Final Results - Part 1

Telefonica SA
27 February 2001


PART 1


                                    Results

                              January-December 2000

Notes:

- The 1999 comparison base has been adjusted to facilitate comparison with the
structure and inter-group relations applicable in 2000. These are different from
those that were applicable in 1999, due to the company's restructuring by
business lines.

- Financial statements in this report have been compiled by translating the
company's accounts from pesetas into euros by line. Sub-totals are already
stated in euros. This could give rise to small rounding discrepancies.


               TELEFONICA GROUP SELECTED FINANCIAL FIGURES

      (TISA operators consolidated by global integration method)

Non-audited figures

(EUR m)                               January-December

                                   2000           1999       %
                                                            Var.

Gross operating revenues          28,485.5      22,957.0    24.1
EBITDA                            11,918.8      10,885.4     9.5
Operating profit                   4,958.0       4,776.6     3.8
Profit before tax                  2,867.7       2,636.9     8.7
Net income                         2,504.8       1,804.8    38.8
Net income, per share                 0,66          0,57    18.5

No. of shares, millions (1)        3,711.1       3,168.5    17.1

(1) Average number of shares during the period. This includes the capital
increases made to acquire new shareholdings in Telefonica de Argentina,
Telefonica del Peru, Telesudeste, Endemol and ATCO and increases due to bonus
issues, weighted by the number of days these have been listed. The number of
shares stated includes the (3xl) share split of 30/07/99 and the 1999 comparison
base has been adjusted to facilitate comparisons.

Telefonica Group Results

In the first half of 2000, Telefonica launched different tender offers to
acquire minority shareholdings in various Latin American operators.  Given the
high percentage of capital obtained through these offers, all management
comments included in this report refer to the financial performance of the
Telefonica Group, with Telefonica  Internacional's subsidiaries, listed below, 
being consolidated by global integration method, in order provide a view of 
operating performance more in line with the Group's true financial situation: 
Telesp, TeleSudeste Celular, Telefonica CTC Chile, Telefonica de Argentina,
Telefonica del Peru, Publiguias and CRT Celular.

Telefonica Moviles' annual accounts include the results of subsidiaries in
Brazil and Central America, plus those of Telefonica Intercontinental, from the
date on which they joined the sphere of consolidation (october 2000) and those
of Terra Mobile june 2000) from the date of its constitution.  Similarly, the
results of the Latin American businesses consolidated by Telefonica
Internacional include the aforementioned mobile telephony operations up until
September, with all other activities still being included, as in previous
quarters.

In October 2000 Telefonica Internacional sold its holdings in TeleSudeste,
TeleLeste, Celular CRT, Telefonica Centroamerica Guatemala and Telefonica El
Salvador (now Telefonica Latinoamericana) to Telefonica Moviles in exchange for
shares in the mobile operator. As it is not possible to compare the results of
Grupo Telefonica Latinoamericana with those of previous quarters, nor to those
expected in coming months due to the separation of the data and yellow pages  
businesses currently under way and the transfer of the mobile activities of
Telefonica de Argentina and Telefonica del Peru to Telefonica Moviles (which
should be completed soon), instead of reporting TISA's results it is shown the
most relevant figures of the P&L account of each Latin American Company and the
respective contribution to the net income of the Telefonica Internacional Group.

Last year the European telecoms sector was greatly affected by sector
liberalisation, which progressed significantly. This was especially true of
Spain where, after the latest measures introduced in November, the market is now
further along the road to open competition.

At the same time, it is worth to mention the financial crisis suffered by many
Internet companies across the world, which resulted in sharp market corrections
in sector stocks from March. The fall in prices in the TMT sector (Telecoms,
Media and Technology) in 2000 was also due to the markets' negative reading of
the outcome of UMTS licence tenders in various European countries. The prices
paid for these UMTS licences, seen by the main European cellular companies as a
way of securing future growth, were considered excessive by financial analysts;
especially the prices paid in Germany and the UK, and this led to a significant
increase in debt levels across all sector companies. This increased gearing
caused credit rating agencies to make rating downgrades across the board, to
reflect the higher risk profile of sector companies.

Against this backdrop, Telefonica outperformed the European telecoms sector in
2000, besides ending the year with the highest rating and best prospects for
improvement of all incumbent European companies due, among other indicators, to
its  having  the  lowest  level, of debt relative to its  cash  flow  generation
capacity.

As for financial results, the Telefonica Group recorded net income of EUR
2,504.8 million in 2000, an advance of 38.8% an 1999.  Telefonica's results were
positively affected by the increase in its shareholdings in certain Latin
American operators in July that, together with the economic recovery in the
region, meant the area's contribution to group results increased significantly,
especially that of the fixed telephony company Telesp in the state of Sao Paulo
in Brazil.  Further liberalisation of the Spanish telecoms market occurred in
all segments, thereby considerably increasing competition.  But despite this,
operating results for fixed and cellular telephony were highly satisfactory.

The Group's results were also affected by a number of non-recurring items:

- The conclusion of Telelfonica de Espana's labour force reduction programme  
and other personnel commitments totalling EUR 1,265.6 million.

- Restatement and write off of assets and investments in a total amount of
EUR 1,582.0 million.

- Capital gains from the sale of the Group's securities portfolio and the market
flotation of Telefonica Moviles, totalling EUR 3,907.2 million.

Had these non-recurrent extraordinary circumstances not occurred and taking into
account its fiscal effects and other minor provisions, Group net income would
have grown by 15.7%.

Excluding the negative impact of Terra-Lycos' contribution, growth would have
been 50.2%.  Excluding the two extraordinary factors described above, income
would have grown 24.8% on 1999.

Lastly, the increased holdings in Latin American subsidiaries helped boost Group
results, as long as minority interests reduced by EUR 535.1 million as a result
of these subsidiaries' inclusion in Telefonica Group's financial statements
since august 2000.

