Answer to Panel on Takeovers

Telefonica SA
16 September 2005





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



                                 NOTICE



That, the Company in answer to the request of the 'Panel on Takeovers and
Mergers' of the United Kingdom, has sent to this organism the following
announcement:



'In response to the request of the 'Panel on Takeovers and Mergers', the Company
notes the recent press reports concerning its acquisition strategy and possible
acquisition targets (including O2 plc) following the responses of Mr Alierta,
the chairman of Telefonica S.A, to various questions after the
Telecommunications Businesses Integration Conference held at the Summer
University of Santander on  September 5,  2005.



The comments regarding O2 plc were of a general nature and related to the
profile of companies which would add value to the Company. Telefonica S.A has
not commented on and does not wish to comment on the possibility of acquiring
any particular potential target or targets in Europe or elsewhere.



The Company is also pleased to announce that it continues to be interested by
the opportunities in South America, notably in Colombia, in the fixed line
operation domestic companies, and that such opportunities are now being 
analysed'.



                                                      Madrid, September 15, 2005








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