3rd Qrt & 9 Mths Results-Pt2

Telefonica SA
16 November 2001

PART 2



LATIN AMERICA

At  the  end  of  the  third  quarter of 2001,  the  customer  base  managed  by
Telefonica Moviles in the region totaled 11.4 million customers, a year-on-year
increase of 38%.  In quarterly terms, the total customer base, not including
operators in Chile and Puerto Rico, has grown by approximately 345,000 compared
to the second quarter, in spite of the region's macroeconomic situation.

The strategy followed by the companies under management is focused on improving
profitability, with special emphasis on investment and cost containment, and  on
selective  expansion of customer bases while reducing the churn rate.  This has
made it possible to increase EBITDA in local-currency for all operators, except
in  Argentina,  in comparison with the same period last year, both  in  absolute
terms and with respect to margins.

Brazil

At  the  end  of  September  2001, the combined customer  base  of  TeleSudemste
Celular,  Celular CRT and TeleLeste Celular-operators managed by Telefonica 
Moviles in Brazil-totaled 5.3 million customers, with a year-on-year  increase
of  26% and net adds of approximately 1.1 million new customers within the  last
twelve  months.  During the third quarter, the three operating  companies  added
247,000  new  customers,  entailing a 28% increase as  compared  to  the  second
quarter   of  2001, due  essentially  to  the  promotional  campaigns  normally
undertaken in the third quarter.

In  the  third quarter, the operating companies launched the 'Mundo de Vantagens
MoviStar  Top' rewards program, based on accumulating points for usage that  can
be  exchanged  for  handsets  and accessories. In  this  regard,  the  companies
recorded an improvement in the churn rate within the contract segment, which  on
average fell 0.7p.p. during the first nine months of the year. This new  model
is  reflected  in  the fact that the three operating companies  have  maintained
their  leadership  in  their respective markets, with an  average  market  share
similar to that of June 2001 (65%), despite heavy competition.

With  respect to financial performance, it is important to note  the  excellent
results  recorded in local currency by the companies consolidated by the  global
integration method-TeleSudeste Celular and Celular CRT. Thus, operating revenues
of   these   companies  showed  increases  of  13.5%  and  8.6%, respectively,
collectively  rising by 11.9% compared to the first nine months  of  2000.  This
growth  is due to the increased number of customers, partially offset  by  lower
ARPUs (-11% on the average, in local currency). However, it should be noted that
average ARPU levels were maintained during the third quarter of the year compare
to  the  previous  quarter, driven by an increased focus on contract  customers.
Thus,  the contract ARPU and MOU of both companies showed a growth trend  during
the last months, despite the country's economic slowdown.

The combined EBITDA of the two operators shows year-on-year growth in reals of
20.7%,  or  8.8p.p. higher than the growth in revenues. This places the  EBITDA
margin  at 39.5%, with a year-on-year increase of 2.9p.p., despite the negative
effect  of  the  real  depreciation  on unitary  subscriber  acquisition  costs,
partially   offset  by  the  operators'  cost  containment  efforts.   Excluding
acquisition  costs,  the operating companies EBITDA margin  is  around  50%.  In
quarterly  terms,  the EBITDA of both companies was 34.4%, slightly  below  the
percentage reached in the second quarter. This figure reflects higher  additions
in  the  third quarter of the year and increased SAC due to the depreciation  of
the real, which intensified during the last quarter.

In  line  with  cost  reduction policies, investment  by  company  decreased  as
compared to September 2000.


On  the  other hand, intensive work continues to be conducted with  Portugal
Telecom,  aimed  at obtaining the greatest amount of synergies  between  the
Brazilian  operating  companies before the announced joint  venture  can  be
legally established.

Mexico

The  effective transfer of the northern Mexico operators (Bajacel,  Movitel,
Norcel  and  Cedetel) to Telefonica Moviles was implemented in July,  making
it possible to bring these operators under full management.

As  of  September  2001, the total active customers base of Telefonica Moviles  
Mexico,  which  represents  the  four  Mexican  operators,  totaled 1,103,314  
active customers, with the contract segment having reached  19% of the  total 
active customer base. Net adds continue to show a positive trend when  compared 
to previous quarters in all market segments, increasing  by 53% in  the third 
quarter with respect to the second quarter of  the  year.  The contract segment 
represents 44% of cumulative net additions.

From a commercial perspective, it is important to highlight the increase in
the  estimated  market  share  of  new  adds  between  June  and  September,
particularly   in   the  contract  segment.  Telefonica  Moviles   Mexico's
increased  share  in  market growth is essentially due to  a  deepening  and
development  of  current  distribution  channels  and  improvements  in  the
commercial offering. It is likewise noteworthy that the acquisition of  more
valuable  customers  and  the  reconsidering  of  customer  base  accounting
criteria  have  made  it possible to attain an ARPU  in  the  third  quarter
exceeding that of the same period in 2000.

Furthermore,  business initiatives aimed at retaining  customers  have  been
reflected  in  a significant 38% decrease in disconnections in September  as
compared  to March, when management of the northern Mexico operators  began,
positively  impacting  churn rate figures. This  performance  is  especially
relevant  in a market in which other operators are assumed to be  using  far
less  strict accounting criteria for quantifying their customer bases,  with
inactive  rates that may reach 25%. These different criteria  are  reflected
when  comparing prepaid ARPUs published by the two market leaders in Mexico,
with  the  Telefonica  Moviles Mexico ARPUs being  higher  by  22%  and  39%,
respectively.

