1st Quarter Results - Part 1

Telefonica SA
16 May 2001


PART 1
                               Telefonica

                                 Results
                           January - March 2001


Notes:

-  The financial statements in this report have been compiled by translating
   the company's accounts from pesetas into euros by line. Sub-totals are       
   already stated in euros. This could give rise to small rounding              
   discrepancies.


                 TELEFONICA GROUP SELECTED FINANCIAL DATA

Non-audited figures
(Euros in millions)                   January-March
                               2001      2000       % Var.
Gross operating revenues       7,603.3   6,447.7     17.9
EBITDA                         3,128.2   2,819.8     10.9
Operating profit               1,355.6   1,183.8     14.5
Profit before tax                523.9     853.8   (38.6)
Net income                       431.8     346.0    24.8
Net income per share              0.10      0.10    (5.8)
No of shares, millions(l)      4,439.4   3,351.0    32.5

(1) Average number of shares in the period. The figure includes capital
increases to fund the acquisition of new shareholdings in Telefonica de
Argentina. Telefonica del Peru, Telesp, Telesudeste, Endemol and ATCO, it also
includes the issuance of new shares in respect of convertible bonds, weighted
for the number of days over which they have been traded. Bonus Issues charged to
reserves are excluded from calculations, as they involve no change in the
ownership structure.

Telefonica Group Results

The   management  comments  in  this  report  refers  to  the   financial
performance  of  the  Telefonica  Group  in  accordance  with   its   new
organisational structure by business lines. This  structure  was  adopted
following  the  tender  offers  made for the  minority  shareholdings  in
various  Latin American operators, in view of the high level of  economic
interest finally acquired in them.

In this respect, pro forma profit and loss statements have been prepared
for  each  business  in order to provide a meaningful comparison  of  the
results achieved by the Telefonica Group by business lines with those of
the previous year.

These pro forma statements are based on the assumption that each business
line has a stake in the companies owned by the Group In the corresponding
business,  irrespective of whether this shareholding  has  already  been
transferred or not, although it Is Telefonica, S.A 's intention to do so
in the future.

Also in order to facilitate the comparison and analysis of the Telefonica
Group  results,  the companies participating in each business  line  have
been  included  as  of  1 January irrespective of when  consolidation  of
activities actually took plate during the period. The corresponding results
for the some period of the previous year are also on a pro forms  basis,
based on equal assumptions.

It is important to emphasise that the assumptions made in preparing these
pro  forma  statements do not change in any way the  overall  results  of
Telefonica  Group  and  that the results themselves have been incorporated 
from  the date of acquisition of each participation by the Group.

In  the  first  quarter  of  2001, Telefonica reported  consolidated  net
profits of .431,8mn, 24.8% higher than in the same quarter of 2000.

At  the  end  of March 2001, Telefonica Group had more than 66.9  million
managed  customers for its fixed and mobile telephony  and  pay-tv  (71.3
million  total  customers).  This is an  increase  of  approximately  3.1
million since December 2000, and 21.8% more than the customer base as  at
March 2000 equivalent to a total of 12.5 million new connections.

The  main  growth  driver was cellular telephony  with  8.4  million  new
customers  in  the last twelve months. This increase occurred  despite  a
slowdown In growth during the last three months. During this period,  not
gain  in  new  customers for both fixed and mobile was more or  less  the
same,  around  one  million  net additions in  each  business,  excluding
cellular customers in Mexico.

It  is worth noting that with regard to the mobile telephony sector  most
of  the  increase  in  the customer base came from  the  Spanish  market,
whereas in the fixed telephone business the increase was mostly in  Latin
America, particularly in Brazil. Nevertheless, it is important to mention
the  extraordinary growth In fixed traffic in Spain,  which  saw  a  year
on-year  increase  in total traffic of 39,0%, This was  the  main  factor
underlying Telefonica de Espana's results.

This  diversified  growth at the operating level produced  very  positive
results  in  terms of growth, profitability and quality, as reflected  in
EBITDA  level, which rose 10.9% to .3.128bn, compared with 3.5% increase
in  the same quarter of the previous year. When analysing the quality  of
EBITDA  achieved,  it  is  worth noting the almost  null  impact  of  the
exchange rates of Latin American currencies against the Euro, as well  as
the change in the scope of consolidation resulting from the inclusion  of
companies  that  were  not  consolidated in  1Q00.  Both  factors  have
diminished the EBITDA growth.

Telefonica  Moviles ranked as the main contributor to this 10.9% increase
in  EBITDA followed by the fixed telephone business, in particular Telesp
of  Telefonica  Latinoamericana  group,  and  Telefonica  de  Espana.  In
absolute   terms,  Telefonica  Latinoamericana  was  still  the   leading
contributor to EBITDA with .1.291,5bn, an 11% increase versus March  2000
and  only two percentage points less than its growth in revenues,  It  is
also  important  to mention the EBITDA growth at Telefonica  de  Espana,
which  was  up  6.4%  to.  1.255,7bn,  driven  not  only  by  the  strong
performance of revenues but also by significant containment of  operating
costs,  which for the first time in many quarters fell in absolute terms,
down 0.9% compared with the same period in the previous year.

Note  that  the  EBITDA  growth  of  Telefonica  de  Espana  can  not  be
extrapolated  to  the  rest  of the year 2001.  Firstly,  because  recent
regulatory measures will quicken market share losses via the start of the
unbundling  of  the  local  loop and increasing competition  in  traffic.
Secondly, because greater competitive pressure from cable operators,  the
step-up  of  the company's price-cutting efforts, via discounts  program,
and  the  nominal reductions imposed through the price-cap  formula  will
tend to reduce progressively the monthly operating revenue. These factors
will  be  joined by the cost impact of accelerating broadband  roll-out,
and renewed commercial efforts to address growing competition.

In  relative terms, the highest EBITDA growth of any business lines  was
reported  by  Telefonica  Moviles  with a rise of 28.6% to  a  total  of
.751.2mn. This  was  a  result not only of the  significant  year-on-year
growth  seen  in  both traffic and the customer base,  but  also  of  its
strategy  aimed  at improving operating profitability and  achieving  the
potential  economies of scale achieved by the growth  in  total  customer
numbers.