Growth in Group net income can be partly explained by the positive performance
of Group EBITDA, which totalled EUR 11,918.8 million, up 9.5% on 1999.  Growth
under this heading has been accelerating since the beginning of H200 (5.4% at
the end of 1H00, cumulative growth of 8.7% to September 00 and 11.9% in 4Q00).

This rise in Group EBITDA was driven by the strong advance in operating
revenues, to EUR 28,485.5 million, 24.1% higher than at end-1999.  Telefonica
Moviles Espana's revenues increased by 28.3% versus 1999 and revenues from Latin
America also grew significantly, especially those from Telesp (57.2%) and TASA
(38.3%). Grupo Telefonica de Espana Group revenues rose 2.1% compared to 1999,
accounting for 35.8% of the Group total, despite the significant increase in
competition, during the year.

Operating expenses, rose 35.7% over the last year due to the increase in items
associated with income generation such as interconnection costs and cost of
supplies.  However, slower growth in this item in 4Q00 (22.2% in 4Q00 vs. 41.7%
to September) means consolidated EBITDA continued to trend upwards.

Personnel expenses rose at slower rate in 4Q00, thanks to a reduction in the
Telefonica de Espana headcount during the quarter (reduction of 3,726 employees
in 4Q00 compared to 1,700 in the first nine months of the year).

The healthy EBITDA performances of Telefonica Moviles (36.5%) and Latin America 
(35.6%) offset the declines in this item recorded by Telefonica de Espana     
(-10.6%), due to liberalisation and increased competition, Telefonica, Data   
(-65.5%), due to the inclusion of new start-ups in its financial statements, the
delayed start-up of the international network, and higher circuit hire costs,
and Terra-Lycos, because of its aggressive expansion plan.

Net operating income grew by 3.8% with respect to 1999.  This growth decelerated
in the last quarter of the year (4.8% to September), because of increased
provisioning for Latin American operators (EUR 159.3 million), the new companies
incorporated in the fourth quarter (Lycos, Atento Group companies), and higher
depreciation charges at other Group companies (Terra-Lycos Espana, Telefonica
Moviles Espana and Atento Brasil).

These results have been achieved in a year during which the Telefonica Group's
assets increased by 44.0% compared to 1999 (EUR 92,377.3 million vs. 64,146.2
million).  This increase in assets, mainly due to the incorporation of the UMTS
licences as concession contracts, the investments made in Latin American
companies, the increase in Telefonica Media's assets following the acquisitions
of Endemol and ATCO, and the incorporation of Lycos' assets after the merger
with Terra, was accompanied by a 79.0% increase in shareholders' equity vs. the
previous year as a result of the Group's policy of paying for acquisitions with
Telefonica shares instead of cash, a policy which trimmed the company's debt by
1.5 points relative to the previous year.

Finally, the investment in the year reached EUR 21,112.0 million, 193.8% more
than in 1999, due to the UMTS licence payments (EUR 12,171.6 million) and
investments in Emergia (EUR 722.5 million).  Stripping out these two factors,
investment would have increased by just 16.5%.

SIGNIFICANT EVENTS:

- On 22 February 2001, IPSE 2000's Board appointed Pierlugi Celli Chairman of
the company. Until recently he was General Manager of RAI.

- On 20 February 2001 Telefonica launched Spain's first prepaid card offering a
flat rate for Internet use. It is valid for a month from the date of activation
and can be used between the times, corresponding to Telefonica's flat rate
tariff (Monday to Friday from 18:00 to 08:00 hours and 24 hours a day on
weekends and national holidays).

- On 14 February 2001 the 3G consortium, comprising Telefonica. Moviles and
Sonera, announced that its corporate headquarters were to be established in
Munich. At the same time, the 3G Group's board appointed Ernst Folgmann as the
company's CEO, former CEO of FirstMark Communications.

- On 7 February 2001 Telefonica Data entered into a strategic alliance with
Akamai Technologies aimed at strengthening the capabilities of its Value-Added
Services infrastructure, consisting essentially of the Telefonica Data Internet
Centers it has established throughout the world.

- On 30 January 2001 Terra Lycos announced the acquisition of Raging Bull, a
leading financial community on the web, from Alta Vista.  This company has over
2 million users a month generating nearly 200 million page views, an average
connection per user of 100 minutes.

- On the same day, Terra Lycos announced the acquisition of Iberwap, Spain's
leading provider of digital cartography services and contents.

- On 26 January 2001 Telefonica Moviles executed one of the non-cash capital
increases approved by the Universal Extraordinary Shareholders Meeting of the
Company held on 26 October 2000, Telefonica Moviles increased its share capita
by EUR 87,431,682 via the issue of 174,863,364 ordinary shares that were fully
subscribed by Telefonica, S.A. The shares were fully paid up by Telefonica, S.A.
via the assignment of shares in Telefonica Argentina, S.A, a deal making
Telefonica Moviles, S.A. the owner of the Argentine mobile telco.

- On the same day Telefonica and Portugal Telecom announced an agreement to
create a joint venture bringing together all their cellular telephone assets in
Brazil, subject to the approval of ANATEL, the Brazilian market regulator.  The
new company will be managed jointly by PT Moveis and Telefonica Moviles
(Telefonica will appoint the President and Portugal Telecom the CEO), and will
be the largest cellular company in Brazil and Latin America, with around 9.3
million clients and a potential market of 94 million inhabitants. It will
operate in areas which combined represent 70% of the country's GDP and where it
currently has a market share of over 60%. The new company will include Portugal
Telecom's assets in Telesp Celular (Sao Paulo) and Global Telecom (Santa
Catarina and Parana and Telefonica Moviles' assets in Tele Sudeste Celular (Rio
de Janeiro and Espiritu Santo), CRT Celular (Rio Grande do Sul) and Tele Leste
Celular (Bahia and Sergipe). The joint venture will generate numerous synergies
in operations, marketing and customer services.  As part of the agreement, and
subject to approval at the Portugal Telecom shareholders' meeting on 23 April,
Telefonica will increase its shareholding in Portugal Telecom to 10% via
purchases on the secondary market.  Also, PT is looking at the possibility of
increasing its interest in Telefonica to 1.5%.

