Proposed dividend for 2004

Telefonica SA
17 December 2003

                            Ramiro Sanchez de Lerin

                         Vice Secretary to the Company

                        and to the Board of Directors of

                                TELEFONICA, S.A.

Further to the information made public by TELEFONICA, S.A. as reports of
significant events on July 23rd and October 10th, 2003 in relation to the
proposed dividend distribution of 0.40 euros per share which the TELEFONICA,
S.A. Board of Directors intends, upon prior fulfilment of the applicable
statutory and bylaw provisions, to bring before the shareholders for approval at
the 2004 Annual General Meeting, TELEFONICA, S.A. hereby

                                    REPORTS


That, for the sake of greater transparency and certainty in financial markets,
the TELEFONICA, S.A. Board of Directors understands, as discussed at its
meeting today, that the proposal to the General Meeting will be for the
aforesaid dividend to be distributed in two payments of identical amounts (0.20
euros per share in each), the first on May 14th, 2004 and the second on November
12th, 2004.

                                                    Madrid, December 17th, 2003.


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