With regard to developing the commercial offering, the initial launching  of
the  'producto  ahorro' ',  aimed at increasing ARPU  and  improving  customer
retention,  is  already  showing positive results. This  product,  which  is
unique  in  the  Mexican market, makes   possible to be differentiated  from
the  other competitors. Furthermore, in recent months, the range of handsets
being  commercially  offered to clients has been appreciably  completed  for
both prepaid and contract customers.

During the third quarter, the following steps were taken in preparation  for
the  launching  of  the  MoviStar brand, under  which  the  four  operators'
services  will  be marketed: positioning was defined, the  new  offering  of
products  and services was designed, the Points of sale in both  direct  and
indirect channels were adapted, advertising elements were created, etc.  The
launching  of  the brand, which occurred in late October, will  improve  the
positioning  of operating companies in Northern Mexico and  will  be  a  key
milestone in the commercial development of operations.

The  financial results of Telefonica Moviles Mexico are consolidated for the
first  time in the Group's financial statements using the global integration
method.  Operating  revenues,  according to Mexican accounting  principles,
grew  by  4% in pesos compared to the previous quarter, due  to  a  higher
customer  base.  Pursuant to Mexican accounting principles,  local-currency
EBITDA posted a 33% increase compared to the previous quarter, reaching 
11% of  operating  revenues. This performance is primarily the  result  of  a
focus   on   improving  returns,  paying  particularly  attention   to   the
streamlining of costs. With this objective, various actions have been  taken
in  recent  months  to  optimize  the cost  structure,  including  headcount
reduction  (by  1,515 since the beginning of the fiscal  year);  outsourcing
activities,  such  as  call  center services, thus  changing  fixed costs to
variable or implementing  the Advanced Purchasing  System.  which  make
significant  savings possible. Moreover, customers can now pay their  bills
over  the  Internet which should help maintain the currently  low  level  of
customer bad debts.

Argentina

In  2001,  the  cellular market in Argentina was affected by  the  country's
macroeconomic  situation. The result was a slowdown in total market  growth,
with  total  market remaining practically unchanged at the end of  the  last
fiscal  quarter (ending September) with respect to June 2001 figure.  Within
this  context,  the  growth in TCP's customer base during  the  last  twelve
months  has reflected the one of the Argentine market. Having reached  1.87
million  active customers at the end of September 2001 (+19.5%  compared  to
September 2000), TCP maintained its position as the second largest  operator
in the market.

Between  July  and  September 2001, the customer  base  increased  by  9,275
customers,  in  line with previous quarter net adds. This  was  due  to  the
implementation  of  a  new  commercial strategy  adapted  to  the  operating
environment,   involving  a  very  selective  policy   for   acquiring   new
subscribers and a greater emphasis on managing the company's customer  base.
Thus, the number of disconnected customers in the last quarter decreased  by
10% compared  to the second quarter. Also noteworthy is the  August  2001
launch  of  the  'Primer Programa de Recompensas' rewards  program  for  the
contract  segment (Unifon Top). This program allows customers to  accumulate
points  based  on  their  bill amounts, which they  can  exchange  for  last
generation handsets.

The  growth in the customer base is driven by the prepaid segment which,  at
the  end of September, accounted for 65% of the total customer base compared
to 60% twelve months earlier, thus reducing the risk of bad debt.

In  recent months, TCP has maintained a strict cost control policy initiated
at the beginning of the year, significantly reducing subscriber acquisition
costs,  encouraging  the decrease and/or elimination of  handsets  subsidies
throughout  the fiscal year, and reducing traffic promotions and distributor
commissions. In addition, from the beginning of the year until  the  end  of
September,  headcount has been reduced by 30% and the number of  connections
per   employee   has  increased  48% from  the  prior  year.   Furthermore,
advertising efforts have been substantially scaled back while network  costs
and   other   general   expenses  have  been  tightly  restricted,   thereby
drastically slowing the expansion of coverage. In line with these  policies,
the  company has adapted investment to the level of demand, resulting  in  a
65% decrease in investment during the fiscal year compared to 2000.

Within this context, TCP's operating revenues in local currency during  the
first nine months of the 2001 fiscal year (October 2000/June 2001) posted  a
4.8%  decrease compared to the previous year. This performance is  primarily
due  to decreased revenues from the sale of handsets reflecting lower demand
than  the previous fiscal year, and to decreased ARPU during the last twelve
months, offsetting the Increase in the customer base.

During  the  third  quarter, TCP continued to improve  its  EBITDA  margin
compared  to previous months, reflecting the company's ability to  react  to
changes  in  the economic environment. In particular, it is worth mentioning
that  operating  expenses in local currency fell by 16% for  the  October
2000-June  2001  period. Compared to the same quarter last year, operating
expenses  decreased  more than 32%, showing the company's commitment  towards
improving  the  profitability  of operations within  the  current  Argentine
market  scenario. Thus, in the third quarter of the 2001 fiscal year  (ended
in  June), the EBITDA margin reached 17.3%, having improved by 8.3p,p. with
respect  to  the comparable prior-year quarter and by 6.8p.p. with  respect
to the previous quarter.

