Possible Divestment inEndemol

Telefonica SA
09 March 2007


TELEFONICA, S.A., as provided in article 82 of the Spanish Stock Market Act
(Ley del Mercado de Valores), hereby reports the following


                               SIGNIFICANT EVENT


TELEFONICA announces that it is exploring strategic alternatives in relation
to its stake in  ENDEMOL N.V., including a possible total or partial divestiture
of its stake in that company. To that effect, TELEFONICA has retained LEHMAN
BROTHERS as its financial advisor and, additionally, has asked MERRILL LYNCH to
offer stapled financing to the purchaser within the context of an eventual
transaction.


If TELEFONICA were to decide to divest its 75% stake in ENDEMOL N.V., it is
its  intention to solicit from the potential purchaser a public offer for the
other 25% of the shares outstanding in ENDEMOL N.V.


Madrid, March 9th, 2007


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