Argentina: Emergency law

Telefonica SA
10 January 2002



COMMUNICATION JOINTLY SENT TO THE ARGENTINE SECURITIES COMMISSION BY THE
QUOTED COMPANIES OF THE TELEFONICA GROUP IN ARGENTINA (Telefonica de
Argentina, S.A., Compania Internacional de Telecomunicaciones, S.A.,
Telefonica Holding de Argentina, S.A., Advance Telecomunicaciones, S.A.,
Telefonica Moviles de Argentina, S.A.)


TELEFONICA, S.A. HAS REGISTERED THIS COMMUNICATION IN THE SPANISH NATIONAL
SECURITIES COMMISSION.



     Buenos Aires, January 9, 2002

To the President of the Comision Nacional de Valores (Argentine Securities
Commission) Dr. Carlos Eduardo Weitz


                                      Re:     Law 25,561 'Public Emergency and
                                                  Exchange Rate Regime Reform'



I have the pleasure of addressing you on behalf of Telefonica de Argentina
S.A., Compania Internacional de Telecomunicaciones S.A., Telefonica Holding de
Argentina S.A., Advance Telecomunicaciones S.A and Telefonica Moviles
Argentina S.A., all domiciled at Tucuman 1, 18th Floor, by virtue of that
which is provided in Chapter XXI of General Resolution No. 368/01.

With respect to that, I comply in making you aware that Law 25,561 'Public
Emergency and Exchange Rate Regime Reform', published in the Boletin Oficial
(Official Bulletin) on January 7, 2002, has provided:

     (i)     to abandon the regime for the convertibility of money,
authorizing the National Executive Power to establish the system that will
determine the exchange rate relationship between the (Argentine) peso and
foreign currencies (Article Second);

     (ii)     to leave without effect in the contracts executed by the Public
Administration under norms of public rights, among them understood to be
public works and services, the adjustment clauses related to dollars or other
foreign currencies and the indexing clauses based on price indices of other
countries and any other indexing mechanism, there remaining established in
Argentine pesos the prices and tariffs resulting from such clauses, at an
exchange rate relationship of one peso equal to one U.S. dollar (Article
Eighth); and

(iii) to authorize the Executive Power to renegotiate the contracts that may
have as an objective the provision of public services, taking into
consideration the following criteria: (1) the impact of tariffed rates on
competitiveness of the economy and on distribution of income; (2) quality of
services and investment plans, when those may have been contemplated by
contract; (3) consumer interests and accessibility of services; (4) safety of
the systems and (5) profitability of the companies (Article Ninth); and

     (iv)     to subject monetary loans originating in contracts signed
between particular parties under norms of private rights, transacted in
dollars or other foreign money or in which there may have been established
adjustment clauses related to such currencies, the obligation to be discharged
in pesos at an exchange rate of one peso equal to one U.S. dollar as the
concept of payment of the definitive amount on account that results from the
negotiation procedures contemplated by the same norm (Article Eleventh).

Additionally, it is established that the approaches contemplated by the
referenced Articles Eighth and Ninth, applicable to Telefonica de Argentina,
in no case authorize the contracting companies or providers of public services
to suspend or alter compliance with their obligations.

The undersigned corporations are evaluating the impact of the norms on the
respective results of operations and equity positions of them and/or of their
directly affiliated companies. Telefonica de Argentina S.A., additionally,
will keep the Comision Nacional de Valores informed regarding the
renegotiation of the contract to which the cited Article Ninth alludes.