In the coming months, the company will continue to implement measures aimed
at mitigating the impact of the country's current situation,  moving  ahead
in the personnel adjustment process initiated several months ago.

Peru

At  the  end  of  September  2001, Telefonica Moviles  Peru  surpassed  the
one-million  active  customer mark (1,028,262), posting year-on-year  growth
of  21%.  In  the  third quarter of the year, net adds exceeded  55,000  new
customers, a 7% higher than the previous quarter and a 34% higher  than  the
same  period  last  year. This enabled the Company to maintain  its  loading
position  in  terms  of market share of net adds for the second  consecutive
quarter since a new competitor entered the market early in the year.

It  is important to consider the growth in customer base within the contract
segment  during  the  third quarter, as this reflects the  positive  results
being  obtained  in  customer  management  and  the  introduction  of   more
competitive  tariffs, These steps have made it possible to  reduce  contract
churn  by  34%  during  the first nine months of the year  compared  to  the
similar period in 2000.

During the first three quarters of 2001, Telefonica Moviles Peru posted  an
8% increase  in  revenues  compared to the  same  period  last  year.  This
increase  was  due  to the growth in the customer base and  higher  revenues
from  interconnection,  partially offset by lower  ARPUs  resulting  from  a
larger number of prepaid customers (80% versus 75% in September 2000),  from
the  country's   macroeconomic:  situation,   and   from   greater   market
competition.  However,  it  is  important  to  note  the  slowdown  in  ARPU
reductions compared to previous quarters,

During  the  third quarter of 2001 the EBITDA margin improved significantly,
by  2.6p.p.  with  respect  to the comparable prior-year  quarter,  for  a
cumulative  margin  of  32%.  In  absolute  terms,  EBITDA  showed  a  slight
improvement  with  respect  to  September  2000,  despite  the  increase  in
resources allocated for customer retention activities.

Chile
                                                          
At  the  end  of  the third quarter of 2001, Telefonica Movil, an subsidiary  of
Telefonica OTC Chile managed by Telefonica Moviles, had a base of 1.48 million
active  customers,  with year-on-year growth of 28%. The third  quarter  of  the
fiscal  year  has  witnessed a slowdown in the cellular market  growth  rate  in
Chile. During this period, the Telefonica Movil customer base increased by  5%.
Net adds growth was higher in the contract segment (+70% compared to 2Q01), as a
result  of  a focus on acquiring more valuable subscribers within this  and  the
corporate segments.

Financial  performance was highly positive, with significant  increases  in  all
margins. The EBITDA margin rose to 38% in the third quarter, compared to  8%  in
the third quarter 2000 and 24% in the second quarter of 2001.

Guatemala and El Salvador

At  the end of September 2001, the Telefonica Moviles operators in Guatemala
and El Salvador had a combined client base of 395,012 active customers, showing 
a 20% increase compared to September 2000, and keeping  practically  unchanged
previous  quarter figures. This is due to a policy of selectively expanding  the
customer  base  within  a  climate  of moderate  market  growth  resulting  from
structural  economic  factors  and the impact  of  the  natural  disasters  that
affected El Salvador early in the year.

Gross  operating revenues generated by the two Telefonica Moviles affiliates  in
this  region  have  remained  practically unchanged  in  euros  as  compared  to
September  2000.  This  is  primarily the result of increased  mobile  telephony
revenues  being partially offset by diminished sales in other telecommunications
activities carried out by the operators.

Combined EBITDA improved, yielding positive figures in both companies during the
third  quarter as well as in cumulative terms since the beginning of  the  year.
For  the  January-September 2001 period, the EBITDA margin rose to 11%, having
reached 33.4% in the quarter ended September 2001.

HORIZONTAL BUSINESSES

Terra Mobile ended September with over 5.5 million registered users, posting  an
increase  of over 2.5 million registered users since December 2000. By  country,
the  United Kingdom accounts for 38% of total users while Germany, which already
has  approximately 1.5 million registered users, accounts for 27% of the  total.
Sweden  and  Finland  combined account for 21%. It is  Important  to  note  the
significant  growth  recorded in Spain, where Terra Mobile  had  nearly  800,000
registered  users at the end of September, having grown nearly  60%  since  last
June.

As for Moblpay, Mobipay Espana was established at the end of July. Each mobile
telephone operator in Spain holds a 40% equity interest in this company,  while
80% of Spanish financial institutions collectively hold 40%, and the country's
large  payment  processors (Sermepa, Sistema 4B and Euro 6000) hold  12%  each.
This company started the test phase of operations in September and plans to 
begin commercial service in December this year.



DATA BUSINESS

TELEFONICA DATA GROUP

Telefonica Data Group revenues during the first nine months  of  2001  totaled
1,365.4 million euros, a 66% increase year over year.

EBITDA rose to 32.8 million euros during the same period, representing 2.4%  of
revenues.  This  performance  reflects the efforts  made  to  expand  the  Group
geographically as well as introduce new services.

