Issue of Debt

Telefonica SA
25 October 2001



'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 Managing Directors of  Europe, B.V., a subsidiary of , S.A., at its
meeting held on October 23, 2001 resolved to issue Notes under its Euro 
8,000,000,000 Programme for the Issuance of Debt Instruments, guaranteed by , 
S.A.

The Company will issue Euro 1,000,000,000 Fixed Rate Notes (5 1/8 per cent) due 
2006 and Euro 1,000,000,000 Floating Rate Notes (3- months deposits in EURIBOR 
plus 0.70 per cent) due 2004.

Listing: Application will be made to the London Stock Exchange

The issue is exclusively directed to professional and institutional investors.


Madrid, October 25, 2001.