shareholder.s remuneration

Telefonica SA
23 July 2003



'Telefonica S.A.', as provided in article 82 of the Spanish Stock Market Act
(Ley del Mercado de Valores), hereby reports the following



                               SIGNIFICANT EVENT




Telefonica's Board of Directors, at its meeting of 23rd July 2003, has decided
to strengthen its commitment to the shareholder remuneration policy initiated at
its meeting of 24th July 2002, by resolving the following for years 2004, 2005
and 2006:


 a. To propose to the Annual General Meeting of Shareholders corresponding to the
    fiscal year 2003, the payment of a dividend of 0.4 Euros per share. The
    intention of the Board is to maintain this same dividend for fiscal years
    2004 and 2005, all subject to compliance with any limitations established by
    law, by the Company's articles of association, and by the relevant
    regulations which may be applicable from time to time.


 b. Not to renounce to the reductions of the share capital via cancellation of
    own shares held as treasury stock as a tool of the shareholder remuneration
    policy where such reductions are deemed appropriate.


In the event that the Company's interests might suggest a change to this
shareholder remuneration policy before the end of the projected time frame for
its application, the Board of Directors, upon prior analysis of the relevant
circumstances, will report its evaluation of those circumstances and such
modifications as may be made to the remuneration policy.




                                                            Madrid, 23 July 2003







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