Final Results - Part 3

Telefonica SA
27 February 2001


PART 3
                              ANNEXE

           CHANGES TO THE SPHERE AND CRITERIA OF CONSOLIDATION


In  December Telefonica, S.A. issued 88,944,644 shares with a  nominal       
value  of  EUR 1 each,  at  an issue premium of EUR 10.230562 per share,      
which  were  fully  subscribed  and  paid  up  via  the  transfer to         
Telefonica,  S.A.  of  404,555,475 shares in  Argentine  company CEI         
Citicorp Holdings, S.A. each with a nominal value of Argentinean  peso         
1, with  Ami  Tesa  Holdings,  Ltd.  contributing  301,946,570   and         
International   Equity  Investments,  Inc.  Contributing   102,608,905         
shares  in CEI Citicorp Holdings, S.A. respectively. Subsequently,  in         
proportion to these contributions, the two companies were awarded  new         
shares  in,  Telefonica:  66,385,284  for  Ami  Tesa  Holdings   and         
22,559,360   for   International   Equity   Investment,   representing         
respective shareholdings in Telefonica of 1.53% and 0.52%.  Following         
this  operation, Telefonica has an 80.91% direct interest in the share         
capital  of CEI Citicorp Holdings, which in turn owns 50% of Argentine         
company Compania de Inversiones de Telecomunicaciones. S.A. which,  in         
turn,  holds 52.88% of the share capital of Telefonica de Argentina,         
S.A.,  26.82% of the share capital of Argentine company Atlantida  de         
Comunicaciones,  S.A., and 26.82% of the share  capital  of  Argentine         
company AC Inversora, S.A

Once  the  share  exchange  is concluded, the  share  capital  of  CEI         
Citicorp  Holdings will be  reduced by cancelling  own  shares,  after         
buying  back  the contributions awarded to the other shareholders,  so         
that Telefonica ends up owning 100% of the company's capital.

At  the  end  of  the  year  this company was consolidated  by  global
Integration method.

By  virtue  of the agreement reached at the Board meeting of 12  January        
2000,  in  March  Telefonica  Moviles S.A.  was  constituted  with  an        
initial  share  capital  of  EUR 3,005,060.  This  company  will   bring      
together all the Group's cellular telephony businesses throughout  the          
world  (in Spain, Latin America, Europe and North Africa)  through  a         
systematic   process  due  to  be  completed  next   year.   Following        
Telefonica  Moviles,  S.A.'s flotation in an IPO last  November, the          
Telefonica  Group  reduced its direct and indirect  interest  in this         
company  to  the  92.15%  it held as of 31 December  2000.  The funds         
generated by this operation (EUR 2,899.3 million), are included in  the         
accompanying  consolidated  statement  of  income  under 'gains on          
disposals  of  holdings in consolidated companies'.  This  company  is        
consolidated by the global integration method.

In September Telefonica sold 11,415,264 ordinary shares in its subsidiary       
Telefonica Publicidad e Informacion, representing 3.1% of its share capital, 
This operation generated EUR 105.6 million in capital gains for the 
Telefonica Group, which are reported on the accompanying, consolidated 
statement of income under 'gains on disposals of shareholdings in 
consolidated companies'. Telefonica now has a 59.87% interest in the capital 
of TPI.  The company continues to be consolidated by the global Integration 
method.

In  February  2000 Telefonica, S.A. sold 6.1% of Amper, S.A.,  to  the        
European Renaissance and European Strategic Investors Holdings  mutual        
funds, managed by Arlington Capital Investors Limited, obtaining  EUR 5.4     
million  in  capital  gains, which are reported on  the  accompanying,        
consolidated  statement  of income under the 'gains  on  disposals  of        
holdings in consolidated companies' heading.  The 6.1% interest the Group 
still holds in Amper S.A. continues to be carried by the equity method.

In  June Telefonica constituted US company B2B, Inc., with USD 10 million in
authorised share capital.

Also in June Media Park increased its share capital by 55,704  shares with a 
nominal value of EUR 60.1 each, and an issue premium  of  Ptas.178,498.5934 per
share, fully subscribed by Telefonica. As a result of this operation, and as of
December 2000, the Telefonica  Media group  has  a  25% interest in the company
which is carried in the Group's consolidated financial statements by the equity
method.

In June Telefonica acquired 100% of Zeleris Soluciones Integrales, S.L.,  for 
EUR 3,005.6 million. This company is consolidated by the global integration
method.

