AGM resolutions

Telefonica SA
21 June 2006


Telefonica, S.A., as provided in article 82 of the Spanish Stock Market Act (Ley
del Mercado de Valores) hereby informs of the following:


                               SIGNIFICANT EVENT


The Annual General Shareholders' Meeting of TELEFONICA, S.A. held at second
call today, June 21st, 2006, with the participating of 91,114 shareholders,
present or represented, holding 2,581,191,128 shares representing 52.45% of the
share capital of the Company, has approved all the draft resolutions submitted
by the Board of Directors for deliberation and vote by the General Shareholders'
Meeting. The full text of the draft resolutions is attached.


It is likewise placed on the record that, in compliance with article 14 of the
Regulations of the Company Board of Directors, Mr. Mario Eduardo Vazquez has
given up his directorship. The Board of Directors expresses its appreciation for
the dedication and services rendered by Mr. Mario Eduardo Vazquez.


Madrid, June 21st, 2006





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ANNUAL GENERAL SHAREHOLDERS' MEETING OF 'TELEFONICA, S.A.' - YEAR 2006 -


PROPOSED RESOLUTIONS SUBMITTED BY THE BOARD OF DIRECTORS FOR A DECISION OF THE
SHAREHOLDERS AT THE GENERAL SHAREHOLDERS' MEETING



20/21 June 2006



Proposal regarding Item I on the Agenda: Examination and approval, if deemed
appropriate, of the Individual Annual Accounts, of the Consolidated Financial
Statements (Consolidated Annual Accounts) and of the Management Report of both
Telefonica, S.A. and its Consolidated Group of Companies, as well as of the
proposed application of results of Telefonica, S.A. and of the management of the
Board of Directors thereof, all with respect to Fiscal Year 2005.


 A. To approve the Individual Annual Accounts (Balance Sheet, Profit and Loss
    Statement and Notes), the Consolidated Financial Statements -Consolidated
    Financial Accounts- (Balance Sheet, Profit and Loss Account, Cash Flow
    Statement, Statement of Recognized Income and Expenses, and Notes), and the
    Management Reports of Telefonica, S.A. and its corresponding Consolidated
    Group of Companies for the Fiscal Year 2005 (ended December 31 of such
    year), as drawn up by the Board of Directors of the Company at its meeting
    on February 28, 2006, as well the management performed by the Board of
    Directors of Telefonica, S.A. during such Fiscal Year.

    In the Individual Annual Accounts, the Balance Sheet as of December 31,
    2005 reflects assets and liabilities in the amount of 50,934.94 million
    Euros each, and the Profit and Loss Account as of the end of the fiscal year
    reflects positive results of 1,754.39 million Euros.

    In the Consolidated Financial Statements (Consolidated Annual
    Accounts), the Balance Sheets as of December 31, 2005 reflect assets, and
    equity and liabilities in the amount of 73,173.77 million Euros each, and
    the Profit and Loss Account as of the close of the Fiscal Year reflects
    positive results of 4,445.85 million Euros.

 B. To approve the following Proposal for the Allocation of the Results of
    Telefonica, S.A. for Fiscal Year 2005:


        To distribute the profits obtained by Telefonica, S.A. during Fiscal
        Year 2005, amounting to 1,754,393,498.01 Euros, as follows:


      • 64,149,297.20 Euros to fund the Legal Reserve (thus reaching 20% of
        share capital).

      • 1,230,282,599.25 Euros, as a maximum, to pay dividends (maximum amount
        to be allocated corresponding to a fixed dividend of 0.25 Euros per
        share for all 4,921,130,397 shares into which the Company's share
        capital is divided).

      • The remainder of profits (459,961,601.56 Euros, at a minimum), to the
        Voluntary Reserve.


        It is expressly noted for the record that the amount allocated to the
        payment of dividends is discharged in full with the payment on May 12,
        2006 of a dividend against profits for Fiscal Year 2005 in the fixed
        gross amount of 0.25 Euros for each of the issued and outstanding shares
        of the Company entitled thereto, as approved by the Board of Directors
        at its meeting of February 28, 2006.



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Proposal regarding Item II on the Agenda: Examination and approval, if deemed
appropriate, of the Merger Plan of Telefonica, S.A. and Telefonica Moviles, S.A.
and approval, as the Merger Balance Sheet, of the Balance Sheet of Telefonica,
S.A. as of December 31, 2005. Approval of the merger of Telefonica, S.A. and
Telefonica Moviles, S.A. through the absorption of the latter by the former,
with the termination of Telefonica Moviles, S.A. and the transfer en bloc and as
a whole of all of its assets to Telefonica, S.A., with the provision that the
exchange of shares will be carried out by means of the delivery of treasury
shares of Telefonica, S.A., all of the foregoing in compliance with the
provisions of the Merger Plan. Application to the merger of the special tax
regime set forth in Chapter VIII of Title VII of the Restated Text of the
Corporate Income Tax Law. Establishment of the procedure to facilitate the
exchange. Delegation of powers.

A.  Examination and approval, if applicable, of the Plan of Merger of
Telefonica, S.A. and Telefonica Moviles, S.A. by means of the absorption of the
latter by the former.

To approve in its entirety the Plan of Merger by absorption of Telefonica
Moviles, S.A. by Telefonica, S.A., drawn up and signed by the Directors of both
companies upon the terms set forth in the Merger Plan itself, and approved by
their respective Boards of Directors at meetings of both held on March 29, 2006.
The Merger Plan was deposited with the Commercial Registry of Madrid on April 3,
2006, with the corresponding marginal notations therein, and publication of such
deposit was made in the Official Gazette of the Commercial Registry on April 17,
2006.

The text of the Merger Plan approved by this resolution is included as an
exhibit to the Minutes of the General Meeting.

B.  Examination and approval, if deemed appropriate, as the Merger Balance
Sheet, of Telefonica, S.A.'s Balance Sheet as of December 31, 2005.

To approve, as the Merger Balance Sheet of Telefonica, S.A., of the Balance
Sheet as of December 31, 2005 drawn up by the Board of Directors of Telefonica,
S.A. at its meeting of February 28, 2006, duly verified on March 1, 2006 by
Ernst & Young, S.L., the Auditor of Telefonica, S.A., and approved by the
shareholders at this General Meeting under item I of the Agenda.

