Dividend Proposal

Telefonica SA
26 January 2005





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





SIGNIFICANT EVENT



In accordance with the shareholder remuneration policy approved by Telefonica's
Board of Directors, at its meeting of July 23rd, 2003, Telefonica's Board of
Directors, at its meeting held today January 26th, has agreed the payment of a
dividend of 0.5 Euro per share for fiscal year 2004 charged against both
earnings and reserves. The corresponding corporate resolutions will be adopted
for such purpose. Furthermore, it is the intention of the Board to maintain this
minimum dividend for fiscal year 2005.



The proposal of payment of  dividend for fiscal year 2004, will be distributed
in two payments, the first on May 13th, 2005 and the second on November 11th,
2005.







Madrid, January 26th, 2005.




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