In May Telefonica, increased its share capital by 14,477,109 shares with  a 
nominal value of EUR 1 and carrying an issue premium of EUR 8.5 each, via  a
non-cash contribution consisting of shares in  Argentine companies  Vigil  Corp,
S.A., (163,395,785 shares) and Ambit,  S.A  (35,562,111 shares).  These shares
represented 100% and 22.15% respectively of the two companies' share capital.
This operation  gave  Telefonica Group a 62.58% shareholding in Argentine
company Atlantida Comunicaciones, S.A. (up from 35.76% previously).  Telefonica 
Media subsequently acquired a further 10.6% stake, taking its  total  stake in 
ATCO, including the part held by CEI, to 100%. Consequently,  this company  was
consolidated  on  the  Telefonica  Group's   financial statements by the global
integration method for the first time in 2000.

On August 2 Telefonica, S.A. issued 213,409,097 new ordinary shares with  a 
nominal value of EUR 1 each at an issue premium of EUR 2.875  per share,  which 
were transferred to shareholders in Endemol Entertainment Holding,  N.V.,  in
exchange for shares representing  99.2% of Endemol share capital. Endemol's was
consolidated in the Telefonica  Group  financial  statements for 2000 by the
global integration method.

In August and September,  group  subsidiary  Endemol  Entertainment       
Holding sold  25.1%  of  German  Film  and  TV  Distributor  Helkon,         
generating  EUR 45.5 million in capital gains. It also sold 25%  of  the        
Spanish Internet  portal,  Telepolis,  generating  EUR 2.3 million in         
capital gains.  These funds are included in the accompanying  consolidated
statement of income  under  the  'gains on disposals of consolidated companies'
heading.

On July 4 Telefonica, S.A. issued 157,951,446 new  shares  with  a         
nominal value of EUR 1 each, at an issue premium of EUR 8.129 per share,       
which were  transferred  to  shareholders  and  holders  of  American         
Depositary  Shares  (ADS)  of  Telefonica  de  Argentina,  S.A.  who        
accepted  the exchange offer.  These new shares represented  44.27%  of         
total  share  capital.  The Telefonica Group now  has  a  direct  and         
indirect  interest  of  92.87%  in  the  aforementioned  company.  The         
company  continues to be consolidated by global integration method  on         
the Telefonica Group's financial statements.

On  July  6  Telefonica, S.A. issued 90,517,917 new  shares  with  a         
nominal  value of EUR 1 each, at an issue premium of EUR 2.995  per  share,     
which  were transferred to those shareholders and holders of  American         
Depositary Shares (ADS) of Tele Sudeste Celular Participacoes, S.A. who accepted
the exchange offer. These  new shares  represented 68.41% of share capital (note
11). A restructuring  of  the shareholder  structure  of this company and its
subsidiaries  has  since  begun.  Last  year, Tele Sudeste Celular
Participacoes, S.A.  carried  out  a  capital increase  via  non-cash  payments
from Telerj and Telest,  the  former  minority shareholders in the operators in
which it also had interests and now  owns  100% of  these  two  companies' 
capital.  As a  result  of  these  operations,  the Telefonica  Group, through
its subsidiary Telefonica Moviles,  at  31  December 2000  had  a  direct  and 
indirect Interest of 75.57%  in  the  aforementioned company.  The  company 
continues to be consolidated by the global integration method In the Telefonica
Group's financial statements.

On  the  same  date  as  in  the previous paragraph.  Telefonica,  S.A.  issued
371,350,753  new shares with a nominal value of EUR 1 each, at an issue premium
of EUR 10.91 per share, which were transferred to those shareholders and holders
of American Depositary Shares (ADS) of telecomunicacoes de Sao Paulo, S.A. -
Telesp who  accepted the exchange offer, representing 61.96% of the share
capital.  The Telefonica Group now has a direct and indirect interest of 86.61% 
in the aforementioned company. The company continues to be consolidated by the 
global integration method in the Telefonica Group's financial statements.

On  July 11 Telefonica, S.A. issued 80,954,801 new shares with a nominal  value
of EUR 1 each, at an issue premium of EUR 8.072 per share, which were
transferred  to those  shareholders  and  holders  of  American  Depositary 
Shares  (ADS)  of Telefonica  del Peru, S.A. who accepted the exchange offer.
These  new  shares represent  53.12% of share capital. The Telefonica Group now
has a  direct  and indirect interest of 93.22% in the aforementioned company.
The company continues to  be  consolidated  by  global integration method in the
Telefonica  Group's financial statements.

Also in July Telefonica, S.A. constituted Dutch company Emergia Holding,  N.V.
subscribing  to  and  fully paying up the new company's initial  share  capital,
which amounted to EUR 46,000.