Analysis of Telefonica Data Group results for the first nine months of 2001  is
affected  by  the  addition  of acquisitions and start  ups,  namely  Mediaways,
Atlanet  and  Optel,  to  the Group's consolidation  perimeter  in  early  2001.
Excluding this effect, Telefonica Data Group's revenues would have increased by
14.2%  and  its  EBITDA would have reached 58.3 million euros, a 31.5%  decrease
over January-September 2000 figure.

The  Telefonica Data Group has a portfolio of businesses located  in  various
markets,  at  different  stages of development and  with  different  competitive
positions. Thus, in terms of the geographic regions in which the Group  operates
and its respective market shares, operations in the countries in which the Group
maintains a presence can be grouped into four categories, two in Europe and  two
in the Americas:

                SPAIN             America I

                Spain             Argentina
Incumbent                          Brazil
                                   Chile
                                   Peru
                      
                Europe            America II   
 
                Germany            Colombia
                Austria            Mexico
                Italy             Uruguay            
                  UK                 US


New Entrant

This  broad  coverage and geographical presence, combined with international
network  service agreements, allow Telefonica Data to serve  its  customers
at  both  domestic level as well as regional and International level.  As  a
result,  203  multinational  customers have been identified  which  receive
with  one  stop  shopping, global coverage through  a  GAM  (Global  Account
Manager) network.

As  a  result  of the decision to expand into new markets, 55%  of  revenues
originate  in  operations  conducted outside  Spain  and  approximately 35%
originate  in countries in which Telefonica Data acts as a new entrant.  In
these  countries,  EBITDA is still negative due to the  recent  date  of
entry into the market and the small degree of penetration achieved to date.

Incumbent Markets

In  the  markets  in  which Telefonica Data operates as a  leader,  revenue
growth  stems  primarily  from developing loyalty among  existing  customers,
serving   multinational  customers,  introducing  new  services  making   it
possible  to  move  up  in the value chain and providing  one-stop  shopping
international  services. Currently, more than 3,000 corporate customers  are
served  by  the  company's  own sales force and  more  than  9,000  business
customers  are  served by the indirect sales force of the Telefonica  Group
fixed telephony operator.

In  Spain,  the increase in revenues has been based on migrating traditional
data  services to more advanced solutions, and on launching new hosting  and
other  services  aimed  at the ASPs (Application Service  Providers),  which
this  year  have  reached 16 million euros, representing a  more  than  170%
increase compared to the same period last year.

With  respect to America, it is worth mentioning Brazil, a country for which
Telefonica  Data  has great expectations for its future  performance,  Thus,
during  the first nine months of the fiscal year, sales increased  by  33.6%
year  over year. New business ventures include participating in a consortium
that  has  been  awarded  a  contract  for  providing  network,  voice   and
multimedia services to Empresa de Correos y Telegrafos (ECT).

The  EBITDA  -  margin  achieved in these countries ranges  from  19%  for
Telefonica Data Espana to 4% for Telefonica Data Argentina. In the case  of
Brazil,  the EBITDA, margin of -3% is still the result of network expansion
efforts  and of a relatively small market share due to Brazilian regulatory
constraints  to  be  satisfied before services may be  offered  outside  the
State  of  Sao Paulo. These constraints would probably be overcome  in  year
2002, once satisfy Anatel targets.

Expanding Markets

In the markets in which Telefonica Data has entered most recently, revenue
growth results from aggressive customer acquisition by introducing the most
advanced Internet and  data services technologies and by providing hosting 
services. Consequently, during  this  fiscal year, significant investment has 
been made in deploying IP networks and Data Centers.


In  its  strategy of expanding into new markets, considered to be  the  base  of
future revenue growth, Telefonica Data has the full support and commitment  of
the Telefonica Group.

Among  European  operations  during the first nine  months  of  2001,  the  most
significant  contribution  is  from  mediaWays,  with  335.7  million  euros  in
revenues.  The  main  revenue  contribution comes  from  mediaWays,  related  to
Internet services provided to corporate customers, notably America Online (AOL)
in  Germany  and, in the United Kingdom since June 2001. Throughout  this  year,
mediaWays   has  consolidated  its  position  in  the  German  market   as   the
second-largest IP network, with a 30% market share in Internet services.

Revenues  in the Americas, in those countries in which Telefonica Data  operates
as  a new entrant, have risen to 26.7 million euros during the first nine months
of  2001,  representing a 39% increase year over year. Mexico and  the  US  have
shown the most relevant annual revenue increases.

The  EBITDA  margin is still negative, the result of an intense capex  and  cost
related  program  that is initially generated, by among other things, customer
acquisition, network expansion, the launching of services, the establishment  of
brand  awareness, etc. In Germany and Colombia, where the companies have  been  
in operation for more than four years, EBITDA margins are clearly positive.

Services  provided  by the TData Internet Centres stand out among  new  services
aimed at adding new customers and gaining the loyalty of existing customers.  In
September 2001, the Miami center ('KeyCenter') was officially opened. It will be
used  primarily  for  serving  large companies and  New  Economy  Players.  This
innovative  KeyCenter is directly connected by optical fiber to the  other  nine
Telefonica Data TData Centers in Latin America and Europe, offering exceptional
opportunities  for  conducting business within these regions.  With  an  initial
investment of 35 million dollars, the KeyCenter provides one of the fastest  and
most reliable Internet connections in the market.

