Consortium Agreement etc

Telefonica SA
31 March 2000


TELEFONICA, BBVA, LA CAIXA, BANCO ZARAGOZANO AND ABENGOA TO FORM CONSORTIUM FOR
UMTS MOBILE TELEPHONY IN EUROPE

*  Telefonica, intends to bid for licences in European countries (U.K., Germany,
Italy, France, etc.)

Madrid, March 31, 2000.- Telefonica has reached an agreement with BBVA, La
Caixa, Banco Zaragozano and Abengoa, to form a consortium to provide UMTS mobile
telephone services in countries of the European Union.

UMTS  (Universal Telecommunications System), is the third generation  of  mobile
telephony after the analog and GSM systems. This new mobile technology, using a
new handset, will provide not only voice communication, but also the exchange of
data and images. UMTS will make available to users a wide array of services
which arise  from  the  convergence of mobile telephony  and  the  Internet 
such  as electronic  mail,  Internet  access and visual  multimedia  content. 
Among  the services UMTS technology will make available are:

* image and voice interactivity between users,

* large-scale electronic commerce,

* purchase of theatre and cinema tickets,

* banking transactions,

* personalized advertising for each user,

* simultaneous participation in chat lines, games and other Internet offers,

* continuous employee data storage/ unloading with their company,

* remote control of computers and household appliances.

All  of these operations can be carried out faster than at the current broadband
speed.

Telefonica  intends  to  obtain UMTS licences in the  majority  of  the 
European countries, including the four major markets., United Kingdom, Germany,
Italy  and France,  in addition to Spain, where the company recently obtained a
licence  in competition  with  the  main  telecoms  companies  in  the  country
and  abroad (Vodafone/Airtel,  Telecom  Italia/Amena, France Telecom/Uni2,  BT,
Mannesmann, Vivendi, Sonera).

To date only Finland and Spain have granted UMTS licences in Europe. At present
in the  UK, five UMTS licences are up for auction. Telefonica is competing with
the main European  and  North American telecoms companies, as well  as  with 
groups such  as Virgin, Nomura and communications/Internet magnates such as 
Rupert Murdoch  or Paul Allen, who are also participating in the bidding 
process.  The final decision is expected to be announced in the next few weeks.

In  parallel with its participation in the licence-bidding  process, Telefonica
is holding talks with international groups for the creation  of a  pan-European
consortium that would hold equity stakes in the  different national companies
providing the UMTS service in each country. As a  result of these negotiations,
BBVA, La Caixa, Banco Zaragozano and Abengoa  will each  take  minority  stakes
in the share capital  of  this  pan-European company.  The  location  of  the 
company's  headquarters  has  yet  to  be decided;  and  its  incorporation will
take  place  within  the  next  few months.

Telefonica  is  also  negotiating  with  possible  local  partners  in
Germany, Italy and France and other countries.

Telefonica is the  world's fifth company  in  the  field  of  mobile
telecommunications  with  almost  20 million  customers  throughout  Spain,
Latin America and Morocco.

Madrid, March 31, 2000