On  27  July Telefonica, S.A. subscribed in full to the EUR 321.5 million
capital increase carried out by Emergia Holding, via a non-cash payment of 100% 
of the share capital of Emergia Uruguay, S.A.

On  28  September 2000 Emergia Holding carried out a further capital  increase,
issuing  18,876,405  new shares with a nominal value of EUR O.10  each,  which, 
by virtue  of the agreements signed with Tyco Gamma Ltd., are fully subscribed 
and paid up. The funds generated by this operation were EUR 33.2 million. After
this operation,  the share capital of Emergia Holding amounts to 298,876,415 
shares with  a  nominal value of EUR 0.10 each, of which Telefonica's direct
shareholding is 93.68%.  The  company is consolidated by global integration 
method  in  the Telefonica Group's financial statements.

Utilicare  Servicios Asistenciales, S.A., in which 100%-owned  Telefonica,  S.A
subsidiary Telefonica Consultora de Proyectos, S.A. had a 70% stake, was  wound
up in the first quarter of 2000. The company, which had been consolidated by the
global integration method in the financial statements of Telefonica, has  now
dropped out of the Telefonica Group's sphere of consolidation.

In  January  2000 Telefonica, S.A., pursuant to agreements  concluded        
with  Banco Bilbao Vizcaya Argentaria, S.A., sold to the latter  a  3%         
stake  in  the  capital  of Terra Networks,  S.A.  obtaining  EUR 453.6         
million in capital gains.

In  December Telefonica acquired 3,386,172 shares in Terra Networks         
representing 0.545% of the latter's share capital. The  Group  has  a         
direct  and  indirect interest of 36.87%  in  the  company,   which         
continues to be consolidated by the global integration method  in  the         
Telefonica Group's financial statements.

On  20  January 2000 Telefonica acquired the remaining 24.6% of TMP        
Worldwide  Espana, S.A, not in its possession and now owns 100%  of 
the  company. On 23 November 2000 TMP increased its capital by EUR 0.3         
million,  with  an  Issue premium of EUR 9.3 million,  which  was  fully        
subscribed by TPI via the non-cash  payment  of  941 shares in International
Publishing Group 2000 S.L. (IPG).

Previously, on 19 July 2000, TPI had acquired 90.48% of IPG  for  EUR        
9.6 million,  via  a cash payment of EUR 2.1 million  and  a  non-cash         
payment of 414,831 shares in TPI worth EUR 0.02 million plus  an  issue         
premium of EUR 7.5 million.

29  December 2000 marked the conclusion of the merger by absorption of       
the International Publishing Group 2000, S.L.  by Goodman Business Press, S.A.U
(Goodman), by which the latter took on the total  combined  assets  of  the  two
companies. On the same date TMP merged  with  the company resulting from this
previous merger, acquiring all its  assets and changing its name to Goodman.

On 27 March 2000 Telefonica acquired 42.91% of Buildnet for EUR 0.02 million. 
On 27 October 2000 Buildnet carried out a capital reduction, to allow it to
write off prior years' losses, and a simultaneous  EUR 0.2  million  capital
increase, with TPI subscribing to EUR 0.1 million thus raising  its stake to
46.35%. The company continues  to  be consolidated by the equity method.

On 12 July  2000  Telefonica  created  Iniciativas  de   Mercados         
Interactivos, S.A.U. (IMI) with share capital of EUR 0.1 million. The aim       
of  this  new company, which has been reported at acquisition cost is to develop
e-commerce between companies.

TPI created Telefonica Publicidad e Informacion Internacional, S.A.U.        
(TPI Internacional),  a  company  whose  corporate  purpose  is   the         
management  of  securities representing the equity  of  companies  not         
residing in Spain. Its capital is 100% owned by TPI.

As  of  31 December 2000 TPI Internacional held 51% of Chilean company       
Publiquias  Chile  (through Publiquias Holding,  SA's  shareholding).         
Both companies are consolidated by the global Integration method.

In  August TPI acquired Guia Local Networks, SA, paying EUR 1.6 million for 20% 
of the share capital. This company has been consolidated by the equity method.

In March the Terra Group acquired a further 5% of the share capital  of      
Terra  Networks Guatemala, S.A., for USD 0.5 million. The Terra  Group         
now  controls  all the share capital of this company, which  continues         
to  be  consolidated  by  the  global  integration  method  in   the         
Telefonica Group's financial statements.

In  January  the  Terra  Group  took  part  in  the  constitution  of        
Electronic Trading System, S,A. Terra Networks, S.A. owns 10% of  this         
company's share capital, which  amounts  to  EUR 24,040,482. This company has
been reported  at  acquisition cost.

