traffic revenues,
despite some loss of market share and the large price cuts enacted.

This revenues achievement is primarily due to strong expansion in ISDN and 
wholesale services (those rendered to other operators).  Growth in both cases
was enough to largely absorb the impact of falling tariffs/prices, the erosion 
of market share and greater discount volumes.  Expansion of emerging services
(access to internet, ISDN, broadband, Centrex, Intelligent Network and VPN),
which grew by 48% and now make up more than 15% of total revenues, reflects  the
Company's policy of replacing traditional with emerging services to secure  a
strong future positioning.

Telephone usage, expressed as minutes per line per day, stood at 15.6 with 
almost 23% growth over the first quarter last year. Total traffic volume was 
24,441 million minutes (+27.1% in year-on-year terms).  This positive usage
performance extended to both incoming (68.9% growth) and outgoing network 
traffic, and featured an increase above 30% in international calls driven by the
Plan Europa 15 (15 minutes a day in non peak time for calls to other European
Union countries, for .9 a month).  Provincial traffic, meanwhile,  rose 6% and
domestic long distance 2.2%.  Particularly noteworthy was the  growth recorded
in internet access traffic, +130% to the month of March, and   in fixed-mobile
services (+44.4%).

Usage growth was strongly supported by the commercial success of the Company's 
discount plans and the introduction of flat-rate tariffs products (Bononet, 
Europa 15, Pais 30 and Novacom Multiplan), which increased the competitiveness 
of the Telefonica service. In particular, the Plan Europa 15 had attracted
203,098 subscribers by the end of March, while the Plan Pais 30 (30 minutes a
day in non peak domestic long distance calls, for .9 a month) launched in
mid-March already had 80,000 subscribers by the end of the month, and over
250,000 by the middle of April.

The Company's firm bet on larger bandwidth services translated a strong
growth in the installation of technologies of direct bearing on ADSL
development, as part of a plan to boost internet penetration in the
Spanish market. Thanks to these efforts, ADSL service is available for
5.9 million lines by the end of March. ISDN lines continued in strong
expansion with growth of 103.4% in basic connections, as far as 427,832
lines in service, and 59.4% in primary connections to 10,129.

Telefonica de Espana group operating costs rose 15.9% to .1.403 billion, with 
interconnection costs and revenue acquisition costs strongly to the fore.
Telefonica de Espana's operating costs before interconnections, .878.8 million
to the end of March, were 0.6% down on the prior year, thanks the efforts made
in relation with the staff costs contention and ongoing efforts to reduce other
costs not directly related to revenues.

Interconnection costs of Telefonica de Espana grew 34.5%. The main factor 
behind this rise was growth in fixed-mobile interconnections, accounting for 
93.6% of the total, in line with the strong expansion registered by the Spanish
mobile market, partly offset by the price reductions of July last year and
January 2000.

Personnel expenses decreased 4.3% with respect to 1999, reflecting both the
fewer expected lay offs this year than last, and the hiring in the quarter of
1,255 employees mainly on the commercial area.  At the end of March, Telefonica
de Espana had 46,990 employees, 9.3% less than last year and giving a
productivity ratio of 415.2 lines/employee.

Subcontracts registered 8.4% growth to March. This was due both to the
externalisation of activities and, more importantly, to the evolution of
commercial costs in general and advertising costs in particular, reflecting  the
greater efforts made in positioning the Company's image and promotional
activities in response to growing competition.

On the above revenues and costs performance, the EBITDA of Telefonica
de Espana group closed the period 13.3% lower at .1.169 billion.  However, lower
depreciation levels following the extraordinary write-down of March 1999, partly
offset in the shortfall for the operating income figure of .429.7 million, a
decrease of 7.3% with respect to first quarter 1999.

Net income was .142.5 million, an increase of 33.4% versus the same quarter a
year ago.


TELEFONICA MOVILES GROUP

The Spanish mobile market recorded exceptional growth in the first quarter of
2000. Penetration reached 43.8% and is close to the European average. The 
penetration growth achieved in Spain in both quarterly terms (6.3pp) and year on
year (22.7pp)is among the highest in Europe. This Spanish market, was maintained
in March its leadership in with year-on-year growth in the mobile customer base
of 107%.

