Agreement Reached

Telefonica SA
3 May 2000

                    TELEFONICA MOVILES, ORANGE AND SONERA JOIN 
                    FORCES TO COMPETE IN UMTS TENDER IN GERMANY

 -  The three companies will form a consortium in which Telefonica will hold a  
   40% stake.

Madrid, 28 April, 2000 - Telefonica (NYSE:TEF), Orange and Sonera have reached
an agreement to apply together for the UMTS license in Germany, through a
consortium in which Telefonica InterContinental, S.A., a business unit of
Telefonica Moviles, will hold a 40% stake, with Orange and Sonera having 30%
each.

The auction for Germany's third-generation mobile license is scheduled to begin
next July after a pre-qualification process. The number of licenses will vary
between four and six, with each participant eligible to bid for between two and
three 5 MHz blocks of the total 60 MHz paired spectrum auctioned.

UMTS technology (Universal Mobile Telecommunications System) will provide
customers with easy access to the internet. With speeds greater than those
available with current bandwidths, UMTS will offer electronic commerce
(m-commerce) data transmission and multimedia services.

Germany, with 23 million mobile phone customers, is the largest European market
in after Italy and United Kingdom. With one of the healthiest economies in
Europe, Germany is expected see significant growth in its mobile market, which
currently has a 32% penetration rate.

Orange Plc, one of United Kingdom's leading GSM operators, recently obtained one
of the UMTS licenses awarded there following a month and a half-long auction.
The Orange Group's turnover to June 30 has been around GBP 813 million. Orange's
customer base surpassed the 5 million mark at the beginning of 2000.

Sonera Corporation, Finland's main telecommunications company, already has a
UMTS license in its home country. Sonera's market capitalization is currently
around Euro 41.1 billion. In 1999, Sonera's revenues amounted to Euro 1.9
billion, profit before extraordinary items and taxes was 500 million euros. The
company has over 9,000 employees.

Telefonica Moviles, one of the five largest mobile telephony providers in the
world, has more than 20 million subscribers spread across Europe, Latin America
and North Africa, and already has a UMTS license in Spain. Telefonica also
manages Terra, one of the leading Internet companies, with more than 630 million
monthly visits to its web pages and a market capitalization of approximately
Euro 19.0 billion stock market capitalization. The Telefonica group's 1999
revenues were Euro 23.0 billion.

Telefonica InterContinental recently concluded an agreement with ACEA, the power
and water utility of the city of Rome, to jointly bid for the UMTS licence in
Italy. Also, Telefonica Intercontinental has reached an agreement with Suez
Lyonnaise des Eaux to apply for one of UMTS licenses that will be tendered in
France.

Telefonica InterContinental participates as part of a pan-European consortium
which already has an agreement for Banco Bilbao Vizcaya Argentaria (BBVA), La
Caixa, Banco Zaragozano and Abengoa to become partners. It is hoped than other
new partners will also join this consortium.