Terra  Networks Venezuela, SA, 100% owned by Terra Networks, was constituted  on
February 2 2000 with share capital of VEB 640,000. This company owns  the  Terra
portal  in Venezuela (previously Chevere), which was acquired for USD 4 million.
Both companies are consolidated by the global Integration method.

Terra  Networks  Colombia Holding, SA, was constituted on  30  March  2000.  The
Terra Networks Group has a direct and indirect stake of 99.9% of its capital.

In  July Terra Networks Colombia Holding, S.A. acquired 65% of the share capital
of  LaCiudad.Com for a total of USD 20 million. Both companies are  consolidated
by the global integration method.

In  March Terra Networks, S.A. constituted Red Universal de Marketing y Bookings
Online,  S.A.  (RUMBO)  in partnership with Amadeus Global Travel Distribution,
SA,  with  initial  share  capital  of EUR 1 million.  Terra  Networks,  S.A. 
and Amadeus  Global Travel Distribution, S.A. both have a 50% stake in the
venture, each  having paid out EUR 0.5 million. The company is consolidated by 
the  global integration method in the Telefonica Group's financial statements.

In  March  Terra  Networks,  S.A. acquired 100% of  the  share  capital  of 
Terra Networks  Uruguay, SA (which until then had been known as Stener, S.A.)
for 6,010.1. This company is consolidated by the global integration method.

In  January  Terra  Networks,  SA acquired 100% of Terra  Networks  Servicos  de
Acesso  a  Internet  e  Trading, Sociedade Unipessoal,  Lda.,  which  has  share
capital  of  EUR 5,000, equal to the amount paid by Terra Networks, S.A.  for 
the company.  The company is not currently trading.

In  July  Terra  Networks constituted Terra Networks Intangibles  with  start-up
capital  of  EUR 0.1 million. The new company is recorded at acquisition  cost 
in the financial statements.

In  February  2000  US  subsidiary Terra Networks USA Inc. acquired  a  minority
interest of USD 45 million in Deremate.com Inc., the leading Latin American 
on-line  auction  company. Millions of people connect to DeRemate.com  to  buy 
and sell items. The company began operating in Argentina on 31 August 1999.

In  April 2000 Terra Networks, S.A. reached an agreement with TelePizza, SA  for
a  joint  venture  to  develop  and carry out marketing  and  sales  activities,
through  communication networks such as the Internet and mobile telephones,  for
products  including books, videos, CDs, pre-paid telephone cards,  entertainment
products etc., with distribution and delivery times of between 1 and 24  hours.
Under  the  terms  of the deal, the Company will also be involved  in  providing
telemarketing  and telephone customer services for this joint venture.  In  July
2000 Terra Networks, S.A. and TelePizza formed A Tu Hora, SA, in which each  has
a 50% stake. The new company has total share capital of EUR 2.6 million and
shareholders' equity of EUR 5.6 million.

In  June Terra Networks, SA, acquired an additional 90% of Ifigenia Plus  for 
EUR 12   million   through  its  100%-owned  subsidiary  Terra  Networks 
Espana, SA (previously  Telefonica  Servicios y Contenidos por la  Red,  SA), 
taking  its stake to 100% of the company's capital stock. Ifigenla Plus is
consolidated by the global integration method.

In July Terra Networks, S.A. increased its share capital by 3,750,000         
ordinary  shares with a nominal value of EUR 2 each, at a premium  of  EUR 9    
per share, subscribed and fully paid up by non-cash asset assignments         
consisting  of  49%  and  10%  shareholdings  in  the  capital  of  US         
companies  Terra Networks Access Services USA Llc. and Terra  Networks         
Interactive  Services USA Llc. respectively. Terra Networks  now  owns         
100%  of  the  capital  of  both  companies,  which  continue  to   be         
consolidated  by  the  global integration method  in  the  Telefonica         
Group's financial statements.

In September Terra  Networks increased share capital  by  a  nominal         
amount of EUR 70,967,742, issuing 35,483,871 new ordinary  shares  each         
with a EUR 2 nominal value, at a premium of EUR 60 per share. Telefonica,       
S.A. subscribed and paid for 35,380,101 shares.

In October Terra Networks, SA, increased capital by a nominal value
of EUR 604,063,948,  through  the issue  of  302,031,974  shares  of  EUR 2
nominal  value  each, of the same series and with the same rights a those
currently outstanding, at a premium of EUR 9 per share.

