Increase of Share Capital

Telefonica SA
17 November 2000


'TELEFONICA, S.A.', in accordance with that stated in article 82 of the  Spanish
Stock Market Law, hereby announces the following.

                              SIGNIFICANT EVENT

The Board of Directors of 'Telefonica, S.A.', applying the procedure set forth
by the law in force regarding the adoption of resolutions in writing and without
the holding of a Board meeting, has today resolved to execute the resolution on
the increasing of the Company's share capital, to be charged to  freely
disposable reserves, as approved by the Annual Shareholders' Meeting of  April
7th,  2000,  through the issuance and listing of  85,035,321 ordinary Company
shares, of the same series and carrying the same rights as those currently
outstanding, with a nominal value of one euro each, which therefore  means that
the share capital is to rise by euros 85,035,321.

This capital increase shall be effected wholly subject to the conditions
established in the resolution V, section A), of those resolutions approved by
the General Shareholders' Meeting of April 7th, 2000 and the new shares shall be
issued in accordance with the provisions Of the Securities Markets Act  24/1988
of July 28 and other pertinent regulations.

For this purpose, the procedures established in law to satisfy the prior legal
requirements for a capital increase shall be effected immediately, following
which the corresponding announcement shall be published in the Official Gazette
of the Mercantile Register, thus marking the start of the period of free
allocation of the new shares to whomsoever is a shareholder at the end of the
day on which this announcement is published, in the proportion of one new share
for every fifty old shares held.

The period of free allocation shall be fifteen days, during which time the right
of free allocation corresponding to shareholders may be exercised through  any
member institution of the Securities Settlement and Clearing Service, and  may
also be issued or traded under the same conditions as the shares from which they
derive.

Lastly, the new shares shall be entitled to receive the full sum of dividends
resolved to be distributed as from the date of their issue and their admission
to official listing on the markets where the Company's shares already trade
shall be requested as soon as possible.

Madrid, November 16th, 2000