In  the consolidated EBITDA, Terra-Lycos made a negative contribution of
.76,7mn,  an improvement of .26mn, or 26,0% on 4Q00, as the result  of
renewed management focus, towards prioritising operating profitability.

The  positive trend in consolidated revenues during the quarter  was  the
main  underlying  factor  driving  the above  mentioned  EBITDA  growth.
Revenues rose 17.9% year-on-year to a total figure of .7.603,3bn.

Telefonica Moviles accounted for .1.94bn, up 17.4% on 1Q00, while  Telesp
reported total revenues of .1.106bn, an increase of 22.7%. Telefonica  de
Espana  saw year-on-year growth of 4.4%, higher than for any quarter  in
the previous year, with revenues rising to .2.589bn.

It should be noted that, in spite of the unfavourable exchange rate trend
seen  in the various Latin American currencies against the Euro, as  well
as   the   macroeconomic   difficulties  in   the   region,   Telefonica
Latinoamericana's activities accounted for the largest share of the total
group  sales at more than .2.595bn, representing year-on-year growth  of
12.9%.

In  the  Rio  de  Janeiro investor Conference hosted  by  Telefonica,  in
addition  to  the already mentioned metrics, the focus was  also  put  on
operating  profits as a relevant metric of the company's performance,  It
helps  to understand the company's depreciation policy and asset quality,
particularly in view of the phase in the investment cycle that the sector
is going through, given the potential of broadband and the development of
UMTS technology.

In this respect, the first quarter saw a positive change in the trend for
the  consolidated operating profits compared to the same period in  2000,
with a rise of 14.5%.  This resulted from the combined effect  of  higher
EBITDA   (+10.9%  against  +3.5%  in  1Q00)  and  a  lower  increase   in
depreciation  (+8.4% against +10.9% in 1Q00), which among  other  factors
explained the 9% drop in Telefonica de Espana's depreciation provisions,
as  a  result  of  the  write-offs made during 2000  against  unamortised
redundant plant and equipment.

It  must be mentioned that goodwill rose substantially by 204.5% over the
same period in the previous year, to a total of .155.9mn, as a result of
the  acquisitions made by Telefonica in 2000. The main contributions  to
this item came from the investments made by Terra, Grupo Telefonica Media
and  Telefonica Data Group. This trend will gradually ease  in  the  next
quarters,  as the above acquisitions were not included in the  accounting
consolidation during the first two quarters of 2000.

In  addition,  minority interests went from a negative .204.3mn  as  of
March  2000  to  a positive .112.8mn in March 2001 due to  the  increased
stakes in the Latin American subsidiaries in July 2000, and the net losses 
at Terra-Lycos attributable to minority shareholders.

Finally, the net income for the quarter was impacted by the two following
extraordinary factors:

- Lower capital gains attributable to the Group than in the previous year.

- Contrary wise, lower extraordinary provisions than in the corresponding period
  of the previous year, the majority of which were against updating commitments 
  in respect of personnel.

Excluding these extraordinary factors, Group net income would have risen by
31.5%.

In addition, it should be pointed out that excluding the negative impact of
Terra-Lycos' contribution, net income would have been up by 26.5%.

Lastly, if all the above extraordinary factors are excluded, Group net income
would have grown by 52.0%.


                            THE TELEFONICA GROUP

MARKET SIZE

Thousands            January-March        %      Weighted figures(*)      %
                                         Chg.                            Chg.
                    2001      2000      01/00   March 2001  March 2000  01/00
Lines in service    43,165.5  39,217.5   10.1     37,460.7    24,303.6   54.1
Spain               20,511.9  19,510.6    5.1     20,511.9    19,510.6    5.1
Other countries(l)  22,653.6  19,706.9   15.0     16,948.8     4.793.0  253.6
Cellular clients    27,163.5  18,758.9   44.8     19,259.7    12,205.9   57.8
Spain               14,246.3  10,260.2   38.9     13,192.1    10,260.2   28.6
Other countries(2)  12,917.2   8,498.7   52.0      6,067.6     1,945.8  211.8
Pay-TV clients       1,025.2     833.8   23.0        654.9       348.5   87.9
Spain                  674.0     500.1   34.8        327.6       215.0   52.3
Other countries(3)     351.2     333.7    5.3        327.4       133.5  145.3
TOTAL               71,354.2  58,810.1   21.3     57,375.3    36,858.0   55.7


(*) Weighted for the economic interest held in each company.
(1) Lines in service: Include all the lines in service as of March 2001 and 2000
    of Telefonica de Espana. Telefonica CTC Chile, Telefonica de Argentina,     
    Telefonica del Peru, Telesp and CanTV.
(2) Cellular customers: Include all cellular customers as of March 2001 of      
    Telefonica Servicios Moviles Espana, Medi Telecom, Telefonica Movil Chile,  
    TCP Argentina, Telefonica Moviles Peru, CRT Celular, TeleSudeste Celular,   
    NewCom Wireless Puerto Rico, Telefonica Moviles Guatemala, Telefonica       
   Moviles El Salvador, Balacel, Movitel, Norcel, Cedetel and CanTV Celular.    
   Customers of the Mexican companies Bejacel, Movitel, Norcel and Cedetel are  
   not included in March 2000.
(3) Pay-TV customers: include all Pay-TV customers as of March 2001 and 2000 of 
      Via Digital and Cable Magico.


                   THE TELEFONICA GROUP: RESULTS BY COMPANY

Non-audited figures                  Revenues                   EBITDA
Euros in millions                 January-March             January-March 
                             2001     2000     % Var.   2001     2000    % Var.