The  purpose  of the above mentioned capital increase was to  fund  the         
acquisition  of US company Lycos Virginia, Inc., successor  to  Lycos,         
Inc.,  by  means of a share exchange, under the terms of  which  Terra         
acquired  100%  of  Lycos  Virginia's  shares  and   the   latter's         
shareholders received Terra shares in exchange, in the ratio  of  2.15         
Terra  shares per Lycos Virginia share. The acquisition  price  was  EUR        
3,388.3 million.  The  company is  consolidated by the global integration
method.

Also  in  September  Ordenamiento de  Links  Especializados,  S.A.,  a         
100%-owned  subsidiary of Terra Networks, bought 100% of Europa  Press         
Comunicaciones, for a total of EUR 6.0 million. This company,  in  turn,        
owns  50% of Advertising Quality, S.L.. so Terra Network's direct  and         
indirect  interest  in Advertising Quality, S.L. now  comes  to  100%.         
Both  Advertising Quality, S.L. and EP Comunicaciones are consolidated         
by  the global integration method in the Telefonica Group's financial         
statements.

On 13 December 2000 Terra Networks, S.A. and Bumeran.com International         
holdings,  Ltd.  reached  an agreement by which  the  former  acquired         
83.2%  of  the  latter for EUR 8.7 million. Bumeran.com is  a  vertical         
employment  and human resources portal and was officially set  up  and         
launched  in  Argentina  in August 1999. It  is  consolidated  by  the         
global integration method.

In December 2000 Terra Networks acquired a 27.73% stake in        
OneTravel.com, Inc, for EUR 16 million. The company is consolidated by         
the equity method.

On 13 June  2000  Terra Networks was involved  in  the  creation of Inversis
Valores y Bolsa, Sociedad de Valores, SA, with a total stake in share capital 
of  10%. The company was recorded  at acquisition cost.

2000 marked the creation of subsidiaries Terra Networks Operation, Inc., and
Terra Networks Games, Co., which are 100% owned by Grupo Terra Networks.  The 
former is consolidated by the global integration  method while the  latter  has 
been recorded at acquisition cost in  the  company's financial statements.

The  Telefonica  Internacional  Group  sold  0.27%  of  US  company,         
Infonet  Services Corporation, for a capital gain of EUR  24.2  million.        
The company continues to be carried by the equity method.

In June Telefonica  de  Argentina, SA, a  Telefonica Group subsidiary, sold 100%
of Radio Liamada SACI, generating EUR 0.5 million in  capital  gains. The
company has now dropped out of the Telefonica Group's sphere of consolidation.

In July, Compania de Telecomunicaciones de Chile, SA, 43.64%-owned by         
the Telefonica Internacional Group, sold 40% of CTC Metropolis-Intercom,
generating capital gains of EUR 14.4 million.  The  company has now dropped out
of the Telefonica Group's sphere of consolidation.

In July the Telefonica Interriacional Group sold all its shares in CRT Fixa, 
representing  16.7% of the company's  share capital, generating  EUR  60 
million. The company has now dropped  out  of the Telefonica Group's sphere of
consolidation.

In   September Compana de Telecomunicaciones de Chile, SA, a subsidiary  of  the
Telefonica Internacional Group, acquired  20% of Empresas  de Tadetas
Inteligentes, SA, for a total of EUR 158.6 million. This company is carried by
the equity method.
 
By  virtue of agreements for the future sale of Cablevision signed in early 
2000, this company is now reported in the financial  statements of  the
Telefonica Group at book value corresponding to December 1999 (carried by the
equity method in 1999).

In December 1999 Telesp acquired 72.6% of the share capital of CETERP,  which
was recorded at cost in the Grupo Telefonica financial statements  and  has 
been  consolidated by  the global integration method since Telesp took control
of the company on 3 January 2000. 
        
November  2000  saw a number of corporate movements and restructuring        
operations at SP Telecomunicacoes Holding, S.A., which had the  effect        
of  increasing Telefonica Internacional, S.A.'s stake in this holding         
company.  The  most  important of these operations was  the  agreement         
reached on 27 November 2000, when the exchange contract signed  on  19         
July  2000  came  into effect, between Telefonica Intemacional,  S.A.         
and  Portugal  Telecom, S.A. in this contract Telefonica Internacional,         
S.A.  would  acquire an addiltional 23% stake in SP Telecomunicacoes         
Holding,  S.A.  (which  controls Telesp)  formerly  held  by  Portugal         
Telecom  Group,  in  exchange  for the  transfer  of  its  direct  and         
indirect  35.8%  stake  in Portelcom Participacoes,  S.A.  (the  holding        
company  that controls Telesp Celular, SA) and a cash payment  of  USD         
59.8 million by instalments.