The text of the Merger Balance Sheet and the corresponding verification of the
Company's Auditor is included as an exhibit to the Minutes of the General
Meeting.

C.  Examination and approval, if applicable, of the merger of Telefonica, S.A.
and Telefonica Moviles, S.A., through the absorption of the latter by the
former, with the termination of Telefonica Moviles, S.A. and the transfer en
bloc and as a whole of all of its assets to Telefonica, S.A., with the provision
that the exchange of shares will be carried out by means of the delivery of
treasury shares of Telefonica, S.A., all of the foregoing in compliance with the
provisions of the Merger Plan. Application to the merger of the special tax
regime set forth in Chapter VIII of Title VII of the Restated Text of the
Corporate Income Tax Law (Texto Refundido de la Ley del Impuesto de Sociedades).


    I.  Approval of the merger of Telefonica, S.A. and Telefonica Moviles, S.A.

        To approve the merger of Telefonica, S.A. and Telefonica Moviles, S.A.,
        through the absorption of the latter company by the former, with the
        dissolution without liquidation of Telefonica Moviles, S.A. and the en
        bloc transfer of all of its property, including all of the items that
        make up its assets and liabilities, to Telefonica, S.A., which, through
        a general devise, will acquire all of the rights and obligations of
        Telefonica Moviles, S.A.

        Pursuant to the provisions of the Merger Plan, in order to carry out the
        exchange under the merger, Telefonica, S.A. will deliver to the
        shareholders of Telefonica Moviles, S.A. the appropriate number of
        shares of Telefonica, S.A. resulting from the exchange ratio established
        in the Merger Plan. The exchange shall not be effected in respect of the
        shares of Telefonica Moviles, S.A. held by such company, by Telefonica,
        S.A. or by any person acting in such person's own name but on behalf of
        Telefonica Moviles, S.A. or Telefonica, S.A., because they are affected
        by the provisions of Section 249 of the Business Corporations Law in
        accordance with the resolution to be adopted below.

        Given that, taking into account the current terms and conditions of the
        MOS Plan and the liquidation transactions carried out to date regarding
        said plan, the number of Telefonica Moviles, S.A. shares to remain in
        treasury as of the date of registration of the merger will amount to a
        minimum of 19,009,513 shares, and that therefore, the number of
        Telefonica Moviles, S.A. shares that will participate in the exchange
        will not exceed 305,640,634 shares, the number of shares of Telefonica,
        S.A. required to satisfy the exchange will amount to a maximum of
        244,512,507 shares. Considering that Telefonica, S.A. owns a total
        number of treasury shares that exceeds such maximum, the merger exchange
        may be carried out entirely with treasury shares of Telefonica, S.A.,
        without the need for a capital increase. As from the date of the merger
        resolution, Telefonica, S.A. will freeze 244,512,507 treasury shares,
        provided that, once the definitive number (within the above-mentioned
        maximum) of shares of Telefonica, S.A. needed to satisfy the exchange is
        determined, only this final number of shares is frozen.

        It is also stated for the record that, of the maximum amount of
        244,512,507 Telefonica Moviles, S.A. shares required to satisfy the
        exchange, a total of 1,363,163 are shares re-purchased from Caja de
        Ahorros y Pensiones de Barcelona with respect to the stock option plan
        for managers of Terra Networks, S.A., which was approved by this company
        on October 1, 1999 (regarding which, due to the merger in 2005,
        Telefonica, S.A. succeeded Terra Networks, S.A. as the responsible
        entity). Since the underlying options have not been exercised, said
        shares will not be delivered to the potential beneficiaries of the plan
        and, although in such circumstances and pursuant to the terms and
        conditions of the plan, they would normally be cancelled and Telefonica,
        S.A.'s capital decreased, it is expressly resolved to modify said plan
        and use those 1,363,163 shares to satisfy the exchange, thus saving
        resources and avoiding two transactions with opposite effects (capital
        reduction at Telefonica, S.A. and the use of additional shares to
        satisfy the exchange, either with outstanding shares or by means of a
        capital increase).

        The exchange of shares of Telefonica Moviles, S.A. will be carried
        pursuant to the procedure and the exchange ratio described in the Merger
        Plan.

        Shares from the treasury of Telefonica, S.A. used to satisfy the
        exchange shall be shares of the same class and series as the other
        shares of Telefonica, S.A. that are currently outstanding, and shall
        give their holders, as from delivery thereof, the right to participate
        in corporate earnings beginning on January 1, 2006, upon the same terms
        as the other outstanding shares.

        A delegation is made to the Board of Directors, with authorization to
        delegate in turn to the Executive Commission or the Executive Chairman,
        all of the powers required such that, within the maximum amount set out
        above and under the condition set forth below, it may specify the exact
        number of shares of Telefonica, S.A. needed to satisfy the exchange of
        currently outstanding shares of Telefonica Moviles, S.A. pursuant to the
        above-mentioned exchange ratio. The condition that the Board of
        Directors and, if applicable, the Executive Commission or the Executive
        Chairman shall take into account is that the exact figure of the number
        of shares of Telefonica, S.A. to be delivered out of its treasury stock
        shall be the figure necessary on the basis of the exchange ratio of four
        (4) Telefonica, S.A. shares for every five (5) shares of Telefonica
        Moviles, S.A., taking into account that, pursuant to Section 249 of the
        Business Corporations Law, the shares of the latter company held by it,
        by Telefonica, S.A. or by any other person acting in such person's own
        name but on behalf of Telefonica Moviles, S.A. or of Telefonica, S.A.
        will not be exchanged and will be cancelled and voided as a result of
        the merger.

        In addition, the Board of Directors is empowered, with the authorization
        to so delegate to the Executive Commission or the Executive Chairman, to
        set the conditions for the delivery of the shares to the extent not
        provided by the shareholders at the General Meeting, including the
        further development of the procedure for the exchange of shares.