Telefonica de Espana Group   2,588.7  2,4130.6    4.4   1,255,7  1,180.1    6.4 
Telefonica Moviles Group     1,939.3   1,651,7   17.4     751.2    584.0   28.6
Telefonica Latinoam Group    2,594.7   2,297.9   12.9   1,291.5  1,163.8   11.0 
Telefonica Data Group          406.4     261.8   55.2       7.2     22.8 (68.2)
Terra-Lycos Group              177.2      35.7  395.7    (76.7)   (61.0)   26.0 
Directories Business            51.6      59.3 (13.0)    (10.9)      4.9   c.s.
Telefonica Media Group         283.7      30.3   n.s.      10.5    (6.6)   c.s.
Atento Group                   153.5      91.0   68.7      11.4     10.6    7.4 

Other Subsidiaries             255.8     269.0  (4.9)    (73.5)   (65.7)   12.0 
Disposals                    (847.6)    (729.6)  16.0    (38.0)   (13.3)  186.0
GROUP                        7,603.3   6,447.7   17.9   3,128.2  2,819.8   10.9 


Non-audited figures             Operating profit  
Euros in millions                 January-March    
                             2001     2000     % Var. 
Telefonica de Espana Group     579.0     436.3   32.7    
Telefonica Moviles Group       446.2     360.4   23.8
Telefonica Latinoam Group      634.4     561.8   12.9  
Telefonica Data Group         (32.5)       1.1   c.s. 
Terra-Lycos Group            (115.2)    (72.6)   58.9
Directories Business          (16.3)       0.3   c.s.
Telefonica Media Group         (6.7)    (15.2) (55.7)
Atento Group                   (4.8)      2.7    c.s.
Other Subsidiaries              12.2      2.5    n.s. 
Disposals                     (38.2)   (23.8)    60.5 
GROUP                       1,355.6   1,183.8    14.5
  


BUSINESS LINES RESULTS ANALYSIS

TELEFONICA DE ESPANA GROUP

Telefonica  de  Espana has major challenges to face in 2001,  given  the
significant advance made towards the total liberalisation of  the  market
as  a  result of the liberalising measures implemented during  2000,  the
economic impact of which will take place during the current year.

As  a  result  of  Telefonica de  Espana's  proactive  approach  towards
achieving  the  tariff rebalancing, a new price regulation framework  has
been  approved  which,  while  remaining  within  the  price-cap  system,
incorporates a gradual increase in the monthly fee up to .12.6 in  2003,
which will have to be offset by further price cuts in other services.  At
the  same  time, Telefonica will have greater flexibility with regard  to
discounts and will be able to offer its customers reductions of up to 15%
without  regulator approval, which strengthens its competitive  position
and its prospects for the future.

Telefonica  de Espana Group operating revenues for the first quarter  of
2001  totalled .2.588,7bn representing a year-on-year increase of  4.4%.
Parent company revenues accounted for 96.3% of the total, 6% up  on  the
same period of last year. This healthy revenues performance was primarily
due to the improved usage revenues, the rise in the monthly fee and the
strong growth in ISDN lines, leased circuits and interconnection.

Usage  in  terms  of minutes per line per day was 20.83, an  increase  of
36.5%  on the first quarter of the previous year, mainly due to internet
growth  and interconnection with fixed line operators. Total traffic  was
33.737  billion minutes, a rise of 39% on the same period in  2000.  This
favourable trend in usage was due both to the growth in incoming traffic,
which turned in an extremely healthy performance, jumping by 132.5%,  and
to  a  22.5% rise in outgoing traffic, which accounted for almost 75%  of
total minutes. The main drivers behind this growth were the Internet (89.5%),
Intelligent Network (61%) and International (27.7%).  Local traffic saw a 3%
drop in the first quarter compared to the same period of the previous year,
while provincial traffic and domestic long distance rose by 15.6% and 6.2%
respectively.  Fixed-to-mole calls saw year-on-year growth slow to 10.9%, a
result of the level of maturity of the Spanish cellular market.

Usage revenues to March were up 4.1% thanks to an increase in the lines in
service and the growth in minutes per line, which offset the decline in
effective revenues per minute caused by price reductions and the favorable
acceptance of franchised products.  Since their launch in November 2000,
subscribers to the Bonos Ciudad and Bonos Ciudad Plus schemes (local traffic
franchise) now total 465,505 and 886,425 respectively, whilst the flat-rate
internet product had 166,498 subscribers at the end of March and subscriptions
to the Pais 30 (domestic long distance traffic) and Europa 15 (international
calls to Europe) schemes rose to 484,461 and 209,091 respectively.

The company's firm commitment to the development of broadband services has
intensified the growth of technologies directly related to ADSL, in line with an
aggressive plan to drive internet penetration, ADSL coverage in March reached
13.5 million lines and the number of connections at the quarter-end was 88,448,
with the number of daily installations reaching peaks in excess of 1,170.  ISDN
continued to record significant growth, with a 66.6% increase in basic accesses
and primary accesses up 43.7% on the same period in the previous year.  The
number of accesses in service was 712,830 and 14,551 respectively.

Revenues form emerging services again performed well, rising 48.8% and as at
March they already accounted for 27.7% of total revenues.

Telefonica de Espana group operating expenses were .1,355.6bn, representing
year-on-year growth of 0.9%, due mainly to the impact of interconnection
expenses.  The group's first quarter operating expenses before interconnection
expenses were .856.7mn, down 2.5% on the previous year, the result of the
downward trend in personnel expenses (-6.2%) and the containment of
discretionary expenditure.

Telefonica de Espana's interconnection costs rose 13.7%, reflecting a slowdown
in fixed-to-mobile traffic in line with the current trend in the Spanish celular
market and the strong growth in fixed-to-fixed interconnection.

Supplies and external services expenses in the first quarter recorded a 5.3%
increase, mainly due to the 14.7% rise in outsourcing costs, because of the
growth in Customer Care activities.

Personnel expenses at Telefonica de Espana were down 6.2% compared to the first
quarter 2000, the result of a 12.5% reduction in the headcount, countered to
some extent by the trend in the CPI during 2000 and the salary review for the
current year.  The headcount at the end of the quarter stood at 41,095,
representing an increased productivity level of 499.1 lines per employee.

Telefonica de Espana's group EBITDA was .1,255,7bn, a year-on-year increase of
6.4%, the result of a 4.4% improvement in revenues an a fall of 0.9% in
operating expenses. The 32.7% rise in operating profits, which totalled, .579mn
was due to the positive trend in EBITDA and the 9% reduction in depreciation of
fixed assets.

The performance of revenues for the quarter cannot be extrapolated to the rest
of 2001, due to the economic implications of the latest liberalising measures
approved by the Regulator.  These will lead to a more rapid loss of market share
due to the beginning of the unbundled local loop and the growth of competition.

