Re Agreement

Telefonica SA
13 September 2001


'TELEFONICA, S.A.', in accordance with that stated in article 82 of the Spanish 
Stock Market Law, hereby announces the following.

                               SIGNIFICANT EVENT

A) By way of the announcement dated April 9th, 2001 the Spanish National 
Securities Comission was informed of the agreement reached between Telefonica 
S.A. and Iberdrola S.A. by which the former acquired all the shares stakes held 
by the Iberdrola Group in the Brazilian telecommunications operators in which 
both groups are shareholders.

The aforementioned announcement set forth the exchange ratios and the operators 
involved in the transaction.

TELECOMUNICACOES DE SAO PAULO, S.A. - TELESP
CELULAR CRT PARTICIPACOES, S.A.
TELE SUDESTE CELULAR PARTICIPACOES, S.A.
TELE LESTE CELULAR PARTICIPACOES, S.A.

Likewise, this announcement also stated that the acquisition would take place 
'once the foreseen regulatory authorizations have been obtained'.

B) On September 11th, 2001 the Brazilian telecommunications regulator AGENCIA 
NACIONAL  DE  TELECOMUNICACOES  (ANATEL)  granted  this authorization, with no 
restrictions, for the transfer of the shares between the controlling holdings, 
or directly with the following cellular operators:

CELULAR CRT PARTICIPACOES, S.A.
TELE SUDESTE CELULAR PARTICIPACOES, S.A.
TELE LESTE CELULAR, PARTICIPACOES, S.A.

C) Having received the aforementioned authorization, the transfer of shares 
among the previously mentioned operators will take place in accordance with the 
terms and conditions of the contracts set forth, in compliance with Brazilian 
legislation and, should it be the case, having obtained the pertinent 
authorizations from Banco Central de Brasil (the Brazilian Central Bank) and 
other institutions.

                                                 Madrid, September 12th, 2001