1st Quarter Results - Part 2

Telefonica SA
16 May 2001


PART 2


TELEFONICA MEDIA GROUP

The analysis of Telefonica Media Group's first quarter results is greatly
affected  by  its major expansion during 2000, which led to a significant
change  in its sphere of consolidation. Of particular note is the  change
in  ATCO's  consolidation from the equity method in  March  2000  to  the
global  integration  method after Telefonica Media  Group  increased  its
stake  in  the company from 26.8% to 100%, and the inclusion of  Endemol,
which  from August 2000 was fully consolidated and, therefore,  does  not
appear in the financial statements published in first quarter results for
the previous year,

The  integration of these two companies has meant an important change  in
the Telefonica Media Group's consolidated revenue and EBITDA profile.

Telefonica  Media  Group had positive EBITDA for the second  consecutive
quarter, of .10.5mn, compared to a figure of .-6.6mn in the same period
last  year.  This  performance is particularly  impressive  as  it  comes
against  a  problematic economic backdrop, with the difficult environment
that  exists  for  Spanish advertising market and the Argentine  economic
crisis.  These  results  enable the Company  to  advance  its  policy  of
anticipating EBITDA breakeven for some of the companies, and to  reach  a
position of self-financing Group operations.

Operating results reflect losses of .6.7mn, versus losses of .15.2mn in the
first quarter of 2000, a 55.7% improvement.

FREE-TO-AIR-TELEV1SION AND RADIO BUSINESS

ANTENA 3

Antena 3 remains just behind TVE 1 in audience figures and has consolidated its
leadership position amongst the public with high commercial potential.

The television advertising market in Spain fell 1.1% vs. the first
quarter of 2000, which has meant that the channel's advertising
revenues have also dropped, down 2.2%, compared to the first quarter
of 2000, to .132.9mn. However, the company has maintained the best
advertising market share/audience share relationship of Spanish
television companies, with a ratio of 1.35 vs, 1.24 in the same
period last year.

Finally, first quarter EBITDA increased to .31.6mn compared to .38.3mn in 2000.

ATCO

The  combination of the traditional summer slowdown in the  Argentine
television   advertising  market and an uncertain macroeconomic
environment  in that country explains the slump in this  market,  due
to a loss of consumer and business confidence.

In spite of this, Telefe's market share has risen 40.1%, an advance
of 2.1pp on December.

Nonetheless,  this reduced confidence has led to a drop  in  revenues
compared to the same period last year, although this has been  partly
compensated  for  by a cut in operating costs, continuing  the  trend
which  began with the implementation of better management systems  by
the  new management team after the Telefonica Media's take over.  In
this scenario, EBITDA has changed from .3.1 mn in 2000 to .5.6mn in
2001

ONDA CERO RADIO

According  to  the data from the first results of the  General  Media
Survey  2001,  Onda  Cero shows the highest  growth  in  the  sector,
consolidating  its position as the number two radio  station  with  a
market  share  of 23.1 % vs. 21.6% in the previous period.  According
to  this  report,  the  total number of listeners  was  2,775,000  an
increase of 61.3% on the the first quarter of 2000.

In  line  with this higher audience, Onda Cero's revenues at the  end
of  the  first quarter showed growth of 37.7% vs. March  2000,  which
allows  us  to be optimistic with regard to the target of ending  the
year  with positive EBITDA and net profit figures. These would be  the
first positive results obtained since its launching.

CONTENT BUSINESS

ENDEMOL

This  first  quarter Endemol has acquired the remaining  50%  of  the
French  company,  ASP Endemol. This company is now known  as  Endemol
Entertainment  France  and will be consolidated  in  Group  financial
statements by the global integration method.

Endemol's clear  worldwide  leadership  position  in  entertainment
content  creation  has  seen  its  first  quarter  revenues  reach .198.6mn, 
growth  of  53.0%vs. first quarter  2000.  This  is  very positive, especially
if we consider the strong seasonal nature of  the production  business, with the
second and fourth quarters  being  the  busiest.

Accumulated  first quarter EBITDA was . 37.5mn, a 95.4%  increase  on
the  same  period in 2000. The subsidiaries which have made the  most
positive  contributions to EBITDA have been the producers  in  Italy,
Germany and France.