At the same time, we are expecting greater competitive pressure from cable
operators, which together with the company's bigger efforts towards reducing
prices-cap (CPI-9% by the end-2001) will mean a downturn in our operating
revenue.  As a result, a gradual fall in the year-on-year growth rate in
operating revenues will take place, which will also be affected, although to a
lesser extent, by the growth trend seen in revenues during 2000, especially, in
the final part of the year.

As a result of the expected trend in revenue growth and the impact on costs
produced by the broadband expansion which Telefonica de Espana is committed to
achieve, together with the additional needs on commercial costs to face the
increased competition, EBITDA growth is also unlikely to be sustained in the
coming months, and EBITDA in absolute terms will be in line with our forecasts,
which means it will remain practically in the same levels compared to the
previous year.


TELEFONICA LATINOAMERICANA GROUP

Telefonica's new organisation structure by global business lines implies that
Telefonica Latinoamericana is now the group company which consolidates the fixed
telephony business in Latin America (Brazil, Argentina, Chile, Peru, Puerto Rico
and Venezuela) as well as the businesses of Advance (Telefonica de Argentina's
ISP), Cable Magico (the cable TV subsidiary of Telefonica del Peru) and Sonda
(the computer services subsidiary of Telefonica CTC Chile).  It is worth
mentioning the acquisition at the end of 2000 of the carrier CTI, aimed at
providing more integrated management of international traffic to and from the
US, handled by Grupo Telefonica's Latin American operators.

At end-Q1 2001, Telefonica Latinoamericana was managing more than 20 million
fixed telephone lines, a year-on year increase of 16.4%.  The major part of this
growth resulted from the substantial advance in the number of lines in service
at Telesp, which with an average rate of more than 250,000 new lines in service
per month, saw its total number of lines in service break the 11 million mark,
in line with its strategy to meet the regulatory targets set by Anatel for 2003
by 2001.  The year-on-year growth seen in the number of lines in service at
Telefonica de Argentina (+6.2%), should also be mentioned.  This was driven by
the marketing of prepaid and limited expense products and by Telefonica CTC
Chile, up 4.6%.

The ADSL project continued to develop with more than 67,000 customers in the
region, concentrated mainly in Brazil.

Telefonica Latinoamericana had almost 34,000 employees, with productivity
standing at 651 lines in service per employee, a 27% improvement on March 2000.

At end 1Q01, Telefonica Latinoamericana's net income was .174.5mn, a
year-on-year increase of 118.7% mainly due to the consolidation of new
shareholdings as a result of the Tender Offers for the Latin-American
subsidiaries launched last year, which reduced the impact of minorities this
quarter by .151.5mn, and the drop in interest expenses, as a result of less
outstanding debt and lower financing costs.

Operating revenues at Telefonica Latinoamericana for the first quarter 2001 were
.2,594.7bn, a year-on-year increase of 12.9%, primarily the result of the growth
in lines in service at Telesp which offset increasing competition in Peru and
Argentina.  Telesp and TASA accounted for 43% and 31% respectively of Telefonica
Latinoamericana's consolidated revenues.

Telefonica Latinoamericana's operating expenses in euros rose by 12.0% compared
to the same quarter in the previous year, mainly due to higher interconnection
costs at Telesp, the result of both increased traffic an tariffs, increased
sales costs at TASA and Telefonica CTC Chile and higher bad debt costs at
Telefonica de Argentina, due to the country's worsening economic situation.

Telefonica Latinoamericana's Group consolidated EBITDA was .1,291.5bn,
representing an 11% increase on March 2000, basically due to the profits
performance at Telesp.  The combined contribution of Telesp and TASA to
Telefonica Latinoamericana's consolidated EBITDA was 75%.

Highlights of the individual results of the main companies in which Telefonica
Latinoamericana has a shareholding are detailed below:

BRAZIL

Telesp net income (.139.2 mn) year-on-year growth of 41% in local currency terms
(36.9% in euros) at the end-1Q 2001 for Telesp was mainly due to the 28% rise in
the number of lines in service, as well as to the 14.2% (local currency) tariff
increase implemented in June 2000, which led to a 29% jump in revenues at the
company in local currency terms (22.7% in euros) reaching 1,109.04. In addition,
at the EBITDA before management fee level, the company saw significant growth
both in local currency and in euro terms up 30% and 26.7% respectively, to
.575.7mn.

At end-March, Telesp had reduced the waiting list for the number of lines to be
installed to 1.5 million, a reduction of 37% compared to December 2000.

The company continued its ADSL marketing strategy and at the end of March had
61,203 customers, with further substantial growth expected over the next months.

Productivity also improved, which should be highlighted, and reached 841 lines
per employee, a rise of 37.7% year-on-year.

ARGENTINA

In the first quarter of its fiscal year (Oct-Dec00) Telefonica de Argentina saw
its EBITDA before management fee in local currency terms drop 18% (down 6.2% in
euros to .413.2mn) compared to the same period in the previous year.  This was
essentially due to higher operation costs as revenues, in spite of increasing
competition, remained at a similar level to the previous period (.784.8 mn). The
higher operating expenses were related to higher sales costs, the increased cost
of purchases due to the rise in the sale of equipment and to the rise in the bad
debt provisions, caused by the deterioration in the countrys economic situation.

At the operating level, in the half-year October00-March01, local traffic per
line was up 12%, driven by the growth in Internet traffic, The 6% increase in
the number of lines in service should also be mentioned, thanks to the prepaid
product sales.

CHILE

1Q01 EBITDA at Telefonica CTC Chile fell 3% compared to 1Q00 in local currency
terms (down 12.6% in Euros to .140.1 mn).  This was partially due to higher
operating costs in relation to interconnection charges because of both increased
tariffs and traffic, and to personnel costs stemming from the collective    
bargaining agreement. In addition, during this period, long distance revenue was
down due to tariff reductions.

Operationally, national long distance traffic performed well thanks to the
success of the flat rate service launched in September 2000.  As a result,
domestic long distance market share rose year-on-year by 2.6 p.p. to 38.6%.
Furthermore, in March01 Telefonica CTC Chile launched the flat rate for ILD
(international long distance calls).