        All of the foregoing shall be carried out in accordance with the Merger
        Plan dated as of March 29, 2006, and deposited with the Commercial
        Registry of Madrid, pursuant to the procedure governed by the Second
        Section of Chapter VIII of the Business Corporations Law, and in view of
        the report of the independent expert KPMG Auditores, S.L., issued on May
        10, 2006 in compliance with the provisions of Section 236 of the
        Business Corporations Law.

        Furthermore, in compliance with Section 228 of the Regulations of the
        Commercial Registry, and as an integral part of the content of this
        merger resolution, the following details are stated:

    1.  Identification of the Entities Participating in the Merger.

    1.1  Telefonica, S.A. (Acquiring Company).

    Telefonica, S.A.: domiciled in Madrid, calle Gran Via 28, incorporated for
    an indefinite period of time under a notarial instrument executed before the
    Madrid Notary Mr. Alejandro Rosello Pastor on April 19, 1924 under number
    141 of his book of notarial records. Telefonica, S.A. adapted its by-laws to
    the Business Corporations Law currently in force under a notarial instrument
    executed before the Madrid Notary Mr. Miguel Mestanza Fraguero on July 10,
    1990.

    Telefonica, S.A. is registered with the Commercial Registry of Madrid in
    Volume 12534, Folio 21, Section 8, Page M-6164.

    The Tax ID Code of Telefonica, S.A. is A-28015865.

    1.2  Telefonica Moviles, S.A. (Acquired Company).

    Telefonica Moviles, S.A.: domiciled in Madrid, calle Goya 24, incorporated
    for an indefinite period of time under a notarial instrument executed before
    the Madrid Notary Mr. Jose Antonio Escartin on February 14, 2000 under
    number 582 of his book of notarial records.

    Telefonica Moviles, S.A. is registered with the Commercial Registry of
    Madrid in Volume 14837, Folio 155, Section 8, Page M-246786.

    The Tax ID Code of Telefonica Moviles, S.A. is A-82573759.

    2.  Bylaw Amendments.

    No amendments will be made to the by-laws of Telefonica, S.A as a result of
    the merger.

    3.  Merger Exchange Ratio.

    The exchange ratio for the shares of the entities participating in the
    merger, which has been determined on the basis of the actual value of the
    assets of Telefonica, S.A. and Telefonica Moviles, S.A., will be as follows,
    without any additional cash compensation:

    Four (4) shares of Telefonica, S.A., each having a par value of one (€1)
    Euro, for every five (5) shares of Telefonica Moviles, S.A., each having a
    par value of fifty (€0.50) Euro cents.

    In determining the exchange ratio, account has been taken of the dividends
    that both companies plan to distribute and to which reference is made in
    section 8 of the Merger Plan and in section 5 below.

    4.  Share Exchange Procedure.

    The procedure for exchanging the shares of Telefonica Moviles, S.A. for
    shares of Telefonica, S.A. will be as follows:


         a. Once the merger is approved by the shareholders acting at the General
            Shareholders' Meetings of both companies, the equivalent documents
            mentioned in Sections 26.1 d), 41.1 c) and related provisions of
            Royal Decree 1310/2005 of November 4 are filed with the National
            Securities Market Commission (Comision Nacional del Mercado de
            Valores) (hereinafter, the 'CNMV') and the merger instrument is
            registered with the Commercial Registry of Madrid, the exchange of
            shares of Telefonica Moviles, S.A. for shares of Telefonica, S.A.
            will proceed.

         b. The exchange will commence on the date specified in the notices to be
            published in one of the most widely circulated newspapers in Madrid,
            in the Listing Bulletins of the Spanish Stock Exchanges and, if
            applicable, in the Official Bulletin of the Commercial Registry. For
            such purpose, a financial institution will be appointed to act as
            Agent and will be named in the above-mentioned notices.

         c. The exchange of the shares of Telefonica Moviles, S.A. for shares of
            Telefonica, S.A. will be made through the entities participating in
            the Sociedad de Gestion de los Sistemas de Registro, Compensacion y
            Liquidacion de Valores S.A. (Securities Registration, Clearing and
            Liquidation Systems Management Company) (IBERCLEAR) that are
            depositaries thereof, in accordance with the procedures established
            for the book-entry system, pursuant to the provisions of Royal
            Decree 116/1992 of February 14 and applying such provisions of
            Section 59 of the Business Corporations Law as may be applicable.

         d. Shareholders holding shares that represent a fraction of the number
            of shares of Telefonica Moviles, S.A. designated as the exchange
            ratio may purchase or transfer shares in order to exchange them in
            accordance with such exchange ratio. Notwithstanding the foregoing,
            the companies participating in the merger may implement mechanisms
            designed to make such exchange easier for shareholders of Telefonica
            Moviles, S.A. who hold a number of shares that, according to the
            agreed exchange ratio, does not entitle them to receive a whole
            number of shares of Telefonica, S.A., including the appointment of
            an Odd-Lot Agent.

         e. As a result of the merger, the shares of Telefonica Moviles, S.A.
            will be terminated.


    As of the date of the Merger Plan, Telefonica, S.A. owned, directly and
    indirectly, four billion, three million, nine hundred thousand, seven
    hundred and forty-nine (4,003,900,749) shares of Telefonica Moviles, S.A.,
    representing 92.457% of its share capital. It is noted for the record that
    between the date of the Merger Plan and the date of this resolution,
    Telefonica, S.A. has acquired, as provided in the Merger Plan, the shares of
    Telefonica Moviles, S.A. theretofore held by Telefonica Internacional, S.A.
    Unipersonal, as well as an additional two million (2,000,000) shares of
    Telefonica Moviles, S.A. As a result of such acquisitions, Telefonica, S.A.
    now directly owns four billion, five million, nine hundred thousand, seven
    hundred and forty-nine (4,005,900,749) shares of Telefonica Moviles, S.A.,
    representing 92.50% of its share capital. As provided in Section 249 of the
    Business Corporations Law and pursuant to the regulations governing treasury
    shares, all such shares of Telefonica Moviles, S.A. held by Telefonica, S.A.
    will not be exchanged for Telefonica, S.A. shares.

