Organisational and Functional Restructuring

Telefonica SA
13 January 2000


                                  PUBLIC NOTICE

TELEFONICA, S.A., pursuant to Section 82 of the Securities Market Law and
Circular 2/1993,  of  July  3,  hereby  notifies the Spanish National 
Securities  Market Commission, of the following

                                   RELEVANT ACT

The  Board of Directors of TELEFONICA, S.A. has agreed, in the meeting held on
the date hereof, to continue with the organisational and functional
restructuring of the  company by business branches enlarging it to mobile phone
services  and  to data  transmission business and to offer to the shareholders
of its subsidiaries TELECOMUNICAC0ES  DE   SAO  PAULO,  S.A.  -  TELESP,  TELE 
SUDESTE  CELULAR PARTICIPACOES, S.A., TELEFONICA DE ARGENTINA, S.A. y TELEFONICA
DEL PERU, S.A.A. the exchange  of  their  shares  and American Depositary Shares
 ('ADSs')  in  these companies  for  shares  of  TELEFONICA,  S.A.  to  be 
issued  pursuant  to   the corresponding share capital increases.

The  Board  of  Directors  has  also agreed to  call  an  Extraordinary  General
Shareholders' Meeting to be held on February 4, 2000 in second call (if, as  is
foreseen, it is not held in first call on the previous day) to approve six share
capital increases, four of them to address the exchange of shares and the  other
two  to  allow  the  acquisition of 100% of the share capital  of  CEI  CITICORP
HOLDINGS,  S.A. ('CEI') and 70% of the share capital of ATLANTIDA
COMUNICACIONES, S.A.  ('ATCO')  as informed in the public notice circulated on
January  3,  2000, besides some other resolutions.

Among  the  adopted resolutions, and as a previous step to the  above  mentioned
offers,  it  is been agreed to apply for, pursuant to the delegation  resolution
passed  by  the  Shareholders'  Meeting of 1997, the  admission  to  listing  of
TELEFONICA's  shares  or  the  securities  representing  such  shares  (ADSs  or
Brazilian  Depository  Receipts BDRs-) in the main  Stock  Exchanges  of 
Brazil, Argentina and Peru.

The  Board  of Directors has also agreed the appointment of Mr. Luis  Martin  de
Bustamante  and  Mr. Antonio Viana-Baptista as new Directors in substitution of
Mr. Javier Revuelta and Mr. Juan Perea.

It  is  attached hereto, as Annex 1, the Agenda of the Shareholders Meeting,  as
Annex 2,   a   press  notice  regarding  the  organisational  and   functional
restructuring  and  the  offers, a summary of the most important  aspects  of 
such offers,  as  Annex 3 and a summary of the most important aspects of  the 
share capital increases for the acquisition of CEI and ATCO as annex 4.

Madrid, January 12, 2000

                              ANNEX 1

Agenda of the Shareholders' Meeting of TELEFONICA, S.A. to be held on February  
    3, 2000 in first call and on February 4, 2000 in second call

First. Ratification and appointment of Directors

Second.Increase of share capital for a nominal value of 432,159,596 euros,
       through the issue and circulation of 432,159,596 new ordinary shares of  
      one (1) euro of nominal value each, an issue price of 1,191% of its       
     nominal value, with a share premium of 10.91 euros per share, which will   
    be subscribed and totally paid up through non cash contributions which      
   consist of ordinary or preferred shares of TELECOMUNICACOES  DE  SAO         
  PAULO, S.A.- TELESP,  or  in securities which represent them (American        
 Depositary Shares, 'ADS') in order  to attend  to the established              
contribution for the acquisition,  through public  offer  of  exchange         
of said shares or  securities  agreed  by TELEFONICA, S.A. Total               
exclusion of the preferred subscription  right and  contemplation of an        
incomplete subscription. Delegation  to  the Board  of Directors, with         
the faculty of substitution by the Standing  Committee  or  by  any  of        
the Managing  Directors,  of  the  proper faculties  to  determine the         
conditions of the capital  increase  not contemplated by the General           
Meeting's resolutions, to carry  out  any necessary  action  for  its          
execution, to modify  Article  5  of  the By-laws  according  to  the          
new amount of the share  capital  and  to grant any private or public          
documents necessary for the execution  of the  capital  increase.              
Application of listing of the new  shares  in the  national  or                
international exchanges, in the required  form  for each one.

