Merger deed recording

Telefonica SA
21 July 2005



Further to the significant event released on July 15th, 2005, Telefonica, S.A.
hereby reports that the Deed of the Merger by Absorption of Terra Networks, S.A.
by Telefonica, S.A. was recorded with the Commercial Registry of Madrid on July
16th, 2005. The Merger has become therefore effective from that date and as a
result of this, the shares of Terra Networks have been extinguished.


Madrid, July 21st, 2005


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