    In addition, it is stated for the record that as of the date of the Merger
    Plan, Telefonica Moviles, S.A. owned one thousand five hundred and
    ninety-nine (1,599) treasury shares. In addition, in connection with the
    coverage of the share option plan of Telefonica Moviles, S.A. (the MOS
    Plan), the latter had as of said date a call option on twenty million, nine
    hundred and fifty-seven thousand, seven hundred and eighty-four (20,957,784)
    shares of Telefonica Moviles, S.A. (the 'Hedging Shares') owned by Caja de
    Ahorros y Pensiones de Barcelona and Banco Bilbao Vizcaya Argentaria, S.A.,
    subscribed for by those entities on the terms of the summary prospectus
    verified by the National Securities Market Commission on September 28, 2001.
    The MOS Plan expired on January 3, 2006 and is currently in liquidation,
    which will be concluded prior to the registration of the merger,
    notwithstanding which Telefonica, S.A. will succeed Telefonica Moviles, S.A.
    as the entity liable for any pending obligation derived from such
    liquidation. Upon the exercise of the aforementioned call option, Telefonica
    Moviles, S.A. shall maintain in its treasury the shares that are not used to
    liquidate the Plan (a maximum of 20,957,784 shares, and a minimum of
    19,007,914). These shares, together with the 1,599 shares mentioned above,
    also cannot participate in the exchange, as provided in Section 249 of the
    Business Corporations Law and related provisions.

    5.  Date as from which the New Shares Delivered in Exchange Carry the Right
    to Participate in the Profits of the Company and Specific Characteristics of
    Such Right.

    January 1, 2006 is set as the date as from which the shares delivered in
    exchange will entitle the holders thereof to participate in the earnings of
    Telefonica, S.A. For this reason, the existing shares of Telefonica, S.A. of
    the same class and series as the other shares of Telefonica, S.A. currently
    outstanding used to effect the exchange will entitle the holders thereof, as
    from the date of delivery, to participate in the earnings of the company
    posted as from January 1, 2006, on the same terms as the other outstanding
    shares.

    In distributions made after the merger instrument is registered with the
    Commercial Registry, all the shares of Telefonica, S.A., including those
    delivered in order to carry out the exchange, will participate with the same
    rights in proportion to the par value of each share.

    It is stated for the record that, in accordance with the provisions of the
    Merger Plan, Telefonica, S.A. has made or, as the case may be, plans to make
    the following dividend distributions:

        (i)     Payment of a gross interim dividend of 0.25 Euro per share,
        based on the earnings of the fiscal year ended December 31, 2005, which
        was paid on May 12, 2006. This dividend was approved by the Board of
        Directors at its meeting of February 28, 2006 and announced to the
        market the same day.

        Such dividend does not benefit shareholders of Telefonica Moviles, S.A.
        who become shareholders of Telefonica, S.A. as a result of the merger.
        This has therefore been taken into account for the formulation of the
        exchange ratio.

        (ii)     As was announced to the market on February 28, 2006, the Board
        of Directors of Telefonica, S.A. intends to distribute, during fiscal
        year 2006, an additional gross dividend of 0.25 Euro per share, to which
        end the required corporate resolutions will be adopted. In any event,
        such dividend will be paid after the merger is registered with the
        Commercial Registry of Madrid.

        Unlike the dividend mentioned in paragraph (i) above, this dividend will
        benefit both Telefonica, S.A. shareholders and the shareholders of
        Telefonica Moviles, S.A. who become shareholders of Telefonica, S.A. as
        a result of the merger. Accordingly, it was not taken into account for
        the calculation of the exchange ratio.

    For its part, in accordance with the provisions of the Merger Plan,
    Telefonica Moviles, S.A. plans to make the following dividend distributions:


         i. Previously-announced dividend:

            Payment of a gross dividend of 0.205 Euro per share of Telefonica
            Moviles, S.A. to be charged to the unappropriated retained earnings
            of fiscal year 2005 and to unrestricted reserves. The proposal for
            such distribution was approved by the Board of Directors of
            Telefonica Moviles, S.A. at its meeting of February 27, 2006 and was
            announced to the market the following day. The effectiveness of the
            distribution is subject to approval thereof by the shareholders
            acting at the Annual General Shareholders' Meeting of Telefonica
            Moviles, S.A. It is expected that this dividend will be paid on July
            21, 2006 and, in any event, prior to the registration of the merger
            of Telefonica, S.A. and Telefonica Moviles, S.A. with the Commercial
            Registry, for which reason, since it will only benefit the
            shareholders of Telefonica Moviles, S.A., it was taken into account
            in formulating the exchange ratio.

        ii. Dividends proposed by the Board of Directors of Telefonica Moviles,
            S.A. for approval by the shareholders acting at the General
            Shareholders' Meeting, within the framework of the negotiation
            between Telefonica, S.A. and Telefonica Moviles, S.A. and whose
            effectiveness is contingent upon the approval of the merger by the
            shareholders acting at the General Shareholders' Meetings of both
            companies:


                      • Payment of a gross dividend of 0.085 Euro per share of
                        Telefonica Moviles, S.A. to be charged to the reserve
                        for the issuance premium and other unrestricted
                        reserves. The Board of Directors of Telefonica Moviles,
                        S.A., at its meeting of March 29, 2006, agreed to submit
                        this proposal for approval of the shareholders acting at
                        the Annual General Shareholders' Meeting of Telefonica
                        Moviles, S.A.

                      • Payment of a gross interim dividend of 0.35 Euro per
                        share of Telefonica Moviles, S.A. to be charged to the
                        profits posted between January 1 and March 28, 2006. The
                        Board of Directors of Telefonica Moviles, S.A., at its
                        meeting of March 29, 2006, agreed to submit this
                        proposal for approval of the shareholders acting at the
                        Annual General Shareholders' Meeting of Telefonica
                        Moviles, S.A.


    As previously stated, the two proposals mentioned above are contingent upon
    approval of the planned merger by the shareholders acting at the General
    Shareholders' Meeting of both companies. If these proposals are approved by
    the shareholders at the Annual General Shareholders' Meeting of Telefonica
    Moviles, S.A. and if the condition described above is met, payment of the
    dividends to which the proposals refer (in the aggregate gross amount of
    0.435 Euro per Telefonica Moviles, S.A. share) will be made on the same date
    as the date set for payment of the previously announced dividend, mentioned
    in subsection (i) above, i.e., July 21, 2006. Accordingly, this distribution
    will only benefit the shareholders of Telefonica Moviles, S.A. and it has
    therefore been taken into account in formulating the exchange ratio.