Third. Increase of share capital for a nominal value of 102,889,652 euros,
       through the issue and circulation of 102,889,652 new ordinary shares of  
      one (1) euro of nominal value each, an issue price of 399.5 % of its      
     nominal value, with a share premium of 2.995 euros, per share, which       
    will be subscribed and totally paid up through non cash contributions       
   which consist of ordinary or preferred shares of TELE SUDESTE CELULAR        
  PARTICIPAC0ES, S.A, or in securities which represent them (American           
 Depositary Shares, 'ADS') in order to attend to the established                
contribution for the acquisition through public offer of
       exchange of said shares or securities agreed by TELEFONICA, S.A. Total   
      exclusion of the preferred subscription right and contemplation of an     
     incomplete subscription.  Delegation to the Board of Directors, with the   
    faculty of substitution by the Standing Committee or by any of the          
   Managing Directors, of the proper faculties to determine the conditions      
  of the capital increase not contemplated by the General Meeting's             
 resolutions, to carry out any necessary action for its execution,
       to modify Article 5 of the By-laws according to the new amount of the
       share capital and to grant any private or public documents necessary for
       the execution of the capital increase. Application of listing of the new 
      shares in the national or international exchanges, in the required form   
     for each one.

                            
Forth. Increase of share capital for a nominal value of 172,037,573 euros,
       through the issue and circulation of 172,037,573 new ordinary shares of  
      one (1) euro of nominal value each, an issue price of 912.9 % of its      
     nominal value, with a share premium of 8.129 euros per share, which will   
    be subscribed and totally paid up through non cash contributions which      
   consist of ordinary or preferred shares of TELEFONICA DE ARGENTINA,          
  S.A., or in securities which represent them
       (American Depositary Shares, 'ADS') in order to attend to the
       established contribution for the acquisition through public offer of     
      exchange of said shares or securities agreed by TELEFONICA, S.A. Total    
     exclusion of the preferred subscription right and contemplation of an      
    incomplete subscription. Delegation to the Board of Directors, with the     
   faculty of substitution by the Standing Committee or by any of the           
  Managing Directors, of the proper faculties to determine the
       conditions of the capital increase not contemplated by the General
       Meeting's resolutions, to carry out any necessary action for its         
      execution, to modify Article 5 of the By-laws according to the new        
     amount of the share capital and to grant any private or public documents   
    necessary for the execution of the capital increase.
       Application of listing of the new shares in the national or
       international exchanges, in the required form for each one.

Fifth. Increase of share capital for a nominal value of 85,464,976 euros,
       through the issue and circulation of 85,464,976 new ordinary shares of   
      one (1) euro of nominal value each, an issue price of 907.2 % of its      
     nominal value, with a share premium of 8.072 euros per share, which will   
    be subscribed and totally paid up through non cash contributions which      
   consist of ordinary or preferred shares of TELEFONICA DEL PERU, S.A. ,       
  or in securities which represent them (American Depositary Shares,            
 'ADS') in order to attend to the established contribution for the              
acquisition through public offer of exchange of said shares or
       securities agreed by TELEFONICA, S.A. Total exclusion of the
       preferred subscription right and contemplation of an incomplete          
      subscription. Delegation to the Board of Directors, with the faculty of   
     substitution by the Standing Committee or by any of the Managing           
    Directors, of the proper faculties to determine the conditions of the       
   capital increase not contemplated by the General Meeting's
       resolutions, to carry out any necessary action for its execution, to
       modify Article 5 of the By-laws according to the new amount of the share 
      capital and to grant any private or public documents necessary for the    
     execution of the capital increase. Application of listing of the new       
    shares in the national or international exchanges, in the required form     
   for each one.

