Interim dividend

Telefonica SA
03 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


SIGNIFICANT EVENT

Pursuant to the resolution adopted by the Board of Directors of Telefonica, S.A.
at its meeting held on February 28th, 2006, we hereby inform all shareholders
that on May 12th, 2006 the Company will pay an interim dividend from 2005 net
income of a fix gross amount of 0.25 euros for each Company share issued, in
circulation and carrying entitlement to this dividend. This payment, in
accordance with the applicable tax legislation, will be made as follows:


       Gross dividend              Withholding tax rate (15%)       Net dividend
     (Euros per share)                 (Euros per share)                  (Euros per share)

            0.25                             0.0375                            0.2125


The payment of this dividend shall be executed from May 12th, 2006 by Banco
Bilbao Vizcaya Argentaria, S.A., through the participating entities in Iberclear
(Sociedad de Gestion de los Sistemas de Registro, Compensacion y Liquidacion de
Valores, S.A.), the Spanish securities registrar, clearing and settlement
company.


Madrid, May 3rd, 2006


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