PAY TELEVISION AND DISTRIBUTION BUSINESSES

VIA DIGITAL

Throughout  the  financial  year,  Via  Digital  has  continued   its
strategy  of  client capture within a highly competitive  environment
because  of new entrants (Quiero TV), the increased activity of  cable
companies   and   Sogecable's  aggressive  marketing  strategies.This
situation  is  further  aggravated by  the  proliferation  of  pirate
cards.

The  pay  TV platform has fulfilled its client target for  the  first
quarter  of  2001,  with  its client base  now  standing  at  673,987
subscribers, a yearly increase of 34.8%.

As  regards  content, the development of the company's  own  channel,
Gran  Via,  is  remarkable,  having  such  a  great  commercial  and
audience  success,  that  it has even been  bought  by  some  of its
competitors.

In  financial terms, operating revenue was, 63.9mn, 41.2% up on  the
first  quarter of last year. On the other hand, costs have  increased
far  less  (6.7%) and this has allowed EBITDA to advance  13.5%  over
the same period In 2000 (. -67.4mn vs. . -78.5mn).

INTERNET BUSINESS

TERRA-LYCOS GROUP

Terra-Lycos  was  created in early November from the  merger  between
Terra  Networks,  S.A. and US-based Lycos, Inc.  It  is  one  of  the
world's largest internet companies.

The  first quarter of 2001 is the merged entity's first full quarter.
The pedod was characterised by difficult macroeconomic conditions  in
the  countries in which we operate, particularly the US, hitting  one
of our core businesses, the online advertising.

During   the  first  quarter  a  new  organisational  structure   was
announced,  focussed  on business areas and on the  profitability  of
the   company.  The  reorganised  group  comprises  three   strategic
business  units  -  access,  media and  commerce,  incorporating  the
company's key businesses - and two geographical units - the  US,  and
Latin  America  &  Spain - which together cover the 42  countries  in
which  Terra-Lycos  operates. These geographical and  business  units
are supported by a number of global support functions.

The company's new matrix-based organisational structure will help it to focus
more effectively on the bottom line and on profitability in general.

On the operating side, Terra-Lycos accounts for more than 7 million access
subscribers as of March 2001, including all the subsidiaries, with almost 1
million new subscribers added since December 2000, representing an increase of
15.4% or 167.8% up since March 2000.

Subscribers from Spain and Latin America reached almost 4.5 million, that is 2.5
million more than the previous year.

Average daily page view were up 22.3%, from 350 million in December 2000 to 431
million in March 2001.  Increases were seen in all countries of operation, but
particularly in Spain and the US.

Lastly, unique users rose by 7.4% compared with the previous quarter, from 94 to
99 million.  The year-on-year increase was 52.3% (up from 65 million).

In terms of pro-forma first quarter 2001 financial results, revenues were
.177.2mn a 60% annual advance.  Revenues were fairly stable thanks to the
geographical and functional diversification in spite of the first quarter
seasonal nature, and the poor market conditions.

The 2001 first quarter revenue breakdown by business area is as follows:

- .55mn from the access business, representing 31.1% of total revenues.

- .123mn from the media business (advertising and e-commerce), 69.4% of total   
  revenues.

Terra-Lycos's business model is evolving in line with the market but always with
a clear focus on profitability.  In fact, the company is not promoting the free
internet access in any market where it operates, but is concentrating all its
efforts on pay-services.  The company's pricing policy is moving increasingly
towards bundling and quality offers.

The company's progress towards profitability is evident in the almost 30
percentage points advance in EBITDA since 3Q00.

In terms of expenses, Terra Lycos is benefiting from the synergies generated by
the merger and from measures designed to control and cut costs without impacting
growth.  This is the first quarter in which revenues have exceeded operating
expenses, which is reflected in the above mentioned improvement at EBITDA level.
While the company's revenues remained virtually unchanged, EBITDA has risen by
.26mn.

The quarter saw further acquisitions activity and new product and service
launches.  Acquisitions included:

- Acquisition in January of Raging Bull, a leading financial community on the   
  web;
- Acquisition of leading digital mapping company Iberwap, also in January;
- Finalization of Lycos Asia's acquisition of My Rice, one of the leading       
  portals in China;
  and

Announcement (after the and of the quarter) of purchase of a 49%
stake in Uno-e, the joint venture with BBVA.