In summary, the financial performance of the Telefonica Data business portfolio
during  the  first  nine months of the 2001 fiscal year is consistent  with  the
degree  of  maturity  and  scale achieved in the various  markets  in  which  it
operates, as well as with the development phase of new value-added services.


MEDIA BUSINESS

ADMIRA MEDIA GROUP

The  Admira  Media Group was formerly known as the Telefonica Media Group.  The
new  name  was  created to facilitate the consolidation of a group  culture  and
identity.  Acting  as  a link between the different Group  media  companies  and
promoting  sinergies among them and Telefonica, Admira is positioning itself  as
market leader in creating, bundling and distributing content for traditional and
multiplatform media.

During  the  first  three quarters of the fiscal year, the  Admira  Media  Group
obtained  consolidated revenues of 1,005.8 million euros, tripling  the  Group's
revenue figure for the same period 2000. This performance has permitted to  read
a cumulative EBITDA of 82.2 million euros, compared to a negative EBITDA of 23.8
million  euros during the period January-September 2000. The third  quarter  has
witnessed a confirmation of the trend toward positive EBITDA begun in the  final
quarter of 2000, with EBITDA of 13.0 million euros compared to a loss of  14.1
million  euros 3Q00. This performance is significant considering  the  seasonal
nature  of  the  media business during the summer, especially  in  August,  when
advertising activity is practically nonexistent and adversely affects television
productions,  which are a substantial portion of Admira's consolidated  business
revenues. Moreover, it is also significant that this performance was achieved in
a  difficult  environment a result of both the negative  economic  situation  in
Latin America and the crisis in the Spanish advertising market.

These   results   make  possible  to  more  forward  in  the   anticipation   of
self-financing Group operations.

The Group's operating results amounted to 24.1 million euros, compared to a loss
of 55.5 million euros in the first nine months of 2000.

Analysis  of  the Admira Media Group's results for the first three  quarters  is
affected  by the Group's dramatic increase in size during the 2000 fiscal  year,
which  significantly  altered its consolidation perimeter. The  most  noteworthy
components  are the addition of ATCO, with the equity interest in  this  company
growing  over  the  course of the fiscal year from 26.8% to 100% and  being
effectively consolidated by the global integration method since as of  May  2000
(thus  incorporating operations for the last two months), and  the  addition  of
Endemol,  which was consolidated by the global integration method  since  August
2000.  However,  if we  focus  solely on the  July-September  period,  the  only
differences  from an accounting perspective are Endemol's activities in July  
2000 and the minorities (26.8% in ATCO's results).

Integrating  the aforementioned companies has significantly changed the  revenue
and  consolidated  EBITDA profile of the Admira Group, from the  perspective  of
both revenues and EBITDA .


CONTENT BUSINESS

ENDEMOL

During  the  third  quarter of the fiscal year, Endemol's consolidated  revenues
grew  to  648.5  million euros, increasing 62.8% year over year. This  increase,
below  the  one recorded during the second quarter 2001, can be considered  very
positive,  taking  into account the difficult economic situation  in  most  of  
the countries  in  which  Endemol operates and the seasonal factor  of  the  
summer period  in  the  countries  in  which  the company  maintains  a  
presence  (the Netherlands, Spain, France, the United Kingdom, Italy and 
Germany).

Owing to the positive revenue performance, cumulative nine months EBITDA rose to
107.6  million euros, representing a 68.4% increase year over year and exceeding
the company's own expectations at the beginning of the fiscal year.

From  a  strategic perspective, Endemol has continued to expand with a  view  to
becoming  the  leader  in  countries that constitute a natural  market  for  the
Telefonica Group and where it has yet to establish a presence. Thus,  in  early
October,  Endemol  reached  an agreement with the  Televisa Group  to  form  a
combined  company  to  produce television content for the  Mexican  market.  The
agreement includes buying formats from Endemol's over the next 5 years. This  
and a similar agreement signed with TV Globo during the second quarter 
significantly increased  Endemol's  presence  in  the major Spanish-and  
Portuguese-speaking markets.

BROADCAST TELEVISION AND RADIO

ANTENA 3

The  television advertising market has progressively declined during  the  third
quarter,  failing  cumulatively year-on-year by 7.1%. The increased  advertising
time  and  the  aggressive price strategy adopted by RTVE, aimed at increasing
market share, are additional significant factors to be considered.

Within  this  context, Antena 3 has focused its efforts on offering  a  premium,
high-quality  programming  grid  by  way  of  differentiation  from the other
competitors.  These  efforts  have  made  it  possible  to  maintain  the   best
advertising market share to audience share ratio, which reached 1.33 at the  end
of  3Q01  compared  to  a  1.29  ratio 3Q00. In  spite  of  these  efforts,  the
advertising revenues of Antena 3 were affected, falling to 372.3 million euros,
equivalent to a for a 9.5% drop an a year-on-year basis.

In  turn,  third quarter EBITDA amounted to 67.8 million euros, 41.3% less  than
for 3Q00, reflecting the aforementioned poor market conditions for advertising.

In the coming quarters, Antena 3 will continue to focus its strategy on offering
premium,  high-quallty programming, with special emphasis on its own  production
content.  This  policy  is  aimed  at  improving  audience  shares  and  thereby
confronting the aggressive attitude of certain competitors, particularly RTVE.