Sixth. Increase of share capital for a nominal value of 19,500,000 euros,
       through the issue and circulation of 19,500,000 new ordinary shares of   
      one (1) euro of nominal value each and a share premium which will be      
     determined according to the provision of Art 159.1 c) in fine of the       
    Commercial Law ('Ley de Sociedades Anonimas'), by the Board of Directors    
   on the execution date of the resolution and with an amount that in any       
  case will be established between a minimum of 5.5 euros and a maximum of      
 6.5 euros. The new shares will be subscribed and totally
       paid up through non cash contributions which consist of shares of the
       companies Vigil Corp, S.A and Ambit, S.A. Total exclusion of the         
      preferred subscription right and contemplation of an incomplete           
     subscription. Delegation to the Board of Directors, with the faculty of    
    substitution by the Standing Committee or by any of the Managing            
   Directors, of the proper faculties to determine the conditions of the
       capital increase not contemplated by the General Meeting's
       resolutions, to carry out any necessary action for its execution, to     
      modify Article 5 of the By-laws according to the new amount of the share  
     capital and to grant any private or public documents necessary for the     
    execution of the capital increase.  Application of listing of the new       
   shares in the national or international exchanges, in the required
       form for each one.

Seventh. Increase of share capital for a nominal value of 110,000,000 euros,
       through the issue and circulation of 110,000,000 new ordinary shares of  
      one (1) euro of nominal value each and a share premium which will be      
     determined according to the provision of Art 159.1 c) in fine of the       
    Commercial Law ('Ley de Sociedades Anonimas') by the Board of Directors     
   on the execution date of the resolution and with an amount that in any       
  case will be established between a minimum of 10 euros and a maximum of       
 13 euros. The new shares will be subscribed and totally
       paid up through non cash contributions which consist of shares of the
       company CEI Citicorp Holdings, S.A. Total exclusion of the preferred
       subscription right and contemplation of an incomplete subscription.      
      Delegation to the Board of Directors, with the faculty of substitution    
     by the Standing Committee or by any of the Managing Directors, of the      
    proper faculties to determine the conditions of the
       capital increase not contemplated by the General Meeting resolutions,
       to carry out any necessary action for its execution, to modify Article 5 
      of the By-laws according to the new amount of the share capital and to    
     grant any private or public documents necessary for the execution of the   
    capital increase. Application of listing of the new shares in the           
   national or international exchanges, in the required form for each one.

Eighth. Delegation to the Board of Directors, with faculty of substitution by
        the Standing Committee or by any of the Managing Directors, of the      
       proper faculties of rectification, development and execution of the      
      adopted resolutions in the General Meeting. Granting of faculties to      
     execute the resolutions of capital increase in the order and at the        
    moment that is estimated convenient within the one year period
        established in Art. 153.1 (a) of the Commercial Law ('Ley de
        Sociedades Anonimas'), the execution of any increase not being          
       conditioned to the execution of the others. Granting of faculties for    
      the formalization of resolutions.

                              ANNEX 2

     Press notice regarding the organisational and functional restructuring
                                 and the Offers

   TELEFONICA SA ANNOUNCES THE PUBLIC TENDER
   FOR 100% OF THE SHARES OF TELESP, TELESUDESTE
   CELULAR, TELEFONICA DE ARGENTINA AND
   TELEFONICA DEL PERU, IN A STOCK FOR STOCK TRANSACTION

   TELEFONICA LAUNCHES TWO NEW GLOBAL
   BUSINESSES: TELEFONICA MOVILES AND TELEFONICA DATACORP

* Telefonica Moviles will cover all mobile operations, becoming the sixth       
 largest mobile group in the world.

* Telefonica DataCorp will be the world's second largest Data/IP specialized
  player.