In this context, Telefonica Moviles reported a total net adds in the first  
quarter of 1,207,803 clients, taking total customers to 10,260,150. The company
now ranks as:

-  The sixth-largest operator in Europe (and ninth in the world) with
   more than 10 million clients. 
-  The European operator with the highest year-on-year growth in penetration    
  points (11.36 pp). 
-  Europe's second fastest growing operator in the first-quarter 2000 in        
  absolute terms of client numbers.

Of total clients, 9,654,726 correspond to GSM dual service MoviStar, which 
registered a first-quarter share of net adds in the digital market estimated  at
50%, rising to around 56% in the case of the quarterly increase in traffic
generated.

Based on the customer data published by the competitors, we find that 
Telefonica Moviles has a gap of 4.6 million over its nearest rival, and
has widened such gap by 49.2% since March 1999.  The company's estimated
share of total traffic stands at over 63%, around 5 pp higher than its
customer market share, indicating a higher percentage of effective clients
and/or a larger share in higher-value clients.

As it is being common recently, the pre-paid products in the MoviStar
Activa family were the main driver of growth, contributing almost 80%
of the net increase in the digital client base. However, the launch of
the new MoviStar Plus concept--essentially a series of initiatives designed to 
increase the number and loyalty of the contract client segment prepared to be 
committed with Telefonica Moviles--has successfully doubled the company's net
adds in contract subscribers  with respect to the first quarter last year.

As to total traffic volume, Telefonica Moviles networks channelled 4.58
billion minutes, 81.5% more than in the same period last year.  Data
services showed extraordinarily dynamic, particularly the short message
service, which increased 700% in year-on-year terms as far as a global
volume of over 400 million messages (539 million in the whole of 1999).
Also, WAP access is now being commercially rolled out since the shortage
of handset supply is over. Already more than 25 institutions provide
their services and applications through MoviStar WAP.

The Company's operating revenues amounted to .1.067 billion, an increase of
36.9% with respect to March 1999.

Despite a net gain in clients of over 1.2 million (nearing the all-time
record of fourth-quarter 1999) and growth rates among the highest in
Europe, the Company's rigorous cost control and tight rein on acquisition costs
--a year-on-year reduction in SAC of 15%--secured it a 39.7% advance in EBITDA
vs. the year-ago quarter to .388.1 million.

The net income figure of .147.2 million represented a 43.7% increase with
respect to the same quarter last year, despite the conservative provisioning
criteria habitually applied.

Telefonica Moviles invested .181 million to secure quality indicators
even higher than last year's, in spite of the significant growth in both
client numbers (79.5%) and traffic (81.5%).

As part of our philosophy of offering clients the widest and most advanced 
range of services and capabilities, roaming agreements were extended in the
period to over 200, covering more than 100 countries.  These already operational
agreements will be joined by 31 more recently concluded  agreements, which will
be progressively brought on stream, and 14 agreements with operators not using
our technology standard, but able to provide services to our clients in
countries lacking digital coverage (via the 'MoviStar Global' and 'MoviStar
Americas' services).

Finally, to remark that Telefonica Moviles has been awarded one of the four 
UMTS licences granted in Spain, with the highest score of all the bids 
submitted. The company also won one of the two TETRA licences (digital 
trunking) awarded by public tender. The price of the UMTS licence was .131
million, to be paid over in the month of April.


TELEFONICA INTERNACIONAL GROUP

At the end of the first quarter 2000, Telefonica Internacional was managing 
17.4 million lines in service (20.0 million in total), an increase of 16.4% 
year on year. This advance was driven by strong expansion of Telesp lines in
service (+27.9%), to more than 8.7 million. We get some idea of the huge
potential of the Sao Paolo market from the end-March waiting list, after
adjustment, of 3.8 million line applications. Telefonica del Peru, meanwhile,
reported a  5.7% increase in lines in service, encouraged in this case by the
commercialisation of the 'telefono popular' format (+99% versus March 1999),
which now accounts for 15% of total line numbers (8% in March 1999).