New products and services included the following..

- Launch of Lycos Talk Radio, the first Interactive radio network on
  the net; 
- Launch of the first voice portal in Spain, providing
  access to the content and services of the country's leading
  portal; 
- Launch (following the quarter close) of Lycos 411, a
  service that provides internet access via a telephone call; 
- Launch of internet portal Terra Caribe in the Caribbean.

DIRECTORIES BUSINESS

Having  finalised  the takeover bids for operators in  various  Latin
American  countries, the Telefonica group is now in the  process  of
segregating  their  directories businesses for integration  into  the
TPI-Paginas Amarillas group.

The   assets  of  CTC-Publiguias  were  integrated  in  March   2001,
following  full  consolidation in the accounts of TPI  from  January.
The  Peruvian and Argentine directories businesses have not yet  been
formally  consolidated in TPI's accounts, but their  activities  have
been  integrated  in  order to give a clear  and  true  view  of  the
business   scenario  in  which  the  company  will   immediately   be
operating.

The  results  appearing  under  the  title  Telefonica's  directories
business'   therefore  include  TPI-Espana,  Publiguias,  TPI-Brasil,
Goodman, Paginas Doradas in Argentina and Guitel in Peru.

Remember  that  the  seasonality of the  business  and  the  industry
practice of recognizing revenues at the time of publication  of  each
directory make for fluctuating and incomparable quarterly results.

1Q01  was  a  period  in  which TPI's Latin American  presence  was
consolidated and the internet services business saw strong growth  in
Spain.

The  Spanish  directories subsidiary TPI-Espana's revenues  increased
by  15.3%  on  the same quarter 2000, in the absence of  white  pages
advertising  revenues  following completion  of  the  agreement  with
Telefonica.  This  was  off-set however by additional  revenue  from
producing  three  new editions of yellow pages.  On  a  like-for-like
basis, 1Q01 revenues from yellow pages were up 7.5% year-on-year.

Internet  services  revenues rose by around 120%, to .2.8mn,  and
account  for  a  growing proportion of total revenues  (from  10%  in
March  2000  to  around 19% in March 2001). This result  can  not  be
extrapolated  to  the  rest  of  the  year  because  of  the   higher
concentration of directories publications in the second half  of  the
year.

TPI-Espana's operating expenses increased significantly  to  .24mn,
due  primarily to increases in the size of the work-force and  higher
distribution   and   marketing   expenses   from   publishing    more
directories.

Publiguias'  results  were consolidated for the first  time  in  the  TPI
Group, and accounted for 33.4% of total revenues. However, we do not feel
able   to  extrapolate  this  performance  over  the  full-year  as   the
publication  timetable for the most important directories  is  different.
Revenues  in  local  currency fell 1.8%, despite the publishing  business
growth of 0.9%, a reversal of 2000's negative trend, when the directories
published  in  this  quarter saw revenues drop by 1.9%  compared  to  the
previous edition.

The   remaining   companies  In  Brazil,  Argentina  and  Peru   together
contributed  around .27mn, a performance that we do not  expect  to  see
repeated in the full-year figures due to the different evolution of  each
respective commercial campaigns.

CALL CENTER BUSINESS

ATENTO

Atento  Group's strategy for 2001 is to become one at the world's leading
providers  of customer relations management services (CRM).  It  aims  to
achieve this through operational and commercial excellence, a global  and
strategic  client focus and innovation in the development of value  added
services.

Commercial  activity in the first quarter of 2001 focused  on  developing
long-term  relationships with strategic clients in  the  external  market
(ie,  outside Telefonica group) and improving strategic links with  other
group companies.

A  major success on this front was the agreement signed with BBVA, which
is  to outsource all its Spanish and international call centre operations
to  Atento. This deal is expected to generate revenue of around .86.4mn
annually  and  add  .15.1mn to group EBITDA.  It  should  also  boost
economies of scale in some of Atento's markets and enhance its knowhow in
strategic, high value added segments such as financial services.

