Capital Increases

Telefonica SA
6 July 2000


                                 TELEFONICA

                          JOSE MARIA MAS MILLET
                            GENERAL SECRETARY
                AND SECRETARY OF THE BOARD OF DIRECTORS
                             TELEFONICA, S.A.

'TELEFONICA, S.A.', in accordance with that stated in article 82 of the Spanish
Stock Market Law and that set forth in the Circular Letter 14/1998 of the
Spanish Securities Commission of December 28th, 1998, hereby announces the
following:

                             SIGNIFICANT EVENT

'Telefonica has today executed two of its capital increases approved by the
Extraordinary Shareholders' Meeting of February 4th, 2000, this being in order
to address the exchange of the shares of its Latin American subsidiaries on
which Telefonica has launched public tender offers.

The first capital increase executed will mean the issue of 90,517,917 new
Telefonica shares, of a nominal value of 1 euro each, issued with a premium of
euros 2.995 per share, to be delivered to shareholders and holders of 'American
Depositary Shares' (ADS) of Tele Sudeste Celular Participacoes, S.A. that have
accepted the exchange offer.

The second capital increase executed will mean the issue of 371,350,753 new
Telefonica shares, of a nominal value of 1 euro each, issued with a premium of
euros 10.91 per share, to be delivered to shareholders and holders of 'American
Depositary Shares' (ADS) of Telecomunicacoes de Sao Paulo, S.A. - Telesp that
have accepted the exchange offer.

The distribution of the shares to the aforementioned share and ADR holders will
be completed over the next few days, once the new shares have been listed on the
Spanish stock exchanges.  The shares will also be traded on the New York (as
ADS), Sao Paulo and the other exchanges on which Telefonica shares are listed.'

Madrid, July 6th, 2000