BBVA agreement

Telefonica SA
13 October 2006


As provided in article 82 of the Spanish Stock Market Act (Ley del Mercado de
Valores), TELEFONICA, S.A. (TELEFONICA), together with BANCO BILBAO
VIZCAYA ARGENTARIA, S.A. (BBVA),  hereby reports the following


SIGNIFICANT EVENT


In February 2000, the two companies reached a Framework Agreement for the joint
development of a number of projects related to the new technological
developments, of which the market was informed at that time.

It was then also agreed that a representative of TELEFONICA would join the
Board of Directors of BBVA, and this was executed accordingly.

Once the agreed projects have been implemented  as suggested by the course of
business in each case, both companies consider that, at present, the factors
which justified the presence of a representative of TELEFONICA on the Board
of Directors of BBVA no longer apply, and the latter will therefore shortly
cease to form part of that Board.

BBVA holds a significant stake in the share capital of TELEFONICA, and has
two proprietory Directors on the Board of Directors of such company; this
situation will persists in accordance which BBVA's shareholding. On the other
hand, TELEFONICA retains its current holding in the share capital of BBVA.

To whom it may concern for the purposes of notification to the market.

Madrid, October 13th, 2006




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