- On 25 January 2001 the Telefonica Board of Directors agreed to carry out a
second bonus share issue charged to unrestricted reserves, as approved by the
ordinary general shareholders' meeting of 7 April 2000.  This increase will be
carried out via the issue of new ordinary shares in the Company, of the same
series and with the same rights as the shares currently outstanding, and each
new share will have a nominal value of one euro, equivalent to 2% of the
Company's share capital.

- On 24 January 2001 Telefonica Moviles and Suez Lyonnais decided not to bid at
the French UMTS licence tender as both companies considered the current price of
licences out of step with the market situation.

- On 19 January 2001 Telefonica Moviles Espana announced that in December 339
million messages were transmitted via its SMS, an average of 26 short messages
per client and month in December.

- On 16 January 2001 Terra Mobile announced that total registered users,
including clients captured in the UK, Germany, Sweden and Finland, had surpassed
three million.

- On 20 December 2000 Telefonica's Board approved the appointment of Mario
Vazquez and Luis Fernando Furlan as independent members of Telefonica S.A's
board.

- On the same day Telefonica Data Corp and America On Line signed an agreement
by which Telefonica's data subsidiary will become one of the US company's
suppliers, offering a wide variety of services to its companies throughout the
world.

- On 15 December 2000 Terra Mobile and P0Pcast Communications Corp, leader in
the video webcast technology market, signed an agreement by which the latter
will develop personal video-communication services for cellular users of the
Terra Mobile portal.

- On 12 December 2000 Telefonica Moviles, through its subsidiary Telefonica
Intercontinental, was awarded one of the four 3G cellular telephony licences in
Switzerland (the other three went to diAx, Orange and SwissCom).  The licence
has a total spectrum of 2x15MHz and an additional 5Mhz non-paired block, and was
awarded at a price of CHF50 million (around EUR 33.1 million).  The company
intends to begin operations in Switzerland in 2002.  Switzerland is one of the
most attractive cellular markets in Europe, as the penetration rate for mobile
telephony is currently around 50% but is expected to exceed 80% before 2010.

- On 14 December 2000 Telefonica inaugurated the Sao Paulo, Operations and
Control Centre which can manage 35 million telephone lines in real time and the
capability to increase this capacity to 50 million.  EUR 66 million has been
invested on this project.

- On 4 December 2000 Telefonica de Espana reached an agreement with        
union representatives to make financial adjustments to the  Voluntary
Redundancies Programme included in the ERE Social Plan, which had been
in force since 1999 and expired on 31 December 2000.  These modifications 
(guaranteed employment for 2001 and improved financial conditions for the
Voluntary Redundancies Programme) were agreed in a bid to achieve the 10,800
lay-offs originally envisaged in the labour force adjustment plan.

- On 29 November 2000 members of the IPSE 2000 consortium decided in a General
Meeting to increase the consortium's capital by EUR 1,700 million to fund
payment of the licence. They also assigned the final share capital structure
with Telefonica Moviles being responsible for management with 45.59% of capital.
The rest of the capital is distributed among   Sonera  (12.55%),  Banca   di  
Roma  (10.00%), ACEA-Telefonica  (6.34%),  Telexis (5.66%),  Xera  (5.0%), 
Goldenegg (4.8%), Edison (3.0%), Falck (2.0%), Planetmobile (0.5%) and a  group
of local businessmen and entities between them holding 4.45%.

- On 28 November 2000 Telefonica Moviles Espana awarded the contract to build
the first stage of its third generation network to Ericsson, Nokia and 
Motorola, its current GSM network suppliers. By 1 August 2001  it  is expected 
that  Telefonica  Moviles  Espana's UMTS infrastructure  will  have  been rolled
out  in  all  cities  with  a population  of  over  250,000, with some 750  base
stations  in  this initial stage of the project.  Investment on network rollout
in  the  16  most  heavily  populated Spanish cities will be around  EUR 120 
million.  Telefonica  Moviles  Espana  plans to invest  EUR 5.288  billion  in 
the rollout and maintenance of its 3G network.

- On  17 November 2000 the Telefonica Board of Directors agreed to carry
out  a  bonus  share  issue  charged to  unrestricted  reserves.  This
operation  will be carried out by issuing fully paid up shares  in  the
proportion  of  one  free  share per 50  old  shares  and  has  placed
86,814,214 new ordinary shares with a nominal value of one  euro  each
on   the   market,  increasing  Telefonica  S.A.'s  share  capital   by
EUR 86,814,214.

- On  17  November  2000 Telefonica Media announced  its  restructuring into 
three  business  areas, to facilitate the consolidation  of  its position  as a
leading company in the audiovisual sector and  to  give greater  priority to
convergence of telecoms, contents  and  internet.  The  three  new business
units are free-to-air TV and radio,  content, and  pay-TV. AT the same time
Telefonica appointed Luis Velo  CEO  of Antena3,   with  Carlos  Lavilla  being 
named  General   Manager   of Telefonica's communications media subsidiary.

- On  15 November 2000 the Executive Committee of Telefonica S.A.'s board
appointed  Calixto Rios General Manager of Institutional Relations  at
Telefonica  S.A.,  with  responsibility  for  the  corporate  areas  of
Institutional   Relations,  Communications,  Marketing,   Advertising,
Sponsorship and Brand Management.



