Share Capital Increase

Telefonica SA
6 July 2001


Telefonica, S.A., by way of this document, hereby announces the following


                                SIGNIFICANT EVENT


Telefonica Moviles, S.A. (a Telefonica, S.A. subsidiary) has today executed the
capital increase with non-cash contributions, as approved by the Universal
Extraordinary General Shareholders' Meeting of the Company on October 30th,
2000.

In accordance with the Unabridged and Abridged Prospectuses of the Company,
recorded on the Official Registers of this Commission, on November 2nd, 2000 and
June 29th, 2001 respectively, TELEFONICA MOVILES, S.A. has increased its share
capital by Euros 101,680,173 through the issuance of 203,360,346 ordinary shares
which have been totally subscribed and paid-in, along with the issue premium, by
TELEFONICA, S.A.

The total disbursement of the shares has been made by TELEFONICA, S.A. through
the contribution of shares from the following Mexican companies: Corporacion
Integral de Comunicacion, S.A.de C.V., Grupo Corporative del Norte S.A.de C.V,,
Telefonia Celular del Norte S.A. de C.V., Celular de Telefonia S.A. de C.V.,
Baja Celular Mejicana S.A. de C.V., Baja Celular Servicios Corporativos S.A.de
C.V., Tamcel S.A. de C.V., Movitel del Noroeste S.A. de C.V., Moviservicios S.A.
de C.V., and Movicelular S.A. de C.V. These shares permit Telefonica Moviles,
S.A. the direct or indirect acquisition of the following percentages in mobile
operators in North Mexico: 100% of Telefonia Celular del Norte, S.A. de C.V.,
Celular de Telefonia, de C.V., Baja Celular Mejicana, S.A. de C.V. and 90% of
Movitel del Noroeste, S.A, de C.V.

Madrid, 6 de Julio de 2001