PERU

In 1Q01, Telefonica del Peru managed to keep local currency revenues (.324.3 mn)
at the same level as the previous year, in spite of higher competition in the
long distance market. This, together with a fall in operating expenses, resulted
in an 11% rise in  EBITDA year-on-year in local currency terms, (18.8% up in
Euros to .166.5 mn). However, net income was down 26% in local currency (15.8% 
in Euros to .26.2 mn), due to the impact of higher depreciation charges and to a
lower monetary correction.

'Popular' service (prepaid) continued to grow (+20% y-o-y) and the new prepaid 
service was launched at the beginning of the year, reflecting the basic
guidelines of its current sales policy, in line with the country's economic
situation. There was also significant growth in lines in the public telephony
service, which were up 21%.


GRUPO TELEFONICA MOVILES

In the first quarter of 2001, Telefonica Moviles obtained a combined pro-forma  
EBITDA of .751.2mn, equivalent to year-over-year growth of 28.6%, and achieved 
an EBITDA margin of 38.7%, an increase of 3,4 percentage points over first
quarter 2000.  This improvement reflects a strategy based on enhancing operating
profitability and the economies of scale achieved by growth in all operators' 
customer bases.  These year-over-year increases show the organic growth of the 
operations, as in the last twelve months changes to the pro-forma consolidation 
sphere have not had a significant impact on these figures.

Highlights of these results include:

-  First quarter operating revenues were .1.939,3bn, a 17.4% increase from a    
year before. This growth is the result of the 39% annual increase in the        
customer bases of fully consolidated operators and the 30% rise in customer     
traffic.  The growth was, partly offset by an average decline in ARPI of 18%,   
the depreciation of local currencies against the euro in the last twelve months,
and the amounts accrued by Telefonica Moviles Espana's customers as loyalty
programme 'points' which were accounted as lower revenue.  Revenue contribution
from wireless data services is growing, with the total volume of short messages
(SMS) tripling the number for the same period of 2000.

With regard to the performance of customer bases since the beginning of the
year, growth rate of net additions has been shaped by, as announced in previous
quarters, the selective growth policy adopted by the company, in light of
regulatory, technological and macroeconomic uncertainties; the homogenised among
Group operators of Telefonica Moviles conservative criteria for accounting
customers; and the seasonal nature of the first few months of the year, once the
Christmas commercial campaigns have ended, and coinciding with the summer period
in Latin America.

At the end of March 2001, including those operators in which Telefonica Moviles
has an economic stake, the Company had 22.8 million customers in Europe, Latin
American and the Mediterranean Basin. Adding the cellular of the Chilean, Puerto
Rican and Mexican wireless operators managed by Telefonica Moviles, the 
Company's customer base exceeded 25.3 million at the end of March 2001, an
increase of 7.9 million compared with first quarter 2000.

* An improvement in profitability levels was registered with EBITDA growth of   
  11.2 percentage points higher than the operating revenue growth rate.

  The increase in EBITDA was driven mainly by the contributions of operators in 
  Spain and Brazil (TeleSudeste Celular and Celular CRT), which together account
  for 97.7% of consolidated EBITDA.

* Operating expenses (+8.2% vs +17.4% for revenues) reflected a sharp reduction 
  in subscriber acquisition costs (SACs), economies of scale derived from higher
  business volumes and productivity improvements. These factors have offset ARPU
  reductions caused by the price decreases during the last 12 months and the    
  change in the customer mix, with the prepaid segment increasing its weight in 
  Latin American operators. In spite of a higher number of employees, personnel 
  expenses remain at around 5% of revenues. 

* Advances in all P&L margins, reflecting better quality results despite higher 
  non operating expenses, mainly due to the increase in financial costs         
  resulting from the .8.0bn increase over March 2000 in consolidated financial  
  debt, required to fund business development; and to the rise in interest      
  rates for the Latin American currencies, which affects the debt-hedging       
   denominated in these currencies. This increase in debt levels includes 100%
of   debt related to the UMTS licenses, while proportionate net debt rose by    
     .3,535bn during the same period.

* Growth in net income of 13.4% vs, the first quarter of 2000 to .154.4mn, after
  extraordinary provisions for investments were made, in line with the Company's
  conservative accounting criteria.

BUSINESS PERFORMANCE BY GEOGRAPHIC REGION

EUROPE AND MEDITERRANEAN BASIN

SPAIN

The Spanish cellular market surpassed 25.5 million declared customers at
the end of March. Of these, around 24 million can be considered active
customers, which gives a theoretical penetration rate for the total
Spanish population of 64%, or 60% if only active customers are
considered. Year-over-year market growth was 20 percentage points, but as
announced in previous quarters, the first quarter growth was marked by a
slowdown from recent levels of growth (+3 percentage points).

In the new competitive environment, Telefonica Moviles Espana has
continued to show outstanding performance. With a solid and attractive
range of services, coupled with a highly successful drive to improve
customer satisfaction, Telefonica Moviles' estimated active share of net
adds was above 50%, bearing in mind the difficulties of assessing
competitors' active customer base. The estimated share of active clients
over the period was 58.9% (55.9% of the declared market).

Telefonica Moviles Espana had 14,246,323 active customers at the end  of
March  2001,  a  39% increase year-on-year. Additionally,  the  registered
customer  base,  a  variable  that Telefonica  Moviles  Espana  had  not
disclosed  previously,  is 11.1 % higher than the active  customer  base.
Networks  channelled a record 6.08 billion airtime minutes of traffic  in
the quarter, with a year-on-year growth rate of 33%.

It  should  be  noted that Telefonica Moviles Espana's estimated  market
share  in traffic stands above 61% and is higher than the customer market
share.  The gap is due to Telefonica Moviles Espana's higher quality  of
customers  and  the  use of a more conservative accounting  criteria  for
customer  base  than  the  recently suggested  by  the  largest  European
operator as the industry standard. The gap between its traffic and active
customer  market  share has remained constant over the last  few  months,
making  Telefonica  Moviles  Espana the only  Spanish  operator  with  a
positive gap.