    6.  Date of Accounting Effects of the Merger.

    January 1, 2006 is set as the date as from which all transactions of
    Telefonica Moviles, S.A. will, for accounting purposes, be deemed to have
    been made on behalf of Telefonica, S.A.

    7.  Special Rights.

    There are no special shares or special rights in Telefonica Moviles, S.A.
    other than the shares. However, it is noted for the record that, as set
    forth in section 4 above, the stock option plan of Telefonica Moviles, S.A.
    (the MOS Plan) expired on January 3, 2006 and is currently in liquidation,
    which will be concluded prior to the registration of the merger.
    Notwithstanding the foregoing, Telefonica, S.A. will succeed Telefonica
    Moviles, S.A. as the entity responsible for any possible pending liability
    stemming from the above-mentioned liquidation.

    The shares of Telefonica, S.A. that are delivered to the shareholders of
    Telefonica Moviles, S.A. by virtue of the merger will not grant any special
    rights to the holders thereof.

    8.  Benefits Accorded to the Directors and to the Independent Expert.

    No benefits of any kind will be accorded to the Directors of either of the
    entities participating in the merger or to the Independent Expert that has
    participated in the merger process.

    II.     Subjecting the Merger to the Special Tax Regime Provided for in
    Chapter VIII of Title VII of the Consolidated Text of the Corporate Income
    Tax Law.

    To resolve that the approved merger transaction be governed by the tax
    regulations set forth in Chapter VIII of Title VII and in the second
    additional provision of the Consolidated Text of the Corporate Income Tax
    Law, approved by Royal Legislative Decree 4/2004.

    For such purpose, and pursuant to Section 96 of the above-mentioned
    Consolidated Text, the merger transaction will be reported to the Ministry
    of Economy and Finance as required under current regulations.

D.  Establishment of Procedure to Facilitate the Exchange.

Pursuant to the provisions of the Merger Plan, Telefonica Moviles, S.A.
shareholders owning shares that represent a fraction of the number of Telefonica
Moviles, S.A. shares set as the exchange ratio may acquire or transfer shares in
order to exchange them at such exchange ratio. Each shareholder must
individually make timely decisions for such purpose to either purchase or sell
shares of Telefonica Moviles, S.A. on the market in order to secure a number of
shares of Telefonica Moviles, S.A. that is a multiple of five (5).

Notwithstanding the foregoing and as provided in the Merger Plan, it is resolved
to establish a mechanism designed to facilitate the exchange for those
Telefonica Moviles, S.A. shareholders who are holders of a number of shares that
is not a multiple of five (5). The basic terms and conditions of such mechanism
are as follows:

(i)     Taking into account that the exchange ratio for the merger is
equivalent, in unitary terms, to the delivery of one share of Telefonica, S.A.
for every 1.25 shares of Telefonica Moviles, S.A. as of the close of the last
session for trading in Telefonica Moviles, S.A. on the Spanish stock exchanges
(hereinafter, the 'Reference Date'), each shareholder of Telefonica Moviles,
S.A. who, by application of such unitary exchange ratio of one share of
Telefonica, S.A. for every 1.25 shares of Telefonica Moviles, S.A., is entitled
to receive a whole number of Telefonica, S.A. shares and who has an odd-lot
residue of less than 1.25 shares of Telefonica Moviles, S.A. may transfer such
residue to the odd-lot agent appointed for such purpose (hereinafter, the
'Odd-Lot Agent'), all with the understanding that for the calculation of the
odd-lot corresponding to each shareholder position, all of the Telefonica
Moviles, S.A. shares forming such position will be computed. Likewise, a
Telefonica Moviles, S.A. shareholder who owns less than 1.25 shares of
Telefonica Moviles, S.A. will be able to transfer such shares to the Odd-Lot
Agent. It shall be deemed that each shareholder of Telefonica Moviles, S.A.
accepts the odd-lot acquisition system established herein, without having to
remit instructions to the relevant entity participating in IBERCLEAR, which
shall inform the shareholder of the result of the transaction once it has
concluded.

(ii)     Given the agreed exchange ratio and regardless of the number of shares
comprising each shareholder's position, the only circumstances under which the
acquisition of odd-lots may take place are the following:


         +-----------+--------------------+--------------------------+
         | Number of |   Corresponding    |    Odd-lot shares of     |
         |Telefonica |  Telefonica, S.A.  | Telefonica Moviles, S.A. |
         |  Moviles  |shares by virtue of |  subject to the odd-lot  |
         |  shares   |    the exchange    |    acquisition system    |
         +-----------+--------------------+--------------------------+
         |     1     |         0          |            1             |
         +-----------+--------------------+--------------------------+
         |     2     |         1          |           0.75           |
         +-----------+--------------------+--------------------------+
         |     3     |         2          |           0.50           |
         +-----------+--------------------+--------------------------+
         |     4     |         3          |           0.25           |
         +-----------+--------------------+--------------------------+
         |     5     |         4          |            0             |
         +-----------+--------------------+--------------------------+




Therefore, in any shareholder position, an odd-lot will range between a minimum
of 0.25 shares of Telefonica Moviles, S.A. and a maximum of 1 share of
Telefonica Moviles, S.A.

(iii)     The acquisition price of the odd-lots will be determined based on the
arithmetical mean of the average weighted price of the shares of Telefonica
Moviles, S.A. on the Automated Quotation System (Sistema de Interconexion
Bursatil) (Continuous Market) for the last three trading sessions for Telefonica
Moviles, S.A. on the Spanish stock exchanges. If the odd-lot in question
consists of one share of Telefonica Moviles, S.A., its purchase price will be
the arithmetical mean of the average weighted price of the shares of Telefonica
Moviles, S.A. on the Automated Quotation System (Continuous Market) for the last
three trading sessions of Telefonica Moviles, S.A. stock; similarly, if the
odd-lot in question is other than one share, its acquisition price will be
calculated based on the same procedure described herein, but in a proportion
corresponding to the specific amount of the odd-lot.