                            THE TELEFONICA GROUP

 MARKET SIZE

Thousands         December               %    Weighted figures (*)          %
                                     Change                             Change
               2000         1999      00/99   Dec. 2000    Dec. 1999      00/99
Lines in
 service    42,263,534   38,385,225    10.1   36,682,304   23,901,248      53.5

Spain       20,317,833   19,226,191     5.7   20,317,833   19,266,191       5.7

Other
 countries
 (1)        21,945,701   19,159,034    14.5   16,364,471    4,675,057     250.0

Cellular
 clients    24,918,966   16,732,732    48.9   18,567,792   11,017,464      68.7

Spain       13,669,000    9,052,000    51.0   12,602,818    9,052,000      39.2

Other
 countries
 (2)        11,249,966    7,680,732    46.5   5,964,974     1,965,464     203.5

Pay-TV
 clients       982,506      767,458    28.0     633,366       432,910      46.3

Spain          633,059      440,114    43.8     307,857       301,874       2.0

Other
 countries
 (3)           349,447      327,344     6.8     325,510       131,036     148.4


TOTAL       68,165,006   55,885,415    22.0  55,883,462    35,351,622      58.1



(*) Weighted for the economic interest held in each company.

(1) 1999 and 2000 figures do not include CRT's lines as the shareholding in this
company is a temporary investment.

(2) 1999 and 2000 figures do not include Telesp Celular's clients as the
shareholding in this company is a temporary investment.

(3) 1999 and 2000 figures do not include Cablevision clients, as the
shareholding in this company is a temporary investment.



                   THE TELEFONICA GROUP: RESULTS BY COMPANY

Non audited figures          Revenues                    EBITDA             
(EUR m)               January - December           January - December

                      2000          1999     %      2000         1999      %
                                           Change                        Change

Telefonica de
 Espana Group       10,182.9     9,970.8      2.1   4,492.5    5,026.7    (10.6)
Telefonica 
 Servicios 
 Moviles Group       4,796.5     3,739.0     28.3   1,790.6    1,353.5     32.3
Foreign Cellular
 operators*           452.22           -      n.a.     58.6          -      n.a.
Telefonica Data Group  920.2       762.1     20.8      44.8      130.0    (65.5)
Terra-Lycos Group      304.0        40.1      n.s.   (359.2)     (77.5)     n.s.
TISA Group          12,583.8     9,708.8     29.6   6,005.9     4,427.6    35.6
Other subsidiaries   2,805.2     1,585.8     76.9     (83.0)       33.9     c.s.
Disposals           (3,559.4)   (2,850.5)   (24.9)    (31.4)       (4.0)    n.s.

GROUP               28,485,4    22,957.0     24.1  11,918.8    10,885.4     9.5


     (*) 3 Months consolidated in Telefonica Moviles Group.


COMPANY-BY-COMPANY RESULTS ANALYSIS

TELEFONICA DE ESPANA GROUP

Year 2000 saw a major advance in the liberalisation of the telecommunications
sector with the approval of measures on 23 June 2000 and the finalisation of
details relating to the liberalisation of the local loop on 31 December 2000.
One of the decisions taken was the setting of a flat Internet access tariff of
EUR 16.5 per month at off-peak times and the sale of  'credits' for local calls
which, like other similar products, will have a positive impact on traffic. 
Both measures became effective on 1 November 2000.

Also, on 15 November 2000 indirect access was provided for local traffic
allowing  customers to choose which operator carries their local  calls,
The  interconnection  fee for single transit was  also  set:  1.35  euro
cents/min  (Ptas.  2.25/min) for peak and 1.06  euro  cents/min  (Ptas.
1.76/min) for off-peak. Certain volume discounts of up to 15% were  also
approved for interconnection prices.

As  for  price regulation, the Government finalised a price-cap  system
for  2001 and 2002 such that prices for fixed-line phone services  as  a
whole, including fixed-to-mobile services, should not rise by more  than
CPI-9%  in  2001  and  CPI-8% in 2002, which  will  give  the  company
greater  commercial flexibility and mark an advance towards  a  balanced
tariff framework.

Lastly,  on the recommendation of the European Union to take appropriate
measures  to open up the local loop. In December the Spanish  government
approved  Telefonica's plan to open the local loop (the OBA) and  set  a
price  of EUR 13 per month for operators to have access. This step  marked
the  completion  of  full telecommunications liberalisation.  This  will
result in increased competition and it benefits end-users through  lower
prices in all areas.

Telefonica  has satisfied all the regulator's information  requirements
in  its  claim that monthly charges should be increased because they  do
not  cover  the  real  cost  of  maintaining  fixed  lines  (the  access
deficit.  In 2000 the monthly charge was increased by EUR 0.6 and another
increase of EUR 1.2 has been approved for 2001.

Moving  to  2000 results, Telefonica de Espana group revenues  totalled
EUR 10,182.9  million, an increase of 2.1 % on the previous year.  The  key
drivers  of  this  growth were the EUR 0.6 rise in the  monthly  charge  in
place  since early August, strong growth in ISDN and wholesale  services
and  stronger consumption, which in large part offset both the  loss  of
market  share  and the decline in revenues per minute  caused  by  lower
prices and more discounts.

Total  minutes  sold were 106.4 billion, a very strong growth  of  28.9%
over  1999,  reflecting the success of the group's commercial  policies.
This  translates into consumption of 16.83 minutes per line per day,  an
increase  of  25.6%. Incoming calls surged 96% for  the  full  year  and
outgoing  calls  were up 19.2%, driven mainly by Internet  traffic  which
saw  its  minute numbers double versus 1999. Fixed-to-mobile calls  were
35.1% higher than the previous year.

Thanks  to  the positive consumption levels and the decline in  revenues
per  minute  caused by price reductions and the sharp rise in  discounts
and  products aimed at generating customer loyalty and minimising market
share  loss,  revenues were down just 4% versus 1999. However,  for  the
fourth quarter, these revenues registered growth of 1%.