With  regard to customer usage, it should be noted the increasing  weight
of  revenues from data services, that already represent 11.5% of customer
revenues,  showing  annual growth rates much higher than  voice  revenues
growth rates.

In the data business, SMS continued to show strong Increases. Telefonica.
Moviles  Espana  handled more than 1.28 billion SMS over the  quarter,  a
215%  increase  over the first quarter 2000. In advanced  data  services,
WISP 'e-mocion' quadrupled its activity from the last quarter of 2000, to
over  8  million  visits and 59.5 million page views. The  WISP  'e-mocion' 
currently  has  160  service  and content providers.  Finally,  note  the
successful commercial launch of GPRS handsets to corporate clients, in a
process that will gradually be extended over the rest of the year,  as  the
range of GPRS handsets available increases.

The  highlight  of  Telefonica Moviles Espana's continuing  series  of
customer loyalty and satisfaction initiatives was the introduction of the
'frequent numbers' service for both contract and pre-paid customers. This
initiative offers customers an attractive single rate on calls and/or SMS
to any five MoviStar numbers of their choice. Since January, Telefonica
Moviles Espana has been applying an average reduction of more than 10% in
its termination rates. This will be followed by a 7% additional reduction
as of 1 May 2001.

Despite the cuts in termination rates, which already were included  in the 
company's internal estimates, the substantial improvements in all operating 
areas of the company have made significant improvements  in SAC  (down 30%
year-on-year) and churn rates, which was helped  by  the success  of the loyalty
programs and the launch of a 'reward program' for prepaid users.

Despite the regulatory uncertainties and the slowdown in the  Spanish market, 
Telefonica Moviles Espana's financial results show a general improvement   on 
all  fronts.  These  overall  improvements clearly indicate Telefonica Moviles
Espana's ability to foresee shifts  and trends in the market:

* Operating  revenues were .1.3bn, a growth of over 21% versus the same  period 
  of 2000. This is particularly significant as the sums accrued  by  contract   
  customers as 'reward points' under the loyalty  programmes are deducted from  
  revenues.  The company had increased its efforts in this area over the last   
  few months.

* EBITDA was .583.3 million, a 50% increase over the first quarter 2000. Growth 
  was well above both revenues and customer numbers due to the improved         
  operating efficiency of Telefonica Moviles Espana, and the sharp decrease in  
  SAC. EBITDA margin was 45%, an increase of 8.5 p.p. over the same period last 
  year.

Finally,  we  would note the measures recently announced by Spain's Ministry of
Science and Technology, which have dispelled some doubts about possible new
licences and the use of the spectrum  assigned  to operators that currently
provide cellular services in Spain.  The Ministry  has  announced  that  the 
necessary  spectrum  will be progressively  released to GSM-1800 MHz licences
and has  noted that 'when  UMTS  technology is a reality it will  be  the  right
time to consider calling processes for new licences  based  on  spectrum 
availability.'

It should be noted that the EBITDA growth rates seen in  the first quarter  are 
difficult to extrapolate to the rest of the year due to the following  factors: 
(i) strong customer growth in the first quarter  of  2000  at  a  time when the
ability to  absorb  subscriber acquisition costs were far lower, and (ii) the
combined effect  of  new price  reductions for calls from fixed-line operators
as of May  2001, and  the  popularisation of recent commercial programs,  such 
as  the 'frequent  numbers'  scheme.  All  this  leads  us  to  believe   that
year-on-year margin growth is likely to flatten in coming quarters.

REST OF EUROPE

In the first few months of 2001, Telefonica Moviles continued to complete its
management teams and made progress in reviewing the business plans of group
operators in Germany, Italy, Austria and Switzerland, taking into account the
new business scenarios in these countries, that basically comprise:

* Anticipate the commercial launch of operations through the roll-out of        
  services using GSM/GPRS technology, allowing the companies to attract         
  customers in these markets prior to the launch of UMTS services. With this    
  aim, Telefonica Moviles and its local partners are at advanced stages of      
  negotiations with other mobile operators to reach national roaming agreements.
  Agreements of this sort have already been signed in Germany.

* Use a network  sharing  model with consequent reductions in the initially     
  projected capex and operating expenses  associated with networks.             
  Negotiations with other mobile operators for agreements  of this kind  are    
  well advanced and will be closed once the  necessary regulatory  approval  has
  been obtained. In  the  particular case of Germany,  the  regulator  is       
  expected to announce  its  views  on  the queries  made by the operators,     
  defining the acceptable conditions for network sharing in June.

* Incorporate vendor financing, thus reducing the need for additional
  contributions  to  finance the development of operations.  Negotiations
  to  close vendor financing agreements with suppliers are at their final
  stages.

At the same time, Telefonica Moviles continues to take steps towards setting up
a common operational framework that allows synergies in Europe to be maximised.
These include defining platforms and service catalogues, information systems,
etc.

At the end of March, the working teams in Germany and Italy included more
than 200 and 140 employees, respectively. In Austria and Switzerland, the
CE0s have already been appointed, and while the recruiting of the rest of
the  management team is well advanced, more than 30 employees are already
working in the launch of operations.

MOROCCO

The  end  of Q1 2001 completed the first full year of Medi Telecom operations, 
whose services were commercially launched on 29 March, 2000. In its  first  
twelve  months,  the  company  has  far outperformed expectations, obtaining an
estimated market share of 29% and a customer base of 577,936.

LATIN AMERICA

During the last twelve months, Telefonica Moviles managed customer base in 
Latin America, excluding Mexico, rose by 2.4 million to more than 9.5
million customers, bringing  total estimated  market share in the  Latin 
American  markets where  it operates to more than 43%. Once again the prepaid
segment, which now makes up 62% of total customers,  was the main driver for
Latin American growth, bringing the additional benefits of reducing bad debt
expense and  lower subscriber acquisition costs.

On  the  marketing  front, a key factor is the across-the-board  trend
towards  lower SACs,  now down around 17% on average.  This  reduction
highlights the success of the profitable growth strategies adopted by all
operators,  which  aim  to  establish  a  clear  link  between  customer
profitability  and  the  marketing  effort necessary  to  acquire  these
clients.

