Fairness opinion on merger

Telefonica SA
17 May 2006


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

In answer to the requirement of the Spanish National Securities Market
Commission (Comision Nacional del Mercado de Valores- CNMV), we enclose to this
document the 'fairness opinion' of Credit Suisse Securites (Europe) Limited
addressed to the Board of Directors of Telefonica, S.A. on the proposed merger
of Telefonica, S.A. and Telefonica Moviles, S.A.

Madrid, May 16th, 2006



29th March 2006



Board of Directors

Telefonica, S.A.

Gran Via 28

Madrid

Spain

Dear Sirs:

We understand that Telefonica, S.A. ('Telefonica') has made a proposal to
merge (the 'Proposed Merger') with Telefonica Moviles, S.A. (the 'Company'),
92.457% of whose issued share capital is currently held by Telefonica, to be
effected by incorporation of the Company into Telefonica, whereby the
shareholders of the Company will receive existing and newly issued ordinary
shares of Telefonica for their ordinary shares in the Company.

We have been requested by the Board of Directors of Telefonica to advise it
with respect to the fairness to Telefonica from a financial point of view of the
exchange ratio of four Telefonica shares for each five Company shares (the
'Exchange Ratio'), pursuant to the terms of the Proposed Merger.

In arriving at our opinion, we have reviewed certain publicly available
business and financial information, including publicly available financial
statements, equity research reports and publicly available financial forecasts,
relating to Telefonica and the Company. We have also reviewed certain other
information relating to the Company, including financial forecasts prepared by
the Company's management, provided to us by you. We have not had an opportunity
to meet with the management of the Company. We have had the opportunity solely
to meet with the management of Telefonica to discuss certain information
relating to the Company and Telefonica, including the assessment of management
of Telefonica as to the potential synergies anticipated to result from the
Proposed Merger. We have relied upon, without independent verification, the
assessment of the management of Telefonica as to the strategic benefits and
potential synergies (including the amount, timing and achievability thereof)
anticipated as a result of the Proposed Merger.

Based on Telefonica's indications, we have assumed with your consent that,
prior to consummation of the Proposed Merger, the Company will pay its
shareholders a special dividend of €0.435 per share, in addition to the annual
dividend of €0.205 share, and that Telefonica will pay an annual dividend of
€0.25 per share to its shareholders.

We have also considered certain financial and stock market data of
Telefonica and the Company, and we have compared that data with similar data for
other publicly held companies in businesses which we deemed similar to those of
Telefonica and the Company. We also considered such other information, financial
studies, analyses and investigations and financial, economic and market criteria
which we deemed relevant.

We have not reviewed the legal documentation required for the Proposed
Merger as these documents are not yet available, including, inter alia: (i) the
independent experts' reports; (ii) the reports prepared by each of Telefonica's
and the Company's respective Boards of Directors; (iii) the draft notarial deed
formalising the Proposed Merger and; (iv) a prospectus or equivalent disclosure
document that may be required to be filed under Spanish law.

In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. In particular, without
limitation: (i) with respect to the publicly available financial forecasts for
Telefonica referred to above, we have reviewed such forecasts with the
management of Telefonica and have assumed, with your consent, that such
forecasts represent reasonable estimates and judgments with respect to the
future financial performance of Telefonica; (ii) with respect to the Company's
financial forecasts prepared by the Company's management, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's management as to the future
financial performance of the Company; and (iii) with respect to the estimates
provided to us by the management of Telefonica with respect to the synergies
anticipated to result from the Proposed Merger, we have been advised by the
management of Telefonica, and we have assumed, that such forecasts have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of Telefonica as to such synergies and will be
realized in the amounts and the times indicated thereby.

We also have assumed, with your consent, that in the course of obtaining
necessary regulatory and third party approvals and consents the Proposed Merger,
no modification, delay, limitation, restriction or condition will be imposed
that will have an adverse effect on the Company, Telefonica or the contemplated
benefits of the Proposed Merger, and that the Proposed Merger will be
consummated in accordance with its current financial terms, without waiver,
modification or amendment of any material term, condition or agreement therein.
In addition we have not been requested to make, and have not made an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion addresses only the fairness, from a financial point of
view, to Telefonica of the Exchange Ratio and does not address any other aspect
or implication of the Proposed Merger or any other agreement, arrangement or
understanding entered into in connection with the Proposed Merger or otherwise,
but has also considered the aforementioned dividends distributions to be made by
the Company and Telefonica . Our opinion is necessarily based upon information
made available to us on the date hereof and upon financial, economic, market and
other conditions as they exist and can be evaluated on the date hereof. Our
opinion does not address the merits of the underlying decision by Telefonica to
enter into the Proposed Merger and does not constitute an opinion or
recommendation to any shareholder of Telefonica or the Company as to how such
shareholder should vote at any shareholders' meetings to be held in connection
with the Proposed Merger. We are not expressing any opinion as to what the value
of the ordinary shares of Telefonica actually will be when exchanged to the
Company's shareholders pursuant to the Proposed Merger or the prices at which
such ordinary shares will trade subsequent to Proposed Merger.

We have acted as financial advisor to Telefonica in connection with the
Proposed Merger and will receive a fee for our services which is payable on
delivery of this letter. In addition, Telefonica has agreed to indemnify us for
certain liabilities and other items arising out of our engagement. From time to
time, we and our affiliates have in the past provided, are currently providing
and in the future we may provide, investment banking and other financial
services to the Company and/or Telefonica, for which we have received, and would
expect to receive, compensation. We are a full service securities firm engaged
in securities trading and brokerage activities as well as providing investment
banking and other financial services. In the ordinary course of business, we and
our affiliates may acquire, hold or sell, for our and our affiliates own
accounts and the accounts of customers, equity, debt and other securities and
financial instruments (including bank loans and other obligations) of the
Company, Telefonica and any other company that may be involved in the Proposed
Merger, as well as provide investment banking and other financial services to
such companies.

It is understood that this letter is for the information of the Board of
Directors of Telefonica only in connection with its consideration of the
Proposed Merger and may not be disclosed to any person without our prior consent
and is not to be quoted or referred to, in whole or in part nor shall this
letter be used for any other purposes, without our prior written consent.
Notwithstanding the foregoing, we hereby consent to the inclusion of this letter
in its entirety in the merger prospectus that will be prepared pursuant to the
Proposed Merger and in any other equivalent disclosure documentation solely in
each case to the extent that inclusion of this letter in such documents is
required by applicable law or regulation or is requested by a competent
Authority.

Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio is fair to Telefonica from a financial point of view.


                            Yours faithfully,

                  CREDIT SUISSE SECURITIES (EUROPE) LIMITED



                            By: /s/ Eduardo Puebla

                            Eduardo Puebla

                            Managing Director



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