* The Board of Directors will propose the issuance of the new Telefonica stock  
 at an extraordinary shareholders meeting to be held on February 4.

* Telefonica adapts its organizational structure to develop the business model
  launched two years ago.

Madrid,  January  12,  2000 - The Board of Directors  of  Telefonica  has
approved  today the creation of two new global businesses, further developing
the  business model launched nearly two years ago. Following in the steps  of
Terra  TPI-Paginas  Amarillas and Telefonica Media,  the  first  two  having
already  earned  the support from the markets, two new global businesses  are
now being launched:

*      Telefonica    Moviles,   grouping   all   of   Telefonica's    Mobile
       Communications  businesses  worldwide, and  present  in  Spain,  Latin
       America,  Europe and the Magreb will become the world's sixth  largest
       Mobile  Group  worldwide with close to 14 million customers  and  with
       good  expectations for future growth. This company will be responsible
       for  accelerating  business  development  worldwide  as  well  as  for
       entering  the European market by acquiring UMTS licenses.  Luis  Martin
       de  Bustamante, until today Chief Executive Officer of Telefonica  de
       Espana, will become the Executive Chairman of this global company.

*      Telefonica DataCorp, grouping all Data Communications and  Integrated
       Business  Solutions  for  major corporate customers  in  Spain,  Latin
       America  and  Europe, will become the world's second  largest  Data/IP
       specialized   player   by  revenues.  Antonio  Viana-Baptista   Chief
       Executive  Officer  of Telefonica Internacional  (TISA),  will  become
       Chairman  of the company, with Guillermo Fernandez Vidal as its  Chief
       Executive Officer.

In  so  doing, Telefonica develops further the business model  that  it
initiated  nearly two years ago, stressing the differentiated  management  of
the  Group's businesses and capturing the full value creation potential  from
each  one  of  them  by globalizing high growth businesses  (Moviles,  Terra,
DataCorp,  TPI-Paginas Amarillas), developing new businesses and  optimizing
more mature businesses, such as Wireline Communications.

To   accelerate  the  development  and  globalization   of   these   new
businesses,  the Board of Directors has approved the launch of  an  all-stock
Public  Tender  for  100%  of the shares of Telesp,  TeleSudeste  Celular  in
Brazil,  Telefonica de Argentina and Telefonica del Peru. The exchange  ratio
implies  a premium of 40% over the average market price during the last  five
trading  days, to be adjusted for exchange purposes. The Board  of  Directors
has  approved  proposing the issue of new stock, to an Extraordinary  General
Shareholder's Meeting to be held on February 4. Telefonica S.A. will  request
a  listing of its shares on the Stock Exchanges of Sao Paulo, Rio de Janeiro,
Buenos Aires and Lima.

By  doing  so,  Telefonica wishes to extend the benefits of  its  global
project  to  the shareholders of these Latin American companies  by  offering
them  the  possibility  to participate in the future  growth  of  its  global
businesses,  becoming shareholders of one of the world's  leading  companies,
the  clear leader in its natural market of 550 million Spanish and Portuguese
speaking people.

        The exchange ratios will be the following:

1. Comp                   2. Exchange ratio
   any

3. Telefo 15 shares of Telefonica for every 90 shares of Telefonica Argentina.
    nica  5 ADSs of Telefonica(1) for every 90 shares 'B' of Telefonica         
         Argentina
    de    5 ADSs of Telefonica(1) for every 9 ADSs of Telefonica de Argentina
    Argen                                                                  (2)
    ina

4. Telesp 36 shares of Telefonica for every 46,000 ordinary shares of Telesp.
          48 shares of Telefonica for every 37,000 preference shares of Telesp.
          12 ADSs of Telefonica(1) for every 46,000 ordinary shares of Telesp.
          16 ADSs of Telefonica(l) for every 37,000 preference shares of        
         Telesp.
          16 ADSs of Telefonica(l) for every 37 ADSs of Telesp (3).