In  November  2000  Telefonica Internacional,  S.A.  bought  100%  of         
Communication Technology, Inc, headquartered in Miami (USA), for  USD         
16 million. This purchase was recorded at acquisition cost.

DTS  Distribuidora de Television Digital, S.A. increased its capital in 2000 
by EUR 189.3 million. Telefonica Media,  S.A.,  a  100%-owned subsidiary of
Telefonica, S.A., subscribed this increase, receiving a less than proportional
number of the new  shares  issued and thereby reducing its interest  in  the 
share capital of DTS to 48.63%. The company continues to be carried  by  the    
equity method. 

Over the course of 2000 Telefonica Media acquired 344,625 shares  in         
Antena  3  de  Television, taking its stake to  47.42%.  This  company         
continues to be carfied by the equity method.       

Interocio  Games, S.A. and Argentine firm Patagonik Film Group,  S.A.         
in  which  Telefonica Media has interests of 50% and 30% respectively,         
are carried this year by the equity method.

Producciones Multitematicas, S.A.,  a  100%  owned subsidiary of Telefonica 
Media,  formed  the  company  Factoria de Contenidos Digitales, S.A, fully
subscribing to and paying up its initial  share capital of EUR 0.1 million. It
is consolidated  in  Media Group's financial statements  by  the  global
integration method.

At  the  end of 2000 Telefonica Media Group owned 70% of  the  total        
share capital of Euroleague Marketing, S.L., having subscribed to  and         
paid  for shares to the value of EUR 0.04 million in the course  of  the        
year.  The  company is this year consolidated in Telefonica  Group's         
financial  statements  for the first time, by the  global  integration         
method.

Telefonica  Media  has created a new subsidiary, Telefonica  Sport,         
S.A.,  fully  subscribing to and paying for 25% of its share  capital.         
The  new  company  is  consolidated for the first time  in  Telefonica         
Group's financial statements by the global Integration method.

Telefonica  Media has acquired shares representing 51% of  the  total         
capital  of  Venezuelan group Rodven for EUR 51.3 million. The  company         
was reported at acquisition cost.

On 22 February  2000 Telefonica Data Atlas, S.A.  was  constituted with initial 
capital  of  MAD300,000.  Telefonica  Datacorp,  S.A. subscribed  to  60%  of 
this capital. The  company  was  reported  at acquisition cost.

On 31 March 2000 the general meeting of shareholders of Telefonica Data Mexico,
S.A. de C.V. approved a capital since setting the value of the  Telefonica
group's stake, as of 31 December 2000, at EUR 15.9 million.

On  27 April 2000 Telefonica Data Mexico, S.A. de C.V. acquired 85% of  Optel
Telecomunicaciones, S.A. de C.V. for EUR 16.4 million.  At the Optel
Telecomunicaciones,  S.A.  de  C.V. shareholders  meeting  on August 18 2000,
shareholders agreed an MXN 51.3 million capital increase and, subsequently,  on
15 December 2000, a further  increase to the value of MXN 57 million. The main
subscribers to these increases were Telefonica Data Holding, S.L. and Telefonica
DataCorp, which bought 10%  and  15% respectively. In 2001 the controlling
company plans to transfer  its holding to Telefonica Data Holding, S.L. Both 
companies are consolidated by the global integration method.

Colombian companies Rey Moreno, S.A and Telecomunicaciones Ganaderas, S.A. in
which Telefonica Datacorp, S.A. has stakes  of  50% and  50.01%,  respectively,
were fully consolidated in  2000  (having been reported by the equity method on
the 1999 account). 

Telefonica  Datacorp, SA, (formerly Telefonica Data) has  set  up  a  Uruguayan
subsidiary,  Telefonica  Data Uruguay, S.A., with  initial  capital  of  USD  23
million. The subsidiary is fully consolidated in the Telefonica Group's balance
sheet for 2000.

2000  marked the conclusion of Group investments in Telefonica Data Brasil, SA.,
Telefonica  Data  USA,  Telefonica Data Canada, Inc.,  and  Telefonica  Data
Licensing,  all  of  which are now fully owned by the Data group  The  first 
two companies are fully consolidated an the Data group account, while the latter
two are reported at acquisition cost.

Telefonica Datacorp, SA., ACEA and the Fiat Group agreed to create  ATLANET  by
merging  ACEA and Telexis. Capital interests in the new company, which came 
into being  on 28 December, the date of the merger, are as follows: Telefonica 
Data 34%,  ACEA  33%,  and  Fiat-lfil 33%. Setting up the new  venture  entailed
the purchase  by  Telefonica Datacorp: On 1 September 2000, T  Data  bought  30%
of Telexis Spa., a Fiat Group company. On 20 October ACEA bought 11,44% of its 
own shares  from  T  Datacorp, which had a 49% stake in ACEA.  The  company
created through  these  transactions,  ATLANET,  Spa.  was  fully  consolidated 
on  the Telefonica Group's 2000 balance sheet.