ATCO

Argentina's  macroeconomic  instability has  caused  the  Argentine  advertising
market to continue on its downward trend through the third quarter, failing  14%
cumulatively year-on-year.

Despite  these  circumstances, Telefe remains the leading  network  within  the
Argentine  market, with an average audience share of 40.8%, 1.5p.p. larger  than
during  third  quarter 2000. This performance is reflected  in  the advertising 
market share, which rose even higher - 43.7%.

Notwithstanding  Telefe's  good  performance  in  terms  of  market  share,  the
country's  difficult economic conditions has led to a drop in revenues  compared
to the previous year period (18.5%). Yet this decline has been more than offset
by  a  cutback in operating expenses (23.1%), which has been intensified  during
the  third  quarter as a means of dealing with these tough economic  conditions.
This  cutback in expenses has made it possible to generate positive  EBITDA  for
the  second  consecutive quarter (2.6 million euros) and  positive  year-to-date
EBITDA,  which grew to 2.8 million dollars from a negative 8.2 million  dollars
for the nine months ending September 2000.

ONDA CERO RADIO

Like  Antena  3,  Onda Cero has been very much affected by the problems  in  the
Spanish  advertising market brought about by the country's economic  slowdown  
and RTVE's aggressive commercial policy. Therefore, the radio advertising market
has had  a  1% year-on-year growth compared to the 8% growth it experienced  
during the same period last year.

Nonetheless,  Onda  Cero has strengthened its position as  Number  Two  national
radio station, with more than 2,537,000 listeners, becoming the channel with the
greatest proportional growth of all.

As  a result of this growth in the number of listeners, Onda Cero's revenues at
the  end of the third quarter reflect a 32.2% increase at September 2000,  which
translates  into  an  improved third-quarter EBITDA loss of 7.1  million  euros,
compared to a loss of 11.7 million euros for the January-September 2000 period.

It is worth  mentioning the increase in the broadcasting  network  during  the
quarter, due to agreements with Radio Blanca and Radio Espana.

PAY TELEVISION AND DISTRIBUTION

VIA DIGITAL

The pay-TV market has continued to be characterized during the third quarter  by
aggressive  competitors in terms of acquisition promotions. This fact has been
exacerbated  throughout  the fiscal year by the as yet unresolved  problem  that
Canal  Satelite  Digital  has  with card pirating,  the  aggressiveness  of  new
competitors, and the increased activity of cable companies.


Within   this  context,  Via  Digital  ended  the  third  quarter  with  752,722
subscribers  (180,537  subscribers more than in  the  third  quarter  of  2000),
representing year-on-year growth of 31.55%.

In  financial  terms, operating revenues grew 34% with respect  to  the  third
quarter  of the previous year, increasing to 196.2 million euros. On  the  other
hand,  cost  control  efforts have limited the growth of operating  expenses  to
6.5%,  thus  allowing a 10.7% improvement in EBITDA as compared  with  the  same
period  of the previous year (-209.5 million euros, compared to -234,4  million
euros).

INTERNET BUSINESS

TERRA-LYCOS GROUP

The  economic slowdown taking place throughout 2001 in most  of  the  economies
where  Terra-Lycos is present has proved to be a determining factor in analyzing
the Company's performance in a developing industry such as the Internet.

In  this  unfavorable macroeconomic climate, where one of  the  company's  main
sources  of revenues -online advertising- in experiencing a significant  decline
due  to  its  extreme sensitivity to economic cicles, Terra Lycos is developing
its  business  model  toward  obtaining  more  stable  sources  of  revenues  to
complement  the  revenues  from  online  advertising.  This  business  model  is
essentially based on an OBP (Open, Basic, Premium) strategy, which is  aimed  at
generating revenues based on a subscription and pay per view/pay per use  model
in both the access and the portal components of the business.

This  strategy  and the Telefonica Group's commitment to expand the  market  in
broadband  business  have led to Terra-Lycos' October launch  of  ADSL  Plus  in
Spain,  offering a package that combines pure connectivity (128 K  upstream  and
256  K downstream) with value-added services (virtual hard disk, domain and plug
and  play  package),  along  with  a multimedia  area  on  the  portal  reserved
exclusively  for Terra Lycos customers. This model, which will be  replicated  
in other  countries, is proving its strength. Terra-Lycos has captured  10,000  
new customers in 15 days, contributing, as Telefonica de Espana is doing,  to  
the development  of  the  total broadband market. This total fast  broadband  
market growth will benefit Terra-Lycos.

Operating figures accumulated through at the end of the 2001 third quarter  show
that  the  total number of subscribers in Spain and Latin America  totalled  4.3
million, 29% of which are pay customers. Terra Lycos; is focusing its strategy 
on acquiring  pay  customers, Particularly broadband customers,  and  on  
migrating users from the free access service to pay products. Since December 
2000, 240,000 new pay  customers  have  been  signed  UP,  134,000  of  them  on
ADSL.  More specifically, the number of ADSL clients increased by 42,000 during 
the quarter, totaling 174,000 by the end of September.

The  audience for all our portals measured by page views came to 481 million per
day,  an  increase of 4.6% over the previous quarter and 78.8% in twelve months.
In addition, the unique users figure for the Group as a whole was 109 million in
the month of September.