With regard to mobile customer numbers, Telefonica Internacional had         
11.5 million at the end of the first-quarter (+83.4% year on year), of
whom 7.0 million are directly managed (+94.4% vs. March 1999).  The
significant growth recorded in the customer bases of all mobile companies was
thanks to the large take-up of the pre-paid service.  The sharply higher 
weighting of pre-paid users across all companies has allowed a reduction in 
both the unit acquisition costs of new subscribers and bad debt levels. Note
particularly the growth rates achieved by TCP in Argentina (+113.4% year on 
year) Tele Sudeste Celular and Tele Leste Celular (+115.2% and +101.0%
respectively  vs. March 1999).  Additionally, Telefonica El Salvador has more  
than quadrupled client numbers in the past twelve months, and  maintained a
market share ahead of 30%.  Telefonica Guatemala, which began operations in
October 1999, has already secured almost 78,000 clients, giving it a market
share of 19%.

Latin American associated companies contributed .92.7 million to  Telefonica
Internacional earnings, an increase of 153.1% year on year. This notable  upturn
vs. 1999 reflects both economic recovery in the region and local currency
appreciation against the dollar.

      - Telefonica CTC Chile's net income, in nominal terms, increased 110%
        vs. the year-ago quarter to .21.2 million. Several factors explain
        this performance:

      - A decline in EBITDA margin in absolute terms, resulting from
        the revenues impact of the new tariff decree ratified in August
        1999, and lower revenues on long distance calls, were not offset
        by a strong advance in cellular revenues and moderate growth  of
        operating costs. However, the Company's cost cutting efforts and
        lower bad debt translated as an increase in EBITDA/sales  to
        44%, almost reading the margin in place prior to the tariff
        decree.
      - A decrease in non operating losses thanks to peso appreciation
        vs. the dollar. The result was a positive monetary correction in
        the period compared to negative monetary correction in 1999,            
       which has offset higher interest expenses.

- Telefonica de Argentina's first quarter net income in euro terms fell 12% to 
108 million due mainly to the increase recorded in non operating expenses:

      - EBITDA held almost flat vs. 1999 on a combination of higher
        revenues (mainly from the large advance in cellular and internet
        client numbers) and higher expenses (increased commercial costs
        in mobile telephony caused by higher net adds, and heavy                
       advertising  and subcontracting expenses at the  service  of  new
        product launches  and  customer  loyalty-building campaigns to
        respond  to  the  opening of the market to competition, and the
        corresponding outlays wiped out the  reductions achieved in
        personnel expenses and the significant decline in bad debt
        provisions.
      - Net financial costs rose in year-on-year terms, because of the
        higher debt carried after PCS licences acquisitions in June
        1999.
      - Extraordinary expenses rose due to staff severance payments
        primarily.

-   Telefonica del Peru  reported a net income of .56.1 million in
    nominal terms, doubling the figure for March 1999.  Growth was
    supported, on the one hand, by a strong performance at the  operating
    income  line  thanks  to higher revenues, particularly  from  mobile,
    local  and  public telephony business, and lower personnel  expenses.
    Also  contributing  was the switch into positive  monetary  correction
    numbers  from the losses recorded in March 1999. Bad debt provisions
    again  remitted  in  the quarterly period, enabling  a  reduction  in
    related provisions as a percentage of company revenues.

-   Brazilian operators contributed .24.3 million overall to Telefonica
    Internacional earnings (-.4.8 million in March 1999),  showing  that
    the effects of devaluation-induced negative monetary correction  and
    the new depreciation policy adopted in early 1999 have now worn off.

    -   In the case of Telesp, steady growth of lines in service and
        usage delivered double digit growth in sales, and EBITDA. Net
        income in the period was .90.8 million (+37%).  The Company's
        efforts to raise productivity have placed Telesp as one of
        leaders in efficiency, with 611 lines/employee,

    -   As to mobile companies, first-quarter numbers evidenced a
        positive trend in business profitability, thanks to the
        economies  of scale provided by fast expansion in customer bases
        over the past 18 months. The result was an EBITDA margin above
        35% at CRT Celular and TeleSudeste Celular and just short of 20%
        at TeleLeste Celular (against the negative numbers of the 1999
        close).  This EBITDA performance plus the aforementioned monetary
        correction and depreciation effects raised net income to .15.2
        million at TeleSudeste Celular (+44%) and to .10 million at CRT
        Celular, and reduced losses at TeleLeste Celular to .4  million,
        (compared to .3.4 million as of March 1999), significantly lower
        than the losses registered in the last quarter of 1999.