(iv)     The entity appointed as Odd-Lot Agent, acting on its own behalf, will
acquire the odd-lot shares remaining in the positions existing at the close of
the trading session of Telefonica Moviles, S.A. on the Reference Date. The
shares or fractional shares of Telefonica Moviles, S.A. acquired by the Odd-Lot
Agent will be exchanged for the corresponding number of Telefonica, S.A. shares
as provided in the Merger Plan.

(v)     Authorization is granted to the Board of Directors, with the express
power of substitution to the Executive Commission or the Executive Chairman, to
develop the mechanism for the acquisition of odd-lots or fractions of stock
provided for herein, including, but not limited to, the determination of the
Reference Date in order to carry out the acquisition of odd-lots at the end of
such day; the drafting of the corresponding announcement of the exchange; the
designation of the entity to act as Odd-Lot Agent; and any other powers that are
necessary or merely appropriate to properly carry out the merger exchange and
the odd-lot acquisition mechanism approved herein.



All of the foregoing is without prejudice to Telefonica, S.A. and/or Telefonica
Moviles, S.A., prior to the merger, acquiring the odd-lot shares of Telefonica
Moviles, S.A. required for the number of shares of Telefonica Moviles, S.A. that
must participate in the exchange to be an exact multiple of the exchange ratio.







E.  Delegation of powers to formalize, interpret, remedy and carry out this
resolution.

To jointly and severally authorize the Executive Chairman of the Board of
Directors and the Secretary of the Board of Directors, such that, without
prejudice to any other delegations included in this resolution and any
powers-of-attorney to convert the resolution into a public instrument, any of
them may formalize and execute it, with the power for such purpose to execute
the public or private documents that are necessary or appropriate (including
those of interpretation, clarification, correction of errors and the curing of
defects and publication of any announcements that are required or merely
convenient) for the most correct performance hereof and for the registration
hereof, to the extent required, with the Commercial Registry or any other Public
Registry. The delegation includes, upon the broadest possible terms, the power
to guarantee the claims of those creditors, if any, who oppose the merger.



--------------------------------------------------------------------------------





Proposed Resolutions Regarding Item III on the Agenda: Re-election, Ratification
and Appointment, as Applicable, of Directors:

III.1     To re-elect as a Director Mr. Carlos Colomer Casellas, appointing him
for a new period of five years.

III.2     To re-elect as a Director Mr. Isidro Faine Casas, appointing him for a
new period of five years.

III.3     To e-elect as a Director Mr. Alfonso Ferrari Herrero, appointing him
for a new period of five years.

III.4     To re-elect as a Director Mr. Luis Lada Diaz, appointing him for a new
period of five years.

III.5     To re-elect as a Director Mr. Antonio Massanell Lavilla, appointing
him for a new period of five years.

III.6     To ratify the interim appointment as a Director of the Company, as
previously approved by the Board of Directors, of Mr. David Arculus, 
appointing him as a Director for a period of five years, pursuant to 
the provisions of Law and the By-Laws.

Mr. David Arculus was appointed as a Director on an interim basis by resolution
of the Board of Directors on January 25, 2006, to fill the vacancy produced by
the resignation of Mr. Jose Fonollosa Garcia.

III.7     To ratify the interim appointment as a Director of the Company, as
previously approved by the Board of Directors, of Mr. Peter Erskine, appointing
him as a Director for a period of five years, pursuant to the provisions of Law
and the By-Laws.

Mr. Peter Erskine was appointed as a Director on an interim basis by resolution
of the Board of Directors on January 25, 2006, to fill the vacancy produced by
the resignation of Mr. Antonio Alonso Ureba.

III.8     To ratify the interim appointment as a Director of the Company, as
previously approved by the Board of Directors, of Mr. Julio Linares Lopez,
appointing him as a Director for a period of five years, pursuant to the
provisions of Law and the By-Laws.

Mr. Julio Linares Lopez was appointed as a Director on an interim basis by
resolution of the Board of Directors on December 21, 2005, to fill the vacancy
produced by the resignation of Mr. Jose Antonio Fernandez Rivero.

III.9     To ratify the interim appointment as a Director of the Company, as
previously approved by the Board of Directors, of Mr. Vitalino Manuel Nafria
Aznar, appointing him as a Director for a period of five years, pursuant to the
provisions of Law and the By-Laws.

Mr. Vitalino Manuel Nafria Aznar was appointed as a Director on an interim basis
by resolution of the Board of Directors on December 21, 2005, to fill the
vacancy produced by the resignation of Mr. Jesus Maria Cadenato Matia.

Furthermore, the ratification of any interim appointments of Directors that may
have been approved by the Board of Directors since the call to the General
Shareholders' Meeting and the meeting event, will be proposed, if applicable.



--------------------------------------------------------------------------------





Proposal Regarding Item IV on the Agenda: Approval, if appropriate, of a
long-term incentive plan consisting of the delivery of shares of and which is
linked to changes in the listing price of shares of Telefonica, S.A.

To approve a long-term incentive plan (hereinafter, the 'Plan'), directed toward
the executive Directors and management personnel of Telefonica, S.A. and other
companies within the Telefonica Group (hereinafter, as defined below, 'Grupo
Telefonica'), as described below. The Plan consists of the delivery for such
purpose to the selected participants, after compliance with the requirements of
the Plan, of a certain number of shares of Telefonica, S.A. as variable
compensation. The basic conditions are as follows:


     1. Participants in the Plan: Executive Directors, Senior Managers and other
        management personnel of Grupo Telefonica, which involves a total of
        approximately 1,900 potential participants. Without prejudice to the
        foregoing, new participants who meet the aforesaid requirements due to
        promotion, new hires within the Group or other reasons, may be added to
        the Plan without modification of its other terms and conditions.

     2. Term: The total expected initial duration of the Plan will be seven
        years. The Plan is divided into five cycles of three years each (i.e.,
        with the delivery of shares corresponding to each of the cycles three
        years after commencement thereof), that are independent of each other,
        with the first cycle commencing on July 1, 2006 (with delivery of shares
        beginning on July 1, 2009) and the fifth cycle commencing on July 1,
        2010 (with delivery of shares beginning on July 1, 2013).