Total  revenues  for  the  third quarter achieved 170  million  euros,  a  24%
increase from the comparable proforma prior-year period, showing that despite 
the unfavorable  global economic situation, the Internet continues to  be  a  
growth sector.  The  quarterly  revenue figure is within the estimated  range  
forecast announced by the Company.

There  continues  to  be geographical and functional diversification  in  
revenue source,  making  it  possible to temper the negative effects of adverse 
economic cycles.  Thus,  the  media business accounted for 64%  of  revenue,  
while  the remaining 36% came from the access business.

Media  business revenues totalled to 109 million euros, in line with the figures
reported  in the previous quarter, Media revenues for the quarter by  geographic
area  ware  also  very  similar to those of the previous  quarter,  despite  the
conditions  in the advertising market and the typical seasonality of the  summer
months in the U.S. market.

Revenues from access achieved 61 million euros, 12% below those reported in  the
previous  quarter,  again  essentially due to the seasonality  of  the  business
associated  with  the  summer season in Spain. However, in  year-on-year  terms,
revenues from the access business grew by 56%.

From a geographical viewpoint, 47% of total revenues comes from the USA, with 
the rest  generated  in  Spain and Latin America, mainly Spain, Brazil  and  
Mexico, which bring in 95% of the revenues for this region.

Analyzing the first nine months of the year, Terra Lycos reported revenue 
figures of 526.5  million euros, exceeding the figures for all of 2000 proforma 
basis, with  a  38% increase over the first nine months of 2000, It is worth to 
mention that access revenues grew by 103% in this period, while media revenues 
increased by 18%.

On  the  other hand, the Company is also making progress on one of its  primary
goals,  which  is  to improve profitability along with growth. Accordingly,  the
procedures  put in place to reduce and control costs and improve  the  Company's
efficiency are all producing positive results. This effort is best evidenced  by
the  fact  that,  while initial published estimates for the quarter  placed  the
Company's EBITDA margin in the -30% to -34% range, finally, the margin came  in
at -29%.

New  products  and  strategic alliances continued to be rolled  out  during  the
quarter.  It is worth highlighting the creation of a multimedia zone  within  
the portal,  aimed  at broadband users, offering over 12,000 video clips  with  
more than 500 hours of audio and video content. Following the OBP strategy, this
zone remained Open through mid-October and is now accessible only to ADSL 
customers.

Among  most  relevant  strategic agreements is the one signed  with  TPI,  which
offers  the  small to medium-size business market advertisement on  Terra  Lycos
sites  that supplement TPI's sales network. In addition, an agreement  was  made
with  VISA  to  integrate the VISA platform for secure e-commerce  transactions.
Also of note is the founding of Atrea, a vertical real estate portal, with BBVA,
each partner holding a 50% equity interest.

With regard to acquisitions, during the quarter Terra Lycos has entered into the
'financial supermarket' Uno-e, which to date has captured over 110,000  
customers and  640  million  euros. It is important to mention  the  acquisition
of the e-commerce leader in Mexico, De Compras, which had over $7 million in  
sales in 2000.

DIRECTORY BUSINESS

TELEFONICA DIRECTORY BUSINESS

As  we  indicated  in  previous  quarters,  to  facilitate an  overview  of  the
Telefonica  Group  Directory business, this heading includes companies  already
consolidated within the TPI Group as well as those currently in the  process  of
integration: Telinver In Argentina and Guitel in Peru.

In  addition, the TPI Group's quarterly results are not comparable on  quarterly
basis,  primarily due to differences in the publication calendar  of  telephone
directories  between  periods,  and  to  a  greater  concentration  emphasis  on
publishing  the directories in the second half of the year. Accordingly,  during
the January - September 2001 period, there were four more Yellow Pages and seven
more  White  Pages  directories published than in the same period  in  2000.  In
Brazil,  in addition to changes made to the publication calendar for the  yellow
pages, the street directory and the LTOG (white pages) by publisher Listel,  TPI
published its Yellow Pages for the first time in Sao Paulo, Guarulhos, Riberao 
Preto and Curitiba.

Moreover, there were other events in this period that make comparison  with  the
comparable  prior-year period oven more complex. These include: the absence  for
TPI  Spain  of  advertising revenues from Telefonica in the White Pages,  which
amounted  to  21.5 million euros in the first nine months of 2000; TPI  Brazil's
start-up  of  commercial activities and its effect on operating  expenses;  and
incorporation  of  the  Publiguias income statements  as  part  of  the  Group's
consolidated accounts as of January 1, 2001.

Even  taking into account all these factors, revenues for the TPI Group  grew  
by 42.1% as compared to the first nine months of 2000. The most relevant item  
in the  growth in revenues has been the publishing business, which has brought  
in 353.9 million euros, 39.5% more than in the first nine months of the prior 
year.

In Spain, the publishing business grew by 9.3%. Excluding revenues from the sale
of  Telefonica White Pages advertising in the comparable prior-year period, the
publishing business in Spain experienced growth of 20%. On a book-on-book basis,
revenues from Yellow Pages grew by 8.5% and White Page revenues grew by 8.6%.