Tele Sudeste    12 shares of Telefonica for every 54,000 ordinary shares of    
Celular         Tele Sudeste Celular.
                24 shares of Telefonica for every 55,000 preference shares of   
               Tele Sudeste Celular.
                4 ADSs of Telefonica(1) for every 54,000 ordinary shares of     
               Tele Sudeste Celular.
                8 ADSs of Telefonica(l) for every 55,000 preference shares of   
               Tele Sudeste Celular.
                8 ADSs of Telefonica(1) for every 11 ADSs of Tele Sudeste       
               Celular (4).
Telefonica      7 ADSs of Telefonica (1) for every 290 shares 'B' or 'C' of    
del Peru        Telefonica del Peru.
                7 ADSs of Telefonica(1) for every 29 ADSs of Telefonica del     
               Peru(5).

(1) 1 ADS = 3 ordinary shares.

(2) 1 ADS = 10 ordinary shares.

(3) 1 ADS = 1,000 preference shares.

(4) 1 ADS = 5,000 preference shares.

(5) 1 ADS = 10 ordinary shares.

    The Board of Directors also approved the creation of Telefonica B2B as a
new business line to accelerate the development of this growing market
opportunity in close collaboration with Terra and Telefonica DataCorp.

Also,  Juan  Perea  will  depart  from  the  Board  of  Directors  to  focus
exclusively on the development and growth of Terra Networks and Luis  Martin  de
Bustamante  and  Antonio Viana-Baptista have been appointed new members  of  the
Board   of   Directors.   Antonio  Viana-Baptista  will,  in   addition,  
assume responsibility  for  all  Wireline Businesses  in  Latin  America  and 
for  the Carrier's Carrier business (submarine cable). To cover the vacant post
left  by Luis  Martin de Bustamante in Telefonica de Espana, Julio Linares,
until  today General Manager for Strategy and Technology, has been appointed
Chairman and CEO of Telefonica de Espana.

The  creation of these new global businesses will allow Telefonica to  continue
growing and creating value for its shareholders.

TELEFONICA DE ARGENTINA. OPERATING AND FINANCIALS HIGHLIGHTS.

          Million US$               Fiscal year ended
                                    09/30/1999 (1)

Operating Revenues                   3,399
EBITDA before Management fee         1,873
EBITDA margin before Management fee    55%
Net Income                            456
Total Assets                        7,010
Fixed lines in service (000)        3,934
Lines in service per employee         386
Cellular subscribers (000)            840

(1) TASA's fiscal year extended from October 98 to September 99.

TELESP 2).    OPERATING AND FINANCIAL HIGHLIGHTS



         Million US$               Fiscal year ended        Nine months ended
                                        12/31/98                09/30/1999

Operating Revenues                        3,527                    1,911
EBITDA before Management fee              2,075                    1,177
EBITDA margin before Management fee          59%                      62%
Net Income                                  584                      180
Total Assets                             12,804                    8,076
Fixed fines in service (000)              6,409                    7,690
Lines in service per employee               338                      490

(2) Telesp figures before the corporate Restructuring that took place in the
fourth quarter of 1999.


TESUDESTE CELULAR PARTICIPACOES. OPERATING AND FINANCIAL HIGHLIGHTS
  

         Million US$               Fiscal year ended        Nine months ended
                                        12/31/98                09/30/1999

Operating Revenues                          795                      618
EBITDA before Management fee                244                       80
EBITDA margin before Management fee          31                       13%
Net Income                                  152                      6.5
Total Assets                              1,129                      942
Cellular subscribers (000)                  772                    1,573

TELEFONICA. DEL PERU. OPERATING AND FINANCIALS HIGHLIGHTS.

