Additional paid in capital

Telefonica SA
23 June 2003




                            ANTONIO J. ALONSO UREBA

                        Director, General Secretary and

                      Secretary of the Board of Directors

                               TELEFONICA, S.A



'TELEFONICA, S.A.', in accordance with that stated in article 82 of the
Spanish Stock Market Law (Ley del Mercado de Valores) hereby informs of the
following:

                        SIGNIFICANT EVENT



Pursuant to the resolution adopted by the shareholders of 'Telefonica, S.A.' at
their Annual General Meeting of April 11th, 2003, we hereby inform all
shareholders that the Company will proceed to make the first of the two payments
approved at the said General Meeting as an extraordinary cash distribution of
additional paid-in capital.


Consequently, on July 3rd, 2003 'Telefonica, S.A.' will pay to all duly entitled
outstanding Company shares the amount of thirteen euro cents (0.13 euros) per
share.


This payment shall be executed on the aforesaid date by Banco Bilbao Vizcaya
Argentaria, S.A. through the participating entities ('entidades participantes')
affiliated to the Spanish Management Company of Securities Registration,
Clearing and Settlement Systems (Sociedad de Gestion de los Sistemas de
Registro, Compensacion y Liquidacion de Valores).


It is hereby placed on record that the shares entitled to participate in this
extraordinary cash distribution of additional paid-in capital are all shares of
the Company issued and outstanding, except for own shares held as treasury stock
by 'Telefonica, S.A.'.


                                                         Madrid, June 23rd, 2003


                      This information is provided by RNS
            The company news service from the London Stock Exchange