During  the  first quarter 2001, pursuant the intention  to increase de
participation  in Latin America, Telefonica has signed an agreement to
acquire all the IBERDROLA group's  shareholdings  in  the  Brazilian
Telecommunications operators in which both groups are shareholders.  The
agreement also involves the exchange of shares of the cellular operating
companies  owned  by  Iberdrola which will be transferred to Telefonica
Moviles in the future.

Brazil

At  the  end  of  the  first  quarter 2001, the  Brazilian  operators
managed  by Telefonica Moviles-TeleSudeste Celular, Celular CRT and TeleLeste 
Celular had approximately 4.9 million clients, having achieved 230,000 net adds
in the first three months of the year - a slower growth rate typical of the 
summer period. Telefonica Moviles' share of net adds of all Brazilian operators 
was, on average,  more than 56%, even though its competitors  use  different
and less conservative criteria to account for their customer bases.

In  spite of increasing competitive pressures in their respective markets, the
Brazilian operators maintained their lead in the states in which they operate,
with market shares ranging from the 62% in the case of TeleLeste Celular to 72%
for Celular CRT.  The most significant factor affecting the commercial
activities of the Brazilian operators in the first quarter of 2001  was  the 
dynamic growth of the pre-paid segment, which now represents around 60% of
the total customer base of these operators.

Telefonica  Moviles' operating revenues in Brazil, which include sales  figures 
for TeleSudeste and Celular CRT,  rose to .329.4 million,  an  increase of 8%
versus the same period last year. This growth was fuelled both by a rise in the
customer base itself, which partially offset the drop in ARPU and lower handset 
sales, as a result of a decline in sales activity; and by the Brazilian real's
depreciation against the euro over the past year. Nevertheless, the Brazilian  
operators  made  a  healthy  contribution  to  Telefonica Moviles' sales,
accounting for 17% at the total.

TeleSudeste Celular and Celular CRT had an outstanding performance at the EBITDA
level, generating a combined total EBITDA of .150.5 million, equivalent to a
y-o-y advance of almost 19% and accounting for 45.7% of operating revenues. This
is an increase of 4.1 p.p. over the same period of last year. This performance 
reflects  the cost containment policies applied by the companies, with a 10% 
fall in SAC, the economies of scale deriving from  a higher operating
volume  and productivity improvements, with the average number of connections
per employee rising to over 25%.

Argentina

Over the last 12 months, TCP has led market growth, obtaining an estimated
market share of net adds above 24%. At the end of March 2001, TCP had a customer
base of 1.85 million customers, a year-on-year advance of 52%, and an estimated
market share of 26%, thus succeeding in narrowing the gap to its closest
competitor.

TCP's operating revenues for the first quarter of 2001-that is from October to
December 2000-came to .192 million, having risen 9.1% year-on-year.

EBITDA was .18.3 million, below first quarter 2000 figures, due to TCP's
expansion in the north of the country from the second quarter of 2000, and the
macroeconomic situation prevailing in the country. These factors have resulted
in an erosion of the EBITDA margin, despite the 15% annual reduction in SAC.
Nevertheless, from the second quarter of the year, in view of the current market
scenario, TCP is taking steps to further rein in its operating costs.

Peru

At the end of March, Telefonica Moviles S.A.C had a total client base of
921,495, with a 23% year-on-year growth, equivalent to an estimated 68% market
share, despite an intensification  of the competitive environment due to  the 
start-up of Peru's fourth operator in January.

Between January and March of this year, Telefonica Moviles SAC generated
revenues  of  .68.1 million, up 12.6% y-o-y on the back of an expanding
customer  base. However, this was partially offset by the y-o-y reduction
in  ARPU, derived from the increased weighting of the prepaid segment  in
the  total  client base (77% vs. 70% in March 2000) and the reduction  in
the  termination fees for fixed-mobile calls which, as of 1 March  this
year, are billed by the second.

EBITDA came to .19.1 million, representing an EBITDA margin of 28%, somewhat 
lower  than in the first quarter of 2000, as a  result  of  the higher 
commercial efforts made in the first quarter to face the  arrival of a new
competitor.

Chile

At the end of the first quarter 2001, Telefonica Movil, the subsidiary of
Telefonica  CTC  Chile  managed by Telefonica  Moviles,  had  1.3  million
clients, 8% more than at the same period of last year. Underpinning  this
advance  was  the company decision to standardise the criteria  used  for
accounting for its customer base with those used by Telefonica  Moviles.
Following  the  application of this change, at  the  end  of  March  2001
Telefonica Movil had a market share of 36%. The company  also  performed
well  at the operating margin level, posting a significant margin advance
on the year end-2000 levels.

Telefonica Moviles is also analysing its potential participation in  the
process  of  granting  three  new 1900 MHz licenses  licences,  which  is
scheduled for completion in the second quarter of the year.

Mexico

At  the  beginning of March, Telefonica Moviles took over management of
four operators in the north of Mexico (Bajacel, Movitel, Norcel and Cedetel), 
thereby extending its operations in a region with a potential market  of  over
20 million people, which include some of  the  country's richest areas
(accounting for over 27% of GDP).

At the end of the first quarter of 2001, these operators had a customer
base of 1,032,032 customers, following the application of Telefonica
Moviles' conservative criteria for accounting for customer bases had been
applied, and a period of transition towards new  management  of  these
companies.  New  competitors starting up operations in the Telefonica
Moviles concession areas also affected these numbers.

Since Telefonica Moviles took over management of these Mexican operators
it  has  carried  out a number of different activities  aimed  at  the
progressive implementation of Telefonica Moviles' business model, working on a
new distribution framework, development of IT systems and other management
tools, to improve the operator's efficiency. At  the  same  time,  the  Company
is carrying  out  specific  commercial activities, focusing on profitability,
offering new services and increasing customer loyalty.

Guatemala and El Salvador

At the end of March 2001, the customer base of Telefonica  Moviles'
subsidiaries in Guatemala and El Salvador totalled 390,067, or 59% more  than 
at the end of March 2000, maintaining their market shares at the same levels as
December 2000.

Puerto Rico

NewCorn Wireless Services, a company managed by Telefonica Moviles, ended  the
first quarter of the year with 169,575 customers, an annual increase of 171.6%
versus March 2000, achieving a market share of 12.5%.

