Real Estate Transfer

Telefonica SA
2 November 2001

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

                              SIGNIFICANT EVENT

Telefonica, S.A has decided to incorporate all the Group's real estate assets 
within its subsidiary 'Inmobilaria Telefonica, S.L.U' as part of its company 
reorganisation process which aims to create different parent companies for each 
business line.

This process of placing all its real estate under the umbrella of 'Inmobilaria 
Telefonica. S.L.U.' will begin with the transfer of the real estate that pertain
to the operator 'Telefonica de Espana, S.A.U.' once the necessary authorisations
have been obtained.

The transfer of this real estate will be carried out from a mercantile viewpoint
through the partial spin off of 'Telefonica de Espana, S.A.U.' by way of the 
segregating of business lines, in accordance with the legal process set forth 
for this type of operation.

As a consequence of this operation 'Inmobiliaria Telefonica, S.L.U.' will become
the owner of all the real estate that to date made up the real estate assets of 
'Telefonica de Espana, S.A.U.'.

                                                     Madrid, October 31st 2001