Joint Venture

Telefonica SA
28 April 2000


            TELEFONICA MOVILES AND SUEZ LYONNAISE DES EAUX FORM 
            JOINT VENTURE TO BID FOR UMTS LICENCE IN FRANCE


Madrid, 27 April, 2000 - Telefonica (NYSE:TEF) and Suez Lyonnaise des Eaux have
concluded an agreement to apply jointly for one of the UMTS licenses in France.
The Authorite des Regulation des Telecommunications (ART) is expected to
initiate next June the issuance process of the licences for the provision of
third-generation of mobile phones.

Suez Lyonnaise des Eaux will hold 60% of the equity and Telefonica
Intercontinental, S.A., a business unit of Telefonica Moviles, will take the
remaining 40%.

Mobile phones have grown steadily in the last 2 years in France. The year 2000
began with more than 20 million subscribers confirming that France had caught up
with the other two potentially largest European markets (UK and Germany). Italy,
with close to 30 million subscribers, half of the population, remains at present
the most developed market in Europe. However, France, with the fastest growth in
its penetration rate (34% at year-end 1999) is one of the most dynamic mobile
markets in Europe.

Universal Mobile Telecommunications Systems (UMTS) will allow consumers and
companies easy access to internet, e-commerce, data and multimedia services.

Suez Lyonnaise des Eaux the second-largest water company in the world, which
also distributes electricity and gas, expands its involvement in the
telecommunications and media sector through the joint UMTS application with
Telefonica for the mobile market in France. Around 25% of Suez Lyonnaise des
Eaux 1999 revenues, 31.5 billion euros, already came from non-core (broadband,
technology and television and content) activities. Broadband activities include
majority stakes in Lyonnaise Cable and Coditel. Together with FirstMark Comm.
and Groupe Arnault, Suez Lyonnaise des Eaux has also applied for the Wireless
Local Loop licenses in France. Its participation in the television and content
business is represented by shareholdings in M6, TPS and Paris Premiere.

The stock market capitalization of Suez Lyonnaise des Eaux is currently around
35 billion euros and international revenues during 1999 were 10.2 billion euros,
some 27% of total turnover. Tractebel, its energy company, holds equity
interests in United States, Germany, Spain and Latin America.

Telefonica is one of the five largest mobile telephony providers in the world,
with more than 20 million clients spread across Europe, Latin America and
Morocco, and holds a UMTS license in Spain. Telefonica owns one of the leading
Internet companies, Terra, with more than 630 million monthly visits to its web
pages and a market capitalization of some 19 billion euros. The Telefonica Group
had 1999 revenues of almost 23 billion euros.

Telefonica InterContinental last April 14 signed an agreement with ACEA, the
power and water utility of the city of Rome, to jointly bid for UMTS license in
Italy.

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