The  better earnings at associated companies, growth in management fees
(+22.3%) and positive extraordinary results more than offset the negative 
impact of higher interest expenses (dollar appreciation  vs. the euro) and taxes
at the Telefonica Internacional bottom line.

TELEFONICA DATA GROUP

Telefonica Data had sold over 90,000 Infonegocio packages at the end of March. 
InfoNegocio.com, is the integrated services environment facilitating internet
access to professionals and businesses.  This total represents above 500% growth
in user numbers over the past six months, and a rate of corporate sign-ups
exceeding 25,000/month.

InfoNegocio.com provides high-performance internet access, company website
hosting and e-mail accounts, among other services, backed by a range of 
functionalities to optimise companies management of their internet business.

Telefonica Data has also developed a broad range of telecommunications products
and services catering to the internet needs of the business world.  One such
service is MegaVia ADSL, allowing high-speed connection to internet through a
conventional telephone line at a flat-rate.

A keynote launch in the first quarter period was the new voice-data integration
service for corporate environments. This initiative allows large accounts and
SMEs to layer their corporate voice communications onto data service
infrastructure-an integration based on IP technology.  Clients of this service
pay a flat monthly fee and receive a unified bill for data and voice, delivering
significant savings in their global communication costs.

Telefonica Data has also presented its  'TData internet Centers'; high-power
data centers directed at Spanish and Latin American corporate clients.  These
centers, integrated in the IP network and operating to maximum standards of
speed and security, will provide web hosting and network application services on
an unrestricted bandwidth.  With an initial investment of over .180 million,
TData will deploy interconnected centers in Madrid, Barcelona, Sao Paulo, 
Buenos  Aires, Santiago de Chile, Miami and  Lima. TData internet Centers
(TICs), already running 75,000 clients in web hosting services,  will be the
primary axis of the company's future growth.

In another new initiative, Telefonica Data and AECOC (Asociacion Espanola de
Codificacion Comercial-Spanish Sales Coding Association) have got together on a
new service known as AECOC-Data, facilitating automatic information exchange on
Net-traded products.  This service, addressed to suppliers and distributors,
combines internet with EDI technology (Electronic Data Interchange), and can be
seen as the key piece in the B2B e-commerce segment.

The AECOC-Data service removes the need for traditional communication
procedures by telephone, fax, etc., and ensures distributor data match up
exactly with those of suppliers-in  other  words, that the information 
contained in product catalogues is automatically reproduced. It serves in this
way to speed up transmission of product information, bring down operating and
administrative costs and ensure that all parties can dialogue with the same
commercial references to hand.

In the international arena, the Direccion Naconal de Comunicaclones formally
confirmed on 29 March its award to Telefonica Data Uruguay of an LMDS service
licence, following the pertinent technical inspections.  This marks a new step
forward in the consolidation of Telefonica Data's  international presence, which
currently extends to  ten countries (Argentina, Austria, Brazil, Colombia,
Spain, Italy, Morocco, Peru, Uruguay and Venezuela).

Meanwhile, the internet traffic carried by InfoVia Plus continues to increase, 
with  over 1.13 billion minutes channelled in the month of March (+71% year on
year). Telefonica Data remains outright leader in this market, on a share of
over 60%.

Telefonica  Data reported first-quarter revenues of .154.7 million,  up
27.9% with respect to March 1999. The reduction in price of leased lines showed
a positive impact at the EBITDA line. This item  moved up an annual 30% in 
straight terms, as far as 17% of sales,  while net income reached .6.7 million.

The  Telefonica Data Group fully consolidates the following companies:
Telefonica Datacorp, Telefonica Data Espana and Interdomain. The  data  business
 of remaining Latin American companies are still included with their  respective
parents, pending the Group reorganisation  which will take place on conclusion
of the current process of public tenders.