It  is  worth  mentioning  that  the  company's  discount  plans  proved
extremely  popular. The Europa 15 scheme (aimed at international  users)
had  193,698  subscribers  at  the end of December  and  the  number  of
subscribers  to  the  Pais  30  scheme  reached  478,839.  The  pre-paid
schemes,  Bono  Ciudad and Bono Ciudad Plus, launched  in  November  had
260,065 and 435,576 subscribers at the end of the year respectively, 
beating  the  company's  forecasts.  And  there  are  more  than   74,000
subscribers to the company's flat-rate Internet offering.

The  growing importance of new services (Internet access, ISDN, broadband
services,  Centrex  (external switchboard systems), Red  Inteligente  and
RPV  have also risen at a rate of more than 45% and in 2000 made  up  17%
of  total  operating revenues. This reflects the company's commitment  to
roll-out and develop new and more advanced services.

ISDN  services  have been highly successful, with basic  access  packages
rising  77.9%  and 632,466 lines now in service. Primary  access  was  up
52.8%, reaching 13,639 access points in service.

Telefonica de Espana's firm commitment to broadband services is
reflected in the sharp rise in lines with ADSL coverage, ending the year 
at 12.5 million, above the company's target. At year end  users numbered 
47,950 and the average installation time was 10.5 days, equalling an 
average of 650 ADSL lines installed per day.

Telefonica de Espana group operating expenses were EUR 5,884.8 million, an
increase  of  11.7% over 1999 due mainly to the impact of interconnection
charges,  which  jumped  32.3%  versus 1999  because  of  fixed-to-mobile
interconnections. If we adjust for Telefonica de Espana parent  company
interconnection charges, operating expenses would have fallen by 1.8%,  a
reflection   of  ongoing  measures  taken  last  year  to   contain   and
rationalise costs.

In  2000,  Telefonica  de  Espana became  one  of  the  most  efficient
operators in Europe thanks to staff restructuring efforts which  led  to
a  6.8% decline in personnel expenses with respect to 1999. The headcount
at  the  end  of  the year stood at 41,193 (5,426 fewer  than  in  1999),
despite  the  strengthening of the sales force in order to remain  market
leader.  Productivity  as measured by equivalent  lines  in  service  per
employee  reached 493.2, a rise of 19.6% compared to the same  period  of 
last year.

Works,  supplies  and external services increased 18.9% with  respect  to      
1999  for the Telefonica de Espana group, due mainly to expenses  linked      
to  the  generation of revenues and the outsourcing of activities  coming      
from   the   progressive  reduction  of  the  workforce.  Adjusting   for      
outsourcing expenses, this caption would have shown an increase  of  just      
3.8% with respect to the previous year.

Thanks  to  the  good  performance  of revenues  and  controlled  expense       
growth,  the  Telefonica  de Espana group's  EBITDA  fell  just  10.6%,      
better than the company's initial forecasts.

Group  net  profits  were  EUR 245.2  million, after a  14.9% decline in    
operating  profits with respect to 1999 and extraordinary  charges  which    
although  still  negative  due to retirement and redundancy  provisioning      
allowed the bottom line to remain positive this year.

In  2000  Telefonica de Espana laid down the foundations for its  future      
by  pursuing  customer-driven policies of efficiency and  innovation  and      
emphasising   quality  as  its  key  differentiating  factor   over   the      
competition. It also took a major step forward as a leading light in  the      
e-economy.

TELEFONICA MOVILES

Telefonica Moviles reported proforma combined  EBITDA  for  2000  of EUR
2,451.4  million, an increase of EUR 655.3 million or 36.5%  compared  to  
1999.  Growth  was  underpinned  by  the  positive  performance  of   the      
company's  businesses, reflecting the application of a profitable  growth      
model  for  all  operators in a year of intense  market  competition  and      
greater diversification, both in terms of geography and maturity  of  its      
operators and entry into new businesses.

Highlights of the results include:

- Strong growth in total customer base, to 21.8 million at year-end, up  
52% on the previous year. Adding in the mobile customers of the Chilean 
and Puerto Rican mobile telcos managed  by  Telefonica Moviles,  the 
company's customer base in Europe, Latin America  and the  Mediterranean  
Basin as of 31 December 2000 exceeds 23.2 million, an increase of 7.7 million
versus 1999.

- A 34.8%  increase  in group operating revenues, with total  sales  of         
EUR 7,401.2 million, driven by growth in total subscriber numbers  and          
higher  traffic volumes, up 51.7% to 30,911 million  minutes.  This            
more than offset the operators' lower ARPUs.

- Considerably higher-quality earnings and profitability of operations. 
EBITDA came in at EUR 2,451.4 million, setting EBITDA margin at 33.1%.

Particularly  impressive  was the growing  contribution  of  the  Latin        
American  operators,  which  represented 27%  of  consolidated  EBITDA,        
compared  with  25%  in 1999, mainly derived from Brazilian  operators.        
Telefonica  Moviles' domestic operations accounted for  73%  of  group         
EBITDA, down from 75% in 1999.

- Net income reached EUR 590.6 million, a 20.1% growth compared with           
1999.

- Increased productivity for all operators, with an average  of  2,056        
connections  per  employee,  31%  more  than  in  1999,  despite   the         
increased  headcount,  and  cost savings  and  synergies  unlocked  by         
extending  the  company's  expertise to all  markets  and  a  rigorous         
policy of capitalising on existing resources.

Looking  at  business performance in each different region  individually,      
we would highlight the following:

Continental Europe

Spain

The  number  of  mobile users in Spain surpassed 24.3  million  in  2000,      
lifting  the  mobile  penetration rate  by  23pp  to  61%.  Against  this      
backdrop,   Telefonica  Moviles  Espana  ended  2000   with   13,669,101      
subscribers,  registering a net annual gain of  4,616,754  and  an  11%      
increase on 1999.