         Million US$               Fiscal year ended        Nine months ended
                                        12/31/98                09/30/1999

Operating Revenues                        1,255                      933
EBITDA before Management fee                707                      584
EBITDA margin before Management fee          56%                      63%
Net Income                                  213                      121
Total Assets                              3,353                    3,187
Fixed lines in service (000)              1,556                    1,669
Lines in service per employee               326                      391
Cellular subscribers (000)                  504                      667

'The exchange offers and other transactions described above require regulatory
or other government approvals in Spain, the United States, Brazil, Argentina and
Peru, including authorizations or other actions by securities commissions in
each of the jurisdictions. Telefonica intends to file promptly the documentation
required to obtain these approvals and authorizations, including
registration statements relating to the Telefonica shares and ADSs to be
offered. Telefonica will make available to investors more information about its
proposals as the various governmental filings are made. Commencement of each of
the offers relating to each company will be delayed until all approvals for that
company have been obtained and the related United States registration
statements have been declared effective.'



                                 ANNEX 3
               Summary of the relevant terms of the offers

1.     Companies which are the object of the Tender Offers

The  Board  of Directors of TELEFONICA, S.A ('TELEFONICA') has agreed  to
make  tender  offers for the acquisition of the shares  representing  the
total  share capital of the Brazilian companies TELECOMUNICACOES  DE  SAO
PAULO, S.A. - TELESP ('TELESP'), TELE SUDESTE CELULAR PARTICIPACOES, S.A.
('TELE  SUDESTE'),  of  the Argentinean company TELEFONICA  DE  ARGENTINA,
S.A. ('TASA')  and  of  the Peruvian company TELEFONICA  DEL  PERU,  S.A.A.
('TdeP') (jointly, the 'Offers' and the 'Target Companies').

The  Target Companies are currently participated in by TELEFONICA, either
through  wholly  owned  subsidiaries of  TELEFONICA  or  through  holding
companies mainly participated in by TELEFONICA. Therefore, the shares  or
securities  representing  the shares of the Target  Companies  which  are
held,  directly or indirectly, by TELEFONICA, will not be the  object  of
the corresponding offers.

2.     Jurisdiction and structure

The  Offers will be subject to the legal requirements applicable in  each
of  the  countries  where the Target Companies are incorporated.  Brazil,
Argentina  and  Peru.  Furthermore, due to the  fact  that  part  of  the
shareholders of the Target Companies are U.S. residents and that part  of
the  shares  of  the Target Companies are listed in the  New  York  Stock
Exchange  as  American  Depositary Shares ('ADSs'),  the  American  legal
requirements will also be applicable to the Offers.

Due  to  some  differences  in  the different  laws  applicable  to  this
transaction,  each  of  the  Offers will  be  instrumented  by  a  double
proceeding:  (i) an offer directed to the holders of ADSs listed  in  the
New  York  Stock  Exchange, independent of their residence,  and  to  the
holders  of shares and securities representing such shares who  are  U.S.
residents ('U.S. Offers'), governed by the laws of the United States, and
(ii)   an   offer  directed  to  the  holders  of  shares  or  securities
representing  such  shares  who are not U.S. residents  ('Local  Offers'),
governed by Brazilian, Argentinean or Peruvian laws, as the case may be.


3.     Structure: increase of share capital and exchange of shares

In  order to attend to the established compensation for each of  the Offers, the
Board of Directors of TELEFONICA has agreed, in the same   meeting  in  which it
approved such Offers, to call an Extraordinary Shareholders' General Meeting of
TELEFONICA to be held  on  February  3,  2000, in first call, or on February 4,
2000, in second call,  to  resolve  the  proposals of share capital increase in 
the  following  amounts:

(1) In  order  to  attend  to  the established contribution  for  the
    TELESP Offer, a nominal value of 432,159,596 euros, through  the
    issue and circulation of 432,159,596 shares, of one (1) euro  of
    nominal value each.

(2) In  order to attend to the established contribution for the  TELE
    SUDESTE  Offer,  a nominal value of 102,889,652  euros,  through
    the issue and circulation of 102,889,652 shares.