Particularly noteworthy in the international context were the publication of the
first  edition of GuiaMais in Sao Paulo, Guarulhos, Riberao Preto and  Curitiba,
-which added revenues totalling 23.4 million euros-, and the incorporation of 
the Publigulas publishing business revenues, which amounted to 56.6 million 
euros.

The  Internet  business continues to experience strong growth, with 14.9  
million euros, 200.1% more than a year ago. Paginas Habladas, the talking yellow
pages, rose  by 75.9% to reach 3.7 million euros, 76% of which are from TPI 
Spain, 19% from TPI Brazil and 4% from Publiguias.

The Group's EBITDA grew by 16.6%, despite the absence of revenues from 
Telefonica White Pages advertising. It is worth noting that these revenues from 
Telefonica had  practically no associated costs and were therefore reported 
directly to the Group's EBITDA. In the January-September 2000 period, it 
accounted a total of 21.5  million  euros. Publiguias contributed positive 
EBITDA of  close  to  20.5 million euros, reflecting the impact of the new 
contractual framework negotiated with Telefonica CTC Chile.

Consolidated  revenues for all Telefonica Group directory businesses  grew  by
16%  during  the first nine months of the current fiscal year, contributing  net
earnings of 30.4 million euros.

CALL CENTER BUSINESS

ATENTO

Atento's  business act' in the third quarter of 2001 has continued to  focus  on
the  development of long term relationships with strategic customers in  foreign
market and on improving relationships with companies of the Telefonica Group.

From  an operating standpoint at September 30, 2001, the Atento Group had 29,559
positions, 3.2% more than three months earlier, and filled to by 47,482 persons,
713 phone operators more than in the second quarter of 2001.

From the standpoint of financial performance, the Atento Group's revenues in the
first nine months of the year came to 471.5 million euros, 30.5% more than in 
the comparable prior-year period. Significantly contributing to  this  growth  
were revenues from clients out of Telefonica Group, which came to 148.5 million 
euros (31.5%  of total revenues as compared to 30.6% in the similar prior-year 
period), resulting from agreements with new clients such as DirecTV, AT&T, BSCH,
Hewlett Packard, Jointex, Yahoo BB and Warrantech. Another source of 
contribution  was new  business  development  in countries such as Japan,  
Mexico  and  Venezuela.  Moreover,  this  revenue  growth is expected to 
increase  as  a  result  of  the agreement reached with BBVA for the provision 
of CRM services.

Also  of note is the growing geographic diversification of the Group's revenues,
reducing  the Company's exposure to economic slowdown in any given region.  From
this perspective, the countries that continue to bring in the highest proportion
of   revenues   are   Brazil  and  Spain  (79%  of  total  figures),   although,
quarter-on-quarter,  the  remaining countries (Chile,  Peru,  Argentina,  Japan,
Mexico, Morocco, Venezuela, Central America, Puerto Rico and Colombia) continue
to increase their weighting.

As a result of the growth in revenues, Atento's accumulated EBITDA for the first
nine  months  of  the year stood at 36.9 million euros, 37.4%  higher  than  the
comparable prior-year period and slightly lower than the second quarter of this 
year, due to  the seasonality of the business during the vacation period in 
Spain.

The  company  remains focused on becoming a benchmark for the  industry  and  is
attaining this goal on the strength of:

- Development of long-term relationships with high-potential customers

- Implementation  of  actions aimed at continuing improvement  in  the  critical
  areas  of  the  business (global positioning of Atento in  the CRM  industry,
  development  of solutions, pricing strategies, optimization of  operating  and
  quality metrics)

- Meeting business goals while strictly controlling investment needs

BROADBAN CAPACITY MANAGEMENT BUSINESS

EMERGIA

Emergia  continues to be the only carrier in Latin America with a 100% 
operational high capacity closed broad-band loop.

During  the third quarter, deals have been closed with first tier multinational
customers, with some circuits having already been activated.

Continuing with the strategy for expanding the number of routes, agreements  for
swaping capacity were signed with various carriers that will allow Emergia to 
offer connections in such cities as London, Madrid and Lisbon. Similarly, the  
network in Rio do Janeiro was expanded under the same capacity swap procedures, 
making it possible  to  reach different points within the city and improving  
service  for customers  within  the  area. These agreements were reached  with  
carriers  who already have a presence in Latin America, and thus do not involve 
an increase in the number of competitors in the region.

During  the  month  of  September, in collaboration with the  Argentine  company
Telefe S,A., Emergia successfully completed the first tests for transmitting  TV
signals from country to country over its state of the art fiber optic.ring. With
this, it demonstrated that not only television signals can be carried over  this
medium  with  optimum  quality but that this provides an opportunity  for  media
companies to reduce their broadcasting costs through the use of submarine cable.
The  quality  and  reliability of Emergia's ring, as well as  its  capacity  for
point-to-point  connections,  were  the key  factors  leading  to  the  positive
results.

In  addition,  installation of the Customer Relations  Management  System  (CRM)
began  in  the third quarter. With this system in place, Emergia customers  will
have  access to valuable information from their activated circuits, as  well  as
traffic out of service alerts, statistics, etc. This investment comes as part of
the  company's  policy of improving customer services by offering greater  added
value. The system is expected to become fully operational by mid-November.

                                                      



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