     3. Maximum Number of Shares to be Delivered: The maximum number of shares of
        Telefonica, S.A. to be delivered to the participants in the execution of
        the Plan at the end of each of the cycles will be the number resulting
        from dividing the maximum sum allocated to the Plan in each of the
        cycles by the average weighted listing price of Telefonica, S.A. shares
        for the thirty stock exchange business days prior to July 1 of the first
        year of the corresponding cycle of the Plan (hereinafter, the 'Reference
        Value'), except with respect to the first cycle, 2006-2009, when the
        arithmetical mean of the average weighted prices of the shares of
        Telefonica, S.A. shares for the thirty stock exchange business days
        prior to May 11, 2006. The maximum amount allocated to the Plan during
        each of the cycles will be determined each year by the Board of
        Directors of Telefonica, S.A. after receiving a report from the
        Nominating, Compensation and Corporate Governance Subcommittee, and may
        not exceed the amount of 754,000,000 Euros over the entire effective
        period of the plan (i.e., over seven years).

        In any event, the total number of shares to be delivered in execution of
        the Plan at the end of each cycle may never exceed 0.20% of the share
        capital of Telefonica, S.A. as of July 1, 2006.

        The participants in this plan include the current executive Directors of
        Telefonica, S.A., who, at the end of the first cycle, and if they fully
        comply with the requirements and conditions established in the Plan,
        would have the right to receive up to the maximum number of shares
        herein set forth: Mr. Cesar Alierta Izuel: 129,183 shares; Mr. Peter
        Erskine: 181,762 shares; Mr. Luis Lada Diaz: 62,354 shares; Mr. Julio
        Linares Lopez: 65,472 shares, and Mr. Antonio Viana-Baptista: 62,354
        shares.

        For each of the remaining cycles, the Board of Directors, after
        receiving a report from the Nominating and Compensation and Corporate
        Governance Subcommittee, shall determine the maximum amounts to serve as
        the basis for establishing the maximum number of shares that may be
        delivered as a function of the Reference Value, without such amount in
        any event being able to exceed the total amount of 29,814,000 Euros for
        all of the executive Directors as a group over the effective period of
        the plan (i.e. over seven years).

        The specific number of shares that are delivered under the Plan to each
        executive Director at the end of each cycle, as well as the number of
        effective shares delivered to Senior Management personnel and other
        Management personnel, will be reported pursuant to applicable legal
        provisions.

     4. Requirements and Conditions for the Delivery of Shares: The specific
        number of shares within the established maximum that are delivered at
        the end of each cycle will be subject to and determined by the Total
        Shareholder Return (hereinafter, as defined below, the 'TSR') of
        Telefonica, S.A. shares (from the Reference Value) during each cycle,
        with respect to the TSRs experienced by the shares of companies in the
        telecommunications industry making up the 'FTSE Global Telecoms Index,'
        which, for the purposes of the Plan, will be the Comparison Group. In
        this sense, the TSR is considered to be the metric for determining the
        generation of value at Grupo Telefonica in the short and long term, as
        it measures the return on investment for the shareholder and is defined
        for purposes of the Plan and for each cycle as the sum of the increase
        in Telefonica, S.A. share prices plus dividends or other similar items
        received by the shareholder during the cycle in question. The Plan will
        forecast that the number of shares to be delivered will range between
        30% of the number initially allocated in the event that changes in the
        TSR for Telefonica, S.A. shares are equal to the median of the
        Comparison Group, and 100% in the event that such changes are equal to
        or greater than the third quartile of the companies making up the
        Comparison Group, using linear extrapolation to calculate the percentage
        in cases between the median and the aforementioned third quartile. If
        changes in the TSR are lower than the median, no shares will be
        delivered.

        For the foregoing purposes, the companies making up the aforementioned
        index as of July 1 of the first year of each cycle will be taken into
        account, excluding those companies belonging to Grupo Telefonica, and
        keeping them without change for the entire duration of each cycle. The
        companies making up such index as of May 12, 2006 are indicated below,
        although there may be some changes at the time the first cycle
        commences: Alltel Corp, AT&T, BCE Inc, Belgacom, Bellsouth Corp, BT
        Group, China Mobile Hong Kong, China Netcom GP, China Unicom, Deutsche
        Telekom, France Telecom, KDDI , Nipon Telg. & Tel. NTT Docomo Inc.,
        Portugal Telecom. SGPS, Qwest Comms. Intl., KPN Kon, Singapore Telecom,
        Sprint Nextel, Swisscom R, Telefonica, Telefonica Moviles, Telekom
        Austria Telecom Italia, Telenor, Teliasonera, Telstra, Telus, Verizon
        Communications and Vodafone Group.

        If the above-referenced index ceases to be published during the term of
        the Plan or undergoes substantial modification in the makeup thereof,
        the Board of Directors shall in all events adopt appropriate measures in
        order to continue with the preparation and establishment of the relevant
        index, solely for purposes of the Plan, based on grounds that are
        homogenous and equivalent to those constituting the basis of the Plan.

        In addition, regardless of the other conditions and requirements that
        may be established, in order for each of the participants to have the
        right to receive shares of Telefonica, S.A. covered by the Plan, they
        must remain as an employee of Grupo Telefonica on the date of delivery
        of the shares corresponding to each cycle.

     5. Date of Delivery of the Shares: The delivery of the shares will take
        place at the end of each cycle, i.e., in 2009, 2010, 2011, 2012 and
        2013, respectively, with the specific delivery date determined by the
        Board of Directors or the body or person to whom this power is
        delegated.

     6. Grupo Telefonica: For purposes of the provisions of the Plan, Grupo
        Telefonica shall be understood as the companies making up such group
        pursuant to he provisions of Section 4 of Law 24/1988, of July 28, on
        the Securities Market.

     7. Origin of the Shares: The shares of Telefonica, S.A. to be delivered to
        the participants may be (a) shares of Telefonica, S.A. held in treasury
        that are acquired or have been acquired by Telefonica, S.A. itself as
        well as any companies within its group, after compliance with the legal
        requirements for such purpose; or (b) newly-issued shares resulting from
        the capital increase made at any time for such purpose.