The  company's share of net adds in the first three months of the year has  
positioned it as the second operator with the  highest participation in market
growth, despite competing with five other operators in this region.

HORIZONTAL BUSINESSES

The following points are of particular importance with regard to horizontal
businesses:

Terra  Mobile, a joint venture set up with Terra Lycos in  mid-2000, had  over 
4 million registered users in March, a rise of 36% vs. December  2000.  This 
strong growth has allowed Terra Mobile to consolidate its position as the
leading European mobile portal, in terms of registered users. It is present in
Finland, Sweden, Germany, United Kingdom and Spain.

The  steady growth in the number of registered users in Germany, to around  one 
million, should be noted, as it represents a market positioning  reference for
the upcoming launch of Group 3G operations in this country.

The  rapid  and  extensive response of Spanish users  should  also  be
mentioned. Six months after its launch, Terra Mobile has close to ten million 
page views per month through its internet website and around four million
through its wap portal.

TELEFONICA DATA GROUP

The first quarter 2001 marked a significant step forward in the integration  of
the group's data subsidiaries in Brazil (Sao Paula), Argentina and Peru, all 
consolidated in Telefonica Data Group accounts for the  first time. Note too
that over  this  quarter  the takeover of Germany's  MediaWays  was   completed,
also fully consolidated as from this quarter.

In line with its policy of using only state-of-the-art technology in its
business to offer its clients the best possible service, in February 2001
Telefonica DataCorp signed a strategic agreement with Akamai Technologies Inc, 
the world's leading provider of content replication, content delivery and
streaming (on-line distribution of multimedia content on demand) services. The 
agreement aims to strengthen the infrastructure to provide Value Added Services
(supported by the 'TData Internet Centers') which is already  available
on a global scale.

Since the start of 2001,  Telefonica Data Servicios Internacionales (TDSI), a 
Telefonica Data Group business unit,  has  taken over the responsibility for
provisioning of international data services, including internet  access  for 
all  Telefonica Group companies. In the first quarter,  there was a
rationalisation of the assets, resources and third-party commitments of all
Group companies involved in this  service. This  is  to  be  followed by the
acquisition and  integration  of  these services into TDSI in the second
quarter.

Also  in  this first quarter, work continued on the Telefonica Internet
Centres (TICs). Highlights were the opening of the new TIC  building  in
San  Paulo. This TIC, like those in Madrid, Buenos Aires, Peru and Miami,
can  offer  maximum  security  and  top data  transfer  speeds.  Services
available include web hosting, web housing and others  focused  on  ASPs
(Application Service Providers). At end-March 2001, there were 5 centres
with over 25,000 square metres.

Operationally,  the group made 458,239 connections to end-March 2001  as
the  migration  from  traditional technologies to IP continues.  IP  now
accounts for 69% of connections.

Switched traffic across the Telefonica Data Espana IP Network rose to 2.19bn
minutes in March 2001, a 104% increase on March 2000.

Telefonica Data Group sales at 2001 first quarter were 406.4mn, a 55.2% increase
on first quarter 2000 pro-forma, ie, including the Brazil (Sao Paulo), Argentina
and Peru data divisions for comparison purposes.

The quarter also saw first-time consolidation of MediaWays sales; .106.3mn. 
Note that MediaWays now has a 35% share of the German internet market, and
provides nearly 25% of hosting services to Germany's top 50 web sites.

Telefonica Data Espana contributed 44.4% of total Telefonica Data Group income,
.180.5mn-a 21.5% year-on-year rise mainly due to strong growth in internet
access and web hosting services.

Telefonica Data Espana's model has been an outstanding success,  making
it the undisputed leader in a market deregulated over ten years ago. The
group  plans  to  extend the model to all countries where a  Telefonica
Group company has the network coverage to offer clients a wide and secure
service.

Sales from Telefonica Data Brazil, Argentina and Peru totalled .84mn in the 
first quarter of the year-20.7% of total group sales and a 43%  rise
on  pro forma sales 1QOO. Note particularly the strong performance  from
Telefonica Data Brazil where sales grew by 105% and contributed 6% of group
sales in the first quarter 2001 alone.

Finally, the Italian and Austrian subsidiaries made the first quarter  of
the year sales of .29mn.

Telefonica  data  group sales for the quarter, the  first  with  all
subsidiaries' results consolidated, were in line with the  group's  2001
estimates.

Consolidated EBITDA in the first quarter of the year was .7.2mn,  1.8%
of total Telefonica Data Group sales compared to .22.8mn in 1Q00. The
fall was mainly due to:


* First-time consolidation of recent start-ups such  as  the Italian
  subsidiary  in  Europe  which  was  not  consolidated  in  1Q00  and,
  together  with ETI Austria, posted an EBITDA 1Q01 loss of .12.1mn.
  There were also the start-up costs of the new Uruguay, Mexico and  US
  subsidiaries (Miami). Together these last three companies  posted  an
  EBITDA loss of .4.8mn in the first quarter of 2001.

* First-time  consolidation in the first quarter of the year  of  Latin
  American  subsidiaries covering Brazil (.-1.8mn),  Peru (.-0.3mn)
  and  Argentina (.+0.5mn) amounted to a combined EBITDA, loss of .1.6mn. This  
  is expected to improve steadily over the year.

* Deals signed in  the  last   few   months   with   technology suppliers-      
  including  Verisign, Akamai and  Hewlett-Packard-have already  had an impact  
  on costs while the effect on sales should be reflected gradually over the next
  few quarters.

* There  has  also been heavy investment in building the  International
  Network and the necessary leasing of circuits.

On the plus side, Telefonica Data Espana sustained its positive trend in
earnings growth, growing EBITDA to .39.6mn, a 14% rise year-on-year with
a constant EBITDA margin of 22%.

Overall  the  key  point is that while first-time consolidation  of  new
companies  into  the group and the launch of several  new  companies  and
services  over  the  last  few  months significantly  held  back  company
earnings  over the quarter, these effects cannot be extrapolated  to  the
rest  of  2001. We expect a continuing improvement in sales  growth  with
costs  under  control, and this should bring substantial improvements  to
operating profit over the next few quarters.

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