TELEFONICA MEDIA GROUP

The Telefonica Media group has gained significantly in size since the beginning
of the year, as a consequence of the reallocation of media assets in
Argentina-ATCO, Azul and Torneos y Competencias, owned by Telefonica 
Internacional up to December 1999-and the transfer of shareholdings in Hispasat
and the Pearson Group-last year owned by Telefonica, S.A.  These changes,
alongside the  investments made in fourth-quarter 1999, have enlarged the Group
to 21 companies compared to 10 companies in March 1999.

Of the companies making up the Telefonica Media Group, three are holding 
companies and the remainder distributed across the Group's three business 
lines: Advertising and Programming (Antena 3, Onda Cero, Radio Voz, Azul and 
ATCO);  Content (10 companies) and Distribution (Via Digital, Hispasat and  
Telefonica Servicios Audiovisuales).

Antena 3

Antena 3 continued in the quarter as Spain's top free-to-air private television
channel, with an audience share in March of 22.3%.  The channel was again the
most popular among the under-65 age group (83% of the viewer universe), where
its share was 23.1%, and attracted the highest ratings in prime time (a share of
22.8%).

Operating revenues in the first quarter 2000 amounted to .135.6 million, up 
21.5% versus the same period last year. Higher advertising revenues and the
inclusion this year of Movierecord revenues were the main reasons for the
increase.  This performance, and operating costs growth contained at a lower
rate than sales resulted in operating income of .35 million (+39.8% year on 
year), despite increased depreciation charges.  The higher tax rate in the  
period-in first-quarter 1999 the company applied a tax credit in respect of
prior-year losses---damped net income growth to .23.8 million (+3%).

Via Digital

Via Digital's first-quarter results evidence the company's efforts to grow in 
clients and achieve critical mass.  At the March close, the company had 500,098
subscribers, after 60,000 net adds in the three-month period. The success of the
company's drive to steer viewers towards a greater consumption of 'premium'
programmes increased average revenues per subscriber to .30.7 against the .24.9
of first-quarter 1999.

TERRA NETWORKS GROUP

Terra's financial and operating figures for the first quarter of the year, 
along with the strategic deals and decisions made during the period, have
further strengthened the company's leadership position in the Spanish  and
Portuguese speaking market. This leadership is borne out quarter after quarter
by the fundamental figures measuring Terra's performance.

At the end of March 2000 the Terra Networks Group hit the two million subscriber
milestone, after having obtained one million new subscribers in less than five
months. The group's total subscriber base rose by 675,000 during the quarter,
nearly 50% more than the increase recorded in the fourth quarter of 1999.
Contributing to this strong growth was the launch of Terra's free access service
in Brazil, Mexico and Chile. but these gains were also accompanied by  a 120,000
rise in the number of paying clients.

Terra reached 270 million more page views in March than in December 1999, 
nearly twice the growth rate achieved if we compare December 1999 with 
September 1999. The group's page views in March thus reached 705 million,
doubling its audience in just four months time, And this growth has been robust
across all countries. In Spain, page views increased by close to 30% over last
December, traditionally a peak-audience month.  According to OJD the Terra
portal is absolute leader in Spain, but solid growth has also been obtained in
the group's portals in Mexico (with 72% more pages viewed than in December),
Chile (up 125%), Peru (280%) and Brazil (45%). Equally important, the US portal,
which was only launched in January 2000, reached 55.7 million page views In
March, up from 23 million in February.

Pro-forma financial statements show total Terra group revenues of .37 million,
for a year-on-year growth rate of 121% and a 33% gain over 4Q1999. Some 68% of
these revenues are generated by access business and 20% by the portal (75% and
5% in March 1999, respectively).

Terra is now present in Spain, Brazil, Mexico, Chile, Peru,  Argentina,
Venezuela, Central America and the United States. Approximately 80% of revenues
come from Spain, Brazil and Mexico.

The ISP business is seeing a growing contribution from revenues from induced 
traffic, which in March 2000 accounted for 11% of total revenues. All the same,
the main revenue source continues to be revenues obtained from paying clients,
which now number 879,000.