External market sales in 1Q01 were significant and will have a favourable
effect  on  group results over the next few months. Atento  signed  deals
with  a  number  of companies and has established long-term relationships
with,  among  others,  BSCH,  Ace Insurance, Citibank,  AIG,  Warrantech,
American Express, Direct TV, Coca Cola, American Airlines and Varig.

Atento  group  posted 1Q01 sales of .153,5mn, a 68.7% year-on-year  rise.
The  internal  market generated .108.1 million of this, 70%.  Sales  are
becoming  even  more  diversified  geographically.  The  proportion  from
Brazil,  Spain and Chile, traditionally the largest contributors fell  in
the  face  of  rising income from Puerto Rico, Morocco, Central  America,
Columbia, Argentina, Italy, Japan, Mexico and Venezuela.

EBITDA 1Q01 was .11.4mn, a 7.4% rise on 1Q00.

Operationally,  Atento had 26,340 positions at end March  2001,  against
24,121  at  end-December 2000. These positions ware  attended  by  42,533
employees,  a 9.4% rise over the quarter basically due to the integration
of  the  Telinver  call  center activity into Atento  Argentina  and  the
expansion of centres in new markets such as Venezuela, Japan and Mexico.

Note finally that Atento has announced the expansion of its presence
in Italy. It plans to invest .6.7mn in a new centre with over 500
positions.

BROADBAND CAPACITY MANAGEMENT BUSINESS

EMERGIA

Emergia provides Telefonica group's international broadband
infrastructure services and manages the group's wholesale market
capacity.

Its clients are international carriers, ISPs and other companies
which make intensive use of communications services requiring
city-to-city, door-to-door connectivity inside Latin America and
with the US.

The broadband market is expected to grow at an annual rate between
60% and 100% for the next four years. Emergia is in pole position
as the first company to offer the service in the region. It also has
the competitive advantage of being part of the leading telecoms
group in the Spanish- and Portuguese-speaking world.

In  March 2001, the company ended its infrastructure investment when it
completed  the  25,000 km terrestrial and undersea fibre-optic  cable
network.  Having  made  an  initial investment  of  around  US$1.3bn,
Emergia starts with a capacity of 40 Gbps, expandable to 1.92 Tbps.

A  series  of  sale and purchase agreements also gave  Emergia  extra
capacity in the US and Europe.

COMPANIES INCLUDED IN EACH FINANCIAL STATEMENT

- Telefonica,  S.A. has direct interests in the  share  capital  of
  Endemol  Entertainment Holding, NY, and Mediaways,  GmbH  Internet
  Services,  which  are considered to belong to Telefonica  Media,
  S.A. and Telefonica Data, S.A., respectively.

- Telefonica  S,A also participates directly in the  share  capital
  of  CE1  Citicorp Holdings. For this pro-forma income  statement's
  report, it is assumed that CEI's 50% shareholding in Cointel (which  in       
  turns,  owns  52,88%  of Telefonica  de  Argentina) is consolidated as part of
  Telefonica Latinoamericana  (Telefonica Internacional).  Also,CEI's  26.82%
  shareholding  in  ATCO and 26.82% shareholding in  AC Inversora
  S.A. are consolidated as part of Telefonica Media S,A,

- As  regards Telefonica, S.A.'s acquisitions made in 2000  in  the
  Latin American companies Telefonica de Argentina, Telecomunicacoes de Sao,    
  Paulo, S.A. (Telesp) and Telefonica  del Peru, S.A., it is assumed that the   
  contributions  of  these shareholdings  to  Telefonica Latinoamericana, S.A,  
  Telefonica Moviles,  S.A. and Telefonica Data, S.A. have been made since  the
  beginning  of the year in the proportion In which each  of  these,
  after  the  spin-off  carried out, may  consolidate  the  business
  which  the  Latin American companies carry out in fixed telephony,
  mobile telephony and data transmission, respectively.

- As   regards  Compania  de  Telecomunicaciones  de  Chile,  S,A (CTC),
  part-owned  by  Telefonica  Latinoamericana,  although  to   date   its
  spin-off  has  not begun, the company's data transmission activity  has
  been allocated to Telefonica Data. Telefonica Latinoamericana does  not
  include  Startel's  mobile telephony business,  in  accordance  with  a
  pro-forma  results presentation which only includes the fixed telephony
  activity in Latin America.