On 20 December 2000 Telefonica Datacorp, SA acquired 89.6%  of  the  capital
increase of ACE, in which it has a 40% interest. This lifted its stake  in  the
latter  to  85%.  In September Telefonica Datacorp, SA paid  a  first  call  on
capital equal to 25% of this increase.

On  17  October  Telefonica  Data Holding, S.L. was created,  with  Telefonica
DataCorp subscribing to 100% of the share capital, paid for via a non-cash asset
assignment.  The assets assigned included its stake in the following  companies:
European  Telecom  International,  A.G.;  Rey  Moreno,  SA.;  Telefonica,  Data
Colombia,  SA.;  Telefonica Datos de Venezuela, SA.,  Telefonica  Data  Brasil
Ltda.,  and its 11% interest in ACEA Telefonica, Spa. The total value  of  the
assets assigned as of 31 December 2000 was EUR 65.3 million.

In June 2000 Telefonica de Espana SAU, a fully-owned subsidiary of Telefonica,
SA.,  sold  100%  of  its  subsidiary Telefonica  Sisternas  de  Ingenieria  de
Productos, SA., (TSIP), to Radiotronica, SA. for EUR 150.3 million. The sale 
brought the  Group  capital gains of EUR 141.9 million. This company has now
been  dropped from the Telefonica group's sphere of consolidation.

Telefonica  Soluciones Sectoriales, SA, a 100%-owned  Telefonica  de Espana
S.A.U.  subsidiary  sold its entire interest (71 %) in SOS  Alzheimer,  SA.,  in
March. This company, which was fully consolidated on the financial statements of
the  Telefonica group, was dropped from the sphere of consolidation, generating
a capital loss of EUR 0.4 million.

Telefonica  Soluciones Sectoriales, S.A, also sold its entire interest in  ZZJ
Mundovision,  18.75% of its holding in March and the remaining 6.25% in June.
This sale generated a capital loss for the Telefonica group of EUR 0.4  million.
The company has now been dropped from the group's sphere of consolidation.

Andalucia  Digital  Multimedia, SA., a company in which Telefonica  de  Espana
S.A.U has a 24% interest, joined the Telefonica group's sphere of consolidation
in 2000 and was carried by the equity method.

Telefonica de Espana,  S.A.U.,  has created  Iberwap,  S.A.U., with initial
start-up capital of EUR 0.1 million. In December 2000 the company carried out a
EUR 1.6 million capital increase, fully subscribed and paid up by Telefonica de
Espana, S.A.U.

In  the  second half of the year, directly or indirectly through its 100% owned
subsidiary  Telefonica  Intercontinental,  S.A.,  Telefonica  Moviles  formed
consortiums  with  other operators that have since won licences to provide  3G
mobile telephony services (UMTS) in Germany, Italy and Austria. Details are as
follows:

 Germany:  the  ORLA  consorflum, in which Telefonica Moviles  has  a 57.2%     
 stake,  won  one of six licences awarded in August for a payment  of  EUR 8.4  
 billion.  Telefonica Moviles' total investment was around EUR 1,211 million.   
 ORLA was fully consolidated on the 2000 accounts.

 Italy:  the  IPSE  2000 consortium led by Telefonica Moviles  (which  has  a   
 45.59%  stake)  was  awarded  one  of two broadband  licences  tendered  in    
 October,  at  a price of EUR 3,269 millon. Atlanet, a company  in  which  the  
 Telefonica  group has a 34% interest, owns a further 12% of the consortium.    
 Thus,  the Telefonica group's interest in IPSE 2000 is effectively 46.09%.     
 Telefonica  Moviles and Atlanet have invested EUR 980 million  and  EUR 258    
 million respectively in the project.

 IPSE 2000 is fully consolidated on Group accounts.

 Austria: 3G Mobile Telecommunications, a company 100% owned by Telefonica      
 Moviles with share capital of EUR 0.04 million, was awarded an UMTS licence for
 two frequencies at a price of EUR 117.4 million in November.

 This company was fully consolidated on the 2000 group accounts.

Telefonica Moviles, S.A. has set up Telefonica Moviles USA, S.A. with  initial
start-up  capital  of  EUR 0.01, subscribed to and fully  paid  up  by 
Telefonica Moviles. The company is reported on the Telefonica group consolidated
financial statements by the global integration method.