In the portal business, advertising revenues brought in .6 million, more
than 40% higher than the figure for the last three months of 1999, E-commerce
generated 2.3% of total group revenues.

Terra continued to push forward with its international expansion during
the quarter, acquiring Venezuela's third largest portal, Chevere, and
launching a US portal, while broadening its offering of different internet 
access platforms (ADSL in Spain and Brazil, cable in Brazil, web phone in Spain,
WAP in Brazil and Spain, and satellite in Spain).

The group has also worked to expand the content and services offered on
its portals, capitalising on its traffic leadership to win market share
in the local advertising business and prepare for the coming boom in e-commerce
with a strategic offering of vertical and horizontal portals.  Along these
lines, the following deals were made in the first quarter of 2000.

-  Acquisition of 49% of the online bank Uno-e, 51%-held by BBVA, and
   acquisition through this new joint venture of 33% of  Uno-First, the
   first global online banking group.
-  An exclusive content agreement with the State of Sao Paolo (Brazil)
   and Copesa (Chile), two of the largest publishers in their respective
   countries.
-  Agreement with Logista, a leading distribution group in Spain, for
   e-fulfilment operations in Latin America and Spain.

Terra continues capturing synergies and opportunities with Telefonica Group
companies. Along these lines, Terra maintains relations with Telefonica de
Espana and some of the Latin American subsidiaries for dial-up access and
broadband access Via ADSL and cable; with Telefonica Media to exploit the
content producton capabilities of the company's subsidiaries; Telefonica Data 
is one of the main infrastructure suppliers for the Terra network.

TPI - PAGINAS AMARILLAS

As explained in previous reports, TPI's quarterly results cannot be extrapolated
to the end of the year due to the accounting policy of recognising revenues and
expenses when the related directories are published, as  concentration of
telephone directory publication in the second half of the year renders
quarter-to-quarter comparisons meaningless.  In addition, as a result of
differences in directory publication timetables, the telephone books published
in the same period are not the same from year to year, further skewing
interperiod comparisons.

The first quarter results are highlighted by the following developments:

-  Strong growth in multimedia revenues, which rose from .0.16 million in March
1999 to .1.82 million in the first quarter of 2000.  In additon, Paginas    
Amarillas On-line (online yellow pages) has consolidated itself as one of the
most popular websites according to polling data from OJD.

-  10.1% rise in Paginas Amarillas (yellow pages) in a like-for-like directory 
comparison, though differences in directory publication timetables resulted in 
first quarter 2000 revenues from Paginas Amarillas declining 38.6% with respect
to the same period in 1999.

-  Lower revenues in Paginas Blancas (white pages) due to the phased shift of 
Telefonica customers to TPI.  TPI recruitment of Telefonica, customers implies
that revenues previously booked on a monthly basis are now recognised when the
related directory is published.

-  Net profits were 98.7% lower than the figure recorded for the same period
last  year 1999, due to the gross extraordinary revenue of .28.3 million
generated by sale of subsidiaries Estratel and Venturi in the first quarter of
1999.

During the first three months of this year, TPI has also strengthened its
presence in Latin America through the agreement reached with Telefonica
Internacional to take control of the Chilean directory publisher Publigulas,
leader in the Chilean directory market with a 98% market share. In addition, TPI
Brazil began its expansion in Sao Paulo capital (it represents 37% of the
Brazilian directory market).  From its position as intermediary in inland Sao
Paulo under contracts signed with publisher Listel, it now markets white pages
directories and yellow pages directory (Sao Paulo Capital) independently.  To
pursue this growth TPI Brazil has put together and trained a sales force
composed of 181 people.  In 2000, 32 white pages (3 of them marketed
independently by TPI), 29 yellow pages and 11 street finders are expected to be
published.

During the same period the company acquired Goodman Business Press, a publisher
specialised in different industrial sectors.  With this acquisition TPI seeks 
to accelerate development of as publishing business while exploiting
opportunities to enrich vertical e-commerce communities with specialised 
content.  Along these lines, TPI has reached an agreement with BBVA to develop a
B2B platform for small and medium enterprises.

The company has also adapted its organisational structure to fit its new
dimension as a global multiproduct company, with three core business areas: 
publishing products, electronic products and e-commerce between companies. An
international division has also been established to pursue and implement TPI's
international expansion strategy.

