Offer Update-EU clearance

Telefonica SA
10 January 2006

Telefonica, S.A.
10 January 2006


FOR IMMEDIATE RELEASE
10 January 2006

   Not for release, publication or distribution in or into the United States,
                           Canada, Australia or Japan


                             Recommended Cash Offer
                                       by
                          Goldman Sachs International
                                      and
                        Citigroup Global Markets Limited
                                  on behalf of
                                Telefonica, S.A.
                                      for
                                     O2 Plc

Offer update - EC Merger Regulation clearance

Telefonica is pleased to announce that the European Commission has cleared its
proposed acquisition of O2. Clearance was conditional upon Telefonica agreeing
that Telefonica Moviles would exit from the FreeMove Alliance. The prior
approval of the European Commission would be required for Telefonica Moviles to
rejoin FreeMove within the coming years.

The Offer remains conditional upon the conditions set out in paragraphs 3 to 11
of Part A of Appendix I to the Offer Document.

The Offer remains open for acceptance and is hereby extended to 1.00 p.m.
(London time) on 26 January 2006. However, O2 Shareholders are urged to accept
the Offer as soon as possible and before 1.00 p.m. (London time) on 20 January
2006.

O2 Shareholders who have not yet accepted the Offer and who hold O2 Shares in
certificated form are urged to complete, sign and return the Form of Acceptance
as soon as possible to Lloyds TSB Registrars.

If you hold O2 Shares in uncertificated form (that is, in CREST), you are urged
to accept the Offer by TTE instruction as soon as possible.  If you hold O2
Shares as a CREST sponsored member, you should refer to your CREST sponsor, as
only your CREST sponsor will be able to send the necessary TTE instruction to
CREST.

If you are an O2 Easyshare Shareholder, you are urged to instruct O2 Easyshare
NomineeCo to accept the Offer on your behalf by completing, signing and
returning the Form of Instruction as soon as possible to Lloyds TSB Registrars
at The Causeway, Worthing, West Sussex BN99 6DA.

Telefonica expects that the Offer will be declared wholly unconditional in
January 2006.

Shareholders should note that if the Offer becomes or is declared unconditional
in all respects, and sufficient acceptances are received, Telefonica intends to
procure that O2 will make an application to the appropriate authorities to
de-list the O2 Shares from the Official List and to cancel admission to trading
of O2 Shares on the London Stock Exchange's market for listed securities.

Shareholders should further note that, subject to the Offer becoming or being
declared wholly unconditional, once Telefonica has acquired, or agreed to
acquire, more than, 90 per cent. of the O2 Shares to which the Offer relates, it
will implement the procedures set out in sections 428 to 430F of the Companies
Act to acquire compulsorily those O2 Shares for which it has not received
acceptances of the Offer.

Copies of the Offer Document are available from Lloyds TSB Registrars at
Princess House, 1 Suffolk Lane, London EC4R 0AX.

Terms defined in the offer document dated 21 November 2005 (the 'Offer Document
') shall have the same meanings in this announcement.



ENQUIRIES

Lloyds TSB Registrars      Tel: [phone] (if calling from within the United
                                               Kingdom)


                           Tel: [phone] (if calling from outside the 
                                                     United Kingdom)


                        
Telefonica                                       Tel: [phone]
Investor Relations Office

Citigroup Global Markets Limited - London        Tel: [phone]
Mark Simonian
William Kennish
Matthew Smith

Citigroup Global Markets Limited - Madrid        Tel: [phone]
Ignacio Gutierrez Orrantia

Goldman Sachs International - London             Tel: [phone]
Luca Ferrari
Phil Raper (Corporate Broking)

Goldman Sachs International - Madrid             Tel: [phone]
David Jimenez-Blanco
Juande Gomez-Villalba

Hudson Sandler                                   Tel:  [phone]
Andrew Hayes                                     Fax: [phone]
Sandrine Gallien



Goldman Sachs International, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for
Telefonica and no one else in connection with the matters described in this
announcement and is not advising any other person and accordingly will not be
responsible to any person other than Telefonica for providing the protections
afforded to clients of Goldman Sachs International or for providing advice in
relation to the matters described in this announcement.

Citigroup Global Markets Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting exclusively for
Telefonica and no one else in connection with the matters described in this
announcement and is not advising any other person and accordingly will not be
responsible to any person other than Telefonica for providing the protections
afforded to clients of Citigroup Global Markets Limited or for providing advice
in relation to the matters described in this announcement.

This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities.  Any acceptance or other response to
the Offer should be made only on the basis of information referred to in the
Offer Document.

The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction.  Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction.  Further details in relation to
Overseas Shareholders contained in the Offer Document.

Unless otherwise determined by Telefonica, the Offer is not being, and will not
be, made, directly or indirectly, in or into or by the use of the mails of, or
by any means or instrumentality (including, without limitation, telephonically
or electronically) of interstate or foreign commerce of, or through any
facilities of a national securities exchange of, the United States, Canada,
Australia or Japan or any other jurisdiction if to do so would constitute a
violation of the relevant laws of such jurisdiction, and the Offer should not be
accepted by any such use, means, instrumentality or facilities or from or within
the United States, Canada, Australia or Japan or any such other jurisdiction.
Accordingly, copies of this announcement are not being, and must not be mailed
or otherwise forwarded, distributed or sent in, into or from the United States,
Canada, Australia or Japan and all persons receiving this announcement
(including nominees, trustees and custodians) must not mail or otherwise
forward, distribute or send it in, into or from the United States, Canada,
Australia or Japan.  Doing so may render invalid any purported acceptance of the
Offer.  Notwithstanding the foregoing, Telefonica will retain the right to
permit the Offer to be accepted and any sale of securities pursuant to the Offer
to be completed if, in its sole discretion, it is satisfied that the transaction
in question can be undertaken in compliance with applicable law and regulation.
The Loan Notes will not be made available to O2 Shareholders in the United
States, Canada, Australia or Japan or any other jurisdiction in respect of which
the issue of Loan Notes would be unlawful.






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