(3) In  order to attend to the established contribution for the  TASA
    Offer,  a nominal value of 172,037,573 euros, through the  issue
    and circulation of 172,037,573 shares.

(4) In order to attend to the established contribution for the TdeP
    Offer, a nominal value of 85,464,976 euros, through the issue
    and circulation of 85,464,976 shares.

The  share  capital increases are independent among themselves,  and they  can 
be  executed  by  the Board of  Directors  in  the  order considered 
appropriate. The execution or non-execution  of  any  of  them will not affect
the others.

The final number of shares to be subscribed will be such number,  in accordance
with the exchange ratios, resulting from the  number  of acceptances of the
different Offers and from their liquidation,  the incomplete   subscription  of
the  share  capital  increases   being expressly  contemplated, in order to
adjust the amount of the  share  capital increase to the acceptances of the
corresponding Offers.

The  compensation for each of the share capital increases will fully consist of
contributions in kind to the capital of TELEFONICA,  such  contributions being
made up of the shares or, as the  case  may  be, AD5s  representing  shares of
TELESP, TELE SUDESTE,  TASA  and  TdeP whose holders accept the Offers.


4.     Effectiveness of the 0ffers

The effectiveness of each of the Offers is subject to the following conditions:

(a)  'that no significant disruption affecting the normal operation of  the
     Madrid  or  New  York Stock Exchanges or any other local markets  on       
    which  the Target  Companies  have  their  shares listed should  occur,     
   that  implies  the suspension or material limitation in trading of these     
  shares'.

(b)  that  the quote value of the TELEFONICA share in the Spanish Automated
     Quotation  Market at the end of any session does not decrease  by  a       
    percentage equal to or greater than 25% of the quote value at the end of 
     the session of the date of the present resolution.

(c)  that, at the end of any session, the value of the stock exchange index
     of  the  Spanish Market (IBEX), expressed in euros, or the value  of  the  
    stock exchange index of the main Stock Exchange of the country of origin    
   of the Target Companies, expressed in U.S. dollars, does not decrease by a   
  percentage equal to or  greater than 25% of the quote value at the end of     
 the session of the date of the present resolution.

(d)  that  no  other  specific circumstances occur which  mean  an  adverse
     significant  change  and  as  will  be  defined  in  the  documentation    
    of  the corresponding Offers.

Additionally, the people empowered for the execution of each of the Offers will
be able  to desist if any of the pertinent authorisations for the effectiveness
of the Offers, including, among others, those of the registration of TELEFONICA
and its  securities with the regime of public offer and listing, those necessary
for the making of the Offers and the exchange authorisations, have not been
obtained within 90 days since the date of this resolution.

The  occurrence  of  any  of the circumstances to which their  effectiveness  is
subjected  before  the liquidation date of the Offers, will  empower  TELEFONICA
and,  on  its behalf, its administration bodies and those empowered in  relation
 with each of the Offers, to desist from the Offer, ceasing its effects.

In  any  case,  the  effectiveness of each of the Offers is conditioned  to  the
approval by the Shareholders' General Meeting of TELEFONICA of the share capital
increase  with the preferred subscription exclusion necessary for  the  foreseen
title exchange.


5.     Exchange ratios

The exchange ratios will be the following:

Company                     Exchange ratio

Telefonica de     15 shares of Telefonica for every 90 shares of Telefonica
Argentina         Argentina

                  5 ADSs of Telefonica(l) for every 90 shares 'B' of Telefonica
                  Argentina.
         
                  5 ADSs of Telefonica(1) for each 9 ADSs of Telefonica de
                  Argentina(2).

Telesp            36 shares of Telefonica for every 46,000 ordinary shares of
                  Telesp.

                  48 shares of Telefonica for every 37,000 preference shares of
                  Telesp.
         
