Re Agreement

Telefonica SA
2 March 2001


TELEFONICA MOVILES TAKES MANAGEMENT CONTROL OF FOUR CELLULAR OPERATORS IN
MEXIC0

TELEFONICA MOVILES NOW HAS MORE THAN 25 MILLION CLIENTS WORLDWIDE

* Telefonica Moviles now manages more than 14 million clients in Spain, 10.5    
  million in Latin America and more than 500,000 in Morocco.

* Telefonica Moviles takes over management of Bajacel, Movitel, Norcel and      
  Cedetel, Motorola's four cellular operators in northern Mexico.  This change
  occurs prior to the transfer of these assets, which was agreed to last        
  October and is expected to take place in the second quarter of this year.

* Jose Luis de la Pena, until now Director of the Company Sales Division of     
  Telefonica Moviles Espana, has been appointed CEO of the four companies.

Madrid, 2 March 2001 - Telefonica Moviles has reached an agreement with 
Motorola to  take  management control of Bajacel, Movitel, Norcel and Cedetel, 
the four operating companies in the north of Mexico which Telefonica Moviles
will acquire shortly.

These companies service an area with a combined population of more than 20
million inhabitants. The operators, which began providing service in 1990, are
100% owned by Motorola, with the exception of Movitel, in which Motorola has a
90% stake.

Telefonica Moviles assumes management control of  the  four  units  before the
regulatory approvals required for the purchase have been finalized. The approval
process is underway and is expected to be completed, during second quarter 2001,
according to the purchase agreement signed last October by Telefonica,
Telefonica Moviles and Motorola.

To carry out the acquisition, the upcoming annual general meeting of
Telefonica, S.A. will be asked to approve a capital increase for the purpose of
purchasing the four companies through an exchange of shares, which will later
be transferred to Telefonica Moviles.

Subsequently, Telefonica Moviles will hold a capital increase, which has 
already been approved. The new shares will be turned over to Telefonica SA in
exchange for the  participations in Bajatel, Movitel, Norcel and Cedetel. This
same procedure was for the transfer of cellular assets in Argentina to
Telefonica Moviles and will shortly be used for those in Peru.

The  Mexican  cellular market is  divided into nine  regions.  Mexico  is  the
second-largest cellular market in Latin America, with a  population  of  99
million inhabitants and approximately 11 million mobile telephone customers as
of  June, 2000. The low penetration rate for mobile telephony  (11% as of June, 
2000),  similar  to  that  of  fixed  telephony,  and  the  favorable
macroeconomic  outlook,  underscore the  country's  growth  potential for
cellular telephony.  The north of Mexico is particularly attractive, given
in large concentration of industry, high population growth, rate and proximity
to the United States.

More than 25 million customers under management

As  a  result of this agreement, Telefonica Moviles has more than 25 million
customers under management,  making it one  of  the  largest  mobile  phone
companies in the world.

The  company  currently has 14 million customers in  Spain  more than 500,000
clients  in Morocco and a total of 10.5 million in Latin America. The  latter
figure  does  not include  the customers of the Brazilian operators  of Portugal
Telecom, which will be included in the holding company  that  will  bring
together the operators  of the Portuguese company and  those  of  Telefonica
Moviles in  the  Brazilian  market. Counting the  clients  of  the  jointly
managed company, Telefonica Moviles will have 30 million clients under
management.

Telefonica Moviles is one of the 10 leading mobile phone companies  in  the
world  providing  coverage to a market of some 400 million  inhabitants.  It
aspires  to  become one of the top five global mobile operators. The company
is a leader in the growth markets of Spain and Latin America and is carrying
out a strategy of selective expansion in Europe and the Mediterranean Basin.
Telefonica Moviles shares trade on the New York Stock Exchange and on the
Spanish stock exchanges under the symbol TEM.

Jose Luis de la Pena, CEO of the four operating companies

In its first decision following the agreement with Motorola, the Boards  of
Directors of the four Mexican companies whose management is being taken  over
by Telefonica  Moviles have appointed Jose Luis de la Pena  as their chief
executive officer. At the same time, first steps have been taken to harmonize
their procedures with the practices of the Telefonica Moviles Group.

Jose Luis de la Pena, a telecommunications engineer, was until now Director of
the Company Sales Division of Telefonica Moviles Espana, the company he joined
in 1998.
        
Jose Luis de la Pena began his career with the Telefonica Group in 1975  and
has held a number of executive posts, among them director of the division
of multinational clients and operators (1992-1997); director of sales to
large clients at Telefonica de Espana (1997) and regional  director for sales to
large clients in Madrid, Castilla-La Mancha and Castilla-Leon.

Telefonica Moviles is one of the 10 largest mobile phone companies in the
world, providing service to a total market of 400 million clients and aspires
to become one of the top five global operators. The company is a leader in  the
growth markets of Spain and Latin America and is carrying out a strategy of
selective growth in Europe and  the Mediterranean Basin. Telefonica Moviles
shares trade on the Spanish stock exchanges and on the New York Stock Exchange
(NYSE) under the ticker TEM.

Direccion de Comunicacion          Tel: [phone]
Press Office                       Fax: [phone]
Goya, 24-1 planta                  e-mail: [e-mail]
28001 Madrid                       http://www.telefonicamoviles.com