On 14 April 2000 Telefonica Mobile Solutions, S.A., was created, with start-up
capital of EUR 60.11 million. This new 100%-owned group subsidiary is reported 
by the global integration method.

On 9 October 2000, through its 100% owned subsidiary Tagilo Participacoes.S.A.,
Telefonica Moviles, S.A., acquired a further 0.79% of Tele Sudeste Celular
Participacoes,  S.A., 5,92% of Telest Celular, S.A., 18.92% of Telerj  Celular,
SA,  an  additional  1.76% of Tele Leste Celular Participacoes, SA  and  1%  of
Telebahia Celular, S.A. for a total cost of BRL 350.67 billion. 

At  the  end  of the year Tele Sudeste Celular Participacoes S.A. and Tele 
Leste Celular  Participacoes,  S.A.  acquired,  via  a  capital  increase  with 
share exchange,  capital  interests in its operating subsidiaries  formerly 
owned  by minority  shareholders, taking their stakes in these companies  to 
100%.  After these transactions,  Telefonica Moviles, SA owns 82.01%  of  Tele, 
Sudeste Celular   Participacoes,  S.A. and  10.75%  of  Tele   Leste   Celular
Participacoes.

Tele  Sudeste  Celular Participacoes, S.A., Telest Celular,  S.A.  and Telerj 
Celular,  S.A. are fully consolidated in the  Group  accounts. Tele  Leste 
Celular Participacoes. S.A. and Telebahla  Celular,  S.A. are reported by the
equity method.

On  21  December  2000 Mobilpay International, SA, a  50%-owned  group         
subsidiary,  with share capital of EUR 30 million came  into  being.  The       
company  is reported on the consolidated annual account at acquisition cost.

In  June  Terra Networks, S.A. announced the creation of Terra Mobile, S.A  In
partnership with Telefonica Moviles, S.A., with start-up share capital  of  EUR
0.6 million. Terra Networks, S.A. owns 49% of  the  new company  and Telefonica
Moviles, S.A. the remaining 51%, having  paid EUR 0.3 million and EUR 0.3
million respectively for their holdings.  The company is reported by the global
integration method.

Terra  Mobile  has  bought  100% of Finish  technology  developer and mobile 
internet  service provider I.0. Box, for EUR  216.2  million.  The company  is 
fully consolidated  on the Telefonica  group  financial statements.

In January Telefonica Intercontinental,  S.A., a fully owned Telefonica Moviles
subsidiary, sold 4% of its Moroccan holding,  Medi Telecom,  at  cost  price, 
The sale reduced the  Telefonica group's stake in  Medi Telecom share capital to
30.5%. Medi Telecom joined the Telefonica group's sphere of consolidation in
2000 when it was carried by equity method.

In  the  course of 2000 100%-owned Telefonica, S.A. subsidiary, Atento Holding
Inc, constituted the following companies:

 - 100% of Atento Argentina, SA, with initial capital of USD 12,000.

 - 100% of Atento Colombia, SA, with initial capital of COP 10 million          


 -  99.87% of Atento Maroc, S.A., with initial capital of MAD 300,000.

 - 100% of Atento Venezuela, with initial capital of USD 147.

 - 99.5% of Atento Asia Pacifico, with registered offices in  Japan and initial 
   capital of JPY 10 million.

 - 69.99% of Atento Pasona, with registered offices in  Japan  and initial      
   capital of JPY 500 million.

 - 100% of Atento Holding Chile with initial capital of USD 36 million.

 - 100% of Atento Puerto Rico with initial capital of USD 100.

 - 100% of Atento Italia with initial capital of ITL 20 million.

 - 100% of Atento Mexico with initial capital of MXN 50,000.

 - 99% of Atento Recursos with initial capital of CLP 1 million.

 - 99% of Atento Education with initial capital of CLP 1 million.

Atento  Brasil,  S.A.  has  absorbed  its  subsidiaries Trilha sistemas  de
Comunicacao  Ltd,  Quatro  A Centrais de Atendimento e  Telemarketing,  S.A  and
Quatra A Nordeste.

All  these  companies  were fully consolidated on the  2000  consolidated  group
account.

On 22 December 2000 Atento Telecomunicaciones Espana, S.A. acquired a further
24.5% of the share capital of Gest16n de Servicios de Emergencia y Atencion  al
Ciudadano, S.A. for  a sum of EUR 0.4 million. 100% of Atento Telecomunicaciones
Espana, S.A. is still reported on the financial statements of Grupo Atento  by
the global integration method.


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