- As  regards  the businesses remaining in TASA and'Telefonica  del Peru
  after the aforementioned spin-off, included in Telefonica Latinoamericana, we 
  would highlight that these companies still  include the directories activity  
  which has been added for the presentation  of these pro-forma income          
  statements to the TPI Group, in accordance  with a view of the Telefonica     
  Group's directories business.

RELEVANT SHAREHOLDINGS OF TELEFONICA GROUP AND ITS SUBSIDIARIES

TELEFONICA, S.A GROUP SHAREHOLDINGS

SIGNIFICANT EVENTS.

- On  27  April  2001, Telefonica Publicidad e Informacion  announced
  changes  in  its  board of directors following the  resignation  of
  Messrs.  Alberto  Cortina  de Alcocer, Abel  Linares  Palacios  and
  Jose. Maria, Mas. Telefonica. do Espana, S.A.U. appointed as  its
  representative  member to the board Mr. Jose Maria  Alvarez-Pallete
  Lopez  and  Mr.  Javier  Lopez- Mingo Olmo  as  its  secretary  and
  non-board member.

- On  24 April 2001, Telefonica Data Peru spun off its data unit  in
  Peru, initiating operatons with an estimated investment of $20mn.

- On  23 April 2001, Telefonica and BBVA announced the start-up  of
  three  initiatives as part of the strategic alliance signed  on  11
  February 2000, as follows:

  -  The  integration  of  BBVA's call centre business  in  Atento,
     leaving the bank with a 9% shareholding in Atento.

  -  The acquisition of a stake by Terra Lycos (tentatively 49%)
     in Uno-e.

  -  The acquisition by Telefonica, through Telefonica Media,  of
     a  47.5%  stake in BBVA Ticket (leader in the management  and
     sale  of musical events), equivalent to BBVA's holding in  the
     company.

- On  20 April 2001, Telefonica de Espana announced that It had more
  than  100,000  broadband  digital lines installed  in  Spain.  This
  number  is  in  line  with the total for all of  2000,  fuelled  by
  higher  sales  growth and a major reduction in  installation  time.
  The  company's  currently has 905 switches, compared  with  603  at
  year-end 2000.

- On 9 April 2001, Telefonica and Iberdrola reached  an  agreement
  whereby Telefonica  will  acquire  Iberdrola's  stakes   in   the
  Brazilian  telecoms  operators in which they both  have  interests.
  The  operation  entails  an  exchange  of  Telefonica  shares  for
  Iberdrola's shares in the Brazilian companies TeleSudeste  Celular,
  TeleLeste Celular, Celular CRT and Telesp. Iberdrola will  receive
  19,136,307  million  shares,  implying  a  total  value   for   the
  transaction  of approximately $313mn. The Iberdrola share  packages
  are:

         - 3.48% of SP TELECOMUNICACOES HOLDING, S.A.

         - 7.00% of TBS CELULAR PARTICIPACOES S.A.

         - 7.00% of SUDESTECEL PARTICIPACOES S.A.        

         - 62.02% of IBEROLESTE PARTICIPACOES S.A

         - 3.38% of TELELESTE CELULAR.

The  operation also includes the acquisition of IBERDROLA  ENERGIA,
S.A.'s  stake in CELULAR CRT PARTICIPACOES (0.66%),  through  the
Telefonica Moviles tender offer.

Last, the deal is subject to approval by ANATEL

- On  6  April  2001, Terra Lycos initiated its Caribbean operations  with
  the  presentation  of its Dominican Republic portal, in  line  with  its
  goal  to  become the leader of the region's internet market, With  this,
  Terra Lycos expands its presence to 42 countries,

- On  30  March 2001, Emergia concluded its fibre-optic ring around  Latin
  America  with  connection  to the US, making it  the  company  with  the
  largest  and  most extensive high-capacity fibre-optic  system  in  Latin
  America,  in addition to be the first company in the region to finish  a
  high-capacity   underwater   fibre-optic  network,   beating   out   its
  competitors by at least two months.