TELEFONICA INTERCONTINENTAL

Telefonica InterContinental, the Telefonica subsidiary responsible for
investments in the mobile telephony business outside Spanish and Portuguese
speaking markets, has made the following achievements so far in 2000:

-  In Morocco, MediTelecom, the consortium awarded the country's 2nd GSM-800 
license in which Telefonica Intercontinental holds a 30.5% stake, began 
offering its services in late March, signing up 37,203 new customers by the end
of the month.  At 30 April, the customer base had been built up to 143,536,
giving the operator a 21% market share in only four weeks.

The services marketed under the Meditel trade name allow quality coverage of 
40% of the population, with a 75% target for early 2001.  Strong growth is 
expected due to the current low penetration of wireless services in Morocco
(approximately 2%) and the size of the potential market in a country with close
to 30 million inhabitants.

-  Telefonica InterContinental also acts as Telefonica's arm for bidding in the
3G UMTS tenders taking place in the  main  European markets.

On this front, the company has reached co-operation agreements with top 
international mobile operators and local partners: ACEA in Italy, Suez Lyonnaise
des Eaux in France, and Orange and Sonera in Germany.

-  On 12 January 2000 the Telefonica S.K Board of Directors authorised transfer
of the holdings in ETI (Austria) and Acea Telefonica (Italy) to Telefonica Data,
S.A.  Given below is a brief description of these companies:

   -  European Telecom International, a wholly owned Telefonica                 
     Intercontinental subsidiary and third ranked operator in Austria,  has     
    continued expanding its services.  The company increased its customer       
   base by 11% with respect to yearend 1999, bringing the total to 18,415,      
  With a 52% rise in traffic volume, which climbed from 13.5 million            
 monthly minutes in December 1999 to 21.5 million in March 2000.

   -  In the Italian market, Acea Telefonica Spa, a joint venture managed by    
     Telefonica Intercontinental and 49%-owned by Telefonica InterContinental   
    (51% by Acea) provides advanced voice and data telecommunications           
   services to companies and individuals in Rome and in the Lazio region.       
  The telecommunications business in Rome represents 11% of the total
      Italian market, with 5 million potential customers, and was worth  $1.5   
     billion in 1999, some $1.106 billion of which was generated in the city    
    of Rome.

      This joint venture project represents Telefonica's door into the Italian  
     market, as recently confirmed by the license obtained for providing        
    nationwide voice and data services.


ATENTO

During the first quarter of the year Atento has expanded its business by
launching call center services in three new countries, bringing the total 
number of countries in which this subsidiary operates to nine.  In February  the
company inaugurated its first call center in Morocco (Casablanca).  Atento 
Morocco was thus born as the most advanced telemarketing platform in the
country. The more than 600 call-center positions projected for 2000 will create
1,200 jobs, with 2,000 positions expected by 2003.  The projected initial 
investment amounts to $40 million. Also in February, Atento brought its
Colombian call center into operation, with 600 positions planned for 2000 and
capex of $9 million.  Lastly, in March the company began operating the largest
call center in the Caribbean, the first of several to be sat up in Puerto Rico.
The new center plans to have 500 positions in operation in 2000, with a target
of 1,300 for 2003. This will entail the creation of 1,500 jobs in two years and
3,000 over the next five. The projected capex is $25 million.

At the end of March 2000, the Atento group was operating more than 16,000
call-center positions, staffed by over 26,000 employees.

The Atento group recorded first quarter revenues of .91.0 million, 221.9% higher
than one year earlier, as the Atento subsidiaries in Latin America that were in
the incorporation process one year ago were brought on stream. These revenue
gains drove EBITDA higher to .10.6 million.

FOR MORE INFORMATION CONTACT:

Subdireccion General de Relaciones con Inversores, 
Gran Via 28, planta 3a. 28013 Madrid, 
Tel: 91 - 584 47 00 / 584 47 02 / 584 03 06. 
Fax: 91 - 531 99 75.
E-mail: [e-mail] 
E-mail: [e-mail] 
E-mail: [e-mail]
www.telefonica.es


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