To the extent advisable under the legal rules applicable to any of the
participants or subsidiary companies, the basic conditions stated above may be
adjusted (including, if necessary, the possibility of making payments under the
Plan in cash, without the physical delivery of shares), without making
substantive changes and, in any event, without changing the conditions described
in paragraphs 1 to 6 above.

Furthermore, and without prejudice to the generality of resolution seven, the
Board of Directors of Telefonica, S.A. is authorized to put the Plan into
effect, and may clarify wherever necessary the rules set forth herein and the
content of the contracts to be signed by the Plan Participants, and may also
ratify, to the extent necessary, the actions taken for such purpose through the
date hereof. The Board of Directors is also authorized such that, in its
discretion, it may decide not to carry out or cancel one or more cycles of the
Plan at any time prior to the date of commencement of such cycle. The Board of
Directors may in turn delegate these powers to the Executive Commission or to
the Nominating and Compensation and Corporate Governance Subcommittee of
Telefonica, S.A. All of the foregoing is understood to be without prejudice to
the exercise by any applicable decision-making bodies of Telefonica, S.A.'s
subsidiaries of the powers they have to put the Plan into practice with respect
to their employees.



--------------------------------------------------------------------------------





Proposal Regarding Item V on the Agenda: Authorization to Acquire the Company's
Own Shares, Directly or Through Companies within the Group.


    A)     To authorize, pursuant to the provisions of Sections 75 et. seq. and
    the first additional provision, paragraph 2, of the current Business
    Corporations Law, the derivative acquisition, at any time and as many times
    as deemed appropriate, of Telefonica, S.A.'s own fully paid-in shares
    -either directly or through any subsidiaries it controls- by purchase or by
    any other legal means of consideration.

    The minimum acquisition price or consideration shall be equal to the par
    value of the shares acquired, and the maximum price or consideration shall
    be equal to the listing price of the shares acquired on an official
    secondary market at the time of acquisition.

    Such authorization is granted for a period of 18 months from the date of
    this Meeting and is made expressly subject to the limitation that at no time
    may the nominal value of the Company's shares acquired through the use of
    this authorization, added to those already possessed by Telefonica, S.A. and
    any of its controlled subsidiaries, exceed 5 percent of the share capital
    thereof at the time of acquisition, and the limitations established by the
    regulatory authorities in the markets where shares of Telefonica, S.A. are
    admitted for listing must also be respected.

    It is expressly stated for the record that the authorization to acquire the
    Company's own shares may be used in whole or in part for the acquisition of
    shares of Telefonica, S.A. that it must deliver or transfer to
    administrators ro employees of the Company or companies within its group,
    either directly or as a result of the exercise by them of options, all
    within the framework of duly approved compensation systems linked to the
    listing price of the Company's shares.

    B)     To authorize the Board of Directors, upon the broadest terms
    possible, to exercise the authorization covered by this resolution and to
    carry out the other provisions hereof, and such powers may be delegated by
    the Board of Directors to the Executive Commission, the Executive Chairman
    of the Board of Directors, or any other person that the Board of Directors
    expressly authorizes for such purpose.

    C)     To rescind the unutilized portion of the authorization granted under
    item VI of the Agenda of the Company's General Shareholders' Meeting of May
    31, 2005.



--------------------------------------------------------------------------------





Proposal Regarding Item VI on the Agenda: Authorization to the Board of
Directors to Increase the Share Capital Under the Terms and Conditions of
Section 153.1.b) of the Business Corporations Law, with a Delegation of the
Power to Exclude Preemptive Rights Pursuant, in this Latter Case, to the
Provisions of Section 159.2 of the Business Corporations Law.

To authorize the Board of Directors, as fully and effectively as possible under
the Law and pursuant to the provisions of Section 153.1.b) of the Business
Corporations Law in effect so that, within a maximum term of five years from the
resolution adopted at the General Meeting and without the need to subsequently
call any such General Meeting or for any resolution to be subsequently adopted
thereat, the Board may resolve to increase of Company's share capital, on one or
more occasions, when and as required by the Company's needs in the judgment of
the Board itself, by the maximum amount of 2,460,565,198 Euros, equal to
one-half of the current share capital of the Company, by issuing and putting
into circulation for such purpose the corresponding new shares, be they common
shares or of any other kind among those permitted by the Law, including shares
with a fixed or variable premium, and in all cases with payment for the issued
shares in the form of cash contributions, and expressly providing for the
possibility of an incomplete subscription for such shares as may be issued,
pursuant to Section 161.1 of the Business Corporations Law. In addition, the
Board of Directors is authorized to exclude preemptive rights in whole or in
part, pursuant to Section 159.2 of the Business Corporations Law and related
provisions.

The powers thus delegated include the specification of the various aspects and
conditions applicable to each issuance, according to the characteristics of each
transaction decided to be conducted under the authorization to which this
resolution refers, and will include the power to amend the text of the article
of the By-Laws relating to share capital, once the increase has been resolved
upon and implemented, and the power to carry out all the formalities required
for the new shares covered by the capital increase to be admitted to trading on
the domestic and foreign Stock Exchanges on which the Company's shares are
listed, in accordance with the procedures established in each of such Stock
Exchanges.

Pursuant to Section 141, number 1, second paragraph, of the Business
Corporations Law, the Board of Directors is also authorized to delegate to the
Executive Commission such powers granted by means of this resolution as may be
delegated.



--------------------------------------------------------------------------------






Proposal Regarding Item VII on the Agenda: Delegation of Powers to Formalize,
Interpret, Remedy and Carry out the Resolutions Adopted by the Shareholders at
the General Shareholders' Meeting.

     To jointly and severally authorize the Executive Chairman of the Board of
Directors and the Secretary of the Board of Directors, such that, without
prejudice to any other delegations included in this foregoing resolutions and
any powers-of-attorney to convert existing resolutions into public instruments,
any of them may formalize and execute the foregoing resolutions, with the power
for such purpose to execute the public or private documents that are necessary
or appropriate (including those of interpretation, clarification, correction of
errors and the curing of defects) for the most correct performance thereof and
for the registration thereof, to the extent required, with the Commercial
Registry or any other Public Registry.



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