Comparing  these  numbers  with  other markets,  the  figures  underscore      
Telefonica Moviles' clear lead on the domestic cellular market:

- Telefonica Moviles Espana retains a market share in Spain of more  than       
56%, the highest level of any operator in Europe's largest countries.

- Telefonica  Moviles Espana's market share in traffic is  greater  still,  at 
well  above  61%, reflecting the better relative quality of  its  subscriber 
base.

- In  2000  Telefonica  Moviles Espania won more than 50%  of  net  GSM,  adds,
reflecting its ability to offer the best products and services on the market.

- This  excellent  sales  performance  was coincided  with  a  17%  decrease  in
 subscriber acquisition costs (SAC) relative to 1999 levels.

- The  initiatives  designed  to boost the loyalty  of  higher-value  customers,
exemplified  in  the 'MoviStar Plus' plan proved a success, bringing about a
reduction  in the churn rate and a net gain in contract subscribers 2.5 times
greater  than in 1999. Professional contracts continued to post the  strongest
growth  rates, With more than 800,000 net additions in the year.  (+42% from
1999),  driven  by  increasing  use  of  the  MoviStar  Enlace  and  MoviStar 
Corporativo  2000  services, both of which are the first  of  their  kind  in 
Spain.

Telefonica  Moviles  Espana's networks channelled  21,013  million  minutes  of
traffic in 2000, an increase of 53% on the previous year.

On  the  data services side, billable short messages in 4Q reached 786  million,
raising  the  total for 2000 to 2.276 million, a 322% increase vs. the  previous
year.  In  December  the  company set a new monthly  record  with  339  million,
equivalent to an average of 26 billable messages per subscriber per month.  This
greater use  of data services underscores an increase in the relative  weighting
of these services in total customer traffic revenues (8% from 3% in 1999).

Telefonica  Moviles  Espana  had  500,000 WAP subscribers  at  year-end  2000,
registering more than 6.8 million page views in December alone. Although
Internet access  via the TME WAP Internet access (WISP) service under the
e-mocion  brand name  has  a  fully open configuration, the bulk of browsing so 
far  has  been carried out through the 128 service and content providers listed
on the e-mocion menu.

More  recently,  on  10 January 2001, Telefonica Moviles Espana  launched  its
MoviStar  GPRS service. Since its launch this service has had the same coverage
as TME's GSM service, making Telefonica a pioneer of such services in Europe.

Costs associated with the rapid growth of the subscriber base, the launch of new
services  and  business areas, and cuts in prices, were sufficiently  offset  by
tight  control over operating expenses and economies of scale, resulting  in  an
improvement in the company's 2000 results in the following areas:

- Despite  a  23% decline in ARPU, operating revenues reached EUR 4,796 million,
up more  than  28% on the previous year. This advance is particularly 
impressive when  we  take  into  account that in 2000 the company  began 
deducting  from actual  revenues  the sums accrued by contract clients as
'points' under  the loyalty programmes.

- EBITDA reached EUR 1,790.6 million, a 32.3% gain on the previous year. This 
represented an EBITDA margin of 37%, signalling an increase from 1999, despite
record subscriber growth.

- Net  income  rose 37.6% to EUR 774.4 million, with the company continuing to
apply  the  strictest accounting criteria for both  operating  and        
financial results.

Another   important  achievement  was  the  company's   high   level   of
productivity,  which  at year-end 2000 stood at  3,461  connections  per
employee,  placing  Telefonica  Moviles  Espana  as  the  top  of  the
European cellular operators in terms of productivity.

Lastly,  we should draw attention to the changes in Spanish legislation
announced,  which will entail alterations to the planned  framework  for
the  current GSM and UMTS licences. This has led the company to  adopt
a  more  cautious  stance on assuming risk, both in respect  to  further
infrastructure investment as well as rates of new client capture, so  as
to  ensure, that current levels of client service and reasonable returns
on  capital employed are sustained as it moves into a phase of far  more
modest growth.

Rest of Europe

In   2000,   Telefonica   Moviles,  through  its   Telefonica   Moviles
Intercontinental  subsidiary,  won four European  UMTS  licences.  TME's
strategy  of bidding in partnership with international and local partners
on  Europe's main markets limits its financial exposure on the  largest
markets while allowing it to maintain control over operations, with  the
right to appoint the top board members at each of the consortia.

After  winning  3G  UMTS licences in five European  countries  (Spain,
Germany,  Italy, Austria, Switzerland) Telefonica Moviles  now  has  a
potential client base in Europe of more than 190 million.

Since  winning  these licences, Telefonica Moviles and its  partners  in
the respective consortia have embarked on different activities aimed  at
launching  operations in each of the countries, following the 'Cellco  in
a  box'  strategy, which allows for rapid rollout of operations  in  new
markets  and thus brings start-up forward considerably. One  example  of
the  results  obtained  using this model was the  start-up  of  Moroccan
operations  only  nine months after winning the licence.  Meanwhile,  in
February  2001,  the first executives for TME's 3G ventures  in  Germany
and Italy were appointed.

Latin America

Another  major  event in 2000 was the further expansion  of  Telefonica
Moviles'   operations   in   Latin  America.   Firstly,   the   company
significantly increased its shareholdings in TeleSudeste Celular and  in
the  operators in Argentina and Peru, as a result of the very successful
take-over   bids   launched  by  Telefonica.  Secondly, in   October,
Telefonica  Moviles reached an agreement with Motorola to  acquire  its
mobile phone operators in Northern Mexico, thereby gaining entry to  the
second  largest market in the region and consolidating its  position  as
the leading operator in Latin America.