- On  29  March  2001, Terra Mobile expanded its international  operations
  with  the launch of services in Brazil, marking its first endeavours  in
  Latin  America.  Two  days  before,  Terra  Mobile  had  announced  that
  registered user numbers in March had surpassed four million, marking  an
  increase of 33% from mid-January, The strong pace of growth has  enabled
  the  company  to  rapidly  consolidate its position  as  Europe's  leading
  portal.  In  Spain, the company boasts roughly 10 million  monthly  page
  views through its internet web and around four million through Its WAP.

- On  29  March  2001, Telefonica's board of directors appointed  Messrs.
  Carlos  Colomer, Affonso Ferrari and Antonio Alonso as new members.  The
  first  two  will take the place of Alberto Cortina and Carles  Vilarrubl,
  while  the  third will hold the post of general secretary and  secretary
  to the board in place of Jose Maria Mas.

- On 7 March 2001, Telefonica Moviles held a rights issue to incorporate
  Telefonica del Peru's cellular assets in the Group, issuing 65,939,564 new    
  shares with a nominal value of .0.5 each and a Issue premium of               
  approximately .3.3 per share.

- On  the  same  day,  Telefonica  de Espana  SAU's  board  of  directors
  appointed  Angel  Vila  Boix,  the  managing  director  of  Desarrollo
  Corporativo de Telefonica SA, as its representative on BBVA's  board  of
  directors.

- On  2  March 2001, Telefonica Moviles reached an agreement with  Motorola
  to  manage its  four  cellular operators in northern  Mexico (Bajacel,
  Movitel,  Nortel and Cedetel). The deal was reached prior  to  obtaining
  the  necessary regulatory permits, currently in course, to  acquire  the
  operators,  scheduled for the second quarter of the year. To  carry  out
  the  operation, approval will be submitted at Telefonica  SA's  upcoming
  general  shareholders'  meeting for a rights issue,  through  which  the
  companies   will  be  acquired  through  an  exchange  of   shares   and
  subsequently transferred to Telefonica Moviles.

- On  28  February 2001, Telefonica Moviles launched a public tender  offer
  to  acquire  54.32% of Celular CRT S.A (210,437,216 ordinary shares  and
  1,391,142,262 preferred shares). The transaction  carries  an  Implicit
  premium  of  approximately 40% to the average  price  of  Celular  CRT's
  preferred  stock from 19 February to 23 February. inclusive. The  offer,
  which  will be carried out once the pertinent authorisation is obtained,
  is  aimed  at  acquiring and subsequently de-listing  Celular  CRT,  and
  involves two operations:

    - Takeover bid via the exchange of BDRs: representing new shares
      of Telefonica Moviles,

    - Takeover bid via the exchange of ADRs or, as relevant, BDRs,
       representing new shares of Telefonica Moviles.

On 26 February 2001, Terra Lycos announced the appointment of Stephen J.
Killeen as chairman of the company's US operations. He was previously
chairman and general manager of marketing at MSGi.

CHANGES TO THE SPHERE AND ACCOUNTING CRITERIA OF CONSOLIDATION

TELEFONICA

In   January,  Telefonica,  S.A  acquired  4,406,606  shares  in  Terra
Networks,  S.A.  at  a  cost  of .52.16 mn. With  this  purchase,  Grupo
Telefonica's stake in the company reached 37.58%. The company  continues
to be FULLY consolidated on Telefonica Group's accounts.

In  January,  Telefonica, SA acquired 811,051 shares in Telefonica  del
Peru,  S.A.A.,  at  a  cost  of  . 859,447.  With  this  purchase,  Grupo
Telefonica's  stake in the company reached 93.26%. The company  continues
to be fully consolidated on Telefonica Group's accounts.

Also  in January, Telefonica, S.A. acquired 100% of Mediaways, GmbH for
.1,479mn. The company has started to be consolidated on Telefonica  Group's
accounts by the global integration method.

In  the  first  two months of 2001, Telefonica, S.A acquired  a  total  of
6,551,543  shares  in  Telefonica Moviles, S.A,  at  a  cost  of  .55.10
million.  Grupo  Telefonica's stake in the company is now  92.94%.  The
company  continues to be consolidated an Telefonica Group's accounts  by
the global integration method.

In   February,  Telefonica,  S.A.  created  the  100%  owned  subsidiary
Telefonica  Gestion de Servicios Compartidos, S.A, with initial  capital
of .60,102.  The company is not included in the sphere of consolidation,
and  has  been  included  in Telefonica Group's  consolidated  financial
statements.