                  12 ADSs of Telefonica(1) for every 46,000 ordinary shares of  
                 Telesp.
 
                  16 ADSs of Telefonica(1) for every 37,000 preference shares   
                 of Telesp.
         
                  16 ADSs of Telefonica(1) for every 37 ADSs of Telesp(3).

Tele Sudeste      12 shares of Telefonica for every 54,000 ordinary shares of
Celular           Tele Sudeste Celular.

                  24 shares of Telefonica for every 55,000 preference shares of
                  Tele Sudeste Celular.

                  4 ADSs of Telefonica(1) for every 54,000 ordinary shares of   
                 Tele Sudeste Celular.

                  8 ADSs of Telefonica(1) for every 55,000 preference shares of
                  Tele Sudeste Celular.

                  8 ADSs of Telefonica(1) for every 11 ADSs of Tele Sudeste
                  Celular(4).

Telefonica        7 ADSs of Telefonica(1) for every 290 shares 'B' or 'C' of del
Peru          Telefonica del Peru.

                  7 ADSs of Telefonica(1) for every 29 ADSs of Telefonica del
                  Peru(5).

(1) 1 ADS = 3 ordinary shares.
(2) 1 ADS = 10 ordinary shares.
(3) 1 ADS = 1,000 preference shares.
(4) 1 ADS = 5,000 preference shares.
(5) 1 ADS = 10 ordinary shares.


                              ANNEX 4

    Proposal of resolution of share capital increase for the indirect
                        acquisition of Atlantida
        Comunicaciones, SA. (ATCO) and Compania Internacional de
                           Telecomunicaciones,
                             S.A. (COINTEL)

   As  made  public  through a public notice submitted  to  the  National
   Securities  Market  Commission  on January  3,  2000,  TELEFONICA  has
   entered  into  strategic agreements with the U.S.  fund  Hicks,  Muse,
   Tate  &  Furst  Incorporated and with the Argentinean group  known  as
   Vigil  Group  for  the  distribution of the assets  belonging  to  the
   Argentinean  companies Compania Internacional de  Telecomunicaciones,
   SA,  Torneos y Competencias, S.A., Atlantida Comunicaciones, S.A.  and
   AC Inversora, S.A.

   In  connection  with the above, the Board of Directors has  agreed  to
   submit   to  the  Extraordinary  Shareholders'  General  Meeting   the
   following proposals of share capital increase:

   1. A share capital increase through contributions in kind, of a
      nominal value of 19,500,000 euros, though the issue and circulation of
      19,500,000 new ordinary shares. The new shares will be fully subscribed   
     and paid up by contributions in kind consisting of shares of Vigil Corp,   
    S.A. and Ambit, S.A. The contributions will entail the indirect
      acquisition by TELEFONICA of 40% of the share capital of Atlantida        
     Comunicaciones, S.A. ('ATCO').

   2. A  share  capital  increase through contributions in  kind,  for  a
      nominal   value  of  110,000,000  euros,  though  the  issue   and
      circulation  of  110,000,000 new ordinary shares. The  new  shares
      will  be  fully  subscribed and paid up by contributions  in  kind
      consisting  of shares of CEI Citicorp Holdings, S.A.  The  shares  will
      entail  the  indirect  acquisition by TELEFONICA  of  50%  of  the
      Compania  de Inversiones en Telecomunicaciones, S.A.  which  owns
      51%  of  the share capital of Telefonica de Argentina, S.A. and  an
      additional 30% of ATCO.
                            
In answer, any queries that arise regarding the information in the Relevant Act
announced about and particularly in relation with the effectiveness of the
offers stated in paragraph (a), point 4 of Annex 3 (Summary of the relevant
terms of the Offers), we consider that further information  should be provided
regarding the achieving of the aforementioned effectiveness. In any event, such
condition is subject to the provisions to be incorporated in the offers pursuant
to the resolutions passed by the Board of Directors:

  (a) 'that no significant disruption affecting the normal operations of the
      Madrid or New York Stock Exchanges or any other local markets on which    
     the Target Companies have their shares listed should occur, that implies 
      the suspension or material limitation in trading of these shares'.