The  strategy pursued by Telefonica Moviles operators  in  2000,  which
revolves  around  the profitable growth model referred to  earlier,  has
enabled  the  various  LatAm operating companies  to  achieve  not  only
substantial  increases  in  client  numbers  in  the  region,  but  also
significant improvements in earnings. As a result, at the end  of  2000,
Telefonica  Moviles  had a customer base of  more  than  9  million  in
Brazil,  Argentina, Peru, Chile, El Salvador, Guatemala and Puerto  Rico
combined,  39%  more  than at year end 1999. The  main  driver  of  this
growth acceptance of the pre-paid card, which has also significantly 
reduced the risk of non-payment.

As further examples of Telefonica Moviles innovative culture, we should 
mention the  launch  of the short message service on the Brazilian market 
in  the  second half  of the year and the introduction of Internet access
service via  'e-mocion' at each of the various different operators.

Brazil

At  the  end  of  2000,  the Brazilian operators managed by Telefonica  Moviles
TeleSudeste Celular, CRT Celular and TeleLeste Celular - had 4.6 million,
customers, representing  a  38%  advance year on year and driven by  the 
strength  of  the prepaid segment.

In  every  instance,  in  spite  of increasing competitive  pressures  in  their
respective markets, the Brazilian operators maintained their lead in the  states
they  operate,  with  market shares of between 61% in  the  case  of  TeleLeste
Celular  and  74%  for  CRT Celular, as well as widening  the  margin  between
themselves and their closest competitors in terms of client numbers.

Net  sales  of  the three Telefonica Moviles operators in Brazil came  to  EUR
1.359 billion,  an  increase of 13% on the same period last year. This growth 
can  be attributed  to the increase in the average client base, though tempered 
somewhat by the average drop in ARPU (18%) due to the increased weighting of the
pre-paid segment.

The  EBITDA  margins of all of the Brazilian companies reflect,  the success  of
policies  designed  to  improve  profitability, with  an  average  reduction  in
subscriber acquisition costs of 35% and a sharp decrease in non-payment  levels.
As  a  result,  TeleSudeste Celular and CRT Celular  ended  2000  with  EBITDA
margins  in excess of 35%, while TeleLeste Celular, which reported an  operating
loss  in  1999,  achieved a 2000 EBITDA margin of 24%.  In  absolute  terms, 
the EBITDA  generated  by  TeleSudeste  Celular and  CRT  Celular  totalled
EUR 475.1 million, an increase of EUR 160 million or 50.7%.

Argentina

TCP closed 2000 with 1.76 million customers, an advance of 67% and net additions
of  more  than 705,000 customers compared to 1999. As a result TCP now ranks  as
the  country's  second biggest operator, with a market share of more  than  26%,
meaning  a  3%  reduction in the gap between itself and the lead operator  since
December 1999.

TCP's  operating  revenues  for 2000 rose to EUR 773.7  million,  a  year  on 
year increase of 185%, due, in part, to the inclusion of Miniphone as 1 October
1999.  EBITDA  reached EUR 107.2 million, an increase on the previous year of 
71%,  in spite  of the higher costs associated with expansion of activities in
the  north of the country and the high volume of new subscriptions during the
year.

Peru

At  the  close  of 2000 Telefonica Moviles S.A.C. had a total  client  base  of
898,173, due to an increase of 186,000 new customers during the year, equivalent
to  a  share  of total net additions in excess of 69%. As in other markets,  the
pre-paid segment was the driver of this growth. Telefonica Moviles S.A.C.  ended
the year with a 69% market share, so retaining its lead position in Peru.

In  2000, Telefonica Moviles SAC reported revenues of EUR 247.5 million, an 
annual  increase  of 21.0%, on the back of a  26%  increase  in  the client 
base,  which offset a 19% drop in ARPU caused  by  the  pre-paid segment's 
increased  weighting.  EBITDA  came  out  at  EUR 89.9  million, resulting  
in a margin of 36% of operating revenues, up 3% on 1999,  due to the 
company's policy of pursuing profit over volume.

Chile

Telefonica  Movil, a company part owned by Telefonica and  managed  by
Telefonica Moviles, ended 2000 with 1.2 million customers, 6% more  than
at year end 1999, and a market share of 33%.

2000  marked  a  turning  point in Startel's  operations,  following the
introduction  of the profitable growth model at the start of  the  year.
This  model has enabled the company to improve the quality of its  client
base,   and  this  should  significantly  improve  Telefonica   Movil's
operations in future years.

Guatemala and El Salvador

By  the  end of 2000 Telefonica Moviles' client base in Guatemala  and El 
Salvador had risen to 372,234, more than double year end 1999 levels and  up 
105%  year  on  year.  The  market  shares  attained  by  these Telefonica
Moviles operators (36% and 23% respectively) in there  first full year of
operation are particularly impressive, and this figure  was achieved  in
Guatemala despite the entry of a fourth operator  into  the  market in the final
quarter.

Operating   revenues   generated  by   the   two   Telefonica   Moviles       
subsidiaries  in  the  region rose to EUR 193.8 million  in  2000,  against     
EUR 68.3 million in 1999. Combined EBITDA was EUR 25 million, which means  the  
companies broke even within a year of their launch.

Puerto Rico

NewCom  Wireless  Services, a company managed  by  Telefonica  Moviles,       
closed  the  year with 149,329 customers, an annual increase  of  221%        
versus 1999, and attained a market share of 12%.

Mediterranean Basin

Morocco

Medi  Telecom  closed 2000 with 515,139 clients and a market  share  of       
28% after just eight months, exceeding the Company's initial targets  by       
a wide margin.

During  2000,  Medi Telecom worked very hard to expand  its  commercial network 
and closed the year with more than 500 sales outlets. At present Medi Telecom.
reaches 70% of the population.

Finally,  looking  at  horizontal  businesses,  Terra  Mobile,  a  joint       
venture  set up in association with Terra Lycos in mid-2000 and  charged       
with  developing Telefonica's mobile Internet portal, which closed  the       
year  with 3,052,802 registered users, a threefold increase in only  six       
months, making it one of the leading European portals.