TELEFONICA PUBLICIDAD E INFORMACION

Goodman  Business  Press,  S.A., acquired in  2000,  is  included  within
Telefonica  Group's  sphere  of consolidation  in  2001,  by  the  global
integration method.

As  a  result, Cernet, a 100% owned subsidiary of Goodman (which  designs
web  pages) is also included within the sphere of consolidation in  2001,
by  the  global  integration method, In 2001, Buildnet,  S.A.,  in  which
Telefonica  Publicidad  e  Informacion, S.A. owns  46.35%,  and  Goodman
51.24%, is now being consolidated by the global integration method rather
than by the equity method as it was in 2000.

TERRA NETWORKS GROUP

In  the first quarter of the year, Terra Networks, S.A. helped set up the
Spanish  company  Azeler  Automocion, S.A. which  was  incorporated  with
initial  capital  of . 8,41 million, 50% of which was fully  subscribed
and  paid  by Terra Networks, S.A. The company has been recorded  at  its
acquisition cost in Telefonica Group consolidated financial statements.
Also,  in the first quarter of this year, Terra Networks. S.A has  formed
the  following 100% owned subsidiary companies: Terra Networks  Financial
Services USA Lic., Terra Networks Maroc, and Terra Networks Caribe,  with
share  capital of 12,020 and 264.4 million euros respectively. Of  these,
Terra  Networks Financlal Services USA Lic has been included in Telefonica
Group  financial statements, by the global integration method: the  other
two companies are carried at acquisition cost.

TELEFONICA LATINOAMERICANA GROUP (TELEFONICA INTERNACIONAL, S.A.)

The  Telefonica  Internacional parent company increased  its  stakes  in
Telefonica  de  Peru,  Telefonica de Argentina  and  Telesp  thanks  to
Telefonica, S.A contribution of its holdings in those companies.

On January 30, 2001, Telefonica de Argentina approved the reorganisation
of  certain of its businesses, mainly those of the companies in which  it
has  a controlling interest: TCP S.A, Advance, S.A. and TYSSA S.A. As  of
January  1,  2001,  spin-offs and mergers took place  in  Telinver  S.A.,
Advance S.A. and TCP S.A. As of February 1, 2001, undertakings were  made
between  TASA,  Advance and TMA, S.A. (Telefonica Moviles Argentina)  to
carry out company reorganisations. With regard to this restructuring, the
fact  that  TASA's  financial statements included  are  three-months  ago
should be borne in mind.

TELEFONICA MEDIA GROUP

In  January,  Endemol  Group acquired 50% of Endemol  France  for  .159.3
million.  The  company  is consolidated in Telefonica  Group  financial
statements by the global integration method.

TELEFONICA DATA GROUP

in  the first quarter of 2001, the following changes have taken place  in
the sphere of consolidation of Data Group:

On  January  16, Telefonica Data Mexico (previously Optel)  increased  its
capital  through  the  issue  of  16,992,251  shares,  which  were  fully
subscribed  by  Telefonica Data Holding. On March 6, the company  made  a
further  capital  increase by isuing 16,743,904 shares,  with  Telefonica
Data  Holding  purchasing  5,228,385 and T. Datacorp  11,515,519  shares.
After  these  increases,  Telefonica  Data  Mexico  has  capital  of   MXN
241,738,667.8, with the following stakes being held in the Company.
T. Data Holding Mexico: 52.0%
T. Data Holding: 20.4%
T. Datacorp: 18.4%
Minority interests: 9.2%

The  Spanish  company Telefonica Data Caribe, S.A., a 90% subsidiary  of
Telefonica DataCorp, S.A has provided 50% of the capital in  setting  up
Telefonica  Data  Cuba, at a cost of . 108,182.  The  company  has  been
recorded  at acquisition cost in Telefonica Group consolidated financial
statements.

TELEFONICA MOVILES GROUP

The Spanish company. MoviPay International, SA, 50% owned by Telefonica
Moviles has been recorded at acquisition cost in 2000 but in 2001 it was
consolidated in proportion to the stake in the company.

MORE TO FOLLOW