Acquisition of Interest

Telefonica SA
24 December 1999


 TELESP PURCHASES 51 PERCENT OF THE OPERATOR 'CETERP' OF SAO PAULO (BRAZIL)

    TELESP ('Telecomunicaciones de Sao Paulo, S.A.'), a fixed telephony operator
based in Sao Paulo (Brazil) and controlled by Telefonica has acquired in an
auction held in the Sao Paulo Stock Exchange 6.4 billion ordinary shares and 4.1
billion preference shares, representing 36.3% of the total capital and 51.04% of
voting capital of the company 'Centrais Telefonicas de Ribeirao  Preto, S.A.'
('CETERP'), which provides wired telephone services (175,000 lines) and wireless
telephone services (57,000 lines) in the municipalities of  Ribeirao Preto,
Guatapara and Bonfim Paulista.

    Telesp has made the acquisition by paying the minimum price required to
participate in the auction, which was 208.8 million reals (approximately 18.8
billion pesetas or 113 million euros).

    According to the terms of the privatisation of CETERP, Telesp will also
purchase the shares of the said company belonging to the pension funds Previ,
Sistel and Telos, with a discount of 40 percent of the price paid in the auction
to the Ribeirao Preto prefecture. These funds hold 36.4% of the total  capital
of CETERP, representing 45% of the voting capital of the said company. Telesp
will pay another 125 million reals for the purchase of these shares.

    Lastly, it is projected that Telesp will subsequently make a tender offer 
for the CETERP shares held by minority shareholders in the said operator
(representing 27.3% of the company's total capital) for the same price paid to
the aforesaid pension funds.