Following  the  acquisition  of  lobox  in  July,  Terra  Mobile  is  now      
providing  services  in  Finland, Switzerland, Germany,  United  Kingdom,      
Spain (launched in September) and Brazil (launched in December).

The  creation  of  Terra Mobile as a free access portal has  allowed  for      
agreements to be signed with 15 mobile telephone operators in Europe  and      
Latin America, providing access to 98 million potential customers.


TELEFONICA INTERNACIONAL GROUP

In October 2000 Telefonica Internacional (now Telefonica, Latinoamericana) 
sold its holdings in TeleSudeste, TeleLeste, Celular CRT, Telefonica
Centroamerica Guatemala and Telefonica  El Salvador to Telefonica Moviles 
in exchange for shares in the mobile operator. As it is not possible to compare
the results of Telefonica Latinoamericana Group with those of previous quarters,
due to the separation of the data and  yellow pages businesses currently under
way and the transfer of  the mobile of Telefonica de Argentina and Telefonica
del Peru to Telefonica Moviles (which should  be  completed soon), instead of
reporting  TISA's results it is shown the most relevant  figures of the P&L
account of each Latin American Company and the respective contribution to the
net income of the Group.

At  the  end  of  2000,  Telefonica Latinoamericana  was  managing  19.3      
million  fixed lines, 16.7% more than in December 1999. This  growth  was      
largely  driven  by strong expansion of lines in service at  Telesp  (the      
Sao  Paulo operator), which registered 215,000 new subscribers per  month      
on  average last year, and had 10.6 million lines as of 31 December  2000      
(28.4%  more than in December 1999). Telefonica de Argentina  registered      
7.1%  growth  in  lines in service, driven by the sale  of  pre-paid  and      
controlled  traffic products, as did Telefonica CTC Chile, with  a  4.2%      
increase in lines in service.

The  contribution  of  the  fixed  and  mobile  LatAm  operators  to  the      
Telefonica group's income was EUR 651.8 million, thanks to the success  of      
the  share  purchase offers which enabled us to increase our holdings in      
Telesp,  Telefonica de Argentina, Telefonica del Peru and  TeleSudeste,      
reducing minority interests by EUR 535.1 million.

- Particularly noteworthy was Telesp's net income, at EUR 180.5 million, up
109.3% due to the increase in the Telefonica group's stake in the Brazilian
operator and the sharp rise in the company's net profit, up 123.6% on 1999 at   
EUR 870.5 million.

Net profit growth was largely due the above mention increase in the
number of lines and the June tariff increases of 14.2% in the local currency,   
which helped produce 57.2% higher revenues in euro terms.

The expansion in the number of lines in service and Telesp's drive to improve   
productivity has made it one of the world's most efficient operators, with 790
lines per employee. Telesp has also embarked on an aggressive bandwidth  
expansion plan with the aim of offering ADSL services, which would enable it to 
complete the year with more than 40,000 connections in service.

- Net profits fell by 7.6% in euros, at Telefonica de Argentina (October 1999 -
September 2000) due to non-operational factors, such as higher financial        
expenses coming from the acquisition of the nationwide PCS licences in June
1999, lower EBITDA in local currency due to the onset of competition in basic
telephony  services in November 1999, and the higher cost of  securing new
mobile clients.

Revenues  and EBITDA were up 38.3% and 28.0% year on year respectively in 
euros according to Spanish accounting principles, against  revenue growth of
6.3%. However EBITDA was down 2.7% in local currency based on Argentina's
accounting principles. The discrepancy is a result of different reporting 
methods: in 1999, Telefonica de Argentina consolidated its 50% holding in
Miniphone by the proportional integration  method  in its local accounts, 
where as  the holding was consolidated by the Telefonica group according to 
the equity  method.  Looking at these results in local currency, to strip out
the effects of the different  accounting criteria, the 2.7% drop in EBITDA
corresponds to increased operating costs (+9.1% in  local  currency) owing  to 
the introduction of competition in basic telephony services and the 
considerable increase in the number of fixed and mobile clients involving 
higher connection, advertising, sales and telephone  equipment costs, that 
were not entirely offset by higher revenues.

- Telefonica  del Peru's net earnings fell 35.4% in euros  following  a         
restructuring of its assets and an adjustment to depreciation of  work in 
progress.  EBITDA was up 28.3%, however, thanks to a 23.5% increase in 
operating income deriving from a 12% increase  in  local traffic per line  an 
the  increase in revenues from public phone booths, cable television and
corporate communications, which offset lower revenues in local currency from 
long distance and mobile telephony.  Long distance revenues were affected by 
the introduction of competition at the  end of 1999 and considerable  
reductions in accounting rates, which depressed revenues from incoming         
international  traffic. Mobile revenues were affected  by a fall in fixed-mobile
traffic, despite a 26.1% increase in  the company's mobile client base.

- Telefonica CTC Chile reported net losses of EUR 216.9 million due to non-   
operational  factors, although EBITDA was up 10.8% year on  year,  at         
EUR 627.4  million. The most significant of these non-operational  factors      
were  a change in the provisioning of accounts receivable in line with a        
more cautious policy resulting from the greater losses incurred due to  a
negative monetary correction. The increase in EBITDA was due  to the company's
cost control efforts and enabled the fall in  revenues from  local  telephony to
be offset following the application  of  the new  tariff decree (applicable from
May 1999), and the negative impact of  the  change  from  billing by minutes to 
billing  by  seconds  in February  2000 which mainly affected mobile and long
distance  calls.  Relevant  sales  issues  included the launch  of  a  flat 
tariff  for national  long  distance calls and the marketing of pre-paid 
products in basic telephony aimed at low volume sectors.

Headcount reduction and restructuring policies undertaken by the company have
raised basic telephony productivity to 582 lines per employee.



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